. . . ?~t~i~:ir:f;troba'.: ~G~~-27:587,<

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•· . I · _Any.entry·-rriad~ Ln'the·books of-reqistry, -includinq: both reqistrationin-itscrdinary and strict sense; and . cancellation, annotation;' and even marginal "notes .. ( Ch~()g;v:. _Gen?to, G.R. No. J-29760; December 29; .. I . 1998r·. . . '. .: . . . -; · \ .. ' . · · · '·" · ::. , 1·· · _.,. • It_. is: th~\1ritry· made i~. the: registry 'which- records solemnly aridi permanently the right ot "ownership · aod:othe-~_rl3al rights ([)E LEON; suprq at 342). _.,.· · ·. . . ' . . · · . . · .R~-gistration R~~ufresAct"ual Recordinq.' If the property was' never really registered as when ' the registrar forgot" to do so althouqh he has been . harided the doc1:1me~t. .. there· "is no registr~tibn . Regist ation in'" jts_~ juritjical ~spec!" must be: understood a th(;) entry. made i"ri a 'book pt public registry or1te6~· (Pg -~l{n ·Tun V, _Pr[ce, G.R. No'. _L- .

"i ·. \.'.~ ~ ;· . :"oni· - -, . . . ' .

31346, Oeeem~r 28, 1929): , · ·.

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Un~~~ ·':"c!· · -~~-- ~'. ~_3'44, • r~9.i~fr.?:fo'•\ o_f }~}tf~.ni~n. s affecting· unr~grs_te~ed lands. JS_ '.yvrthOl;Jt pr~JUC:lrc"e t~ a third..,,party with ·a.: beft~r· _rig'ht.'- 'The .,.af~quot~d phrase has b~en _held by:t_his -C9urt:to m~_an tha~tlie . m:e_rE3 ,reg[strati0.11·, of. a. sal~ :i!°1,Pf!~'s d0\S _not" . .". . _gi_ve .t:i_i~ ?riY rigN ~ver the .l~_n_d;if the y~pd9'.·Y.l.~s-.no_t · · aQymo~e. the :o":'ner 9f..:tQe _l.c3n_~ 1havi~~tP.r,yvi~1:1s[y. · sold the same to-so[l)eb0dy else- even. if. the earlier . s-aie·:~as -u~record.ed (S,po,.yse·s:· sal)ijs_9 _Mi.Je,:t,¢gui, G.R. No. 181_3.59,,Aug_usl 5, 201)): .

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A _buyer qf ~-I) .ur1regisfe.re.d_ lan9 a·sqdi.rE!ls a p_etter t11e thfil1'a sub~i:fqu"e'nt._b(.iyer·, iive_n· if tt-\e "1atfer regisie_red · ,. the s_al..e io.good faith after the re.gistration of the land . by th.e seiler be.cause tt)e ~·~cond.buyer n:i.ere'ly steps: 1s"ale ·· .. ,. i'rito the clth:e ·seiier'who ~t the tirhe 'of the .'. fo.. ~irri rel="nofollow">is\ -~d)¢~g;~~,the' ci>_wn·er .the ~J?rop.~rty ..

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(Radiq,w_ealtf.J.'·Finance· Cq_.. v. PcJ/ile'o, · G'.R: _No. -~/3,434,fyf~i?O,.1.99.1):,. -~· ."." . : . ._-.. · .. ,; · ·

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do~b_l;·pon~~i~f ·.· _·- ·.;~ - · .. - .. ; ·. . '- · ·. :.. Aft·...J~M }1Pplies .. !o-~ajlouble .9.?nc!tiC?f1: _!:- de.e_d_ of · .. lllusfration: A sold his. land .to 8-With: t_he1right to.... d9nalj~m.e~ecu.ted)Nith all the forma[itj_esrof the·Jaw . repurchase ."the" sa~i-·,_A·.tc!i)e~· t~>; -~~de,en,' -~he. . , ji_on.the_s~~~-f6oting,as a.·~ci.~ed.. {>f.sale)n the for.m. . ·: prop"E3rty, thus.· ~-:r~gis_te·r.ic\-.th:e,. land. io-.:~!$ · nar:n~: . o.f: a, .. Public:instrµ_me:rit(Cag~q~n v .. Ca_ga.oan; G.~ ... · . Unknown to B, j~. o.bt~irJ~d·.·.::vfr.ee l?a:terJt,:ov~r. the ... , . " ·No. 1"(_90[)/Jyne ..2-1; 192_2); · i· . · ~ .. :,:: . . t,

·. . _. · . : · . . ,. .- , <: . -:.;·_, . . .',: _.,/:··' . -~.", ··. .

.. ·

land,._·· Th9~fre'e p:atent :.was lafer:·dri'•cancell~d:· bY a. · . · ~. \t· · ~- . . ·. . . . . . . . ~. . . .. .· to :"c;. A'aiso' sold . . . possessipn· ·.. · · .. ... : : ,: .. . · ·...: . . . ttie.,land tc," [) ·w~·o· regist.er_ed:th:e·$ale ·a~d 'a:J,¢J..y.,ag, ·, · .. . ~q'.sse's~i~n," rne~ns. _both: ·actual. -~~d CO~St(UC!ive.· · '.iss.ued 1n·her- n_ame. Yyho. has ~·better ri~ht?1 · . · ·. · Cfhe Roma~_-cat_hbl{c ·.c;hutch,,v; ~a[Jfe, G.f:: _No, : . ' ·· · ·:-.:. ,. :· ~,., .· · . -;. ·.. -. . . . ' .. :17.41<18, Apnl 1.1, ?0.12).; · ··. ·.... __ · : ·.

-for.:. Meanwhile, -s· sold tbe~land

Answer:- D. Both" C~arid P. ,regist$r~d. th"e sale:ot'thE(. property. Since C did not know t~·at the~ p·ropefly was ·covered qy Torrens Sy~tein, _he regist~red the sale · ·. ·under ,A.ct 3344; wriiJe· cfr.egistered the trqnsactfon · under the-Torrens system; because during.the sale, A-l?reserited the· TCT c9ver1ng the ·p~operty. It h~s

. . . . . Possession under- Art. -.1544 of the· Civil. Code is : e1th~~ -~·aten~I or symbolic(TerfFciftVRealty"v.Cruz..

G.R. No. 151.21_?; S'eptember.10,2003): :: ·

.. : - ~019 SAN. BED.A. .

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LA w CENJAAl:.IZED BAR·. OPERA.TiONS I 493. . . ' . .

SA·LES·· AND ·LEAS-E SAN BEDA 1..1>:~CENTRALIZED

~A~OPERATIONS - ME~O~YA/0 2019

Good Faith r_Jlust Concur with Registra.tion To be entitled to priority, the second purchaser must . not only. esfal?lish prior recording .of ·his-deed, but . m_ust have acted . in .good faith:. There.fore: 'the reql!ireinenrof the law is two-fold: (1) acquisition in good faith and (2) registration in good faith. (Gabriel v. SJ?.S; Mabanta, G.R. No. 142403;-M~rch ·26, 2003).

The ·obligation· to give a determinat~ thing includes, the delivery of all .its accessions and· accessories, even though' they may not have been mentioned (C{VILJ;dDE, A°rt. 1166). When the vendee is not entitled to the fruits 1. By agreemen_t of the parties; · 2. . When ·the ver:idee rescinds .the contract of sale · . instead of exacting the fulfillment thereof_(C/V/L ·· COPE, Art. 1385); and . . ·-3: a contract of promise· to. sel[ since the orily right. of the contractir:ig parties is lo reciprocally d_emand the fulfillmen~ of the contract (DE ·· LEON, supra at 324).

Duly, Registered Attachment . It is a settled rule·that an attachment, which.is· duly regist~red;· takes . precedence . over .a .prior unregistered s~le.. ·

.

The preference created by the levy is not diminished even· by subsequent registration of the prior sale: The reason is that 'an attachment- is.a proceeding in rem. It is aqainst ._the particular .property and. is enforceable aqalnstthe whole world (Va/de,vieso v, Detemerio, G:R. No. 133303, February 17, 200~

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Deli~ery .of f r:.Liit_ and. Accessories · (CIVIL Arts .. 1164,.-1.16~ an,d 1537) .. ~~

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Condition . _ _ An, uncertain event or contlnqency: upon _the.-. 'happenlnq of which the obliqation or right ·of thecontract depends: In such case; the ~l:51_igation ofthe cor:itract does not attach . until . the condition is feifarmed (DE. LEON, supra at 37 4). . . ·

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. . Accessions ' ~ . . It is. the fruits of .a .. thing; o~.a1dlio~s to,

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Note: Jnere .R.'.~Y\.be a contract of sale of goods; . \'f.~O.S~CAU~1t1o~by· the se11er. '. depends . upor}_ a ~~9ntipgen~y. whig!} ~ay_ or may. not happen (CIVI(... 0.0P,13, 1~6?! par. 2). .: -. . , .

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i_rr:,proy~ments_ UP.On, a thinQ (~:g.yol;[lg.of • nirnals, house or ,tre~s on a land, ~tc~,J.D~ /.£ON, supra. at. C ~ · f) . . · · . ~22). _The_ te~m. __"fruit~" h•er_yi~tlu~esJ na!u.!:,al, ; ~ff~G.t_
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This means'that the selier has the.duty·to prese~ethe Jhirig. ifnp its accessions':and- acce·ssories .from th~ nio_m~nt-.9f perfectio.n th_e· G~nfra~t qf ·sale: ... If anything ;l:iappens. ,the thing b_efore its. delivery,

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· .(¢.g: 1dss or delefidraticin'; ih:Jproverr(~nt}-tfhe·sclller's. ·right\;anc:f'liab\lities 'wili'be governed by the' n.ile·s· in Art:: j 189 'of the ·civil . ~ode, the s·eller' be_ing · .considered i_t~;deot<;i~ (CIVIL"CObE,.Art. 1538}."". . . . . The buyer·ha_s a right to the fruits Qf the-tt]ing.from. . the·tim-~}he' obligation to deliv.er.itarises.
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The fruit~, (natural; industrial or civil).-shall· p·ertain· to._ . . . . I the buyer from the .day on ·which·-the corilract was perfected (CI\IIL CODE,_ Art .. 1537, par.

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2"019. SAN B'ED~ lAW CENTRALIZED BAR OPERATIONS

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,,:,.c~n _rff .'?~l'.;'een_ ~he P.a~1es :~ind: ~n~. ~f:them . the_ performance of· an ooligat1on under the · - .conlract'(Devit-"Bank of_the.Philippines v. Me_drario, · G.R:.No.161094/ February_ 1, 20J1);' . . . '· .· . -. · · : ; Distinction be~een .· Condition . Imposed.,- on ' ·. f>erf~·C:tioni o(Contrac;t .,.~·!lc('Coridftfon' lli'lpdsed·· ·" Qn. Per{or.i:nance·of·O~b.ligation; ... :.. 1. · ·Con_d.tfo~ imposed ·an peifectioii ·of contract . prevei:its·t.he·jlltic!ic·a1_ relation from· coming into ~exi~lence: . - .. ·. . 2. ··Conditien imposed-- on ·-p~rformance of .oblig~~forfgiv~sthe·.qption to'the',p~rty eith~r-to refuse or- proceed with the,contract of sale and wai~e the condition· (Romero v. 9A. G.R. No. 107207; Novem~er 23, 1995). ~

.

494

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.. \' . · .... , ·: ~~~nty(CIV(L.CQDE;AH.1545,par.'

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.SA·L . ES ·A·N;D t.·EASE·_.;. SAN BE.DA LAW CENT~ALIZED BAR OPERATIONS - M~MORY AID _2019

wa:rranty v. Con'diti~n ..

~...

· The vendor. is, bound to transfer.the -ownership .of ·and deliver, as well as warrant the thihg which is the · ·. object of the sale (CiVIL GODE, Art 1495).· While warranty is not an essential eiement of a sale, there can be· no warranty without a sale. If the sale· is illegal, the buyer cannot maintain an action Ori a warran,ty accbm.pariying it (Id. at 378). .- . .

'

Goes : . info "the Goes into the root ofthe performance -'of such existence . ofthe _obligati6"ri ;a~d ln fact may obligation .. constitute an-obligation in.. . . itselt, . · · ·- ,,

.M_ay. . form . part of 'the · obliqation · or, contract by, provislon .ot. the law without . t~'e . parties havinq aqreed -thereto.

-

. . T-tie. i::l,ecisi_v~ tesi·,s. whether_ the :seller .assumes to , .ass~rt a fact of. which the buyer is ignorant _(Goodyea'r Philippin~s lnc.··.v. Sy, ·G:R. No. 154554, Novem.ber 9, 2005). . •. · ·

ryi_µst be. stipulated: 'by the parties in order· to form . part . of · an obliqation .. '.. . ;

Note: Thef buyet may make.warranties as well, ~s wh_en he warrants that lie' will pay or when he make.s any affirmation 'or promise· to. in'duce the seller to. enter in'to the con.tract of sale (DE LE;ON, ,supra at

379).'

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Time of Warranty_;· . , Under Article- 1546, the 'c:1ffirmati9n . .must.in,duce th'e buyer to ·purchase "the goocl and Jhe . buyer ·purchases tne thirig relying .. c;in the affirmation. If the warranty is;giien a~er the con_trac:;t of sale ha.s beeri .. p~rtec ed, the w;;irranty must generally.in order to ..) _be'-'effe·ctive, be ·accompanied by ne\Y and· · sepa~ate co~siaeration (Id. ·at-380-381). . < .

Whether · _express, 'or implied, . relates lo the subject 'matter itsetf or to the obliqatioris .ot the seller as to the · subject matterof the sale:

a

contract..

I

..In~_entionl.-M·a~~aWar;a.~ty .. . . . "1t -i.s tht,t natural 'tendency of. the affi_rn_:ration' --~p~omise!..to ir.iaiice the bt.iy~fr to. purchase .Jnat import~ and riciJt the :i11fention ,of ·the seller . wa'rrant,. and in the· .abs~nce 'of an intention w·arrarit is of no con.sequence (Id.' at 381). •

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Wa~r,anty·is a collateral undertaking ___ ,,_,.__Since an assignee merelysteps -into the shoes, sci to speak, of an assiqnor, theassiqnee shallllkewise (VILLANUEVA, supra a{454). shoulder all' the 'obltqations ·.of a vendor-assiqnor. . ;.... . . . ' .... including the" vendor's. warranty. As a:_..GQllateral .Warr~nty.. ·.·· . . · ·'; ·. ·· undertaking, it follows 'where the principal obligation A warranty is a staternent.orrepresentation-made by :-g.oes (Koa v. CA; G.R: No. '84847, M~rch 5,_..1993). -the sell~r.dgoods - contemporaneously and as_part of the contract of'. sale - .that has reference -to the · . A warranty is a. collateral undertaking in a sale of - . character, quality. or title of the qoods; and· Is issued · )either real or· personal property, express or Impfied: to promise or undertake to· insure that certain .facts · that if the property sold .does not possess- certain are · or shall" be as· the- seller ·. represents 'them' · incidents -or qualities, the · purchaser may either (Philippine steeicoetmt; Corp., v. Quinones: G.R. consider the· sale voio or claim darnaqes for breach' ·. No::·194533, Ap_ri/'19,-2017), · of warranty ~ An. express warranty pertalnsto any-: affirmation of' fact or' any promise by the seller· A'warranty is not necessarily wrttten.lt-rnay be oral relating to the thing,)he natural tendency w~ich.is. as long as it is h0~ given .as .a: mere oplnlon or., . to -induce the buyer to purchase the sarne.: A11 judgment. Rather. it is a posltiveafftrmation ofa.tact implied 'warranty is. cine which the law derives by that: buyers re[y, -upon, .and thc;1t. influences or application or . inference from· the nature of. induces them to. purchase the 'produd ·(Philippine transaction or the relative. situation or circumstances · Steel Coc1ting Corp. ·.v
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·2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS

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Kinds of Warranty; . It may be waived or modified by express 1., Express :-'-It is-any affirmation of fact or promise - stipulatjon ... (e.g __ . wetrenty against eviction, PY the seller relating to the thing,· inducing 'the . : ~a.rran(y a~airist !Jidcfe~_defects)'(lci.). . . .. 'buyer to purchase the same and if the buyer . ·'p~rcliases the thing relying. thereon .·:(CIVIL , Althouqh .only,:~ "seller is bound . b\1 implief • CODE, Art.' 1546). '«atr;;inties of law, nevertheless-an agent of the ' . . 'seller maybind hibi;,elf Jo. such w_arrarWes, by, Requisites: (AIR) . . express conjractua' stipulaticn (Schmid end a..: It.' must be an ~ffirmation of fact or any . · Oberly. Inc. (. v. RJL · Martinez Fishing , jirom_ise:bylne:ifell,er relatinq' to the subjett. . Corporation,. G.R. No. --7'5i98, October:. 18, . "rnatter'of ths sale; . . .. . . 1988).·, . . · . ,. b. The natural tendency of such affirmation or· , ·· • · · promise i's to [nduce the .buye'r to purchase . ' ·lltu~trations: .; the .tning; .and ·. · .. . . . ·. . a .. wa_rrar:ity that the seller-has a riqhtto sell; c. ·lJi~ b.u·yer purchases the thing Relying· on . b. Warrar:ity aqainst eviction; .. . 'such ..affirmation or promise·(Ptiilippine StE!el' . c .." Warranty. against -non-epparent burden or . Coatiog ". Corp.'.. Y. Quinones: .. G.R. : N,o. . . . . ser:vitudes';.. ,~,\~ - .. -": - ' . ., . . . : . . 194533;_April 19, 2017)~ · · . q. -- Warranty ,ag~'jost .bidden> defects · or . · . , .. urk~q~n~·enc1,J_r:ubt~mc.e. (9IVIL CQDE. Art. The b~~a.9h of an express warranty 1{6V-:' •. ·: .. .:". .. , .. . . . sel.!eir '!r qa_mages (VIL~LANU-.v'A, ve·~'1~rranty__~~~i~st __ redh_i~ito_~ detects _on . . . at-455}: . . . . ..(.:a.r.!,Wal~,. ~,. . , .: ,. ,. · • , '. ,;· I ·' • : l ·. • ., •, ',(' , ~I.,,,< 't • · · ... '<~~r:ai\ ie_s-a·~ !9-.'fi!n~s~,,cfr~mercharvable }~e., usu.~I ex~gge_rat,on,s._. W Jr~)~"""'..~t@e~q!la,~,,.{Ctl!i...~QQ!=,' A.'r!· 1_.5_62);' ··· ···:, · : O~her p~~rty ha,9 ~n-_opp~r:f.\;fn]!fl0~l
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-~ti~~ l~~li~d :vy_ar~~-~~·~OT -~PP!i~a~le: , . . Deale~'s ~r Trad.~['.~ ~~I~ , .. :·, · ~~;. c1~f~ .'t~np s~.!e ~.T:n_e Y~.!1d_0.r m_a~~s: · · ~e~l~r_s .. t~_lk. !ti<~.. l~,cell_~1~· ~rqt . e.~; . '111-_no · warrantyJ ·ra~le , the··:qyahty o~. wqr~able -.c~~s.1d.e~~q- ~~- an _expre~w.qj.~a~~1~$, .~\11})1jf ._. _r;o·~· ~itor,lo.., _ofg~e.ioi9s:a.nd:-t11ei· vend'?e.,.take.s·· ~~p!a a_t. 208). · :r~e. la_w ,~Hows_ ~opsi11 era~ · · 1,:)~. ·, .,l:. · _the,l~fldttjons _in"which they ar~ fot,mp !at!}u~~·-. to, SE)ll_er's sta_teg,~J,_i) o{ _dJ~~~t~I ·. ..!~~~7 fTl.~J}e pl~lce Jh~y. a'rE:.IP.~'.3led (f!.E L_EON, . {Ta~ke~,v.. De~'l. Bc:nk.·o~he _Pli11pp1~~~"f!F.?. ~ ~-at 387~.· ., · . · .. -. · .. :·.. .(.

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.·extend.. _· to· \iens .or · · -~- ~7-[~-:~'5P_~~s~.i?~ r.aJ)_ce{u\1\~9wn _.to_ the. v~n9e~ ·~nd . .. 1?,,~,~1~1.yely~ss~.~ep(d.Q'~lf.9£f.~9fy~cf~riY~¥b~'..a_i~clo_se.d ,,by, ~a . ~~1nc1p~I. .. · . , · · ., 1:1.n_l;E;.~f:J9,e. s.e!J_~~. !S. -~~ i~f P:~.rt _a_r:id~. is:; _.1\~~JS.~~.r~aJ1on _o_f the _gi:lQds s~ld_'·(Jd.) .- . , .. : , ·. . :, .YJ. . <·.:-::_ :' .·· :-. •' . . ,: .' /.. ···~ .. · ... .. . ... . .• ·, . . . . ,. . .. ; :1frri'pli~d;war'r;_~'nty as: to.,tt,e'.·c?hd_itjbn; a9,aptation:. . .:tvlisrepresenfation'· ma.de· in. good f;:iith., is Hot ·.: .i' ·:· '.fitnei,fs-or-"suifabilitydJ(tl1e~~qual1ly:bt>.a·n·· article. , 1•• • fr.gu·q_µle,n,(-. l;H.i,t W.~Y . ccm~titute ~·rror_. ( Cf.VIL. · : · \,soy:(as ~ tseti:>rid~hin!:l:'a.~i~le:\Sucli ,:articles, .: ,CQDE, .f.l..f.t;·.1~43f ... -' . :. . . :· .• " . ·. · . '. · . .:.. ,··, riiigl1t';be;~olp· u'hQef·s~·-~h· drqutr,s.t~nce_s:as· to• ,. ·: •• •• / .. ·. •·•• , : • _. ,· , ·, .. •. • •• :0,:. • :·. • • • ~ ·raise an:irnplied warr$hly;Neertifieation·fssiJ'ed·, 2, ·1.rnpij~d ·~jtjs tti~L~hic'1,,the .. 1'?~ '.d_erive.s. :b'y ~·yeMcir. that .a-seiconcJ~Jfa~clfniac~irie;_wa~. in_ . . · ini~li~J1Hi:fr1 .or ,inference;.fr~ni. t_he. natu·re:.-~r t~.~ .. - ·... Nreo,:iditior.i. i\i.ar:i· exj~~-~s i,yajra~ty ~i~di~g on ... ,rran·saction .. ·:,oi: · 'the.-, relative situation .. or , .. tlie vendor '(Moles .. v.. ·l'AC;.' G:R:· No. :'739'13, '. ; circ~r:nsta~c~s-p(ih~.p-~fti~$, ir.respectiye_ .J~nu~ry 31;,;UJ,89/ '· . . ··intention .6fthe' -selle'r to' create 'j( {Ahg 11. CA . ,: . :: ~ . I. ,-,.;c, .. -.··:· ,;.· ..... :,:· . .. , .. ••

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· · . N_~ture :of. l_ry1pll.~d ·Warrc!n~y,. . .·., ., · )t is. a ·.natlircjl eler;nent, of a · eontrac~·; deemed incorporated,in tli'e·coritract of sale (Id.) ..... , ·~ // . . .·.. .

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SAL-ES' .AND. LEAS.E:· . . SAN BEPA L.AW.C,ENTRALIZEDBAR OPERATIONS - ~EMORY AID 2019

. . Reason: In· :ord(;)f. to . give. the .vendo'r _an. oppqrtunity·.tfffntervene a11_d ·d.efend th·e title fhat he has transferred, for, after all, he:aJone.would . kn.ow the circumstances o~ 'reasons· behind the claim. of the-. plaintiff-· arid· be· "in a positlon· to . defend the validity .of_ his- title (De· la .v. Escobar; G.R. No.· 27300, December 17,·1927)-. . ; . . ....

Note: The persons.enumerated are·; howev.er, liable· for, qetJal representations, fraud 9r' negl°fge'nce .in the exercise of the.ir dutie~. (DE LEON; supra at-389). ,

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._ Warranty that.Seller has a Right to Sell· Although Art , 154 7 use's · the phrase "unless a .. . contrary intentiorrappears" .. there can be .no legal :. .waiver of such-warranty without changing· the basic nature of the: relationship; for- . the-warranty' on the. part of the seller that.he.has the capacity" to sell, l.e. to-transfer o.wnE:irshfp" of the.thinq is.the essence .of .. saie, unless it amounts to clear assumption.of risk on the part of the, buyer· {VILLANUEVA; supt» at · . 49_7/ · · ·· · . ,·.,, · · · ·i._

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.aqalnst.Bvlctlon :-, ,.. · · :,·: . , ; .. · g·uarante·es that he 'has'theriqht to-sellthe and. totransfer ownership to the buyer.' not- bedisturbed in his leqaland peaceful . possession there_o((CIViL C.QD.E, Aii· .f 5"48): .. · .t-. , , . . . . · Elemen_~s:. : ". · · · . · -1:. Ve.nde~: is' .deptivedJn whole ·.or.io;.'~art_, of ti;!~ 2:. -:~~np~;~~~~~~:e:~·virtue of a -fi~-:lijU~~~~nt;

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Eviction Suit' .. / .. It -~~fers: to: a. case where the_\i~!1qee. ·i;. the, def~f1dant in. ·_!:I suit instituted. to d~priy.e.J,i_m· of th~t.h(rig. purfha~ed. (DE LE_QN, sypr~:at·4Q6}: .. . . . ~ . . .. ; . . 5. }J~- waiver.ol warranty. by the. veodee (i'q. at391);_- -, ·. . . .: . ... ·. .:..· . . .. ', . ' .... :::~ . The· .. vendor's _liability for ~qrrafltY: · ,ag§li~st .' eviction. in .a contract of sale. is,,.·generalfy-· waivable 'and rnay be.renounced'by theveridee

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~ Evislion ··may·. taKe' _·place . .virtue of .<;! fi~al . . . .. Notf:lv1~~: tr~spass; d6e~ r'iof~ive-:"rise ~-. judgme_nt -~f an_-c;1_drryinis_trc1tiv~·9ffi~~or boa,9. ·It· . ·_ . ' ·... to; the".:applicati°on"' of th.~ doctrine· ~f. ElVlt;tii)n ' :._.is not:. n~~es.?_ary· :that-.~a court~,·1:11ake .~nal. ·_ ·· : ·· (CIVI( .CODE,· Art . .---1'590).: ln.·suGh. ¢a-se: the . I I ! juclgrneht, _·prOVided;,. it' \NaS, renderetJ:·~by .a· . ' . .-vencf'e'e: ha'S·: .a· direct acti9n , ..:again'st-' 'the. '.. . ,· ··: COfnp'~ter\f ~Uthori~y arid i~; COnfor.1:1it(with_·lh:·. ::I .trespas~er.·i~ the ~~rne·~ay ~s'-th~ lei~e,E:: ~~S· .. · ·. , -. pro~edu_re, _;PrE:scnl;led .-by_. law: (BonZO(I;_ It..· .:.· such-right·(CIVlt..:cooE/1664)/.'·•.,.·.·· .::·'·.''·· .:.· . ··Standard Oil Co. of:-New. Y-otk;,·,G,R.-'No, L--. ' :: :; ···_: '~- · · ·. ·. ,· .- ... , · · .... ;. ~.-_., ·:,; .~-,> :10297, Ma,:ch''J.1:, t916j'..5 ,.·· ._.Rule~ tha(G~~erri.Evictions:Jit<.__,. >··.'._ ·:., ) ·· . . . . .· . : . . , . . 1.- No appe~I is· 1-:i°eeded Ji91' for "tiuyer. 't_o- resist. . 3i Ju9grn~nt· is basecFi:m a,ri§ht p~ior to·the'.sale or , ':. · eviction tor rig~t to accrue;· it· is _enough tiiat t~~ · ,. ·an 'act fi:npuJableJo the, vendor-;: . .: ' . '. . .. aforen:ienticmecr" requisitti~ are. complied -with .' 4: V~ndor was s.t..i~moned i~ the" suit'f6r evi.ction at (<;IVIL:CO_DE, Art_. -1549). . · .. ' .. , . ', :· . . . '.'. : .-~.' the inst~hce ofthe vendee:. . . .· :· 2) :Applies· .. fo:·' juaicia1:·~ sale;/' judgrn'e.rW:'c;leb_toii ... ··,: -'.:·a:· Tei e~ab.le the:seller.to· proy~·his clai~; . , 're'.sponsible·- ... for. _?i)v1qiioh . uhfess·.; 6fher,,vi~·e . . . , : . b. 'To avoid m"uftiplicity of. suits; and ,.. : .. · · - , .. c;le"cre-~d irt.judgmerit' (CiVILCObE;.:Art.'1552): · , - ,-c ..:, To.sat(sfy'du1tproc·e·ss·, : .... _,"-:·, _... · :' · · ·: -3.- 'vendor r10t liabfl·Jo/~·evidion--':·w·ai:lveirse · ·. " . • . ··.· . . . - .,. ·, . p~s~es~ion)lad been' commenc~·d befo're sale . . Th~:vendor shall·not-be .. ob.lig_ed to rilake g~od ... ·but. presc;riptiv~-- _period, is :·completed', -alter Hie proper, Warran_tyr.unl~ss _he· is st..iinmoned \n , ,· . .- . · transfer1(C/V/L G_OPE, -A,rf.1·550).;_ ·: . · ,:., · · . the, suif for ¢vittion at. the in.stan_c·e'of__the vehdee ·. '. 4.' If tb.Etproperty is'.s9ld for iioripa·yn:i~nt--offaxes . ·: ... (CIVIL C@QE;-Art: 1558)._. · ·.'. · · .. \: · . . due'and ribt made.knowrrto the~veridee·before·., ··. .. • . •• •• . I • •·•• '. the·: sale;. v~r:icfor.~is li~lble. for. evictio'n~ ·{CIVIL· CODE, A·rt... 1551}. · .·:.· .. ·,. . ·

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. . 2019 SAN BEDA,LAV/CENTRA!..IZED BAR.OPERATIONS .j. 497

·SAL~S.ANO

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SAN BEDA LAW CENTRALIZED BAR.OPERATl?NS

- M~MO~Y AID 201~

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Rescission 'Is not 'a remedy in case of eviction the nature or _tim_e: insofar. as they may-affect the because rescission contemplates that· the one va.lue·of the property, are taken into.ac9ount in demanding "it is" able to· return whatever he has determining the· valde of the _,property (Sta. received under the contract. Since the vendee Romana vs: lrilperio, G.R. No .. l-17_0280, can no lonqer restore the.subject-matter.of the·· . :oecem/Jer 29·;° 19?5)_. . ' sale to thevendor, rescission cannot b~ carried out (CIVIL CODE, Ari. 1385}.". Note: Article 1555 does not" speak of-payment bf 6. The suit for the breach can be directed · only interest on the purchase price. ·The la"'.', -had aqainst the. immediate seller, unless the sellers intended that-·the interest on ·the price.shall be ofthe sellerhad.prornised-to warrant in-favor o( set" off agafri'st lheJruits received by the veridee later, ·buyers· or the -immedlate .-seller. has from ·the · thing while in his · posses$ion: (D°E LEON, supra §!f·398.) .. ·. expressly-assigned to the buyer his own· right to sure his own seller (De la. Riva· v. Viuda de Limjep, G.R. No. 273()_0, fJeceniber;t,7, .1927). 2·. [ncorne or fruits, only if 90 decreed by ~he COLJ°rt;. T. The· dis.turb~nce 'referrec to . in' the case of . . . . , . . . · 'eviction is a ·'disturbance in law which requires Note: To the vendee belongs the use.rfree of . -. that a person go to courts of justice cli:)im_ing the .any, liability; of thesubject 'matter of -sale. (Id: et. thingsold,orparttt,ereofandin'{Oking_rea_sons. 3~9r·· ... _· -r . ":'> , ·.•: .::,_.:_· .. ··: ·:' . 8 .. · Mere :ti-esp.ass . in fad shall not authorize . ~ , " · su.spen~ion ~f the' p~yment oL!he priceAe7_VIL JVs:B. C~st~--~~ the ~uit·(R,ULES_00 COURT.Rule 142,. CODE, :Art. 1590). . r"" ~ : Se.c.. t), . . . . Q. Vel,.d_or's·lia,_b)!ity is waivable bui anf.s:firyJ.a~ · · .exemP,ting. ·the vendor from tlie 0Bligatj0h to. · -Note~ jb~\,_i:1ot· include .travellinq, ~xpenses. c.\!)S\//~r. fc>r"evictio_n_ sha] be,,.(6ia~he~tedwin-:1,~jnc~red~"yth~endee)n. defendinq.himself in · - bad faith (CIVIL CODE, Art!,1'553)~/. ·. )!5l" /,l. -vr a~ction (p.~s-~e-v, Jaucian, G:R: No; L-561~. . .· . · _ ··./ ~/· _ . 1r. ~\_ In'\ M£!mh ·11, ·1{{9).:._. . _ _ . . WIJe,re ..w~rranty ~ga1~sf _ Eviqtion is-· Not ;'AA . ·. "Appli~-a~le. .· ... !.~.! . -~ .... raoys_-no_t w~P,;I_Y to a situation:.w~er~ the·· 1. The ·sal~. of .a.n inh~nta~ce-;-1~ ,~h1ch t,.~ sel~r--,'.\ ! ~.i r"-~J~d~l]lent 1s_.~~ fa_Vf.lJI of-the -~e~~o!: except ·1~ th_~ ·. sh-¥11 only· be an?weraq!e ·!£fth1s chara~te~ as_ an~\\\;1 _veri~~ actea,_w1t~ ffa ult · or,. ~egllgence __ (CIVI~ ·:· · · "", l.1~ir. b~_t nc;,l .owne.~sh14 ur~~q111 ll~~ .), lgs ll!at .::::,~...:. rts.Jt-170 ~J1d 2·~"!~): . · · · · ·. .. . s~p_pos~dlys: c:;om_p~1~e. t~~---cl~tientc:~$re tC7'VI. -.'J.~ · , · . CO_DE_, Art._ .H!.~0}; 9r ~-
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. .. ·- fn case:· of Partial. Eviction, vendee rr:iay · (CIVIL CQQ~i.Art .. -1-556),-·· /< . :· ,. .. ... 1.. ~.nfor.ce ve_ndor's li~bi!ity.for eviction (VICEQ);- or . 2. Demand rescission of the contract. · -

.2019 $AN_ BEDA_ LAW CENTRALIZED BAR OPERATIONS

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SALES·A·N·D.J_EASE . SAN BE!)A lAW CEN_TRALIZE{)BAR OPERATIONS - MEMORY AID 2019

The choices are available in theJollowing instances: 1. When the v:end'ee is deprived ot a part of the thing sold if such partis: of such importance to ·the whole that he would riot have bouqht the thing withoutsaid part (CIVIL° COQE; Art. 1556,. par. 1),: or -- . · 2. When two (2) or. more. things are jointly -sol.9, whether for a lump sum or-for a separate price ·. [or each, and -. In'~ vendee would- not have purchased one without the other (CIVIL: CODE,· .

Basis: Principle of law that a person· may not enrich hims_~lf at the expense of another (QE LEON; supra .flt 3f!5). .. ' ·, · . ..

·Deprivation for)Jori-Payment of. T~xes · : If-the property .is_ so_ld· for ~rwn~paymerit of taxes· due . ~md not-made known to the vendee· before the sale, the ,Jendor is liable for eviction (CIVIL CODE, Art. 1·551): ,. . ~ .. . ;I

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\~.~dee niust act. fn good faith. 8e m~st 'no't have· .~ ~~ · :koowJedge of the non-payment of ..taxes,at'tt]e time · . . . . .•. : ~. . of the :sale (DE Ll;ON, ·supra ·at 395). . · . . . · 1n a,pp)ying :Article .1 ~56; the Intention · of; the . ~. . . vendee should. · be determined . as ..of the . . · perfectlonrof the 'sale. ··1n. this regard, under · .lnappllcabillty.of Re·~cissi~n . <, · Article 1371, in order.to judqethe inlention of the · · i Rescission _is f!Ol ~ remedy- in· case of. eviction contrac_ting parties, their contemporaneousand · :- because 'rescission 'contemplates that· .the .. one subsequent acts. shall be principally' observed . . :~ema_ndin'g'li ls ·::able ?t<;>·_re.turn. ~h~\ever_· he 'has - . (DE LEqN, '.s~pr'crat 402). · · ·. . _· . re~ei~ed. u·nd_e,_r: .tt.J~ contract. S(nc$ the vendee can. . · •· no 19.nger/estore the subject matter of the sale to the · Vendee has dutyto appeal from .th'e·J~dg~ci~t .. vendor.' rescisslon 'cannot , be carried out' (CIVIL Appeal is' riot needed-and the buyer-need.not resist __ :CODE, 'Art. ·1'385). · · ·.. . .· ·. · · ·..· . . eviction for- the right 'atrains't' the vendor to accrue. It . " .. ':-· is enough that -the requisues are=complied' with : Exception:· The buyer may.demand .rescission in .(G_/VIL c;oDE;_Art. 1549).- ·. ·. ·. · . . .. ·rcase of,parti~evic.ti?n,.·b-ecause-there still remains a · · · . .' , ·. l· portion of-the thin'g 'sold (DE LEON, suor« a(-403), ·. 1 Th.e .requirnment ~f' final judgr:ient · ~<}e }ot..:'~lso1,.;;..!, . _·· . · . me_an th'at: thP. rr1?.1P.s_.hnve· t~ken ·~II:· ~terne~1~ij. ,. · · _Th~_,5u1t f~J.rl~e1~n~ac_h can, be _airected. only c,=1ga1nst . Thu.s, -the fin91 J8dgme_nt rn?y.·· b~f??sedtJl'.on--a •... the 1mm~~h1=1ti,.·sellE;Jr, u~_less_t~e sellers ·qf·the seller _ .. ¢ompr~mise · rigree_me.nt among/fne.: -~~i~sr_(DE · _;,, ~ had pro~ise~- to \,arrant in favor o~ lat~r buye~s or · · LEON, .supra.·at 3§)4). . ., ~"-, .. . .... ·':'!\ · the imr.fodiat'~ sene·r-has. expr.es_sly assignecfto the · . , ...:;::, ·..... · ·. · . buyer:'h1~.....o'"W~rig~t o;s'ue t.lls.own.sell~[ (id. at-401). Eff~~f c;,f Prescriptio-n'. , - When an adverse R,cissessibn _had oee'n'~comme_nc7.9 · · Waiver: of Liabliity·_. · · 0·~endor's . before the sal~ ,but the. pre$Gfifttf~ pericid-.-is ·. :liability is- waiyable·; qµt a1)Y :stfpulation. _. . co'~pl~ted after the-transf~~.: the ..vend~sb,.~11,not pe . exempting-the·:vendo(from-.the obligatio'n to ~.nswer ·· liable'for.evicti'on (CIVl(·BODE, Arf:1·o50). · · -~F.....,. __·,..i.f@r.'..evictioA·,s'halhje Void,· if he.:9cted in 'bad .fa1th . · · ·. · · .: . · Lt · · ·• ··(c1v1d:;boE,'Arl.'1553) ... ·· · · ·Basis;_-1:he:ve.nd-~e eould easily.interro~}~ni~~ .. ~ .. , bf. the pre·scriptive period by bringing 't_h.e·necessary . Effect ~f Vendee's Bcid F~ith action- (DE LEOty; supra c;lt 394). . . - :.-_:-. . . · . H~ cannpt cl~t~ ttiat:th~_.verdor has w~r_(anted h.is . · · · 1egal -?rid _peac~fu! .pos~$SSion of th~ property· so_ldWhen. the. presc~ipti~n .. h~s . coniriience.d >to··· oh: the. theory.- that·. he. proceeded '.with ·ther·sale with agai_hst thi vendor . .'and was co[ilpl~ted before th'e ·. the a'ssumption 'of .the' danger .of. 'evictio'n .:(J.M. sa!e'r ttie · vende~ ·c~fn erifo.rce 'the-· warranty against Tuason::&· Co., Joe.; CA, G.R: 'No: Ls41233, e','.ictiori. (Id. 394):. . : .. · :. . · ....'.: No~e'rrlbef.21; -1.979)~ : . ·. ·, . . .· . · . . :· '- :·. ·. . ,.... . . .

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Note: ~i)l:·hav-e. no ·applicatfon·' . :Article . . . \ . ' . if. the· . . property:sold ,is:~ land_registered. under. the Tqrren~. System. Under the latter, owner.ship o( the larid is not su_bjec_t to pr~s~ription (Id, al 394): • :;_: · : . ~ : ~·· Liability ofjudgm:ent debtor: . Th:e~·judgme1Jt debtor' is ·also ;responsibi~: for eviction . in judicial sales,·unle~s it is otherwise d~creed in.the . _: judgment (CIVIL CODE,-Art. 1552).

Ki~ds, of cbpE,. AH .. 1954) .. . . . Consciente·/Siinple - the waiver is volunt_arily made.by. the vehdee without the-~nowlecige'and .... · · · ·": assuinptior,~ofthe' ri_sks ofevictiol'l: The .ve.ndor ·' . 'shall'·pay only the'.value.w.hich the-thing ~9ld had · ·./ .. ... -:a(the time· Qf'E)victioh'.,: .. ' ·. <.. . . ·.. ·' . ' . 2. : lntenciorJad~ I Ca'fificada ·.. .:. th·e._wai_ver' is ·m.ade t;>y the ven9ee with kn'pwledge of the risks. 9f ·.:eviclion and .assumption of its consE?qUences, in . Which case vendor' is not liable provided. he did ·. .not act in bad· faith·(9/V/t CODE, _ART. 1554).' . ) -· ; .. .

1.< ·

2019 SAN BEDA LAW CENTRALIZED BAR'OPERATIONS

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SAN BWA LAW CENTRA~IZEf2. Bl)R OPER/\TIONS _· MEMORY AI0-2019 . . Note: Every waiver. is .presurned .to be conscienie. . . ,To consider it intencionede, it must b'e accompanied . by some circumstance, which 'reveals the vendee's knowledge of'fhe 'risks of eviction· and his intention to submit· to such consequences (Et·Bant:;{5:Nacional i=ilipfno . ~ . v. Silo;~G:R. . ... . . No. L-4-7920, _., . ' -Aprfl:-30, . . .. 19.41): .. · Formal,Summohs.to Ver,1dor.Essentia·1 '- The vendor. sha.11. not be oblig~'d tb°'rnake good-thewarranty,. U111e$S he is summoned. in the .suit for evi~tipn at the· ins~ance of .the· ,/endee (CIVIL · CODE'. Art. f_55J3). · -" . . .

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Prescriptiye Period'{Res cisaion] . . ' . .The period is. ooe·'.(1-) year; computed from the execution of the deed (CIVIL CODE, Art. 1560, par.·· 2): . . If the period has already elapsed, the vendee may . . only bring· an actlon for darnaqes within one (1 jyear · from the date· ofthe -discovery of the non-apparent · burden . or servitude (CIVIL CODE, Art:'.1560, pars. 2 . and3j:

. Warr~nty againstH:i'c:lden Defects . . S@ller guarantees that u1e:thing, sold Is-free . .from any · The phrase "unless.fie ·i~ summoned-in~the suit f6r.. hidden · faults ·or.··-:·defects or· .any charge or ; eviction;' 'means that the. vendor.should: be. rnade.a encumbrance not-declared, or.knowrr to the buyer . ·party ~o.,ttie{iuJt. either b'y' wayof .a'.sking.·th.at)_he (CIVl~:CGDE;·Art:-;]561)._. !... former-be-made-aco-defendant (.ctVlt:-CGJ9~.Ar:t:·. · ·-· · . .- ... _. 155.9), or by )he. fillng: pf,_a·~ tbird::party .... corn plaint . · . This warranty in . .salesis applicable)n 'lease .(Yap .against,sai~.ve~dor (DE~lEOtJ;:su~ia at.~Ch_u~IJ v.. ~i~oqi.Ji, '.G.R No. 1:0_006, $ept~':1ber

-'~b~~~~~~t~~~~~:zii:~i:'ri.i~;~;~t~:~e~~t· l) 1$Ll:~;. ~~"fL~~tefe~i~·~ p:~.~ino~ly to thOi~ th;! ·:f?r.

42~36, :1:ugusr 1, .1_985).. ··. . ~_;. • ~ . . . the· use which 1t. wa~ 0n:iqK~~UbJ.r'c~.unfit·:fo~. ·. . :-_. ~ . , .. ·. -,'. . ,, - -,' :....-_~ .1~inte~~atat-t~e tim.,e of thesale (lnv,estments & ~ev t . W~rr:anty ·. fgams.k1Non-_Appar:.~nrt · B.u~de_r:i._le . ;.sold 1s .· encOTI)bel~d . w1 fi .nor):·fie avo1aance'o'fl ia/e:on-account-.of. sorne·v1ce or : -. apparenfburden··or. seJitifclet,not' m~nlioneafr!Y.~ ,: Cdefect . if .th·e J~~old;- which renders_. its Use, - . 'the agreem.~n,t; and ... :: ~ :c \· -~~~:,~pos.si~ler.or,;s~o. LQG~~venier'if and. ln::ipe.rfecr.~h,~t it . . 2:·: f\latu.ref_;of, riQ!J':capp_~repi S~flYJJ.~deJW~~en ·1s ">:,...,___:Wmust !:>eJ~ffp,posP.ld. t_h~f the buyer. ~ou)d, riot ti?ye · • . I - ·. ·su.ch_;.,tha!·tit-'mus! be'yr~~,ii;ne~t~~Qni~~yer:im I ·, ~li~r.c~rcCJt~. a ihe!'k.now.n of ~he .~ice (PE L:E,ON, _. ·. . . _ '. . .. . · - ~ou!d not hc!Ve' ac~uir~d _1t-;-~~~ he .b~~AWa(e~ . iC,~J,lj~f-9). . '< . --.: . :· ,, . ·. · .. .! · ···. ·. · . ·'::. ·:. ·•· :·; thereof. · . ,, -. , 'i,· , .,_r_i{J'-. : · "'-"·. · . '\~~;,(~)':.:.·.. , ...-,c .:~·.,:· :"1• .. •. : . _ .'.: - _.... < .-.r :' ''·'. · ·

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l.f there was- no waiver.of warranty, and· the•thing was lost due t'b h.idden defects:. ·. . . . ... ' 1 . .when seller is aware of-the hidden defects: '(L:PED) -'. . ·.. a. Bear the Loss; . "b.'. RetUrn',th"eer.iCe~ · /~ ·.·. .·. · . -, . : c. · Refundthe .!;_xpenses··6f the contract; and · ·' · d, _Pay,Qamages. ··' ·, ·., · /. ·.. · . . 2.. When,seller is not aware ofjthe..hidden defects: .(L-PIE).. ·. . . . · .. \ a·;· . Bear the- .boss; .. , '· · : ' b. Return the E,ri,;:e; ·c: · Return 'the· Interest; and , .-;-' , d. Re.iniburse~Expeiises/of·the .contract if paid by.fhe vendee. 'r- ·' .· . , : . .' : · . ·_ .: .

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Vendee must give Notice. of -the defect to·the vendor. withln a. reasonable time (CIVIL ·COD~, . Art. 158_6);· . -. . . ·, . · ~- . ~~-medies. must bebrouqht -1«ithin. the, e_eriod·.-~f · · · .. six.-(6) monthsfrom 'delivery of-the thinqor forty . . · . _.(40). 'd.ays from' date ·o( delivery · in' .case of ·animc!fs,(C/V/t..' CODE, Arts. 1571 &-1 !5.77); and · ., ,. . ·. , /. "'. · .:··. ·. ~- · ·· .· ·. . . ', . ·,~ .. · No Waiver' -of the warranty on the part. of.· the . . vendee (CIVIL CODE, Art. 1548, par .. 3): ·- . .. · . ·· · ' V.encfbr i's NOT uiable for: · · - ·.,:-·, , ·. 1 .. Patent Defects :· . , 'r: a:. ' Defect, ~hich . the .. buyer . must ha~e , .. · · obs'erved;·or, · -~. · . -~· . ~ : . /!. . b .. :· q_ef~cti-0hic~· i~·~~t· ?bviou~·; ~~the_ ..s;l!,w, : . . . ,. . tells_ the buyer, _or. which the· buyer Reows a~· . .. , · . ?~ould. , have- l<nown:·. ,(e,LVJ[ : C(l:JE7 ,Art:. _ ·. -._ ·. · .1~61). 1 __ • • ........ ·,({';,.·· • ··./-·-_, ,. · . . 2. Those' that are .not ,-yisil;>le put >the :.guyer, .is 8:(1 · . · . - , · expert. who, by. r.e~son of tiis pro~ssiQ~ sho~la . ··:tia~ekn0wriJhem·(C/V/L·COBE;~.4-,J561J,

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Whln'.-thl sellt§r fa':.not'.aware,of'the hidden. ·.: _aef~ts~/ncl1ti1FtwcqrifraryJ1as oe~n: sl,i_Rui°a~ed, . · the selleyj§~nq(liable, .. · . . ·.-

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···. .-Defect·arth~ t1me'ot.Sc1I\;? . . · /·~,. . If !He sbl~ ha,d ·an/.hid~e~·faul.tat-:t~·e_-iime of The·vendor can'not be held liable·tor·defects sufferecl ·' th~sale:".and ~should.J~~reafter -be lqst ~nrougti.,a by:the'\fiing sold:~tter. tli~ p~rrectiqn,ot (~e sa1~. ihe . · to~uitous·event tti'i-.ough ttie-.taµlt ·o.t,.the b(Jy.er: ve'nd~e n:iust prov.e thaflhe_defec't existea,'at-the·tim'e ,' : . th(;) :buye~: 'may 'deihand·,pfJh¢ ·s~)le"r.-th~:..price'·paid t. \: . of.the sal~ visible_ (DsLEON;:~uw~ at 413).· · · _ ' . l~ss. the, value._of lhEl 'thing· at !he Ji rile ~f-Joss (CIVI~1 1 • • '\· CODE' Art -·156911•J• • -~ • , ,' • ' •' • • • • i ·' • • , , ' • ' • , •, \ " • • ,• • •• • . Kn.owledg~ ·of Vendor, Not Important ' - . · :· . · . .·. . · ·,.· · .. _, · .. - ·, · ·.. ' . :·. ··. . .. · . · (Applicability oJ Doctrin·e of C~'.(eat Vend/tor-or·i · · · Tfi¢· dif.fe'rente ·bety,,e,en.'th~- pri~e paid.for-the thing. V~ndor_Bewa~e). .... ·., _.- __ .', ·., ··- ... · •. - .... · ·ar:id the.;va_lu~:.at'the fime .oft.h.e.!oss"·r.epres.ents.Gen~ral· Rule·:··selle'r· is· liabJ~- ·~ven thougt, .• he~ i$ . .. .damage'··suff~rl:)f: l:5y . the_ vengeie. I{ Ljs .. also the. :u~aware.-of the. hidderi' defect (CIVIL. CODE; Art. · a_mount:by.whi¢h- the. ver.idor ~as·:enriched ,hims.elf; ki . , .1566, pa_r:1):_ · other. words, jhe . vendor_.ji/~ti!I riJad§'iiabl'e 011:-his : ,· : ••· ·: .·., ... :·.· •. ·,::· · · : •• < .· . . ..• f·. , w_arrarity (DE-LEON, supra at'425).' · ~ -~· .··. , - :· 1 E:xcep~jori:, When. th~re is . a stipulatiori. to:,;;, the·. - · . . ; .: ·;. · . •. · · · · ' · • ccintr~:iry.'.'ancJ.'.the·,seUer _is-: not aware it. '(C_IVIL ·. _. . 11:iustr_ation:· A ' p urc:has--ed,''a.'televisi0n' , from ·.g P250,QOO . CODE;; Art. 1566,"par. 2j.. . . · . _.. · . ·. ~ . ·. "· ~-: .... whi9h y;,as paia ·in fµII,. T~~:.tele~ision·has .. •. . . . . . . .. · ·. . : hi.dde'n'cle_fects, th_e·'(elJ_r,1iro:fwhich,-i(i11.co~lP50.,gOO: . 'N6te: GGod faith can·~·ot be ~vailed~of as ~_.d~·fens~ . The..teleyision;' howe~er;_ \AJas:lost lhr9_4ghJortuitous ; by the vendor (DE LE.CYN; supra· at',4_2·11:f .. " ·. .···.. . event. At the tim'e, of the .lbss the televisioh"is·worth / ··. •. ·:: · :. . .. · · · .. : . , · .. ) .- · · -P200,000 .. B~is ·1iable .. tcLrefl.11id to A·.the.sum or' , Reas.~n;i:· A ·sound.price' warrants ·a;s·ound: ;:irticle · ?50,000/ .· • ~ ·,. ;.. . ... : : . ' . . . '.(McGi.J{lqugh · .v. Aenl/e. . &... c_o., · G:R,. '. No,( -1300, ' · ' . ' . ''\. February:3,·1904). ·,. ·. ,·: . :: .. · · . ··- ... -· · ').: : . '··. ':·<· • .,

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. ~ Note: If the vendee is aware of the defect in the _thing he buys or the·. lack of ·title. in the :\•endor,· he is . de~med to have Willfuily and voluntarily ass.um·ed the · risk attendant 'to the sale (Madinez·v. CA,. G:R..No. L-312_7,1, April 29; {974).' . . .

Defect is Hidden . · l:lidden :.. Ndt known .or. COl,!ld not h;3Ve been · known to th~ ·v-endee .(McCullough v. Aen/1~ & -Co., G.R. No:; 1300,- February_"3; 1JJ04); Hidaen to the eyes.· and 'cannot :be· disc6ve,:ed by · o,rdina(¥, careful inspedidn. -H.~oce,· there is rio . warranty if. the._defect is patent or visil::ile. (Id. At '41~. . I

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deat.b existed at ~~e time of the contract (CIVIL CODE, ~rt. 1578).

i~ the vendee who caused the lo'ss of the thi~g. vendor is s~ill liable by virtue of the existence of defects in the thing·: He lfv'.ill be liable for PS0,000 amqunt needed for the repairs of the thing had it been lost. · · ·

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N'ote: The clairn of the buyer m1.Jst be based on a.finding· of an· expert that the.diseas.~ causing ·the de.ath existed ~t the time ot the Gontract- (DE LEON,: supra at.432). .· ·

Alternative Remedie.s ·qf. the Buyer to Enforce. Warranty (CIVIL CODE, 'Ari. 1567) · . · Buyer may choose between the.following: . , · 1: Accibn Redhibi(oria (Redhibit,ary-Action) ,..-: Tlie · buyer withdraw;; from the-contract · 2. Accion· Quanti Minoris - proportionate reduction of the price. ·.

If the death qccurs afte.r three (3)° days from · . : purchase or the ·defect is patent or visi51e, the seller is not liable. If the. loss is caused by a . fortuitous.event' 9r by' the fault of the ven<;Jee·, and the animal has. vices, Article 1569 should be appl_i~d (id.) ..

. . Noter The buyer.has a right to darnaqes ineither · 'case. The remedies are alternative. (DE LEON, . Sale of Animals' at.Falrsor at.Public Auctions or 1 , supra at 423)... .The choice· of remedies ('acci9n·· : asCondernned . . . ,. . .. quanti minorfs or ac}:ion:redhibitoria) is available · ·there. is no wairanty aqainst hidden defect of to the· buyer only when the-thinq h~as .. riot been~nirry.als ··sold· at -fairs cir at public auctions, or _of lost (VIL,LANUEV~. supre.et 464). . h~e~tock sold as ..condemned (CIVIL CODE, Art. . . . . . • r> · . • ~ . }5~4});: • .,. , . , .. The ~ame ri~h(_is,.g~v.~n to the.~fe'crirfth~·s~_. ::"'!ot.·. 1_/ . . · .. ·. : . . of animals.with redhibltory defects~(Ct~i!ceDE, Basis:~ is as~med· tha.Hh_e defects must .hate , . Art. 1580)._ . ,/ ~ :/ · . .be~~earJy~own to the buyer (~E- LE~N,_· Sales,· ···.'"JP) ·i· .·~JJ_pra.a\42?). The buyer must present pr.ooNrlat he suffered ~ ~ . . \ . . .damaqes as a resu!t of tr(e bre~_~fi of. tht_.seller'.:.JK';\ Publi~~~fticins ~~!.t~er_ be jud,idalpr·e~traj\Jd~cial.·· warranty to be· entitled to"a-ctu~I d~m~ge~ lawaoes npt ~grnsh·(/d.) ... . Vera, Jr. v. CA, G.R. No~?869, Oc ober...J:f /· tikt r: :~;·· /_ · _Ir ·\ . . . . · _· '?00_1). _ · ·. ~-~le:of.a Team ~at.VJ~ ~ODE, Art:: 572), _. : '\:,,,s_,_fGeneraf.~J~=rlle defect of one Will only give rrse . Applicability toJudicial Sale(: tffi : J:l8.1~s J.1f~~hi(\iftion ahd,riqlof th~ others. · T~e.· · warranty :i_s·· applicab e-,.;to: _judici~- aies;~·.. how.ever, !he __JUdgi:ient de~~r · IS \ot 'l)'\,~e .· f~t"'!...... tt2{y~tr n: ·phen : t~e'.. ouy~r. WOUIQ. not> h~_ve damag~s for t!i~ r~9son·that h'~s ~~r~l'i co_1;1Rell~et.ia7se.d 1e7sun '.a~1m~I(~ w1thout-the.·d~fect1ve

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~~~:r,:or each ~n_~.of,.t~e~~nimals_.co~P.~:;;ing · ,. •. Remedy: ·-... . , · ·.. ·· · ·1 _. · Accion Redhibiioria; or . i ... ; Acc!9n ·qµ_antifr1,inoris,(Gt.Vlf:·co.DE, '9,_rt:·: :~1580)." · · .. . •' . : · · · .. · · · ' · · 'sa'le T0o ·o·r' M9re .thin~s T?Jj~t!i'er (CIVIL·· · ·eoDE, Art .... 1573), . . . . A.rti¢1e.1572,\vith resp¢c,t !
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· lnstai,:c~~ wher1Hhere is Redhibitory Defe~t: tEVA), , ·, 1.. gx~ert· knoi.:vledg'e is not suf(icierit to cliscovef. it .. ··: . ,, <'(G._l}'ICGbDE,.Art. f576;.par.·1);.br. .· .: ...... When·Sale ciAnimal~-V~id: · 2. Th~ ~et~rinarian .failed·to discover o,,ai.sclose it . ~- Sale_ofanimals\'>'ith co.ritagious·diseas~s. · through· ·ignorance or. bad faith .,(CIVIL CODE,. . 2: ·Sale ·of. unfit animals, i.e. ·the use service for ~rt. 1.576, par. 2):- or · . . · . . · · .,... ,'which tt!ie animals we acquired has been'state'd 3. The ~ninial dies. wit~in three '(3) days after its in. the. contrac.t. and, they are' found to be unfit' •. purchase anp the. disease. which: caused 'the . th.erefor (CIVIC CODE;. Art. 1575). : . .·. .

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The pre.seriptiye period of six ·(6) months is ·a_nly appl_icable."to:: implied warranties,. For :expYess· · · wa[r,ah(ies, the ·pre'.scriptive period ot four'(4)°years· shall :apply-tbE L!ibl:,J, -Sales,. supra at: 427}:' unless.·, anotlie,rperio~l:.is specifie'd in'the expr.ess\varraciiy · . (lsii:Jro v. Nissan Motor PHL:·, Inc.;. G:R. -No. 1,36500, .. · D.ffcembe/;3,; 1999).. . . . Wa·rra~ti .. ~galn~t-- . Re'dhibitory; Animals·_.. : . . .

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warranty that the goods sball be free fro,m- any defect rendering them "unmerchantable". · · :-

. Obligation of Buyer toR,eturn . . In case ·of rescission, the animal ?hall be returned in the conc!ition in wt:licb.it was sold and delivered, the· venclee. being answerabli:dor--any injury due to his · negligence, anti not aris_iog from the redhibitory-fault or-defect.(C/VIL. C.ODE,Art-. i1579) .. · .· .

Causes oH.mmerc,hantability Goods may be unmerchantable not because of a. physical defect but oecau·se of-.so,me other circumstance~ .(e.g.· infringement·of.trademark, use of them is dangerous) ·(DE .LEON; supra at· ~ 417) .' , · • · ;. :

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Manufacturer· or 'seller of -anlmal feeds . cannot be held Iiable ,· for any. damaqe allegedly . caused 'by the product ln the 1the absence .of. proof that product was defective: · ·· · :-';·' ·, .:.,:·,.· :· · · ·;. :- ·

The pr~scriptiv.e. p.eriod shall- apply-only:.with respect to faults· and defects, v','.hich: are determihe_d· by law. . 6r by local custoinsJqlVlLCOPE, Art: 1·57.7, par. 2),. ,.·, .... • _, . . .. Warra.nties Jn Sale of ..Goods /. .Warrantjes of . Quality_ (CIVIL (?ODE, Art.· 1562< .. ,. ··\··,·

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It is incumbent onpetifloriers to establish lia~il)ty .'on the basisof breach ·ofimplied:warrahty. The manufacturer or· seller" of animal feeds 'cannot be held liable for' any darnaqe alleqedly caused by the product lrr thEi- absenceofproof that the ·. product.was defec::tive/rlie defect of the product requires evidence that there was ho tampering · With, or changing of the ariirne! feeds.The Court · .explained that "in the sale 'of animal feeds, there .. ,,,,__.__._,·ls- an impJ_ied warranty that it is reasonably fit and'suirable-to be used forthepurposewhich· . both parti~ corifemplate·d .." (Padil/a'v;-i.Jrliveq,al· :Robiry{-fcorporation, · _G.R .. No. :-214805, Declber .1\2017): · · · · . · ·

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quality of go.9ds. ,. · it includes their state or condition (CIVIC CODE, Art.. . . ' . ) . .. 1 ~:}6, par. 1): ·. . · . · · ·· . - ; , ~

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2, · Warrah_ty,ofMerc~ai1_tability). . The. seller g·ua.rantees, 'where -the qoods-were . ~ . bouqht.bydescrlption, ·tha~ they.are 're~so.riably·, fit for the ·general purpose- for which (hey. are : 'sold. . · , · It re,q~iret;identi_ty t:>e~een what is-described in. the .contract ·and what is tendered, in the sense . ·thaqti'e latter is o( su'ch . qu.~lity a'nd vaiµe (CIVIL · CODE, ~rt.· ~562.par.·2).' · · ·

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Eff~.ct of.Usa_g~~of.Tfad~· . ·. ' . ·.· .. / .... '· . An impliedwarranty or conditkm 'a.sJo. the' qualify or .· · .. fitn"ess' fqr' a pa_~ic"ura'r pwpose.'ma{be an~exed_ by ·_. . the 1,1sage of trade (CJVI[ _COD_E, Art: .t56'1j . .

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. · The.requ[remer:if'~f-mer~hantabie quqHty.carri~s with it. 'no- irnpli_cation that'° th_e goods. sh~II be· . ' Merchantability o,t,qoocis_ by·.sa"mple'.' . . . saleable in a particular market (DE LEON, ·supra. · . · In 'the case of: a· contract :of- sale by- sample1 ff the _at 416).· · , , : .. . . . ·. . seller is· a· dealer.in ·goods" pf that kind; there is an implied· 'warranty-thanh'el" goods-'shail- be free' from Note:. Article 1562 which ~pplies,. -to •.goods. , . aQy -defect· rendering t11~m unnierchantable which ·. bought ·by. descriptiqn and :refers· to an implied would not-tie apparerit'on reasonable: examination ·wam1nty that the goods_ are of "mer~hant9ble · o(the'sample (C_l'(IL- COf!.E, Art. 1565): _· ... : .. quality:· Article 1565 wh.ich- applies to goods · bought by sample a!1d refers to an jn-;i°plied

2019 SAN BEDA-b..AW CENTRALIZED SAR_OP_E8ATIONS

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, Form .of-Sale of Large c·attle Governed by specia1·1aws· ('i.e'. 'f:'?:,D. No. 533 or The . Anti-Cattle Rustling Law) (CIVIL CGDE, 1581).

Liability· of Vendee for. Obliqations 'of Company Bouqht' Out. ·· _ 1 .. Obligation not "of considerable amount-or value .- the vendee may be said to.assume the

Preservation·.ot-the Thin'g Peridi_ng D.efive_ry·· · T.he seller is bbund to:take·care otthe thing with the di_ligence ·af'a"good fath~'r-of a family (CIVIL COPE, A'rt. ·_116.3). . . . . .

obligations of the ·..c6mpa_nY, :boughr 'out (e:'g .. · when· incurred- fii' the; ordiha_ry codlse_ of trede and when the business of the-latter compeny is

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company was:bought,.;(9-:stop its operations in. order 'to -eliminete competition) (PH- Air.lines v. · · Balinqui(G.R. -Nb>LAJ,715, Jurie 30, '.1956). ·..... "P;i~ti'p~I Obiig·9~Jons (CIViJ.. CODE, °A.rJ. 1582) 3. Monefary ::·liabilities' to selling. company's . Opl.igatfo'n!?. q( theVendee; . · .-. · ,· employees '._ :· .. ·.. ·.. ', ·· <· ·. · 1. Tpa.cceptdeliv_\:lryofth_e..t~ingsol_d:_._ . · ::..•. , .. ,,·:.·:.· .. Gen.era! Rule-Unenforceable aqainst the transferee 4. · ..T_9~p_iiy the ·gr.ic;;e:oft.h~.t!:iir)9 pol~-.jn,l.egal_,t~nder. ·: uriless another mode has been aqreed.upon at of an enterprise (e.g. labor Gontracts:like Colle'ctiv.e . . the ~ip-i"e .l=l,n<1.place. stipulated in .t~e c9ntra~t· aric3'.:uu Bar.gaibi!J2..._Agreeinen'fs'[Cf}f:.J). .. ~ · · · ·_: ·, · · ·' · 3..:,· .To. bear: the- e~pe~~e:is· for ·_the_ .ex,ie_d(lq_? a~d . . .. registration _qf _th~ .s~l~_anqyut~,~~~~e- 9,oi:a~~!J.?""""._--. easRnJ9~0-&._ contr,act~, ~re tn . pe~s_Qn?~ and : a d~l.iye:ir8:ble·s!~.te,.i.f such 1_s _t.hy>~~~t1on:1(r5E. _... ~fri~-?~ly betfeen,_th_e Fa~1e.~ __(Baray~g_a v. A9set . .

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_' ]P . > · A,grace P,E,'lri9~q· grante9 t~e:.vende_e-in case pf failure . Exception: Un!.f~P.res·s1y assun:ied, or the~sale · to p~y the. a111.9u~t/s.'d_u.e .is :afri92.t,~m,~· an opligat,ion. i'·l · · o_c:t~~n,sfEfr·w?s~~~~ad faith'"(Barayog'a v,Asset.... ·· Th~ g_race period must. lil,:· .. -. . . ,... · ~...e sa1q :tQ :i!nse .. (Qpt1mum.,p~ve_1.o'",Jm~Q~.l,t}·· v: ; • p/a~~care·-06 t~e go~ds w1tliout-,Jh_e. o~hgallo~ . -. ~PS.- Jql(ellano~, ,G:R. No. 1JJ~9,145, D~F;?~nl_f_jf Q.4,.-1- ·. ~~ ~~urn:).~,her~·W,.e. ·goods are:d~li~ered _to th_~ - " . :·.·· _:, ·2013)_._ · ..,-· .· . .''~u{e~:an? he r(1lf':Jll~_,f:~f.~ses·:to'~cce~t-1t:·lt_)_s .. ~ --}''-_/ · ,:.-- -· · • .- .• '. 1 .... _·,.,_·: ':. ·: •• • .>,.: · · Scn:;Nt\~s~ffi-9-{n~t~a.t~e b.uxern?t,fiesthe-seJJ~r-that-he · . _R~!.e.s.: ,., :· · .· . ._,:".':' ._. . · : , ·:· · ... · · -:' ,:, . ,j,·...:, ··, :' ,· :" I · ·_. r~tdje$~to,:aq::~pti·· _t~ern· · ;(CIVJ/i.-~'eOf?E; · Art. _ · · 1. '_I~ a.~~n,tract _of:_:"ale; t~e V_~.l)d.o I~ ~t~pu11e~S84tJ/ 1.•. ·"'" • .'.'-: .::: ·'. ::'_::. '.', • . to deliv,er,th~ thing sp_ld un_11qhe_p~1.9e 1s:p~1.p~r: ,'\; I t\~ ~ ·.·. . ... : . : .. ': . : I . . .~ the_-_ver~e-~ t91 pay, tt,e, P~!~-~ _b.ef9J~- t9~~~-~s,,, ·tyl("'-~th~ ~_eller .refyses'. to tcj~ei' deliver:y,pf,tht:g?ops - • 1,qel.LY,_1:lf.~Q,1,n; t_l}~·.ab,&§l_[:l~-~-of, ;;in ggi::~~r:nent .. 1[,J;Jfle ,-· .. . :- ._9_f!'er-. being'..li,·~ ·_-·._,:,:. /:··.,( / :.c~ ·.,, · d_eJ1v_ery ai;id t9:·p~y .,th~· pn~e:·at th_e t1m!3 and·. , ~ . ,.· . ,. ; .. : ~. . ... ::._. .. _ , ,. , .. place designat~q;, < '.,' .: . . , . :..,, "·· ,, •. , , . . ; ..... · The buyer in;.such· c;1 ~a.se is:in·tt1~ position· of a ·. 3-,.. · ·If J,h'er.e'.i_s _no'._?tip1:Jlc)tioi:l;'.~} tqJr.~,tir:fre .a, od plac~ . .. ' " ··oailee'·wl:io·: has :had· goods:ientru~ted· ·upon, him·,, . , '.,PtR-~.YrrJ~lltAti~ .91?Jj~ery,,:\he Yf?!},fJ~e ~s bp_u~d t5:i-_ . ,.-. · \~itho~·t,tiis,ci_ss'enL' He>fras th_e: qb'lig~'iioJ)-to· taR~ ·. ; ·. P?Y a_[,Jb!:l time and:p!aq~·otc;t~/1,very; · · : . ·:' . · .. ·. . r_e_a:fonable-carerof)h'e:..good{bot · rioth.ing m·ere ·: : ' '4:; . ,l_fl.fhe ,abs,e.r1c~~Q(:a:~t.iP,U!;:ltiQI;), ~S·~O. tqe pl,a~e O.f . c~n oe dE.'l.m.~09etj· oJ~liirl)_'(/cf.):- '.. > : ·;; ,:_·"'; ·: ..... . . deliv~ry.it_.shaw·R~·mqd·~-wherever t~~:thing ... ... · ·· · · ·· · · might be· at )he ,m'orrient. ·the. contract was ·The-~goo~-~ ib th~-.bi.Jyer'~·pbss~ssion a~e· at.the.· . perf.ecte?,(1Nll;:,C9_9._!!,i_1rt.:,1_2p.1)i,?: /_1~9.fcl .t.~ing, i~ _d.eli;~~.r.epJ0 \~jfl:1:. ~, 9onstitut~a himself ~uch. (CIVIi:--·coo'E, Art. . ·. If qnly. the _t1m~ for·paymem(of,ttie pnc~;has_ bl;)e(l .. , · 1587). ,. .... · . ,:,.,-; .. .·~: ,:· : ,, '::· . : .. · .. · · fi~E;ld,,Jhe ,·.V.~l)Qe.e is! entil!ed,. to .. delivery; ,~ven . :·., ..'a: .. T:o ·.pay·, ,interest . fo/:;-'lh$. '. 'period, ,betw~en . . befdr~ ihe . price is:pa.id·by_h\m' (CJ.V{[ CQDE;:,{l;rt.... . . delivery:_of i~e thing:-and:.tne:paymenJ,of tbe 19.24; DE LfON, ~uP,rfJ at 437).. . . ,· .. ,_.. ··~ -pri~e: irrthe· fol!owin·g ca~e.s· (CIVIL CODE,

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Gen.era I . ·Rul~: · Uril_ess e>therwise ·agreed- upon, accEfptarice of the good~ (CIVIL CODEi 1587) by.the buyer does·not discharge the seller from liability for .·damages 'or 'other .legal rell"\edy (like r~sqission) in _breach. of -any prom_ise- (CIVl(,.CODE, Arj.· 1586r or warranty, in tile' contract of sale (CIVIL CO_DE, Art. · 1547); <. . . .•.. .

Interest is stipulated; · . ·. , ·· . lt .. is th~ rate stipulated. which governs; otherwise/the legal rate ofinterest'shall be.due (DE LE_ON; af4q5), .. '. .

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.. ii. . f.rl'.lits ct iricome·. are recei'{~(j_ by th~, . vendee from the thing sold (DE_ LEON,s_upra at 455); . . . . . This-applies _even ·i.f-a-:term ha~ been· fix~d for the payment .of .. price (Id .. at

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. Excep.tion: !f t_he buyer, a·fter1.~cc~ptance J:>f th.e . gooqs, fails to give. notice to the seller of the 'breach in a_ny promise or:w9rrarity within a .reasonable time after the buyer \nows or ·a_ught. to know· of such' breach. = ..:.. '

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Pl!r:pose: To, protec~-. the .,·seller; against:; belated claims (DE Lf;_ON, supra.at,.452). ·, .·-~

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. ' ." Right~.c>t'the Buyer: , 1. . Not.. bound to- accept . delivery ct: goods by . l:Jnoer Art, 4169- oMhe, Civil· Co.de, the installments ( CIVIL: CODE, (\rl: 1583); - , ·, . :debtor'- in~~rs'. delay 'trom the . tim~ ..,.l • • • .. -: ; . . . ~ :· . r · ·.ju.dic,ial ·or· extrc:dudicial : dem~nd /bf' 'However, .where the contract provides 'for the payment of the price. However, d~r:nand, '.8e!ivery of goods,by installments and'a separate . is not' ~ecessary _jo c.on~Jjtute\aelairtn price' ha? .been aqreed upon to( ·e'ach. -the foJlowing ca:ses; (LT-D) , · · .. ·-, .. __._-:fhstailmeot, it depends .O!')· ·each: case oltbe 1 :)- _The· ·.ba:~y,~or.,::.dpligation- e'xpressly terms of fh·e contract 'and 'the circumstances of .. provide.s; · • . . · ·. ·..- . ' . · .. .... . . . it{El.,tas~~liether the ·breich isseverable. or riot , . ·2.) · Tfine (s. of th.e essen~eVor. · :·.. ·. (DE LEON, supra.at 440). . · .. . . 3·_) Qem~nd wo.uld: b_e ·useles~ a$ _wq_en . .- ; . . . ·~ . ' . )· t~(oblig'or.·i~~s~_renwr~ i\:be'§orl'cr . _: I Where .g e'acfi Aff~cts .the. Whole ·contfact·~'.. . · .. · . · 1 f,,.-·t$e;·:~~e~~-ke·~ :.-8efect!~e •. p~_rtia1. '>··· '.: ... . Acceptance_,· Not a-Bar·.tq_ Actjon tor, Dain~ges:tjr. ·, · · :where the:Breach is Severable :: :_ . ·: ·: . · · · Otli~r li~gal-Reme'dy ((;/VIL CODE,·.Art 15?6):. . . ·: · '. ':/1i.·: ;".Vil(.':: ~'.~(eJY\:_gii~ :·:)i~e.· .·'tc?,°-;_:a:.·cl~i!Jl{ JqF · , ·, · ,:_.. ·· ' ·-, . compens·at1onJor the particular- breach: BL.it not a· Accf!ptance . . ... t ) .. .. .. . ' : ·. rjght tg tr~~t::the' wJi'.ol~. ~on'tra~t;as· b_ioker:i_(L~J Acceptahce is ·the ,assent.to. become the owner' of-· . ... . ' . . .. .: . . spe_cifi_q goods;:vyh~l\ ..d_eli~~ry of.!he.rp is offe~e_d.'to >i. ' e~e·rJ1./·Rui'~: .· 'R~~'spnabfEl·· toppoi.tu~ity to . ·-· . buy~((DE LE9f'!;_Ji.Jpii{at·4.51)>:._~ .. __; -:. : ', ·.: .-.'. exainine>_--the goods Up_oo d~l.iyery. t9:·cfo<::enairi . · .. ;: -_.' ; •• ,;: ; , )_ • -; :' :;/-: : ·: i._ :.:- -.: ~. ·. ·.\: • -:' · · :·,. ·• ·::, ·• . • · wt-ieth~r thef o.p!igat!on·:'(DE LEON, s_Lipra·.. ·. . :.-.· . _ · :, ' · . . . ·, • . . :at}68): . .,' . '· · · · ·, ·/ <. · -'. · :. -;_ · . . Exdiptio'ns: · • '· · ·. · .: \:.. ,... ,· \. . . '~ . · ... ··a.·. Ther~·is a.'~tipLil'ation'to""ttie contrarY-(C/1//L . A¢cepta6ce i~ . .r;i.o.t.a CQnditjo~ toi~ofI!pl~_te.d.elivery:. .- ·. ·' .. CODE;·Art 15f1_4J.. .. '· _.. '·· ·:· ') . · .... ;·., _Ve.ndee rc1s.,0oth_ing to._do'~\ttJ.the vendor's ~eliveri ... · b: In case --of ·c:o.D . .'· (c9Jle_ct c:in. d.~livery) - . . The seller rn~st.cciniply with ~is obligation to deliver · · . ·buyer· . is·. not' entitled· fo examine'~ until . . although th_e.re:i~ n(? acc~ptance'y~t.by the·buY,e~ (La · · payment is· madE:i; -~xcept if: . Fuerza ·inc:,· v. · CA, ·G.R. No:· L~24069, June ·28;' i. Tihere· is·"· _an agreement · perfnittfng .. ·, 1~68). · · · · examination; cir :

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The. usage .of trade permits the examination (CIVIL· CODE, Arl. .1523, par:-3).· ··

The rigftt of examination is not· 'absolute: The seller is bound to afford the buyer a reasonable opportunity of examining . goods only. on "request"-- (C/YIL CODE,:Arl. {584; par. 2). . . . ·· If the seller refused toallow inspection, the buyer · · ,· may: rescind the contract (DE LEQN, supra at· . 444)>-· ·.

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Modes Manifesting Acceptance (CIVIL CODE, Arl. 1585): . . . · 1. Express Acceptance - .when the buyer, after delivery of trie · go9.d_s;- intimates to the seller, · verbally or- in writing, that he has accepted them. 2 ... Implied Acceptance :-·· a .. ·when buyer, after delivery .of goods, performs acts of ownership b. ·- Failur(;) to return goods after reasonable · lapse ·of time (DE LEON, supri: at 448). · Use of Property . . General 'Rule: An act inconsistent with the seller's . ownership prevents the buyer from claiming that he has not accepted the goods.

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. A.c~{J.t;~c~... ·t~~ .' ~act~ak _: :· d_el!_yety; ·th~_r.e. m9.y _ be .-c'.1_£t.Uc1_l _r~-~~!Pt W!tlJqlJt . . ·· acceptance and t~.e~~ .may: be acceptance without . receipt ([)~ ~E.Of'!,s.up(a at-451).'' . · <: '.

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is,~· - -ari · · abft auan111·e_ otth'e thing 'sold (CI_VIL 'the .. -vendee · '(CIVIL. CbDE;,-'Arl:-~ 1'495); ..•. · COEJE, Arlt :1'582}.' · ·· . · · · · . ·. .' . :. . . . ....

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· already pay .(Bareng v. CA, G.R. No .. L-12973, AprilJ5,·196Q). :

· Payment Nonspayrnentdoes not prove simulation; at most, it ·gives the seller the · rignt to ·sue . for collection. ,Payment of the price Is a resolutory condition and the remedy of the seller is to exact fulfillment or, in case of substantial breach, to rescind· the contract under Art. 1191 of the Civil Code (DE LEON, .supra at71). ·· · · · · ·

Mere A~t of TrE!spass · A mere· act of trespas·s shall not authorize the suspension of'the payment _of the. pric¢ _(CIVIL CODE, Art. 1590). ..

Righ_is of the Buyer: t. . S_~sp'.ension pf ·payme_nt · (CIVIL· CODE, .. Art._ 1590);. . . ' ., · . . · · ·. -· . . . .. .> . It conternplates.a situatlon.where the· contract is . notyet c·onstimmatecl.(Dt;: LEOJV, supra af457). It is applicable in lhEf following cases; · . a: Wh'ere I. ttfe . vendee . ·is disturbed m . .... ... . .. . , .... · · :t possession 'or ownership · of the. · thing bouqhtt.or · ·. · ·· · • ·. b .. Vendee has reasonable ground to fear that · his posse?siori ·or . ownersh1p · would· beAl'.I . . -- distu.rbed : (by· a ·vinqica.tory ,action- or a . 'foreclosure of .1"0ortgage ) .. ' .· ·. :\

2. · In ttfe·sale of immovc1b).e property, to pay even . a-fter the expiration' of the period a·greed upon .. 'as long · as no deman~f for. rescission of the · ·. contract . has · be~n made • Ci'por1 'him: ·either .. judicially'br by'a notarial a~t. e~en though it ma'y ·have been stipulated·that rescission shall.of right · tc1~e place L!POI) failure to pay the. e.,rice at the tim.e'agreed upon (C.IVIL-{;QqE, Art.1592): . . . ... · . . ,'. . . --~·. . .. '_ __. . .. · . . The defaulting vendee.niay QE;lfeat the vendor's right to rescind 'tne~COl)tract cif sal.e if he pa°,~S the ·. am·o~_riLdu~··.before ~~>·e~eiyes a d~(lland for . rescissiqn,· either'judicially or by ~r'notariar·act, . from. the... ven-ddr (H~fis of ~angan v. Sps. · · Perrera~;· N,o.-'1p737 f( Aug~s(27,; 4009). : . . ·.. . }·. . . . .. .

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---·. ew..,.Term ., . · General Rule: Once:a pema·ncJ'for rescission by ~-~if_· or ~a~_.trial act i~. i:na:a_e,}~~ _cou_rt _oiay not . grant lfl.e v~nde~ a.·,new· term (.CIVIL CODE, ..Artf592),. · :_ .·_ · .. _, _ . . .. .

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Exiept)ori: ~In the i'ntere~fof_ fustice ·and. equity, . . . ~ ere vencle_9'h;:3S substantially~performe~;in · . ·, · .. good.faith (J,.M'!'Tuazori-& Co. v. ·Jc1vier,. G:R. No. . f(}bruary-27,.1.970)., ·..:.. · · . . ' L--28569, . ·. .• . . ; ; Art f592- ·ii'· not· ·applicable~ in the following ~,..,......,......,'""""'_.;.'',cases;)L :· ·· .:· .. · .. , .. · · , .. :·_. '' · · -a .. · s~·1e of installment on rea1 ~state --it does apply to ~ saf{ orrlnstaument .. of r;eal· property when -the. parties. laid down . .the proc~du,_re .J9. . .be ~foll~we~d .in (~·-even\ . -tJ,a! th~\·~ndee·'falle.q to·fulfill hjs' obligation (Albea' v, 'Jnquimboy, 'G..R.' No. L-1601';" May 2~, 1950): .. · · · . ' ...

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Contract )6. \~!1/doridhJ_<;>ryal _"sale of, real . estate ~ In this case, the.title.remalns with . . . . . the(v~~~~or .lintll full p.aym~nt.~t't_h_e·purchase · · ·. · price (Roque v, Lapuz, G.R. ·NoY. L,-32811; . .. March -fg~pJ,°Pay'8J'.e.nt' in this case.is a . __ positive suspensive conditlon, the .failure·of . which prevents the.obllqation ofthe vendor ... . to. convey 'title. ab~9.lute)~1e; payment ·. -, is · . ~-- _;· resolutory · · co'ridil_ion · · . (Pangilitiah v, cA, G.R. · · No. · 83588, September .. 29i· 1997). ,· · . ... ' . b.

. Note·; WhehJhe .di;turbkin~e is caused- by non. app~rer)tse"rvit_ud_e, remedy is,'re~~issiol)·. not .. ·-, ·· · su?·Pe.n.sion · of .. payment (CIVIL CODE,:· Art ..... :1560). '. : · · _· '• . ·:,

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. . Length of Su~~~~s,ion "of.Pay-~ent '. .· ·. ~- .. . ,The. dght to ·su7pend paym~nt ·granJed by~aw to ·. the vendee ··exists only.. while the : danger or ; disturb'ance lasts>Once th·~ vEfndor has caused .-the s:.essatio_n of. ll'\is. disturbance. su~h 'as by · pq~pr9~i.sing .¥,'ith \he third. P.$rs91) -wi,q . poses thE;l danger or.· disturbance . to the . v'endee's poss~ssion or OWnE:rship, th~- vend?E( mus.t·

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1-191 is subordinated ·. to. the provisions of Article 1592 when applied to sales of iinniovable property (DE'·LEON, suP.ra.,.at 459). .

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MEMORY AID 201~

Vendor has.reas~nable ground to fear_the:. · i. Loss of the immovable property; and ii. L~~s- of price- (CIVIL G_ODE;· Art. 1591)

· This- c~ntemplate.s 'a situati~i, where the~e:- has been del_iyery of the immovable property-but the . vendee has nor yetpaid the- price (DE LEON,. supra at 458). · · This is applicable to both cashsales andto sales as· Art- 159l of the Civil Code . does. not distinguish between one. arid the. other {Id. at_· 45~J- -· · · · · -.

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According· to De Leon,. however, \he phrase ·. "even though" emphasi.zes ·t~at when no · stipJ.Jlalion·is fourid on automatic rescission, the .· judicial'. or·. notadal. requirE)r:r,ent .. still. ~pplies. Acc0i'ding· to him;' therefore·,Jhe buyer may still · pay:the price eiien ~fter the expiration··of the -: .p·eriod .and .noiwithstar-iding a ·stipul~tion on '.· .a)Jtomali.c rescission, as long as _there is no. . · · clemand b~ judicial .or notarial_ act (DE LEON,·

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Specific Performance (CIVIL CODE; Art. 1598); and · - · . ·.•. . 'Rescis~ion o~ damages for breach of warranty .

4. · 5.

(GIViL CODE;Art, 1599). i..,

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. Art 1°593) · . i· . ·: •:,,' r • · ." ·· ",~-~".:•, ·' ·/·'. :·i . ' .. ·. ·. . •.·. , ·... . ·. ·-· .. ·. .. ·. ,•

for r:econv$y,_an.ceris· not an actionfor rescission. The judicial resoission-of a contract givet" ris.e.,to mutual restttution which d,o~s 'not ~_appen i~ _ an 'action foJ1_reconveyance (Olympia Housini; Inc.~:

468).

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Ho~aver; · when .... t~1e,re _·is·. ·~o , jL(dici,al1or,. ~6tarit, -, dernand.cthe buyer: may. still pay. Offer to. pay J.S sllfficient:te de.f~cit.s~ller's· pterogativef{DE tEON, ·... s~pf~ ·~H60) .... ~·:':: : '"'. ':--. . . . . .

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-Reason'' behind , Art. 1 ~93: -, The delay is. prejudicial . to the 'vendor __ since . personal' ·p·roperties\are ~bt capable of. maintaining .a ...:-· stable prite ·in. the market (DE t_EON, 'supra at

~ote: Arf~cti'on

... ·

.

for-

·

Seller is give.n: an 'option to demand .. rescissjon· upon judiciai or.riqtarfai ~emand;(C/Vii:. C'Opf=: f',rt. 1592). .. . : ... . .. · . . . ... . .

.

_.

· ..· Automatic- rescission, shall take .place in the· . · interest of the'seller if thi buyer· without anywalid .cause', upon· the expiration. ~qf the' period delivery of thing:. . · · · . :· '. · · '. a. Should not have 'appeared to receive· it; or · ·, b. -·. Havinq appearec(sJ,ould .not have tendered . : ')h~.i:i'.rice at'the time', :unless a''lpnge~ period ' ·- . is stipulated for its· p·ayrii'en_t(CIVIL: CODE,.

'

. . _ ·•

..

In case 'of Movables - .

, ·., · . . . -, · . It ·rn-List oe br.ought within ten (1 O) yec!rs from tt:i.e time the fight of actfrfr1 accrues (CIVIL 'C.ODE, Art: 1144). . :. .. . ... . ~ ·· ... ·. -~-.·~· : . ._ . _... .

t··/ ,·.: -: · · · ', -· · . • · : : .

••

. t. ..M,O\,'iible~ In gen~ra.1

. ,11_91,~n9 1_592)' ·.: .. ' .

dfJ;·2~03

,•

.

. ·:

It applies ·.or)ly when thing delivered to· the buyer: ·.

Reas~!l~-~e buyer ca-nno/:1<e:the- law in his··:.

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2.';......Sale qf qo:o~s :.' . · i~'ner'.~ . . :Right:'.

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.

sold, has not beerr · · . · · · :·.

. .T~-~· !i~·ht_···of :_- a~t~-~a!_i~~ .. res_cjs~i
fs st1p1:Jlate~,m a·con'tract'of ~al~. ,s ~ul?J~~tio wa1vei I~. this ca~~._ th_erig~t.was ~eld_ waiv~y,t':,.e.\.ve.~<,ipr ·'y.,}:l,o gr.!3nted1 many· exten~,ons· !O' the v~ndee, · in all . of v.ih~h, .the ·V~ndo(ne.veif, cali~d · attention Jo the .

· · ..

· .....

-

, . -

•·.·.· ,, :·

.

of_:; Acti9;_p·. fqr tlie '•Pr!ce ..

(~I.VIL COD(=-, Alt. 1.~ft5)' . ·..

.,

. ,. ,. :

irWne"f.f~~o~n~r?~ip .. of tlje ·goods·has: gas_sed to.th_e bt.iyer an_d he wrongfully.:· neglects cir refµse's.to pay for the. goods_...-. . cjcco'rdiq_g to)he- terrrj·s~'
'fq~·

.Ji.90.n 1'._:1J9P8's.ii!f:_)if!. B.ari1<.~r7. ,:,;._."""".......i...:.-_.........,....,..., qg.a)hst. him the'ptic'e qf go,ods (CIVIL ·. ,'/.:J ,_ . . C.QDf, t,.'rt. 19~5, 'pai. 1J': -·; · ·; . - . · _. 7a8J.i8._c1:r,.e.J.su}n{~es_

·p/A. roCv,·i.sG.o._.Rb.nNt0.a·~.-Lt~m6 , Pr~~isio~~·ciov~r~in~

1

~re~~~ ~fC~ntract.of·S~1/.

'· ofGoods-(Cli.Jiccoo{.Arf15'94/"

·. :··· · ·

. . .

.. ,

. G'overn'e'd p~i-tict1arly'l3Y. the pra'visions c::ir'Chapter 6 (CIVIL CQDE, Arts. ·1.595.~15fi9), an'd-secondarily, by, tfte-' oth'e( provlsioris': q.f' the Title. on' .sales' Sb faj': as said.'provisions can·apply (DE LEON;'supra at470),.

·~

:'. .. • ·,.\ · ·.. . · · .. ··· >. :. ;- . · · · . ·; · ; ·:· •·.

'· . .

"Goo<;l~"'incluc;Je--all·chi:itt~ls.-persdri?l~but not things . : •' in action..or mi:mey.pf_'!egal·ten~er in th'e P~ilippines, · Th'e.Jerm includes· growing fruits · or- crops (CIVIL .

CODE; Art." 1636;-·par. 1). ~-- .'."· .. '::.. .. .

. . :· · ~ ~ .- -: - :,~~. .~ ,· ~. ~

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..

. :. · . , . . . · -<>. ;~· .· : ~ . . tb.e

(CJVIL_CQQE,. Art_._.1.596);,. . ·3.

· ·. .

.

Rescission. of the· contract for- breach thereof .

(CIVIL CODE! Art.- 1597);

A

·: · - · - Y·

·- ·

. /

·

",' ·passeffd ·(CiVIL'COQE; Ari:. 159$, pac2)

.

'

.... , · ' : . . , . . ; ; •. . ... ·H~w~ve~,:.jt is·-~:·def~nse to ~·u~h action . ':,. :· , -. . · that·s'e.llimhas manifested ·an inability. to - . . ·!· ·r>~rfo~ljl 'the· coritracb:5tcsale.. on his part.-.~ .

· · · .,.

A~tions .~'iailctble · . '·_ .. ::.-:~ - . .. · . · : In ·general, the:. actions. available,Jor ~reach' of the~ ' con~ract of sale- of _gpods'_:are fqllo.yirig:.. ' . . 1 ..- Payment ofthe price (CIVIL COQE, Art. 1595); 2. Dam.~ges .for. rion:~ccep!an_c·~ ·,_of :!he gq'ods·

0h~n-pr;~~ is ~ay;bl~ ciri ~:~~~ain ~~y.,·. ·. 'fransfer of- .· . :· t_iiiei'.'and'"the buyer wrorigfuliy neglects or' . r~fuses . 16 ';~pay, :'1fte.:. ,seller 'may ... ·, : maintain'·an 'a2tio'n 'for the price' a.ltho!,lgh · ·--the: o'wn.ership ··frf:the .'g'oods· ... has .. not ~

.. · ., , irreS'):?E?Ctive' of ~eJivery._or

· · ~ ·~ ot an ·interluO·Q

· riot,·t.o . J)ertorm~ ir.at ·ariy .. ··

. :_-. /,. · :. · time b.efor!;l thejucignj~nt: (91.VIL'C:ODE, : · ) >· :· Art. i 595,'pa'r:':2}.: . . . .· ~-.- ·,_. . . .

..

·

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SALES-AND· LtAS,E SAN BEOA LAW CENTRALIZED.BAROPERATIONS- M~MOR_YAID 2019

subsequent performance from the-seller (DE LEON, supra at 473): . . If goods cannot readily be resold for a reasonable price, althcuqh transfer "of ownership has not passed, and if the provisions of Article 1596 par'. 4, are not applicable - seller may offer to' deliver the. goo_ds. to "the buyer (CIVIC CODE, Art. 159°5, par. 3). · .

. ii.

. iii-:' If buyer refuses to recelve.rseller may .: 'notify the buyer that he holdsthe goods , - ': _as.·b,ai,ie·e· ·fo~ the buyer.' Thereafter, the , s·e11et may ifeat the qoods as t~~ buyer's · and may maintain ari action for the price . (GIVIL CODE,.Art. 1595, par -. 3). · . .... ·...... ~:· . ... . ...

b,

Measure of Damages" (when there no available market) . . . The seller .is .entitled to. thefull amount of · damage which he has really sustained _by a . breached ofthe contract (DE- LEON,. ·supra a(4'7'5). ·

-

Me~su~e of Darnaqes- .· (special circumstance showinq r- __proximate · damaqe] . ·: . -~ An -arnount greater. than th·e -difference . between the contract-price and market price . ~w.hen "may be 'reasonably a~tr·i~~ted' to ~he · non-performance of· the obligation. (CIVIL . cooe. - A it 22CJ1~ paf. 2); · · ·_ ·- . _.: ·. . ... . : .. ,: . -: . .. -~~aniph:~: H9.spitaliz~ti'gri expenses due, to the refusal of the buyer, \>'{ithout'just cause,

·· -. . . .

Selfe(s Right ~f.A~ti~n .for _Damages~N· .. to ~cc1p.t the d,elivery_ so angered the seller ,When ..!he buyer wrongfully)leg epts or /.t, the 'latter ~Liffeq~d .a heart attack for, refu_ses .: to. accrpt and.P'}Y f,or'the, 2oods . . . .. 1hi9!5 h1:iiwas. hospitalized (DE.Lfa9t:J,.s,4pra (CIVIL CODE, Art. 15j6,t~~'v,/ . · .· _ ', . . af/47~\ . · -: · _., . . .· . . ·- . ii. .ln an 'executory c;nti1i!.3l,)Jih7?'the~ ownership in the g~~-hpl,_notp.asse1,~· ~~ W .. _ . ~ea~_1,1f~f C>am..~ges· fe>r Repu~iati'o.n _or, and th$ seller can.pot fffgintain ~n a~tiotf /.&. ~c;>un~~mana . . . · · .· · . · . to r~coverAh.e ~~ce (C/'7/L·cooE, Art. -;-~ llhe ~ea~~otdatna~es,wo~l_d incluqe,. ,_,· 1595, par. 4); o:l__ i':ir ,~ , . I . labor-ip~rform.ed qnd· expenses iii. I~ the g9~ds a,'.-ein-otye_(isJ_~~tified a, ti5'i2:Jinl ::..._ ~ · .. inc~vtd_f_h mater!als · b.ef~r~. r:·c~i~(ng t_1me of-th_e c~~!~act ~~l~~se~~tly, the¥~~ . . : not1ce~~~t~~ buyer's repp~1~_t1?n_; ~~-d . .. ..· seller's·?1_ght 1s ~~~!_~ar.il~o1 ~1 ed to· ·· "~: . _ 1~ h~~rofll''hp_woul_d. h_a~e reah~e,d 1f the . ·. _an ··-~c!'.on for' 0a'5-a9es (Q . EON,f~ s.a_J.~~,i(,--~~~r:i_,fuUy.'.p~rfprm~~: (CIVIL

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s~pr?Jal475) ..

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~JP)- .· ~!tlJ · ~ ~-~. ~- q~_[?f ~~tt,_1~9.6'. p~r. 4) .... . / ... t .... . 1

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·· ·. M·e~_sur:e..9fD~m~g~s·.: :. . ':, .: . ,G.":;.~.. ~-·· ~- T~ry·~:ica.t)e~~is'i!~~-:(y/V/L'.-9,,0DE/~n. ··· · ~s.t1m_at_~d · .l~?,s d1~e~tl~ a_nd · natar~:./fig97).. ,.-.,r: ',.· .. ·_ _ . _. ._ . resullin~ 'in. t~~ ?rdit:J~~ cours~~e~\1hta_1Lcle'a·P_P,liel~,~~e,re_ t~ere-ha?_ been no · from the buyel''s_ breac~- (C:;/VI __ coi5,!Jfrt.. ~~\\?-rhv~ry of_goods yet..· . ·_, . : .... · · .1 !596,· par. 2). . . . . . ·. . . [')...\:."' .. . .•. ,. . . .. ·.. . . .. . . ;, . . .. . .. ; . ·lri" 'the'. foliowing insta.nces·,· .the· seller. may" , ..M~.as4fe .. of . D.amage·s·~ (wh~n tl')ere is· · : •.· ·. . 't9.ta"!ly re?bnd·°f,y'·giving nptfc'e of hiire(ection· . ·availa,b!e 'rnarkeit) : , · .. · :,: . .. .. ·:'ta·qoio)d,_t~e:·6_4y~"i;., ·.· '• ;.; ;. j. ~ -: .-· . ·, In th~. absence of special circun:istances . ' ...... _. i. B~yer:. has''repudiat~.d · _the-contract o{.. · .Sh()Vvj_ng . pro~im~te damage. of a differeri,t"'·. . .. , ·· .. S_9I~;· ~- , .. : , .: . '. .,. .. : _ .:~ ,,- '',:· '. _:·.,. amount,.tlii dff(erenc,e betw~en the·contract. ii. .... Buyer' has . rlJ.ci'nifested his . fnc;1bility . to_ . pdce·arid Uie market or current,price at the · ... - ·perf.orm.obli~fairons·.tt)ereund.er; qr. . . . :-·· lim·e !h~~ 9Q()dS ought·. to·· have "been_ .iii'. Buyer ha~ commit:te.d a breach _. . : : . accept¢d, o_r.· at. th'e..time· of,refusal .toiac_cept . . . . .. ... . . . . : '' ,,

M.·

-. wh~n thered~ no tim_e. fi,xed. (CIVIL CODE, , . .. Art.' 1696,ipar .. This foliows tne general . . rule' t~at aama~1es. comp(ehend .not pnly th~ . . '. a~tl!?I lo~s suffered··· b·ut aiso. ·_uiirea·l!fe~". . . '. . :profit (CWIL COO{=, Art 2200).-(0E LEON; _ : - '. ·. supra at 475). . . :. .. ·.~. - . . . .·' .. ; -·..

3f

··,

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2019 _SAi'} SEDA LAW CENTRAt.lZED BAR 'OPERATIONS

N~te: Ttw s~li~r,is.:r~q~-ire;.;o.~i.ve.~ojic~.9f: ;: his election 'to seek rescission. Formal . notici: )s· c·ertaif")ly '· not,_\1 :_'·r'?q.uisjte; .. bril')ging· an a·Gtiqn. pr9_mptly· for 'restitu'tfun' is .

a11d . . ,

st.ifficient·(DE~LEON;.:Supra-.af4-77}, . . . '·.

'.

.. . .

..:: .

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:' . :

lfthe goods have been delivered\· .the seller . · may re9oyer the.valLi~ 'of wtiat he has· given . , . · (C_iVIL CQb~,· Art_ 1'~95).: · ' . . . . ..

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The obligation of the buyer to pay shall be governed by Article ..1524 of the Civil Code (DE · LEON; supra 301).' · ·- ·

. UNPAID.SEiLER . 1.

· 2.

at

, i -· .The buyer becomes !nsolvenl'(CIVIU:;oo.E,

The ~eller who towhom the _whole .of theprice .has not been paid or: tendered; ~ . .. The · seller of the qoods,'. in ..,cas.e. a· bill of 'exchanqe or other neqotlable. instrument-has been received· as conditional payment, and the . condition on. which it was' received has .. been 'broken by 're-~son _of the _tli~honor. of.. the instrurnent.jnsolvency of the.buyer or otherwise (CIVIL :CODE, Art. ·1525). . :·- •

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· Insolvent - A persor:i who, ceasedto payhis debts in. the, ordinary .course of business or · cannot pay. his debts as· they become due, .· · whether insolvency proce~dings have ~ee·n commenced or not (CIV/J,_GODE; Art:.1636, par. 2).

'-'

,

The term seller· as .. usedIn .Articles ,1525 to 1535 includes the following: . , . . .. a. Agent of the seller, to whom the bill of ladi.ng has been-indorsed: · · . .. · b. Co~sig'no.r or aqentwho has hi.mseif pai~,..or · · · is directly responsible for the· price; qr. , : c. Ari'y other.personin the position of. the se~r. .·· (CI.VIL·CODE, .Art. 152/5). , : .. ,··

·Basis: When one, party to a ~ilateral contrac.t is. ·incapacitated· fr<;>m. perfo'rming- his, p~~ o.f the agreem:~rit, the qther. party .is. ~lso excuse.9 from ·pe.rforming.hi.s part (DE LE.Of!; _supra at 300). Note:· The selier . r:nay e?{~rc;:ise. his . right of lien notwithstanding 'that he is.in possession of the goods · as -agent or bailee for the· buyer: (e1ti1(·COD~, Art .

1~~~~~

..

-·

Not:e~A ~~ll~r i~:·u~'pai~ ~i.t~i~ the defjniti~·f?::~et~-er . title . has or . has not passed'(CIVJL., ;1526 .. ' . ·. ..-; .. . .. CQDE,. Art. :, •:·,

heni.Unpaid Seller Has Made Part Delivery of · . · the. G'oods ·._ ·. ·... ···· ... ·. · .· · . . . . .. General,Rule: maY: exerc.ise his right of lier:i Off th_e reniaiwre•r·\!:lat _has ·not_ been delivered ( ~/VIL C,001;, , .. 1528),. ... · · . · ·. . · · ·

He

. E.~c~_Ptk9;,: ·~~·~p~r,t ~ d~li~e.r/ ~~s · ~e~-~ . made .. ·unde~ suclf7cifcuffistantes ,.as to sho,w an. intent. to· waive:the lien o right of (etention (CIVIC f;OD~, Art . '· . · '1528)... : , · ... ," ... ·.,. · . . . •'

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2 .. When the .b'uyer oi:. .liis .agent lawfully Qbtains · · pbss·~ssiqn of.the 9,Qods;.

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. . :.~ Reason: .. _ ·:rhe.'. seller any · .3..

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The goods have ·been sold on credit, but the term of credit has !;_xpired. · ·

-...: .

has ·.. no

.'

possession

ne.ce.:5sary for c;1 ...lien· (Id.).

. ·The ·;~II.er. is' entitled }O·the_ payment oft~e price .... : at ·. the same time· that . he ... transfers · the . possession o(·the 'g9ods (C,VIL CODE,_ Art. : -: 1521): \. .. . ·2.

•

at

Possessory. Lien·'(GIVIL COD~, Arl. 1527) .. The· seller is· entitled .to .retain .. possession of the · · qoods ?s security torthe' purchase price· ". · · , · · · . · ... \'Vher:i it'may be.exercised: (WEI) . ( i: 'the . g~oqs_ . have been sold: Without · . ·· .stlpulationas'tocredlts-: : · · · ··

•~.

,When,unRaid:~.eller i'oses his .lien: .(C.OYI/) ,,.._.,......._.1. Qeli~ery of the goods to· a farrier or' other bailee . . •for th~_;iurpo's~· of tran~rnission to the buyer- . . ,· without-reserving .o\vnership in__the goods o~.right .. . to·the posse'ssion th~reof; . . . . . . .,· . . ' . . ' ·;. ... " . . . · ·Reaso11-: An unc.onditjonal delivery'to,an agent • ~ · or·bailee for ttie' b'1.iyer·is the-sam~. as.delivery to '. · . : . the l;>uyefinsofar a.~· the selle'r•s lien is c;:o_nc~rn~d' . (DE.LEON;·.supra 303): ·. ·.. . · · : ·. ': · . . ... ,·

By:,Waive.r. bf.fhe lien (,CIVIL-CODE,,Art. 1529). · .·

I.,

Loss.of.Lien ·, . The lieri ·of .. the . seller · depend~ · upon either · possession or c;;ontrol of th.e property 0,n··which the ·nen is daimed,-,and,if the seller permit~ the·property to go into aptual p'ossession of the' bLiye.r, such lien is ·.lost,. although he .delivers on. the faith . of a .ctiattel· . . 0

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mortgage which turns out to beinvalid, or draft qiven in· payment was dishonored. lf; however; the seller has been induced to part with .possession by fraud, the lien of .the sell_~r is not lost but continues (5 TOLE("Tlfjb, ·CivifCode, supre'et B2). . Revival .of Lien after.Delivery:. 1 .. , If ·the qoods -are :rejected -by the. buyer, and the carrler or other baileecontinues in possession of .. them: .evenif the .seller has refusedtoreceive

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·2/:-- ·. . (CIVIL: . . . . . coce, '.. Art.·1531, .

b..

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Give notice of hrs claim to the carrier or other. person in possession' -of ·th,e qoods · (CIVIL_ CODE, Ari. 1532, p~r.-1).· · ·

Note: The carrier rnay'lncur liability to the seller : \ for delivering· · the goods to .. the · "buyer . notwithstanding the proper and timely 'notice lo slop in tiensitu (DE LEON, supre at 308).

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· · , When a_ carrier first receives goods consigned tothe · buyer, the carrier is agent .for. the seller. for the purpose of delivering the goods, to the buyer. ln.order to terminate the seller's right to stop, the 'earner rnust enter· into a.. newrelation, tjistinct from-the -priginal contract of-. carriage, so· that he then holds . possession -of good.s for the· buyer 'as 'his agent. for. th:e purpose of custody-on th~ buyer's-account (OE

3. . The fact thi:it the goods- have been IE!Vied by ·- attaching cteditors· of the buyer; unl~ss·· the · buyer is insblven·t (DELEON, supra a"t 307). Time .of;liisolvency.. . The· buyer bee::ame.- insolvent before he has taken possessi(:)n:of the g0ods,.or. ins.olvenc·y .existed at th.e time·· of ·the · sale; · if-· it~ wa$· not discovered until afterwards by the seller, then the seller has;the right of stol).page (Id.}. , . . · •· ,,. - . · ·,, •• ~ ·."

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L,~ON, supra at_311).. ',

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.: , ·. ·:.. · . , · •. · .. ·· . · . .Th~ mere .act -.of the ~q:ri~'. or. mid~lemanf n glvi'lg ~Qtice.to_th~,_bu~er r~ga_rd1J')g th~ arn~~J~_me.~~o~s 1s nora Jerminat1qn' of the tr~ns1t,(/c/~J. . . . . ·.. . , ,- , . ~ ,. . . . :. ~ . .. _Note: Takin9 of .. the:· go.?dq'in•tr-a.o.s.1 · by~~~ unauthorized
.

.. . , .

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. Delivery, to a Carrier Chartered by the Buyer J(does notmake-a delivery·to the carriera delivery to -the buyer .. lt·.)s';. a question depending . or, . the. ·ci[cumstances of the particular case (CIVIL, CODE,

to the _ter,nis bf th;e?ontrac .. Qt .

·

.

Rightful -Refusal ..: Right tq stop- by the. seller would. not be ·.termi~ated ·(9E._LE9ty,,-supra at

31_1J. · '. .. '

Meje arrixal·of the goods··at.or on the premfs~s,of the "carrier atthe.point otdestination doesnot terminate' , . the- transportation -for. transit ir)~lu9es .not only: .the · carriage of the goods to. the desflnation, .buf also

.. ;

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When the Goods·are Considered-"li1 Transit.":. · 1.· From the time .when: th~y are: delivered to·. carrier or other ;bailee and before Uie.·buyer or . "his'agent'takes-d~l-i,very of. them; arid ... -- . 2. · If ttie.· goods ar~; rejee::te·d by the. buyer, and the ' .. ·carrier or .othe·r bailee-d:mtinues'in possession 'of. .. ·them (even if the selier refused foreceive_th·em. ·.oac.k) (91Vll:. CODF;,"Art.·1!531, par. J): -

LEON, .su~(c!0at 3_10).

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.. Effect .of Paii~I-D~livery· ' . -, ·-· :.· . It does n.ot~1pt,~;e·_thy ·s~l.ler. ?.~ !he (igh~ to stpfwith · .. re.spepty}.th,eJr.e~a!,n~_~r-un)E!.ss_1t _may be·.sh.own J~~t · ..t.~e pEl118.,f~a~ an'lagre~rnent with ihe buyen tp· give up· possess1Jn _of t~~~ ~h.ole-of tne. goci~s (CI_VI[.. COD~.~A'ft:"1"53WJla7)!4) : · . ._. ··, ~·· .· · . .. , ' ·· ' · Effe~ts 6ftti~··Exerci:;e· of t~e'.R1gtit oi.:Sto·pj:ia'ge·

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.. . ;i;h~.JJ.2f'dS are: no longer in t~a~si_t (Cf.l(IL COD~. Art 1531, par. 2); · · ·, . · ·· , .-'l\ '· - ·...

!n C?se' ?f!!lis~ei'ive·iy .. i~e:·goo~~ ar~:~ti~co~·side1~ 1n' tran~1t;- t,'en_c:;e-,. the, seller r11ay st1~I. e~~~1s~, §a1d· : . ·. · j.. Th~ 'confr~ct·cif.carri:age ~nds:·after"the a'rrlval .cif rig~t~pqrsuant to· ~rtid~ .1'53:2 of. tt.iE:l Ci_vil ~- w_~ich th'e. goods -at :Jtie·'. d·~stinatipnr The:carrier now ·· · ... pr~v1des t.~at.an unpa1d_.~~ll.e.r: may exE!rc1se,h1s nght ·-::. ~~~Qi:r)es_. .~. .- _rne,r~ ·, qai!e.e,i _apd:,-.will -~~- lia!ile· .as : ·. · of-stoppage h trarfsitq by. gLving' notice'of hfs claim . ·:. S\.JCh. (QIVIL_ Ar{ 1 p,31, 'par.' 2(2)); .and'· . · . to. th.e._ ca,r.ri~r- \>r·6~h~r. gailee iri whose .possession 3 ... :The seller·\vould, have the..'safoe ·rights·fo: the . the·goods are.-" . .<; . .: • · . · · ( -,:._,., ,· ,.__ · · - . · · - - . · . · · .' goods ~·s·if: hihad·neve.r p~rt~~ posse~~io~ with

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.: Wh~n. ~tie· Goods_ are-~NO \onge·r in· tran$it:. . (AD'AR)· ... : . ·: .·,,i_ .. :- ...•. ·' .·. '· ,' . • .. . ' ' ·-' . \ 1 .. · 8fter, deliv._ery .. to the buy~r ·or his· agent. in· that ,. . ·_. genalf; : . ·. . ·.. · · : .' .. ·, .. -,'. . . 2-: : If; !h~ ·.b~ye_r; or hi_s agent cib'tains,Qelivery of the· . gotid~. at; a. 'P?inti·.b~fore.,·tt,eir. ardyar at, .. the · appointed d!3stmat1on; . . : . .. 3:- If -~fter. the·9rrivar the· go·ods. a"L the a'ppointef.'. . . .destiriaticin, · the ,.- . carrier . or ~, the· bailee ; ~ckn_owle'dges .fq hold:the· g~bds i;· behalf of the buyer (also kno~n as Attorninent by the B~ile.e)

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4 .. ·.It.the_ carrier' 0.r bailee :w_roogfully· Refuses to . .deljverth.e goods.to the:buyer (CIVIL CODE, Art. t-531, par. 2). , .. ::-: · · ":

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· . · . · ... ·, · "·' ·.;:_. ,,· :, ·, .. w·~ys .Ex·e;ci;ing' th~· Right:"·i~ .· ..:_··.. ·: ... . 1. By taking actual· p6sse~sion·of thEf.goods; '. 2. By g·iving ·notfce- of his claim to the carrier or · ·· .. · bailee ·fn · whose possession· the · goods -ar~ ·. •>, (CIVIL CODE;_ ART._ 1532, paf:.1 ;: .: . ' , ··: · · · ·. ·. . · .. · ., J:ffe'~{if _t!fo i3uye.r Alrea,dy S~ld. t!Je· Gbrids~ ·. ·General· .Rule: Th~ unpaid, seller's. right .to• lien or st.oppc1ge in {ransitu ;reniains·even·.jf' b:uye.r, ha·s::$010 . th'':) goods (CIVIL CODE, Arf... 1535):. · ·.· · .·

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1=xceptions: ,. . . :-·1: ··When the selle~ has,gixen consent ttJereto; and. · 2. When a,negotiable ·document of title··has been issued f9r-thE:l good$ (CIVIL G_ODE, . . . Art: . 1535}:

-..: 2019 SAN BEDA LAW CENTRALIZE·D.-BAR OPERATIONS

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·513

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SALES. AN.D LE·AS.E SAN BEDA LAW CENTRALIZED BAR OP£Fy.TION5 ~ MEMORY'A/D,2019

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Reason: It. opE!rates as a delivery of the. goods described there°in when -indorsedi It protects a purchaser without notice.' after the seller. had · stqpped .itie goods either by v1rtue of his lien or . · stoppage in transitu (DE LEON; supra' at 320) .. . , .

It is prudent to give· the- buyer such notice, -~·s.the -giving Qr failure to give· it may be imi:,orta.nt evidepce . . in regard to the fairr:i'ess of the sale (DE LEON, supra ·at 317). ·· Manner of Resale· · The law-is ·satisfied with a fair sale made in good fahh according to established busines·s methods with. no attemplto t_ake advantage of the. vendee (Id). ·

Wher!;! Goods Not ·Covered· by Negotiable Document of Title A seller· cannot give any ·right larger than he .has. When the go,ods · are subj~ct to a legal _lien,. a purcbaser from. the original buyer can acquire only . su~h· rights as the buyer then had ·(Id.).

,.

Note: The seller-cannot, directly'or indirectly, buy· the goods .(CIVIL CODE, Art.· 1 ~91.,: par. 6). . Time of Resale·· . . . Must be made within a reasonable time pfter the breach (DE:LEON, supr~ 317) ..

Special Right of Resale (LSPfW) . . :· An unpaid .seller, can exercise the. riqht to resell .only when he has .either: · .. · · · 1. ·A right of !:ien (C::IVIL CODE, Art: 1526 (1)); or 2· .. Exercisedthe riqht.to .§top·the-goods.in trenslt. .(CIVI.L CODE; Art. 1526 (2)); aria under.,-.§.0.Y of the three ·(3) followinq cases: . ·· . . a::1Gqods aieJ~eri~habl~ in1n·<;1ture; . . I\. , .: · . b: The right to· resell is express1¢.gese~in · : .. casethe -~uyef'shou_[d·m~a"de~Jlt¥0~ : .

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Place of Resale · . . Gen.eral~Rule::At the place of delivery (ki.): ..

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. price tor an unreas.0~91~ · t,_me (CIV{h) .. · CODE, Art. 1533). / '~/ . ~ -~{,,.

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l'lote: Trle seller,.canm>t, arbitrarily and without good r~asori;· a_ke·[email protected]~~~to another, market and ·hold No.t~: Article j 533 of the "'.l~Odf-, a~phes o,~1~..J.f th~ buy~{ fo~ t~ ·diff~r~hce between th~ .c~ntract the .title to goo_ds. has .already:-pa$sr:1 to buy,;.r~ r.f'rtce'ang. tlie am~n\-for· which -the- property was Otherwise: the goods cannot ~resold.: . . ..,n-._,......,....;_ esold·· i m·· luding rute~cosl of transportation (Id.\. ,:'

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_i;,we1ftion: At.another place if the·seller is unable to · sell. rladily·at-a fair price atthe place ofdelivery and ', . 9an get ~betfe~P.rio'e' by reshipment- and' s·a1~. at

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. Article 1533 'pr.ovide~ th~t· th\ 'seij_~IJ h~0~~~iglitl:.~:--. ~~Sp~~6ta~~ Mo. ~~sfi~d '(L.SRD). resell t~e ·goods:·. :rh_eJ~hguJge is.· pec~tss.ive;\ . ~(Itr~~ni;>aia:se11i'r-havr~~ _eitti'er:.. . ...

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. ;j~rre rather thao ~and~tocy1Df?."~N~ . a ~~i7'.1:ietl~ILEOD~; P.ar. ·.c .. ' . : : .:,i:~Sc11:~A\.~1 t~_l,t~theg?otls m l'.ansil, whe~ seller ~\~t. · · ~ . · Art__ 1526,

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.. :.Effect orR~sale . . .·· .: . : .. · . , .. · T~!=!_.new buye. r~ acquires .a ·good .t.1t!~.as"c;1~-]st1fjer-- . i .. . ·.m1g1n_?I ~uy~r.(CI.V/1., C~OE, Arl .. 1,5~~; p_ar. 2f . ··;.: , _.,.__ ··· .. .-.. . -.'·''· •.. ·

·has·a1re~g.y=i;>~rte.d:v.:1th possess1on,.of.tl)~.g~qds 1526, par, 1, (2))., an~ _un_~er · /\.~e!tHer. ©f._t~e .t~o ~2) s!tuation~'. ~:. ·: ·. < ·: ,'. :,.~a~~!:'lfe.ttie right to .respnd on,9efault,.has . :·· · · 0, oeeri expressly Ee served.~ or. · . ,., · · · · :. · . . . b. ·.. IJYher~:th,e buyer-·has been:in.Qef9ult fqr.~ri . : : : · anrepSOriable time (C/Vl(CODE,-'11,rt. 1534;·

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·s~ll~r· is iiot l1aqle to lhe original quyer for any . · · p'i·dfit e·arne-~j' · in,.·, ib~t resale,: (¢{.VJL : COD.fF; Art.. 1 ~33; pfir. 1) ·.. · /

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The.-seller is· not.liaple. td':th,e original. buye·r: any profit earned in the ·resaie.arid may recover darriages .. oc.cas,oned by. tlie ·buye(~·breach o(fh~ :contr~ct-cif sale .. Action .for. the .rescissio'n-·of the .'.sali is not nf/cessary'(P//VEOA, $ale.s,_'iup'ra'at 211) .. · ·.·· . : . "·. . Notice cifResale Not Essential ; .. · . Though the selle.r· is not .bound to give .n-qtice of h-is · intention to resell .and o(th_e tirri.e and piace·where ,the resale·will pe held (CIVIL. CODE,' Art. 15:J3,. par. \4).· . ... . : . '. ·. . . . . ·.. .

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The. seller, S~pll not .thereafte(be ·Hable .to. the buyer . up_on the'· contract of sc;1le but may' recov.er from the" -· bJ.iY,er: damag~'.s-_fpr', a~y, .IQl>S OCGasioned ''by .the breactulf ~o.ntract-.(CIV/t.G;ODE;,,Art. 1534; P.ar: 1). .. : . . : ,.

_ Eff~~~- of Rescis_sion" .- .. : · ·.· ..:.: '.: . : ·. . . . Th·e: se,ller . .r_esumes ·:the, ·o.~n_ership, of -the gooqs . (CIVIL CO[JE,-.Arf:::1.534,'.'pai..'-1), · ·-r-· .... ·:.:.~.:.,. _~ ~ . ..' . . . . .. ,, Mari'rier oft{esc.ission: ., . There must be ·notite er.some other overt of an· intention: ..'to. rescind.-. O~ert :·aet·. need-·:not be· . cornil.fun[c~ted bt..i\ the gi~ing ·of notict{is relevant i.n· . determining. t_be reasonableness of the' .time given

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the buyer·to make goad· hls obligations under the· . co~~ract (CIVIL CODE, Art. 1"5~4. par. 2).

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Repossession by the Lessor Need N'ot be through Co.urt Action . If the l~ssee-buyer does so in obedienc_~. to the lessor's demand or where the cont~ac't specifi¢ally authorizes the lessor-s_eller , to .repossess ttie . · prope,rty whenever the lessee.-buyer 9efa.l!lts in the 'payment of rent (U.S. Comm·ercia/Co. v. Ha/iii, G.R: ·_No. L-5535, May 29, 1953).· · .

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It provides fo·r remedies of a vendor in the S?le of · personal property by installments (C/Vlt CODE, A_r!: 1534; VILLANUEVA, supra at 345).

· Article· 1"484 of the Civil Code, \vhi~h g~ver~s the sale of per~onal. properties in installments· whic~ · . giv~s- the vendee th.e rernedi~s. ar:iplies .. only"when Sale on Installment . ·. there is a vendor-vendee relationshipj:)etwe'en the· When there is an initial payment and the ba1_ance is parties and not a .debtor-mo[!gag.9r cr.editorpayable in the ft..Jtur~ •. there is· no'. basis. to apply the-- ., mortgagee. A j'uclicious· p_er.usal of. tfle rec:ords _would R·ecro Law. ,Such is· not a sale orf installments but reveal that respo-naen.t never ~~_ugh( the subject ·: rather a "s'traigh~ sale(: Under the l~nguage· of then vehicle from._petitioner but_ frorr:i a ·third p_arty, and Article 1454 (now 1~84) of the Civil Cope, the buyer. merely sough( financing from petitioner for' its full rieeds .to nave defaulted in tbe payment of two or_ . . purchas:e price. Since it is undisputed that petitioner . more, installments. to allow' the seller to. rescind or . had~regain.ed possession of th~ sLi~ject ve_hi~le, it-is foreclose on.the. chatt"el m9ftgage {Levy_Hermanos, · only appropriate that foreclos.ure proceedings, if /nc: G"erilaciQ, G.R.- No. L-46306, -October 27,_ .none yet .has .. ~een condu_ct_~d/conduded, be . 1939). . . commenced in accordance with th.e provisions of Act Nci~ -1508,· otherwise kriown as '"The C:rattel Purpose ~f the Rect(? La"! . • Mortgage t,.aw," ~s in_te·nded (Equ,tabl~ Savings To r~medy the)i9~~J~s committ~d in·connecti~n'~ith. Bani< v. Palces, G.'R. No .. 214~52; March 3,· 201.6). the. fofeclosure·ot_~hattel mortgages and 't{aS meant to preve_nt fl!Ortij°agees from-seizing the. ~ort~ag_ed Art; 14~f .ot:_the Civli Code does ~oT:a~plY, ~~.: . property, buying. it at foreclosure _sale for~a low.price . 1. Sale
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The vendor r.~fain_ing·o~ne~ship over the property . in the guise of being "the lessor,·retai.ns "iikewise the right to possessjhe same, without gqing through-the process. bf. foreclosure, in the "event _ttje vendeelessee defaults: 'in the. payment of the installment. There arises · no need' io · con.stitute a chattel · mortgage over 'the· immovable· sold (i=ilinvest credit, c;orp_. v. CA, G:R. No: 82508, September 29, 1989).

.1.

Specifrc.Perforn_,ance upon .Vence.e's· f:~iJure to Pay.·· ... .. · .. : · ··. .. The vendor · 'ma'y, after obtaining,. favqrable judgment from the cou.it; cause'. the·sheritt to levy -~n the. thing sold ·and have ".it- s9ld at public. auction. If the proqee·ds of the sale wer.e not eno'ugh, the vendor may cause-an alias of writ of . . execut.ion to be issued 0(1 the:other'properties of the vendor (DE,LEON,.supra at 1_57). i

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2019 .SAN SEDA LAW CENTRA~IZED BAR O_PERAT[ONS.

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S,~LES.AND~_-LEASE SAN BEDA. LAW CENTRIIL!ZEQBAR OPER/1TJONs·~· MEMORYAID ;,?(!I 9

In· .. sales on installments, where the action instituted is for specific performance ·and -the mortgaged. property is- subsequently-attached andsold, the sale thereof does not amount to. . ' foreclosure of the . moitgage, hence; .ttie· seller,-. creditor is. entitled to a- deficiency judgment ·· (Souiberri.Motors Inc. v.. -Moscoso, G.R. No. :L~ "14475, May-30, 1961). .

under Article H84, the same is·impliciUrom the' natur.e bf the · remedy of rescission, · which requires mutual restitution (VILLANUEVA, supra

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..· :; ; ' . A~. 1484 .(3) ot -the.Civil Code does not bar one to. whom the-vendor has ·assign'e'd on:a with-recourse · basis-his 'creditaqalnst the vendee from recovering. . . from the vendor the 'as~signed credit in full allhouqh :· .· the vendor ma·y-hav~·:np right o(re·covery-again.st the .. · · 'vendee- tor the deficiency, (Filipinas_Investment · & . Finance Corp .. v. Vitug, Jr.,'· G.R. No. L25951, June. 30, 1Q69).. ·:, .... ': . ·' · ·i

\{endor given pqss~ssion ~Y ve de~~-did n~ . f9recJ~~e. (F/t{:ivesf... Gre?it· C?!P· ~_Phifr.

;A~etyt~ne: _co.,. Jn_c'<:: G.R'YNfJ,:· t;.-50449, . . Ja.n·ua(Y 30,. 1.982), .. ;. .. -~, · ·: "\.

f. . seiY~,r.: fi_led .... petiHon. !9,_.,.,.j,x:traj1:1clicial foreclos~re and.obtainetl pbs~sio.n bu~cl.i_c! _ i:1ot. fpreclo~e (De.la c;ruz ~ASic}JJ.-COn~um~I\ .

& lildus(rial Finance Corp., G_.R. No, 94828, '. _,September {8, 199Q).'· .-. . ': . ·

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·. · .. ':,Gocp. v. fc;,bias,· ·G.R. /IJ.o};41.5°f?~,)l!IY 27,. 1977): . ·· - . . . : . . ; · ·. · .. · : A. c.
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sltuatlons-were not considered as h·~ying_ "exercised". the .. remedy .. of. . foreclosure. be_ca.4.~e -: ?f . .: it~· incomplete. implementation; . ·, : . . . - a. The seller. merely informed· purchaser of . . . intention' to' foreclose and did· 'not.aclually . foreclose .(Rad_io~ea/th,, J.n.c. y. Layin,.-._(}R: · .. .-_'A{o: :L-1 ~5~3r:f\W!l _2°7; _:1.Q6.~)--~ · ..· ? .- : . .. b' . Mere demand torsurreader of t~1ng .sold but . : ... n~: foreclosure ·.(Toli{as'. lh'qf]st(f9./·.Ejnance

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. Payments r_pad1·.bef~re actual.torectosure could be.retained by.the _yEJ_nd9r" (Nctthern Mo.tors, Inc. v. 9apinoso, G.R. No .. f,_-2,~074, Mqy_29, 1970).

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' Seller+s Assignment of Credit When the seller assigns his credit-to another person, the same law llkewlse-binds the latter.Accordinqly, when. the 'assiqnee -forecloses on the niortgage, there· ·can no further-recovery. of -the deficiency-, . and . the . seller-rnortqaqee is deemed · to ·_ h?ve renounced any right thereto. To r.ule otherwise would· pave the way for subverting the policy under Article 1.484.'(Bo'rbo·n II -v: Setvicewide Spe~ialists, tnc.,

payments qn· th_e unp_aid bal?3nce of the p_rice· from the o.uyer (Sps.Rosario I(: PCILeasing and·

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. - , .. Despite.the limiting ranguage of>Arliele 1484 of the -Civil'. (;Qde, ·which :·uses the phrase ·:any' unpaid . · balan all other claJms,(e.g.,.the interest on-t!J.e pr~ncipa,1;·-9!,!W:.oey's: fef!S, · exp_enses. of,colleclj9n; - . an_d... ~h-'e_·.·.c·o_s__._ts J_,__._(t~::··~-·:o· ·. __L.. · ~:.3.·68, , ·3:',_ .J..-~-:_'.Y16.• _ · J_-9{_:_ n_.-

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: ·perverse B.1./ye.r-M.ortgagor.- /· .·. . ·.. ; · · ·. . ·V\lhen. L.defaultirqQ · buyw~rnqrtgag_or·.r.efus.~s Jo·.· : surrender- mJ·cnatt~'To:thE;l_ selle~. to allow th~ laUer· .. ·ta be able-!Q.....pwceed· .with(fore<;:lo'surl;), .,then., the . seller.-~_eve'n .after for.ecl9_sure, -should .. be.,allowed . reco_ver. ·eiperises c)nd -attorri'ey'_s :fees- .incurred _in ,. tryin'g-,t~ otitair.i-posi~~sjo_i:i:_of the Gh?tte((f.!lipinas

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lnvest,nent & ·Finance Corp,_v. J3ida,;J, :G.frp~ Agustin- r1,1lin.g--provides

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. , an I exceptio.n to. the . COriip.let~ .· b_afring effect . - · · . ' ·. · , ,. . · ~spo:use,d· in Macon'dray_& Co./ f(lc;:.ri:lling.:~- .·-.., .i· ·• :-- 'Ba~rin1}_ .. Effec!·- on i~th~t Secur:ities _.Gil{°en. for . . . ; :·p.3ymenf~f Price.> ...-.· __ • · .·,.:-._:-···r·, . .at.-····""··>-· . After f~r.edo_sur_e1 the.y_e.ndpr c_arinot. pr.9cl;led agai_nst _.... . · . ·:: . ,. , ,· ... ::- _ .. · .. ·._ . any-. tti)r,d,. party.· y.,ho-;:m_ay .. hay~~' _g_uaraijte~.c.F the .-~ · · . ·· · MA c:E':oA. LAW )• . ·v_e~d_ee's peif<11rma_nce. ·of hi~_ obligati9n,,. for ·if t_h_e. ·._. 1 .•. ,,.. ·A-·· guarantor should be'conipel_le.d_ to'pay lt)_e. balance,.· , :· :(, ·. :, . - : 0·:-. 5~'2__: .·· ... ·;·· .. 'the guarantor will be. -~-ntitl~c;l fo recover he lia? ,• : ... · :-: :: - :,··.· ·.: ,.-'-", ,· ... .' '. ·; : .. . . ._.._. . · .. . 8c\id from. .\~.e d.e~tor,,~e-rd~e;:s? th~.t uLtih').~tely, it ~ill_\· ..... , .Pl)rp'o~e ·. . ·'. oe_the vAndef:,who w1)\ ~~ m~d13_tq Q~~r,t_ht:P~~rl?ent . · . -. It is an e?(pressio11 public policy;toj>rolect.buyers of .. t~e: ba_1_~nc~ .. -~f __ ·t_q~·.pn~e- .(Grµz::. v.._ .·f,/Jpu:ias ·. ot-.reai ~~tate _orHristallr:nent~·,aga.inst onerous an.9

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. The·_;;orci ·i~tio~" i~-refe~ri:~g \~ ~~yJb~ic.ial ;r .e~-tr~- ·' j_L,Jdiqial prci~e~_9i~g-b.y_ virtue_ o(~hY~ti tli~ ye11d?r ina)'. _ lawfully satisfied.balar:1c~.of th~ putchase·price from · 'tne hi:>. ;.privy (Crv/, \;_ ..filipinas. .. . ~ pyr.~ha~~e(~qr . .. Inv.$StfT!~ht_&.Finance Cotp.'; GR._No .. L-?,1772, May

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-~~::~~~~i~~~ or.cQritra;ts_inyol~ing sale :Or'fina~·~;~~ of .-.r.~al _e·state pn · in~tallment · payments i_ncluding , .. residential ·'tdnddmihium.:ap,artrnents·· (R.A'. .·6552; · · Sec. 3). ·

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Riqhts of the Buyer: . 1 .. If the buyer has paid at least twotz) "years of installments: a. The buyer must pay, without additional . interest, the unpaid installments due. within · · ttie total grace period earned byhirn, Th'ei-e shall be one (1)' month "grace ·period fo_r . ~very one (1) year ·of installment payments made (R.A. 6552, S~c. Bf .

It does· Not apply to: . . 1 .. Sale \:overing.industrial lots; 2. Sale covering commercial buildings (and · . commercial lots by. implication); . . 3. -Sale'to tenants unde;::.agrarian reform laws: or 4. Sale 'of 'lands payable in straight terms· (R.A.

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It· is.clear that the buyer's protection under R -.A. No. . 6.5_52 only applies to contracts of. sale" of real estate on installment . payments, including ·.reside_ntial condominium apartments, but excluding industrial. lots, commercial- buildings and sales 'to tenants. A purchase ·by a company involved ."in the real ~St§Jle · business of a six-hectare, - lot · can hardly : be considered as 'residential (Royal. Plains .View v.

Note: This right .shall .be exercis~.d by the buyer only once every-"fiv'e (5) years.'of the life of the contract and. its :exten_sion·s (R.A.

6q52, Sec. 3). ·

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Actual cancellation can only takeplace after · 'tbirty (30) days from receipt ~y the_ buyer of . • • -, • , ••• • • · • r • • , • • the notice of cancellation" or· demand for · The enumeration ofthe transactions not covered b:t. rescission by n.otaria!. act. an? upon fulf -the Maceda Law is N.OT exclusive, since,.:oflier P,ay1J1ent ofthecash surrender value to the · transactions over immovables, although1'n'ot wit~in · 1.~\//buyer (R:A. 65~2. Sec_. ·3; Olympia Housing the _en_urrJerated ~xclusio~s _are~to7.{~'\s.~~e~d. . -~ vf )lan.i!_s{atic.·Tra~f?I Corp.,. G.R. · No . . ~xcluded .. An-,-ex_an:,~le ~~ould:.)o/.'1~~}9.le_- ?n .. · _ {4~,/l{nµary-1~,.2003)'. · . : · · installment .of commercial · con8hm1(11u!!1 unit.~"'!" ,;1-,. -~ ~- ._, · . ... · _ , _(.VILLANUEVA;st..ipra_at384)f· ~-i, c. Fance+l~_~of~~mtract. ·.-· .: a. vc!lid ;[lei effective can~ella\i~_n of the 1x Note: . :- $_ec!19n -~ . of !hJ\ ...:. Maceda L~~~ rt~ :~ con_t~aet ~p-~r _ th~- ·MaGeda Law, : the . comprehensive enough _to ''}cl~£1,~~t(oth contraS!._s ,of . ::\ .~, m_a~_datory twrn\reg~,r~_m;nt~ of a r:iotanzed ~al.E? ard .?qntracts ~o s·~I!,. proyrd~~ ~tha_t th~\terms~2J~: r;' ~V. · 2ot1c_e _of~p~llatro~ . and ~efu~~d_-_·of t_~e. 1 the p9yment of the price .~.regllrl".t,eat - least_~ two '-1.'"~ JilJiJ'd , . ~~hsur~ender value mu?t be comph~9 11y1th installme_rits-(Jd. at 3~5). ,_.. · ·. ~ · -~--- · ·., · -'~~::1:.::: ·. ·_(G.aJ1_h~«an Ref_llY _·in.~_.. Anr,~J~~·· G:R._ ·

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~-E:~~;:-~;;~t(?.n?: or· c?:ntracts. inv~lyi_Flg· _th\: ~f:{gf:_ ~~ ote/f..he ~~r _s.h~I{ r~j~nd. to_· the._p~ye[ . Ji~a_ncrng of-real.,est.ate-on:rfustallm~t P.ayi '.~e'f:lls1 · · the eash.surrenoer va!ue of-the·p?yments·on ~-.- inc1u ing ·_resid_entia1 cfondominiu:m -~art.~e@s •. [E. ~irM th(propert/eq~iv_aJefiJ to_fitty·8eccent (50%) : a!Jd . -·. _ · ., : ·. : · . ·. · _ · l . · · · --~~~f_;tl1e to,titl: pi:3yme·nts niaae. After .. five ·(5) ·· 2. . ~~yer .default~ .in · payment o -~t§te.ding~"\5.eaf~df·in·s!allmenls, th~re sn·an be an' ,~_stal_l_~en/if,(R:_A. ,a~ition'al·fiv~ P~:ce'nt.,(5%) ~\'.~ry_y~ar'qut .. no~. to,exce~d.,nrnety- percent (90%) of ,the . Sale by.lns·tallmen.ts··· . ·. tqta) payments maqe:_(R.A. q552; Sec. 3). . . . Its definition is· the s·,:i"me .for' s'ai~ of movabl~s, by_: - . . ·.: : , . ;. .· · . '. . . :, ·, · '· ·_. .. ' .ir:istal!me.nts •. :whic_ti .wriul.9' ir:,_~olye:it-1¢a~t ..~o- .(2)·. ;i6ht ofttie ·b-~yer.~o r~funla~~ru~s insJallments lVIL~A_f-:JUE\(ti."·supra a( 3?iJ. · · , . w.nen he has· paid -at· lea$( two years of . ' : , . ·. , .. -· .. iri.stallments.'.(Manuel &. Son_s;: in:c:, 'it: · N_ote:,Whil,e u. n.de_'r'S.Efo. 3:~doWn_p'ay· rhent is included \I: lb . ··1 ·. ' G' R', 179' __ . -: a uec.o, . · .. nc., ,- · : . '"N 9. . 594·, ··in.· ~ompµtirg .. Die. total __ .. n0iti~er.. ·ir:,~taJlm.eQt•. September 11;-· 2013j. . . · .,, _paym·en.ts· made;, the proper di.visor is the monthly · · ·, · ·· · . ·_instalj~ent: Ori ... the" .. dowri '_"i:>aymenL '(Jestra ., ' _CanceU§l~ioii:.~r-~ co"nfract to s.~ii·n'i~/-be . . ' Dev.eloprJ]f)ht an,cJ.··Managein.(!_flt :;corp._ I( Pacifjc'o, ' . .• dq·ne ·. out.si.de- . of. cow{. : however,' th~ .. _G'.-f?: Nb;·:167~52!"'J~()t/a1 '20~7): . .. . c9ncellati,or:,/~{ th_~ s~il_~r- · m\J~(_br · ·: . . .. .- ·~ccordan~ew.it!i S~c. 3 (ofi:if R.AfNo;:6552 .. Mace.da : Law Cannot . be ·-Availed of. by. the · · ... , Wnere t~e buy~r has p~id !31 least"two yea'rs Deyelciper . · , · , · , , - ·· · . of jnstallments·and·in-case he·defaults in:the . .1he'Maceda Law has no,appl.icaHon to·protect the . ;.. · _·piiyf!)ent ofsuc_c·e'eding 1ns,ui'11M~-nfo:'tie·\s· dev.eloper. ~r'· Ol')R who succeeds .the_. .'develope~ ·. · entitled to 'the ·refund of 'the: cash surrender 1Jaiue _of .!h¢ (Lagan~aon v._ CA, G.R. No_s.. _ _102q2_$,: May .21;.··. payments· 'on. 'the property . 199~}: . . ,\ equivalent to _fifty ..per ··cerif' i:;>ftotal" paYrT)e!')tS mads:··a_rid. affer five years of installn:,ents, an "additional five' cent.

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e.' . The buyer. shalt ·have. the ~lght .. to ·p~ry ·irrl advance any .installment or, the full unpajd" . balance 'of the purchase . price any. }iri},e without interest. and· to have_ such. payment annotated- iri the _certificate of title cove1ing · the property (R.A._ 6552, Sec. 6). . . .

~.

The seller shail ·g_ive the buyer 9 sixty (60) . day grace perfod to be reckoned from the · date the insl9Umerit became due; b., Th~ seller must give the buyer a notice of car.i·cellation/derriand . for . rescis.sion by rioia~ial'. act- if the. buyer faiJs to pay the · .·installments due.aUhe expiration of the said · .. grace.period; and . c. - The seller may actually. cancel- th·e contract . only afterthirty (30) days'from the buyer's : . r_eceipt . " of· · the_· . ~;'aid notice· of .· cancellation/.dema·nd . for . rescission by · --:notarial act. (.Optimum· Dev't Bank.,v .. ·Sps . . _ Jo.veilanos, G.R. No.· 189145, Decembe/04, 2013), ·, ·. · . =.•

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·. ·Note·: Down payments, depos.its or options 6ri ' ... :the contract shall be. included in th~ computation' ', bf the total number of. installmeni ·payments ~ad~ (R:A. 655~, ·se·c.. ·_3). -~~ ·· Remedie·s· of the Buyer . .. In casi of Immovables-:,:. ' .·. - . :Suspension"of- payme'rit.(C/V/L CODE; Art.

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.· .n:}~i~arent ~ervitude, the remedy is . · 2. }'. Buyer ha_s_paid less tlian two mi'year!? Jf r{s:cilsi~J.:i;_.1')9t · ~LJspe_nsion. of payment Installments; ' . ' .. ; . . · .:a: .Thei.seller-shall give,,...~e .buye!{a gract,· , . ·~··. . ~.· . 1 • · •.• _ ... (,GI_V-IL ~~®{fE:.Ar.L15q0): period of not less than.~ixty (.60) daysfrorriv . ~h ~~s~ of/Subdiv.ision · or Condominium · the date the in~tallrrient,.ff.ecam~due: ff::the 8wj~.-(P.D. 95-7,:. The $ubdivision and buyer fails to pay the in~tallm~nts~ue at,tl'ie Cor,,domiriium Buyer's Protective Decree). · . . · '-· expiration· of. the .QTac~ peri.o~cl.JJ.e seller mjY' .. · .. · . can~el. t~~ contract after tl;iirty (30L,days -: = from receipt by the buyer of the .1:1ot1ce ·of. Non-forfeiture.of Payments . · · . cancellation or .the demand for r'5cissiori of...-....-----No!jnstallmerit paymentsmade by ~~e buyer . cor:!tract by. a notarial :~cf,(R_.A. 65~2, Sec, . .· .. ·.'i_n a.subdivision orcondornlntum project for 4). .. , . .. . . . ... : · · ·. · ·.. the lot or.unit hecontractsto.buy' shall be .·. b, ~11ie buyer .shall .have .the_'rjght·to .sell his; · · .. · -'.:.· forfeitedln fa'v9r of the owner- or developer .. rlghfs.or'·assigr1 the sameto another person .' when .the buyer., '(after' due notice' to• .the -~-- or to _reihstate the contract by updating ·the owner .or- developer desis'ts. from further · . account during the grace period and before . payment. due to the-failure otthe owner or·-·.0' -'the actual' cancellation of th8/.con!ract'(B.A. . : , devetope( fo 'develop., ttie 'Sl)bdivision. or'·, . 6552; Sec: 5). · ·-~- cqnd_qminium ·proj~cf . accordiog to. the c: The ·.b\J_ye~ shall ·tiave the ·rigrt to'- pay in . approve.cl plans an.d;.wilhin the· time limit ·for : advance any installment .or the full unpaid ·: complying ·wi.th the s_9 '(P.D. 957, Se.ction ·. bala!)'ce of the · putcha·s_e 'price .'a.ny time· . . ·23). ·_ . ·· .· . · .:· · -·: .. ·:·: · ·.. , · · · . · .. . ~-without int~rest' and tci,have s'u.ch:payment . · .. annotated .in· the- certificate of title ..-cov~ring ·: · c .. R!ght to·-the grace period s.tipulated · _..:ttie-property'(R.A: 6552, Sec. 6).· ..... ~~ . ·/ Whe~- ~ ·g_~ac~ :p:erlod:.is_ provided. the . . . . Not.e: Section·4 offtA. 6552 is.the provision· ·contract ofsale, it sh'ould.be·construed as a "" - · · · _applicable tp· -buyers wlio hcjve, paid less than_· . rigti~: not. an. :oblig'atiqn the. debtor, and •. twc,-(2) years~wprth ·<;:If installments. · , . . . · when uncol'Jqitionally ·.{?9nferred, ·the· grac·e perigd is,effe'c_tive· with.out. further need o( . . . . . . I Fo,r:_buyers 'A(h
·:'

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every ye_ar but not to excee~ ninety'per cent of the tota) payments made. Provid·ed, that the· actual c'ancellation of the ·contract shall take place after thirty days from receipt by the buyer of the-notice of cancellation or the. demand fo·r rescission of the contract by a .notarial act and- upon full :payment of th.ecash surrender v'alue to the buyer. (Associated Marin~. Offic~rs ~nd ·9eam_en's.· · Union of !he ~hi/ippines PTGWO-/TF _v. Decena, G.R. No.·. 178584; October: .8, · 2012).

The buyer shall have the riqht.to sell his rights orassiqnthe same to another person OR to reinstate (he contract by updating the :. account ·du_r'ing the grace period and before· '. '. actual cancellation of the 'contract (R.f\. ·· :· 6552,' Seci 5). . ·

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Reason: Damages are imposed by law to insure fulfillment _ of contract and - not substitute for-it (D.E LEON, supra at 479) ..

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-In the sale. of immovable property, the buyer .. has the rig hf to Pc!Y even 'after the expiration of .the period agreed -upon, as- long as no demand for rescission-ofthe contract has been m~d~ upon him ejther.judic'ially or by a notarial CODE, Art. 1592). .: . act. ( CIVIL . .. '

b.

The . judgment may be uncoriditional, or upon such 't~fms. arid conditions as to damages, payment' of .: the ·price . and otherwise, as' the . court. may deem '·.just (CIVIL CODE, ,1rt. 1598). ":

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This article applies only where-the ~oods to When Republic Act No'. 6552 or the Maceda Law . be· -dei'ivered are specific or ascertained speaks of paying · "at · least .· two years · of (9IVIL CODE, A,t. 1598) . . . installments" in·: order 'for the benefits under its · , Section 3. to become. available: it refers. to.the . buyer's payment .oftwo (2f years' worthof the · . c . .' In case· of breach 'ot seller's warranty, the.:· stipulated fractional, periodic payments due to . buyer · may; at his election, avail' of the · ·thl:l_ seller. When the buyer's payments fall short . · following remedies:.'(RADaR) . .of .the ..-equivalent.iofv lwo '(-2-)''year.s'. worth .of .. , · i". · ·_B"~Go"upment·,_ Accept or, keep the . . ·· -inst~llmen1s·, ._th;~ benefits that th~· buye~ ~~ . -~ .. qoods ai:i,cl se~_ up -~he seller's_ ore,ach to · avail of are limited to :tho~e .under_ Section 4. reduce or exlingu~sh _th~ pne:e :(CIVIL. 1............. ·Should . the· buyer stlll fail. .to .mak~yments . · J: \//" ~ C~DE, Art 15~Q, par.• 1): · · . . . : .. within· Section 4's grac~ .' perio_d,:~t~~lle~y . ~' I , , ' · . _.,: . : ..· , .. cancel the. contract.' Any- suc~~c~ll~t1on .. 1? . .. . .: ~Theor;y of Recouprnent. _ . · . . ·. ir-ieff~ctup.1,:however:,'·\Jnl~s~·f~ rr~,r,!lfr~gh a . ·· ~,,{6is[I er·~_dam~ges are cut d~w~ toan 5:,: valid notarial .act (O!Jre _v. ~'fl"'e~/ Land, .ln_fti -;[ "o/! .. .: : a~G~t wht<::h will compensc!t~ him for -, . -~:R.. No_. 208:85,_ ~ept~'J _er6\2017).l··:. lt !J_·~'v:..~ . thidehti~ed · :on.ly as · : _· .' · , ,·action ·--_for ~ damages , for·, breach cif. · · ·· be_longing · ~ to ·, .· ·resp~ndynt:s ... Collectiqn··,. . . warranty' (<:;NIL CODE, Aif._·,15Q9,. par... . . 'Oepartrr:ientf,-A . ju rat·-. i.s ··a·. distinGl-· nQtarial act, · · . · : · . · 1,...(2)); '· , · ... ' . : _..-." :· · . · ·.. ·.,r '. · · · whlch.<mal<es ·.·no4·;_averment _... ·conc·e~ning the . : :·: ;· ·: ·. ·;. · · . . · ·' ·. -~,· · , .' ,, -.:- - · · authority of a re_pre:sentative (Obre ·v~· FJ«fJve_st · iii .. Actiqn·or co.u"nt1r~la_im:f~r·;oa~ages . ·Land,. (nc., <:$-R· No. 2081.85,,. -Septembe,r. 9; :1 -: 'Refuse to :a~cep( t~e '· goo~§· .'.and. .. 2017)'..,,:. ·: '.::<'_:-:, ;.: . · ..•• : •. . _:. .. . • ·-.·: rjl'aif)\a)n':an action:.for,:dainag~s for-·, .· · b·~eai,r,i of warranty (C/Vlb. eopE, Art. 2. )n ca·se. bf:Movabl'esi-<\:-:, -· i. 1599 ... ·· 3··i · ·· . . . i:.;· . .. _ , p~r: 'l; or ·. , ,.- .... ', ·. ·a.·. ·111 ··case of failure ·.o(·seiler, ·to .deliverr- the ·· · . ... .. · : . ',.bLiy~(·.· mai: s;~ek.:~:"a~tlph .:.'fo~;(spJ~1fic, .-.:: \-.. ':Note: Aqcepfa,rice1wil_h Rriowl~dgE?,.if the P..~rf0i-m·an~,~·. ~i~ho1:1t .-giyin~f th9~·sell9r~ fne bre_ach: of.'· ~a~rai:it-y •. dqeif'':'pridude (!Pt[bn'_ of (etaining·· the g_oq9,~ on paym_13nt of ' r.escission bur it does not neces~arily: · ..-,·damages·, ( Cf.VIL' _precl~d,e' a right _.:!6 recowpment ·o"r . ': . . ..CODE,· Art. .. :1598)\ . .damages',(DE LEON,. supra ·a'f)483).:' · , . . r ...... . . ... ,

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Rescission c--:Rescirid the cohtracf and refuse tcY:re·ceive the goods; or if qoods have already been . received, return: . them or offer to return them and recover what . was' paid. or any . part of it concurrently with return or immedlatelyafter it (CJ_VIL·CODE, Art. 1599, par. 4).

·goods for -any portion of the price already-paid which· such lierrrnay be . · enforced.as if he were an .uhpaid ·'seller (CIVILCODE,. Art. 1599, par 4 (5)). · .

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Suspensibh of payments. in antlclpatlon 10f· breach: · . , . These ar~ . alternatjve. rem~~ies,. · Applicable jri the fq,llowing: casrs: : . · ·· \VilhO!,Jt prejudice; _·to para_grap~ · ·2. of i. .where )he vendee is .disturbed in Article 1191 ofthif Civil Code (a·'party .. ,· .possession or' ownership of 'the _thing may seek rescissJon after ch_oosinQ bought; or .. · . ·· · . spec.ific perform!3nce_ if the- :,latter is. . ,·· . ·ii.· =, Vendee has reasonable-qround to fear , fil]possibl~) (CIVIL copE,. Art ... '1599, . . that.his. possession o~ ownership would . par: 4 '(2)). ·. ,. · _· . be, disturbed (by. a ·vipd/at.ory action ,or . Note:: Article 1599 applies: both to · , ·s · a: foreclosure· of a mortqaqe): (CIVIL · . implfed .. warranties ·and .to 'express ·CODE, 159.0j. , ''warlantie:>, whether of quality· 6( or· _of , . -· ,· title, (DE LEON,· supra et 481 ). . . NQT applicable _In _t_h~· fol_lowi~_g C?,S~S: ·:: · , · C. · If the vendor' gives security for the return · _Artic!e' .15;9 :· does riot apply .if . th~ · 'of th~ 'pric~ (CI.Vl[::'GQQE-,Art: 1590);' .. contract 6( 'sale \vas not . perfefte,d . il: - If.·. ii has.' '15een ; stipulated · ; that . (lrsular Lite Company .Ltq. v. - Yo1}_hg, . . . nqtw\thstandin_g-·suc.h continqency, ,the · .. G.R. No.140964, January 16, 2002). vendee is.oound to make the payment · · ;· ·· -. - ·· --~-rcs;1v1L:.cooE,. ilrt.,_1;590}; .,· . · ·. ·. Wheh:, Resc_issjor,,·: by BuyEfr Not ii/:1.ff\ 'the. .vsndor : 'has··. caused: the ; .Allowed:.· ,. . . . . ,._ ,_: 9i~lurfc;WGe·or,d3.ngeir t_?·cease ·(~a-_reng .. i)'- lfl~~- b1.i'y~r-·ac~~p~d .the goods .· · · · JJ.CA,.supca);· ' · . · - . ·: .·· · · .. · knolf;,i~g. __ tne·: ....'?j..ea_cl:l_·or~yvarrantY... · · 'iv .. t_t;t\. __9is!u.rba.r)C,_e- is · g: r:net.e ,,a~t -~~ . · . · .\'>'.ith.out prqtest; .. . :Ji. · . · . ~ · ·. · · ;. _ tr~~p<:3ss .(9WIL CODI;, Art... 159.0); .or: · -.-- 2:) l_f . v. lf!~e~ ~a·s_.f~Jly pai,9 the pr_i~~ (OE 0he.fail~:to·.~~tjf~.t-~.e-·~gller;w(!hin,.a :. r~~s?nabl~- t~me.. ofJu~ elect1.qr~~ . · ~ON, supra. a.t 4_57). . . . . rescind; or · , · •·•

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,Rights ·and Obligations 6f .Bl.Iyer in'. -'C~se .ofResdssioh:: . : .' . -~· 1-.) :s-uye(sh~ll-ce·ase to. b~ liable for.tbe . . price: his 6'nly obligation being. to _ · refurri_the go9~s .(CIVJL CODE, Art. . 15~9., -pa'r. (4)'(4)); .' .- . . . 2) 'If he _has p~id- the· p·ri·ce or _any part· . ;ther~of,' he;fnay:red:>Verft'.from fhe , ..... · .. · - ~eiie_r (CfVtL, A[t'.'·1 [?99, par. (4) (4)); · . 3~) ~~ _ha~ t~~ righ! to h9!9 the'goods as. bailee-' for. th:e · seller-'shouJd the latter'refus~ .to accept the offer of· . .. . the buye~ to return the gobds '(CIVii . ·.. CODE!~,':'.. !599, par. 4 (5)); and .

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. · -,. ·.-: . . . . . . . '•, : .. ·. ·. ,· _ $ale by Descrfptfon· ·· .:: ·_ '· ' . , - . .. . . p'lirc'li~ser'has n.ofseeri the. article sbld 'and 'relies on , · the de'scripti9n. given: t9. him b/the, vendor, or has · · · · see'r1:·t_he :gp9ds ·_blit th~: want. bf';..identity. is not · - . app~renr on ·inspection (DE LEON, ,supra. at _135). . ··, · .. · · ·. '· · · -~ale.by Sanipl_e_· ,-' . · .. · ' :_· .. ,- ·· ·. ·,_ :·_·:·.::, .· . · IJ-must appearth'at the- parti'es.cohtra.cted solely.with:· reference'tothe ~~rriple-;witli-_the un'qerstanaing that _the bulk was' like· it (DE LEON, .sup~a ~t-135). ·: · · .' Sa.le-by Description·a~d by.:sa·;ple· Tlje . goods must . · satisfy . all· ··the , warranties. . appr
2019.SAN f;!EDA LAW CENTRALIZED BAR OPERATIONS

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· SALE:S AN-D· LEASE . SAN BED/\ LAW CENTRALIZED BAR OPl;RATIONS - MEMORY AID 2019

Buyer's Right to Speclfic-Perforrnance case the seller should. violate his obligation to make delivery, 'the buyer as: a rnatterof right can demand· specific. performance. upon application to the court (c;IVIL CODE, Art. 1598).. . .

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RiSK O.F .Loss AND D.ETERIORATIC)ll{AND ITS' . : . EFF:E'CTS. .•.

The seller cannot retain the goods· -on 'payment of damage_s (CIVIL CODE,' Art. 1598). .

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Reason: Payment.of damages is. hot a substitute for .. specific pertormance.jt is.imposed by law to insure fulfillment 'of the contract (PE LEON, supra at 479).

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specific · .· the ·. qoods/speciflc pe_rfpr.mari9_e,·in cas.e: . · ... ,per:fprmc,!6~ . ...( CJVIL specific .9r _a_sq:?'rt9ined . ·,. CQDE;,Ar.f. 15f)5)' . , goods . { CIVIL.- CObE; , . 2. · Technical Rescission 1598) . ·. . . · . ( CIVIL CODE, Art. 2. In- case of breach of .· '.'' 159'7)'-: . . . - . warranty ·~f. seller) CIVIL . _3. Rescission based on 90DE, Art:_ 15!J,9): : .. .
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; · · -_.c;;~neral·R~l~:· vV~<;>-,o.ear~}h~ .risl< of l?ss is· .. . . . ·. govwnt;!d by the stipulation~. in .t~e contract. .

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.~ ·. FirsJ :P;.~it.,~r~ditori. or buyer · ~ears,th·e: risk of loss (according to Paras, . ~itug, Padilla, andD~ Leon). ~· : . ..

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. J~stific?H.on; ·Art. 1504 'a'f the: Civil Cede, ' -which e.m6odiesJe_$· 'perlt domino, "only covers goods·. . . . . . . . . ·. . . ~ : ·• . .Goods,. ~~:define·d in Art. ·1535 par. 1. (1) of . ·,the C_ivil Code, 'includes : all 'chattels

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obliqation to pay; shall subsist (PINEDA, Sales, 'supte at 10) ..

personal· but not ·things in action -or- money df legal tender in the· Philippines: The term includes grclwirig fruits or crops. . .

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The obligation pay.on the part cit the buyer _ is not extinguished (as tie is not.the obliqor): (VJLLANUE_VA, euprest 319). . •; ··... .

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Under the . Roman' Law, the reciprocal. ·abHgations of the parties are considered · ... distinct-stipulatlons. · · ·

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· The thirdparaqraph of Article 1480 purports to-provide.different rule from-the first two (2), · paraqraphsof Article 1480. · Under the. third paragraph, should fungible things be sold for a pricefixed according to weight, riumber, or measure, the risk shall not be imputed to the · vendee (buyer)· until· they have weighed, __ . countedor measured, . ~ . ~ .and . delivered.· ' \

: Under the same -1aw, "the risk of. the thing .sold passes to -the: ouye'r. · even thouqh he. has not received-the thing.-For the seller is· · . nor" 'liable '. for. any;thihg which happens . without hisfraud or ~egligence' ~ x x:" . ·

Note: ·The implication is that with respect to . items coveted · by. the, · first two · (2). 'paragr~pt,s. tt:ie risk of los's is with th_e buyer even prior to ·tne.'delivery (DE LEON, supr.a ·

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. . ·Second-·Vi~w: Res peril domino o( seller· 'bears. the rjsk of '1o~s (a_ccor.ding to Tolentino, Jurado, Baviera, and Vi!TanuevaF .

.The .Sp.anish Civil Code follows Roman law . .. by ir,posing upon the veridee the obligation' · to pay the price· of the thir:ig sold that was· . lost as.' a . re~ul( of .fortuitous: event. LEGN, ~upra a_t 125): _. ·~ ·,, . _· ·. .

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. Artic!El.·148_o· of the .Civil .. Code. is. bas,d· 09 · Article 1452 bf the Spanish Civil Code; there. . is reasonable ba.sis'for the p(opositiori_·_tti~t Article 1480 fotlows: 'the- 1:,ri&ip.le ... cif .. perfe¢tiort(e.g: thefisk°dflosj/ftraQJ_rnittid_.-.; . to-the buyer frori] tfl'e~m~· ent tfJe fOritract is :perfected) (ltf-at'126). · , ·. -,:

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J~stification:· Dr. Tolentino opines that i~ reciprocal oblig_ations: the extf ngu°ishment of : thif ~~lig_ati6n d~e to__ l~S$ of the t~in~ a~~~ts .· . both debtor and credltor; the entire [urldical , .·_·re_[§ti~'li~ ext_inguished.yn_d,er. this view, the . · rull- o~~oss ·under. Article '1189 would- be . .,djferf_nl rotr,.the rule on.deteri?ration:-:; the: . · loss woultl b~ for-.!he_ account of the seller, · '-Kitiile the deterio'ratidn 'would be for ·the',:· account tffe'buyer Oris· view is, attirrned by·

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Thi~.theo~y is a_n excepti~fl !0sthe ~u~ ofJr~s - .Bavie:a). · · · . : '.· . ' . · · · · .. · · ; · , ·. · ··'.t,rticl~ _148ci;. par~gr~ph 3,: is no~ ·an . · A[lic.le 1164 gives. the. creditor (buyer}' the . . . ·exception b't:1t ··is afr. · ex'pression 'of 'the . . . .'·. 'rig~t to_ the:'f~ui_ts:,.~fth:~_ti[lg''f~orTJdhe timeJrie-!'. --.""'.-....-.....-.-. -g~ er~r'rule(that the_ ris~ )s not'i~puted to. .· . obltgat100 t_o._dellver a.r.i.ses (or. from !he time . . th.e . ·.vendee .until .· after delivery (A.M - · . pejf~cticin 9f the ~?ritract)' ' .. _- ·"T,olentino;op, __c{t, PP: 23,27) ..•. ·.. :.·.- .. _· .· ·

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·,F~r_si:Janrto .Article ) 537 ot.the Civ.ii Code, all the.fnnts-shall-pertain to 'the vendee from ::_ the day on· which the 'contract Was· perfected. .. ·. · .··Rationale: If the buyer. is entitle~ to the fr~its· . _· of th"e thing from th'e ino~ent qf pe'rfection .. ·· t~e e:o~_tract, i!.is logical that the buyer. bears · the· r'isk ·of loss .'from the .mome·nt of the·· .. - ·. perfection· (Id.). 2., . • · · ·

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. Under-Article·.-1.1,65, the- implication is-that .if 't~r sell~r was'· n9t.)i,t fault· the··'buyer i;_ · respon_s1b1e··. for the. 'forfuitcilis ·event. even .. pr[or to the delivery. :- · ·.'. - . . ·_}.: Pursuant to,Arti~le 1262 of the' Civil Code if . the thing is_1o·st cir destroy_ed without the fa~lt , · of the: debtor (or.seller in case ·sale), ·the .. obligatiqi1 to deli~er is ex!inguished but the

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. Purth~s~· and sa1~··i·s contract;~ . .where' : .the ca~se, ~ith . respect' to .. the . verid·e~. is the ihi.ng. If. he cannot have ihe . _ . ~thing, it· is juridically illogicaf ,and _unjust tci ·.- . . rnak~ h.im p~y the pri~e-.(ld:). ._ __ · · · ·. · ":": . Acc~rding 'to ··J11stice 'Jurado, .this .vie.;.,; is .mcire j_us_t ah(:! :.~qui!able a_nd . more in COl']f9rm1ty y,rith -the _prindp)_e·· of :res perit <;lomino., ""' ' . .

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to Villanueva, this· vi~w would make· 'Articles· ·-14'80 and .·1538 . c.onsis_tent with th:e .pro·v-isi~ns of Article 1504 (VILLANVEVA, s_up(a af 323[ . . . . . : . . . ;·

. ·Acco~ding .t~ :Pineda:. . i. Ownership is · tra·nsferred - ' - delivery;

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... ·, 2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS

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Cause~... o.f · E;xting.uishment, in General: ~(PaloC.63-PARe-FuN)· ', . 1. Pay!J)ent or performan~e of obligation; 2. Loss of t~e 'thing· due; 3. Concfonation or remission of debt; 4. ,Confusion ~r merger· of rights; . . 5. Compensation; 6. frescrip'tion; , 7. Annulment; ·s. Rescission; - . , . '9. Fulfillmen_tof.a r~sol.utorycondition;·o.r ,·. 10._ Hovation, (CIVIL GODE, Art. 12:n)·

Arti1480,,par. 3, is· an· expression of the general rule .that ttie. risk. is not impµted: · to'the vendee until after deliver.y; and iii. The. cont~act is reciprocal: If. the vendee · .. cqnn6t have th~ thing, ·it is illo gicai' and· unjust.. to .make·. hirn.,.p~y th';! price.

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.(PINEDA, Sale.s,.supra at 69).

Deterioration . . I :" . lm'pqi{meri is borne: by the buyer if the thing .. deteriqrat~s -·witho\,Jt. th~. fault- of- the. seller

( CIYIL CODE, Art, 1189,. p~r .. 3)

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it 'deteriorates throuqh the- fau.it of the debtor. the creditor. may. choose between the- rescission'. of the. :ob.lig"a'tion and its fulfillmeht, with indernnity for, darnaqes in either-case (CIVILCODE; Art. 1'189, par. 1)..

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A!t~r p;1'i~~~ . . Res peril domino applies.

Conventi~~al Reclemption · _. ·, . . The rig'ht. which the vendor. reserves to himself, to reacquire the property sold, provided he· returns _to 'the-vendee: (P.EQNl:l) . 1. f:riQe of the.sale; ·

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, , · . ~:·r L~ . . . 9· . Where:deHvery ha?:-?e~ ~-~ae ejt ..er'_~the 3. ··-Ariy-~ther leg~at~ payments-made. therefore; b~yer_ or.· t~ the- ba~e_~for1 the- ~uyer;_· 111 , . : . · -O'A'._n~_rs.hrp rn the ...gooas-:,~1_~- b~~nfet~,n~c17 !: .· t:47l;,~9t~:~Nur:nl::>f~S: 1-fn~ _2 ~eed no~ b~. i:~rd at. the. : . _by:tn§ seller .!~te,rel~ t~~C.~~~- petil':r1·an~·-,~ . ~ viet1me of ~l1e•exejc1se;o~.t~.e T.rght,_;:;.rn~e. (hey ·-· . , . , .:., .. b.Y.,.1h..e.:..buy_~_r_of..b_1s_obhQat_1on~cler.. the_ ··-.__0,,_ .• are ~~w~1,am~~n.ts.,.The:t,;ll')ay b~ p91d.later. . .,;,. . . . .. · . ·· ,c0_nt_rap:t_ (~/VI~: COID,~; r.Af\19!iip'fff:r);'flj : _ j,~1 -ye~2me ,1s ~i:fef of . n~ces~$ry_ "~tid·_ useful .. , . and . . . . .. \ ex~??es_ (JJ~P=ON?supraat. 5,39J:... · . . ... ,· . . . b. ; IJYher~ _actual. dehy~.~ has_ ifen: i:f~laY,ed~i "" / . :· ·. . .- thro~gh the..f.a~.l~·of e_,t~er tbe.q~yer of~ell~WJ~essa_ry e_xpenses made- O(l_. th~. thi~g ·sold; . ·· ,··. . .... > .. th~~good~ .~re atJ~e rr~~·.tb~ P.~Q_Y ir<J~ut"~[EN~ !?) > :. · (G_/V!b-, C_.DDE, 15~4,_pX.2~7'~.!J.s.eJL1l~1;,,e2.~es n:iad~ on th_e th(ng ~q!a (C/1(/L ...

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~?\ ?.Q~~~, ~~!!.~~~(s:~e~ th,e., . otiJtgati<:>rs_:to.~h1ch t_~~Y·',P,Jii_?_lr! ..!9,'~·.a .c<2~!:?~t of .. · _sa.l.!3, ~u1.not,ne.c.e9.sanly..th!;!, cpntr9ct,1tself.s1nc,e the . .relati?l)Sh)P o~tw~en'buy~~·an'c:i' ~~lier rern-~ins-'aft~r. ._th~ pe'rfo'r~ance or payment,. th'it~6ntinuirig ~.nforceab1hty~ oL the 1war'ranties of the I seller. (V~LLANUf=V,A,_ supr.,a a_t 516).' :. ::, · · ·:. '

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P.~rs~.n. -entitled·. ~o_, ex~r~ise· is. ne.¢.es~arily·. the··. ·, ~- .Qwn'er. {Quims.op; ,v.· PNB,.·GR. -No.· L-24920 - fl/.9:V~mber.}f {97());. . . . · •. :·.. . , , ,· ' ~- · · Beal:rigj,_t (CIVIL GQQE, Art:._1608); . 7. B~solutory conqiti.°n (Cl\(_IL CODE, Ail. 1_1}9);

Period of Redemption' : . When· No Period is AqreedUpon· It shall .last forfour. (4) years from' the· date' of the, , contract (ld .. at 519;_ CIVIL CODE, Art: 1606)., .·

Gives' Beciprocal obligation (CIVIL ·CODE, Art. .' '1616J; arid, " 9, Reserved at· the Moment of the perfection of contract (Diamante v. CA; G.R No: ,L-.51824, February 7, .1992), , , .. 8,

ProperReservation -The riqht.to redeem . through a stipulation : ·;, -, safe (Villarica' 1.1. ·cA, :29;,1968);., . .

of Right to Repurchase . must tie. reserved by the seller to that .effect.tri the contract qf GJJ, No.. L-1919,6, November ~ ,

· , For a sale to be. 'one a' ,retro, , the. right mus{ be : reserved in the same sale contract (Torres ·v, CA,,., G.R~ No. 134559, December 9,, 1999). ' . , .• ,: . .. ... ,, ,. . . . . ·.. . ; . · The essence of a· pact6 'ae retro sa:1~ 'is. iha! tiJle ·a'i1d . · . ' ?~n$rship ~fttie·ptoperty so'fq is ir:1ime1ta~e)y . . m. the vendee ·a. retro; subject to tlie restrictive . condition of repurchase by 'the vendor fl reiro w)ibin 1 th¢.)e~err1ptior:i _ _perio.d (/vljs'terio. · V. · Cebu . s_taJe ., Colleqe ·o{"Science -and Technology,
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However; in . _Misterfo v. Oebu Stat~ College of Science and Tectmotoqy, the four (4) year period was' held- .to "begin from the happening' of the stipulated condition contained in· the' covering 'deed of·sale'r~ther tharrfrorn the date of the contract, and even when- the' e,rltite CO~E;-red' period' from the pate. ·of 'the· conttact wouid exceed ten years. Since' the' -vendor.rnay still, exercise the' ·'right to "r_epurchase, · within· thirty days· from the time. final, judgment· was · rendered in· a" civil· action on the basis that the contract was. 'true s~'le with right to .repurchase . . (G:R.' No> 152·1_99, J_LJne 23,'2005). :·

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Wh,en Period is Agreed Upon·. . ..The perfo'd··c_a.nnot- ~xc1:;ed, ten (_10) years/('CIV:fL . CODE;'i\rt::_1606) .. If, it exceetls ·ten (10) years, the ·agreement _is· valiq only_ for the first ten {10) years :{,4nchuelc;, 'Ii, ,!AC; G_.R. ,No; 7j39_1; ,January 29,· 1987). · _. . , . : ... .' ' ·., . ,, When.a-perioa 'O(redemption .is\igre~d upon.. by' the , parties in- a !ale- a retio, aith,ough Jhe peripd agr~ed upon m9y·b"e u~dear..or void, 'it is the,.10-year·peri'od , -and' n6(_tne, OU~ (4) year p'eriod th~t,·~hall.:apply, (!,ayaoj D~l~(·G.~. N_~· ~-,2_1_1~0, Aprit30,_':.965). · : Wh'ffftfie'l;>lrioci :A:greed'l)po,ri is .'-'l.ndefinite", -· . ' .·· °(e.g. v,endoLa retro''sh'all r~purchase "at.any limf: ·-, has money."·or, vendor wili redeem· "within' the month or..-tyiar.ch: 'of any.,~e§!r;'?, the time .of.re~~miptiori ·is witfiin- ten (10) years from·' execution of cont(act (PINE9A, Sales, SUp(a at 38) .. ' . · . ,..

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.· ....... . ... . . . · Date·froni:which Perio,d Reckoned.·. . .. ,··- : At :the!aate _o'{ tiie· c:'ontr~et. tram- whicn,the· contract ' ' .. produces. its effe~ts {e'.g.>froin"the .fulfillment of ·the_ suspensive c9.hdiilon) iDE;"(EON, · supra at 526). ·, . ~··.-· >·~ .. : ._·!' ..\":>--~··.,.:;._ ... ~:- .:. ', .··:~!· •!(:··: . Note: 'The rigliUo redeem. t:iecomes· functus ·officio. oii-'tiie' clatE; 'of its j:)xpiry, arid iis'.'exerc1se. after th'e · ·period- is not reaJly' ol:)e, of redemption but a right of . :r,fipurcha·se Od.:at·489f~,.- .: .. • .. ~· ; ."/. -.:...~. . ..•. ·... . . . . ·.... . '

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There-must · t>e. a· tender ·tviay , be : .'e'xe~cis~·d· -by of payment of the amount . notice of its. exercise to . · required t:>y·1aw.,·induding the offeror. · .. . · · ·· · -conslqnrrrent. , thereof · )(

tender · . oh .. payment .. · cannotv-, .be- · .. 'made ..... ·. effectlvely or:, the buyer..

Pe~deric'y'ot"Action. JolJs Redempti<;>r:i.Per.iod. :: . . fii~·i:>enoencyof an:actipn broughtJn good.faith and' C:eilating to· the·, validi,ty of_·_a Sc!le. a r.~tro, .t9lls the ,. runn_ing. of ·ttie period Qf .redem'p\ion' (Ong ·ChUf! v.':. C~rr, G:Ff. f':lo. L-?9512, January 17, 1929). · .'-.:

. ,:Non-~ayment of priee.does:not.at7e'2i the:rdn~ing"ot the redemption· period (Catangcatang v.- Legayada; G.,R. No: L-2629_5; July 14; 1978)> ",: · · :,: . ,.. ; .

(OE LEQN, .supr.a,at 488) ..

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Possess'ion of the Subject Matter During Period of Re'demption · . :. . Buyer has a. right to the irhmedia~e possession of the· property sold, ur,less o.therwise agreed upon, .This i$ ·subject 9nly to the resolutory condition of repurchas~ by the seller a retro within the stipulate.d period (Solid Homes, Inc. y. CA, GR.:No. 117501, JulyB, 19:97j.

the whole property, if:the latter·wishes to rriake use of the right of redemption (~/VIL CODE, Art. 1.611).

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Illustration: A, -8 and ·C :are co-owners of an · undivided parcel ofland. A sold his. undividecf portion to D with right of. repurc.hase. As a resuJt of a partition, D wt:io is·. how .one .of the co-ciymers, acquired the whole land after paying the portions belonging 'to Band C;lf A would like to repurchase the. portion .sold by him., D .rnay compel him to· r~qeem· the entire parcel of land so that. the property wil.l not revert to a state of co-ownership (DE Ll;=ON, supra at 534-535). . - · ·

Exercise of Redemption ·'-. · Tender of, payment is sufficient .to ... compel redemption but is not in itself.a payment that relieves the vendor from his liability to pay the redemption · . price (Mclaughlin v, CA, G.R. No. L-57552, 'Octcbet: . . 19, 1986). · . . ,. , Redemption- in Joint Sale by Co-Owners I Co; The law requires that the offer must be a bona fide Heirs of Undivided Immovable . . . · . . . one . and accompanied · by . an .actual .andv.lf several persons, jointly and in the .same contract, simultaneous tender ofpayment or.consiqnation' of shouldsell a11 undivLde~ immpvable witli a right of · the full amount aqreed upon fo(. rep,urch;~~gur~hase,,non~. o_f.t~~-n:1.rnay exercise this right.for (Catangtang v, Legayada, G.R. No. l-2_6295t"July mo,~th..__an-h1s respe_ctive, share.The .sarne rule shall 14,-1978). .· - -. ----;,;,,:- · ~ _ ..1ap,.p.l~j~thj; pe~son who sold ari imm9_vabl~.i:llon,e has ·. .. ·. ' · . _ ·. · /··() [~ left1several hefrs (CIVIL COD,E, Art. 1.612). · . It is enough for· thevenoor: a· reJro:i-to t~~er the. .· .: ~ . · ", -~ . · repurchase 'price at the- time of itd~ptio~The'"" ,"~ ·:·'Fhe buyer: m~ demanq of._alrthe ven.dms_
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. • .. ·t· . .: [ ~d. ''--:1. . . ·. . . t. . I . ,· C· onsiqna -~~~ . . . : . ~ . : , "::::;. --::.:.··. o_ «;::,_:J•,v~)J.re lemmg---GO-?~ner .. -G~nno; .- r:c aim _ G~neral -~u.le:: It 1s nqt a legal'fe!=lu1s1,te.~a~{n or~ · r~excl~_.s1~e... i)gh\ t0Jit~~Ji!rop_e~y}>wn~.d-1_n ·comi:n~n. . ~0-1')1ake- CC?nsignaH_on or judi~ial/dJpbs1t oQ'lie,~,(i~~~ .e's~gi_{~ofi: of}r?per,t,/ fs not a _!}lea~?.pf aGqU_irin:g 1flbe. offer: or ten9er (sJe.fus~fl. He is~ot:afiebl'~r.- · . ··:oSv}.,4sJJP-ltffopera~esf cJS ~a'mere, no!!c.e_:0f:e.x~~,ting· H(:l ~as-a~nght, not q9 ·obliga.t1ons~ to-r~pu chase rfi?_~l'jatisjrthere isfone'- (A'qijl_ev. CA, G.R:,No. LLEON, supra _at54,3). . , .... -: .'. ,' ' Scr:r-N~~ct~~·j;l1uaiy·?9ft988),-.· · ~·· .. ~ _ : ·. : .. <. · ..

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Exception: '. ' · .. · · :._ .. · .. · . R-~~emjtionj!1 Sepa~~7e'. Sales .by c.o~o~ne~s ·o/ 1. The · _ve~de_e ~a-.,,retro .. refu~~s. ·to_. :accn.e.. of the co~own~rs. of _an u~di'd?_ed · L~1-7-734; ·Septe.mber_ ?ft., f 962); or: . .. -. -:.. :' .. . 1mn:iova1?)e_ w.h.~:·mcJy ha'{~ so!d hi.s s_h~_re:seP.aratel5';' 2. ·'{'[hen a ju~icial action ):l9s a_lr~ady'be~h:filed to . · m9y iridependently ·exerqise· the riglit,:of:repu'rchase; · . · ~nfprqe <;om'pliarice_w.it~ \tie cont~act of sale with . as.:.regar9~_.his o_w~"~h~re_. and· th~ buyer cannot-. · ·:· n~ht ~r·re~ur.chase (R.iver.o v. Rivero, ·G.R . .No.· ·cohlp~I hi~ to .reqeem th.e -w~ol~- property· (CIVIL . L~578;_Ap_r,l30, 19..4.8) .. , ... · ~ CODE, Art:Jq14).-. · '· .. . . . . .. . . ~~:--~·. :· :. . ... . Consignati.on is irnperative .. when the ·:.tender of Re.isqm i.!.wquld ~e. ~njusfia< requife:ihe :co-owh·ers_: . payment cannot be' valioly' made -.becaus_a the buyer t6 coin'e . f6 an·_ agreement with.· regard _)q'ftlie' cannpt b.e l6cate9,. and failing,_.to. do, sci .within·. the . repurchase ·o(the{ thing sold; _and: c':lrtpinly, ity)o_uld. rede1J1pti'on .' peri.9_d,_ th_e rig.ht of .. rederr:iptfon ·.s~·a11 · be W(?r$Eft~ deprive .th·ern of their right in'· case 'thE:l-Y f~il 'disagree:· : .: . ' • . . . . · · lapse (Catang_tang· v. Legayada, --G.f( No'. L-26.295, July.14,1978).:-,-·:,. · ·. -"-.· :._ · ... _: :. __ :_ :· f~_ e ,,ery purpo·s~.::or the lcJw · i_s·,._to·-pr~xent ·u11jus_t . · .... ~ .. . .. . enrichrrie.nt (DELEON;· $·up'ra_ a_t-5J8).: . ·: · · · · In ca'se bf.Multi~Parties . Rederripti2n. in. · Sale -of .. Part· ··of. Undividea . ·11iu~·trat1~~: X·, Y and :z ~r~;co~~w~~is bf a ·;ar~~I of, . land .. If they should. s'ell the. property to· B ·With the~· . lmmov~b.ie_ . ·. · .. ·. ·, .... .The buye.r of'a pa:rt oJ an undivided immovable who . · · right to repurchase in t~e-Go'ntract,, each-one of'.tlierJl _ acquires tlie ~hole thereof in the case.of Article 498· . may exercise tnat right. <'inly· ·as -rega'rd.s t:iis· own· · : of Jhe'Civil'Code.-may comp~i' the seller to red~em share Or fqr One~third portforj::of . -. . . fhEf ...property. .

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Art. 1607. of the. -Civil Code abolished automatic consolidatio,:i of title in the buyer (a retro) upon . · expiration of,the redemption period by requfring the buyer to institute an action for coniolidation where . the·. vendor _(a, retro) may be heard!(V.Jl.LANUEVA." supra ·at 4[!4): .·· · ·

The sa~e rule applies if C is the 'sole owner of the land and he-soldit with riqht to repurchase to- B· and should he die and leave X, Y and Z as.his heirs. 'Each one. "of. them .can only .exercise the " rig~!. of redemption for the one-third portion he has'lnherited. ••

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But B can demand .that they come to an agreement , upon the repurchase of the whole property by all of ·them or-any.one of them. If theydo not do so, B cannot - be • compelled · to .13sserif to .·
1( X, Y and-Z sold thelr respective shares to- 13 with

Notwithstanding Artide 1607 of· the" Givil "code, the recording of the .consolidation of owni3rship is not· a . condition : sine: qua . hon to· transf1?r _· the. ownership __t (VILLANUEVA, supra at• 485),. -· • . • • .. ·•

Purpose: To-.minimize th.e evils of which the pacto ,-. _de retro sal_e.,h_as_ ca~sed ~in_ th~! hai)p_$ of u_s_urpexs · (Cruz-v. Lei~, _G.R:_No; 1?52.33.;_March 9, 2000).

the right·of repurchase in· separate in_struments and differentdates. each one of them may exercise his righ~. independently of the others and· B cannot compel any . of themto' . . . .redeem - . the ·. whole . property. . ..

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. A jud_icial ';rd~r i~ n~ces~ary .. in ~fder .to d_~termine the true n,atur'e cifthe transaction and·td prevent tne . iriterpositipf) ,. of_. _b.uy~rs_. i11 good .fa_ith , w~ile ~ th~. · de_termjn~tion is beir.i"g'.ro
· Redemption AqalnstHeirs of.Vendee . · If thevendee should le aye several heirs., the action .. for' redemption cannot be brought aqainst each o thernexeept forhis own share, whether the thing'is undivided or-ft has been partitioned among them. But· if the inheritance.has t5een divided and. the thing sold has ~ee~: awarded -t~ o~e _of. heir~~ _·t~:E: .. adiqJ.tor redem_pt,on: r,ay be. inshtuted :again~· hin:!Jor ·ttie whole (CIVIL CODE, Art .. 1615). '/. •

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Grant of ·30-d~y .Redem.pt;on Rig_~-t ·in ,C~~e of · itigation . · .. .· · . · ·. · · : .. When the ~iod of r~demption· h_as: expired, then ip~O)J.jre 1h~1-ight to'.refde_e.rii' ljas be~n:extinguished.' . However;: .7.\€:~ "'.'he"n th.e. right tcf_ ~ed'eeni h~$ . e~pi~~9 .. a~cl Uh.r~ h~s "been a R.feVi?YS ~u_it o~, ,~h~. natw~ _o( t~eJcbAtr~ct,._ th~)'!eller: ~ay. ?t,11. e~erc,se the righ tp repµr~ti~~e _witHi,n thi~y (3"0) cjays fr~m . . the timEpfil)~IJuig~ w_as rendered:in~acivilj'~ti?n . qn .tfie""oas,s. tfiaf tn~confract was _a true sale w,th ' right to rep»rch~se (CJVJCCODE, Ai1.. 1606, p'ar.. 3) .. . _ .- . . ·:~ . . ·.. . . .... . . .... · · .'-~; ..

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In. G~;inan: y. "the 'court held tha ·un9er'Jjje . rules lnArtlcle 1612-of the Civil Code;·slfould~n.e of;,

.. the -.'co~owners -· or -co-heirs- .. succeed c\lo~e 'in .-re"deeiriing:the If prcipirty, ··co~o~·j-·co~ .. . heir shallbe ' considered as ";;{ mere trustee "with . respect t9 :t~e. shares cfhis. CO-OWn(irS or co-heirs: _accordlnqly, no "prescription will" lie -aqainst tti'e rig hf to any co-owner or 'co-heir to. demand from· -the . redem.ptior:ier his respective' -'sh"are' in the. property· . redeemed·,·(De :Gutman-·v. CA, ··G~R:-: No._ L--47378, February" 27, 1.987);"- : . . .

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Note:·. The- purpose , of· Article.. : 161.1-1.6l5_ .ls': Jo . ~is.courage -co-ow,nersh.ip . .whfch;. is recognized. undesirable, · since .• :i_t does· not, en~ou~age .· the .. improvement 6flhe property co-owned·{DE LEON, ~l!~ra at 534) ... ,·.: .· . .

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. Judil,a•:0r.ct'er" R~c,ordin~ · of Cons~iid~tion· of Ownership . . · . .. · . .ca·se· of real pr9perty, -.the .. ·consolidation .. of owner~_hip _1ri th:e bl}ye.r.shall 'n.ot be. r.~cqrded "in th.~ Registry _of Pro'peGy Without a judicial order, aft~r th,e ·seller has been duly heard (CIVI.L CODE, Art .. 1_607).

In

:Date frOm·.Wfiich· . P.e~riod:R~-ckOned .· . < • . . ' - . At the tfrriiJ· :the judgm-~n(bec·o~e;s· _final;··-~nd· ,a judgment-:cl5'ecomes. fina_l ·aft~r·· th-e'' period_ to _app"eal . . _had iapsed-without one having perfected (DE LEON, s1pr.a._at·~!?.X: ·. ·, :. 0• • •• • • _·; · • ·, :·"' .. ~ . . Th·e· 30-day Perip:0 -P~temptory . .. . The policy of.the ·1aw. is· n·ot to leave the· 'pl!rchase(s_ title in 't.incertai"nty.beyorid:the saia period. lt-is'.not"a .· . prescripti',(_e period t3ufmore··a,requisite or.condition . . . precedent" to ·. tfie exercise i of.· the : rjght .. of, legal .··redem.p(io11 (Pangilinan· ir: Ramos,· G~R:- No. 75304, Jamiary 23, 1990}". .· . . ,, ·...

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. , : ·. Non_-Applicability··. :. . ._ . , . · .. . 1. ·. Confract·found: fo be an -absolute,sale '(Tapas v.·. . . .. CA, µ.R. No. L-22202, F,ebruary°.27, 1976); .·· .. , ' 2. Sale known and admitted by vendo,: as·pactci. de . ·. ·.· ietro- (Feljcen;··sr. ·v. 'Oi'ia"s;'- _G,F:?: ·.Nb.·. L-<33182; :December-18, 1f!87);ahd. '· · /, .. ·.· : ··_ ~ ·. · 3. When p~rty°"a~l,mdon.ed his positioh Jha(the. transaction was · an, equitable mortgage aft~( judici~l-declaratiori of transaction:afa pacto de retro sail? (Abilla.. v,_ G'obonseng, 'G.R. -No. 146651, ja(J.uary_17, 2002) ..

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_Effect of Stipulating . Extending P.eriod of Note: The law est~blishes an .exception with respect Repurchase . · to leases which the vendee may have entered into in t. · After expiration of· period of redemption - void. good· faith accqrding to· the customs of tti"e place and no effect because thereis nothing toextend. \vher.e .. the land is. locc!t.ed . .The e~ception is_ dittated Ttie· i 'ownership . in the . vendee is. already b'y public coiiyenience)n th'e .interest of ·agr,iculture consolidated; and· becomes absolute (DE (OE 4EON, supr,a at 546). . . LE;ON, supra at 526). · · . . Equitable Mcirtgag~.· ·.·· . Not~:. The. partiescan enter into an entirely new, · One ·YJhich:~·although lacking in. some ·formality,. or . agree contract' involving the same· property." .. fbrm orwords, Or qtber requisites :den)ancied '.by'a . independent ofthe peao de retro.safe·{fd.).. . statute, nevertheless reveals th'e iritentlon of lhe . · . · . . parties -to charqe real_ property as security for a, '. 2.. Before the expirationof the period of redemption -debt, and contains oot~hJg irnpossible or -contrary -: ..the original term maybe extended.provided to,iav,, (Ceba!l<Jsv.".Mer¢a: · ·:· .. , : be le~t- for a lotl~ period of ti~~ su5!~1,1? ·ndf~gJIEf ~e..9ujsite~ for -Presumptlon qt _ Equitable c~n~'.t19ns ?f.~~}? -~a\u~e. The 1,:i,t_enllon ~-f t~e·la ..,S":" Mortg~~v: . '. -r-, .. · .·· -~ -. _ .· _·. - restrictive and llm1tallve-(/d. 1:. Pc!~i~ered'1_nto'a·con!~a_ctdenomm9ted·as · . · J · . ~ ,...~ale·ana~ ~\ · ... ,,.. ·_ : .... i{!~fts of,P~ii!e~:·as _to f.Yujts .6~~ Thei{ ir,te~tiB\,-~as to.securea~,e·xisting·d_ebt-by lfa_t !~e. tJr:n.~··of._tt,~ ~~ec~ti1ori ott~,~ thet s~·o_uia ,i',.'J,.:, li~ way pf mottqa.geJfom.u/o v: -Sps. Layug, 0G.R: be; v~~1ble or 9.~~Y:'~ng fr.u,ts_o,:ifti~r;i,il,,th~r.e.sh~_ll:h~4\ \· _ No-1,512'.\'S~pfem~:r8, 2906).. __ .. ' , n_o.r~1m_burs.emer:it ro_r ~r J?r.?·wti~~R~_tt1?.sJ ~x.,s~q~~' ..-·. at, ttie' ~~~~ o~.·r.~de~_pt,or_,, - '~~p~o~1;1. n.1ty p~1f:\C I~ o! ~ep_~r~~as~ for ~r:i E:lf.t;.n_d_~~·P~e~1,oa_ •~. ,_ __ :.... by,t~e 1?,\.lr9~aser_~h~n.~h~ sale~ast· x~,c-~, t cl (F{'l1L~•.IJ,.~e¥':]}1't'e.-n S9.l!IT'?.&Je ~ntir_,u~.~l_cro.~s_e_s~ion}r ~~ne.~_tC? · ·. C.ODE; A_rt. 1~1:,-R_ar. ~).. -~ . · .. · _ ~..I..._· -~~9t@~m~_11t-of,the:~9..ns(~?rf.t!o.?. lJi:,_d.~r. l_h~~~ .. _ ·:- ·. · ·. . . .. : . ... .. . , . ~, . . ·• ~crda~c~,i.v1tJ:i...J:\ITJcl_e.:·).l?Q?,2U~~-'. · . \ -~ppli_c~bi.l~fy -,. --.'. i· _._·, - ·.,i ·'" · , _, ., • . _ .:_··: G.ixW9qcJe.,'.t~eJ~-~-fli9~_n_gfe.ff lo:~tlju_9g_ing:_t~-~~.R.c!.£f9 . _ · - .... J\iii"le,: 1.p1.7 JlppJi~J; only wh.en- t_t,ere.'i,s "no,p,haririg q'e _retr.9,s~_~e.to.,b~.in r.e~!i!Y,,a°n-,eq"l!_jl?bl~/no(1gag~,- · .. '· ag[~erp_~nt· with .respe.Gt .t9J~~ Jftiif~ -El,~istjn9 ... a~ _the _Art1cle._),692· pro.,vi!::Ji~~ _...t~\1t S:QrJ~t~ict. shall::D_\'l· bf r~c!!tn;tPl[on (Alm·~.c;/_a.y.,Daft.J(O-f3.R.·. Np,._ ll:. i:>re~_umed._tq,be ·~11:e_tj~itabl~·Q?..9,CTQag~;~:in i:J1J.y,9f.J_ht:l ··2a0:10,. October- -·~, ·; 4997)". ·,.'.Qth.erwfs·e;,. ·,such·.' · · following· cas_gs:-:tj>N6J.lrj ·any.-.61her. eaie.whe_r.e.,it · · . agre~meni' will control:° it refer~ 'or1iy_.!Q. flc)tura·l:.,c)n~ ... ,· ~ay ·pe fa°irly · inf~rred _ that _the.-nfal)~te~!ion,· of.tt:i.e: industrial fruits.-Civil fruits are.'dee·med to ·accrue··-: .pa'rties· "is th
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theuiend.or.wtio: r~c6vers:th~. fhing:so!d.sha)I recei~e _. . . ;C?n.sJf~:~;~tr_~n-~<;1,qtiC?,f}, Wfre·e-·fr0irl"a11·.:1::~arges/6t 'mortgag:e~i, constitµtea by .. ., ah equitablel° · m~rtgag_e; _:'«hith :• involv_e~----~-);,§..f~~. the ven~ee; bu_t"he sh~II i'e_s_pect t~e ,l~ase~~-w~it.h.thet .... fr?nsri]is~!.O..f.1 ~f -~i§hts_ ar\.d J~t;~t~sl.,QX~(pr'~f?e,fo/·i~ ·. l~tt~r- may- li'c!ve .·ex"ecuted:·.in _go9d ·faith, ·and. in · ,.c9_r;itfov.e($~ (9'{Jl,: C.Of),~/-~.rl.:-,'JJO~;,§a.i?n..9f1;_-'(.·. . ·accordar:ice with thr:fcustcim of the ·plate where the · Con~ep_c,on, ·. GJf No.,., 151~33;.·.Septemb_e_r;· .?q,. land·is_~itu~t~d-(C/V/L. CQDE;Arl. 1'6"18). · 2005):·~ · . · ; · · ·' .,..'' __ '

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. When. Presun:,ed: (T-PERIOD) . ,1. Vendor- bi11ds himself to pay the Iaxes of the thing-sold (Lumayag ,V,. Heirs bf Nemen·o,. G.R. . No: 162112; July 3, 2007); _ · . . ·2. ·_r.ossesSibn by.the ve11dor remains, as lessee or otherwise (Capulong.. v, ·CA, G.R. No . .L-61337, Jt.ine' 29,. 1984); · · ·. i . · . · . : 3. .gxte.nsion of redemption period after·expiration (Lacorte- v. CA, G.R~ No.· 12457 4,: February 2, 1-99[3); · . . . . . 4.. ' ,Betention,bithe, vendee. of ·part of the purcha~;°e . '· price '(Cain.us v:-.. Q:A. ,G:R. Nb, {02314, May.261 1993)( .. ·. · ·. · .: ·. ·:.'.· .. ~-,:,. · · . , . ·. 5. · Unusually !!;i_i:ideq'uate_ purch?~~·Pri.ce :(Ca~hola . v. ·CA-.-;GR .. No,.97822; May 7, 11992); . · · · · 6. '-(l.n'y, Other case · y.il)ere' the. parti!')S really . intended that the tra'nsaction ·should securedhe : . . · . pay'rner'1t .\)f. a ~r, the .perforn,a·nce of an·y ·· obligation.(CIVIL COQE;.Art.•-1.602); or·· · .- ·_ . 7. · Whe.ii'. there· i$.Qoubt ~s· to 0hethe'r contract,is . contract ·0f sa.le- wit_h right·of repurc.hase_-or ,an. . eq~itable_ m·ortga_ge __· ( CN/1,. GO~E_,. Art .. 1

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Note:.ln.the ·case~ ~eferrec/to in '.Arts.0160i a~d '.1 ~ · pf the Civil..Coi:le, the' apparent vendor ·may·_a~ltt'
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Remedy of Reformation· . · In. the cases. ref~rred in Articles 1602 and. 1604·. the apparent vendor. may ask for·the reformation of the. instrument (CIVIL c;ooE:· Art: .1605r · . . . Rea~on b~pin9 ·the. Provisions. on . Equitable· Mortgage: To. curtail circumvention ofthe USL!r:-y law - and pactum comr:nissorium (Ching Sen Ben v. CA, G.R. No. 12;1355, Septe.mber-21, .1999)., · Appiicability to~D"~ed~ of-Absolute sa'te · · The:provf"sions of Article.1602 on equitable mortgage. sh'alh also· apply .fo ~ coritract purpcirting id qe an absolute sale (CIVIL CODE, Art,. 1604). · . . . . . - \ . - -.- . This holds· true. if indeed; the real intention of the. · . · pa_rties. i.s th_at ·.the ... transaction s't1alf..:se_qure ·the . payment of a debt or-the.perforinance:_of·a.ny oth·er . obligation (Cruz v.. CA G.R:· No. 143388;·.0ctober 3, 2003)- . : · '-

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.Proof by· P.arol Evidenc·e ' :.. Parol·' evidence. -may be ·adduced t9 · prove· the agreerpent granti!lg the seller a right to repurcha~e ~roperty sold,. since .th~· deed of __ s§!le ?nd ttie · · verbal agreflhen·t allowing the· right oLrepurcha_se .should b_e ~f~dered as_ an'.fri'tegra\.Whole '(fvtaclan. Cebu lntf:_rp~;ona_l-Airpo_rtAuJh_ority v. CA, G.~., No. 12.1_59{?, Oct,elx0,-199(!). . . ·1 . . _. . ' ,__ . . · .., '. - ' . ,· .. I! . . . . .. .. ·' •

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. To shpw a'lraQsaation purporting to b~ an_ aqsol~te ,., or a,~tcraq}rtr~ ib.~ally o.ne of _loan \vifh ·a security an.d, therefm:§;~g;mortgage}Sertano v. :CA, G.R. No. L-46307; Oct~bef 9;-..1995).· > .. ·. . _· · , :· -~·

._.:. f:.ailure'._·;, :6(: ~·sell~(:·. :_io . -~~purchase 'fo$es: all: yiis iiiteiest::·in·'the_ property_,. title io· ·whi_ch ·v.ests 'uporl . the buyer t;>y. operation ·at

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· 3.· . The court, m·ay:·~e:cree. that. "ven.dor'-debtor 'pay . ·,. liis-91-1.ts~arid,ing .. loan t~. the, ~vende~".:s;r~altor . , . _: ;: (~anga· _v: Belkr; ., G.R. ·; No. :.15!3705;, Septemq~r . 30 2005).. . . .. .. ·" .. · · 4. : -A ·;em·and·ofthe case to.the trial court whe.re the· ., . · latt~r-did riot· pass upoii. the .rrlortgagor::',s·· d~irn . ·

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.obligatior? upon. the t;;Juty of th~·· m~rtg~g¢e . p·urch~ser,.· .fqr.~Glcise .. to. foreclose if . he nor the vendor" t
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Eff~cts when .~cile ls _Adjudg~d as an Equitable Mof.tgag~:. · ,'--:···-- : · . · .: :' · :' · ·. . ..:" ·. , :· · .t. ·-1, ·· The apparent seller may_ askfor thi reformation - · · 'of the. instrumentJCIVIL CODE; Art. 16_05); ·.: .. _ - ,. 2/ Money, f.ruit or other benefit to be rec~ive.d· by : ... . ( the -buyer. as ' rent "or otherwise. "shall '· be' . • ' - t- considered as interest .(C.IVIL CODE; Art. 1602;

:, ... · -·· \: that,-he-~ad)5~id h_is rr:iortg~g_e_9~Hga!ior1, for: t~e _ . . . . . .yu~pos_e,. ·.of._, _the '. ~et~_rrrrnrn~~ ~h~ther sa_rd . .. obhga_t,_on_ he)_~ ·be~n paid.iand if-not, how ml.l~h ·. . ... should- still· be paid (Banga ~- Bello'. G.f:. No. . . . · 1~56705, Sept~mbe[ 30, 2,0_05). · .: 1, .: •• • -· : . . . . .· .. ,. . . : . . . .: . . . ,. ·. Pactum Comrhissorium . A. -s~·,p·'ulat·,0·· n f o·r .. aJ.tom. tic ve.st,ing · of Utle: over 'the .. securit,,. in the creditor'. in case :of' deb~or's default .. (VILLANUEVA, supra,at 492).:. . .

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2019 SAN·BEDA. LAW. CENTRALIZED.BAR . .

OPE.RATIONS .

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SALES AND LEASE SAN BEDA

i:Aw CENTRALIZED BAR OPERATIONS -

The ·creditor cannot appropriate the things given· by way of pledge, or mortgage. or -dispose of them, otherwise · that would result ln · . pactum · commissorium: ti:,e proper remedy is foreclosure of the rnortqaqe. If there is no foreclosure, the debtor retains.th~ ownership -(Vasquez II. CA,' G.R. - No .. 144882, Februaiy·4, 2005). , . ..

MEMORY Aiq 2019

Reason: The seller of an undivided.interest is in the best position. to \now who. are his co-owners .that under the law: must be notified' of the sale. It 'also. · removes the doubts as to. thefact of the· sale, its perfection, and, its validity, the notice being a reafflrmation. thereof (Cuizon V. Remote, G.·R. . No.'1430_27, October 11, 2005). -, . . . .

Pecium commisorium applies· only when the · covering transaction is a _m9rtgage or other security . contracts and: has. no application .. to a -true sale or. transfer. transaction (Vda. Zu/ueta v, Octaviano, · G.R No. L-55~50, March 28, ··!983). .

In stressing ·the· .rnandatory

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Legal Redemption . . The_ rig_ht to- be~ subroqated,' upon· the· same .. terms · and conditions.stipulatedfn the cohtract.In the place of one.who acquires a thinqby: '; · ·

NoticeMust be in.Writing . 1·. . . To remove.all uncertaintyas to thesale; · itsiterms 1_. Purchase; .. _ · . -. · · and its validity and · to quiet any'. doubts· that-the 2. Datio_n in.payment;-~·r . __ · aliep~tion is,~oldefinitive (Conejero·v.-.CA,,G.R. No. 3. Any o(~er 'transaction _whereby iwi:1,ers~J.R 1_s "j-~1_8ffe,f Pf4. 29, 1966).. . · . . .tr_ansJer_red by.. onerous· titl~ ( Cl'-:l~Ofi?Ef, Art. . .[ · . /. · _ _.. · .. . · . . . ·. ·. . -1619). · · r_ _ . N.ote: .)':V·~~nout)_t~e wn~t~n notice, the·peno_d _of -30~days~tBm~uch the ·.right- of leqal-pre-empfjon or rnay_,,.be .. effected · ~gaj~s~~P;'~~~ s a~~ ~ ·~~d~mpt\·o~n_ 11'\?~e~ exercised'. does . not . start: 1mmo),'.~ble_s. (U.S. v -._ .Caballe,:o, No. 8608, ..{.<Ewllen· . C , (?.R. 'No. 159755, June 18, 2009) .. · . . September 26, .1913), .. _., ··· f). · .

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. It is n~t av~ila~le in ~a·s~~ ~ (Ztion·. SU c~~'s10.'fi~-,·'i 0TJ~;i~~-~m~~~Je~crib~--a~y_par;icu1~·r.;orrri 9r· 1ease (DE L5Nq}.hav.jng::parted·.with anything, .the . c9-heir~.- were· undeni?b!y°' intcirrn~d 'of tt)e .sal_es· ·. '. · . _ 1.egal redemption:er ¢a~cori1pel the purchaser.tq sell . · · a!though nq no_tice :\n w~it1n9.. w~s;gi_v~n· th~ITI-' T~~-~but. the former' Ga.rinot 'be'· _eon:ipillec;l;·to, buy (DE/ 30sd_ay. p,eriod .began a,nd.·ended during the 121-years · · . /_EON,:·supra,at';549).. . . · .. · . · '.. ·.: .: ·.:.. _ . · . _-:.betwe'eri the ~iale_s and .the- filing bfthe:6on,p.la_il')tJc>i-. · Jn;_sale,s~cif"pr_OP,~rty. approv.eq by tb.e: COLl~ ln testate· . red_~~pti~~-- ih-'1,977, fitociut)~~- qo~hei.r_s··:El~~rcising, or j11testate. prpceeding~Jgr_ the. purpose of)'aising:: .. tt,eir r.1ght__of:r~9~mpt19n (G)}-':N9.72873, M~y ._28, tunds fo(p~ym'ent debts ofthe,estate are final-and . ·1987); . ·. · . · ':. . . -.• .. ·_· · ·-. !-.~ .:. · · .,. are.not subjec"t fo leg.al redemp_tion ·unlike in·9rdinary exeeution ·. sal~s-(Plan. '. v.. !AO,, G.R. N_o: · L.65656, ·. Contents of Written Notice.-ofSale .. . · ~ · ·· · . February 28;· 198q). . ,, · ·- ··· :·.' ',The Which~ Art le: the: .Civil~- G_pde. . . \ ·. ·. . .... -riHui.r.e§.JP.~J;i_ei. _"i(.a .. ~~t __ o~ly ..q(~-- . ·' ·t:· . ., ':''- .• :· .. ·. ·• . ~· • . . ·:.. ; . . . ·p~·(f.~cted ·s;3le' '·but ·or·th~ ... actl,J:31 ."ex(:1cyticin -~rid . Exercise of Ri_ght 9(Pre~e.n:iptiori or Redemptio·n . It must be ·exercised·.within:1tiirty .(30):day.s from the dE:1li_ver.y o(tf:ie 9ee:ct sale. Thi~·is irri"pJied fr~m 'the. second. senteii"ce of Art: 1623. of the Civil Code (DE: notice' in writing· qy the pr9spectiyei vendor, or.~y the. ~EQ_N,· supr~:'at 576). . . . . . .• . . . vendor,· as.. the case·· n:iay _ be (GIVI~ q.ODE,· Art. 1623). . . . · · ..-:.

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Pre-emption v: Redemption

The law prefers that all the terms ·and conditions of th~·sale should be definite.and in writing (Doromal v.. CA, G.R. No.L-.~6083, September-S, 1~7r5). ·

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. There is no prescribed form offer to redeem to. be properly effected.What is paramount is the use . of the fixed and definite period within. which to exercise the right of leqal redemption (Lee, Chuy .Realty Corporation- v. CA, G.FJ. No. 104114, · December 4, 1995). Basis· arid .. Nature · of · the Right -of ~egal Redemption· · · so.u_rce· of :the right proceeds from the. law,- .wtiich creates it. However, it may be.converted into one of conventlonal redemption (DE LEON; supreei 548). ..

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.Th~--- act_19_ri is: . ~ire.G_ted Action . · is. directed -· ag~jnst. the . prdspective· -~g~ihst the huyer. seller: _.. ·

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Le,gal r~demptio~ i~:·in the-~ature -,~/~· ~-ere 'pri;ileg;· _created partly for reason ofpubllc policy and partly . for the be~efit and convenience of the redemptioner . (Basa v. CA; G.R.- No. L-30994, September 30, 1982). ·

([J.E LEON~ supra a(56.4} .. , · · .. _. ·

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Re_quir~~erits. f~r- the. Eiercise of. the Right of f>fe-Emption or Redemption.of.Urban Lands: . 1. The orie exercising the rigtit must be an adiacent

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i~ riot pretlicaled 011 proprietarv-richt but ~,i:a bare .. . . · ,· . ·· . . . . . statutory privilege to be exercisedonly by the P.erson Rurpose: 'To discourage. speculation in real· ,} named: in the s_tatute. The-statute does:.nd make ...... ~~tat~__.and. ccinsequ~nt . aggra~atiori. of . the-~ actual ownership at-the tim~ of.sale orfede~ptioh-a ·: .. liousing/~~blems in.cente~s of population (DE condition precedent, the right follO\'.,'i'n~tt.fe person· L_E_Qf,J__,js.~.pt/1al 5~9). . · · .. ·and ~bt lhe.prop~rty.(M~gno v. °Viol~.~!]d ~e,fo(({R_ . . 2 .. _ -Tl)e PJe_9e.of~a~?, IS urban; r . • • • r · • 3752·1, D~c;err!b(:!r 22, s1934) 3·:· ·• Th~~n_d Sc:>.l\!1111~! !?.fl so ~m~ll.~ncl Rh·Rilt1fl!P.d ·: . , , . . ·. . , . . ~.. . ·. . . . . ~ · , tha~~:a~o _t_h_er~of canr10t: ~e u_seu forc1ny' ·· l.~ga! rn9omptlon. Is in_· the-lm~re;of.,.i.a p.rivil~g·a· . :,_, · .RC.f1.f>..~S~b~1l{R0,~~fw1th1n:rE?aso.nable !Im.~; created part_ly ~or a ~eason:-o(publbp~llcy;an·d __paftl~- · :. · 4. · It; w,a~_ugl:lt;J:neremerely for- s·peculat_ion; ·and· fo~ th~ be_n~frt and c:o~v~n!en~e of h~aemptiomi. . 5.. Thf:· lar:ro"1s.aboi:Jt tq, be r,esold1 or that its resale·· ·_It· ,_s. rntende_d·· t~ ll)lnlmlZ'?" co-own~csarp; th~_ latter tias b~_en pe_rfe,cte~-f /VIL CQDE'.·Arf~ 1 ~22). · .. :- :: · berng notfavored by.law (DE LEON;:supra at 549) ... ·. ""' . . -· . · .A-~-..-!i:~;.i_res.· f!.!;e:Lre!l!nlJ..' ·ascBe~een !:iS:e. Two (2) or More Adjacent -~on~enti~'nal Rede~pfion v. _L~gal·Re~~mpti<;>n . Oviners .·.•. . ·.' '·, .--:. · . .:· · The:" owner·. whose_··ir,ten~ed ~se bf .-the land. in_ que$tion appea_rn best justined ·shall .be" preferred (CIVIL CbbE..Art, 1922, par. 3). . .. . . . . · · ,.. . . :" . ~~- ). :· ';: . . ~\. _:;.1,'. ,. Urban· Lahds . "By express-rel3~rv~ition .ooes n·ot hav~ .,to .. be Their purpo_s_e -or: beTn.g for dwelli_n;ii.· iri_d.ustry or.· ~ contract of s~le ahin_,e _expressly. reserved and ···CPl"!lmert(?;ai:i.d. f"!Qt fqr ag(icoltural, fishing, or limb.er. bf perf.ection. . . :-Covers· sales and other -exploration'_(DE.L_EqN;-s_upra, ~t 567). . . .. ·. : . . . - . ·"on"erbus ; ira'risfers ·s·of

=

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It refers_ to. thfch~racter qr° community or' v_lcinit_y· in . . .. whi_c]l it)s·.foul")d. Even if land.is sorr\"ehow dedicated . fo agric-~lture, it ~!iii urb'an"ir.it is:.located within !tie .. c~nt$_r qf the :pop~_lation." mbre.oi·· 1ess portion,of a .. .. city qr.town:(Ortega v. ·or9ide,: .G.R ... No:. L~28317i· .... Mar9h.31, 1971}:' ·

is'

. :.·

.

.'.

.. ··.. "·

-,. Ex.tingu.ishes .. , ·1fie Adtualfy constitutes a underlying · c9n_tract •of n"ew sale in substitute· . sale as though there was of the original.sale. . _ neyer any contract at all. •· ..

or,

. Mea.ni~9 of'.;to ·sp'~c.u1~'te" . . To erigarj"e· in· a hazardous b_usiness transaction for the ~-h~nce of c!.n unusually ·large prnfit :(DE LEON, . suprc1 at.568). · ·

(VILLANUEVA,: supra.at 506-507).

2019 SAN BED.A-LAW CENTRALIZED.BAR OPERATIONS

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SAL.Es· AND LEASE . . .

:

SAN BEDA LAW CENTRALl~ED BAR OPERATIONS:- MEMORY AID 2019

..

I..

Instances of Legal ..Redemption: 1. Under the Civil Code: . a. Sa.le_- o( .'Co~o.wder of His --~hare to A Strariqer (CIVl(C9DE;-Art.--1620) . , ·.

If · the price is gros~ly excessive, the redemptioner- shall pay. only ·a reasonable one. This· is to prevent collusion.between the , purchaser artd the selling co-owner. The . payment ofreasonableprica requires-tender of 'payment and consiqnatlon of the prlce. independently of. · the. size · 'of the redemptioner's share · in .the · .co-owned . property. (PINEDA ~ales; supra,.,at 390) .. · · The Cb-owners may only . exercise redemption in proportion to the share -they may respectively have (CIVIL CODE; Art. 1620, par .. 2). \ ·:-.-.· · . ' The. right. of redemption ·, of. co-owners , . excludes. that of ;,idjoining' owners (CiVIL:,CODE, Art: 1623,. par.-2).. , ., ! .. 1 . . . . · . · , -, . . .. ,· ..

a

Re'quisite~: (BRACES) ,.. i. ·.T-b!=!·s~le· mu,st be ,_!;!ef!'.:),re. pc;irt,ition

-L;EQN/supra 9t 55~);

-· ·

(DE

. -'. · .

.t~9t_e;. The., basis _of the right. of regal· redemption is the .status 'of an "owner · (Butt~ M.. l,Jy .lk,E{ons,, lnG.,-G.R. ·No,:L:-· 15499, Feb°(ufiry'28, 19.62).. . · · . .

v.

·. ·< . .-'.

·'

· , · : ..._ . ·.

ii._.· )6e.~e:1Ae'e.rn,ust b~ BErimbursea tor.tije · . · · price of the. sale (DE LEON, 'supr«

at

.· 555);·.

- .. · . ...... .

... '

r: .

iii. -There must be ~ienation bf all.or.any.of" . . the shares of the co-owners (Id.);

8t

.

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su,tis~syn~~¥~lJ If 9 property .of aco-ownership is_p~rtly sold· _ ;b~ ~o-o"'."n·er;·th~ others must beinformed ' • • ••. • • I ' /.-{.'"'\ !fiat they . can: exercise the . right of . · . Purpose: 'The -r~le.J~~te'"'~·nl:*itne ~£.:.___. ~t-aelJ)plio,ii (Caba_!es v.. CA;_ G:R. ·tyo -. theory thatthe··pr.i_v_ile·g.~ ~~_ferr~Jilon~ l6~~,1}Aug, -B1,,:2007j.··. . ·._. · · .: ·. tfie CO-OW~·er: to iS',i~'te,nded '\V/' . \ '\. ~ \ ': .' · • ; :1 . . • . . ·. ., ' · ' ~.: . facililate th'e.'te'irp~~tion~b OIJ>'.hir~~ip fa 1 ~eason; In 0raerto remove all.uncertaintie,s c9mmon/.~0,000._11, . ,. . · . (,.e:, anyo_'!e_ W.?.o ,s· npt _a~~?3fl.P~l: · . . · · ;,i...:\"\·{~~~i]1(m~E_'!rest. to -~,-fot·-P20;000:.-.~; o~- ·c· . . . . :.e..xr~f!~.e,. .th~. ngN~~f_ -r~~ern_pJ!9.p. ... ; ... ·.Note: Tn~· --term ·,_"third·' perse~~(: br' · .. 1v1 ~E ~fllbhJrsmgD:of.th~,.PJ,ICe,qUh.~_?ale_; !fb.0th . ; .. . .- , '.'strange?. refei-s':to a1f:person~:w_~~'.Ii~tj,G"'re'q~ern·ii\e'Jhtere,s(~qld·Ji{A;;¢~cti · .. ',- '· · · . · · . · not-heir:s in sud:e.ss'iori; a_hcl by-heirs ani · . . · · •. - ·_._ . of:fh~.rri':shall_:p'ay'P1 b ,QOO .to:J:>Jvhicti; fa. the ·. ·. · : : · . J • ···: .'rneanlo'nly_'ttiose:-~ho' a_re··_cal_leti"eit,li~r . ·.. ·. . . propo'rtio~-;ofih~ir)¢spee!i.ve:st)ar:ef.ii, th~:! ·. ' __ by-: ~).ii' -~r · _ttie\la»'.. s11cc_e-f::d·i·tti~ . co~ownersl:lip .. lf-..ttfe· price\ ~f,.P2Q,O.QO . is · ., de-cea'sea 'who- actually .si:iccl:leds. . : gros_sly, ex_!:;e~sive, .. th·e· same !;may:; be_ : ·· (Villan'i:/eva· ·v. =F,ipfonilo}, .G.R:' ··rvc/ · t:.·· · ·.· ... ·:.... -- ·equi_t~bly .r¢duced b/the. court~ '(D~ [EOf'!; · Jv .. 1:here_ :·_·m~s,f'

- . ownership;":'

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tbe-: ;cirli~~--i_;,.~-~1~.: ;~:~n6'th:~/;ci_:. ·. ·~ .. owner/the· [ignf o(re'cle.mption

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..... 6f.f~i-e.o.J9.c~iaj_e_:..b'y.:_cQ~c:fw.q;rs.::ra~ ,· . , . · ·. , · · f:E;?N,· s.iipra-:'~(551~;55~(-. , :" :. :' /.'.;::.· ·. :·. .. ,.. ·::

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..

2019 SAN-SEDA LAW BAR , ~ CENTRALIZED . - OPERATIONS . ' . . ,••

at 55,5:556),

i; ·.· .. jh_e .,lhirg:".qw!1ef ir1 ,c9mi:i:i~n Jiad b~-~~ . · ... · partj~io~ep,.judicially:or· extra-judicially; . ,-'. ·:. i,i.. !'.~~~~-0}!.t~~-·Pt:~lh.~~?,W~~~~-- ~r~~~~ld_;,,?r;

-19:15; 'F~/ices: ·ii.'. NO. . -~ ·[~233741 . : .

~G~neh111y., if is-thi/i:iutc_ha~:e.-price 'pa)_a,by_. . the. bwners to the. selling co-owner(s)'(bE

532-

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. SALES AND ·LEASE 'SAJI! BEDA I.AW CENTRALIZED ~AR OPERATIONS - MEMOR\'. AiD-2019

When A Credit·or.Other lncorp~r~ar"Rigf:-it , in Litlqation.is Sold . ' . Requisites: (SAO-P2E). . . 'i. . ·.There· must be a ~ale or ~ssignment of .. a tJedit or other incorporeal ·rigbt~ii. The assignee must" have -Qemancled . payment from the' debtor; . . .. . iii.. The credit or right_niust bethesubject of ... a. fend in~. litigation . at the -, time. of .its ~ssig__n~ent Of sale, i.e. that an answer . :· .- to the complaint ls already fi/ecf; '. ·:·.iv. Thedebtor must fay. the assignee: .. ·.. · · 1 :) -the price pald; . · · 2.) judicial costs; and ·. · · . · .. · -. 3,) interest on the price from the date of · . payment; , . ... , · · . v, ·. The riqfit -must be· _sxer~is~d by the debtor within .fhirty. (30) · days .from. the :. date the assiqnee dernandsjjudlcialtyor . . ·· extrajudlcially)' payment from him (C.IVIL r: ·.· ~rt.. -1_634i id. arno1j .. · .

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jrornthe time they were;~otifieci' in writing of the sale by selling co-heir (CIVI!- CODE, Art. · 1088}.": ·. · ... · . ·. . ·. . ,:' The right of legal redemption applies only to. the sale by an heir ofhi_j. hereditary right, it . doesn't apply to.sale of estate.property (Plan' v, (AC~ G.R. No.' L-65656, February · 28, · 1.985) .' ., ..:.. . .. · · ,, ·: · ; ,. :; · ... r·

. When ·the subject· matter was q particular .: 'property 'arid . nc:it hereditary riqht, .the . : . redemption. by co-owner redounds to the : ·benefiT\:of · a11 .:ot_her:-.> co-owneri;. wh\le redemption bya co-heir isonly for his own . : ocoo~~ · · ·· .. ,.: .. , 9. · Sale· of- 1}\gfacent ·Rural -Lands Not _-_. . : ,_Exceeding One· (1) Hectare -: .· ... ·. . . ,, ' ..

·~.;;·

,.

_.....

. .

Thisriqht'is not applicable to adjacent lands separated.by br~oks; dratn~. .ravines; roads · . , and other apparent-servitudes for the benefit of.other estates· (CIVIL CODE, Art. 1621). !

......

•

•

...

•

t.

-

R_equJ_sjtes_: (RATE.;QS) ·:, . :. .. '· . , L..,:,s0th· t~"e lanq ·.of.the one ·exec.dsing the"., 1i~Jjt' · . _of.redemption: and. the·iand soug_ht · · h

a

·

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,_~o~l3\7de~-~ed mu_~tb~J~u~~\:

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- . " Jrvral la~cr~_efer_s ~o ~:lar:id. a,dap_ted_and· . , --. · u..sed. l,~or -~gnc~lt~~al ~ ~r. pa~tor~I ,', . 'PO,£P~f~?dt-:1~:pnnc1pall(1,1sed tor:·the · .· Q.!Jip.ose of-ol:>tainin·g,p(0du6ts from the. soil;(DE"L.EON,' suprih1b.!J61). -' · · .· . . . . ' . ; .

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·.: · .·-_:rhe intention of the I.aw is the pron19tion · ..n.~...-..._..;;;a;,,:_.:;.....w....._....,, ~rfd: prote9tion:: at ,_agri¢ulture·· by ~ the · , ·. \L·. .: . 1,1hiori :of·srrian: c:1griculturalJarias l,Jnder . . one: owner- tot better exploitation of the, . :, :. _:_ :: two:-;·lands· · (Fabia: ·y. ·dhterinediate ."·.-.. . ,· .. . - . . ..,. ..· . ~· , .-. ,. ,,·. Appellate. '·court, · G:R.~ No:-"' L-66101, . . · : 'Presumption·:. The 9ssignee-·cannot be : ,:°. -C~nsidere'd. :as 0-.vend~e· of:a right .in : .. · :Nov~"!ber 27, ·1984).· , :.. . ._ : : ·,., . .. .. ·-;:-_ ;.,. litigation' and ·as a .sp·eculator:· It· really : ii. . .Th_e ·Jaf!QS must}i~7~qjacet1t;. _.. .. . ·..... .-. · ·: re_fers to
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2019 SAN SEDA

LAW C:ENTRAUZED BAR ORERATIONS '_I · 533

-;

SALES A_N D LEASE .

. . SAN !3EOA LAW CENTRALIZEDBAR OPERATIONS- MEMORY AID 2019 at:ti#!&g;&Mi'4t&1as:,ga\t:m •&iMii?24?··t?,{ 2t:,:e tiift5%ffi%,i ·m•-ta$~ et,,:, :411 :W;11t: v-:e-a&!@·.&tA¥?4

. v.

The vendee, must already Qwn some rural land;' and . · ·,. vi.. The rural · land sold must not · be §eparated 'by -brooks, drains; ravines, roads . and ·. other apparent servitudes. • ; from' the adjoining land . .

e.

In case two (2) or more adjacent ,owners desire to exercise the right of redemptior:i, the. law gives prefere~ce to the owner or thi .;:idjoining land of smaller 'area . but ·if both lands have the same a rec\, to· the' one ·who . first requested to redeem (CIVIL .. C.ODE, Art.· 1621,'pa_r.~\, ·

f.·

Redemption by an agricultural tenant of land sold by the. landowner- .. . . .. ·The aqrlcultural lei;see · has the right to ·. redeem within one hundred eighty (180). days: from notice In writing. (AGRARIAN REFORM CObE,.Sec. 12). .

Redemption in- for~closur~ by . rural banks (R.A. 720) _ If ttie _ land is mortgaged to- a· rural bank, mortgagor may redeem within two·(2) years .. from . the date of foreclosure or from the· registration of the sheriff's certificate of sale at, such foreclosure · if the property is not covered o.r. is : covered, respectively, by Purpose: To encourage the maximum Torrens· Title. If ttie mortgagor. fails to development anduulilization of. ·agricultural exercise such-right, he or- his heirs may still lands (Otteqev». 'Orclne, G.R.~No.-L-28317;. . repurchase within -:five (5)· years from.· March 31, Hl71). . . -· expiration of the 2-year·redemption perlod . · ·. · -, : · r, ·· · · · 1:iursuant. to section. 119·:of the Public· Land Unde~i.S_p_eciar L.:a'-'."s: .. '. ·: . ·. l\. . " . . - 1A~tPFirsttnstance._ of (lo~,:,, :'rij' ~~9;._~gre rnent. .l1Y• v1r.t~l .of which ·the owner of a Branc~ 1_11'.· G.R.·_~0.{~:453;32, ·_July 5 . 19_89j~~~r~dit (iown · asltp.~_,,.~ss1gnor), by a ·1egal _cause ~ ·<.'11~ . ::.:,---~-s.ucJ:i .a,.~tr.··.d~tLop..ilifp_ayment ,0Le).(_cJ1q_[]g~ .or b,. Rig_ht ~of .Re,dem~tii'l; in\ca~~~J~f Ex r~-~ ~~on_atip~~Ji~ Ygth~tin~ed. qf the_q~ptor:s ~ons_ent, .. Ju-~i~ial Fqr.eclo_s_un(LJ. (\·~-: ..,~c\(;~ns!,l:,S'
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·: Th:e.ex_e,cuti9n of dacion-en..~cw~se~ M,.,...~.of As:1gn~en.t of q~e?1t . . . . · . effe~ti~ely -w~ive~ th~ re,~_empti?n · peri~.a=· ~ •1 ... Q.onsE:n~u.al;_. ·. -pi.lateral~ ., : .o.n~rou~!-. . :c:ind. normally_ . ·g,ven .. by· th¢. i mortgagor · (First· · , · .. c.~mm_utat_1v.e.-_ or_ '.aleatory .contra<::~. (f!E LEON, ... "Global Realty andf;>ev_efop·iiient Corp v. San . .. · · .: supta~~t 588);- .-: .. ·:···. · ··. . .- . .. Agustin, {3.R.':.. No., 141149'9; · F.ehrc:iary _ 19, · · · -2. T~.e -:as_signir\Eint · :inv_olves _no· transfer · bf . . . 2002) .. :..· · · · · · · owners_l:iip _but m.~rely effects _tb.e transfer of. . .. . .. . .. rights-which the assignor. has at.the'.time· to the c. Re:d~~~-tion of.Homest~ad~ ·,. . assignee (Cas;;b"q"~na'v. cA''G:R~.No. fi5410, .· C'oriveyance of"land. acquire'ct ·u.nder fre.e February-27, 1998};"-,~· .. ., . _ .. . pa_ten'i. .. hon,estead··_provi~io_n~ . shall be· . . :(. lt-.-may b~_- done~pr,erously ,·(i.e.,. excfl.anfje, . - . suqject\to: repurcha~e :with[fl five_.(5) years · . .' . . d<JCJ~n .8/J. pago) 'Or-grat(i,1tousl.y (i.e., ..donation) frcirn the·. date. ··of':conveyance (PUBLIC . ·. (DJ; LEON,$bp'ra. at 58.9);and-,· .. . · ·. , LAND.ACT; Siiq. 1'1.7).:_ . ·. : · .-: · ·,. · 4. _A9 a ~-~npa_l rule_, c1II pr-im;:(ple~ governing ~ales . · ·· · · · ·. · · ~ . . ~ · - also ·applicable t_o. this\tran!3.actidn. The ac;:t" ofct".. --Redernp"tion fn 'tax.sales_ ·. . .· . ... -.~.s~ig_l).[!.en"t _c:a,_ni;i12f_op·~r~t(t
'9r_

···:·

. 534

I

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2018 SAN BEDA LAW CENTRALIZED BAR OPERA TiON.S

..

. SAt-ES AN·:p. LE.AS:E . • . f Rrii#Q3ZW6·:d:'if@W4 . .

·· .

.· . · . SAN BEDA LAW CENTRALIZ_EDBAR OPERATIONS - MEMORY.AID 2019 . . il'~t#f f& t'#.1fi~i4MkJBw.:;7*hA U !ii¥¢$W3iW4UN%W¥if·Ht&AAPSi_:fi@:CUES:§.'rP'¥f11?tlt:>!l&SklfWRU1~8z:7I • y

·. Perfection of Contract for Assignment· of Cre'dit (CIVIL COPE, Art. 1624) . . . The·. contract is perfected from the moment the. 'psi_~tie-s aqree upon the credit or right assigned. and · upon the -price .. even if neither has been delivered . "(CIVIL.CODE, Art, 1475). However, the assignee will acquire ownership only upon delivery (CIVIL ·cqDE, Arts. 1498, par .. 2 and Art. 15.01). · · .-

· Effects of Assignment 1.· It trar.isfers the right to collect ·the full value of the credit, even if· he paid a price less 'than such . 'value; a'nd . . 2. It transrers. all the· access_ory rights (e_.g. [!Uaranty, mortgage, ple_dge, or. preference) · c(9,IVI~ CODE, Art.- 1627); · •

Cpnsent of· D~_btor No_t NeG.~~sary. · · . . In an assighment,of Qr~dit, _the consen·t of the debtor . is ·n_ot necessqry in· order tha·t the assignment- may · fully proeuce the legal effects -(DE f.EON, supra at ·590). . .. ' ·. . . . . .· .: : ,....

r-

. ·Contr~c(of;$:al~-- v. .. :Assig_nnient- o_f Cre_dit·

0

, Note: If .the . period for_ paymerit· has. been e:xteoded_ without the con~erit of the guarantor, tJ,e assignee cannot go after the . former . because1 as tQ hii:n his g·uaranty i~ only up to ·the ~.rigirial peri_od. -

..... ··

11.iustratio.n: A obtained a loan (P100,000) from B.: To sec_ure t/l~e .paym_E!hf.of [o.~_n, C. ·mortgaged l)js property to _B. B- assign~9_ his ,c_red.it pwing . 'tro,m ~·to fa1!ed ."to. pay· th~ loa·n. o'"can' •' f9reclose. · the · niortgagi 'beca(,Jse . b~ing. 'an . accessory right, 'it is deemed_Jnclude,d in .the _assignment.. . -.. . . ·.---, .

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Deb,tCJr,ian_.set,up _agafns; the ~ssigriee' ~II the . _defehs(;lS he .could have set \:JP· against th(; L....o,............. -, aSSignor (Koa· v, CA, G.R. No. 84847,' March~5, 1_99:s};~an<J _ · A~?ign.encannot go after the assiqnor to enforce : r > _the __cr~oit if thro~_gh_ his n~glig~nce ~e -·. al!oweJ:l the credit to prescribe provided the. . · ~ assigFiee was given ei19ugh time.to .enforce the. :.,- . said'cred1t: -- . · '.... . . .

ow~.

.i°ifustration: _/!\ lendsmon·ey to'.B on ·March 30, 2009. Altitfn ass1gneITThe · credit to' C on- April 30, ·2009. C "demanded payment from _B only.on M~>.' _2019. Footeri years, C_Qann.ot collect from B since ttie loan ... nas alreacl¥. prescribed; r1ei\hJr, can he' collectfrom . • . , - :,l;c '·.A '(the assiqnor) ·.- he. cannot through his own . . . :.. -·: . •. . ' . .. ,__ . . . .-.r\~gliger:ice, (and _c;:onsi~e·ring he was giyi:m 'enouqh Tr,~nsfElr of. o~J:lEfrship .Gwnership is trarisf~rred , . -tirne to enforcelhe 'credit}°go afterthe assignor lfhe -~~e~ . riot:_ ·qe · upc;m. u_pq_n · _delivery q_f'> !h,~ . deliv~ry of th~ thing:'The docume'h_ts· · evidencing · : . cannot anymore collect f~om the debtor." . .' . . :, · ' . i:iarties ·i:nay. agree, th.at the credit "or. io"corpqreal _· Ei:if._orce~b,!litY, ag.aiiJ.st !h}r~f P.ers~ns:_.... _ .. .o_wn·~r~hip, ,: ·.· .. · (_'.~e ."rights .. : · 1. As betweenthe _parties, the assiqnrnent rs valid transferred only _after full delivery). (\(JL_lANµEVA;. ·. . . , although. it 'appears orily in "kt• private document · p·ayment. '(CJ.Vil~· CODE; supra 'cit 576)..' ' · · · · .: so ._l.cmg as "th_$ l~w. does 'not .require-a 'specific : · fuJ... 14'78) ... ·:,. · ·.. · - :. -::--::_ · . ·.. , ·.t. . . : . ·. form :fpr its._va~id_ity "(CIV,IL. cqbE,. / 3_~6).... ' .... · .· --2. If th~ as·signm~nt involves credit; right or_a·ction; .... , . .,. . . '. ·. '.. .. . . ·. ' :. .... ·, . . . ' . . -~ a: public. instrument is needed : to _make the : It ._if ?!'!;".ays ~'.:reR,yisite' Not' alw~ys 'a -~equis1te: · · .. :assignment effective'again"st:third persons. : · · .· (PNf3 v. CA, supra). ,. ·Actio_n ·· may" ·:· - tie 3:. If' real ;property is involved, recording: in the . main.tained· . by tt}°e· . _Regis.try _:of Prop~rty would- be . needed .(CIVIL- .. assign~E(based .. on. his CODE, A_rt. {625). · · . . .. . ·. . .._: -: : ·. ti!l_(_eyen . if th.ere is no ' ' . ... ·... .consiqeration .··(pNB v. ( . . . Effect. "·of _Payment by ·tne Debtor after" the CA, ~upra). _ . . ... Assignmerif of Credit:' .. . . L----=-------...1.-----,~-"----.c..J -1. ·. B~fore.notice of the assigrinient -. payment 1o .· . the .origin'af creditor is ,valld. and debtor shall be .. '(PINEDA; Sales; supra at 4p8). · relea.sed from his obligation (CIVIL CODE,.. Art.1626); or ·

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2.

:After.notice of-the assiqnment _·, payment to' the original creditor is not valid as against the assignee. He canbe made to pay-aqarn by the . assiqnee . ~ ·. . : (Of= LEON, supra .at 593). .

a.

One·{1) ye~r.from the. assignment of credit when the period for payment. of the credit · has expired;·or · . / · . _ b. One (1 )"yea·r after its maturity:.... when such , . periodfor payment h~s·not expired.

Formal notice is _notessenti~I. As Imig as the debtor. has knowledge' ()f the assiqnmerit; fie. is .not released, from the! responsiblllty should. he pay the oriqina] creditor '(PINEDA,. Sales,' supra at 412). · ~. . . .... . . .

Reasons for the Rule: . 1.. 'Tb prevent fraud 'which may be' committed ·by feigning the solvency ot't.he debtor at the time of theasslqnrnent when irrfactheis 'solvent; and. 2. ·To· oblige the .assiqnee to 'exert- efforts in· the · recovery of the· credit and thereby· avoid by his oversight, 'the assiqnor may··suffer (DE; LEON, supra at:597/. . . ·. . • · .·: . -

The consent of the debtoris not necessary tomake. an .asslqbtnent of credit' effective.-(DE LEON, supra

af59-2). ·

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Liability 'of Vendee for.Debts o0iand charqas- on .Estate :.. . · ·· . . · · · ,. The vendee, .on his part, reimburse the-vendor for all· . . -- Jh~f th~. latter .may: have. p·aid, for-the debts and . _ _ .. charqes onJhe estate and s~ti~fy thecreditshe may- _ - have agarnst the same, unless "there is. an . t •. ':'" . . .. . . .. ~'" agreement to the contrary. (CIYlt C,OQE,, Art,· 1633).

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·. . . ' . . . . ' '·: . .\ . ' .. · Concept and Nature-of Contract of Lease A contract whereby on~ pe~~-on (l~?sorl ,qing~ hirr,i'self tq granftemporarily-'the 'enjQyme[lt' or u~e of a. t!1in'g 'or 'to render of some work .or_ sefrvfoe ici ahot,her _(les~ee). ~h~. u~dertakj:l; io. pay·some. ccimpensati9r:r o·r price ·th·erefor'(DE.'LEON,'.'supra ·a.t 703). · '. ' . . '... . '. '·~·

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It is 'sirrillar' to 'a- sale with 'only difference that ~.instead of p_aY.ing a prlce in.·ma·ne'y, another thing:is· given in -lieu thereof (DE LEONi''SUp(a 6,10) .. . . · \. . ... . : ' . ·. . ' ·\ ." .. :

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L~ase Contract· is nof ES'se~tially Person·ai In Character G_eoeral ·Rule: 'It· survives the. dea\h of ·the parties· :-and continues to l;>ind th.e heirs: . ·_ : . . ' . . i . . . , ·,·... ·'. . . . . ·~ ~. ' .··

. •.

-· :Exce~tio.n: 1(· .. the ,· c'ontract states 6therwise (lnocencion v. Hospicio de Sa.n. Jos~,. G.R. ·'flio .. .201-787, Septf;fmber 25, 2013).-· . . '· '"-..: . ·· .. Kinds .'df Lease· as to the S~bject Matter (CfVIL COD,E,-Art: '16.~2): _. · · _ · . _ · ' _ '. . 1.~ lease of things {CIV/L CODE, Art.--1654).;. · 2. bease, of 'servic~ (CIVI( ·CODI=,: flrls.. 1 (ff3fi, . and. . ' . . ~ .. ~ 170{t.and . , 1732); . .

. ·. ·3: . _L~~-s~1r~or~ rc.1~(L ?ODE, 1rt 17~13). '.. Gh~tact~iis't,ics · c;fr · Requisites, :Thir:igs':ic3qi?P)if-DONE)'• .,.-1 .... Qons~n.Sual; r : ·. • .. ,.

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: '." -J~stJance of-the.certificate by the city.enqineer's .. ;:,,,. · .offlce ~.is . . riot .reqwire4~:for the. perfection: of a ~ ·. , ;. contractot. lease.' Being -a.consensual contract; . lease is p.'e-ff~cted. at i~e fDo°nlent there.js ~-..-..:.....;:-.-,',01e.e:t'ii;ig. of.the rnfnqs. upon the thing · an·~.., {he.. ·. · , · ~a use or· consideration -which · are to constitute . . ·-.the, contract · (Hilltop M_arket' Fis/1 ,vencfcm{

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;· ·. ·. ;~·. :,g:o~·mutati~e;·-· • "'. :" ~ .. •r • ·.• . :\i~leliclovernihg·Eia'rter:· .·.· .. '. :..:; .·~ :_'. ::·_;. ·,_,·· · 3. . Subject' !Tlatter m~st qe wi.thin _the _g_ori,n:ierce of . Where :tti~·'g1ver' of.th~ !hiiig. bc!rt'ere.lis_ not the mar:i (9/VIL_CODEJvt. 1~74)';. ·,· :· . ,·. \;· :Ohej.ofis:'(tl)~'r~ !l}U§t qe r~n(_or,·pri~·e-~ertqin); . . . ... lawf.ul·owri~rlher_eqf, .the aggri·eved party .¢arinbt 5.t . §.i_l~teral_;. , ' · · ,. · · ·.. . .' . be-compelled .to· delive·r:th.~ 'thing· which he his ·5_ .E,rir]cipal; . . , . ... .promisecf. He. is _also ·entitle·d to damages:(CIV/C . · · ·_CODE, 'fl.rt: 163~).: .· "./'','... ··- ·.' .. · .<·. _:. ·. . · · · 7.' P..!Jr:pose. to Which th_e _thing, \~iill. ~e _devot~.d : ' . should not be fmmoral; •' :; .. . . '. ... .' ,:- . - .. -~. ~ Where a 'party is.e~icted of.the' thing, ~xchanged,. · 8. Period_'is :temporary (not perp_etual; .hence;the ... J~:e i_nju_r~~- pat{'Y: !S :givenJhe ~pti.~n,.'.eftl;ler,,_t? : , lbng~st pedod is ~·9'years); . . ' .... ': ·., .. · . - ·.' .. ; recov~r ttie· pr'oper:ty-·he ha~- giv~n iii excti'~nge· : . 9. 'Period 1s eitlier Definite m·indefinite' (5'PARAS, ~ : .·witt,. cjamages., or> claim.' _an.:iindeimnity 'for q(323:325J;·, . "; · .·. . : · · _:. d~ma'g~_s·... TheJi_g~t to rec_ov.er is SUQject t
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SALES· AND LEASE .

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ml@wtk?blilti¥A¥ 1i¥FWN16fflPN@tR!M ,f %ht W 9 tlWrl !4 . . . .

11. ~ominate; and 12, Purpose is toallow gnjoym_ent or use of athinq (person enjoying is the - lessee; the person allowing by another is the. lessor). .. . . the . enjoyment . . .. .

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Note: It must be capable of deterrnlnatlontslnce the .law says "price certain") (5 PARAS, supra af 324):_ : :

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It must not be fictitious or nornlnal.' Otherwise, there

is - a· · possibility that the contra"d commodetum (which is essentially (CIVIL CODE; Art. 1933).

Forrn-ot Lease Contract ·· · . Lease .. may \,~ made orally, but jf the lease .o(r_eal . · property is for more than one (1) year, -it. must be in . · writing, in compliance. with the· Statute· "of Frauds (CIVIL .CODE, Art. 1403, 2 (e)) .. · .

is: one · of g'rafuiious) .

Right" to fix rent Tt belongs to lessor .as lease is · a consensual contract, similar to sale. If the' ~e·ntalsbeing claimed are. exorbitant; the courts couldIintervene 'as a matter of fairness and equity. Th~ burden of proof to show the . unreasonableness of the "rent is. the lessee (Ramon Mags_f]ysayAward F.oundati9n \.\ 'CA~ G:R. No. L-~59_98; Jariuar.y 17, .19{35). . . ·

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Even.the lesse,~. ~ims_elf_;r;r.i_a>\1~'9s~ the P.f.OP~_~y'-to another; in such· case,:·~ sublease· results' (CIVIL COD_E, Aft .. _1 ;

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ih :its_-~ci~tv~1ent,:_ such-as, P(b~tJc.ts_,. !r~its o_r other .. ·. _.. -rti-~- rice of lhe obf~~tr,; useful things. or some other _ prestation which .the . · ·· ·· pll ,.. ·-1· ·, · ··: ti · ,d · · · · .- - · , . · · -· ,rt. t · . . · usua y. .. ,no . men 1one , _l~ssee·bm'ds h~rn~elf to_ undertake. Th: lhlpo_ -~rn IS . LEON, 'su ia · ~·t that what"haye,9.1v~Q:bY the-lessee-has. value- (D~ '720). · - · · P LEON'.-,supra·at 707). . , · (DI=, LE(?N, supra 720)~,

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. pwn·~·r·\·(pf. !;EON, ·. 'trpriS_fer._·, .... ownership; 9a,{e~, supre.et _7.Q~)-. · ·(CIVIL_: COD_E, Art.' . . · .. , . ./459)._·.·· _·, .. ·.. -~ ·.--:-, ·:.: -

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·co·~~ideraiion· of L~a~~- .- - ... .: . ' · 1 • Rent . . ·. ·... ,. . ... . .u fs: the cause of the contract ~f.l~ase, money

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LAW_CENTRAllZED.BAR9PERATION$:

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s·ALES_A·ND LEASE SAN OEDA LAW Cf:NTRAL/Zfp'BAR OP~RATl<;JNS -· Mf:M~RY AID 2019

Note: -Both consist in .the ·transmission enjoyment or· use of a lhing to another'(CIViL Art. 1933)'. , · ·

-

- Lease v. Usufruct·

:-....... ::- .. nof lose o;ne~~hip~··Of. :th~ ·,t'hi~g transfers to the borrower .or debtor {CIVIL COOE, Art ... 195_3). . ;:

Lessor does ow()ersh.ip. ·

.

··-;·. ' .. . ..... .,.·· ... : . ... -· If what is leased is. real :Nor gpverned .J>y, the. property' for - more.·tha·n: Staiute of Frauds.': ·_ .... . one (1) year, the Statute . · · · '. · · Frauds·:· must be '.. ···. '· c;omplied with. (CiVlt . ... CODE, Art. 1403, ·2 (e)) ..

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Limited . ·to . 'th"e 'use' ·~p~ci~~d in th~\::qntract. · · ' :· ' .. · . . . ' ,. . _ .· .. -- .

·fr,clud~~ all ·possible use~.. ~nd. enjoyment' ·of -the: thing (9iVIL CODE, .. Arts, '562, 564 a_rid 566).:

A:· real

Al"'!ays _ ~. -real right · (CIVIL CODE,· Art .. 567,· par. 3). . .. .. · · - ... ·. .. ;: ., .,., ·

right·. only- by exception; . : when, it inyoly~s. Ja_rid,.., ?3nd it. is for m6re.Jhan·.1 ye~r; ·or is,reg1ster~d:;·> '· ·-; :· · ·.

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.. . _. . . . . . . ··- . . . ~arbe""cr~atetl~onJ,Y1._by May b_~ cr~ated .. by... lav:,\ · cc;mtra~t;~,,,_wc!y of by.. tha- w1Jl ·· of private exception, by· Jaw. (as. in persons· .expressed - in __ ,_th_e case.ofimplied.new acts in.t~[ vivos .or. in· a lease; 'or when 'a builder last \vifl . and testament. .....---1.has built goo-d·faith· 'and' by · · prescription' buflding. on lh({iah;cVqf .(CIVIL-90QE;, Art.· 563). 'another, :.when the land . . . . is'· considerably. worth .. ·: . ~. . . . ... ~··: .. ,. ... ,· . . more 'in: value· than. the . . builcling\ .··. . . . · .. . · . .; . .

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·awr.ier-or·1_e~$or:i~;.rnore ·-The o_wn'er· is-.mor~ .or. br. . less .·a<:::tive, passive .. and. he : . ::... . and· .he.. less . ~. makes -the lessee, en Joy -allows . tpe .. [!Sufructuary tne"(hir:ig·..:...''hace gozar': ·to .enjoy the ..th1ng "given. . :.. . . . . : . : ···: ..... in usl..ifrucr- ''.deja'gozar' ·... __ . : . (CIVIL 'G_ODE, -~rt: 62)'.

· - OneroCJs, although. the. -Essentlally .gr-atuifous/i_f · rent' . . may. ., ,:,be there i_s a prfce or lent; subsequently condoned the contract ~~as~~. !.b orremitted. . . be commodetum. . ·:- . "' . . . --~· :" ·,_:. ·. - - : :··· .

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. '• personar- ·.Pers9Qa( ··.in·.· in character.' Hence the: .Thus-the death bf either . right may, be fransrriitte_d the bailoror bailee .. to the heir~: · · . .. · 'the commodetum: · ·

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Th~:, less~e· ·generally The1·• Li.sufr1:1ct~?ry. has hasJ. ho ·duty._to' pay_ fc;ir the, dl,lty to.. make the .r~.Pa.irs. ordin·ary · repairs (CIVIL Aft 592).' · ... ,

coo~.

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(DE.LE.ON, supra at 72_1). ·.

2019·SA.N SEDA 't;.AV.:fCENTRALIZED BAR OPERATIONS I 539

SALE:S· AN·D L·EAS-E

s~N BEDA LAWf:ENIRALIZEQ BAR OPERATIONS . ... ~.. .

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.; Lease ofServlces.v, Contract for a.Piece of.Work-. =,----_,...,.,~·~;·: ;-.. . . . . . . . ~ . -~ ·. .... :·. The

lessee

pays no taxes. /

qenerally The -; usufructuary .pays . .· ·. '. for .th"e annual charges : . and. taxes on. tlie" fruits'

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constitute' usufruct on lease the" property '"itseJf the prop_e"rty leased. .,. to another (Cf VU-: . . . . C.9.P~. Art. 581);:· · .: :· . . ~ ~.. ·~ . . . . . . .. . (DE L:EON;.supra.at 7?2~72.3).· · "

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The.obj;~t o'tih~ ~-on'tra'ct The object. of. the is {he 'labor . or, service contract .is the work ·rtifol{ :.p'e~formed', by' :d~he' (the." res bit ·,i.tlie lessor. •.. . · .. · · · · labor) · ·,., . . wiihoui . .considerinq. ·the :'labor · ·,·· · that produced it (¢/VIL CQDE, Arts~. 1689 -end

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2019 SAN BEDA LAW CENTRALIZED BAR OPE8.4TION5

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The-~ lessor performs - · a material act for 'the benefit" of, his employer withou! representation of the _·!_after" (CIVIL- 'CODE=,. Art. 1644). ', · .. ', . . . .

Employment'

The ·agent· e_xecute~ a

juridic~- act for 'and in behalf -of "the principal (CIVIL :- -- CODE: · Art. ' 1868): . . ·:. :

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. Worro'r service must _be .Presumed to-be for a· for. . . price .. - . or. , price ·..o.r._ cons id eration 'consideration. -. . _ · ·.:: (Cf.VU:. . - eODE, Ar_t.

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Service ~as iver under Boundary.Systern.: .. - · Under' the b©U~~ry system, the relation between. · the' ariv_en !h~eJp11eY.. oV{n_er thaf P.f.i!"l;lp[oy,~~ _-

~~d

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. and. enipl_oxt~SJ_?~aqd. lessee._([),£ LEOi'J, :

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. -In-case of breach,. there ·1r:( case bf br~ach, .no . '. .. ca11 :_be ~c-tfon' ac\ion : ' fbr_ :. sp_ecifi9 . .specific p_erfofmaric.~.: _. performaf)Ce.. ;- .,

·ah·_

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Agent, · :. _ exercises . . .- ... -dlscretionajy ... -. power - (CiYIL _ . · c:¢pE, · · Arts. · ·:· :1876, :.. .-. ,J Bl7, ·..=~,. 1 Btil:

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· · ·R.ule for.,L~.al?e. qf Consumab!e. Goods · : . · · ~ener~I- 8(ile: . Cor;isuinaple :goods _cannot b~ th~ subjed matter ofa.cor:itract-of lease of thiQg~ __ (CIVIL . CODE, Ait\1645) ..... : : . ·:·_ . :.·: ._ ..

:> .' ': .' ' . . .- .. : .... ·.

-for"

:·. {DELEON,.. supra·at .724f

. : :·'. _.,- - "1882 fS84 1887:'~nd

.. , \

. .

. '.: L'..'ease-of-lfiings v.Lease of S~ryices .

_agen_t,. _ himself or exceeds the ·--- ', ~ , , Hini_t . of-'. his·., au.t1;i~rity_ ·. · (Cf.VIL- - . CODE, ' ;· Ar( ..

-- .' rnlrilsterlal'dutfes. .-

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: ~J:~}tfexpressly on.. Whe~. the binds

.Leiso/ is _ ~nly··i1ri-iit~d"lo · . ".

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Reason:_jo LJse or enjoy )h~m.-th~y wi"II have to be · cons"t'.1med~; ..This _: canrfot be. :aone in lease· _since returning. the ._thihg .- is ··tlie essence of lease. (CIVIi.:. . CODS, Art. 161_3). . · .. 2019 SAN BED.A LAW CENTRALIZED BAR OPERATIONS

I

541

SALES ANO. ·.lEASE SAN BEDA LAW CENTRALl?ED BAR OPERATIONS - MEMORY AID 2019

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E·xceptions; . . 1. If they are mer.ely tc:i be exhibited; or 2: If they are .. accessory .. to · an industrial· esta.blishment (CIVIL CODE, Art. 1645) .. . . . Persons Disqualified .to be °Lessee.s Th.e persons disqualified to buy referred to.in Articles . :· 149Q ·and 1491, are alsq disqualified to become lessees of the t)Jings .m~ntioned therein (CIVIL CODE, Art. 1646). . ·'-:

~

~ .

3.

·1~91)

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reterto .

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.

.

.

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.

The manager (admii:ii~trator) with respect to tbe prop!'lrty under his ·administrati9n (CIVIL CODE, A,:t. 1647).

_'to· the exc~~s (DE LEO['J;- supja· at 739).· , . · . .,

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Lea~e _of,.Re~l ProB.e_rt~ t~ Aliens . . . ~. 1 ..' The...administrator of conjugal property (Chua v. Foreiqners are.pro~1-~1t~a by. !l}e ,c?.~~t1tut1~, e;.c~p~ .. ! ·-1;c{ G.R. No. L-60015, December 19, .1984);· OIJIY 1~ case? o~. _1:ie~ed1fary succes~1o~~to 8-rn'<1_pA I~ i~ intended t? W?tec.t th.e which F1hpmo~ ot erw1se ~-. ·-' 1 essee ·. -·· · .1' 111?'>· .,,. t·b ~Nous ·~ t e_.·.d.. "'uy· tli e uy;: th e .. . . .·owner· · · cann~ell ,. . . " . . or\r::<,w .-~---f.~'-.o/ca?,,no .~r ·f· 1 ·... dispose of her property for 50 y,e'3r~;\irc'\rpve'n:rst em"i ~l~ase ).s,tecora~d~(Reporl· of the: Civil C.ode 1 con~~!t~(~io.ria,I_ l?_an· . a.gainst V.~lfun._-:19(cir-~lding~p_/142)~'/ ·. ·. · · , ·(f.fJ1/ippme Bankmfj Corp. v. Lw.. -S/;le ~- .'JY, 2005). . ' · · y~ars, renewab~e· fo~ ~c!n_other 25. years upon N \.: · a.gr~em~nt of.bothJ~~~or'c:1nd Jesse.e: R.A... Klb!!ol652 . Lt::e~~ Pe~~ona_l,_o~ .. R.e~I ~1ght . . : . (rnvestors' l~ase.'Actr·rsgulates the long~terni I~ ":~:en,eral: ~1:1}. ~: _Le.~s-~ !~ ·only ~. p~r~,o_~~I _ng~t (D.E ·: . 6(prly~te'l~n'd~'·byfor.~igrUnve~tcfrs'.'.":. ·. . . SU~(a-at 7~3/:'. ·, ·,'.. . : . . ·: . -· . . . '

·x

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Lease 'for More, Than One (1) Year . .Artici.~ 1·547 does not specify theterm of the lease. The r~uirement under Articht1878 (8). is imposed whether or not the lease will be recorded. In the absence .of a special power, a· lease. for more than one. (1) · year executed' by. persons· mentioned. in Article 164 7 is valid o'nly' (or one (1) year but void -as

the cf.iscus;idns in Articles 14,90 and .

.

Reason:_Th~ regis\ratiqn ot the lea.se -is an act _of · ownership.'or strict doi'f![nion; hence, a special power of attorney is n·ecessary (DE. LEON, supra at 739) .

The p.rohip1tion is ;;idqpt~.d in Articl~·.1.946 because o~ the similarity b·etween the- contract· of lease a.nd .that of sale (DE-LEON, supr,a at 7~6). · · (Plea.se

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.Proper ,~· . ·..../Autb1:irJty-:.Re_ql!ired ·. ·. "< · . \ ;._ ·.- ·;· . . . .If :'. ~eps~d· ·. · .... ,to:.· . · qe.

... r~cgrde'd ~h,R~gist,f\ o'( Prbp~r!Y · (Ct~IL

.CO.OE;

~-:. '?a4~{·prQp'.er.·. t~ b~· rec~·ra~d.'-i~:~~oll~wi~·i:i b~rso~s u~hority ·(special·. pq,~i~r of

. mi:fst have

a.'

attorney fo.constitute:th'e'lease): .- · · · ·' · : · 1. The husband· with:respE:!c1. to,. the . parapherna·I real estate of the wife, unless the administraiion of. such· 'proi:ierties has ',been. tra'ri"sfe'rri:id'·fo.· fh·e· hus~and . dcm~ -:in··. a ·public )ristri.Jm~nt 'di.Jly. re.eor~ed·· (i=AM/ljy: CODE:/ Art -1 ·1-0). 'Conjugai property ~arinot 'be lea~ed >.vithouf- the . joinf co9seqt..pf the),ppu?_e::f;.. · ... : ... :·. . •; 2, · . The. -f~!her Of . guard,Jan with : re.~pe~t .,t.o tne . PT6p·erty of the.minor or.the ward'(C/VlL CODE,. · ~r;.··1647); and · ·, · · · · · · · ·

5~2

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-~~ceptioni: .partakes .:6f the. natur~··_of rear· : right'if> .· · :· . · . ·. .. ' : · . · . · .· :·1}. l~~·se_ of r,eai·property is more thari. or:ie (1) year,, · ;-~· ·' ;:ind to pe ~nforcea!;>l~. it·,mµ,s(be 2;. 'Lease of real·propertyiisJ.eg.istered . . du~a.tion_w1th. Registryqf Pr_qp.erty Art.. 164~) .. : . .. .. · . - ;· ....

in·writirig; or · . regardless ·of (CJVIL.CODE, . · . .. ·-: . .-- ·. t.t~te: Lease of . g~.rsor.ial property' .cannqt be ··register~d.:Jo be .biridi~g againsrthiro persphs,. tlie · p·arties musfe~~cute.a.pu.blic instrurnent(DE LEON, , . supra .~t 740:..74·1) ... , -~~·:· . . . ~;. . . . . . .. . . .. . . . ·..... . . . .. ..... . : .• ·""' Effect:of Acfual Notice of.~nregistered Lease· by . the P.urchas·er . . . ..... . . wher~ purcha?er a. lai:id at the um.e of ·i~e . p·urchase ·has· full knowledge thaf. the land has been lease_d to a third petson, he'is bound .to respe~t sa.id

j .2019 SAN BEDA !:...AW CENTRALIZ~DBAR OPERATIONS .

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SALES AN.D LE_AS-E .

SAN BEDA LAW CENTRALIZ£.D BAR OPERA TIO.NS - MEMORY AID 2019

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Rea?on: In the case· of ce;sion ·or as$ig~m-ent of lease rights 9n_ real property," there is .a 'ri·ov~tion ·by the ·SUbStitution Of the person of one. of the parties:_·. the· lessee. The personality of· the' lessee{ who dissociat~s ·from''lhe Jease,··ctisappears; only ~wQ_· -persons r_emain·in..the juridical -relation....:.... .th.e lessor and the assignee who 'is. converted into. the. new ,· - !es.see (lnocendo ·v. Qe ·Sal) Jose, G.R. No.: 201787, \.September 25, 2q1_3),: . .The .. -objJcti~~- 1qf : the ·i p~ohibition ·i~/ to 'i:;-rotecf

Note: Under _Section.· 9· (a) of R.A. · 9653 (Rent Control Act of .2009), assignment of lease .or subleasing 'of residential in whole or in part, including the acceptance of boarders or bed spacers, without the written consent of the owner/lessor is ground ·for [udlcial ejectrnent. ·

a·

J.

ihe

Riqhts.of the Les'sor.ifSu blease

to ~the contra~

/ •• ••• •• A ( '?. ~ _ f:\n assiqnrnent exists _wheh . the,Jesr~ /rcld; in ab.solute transfer of hi? leasehold rights ina contract, -and he has 'disassociated' himself:J-frbrrr'tne original· contract of lease. Con_s.equentJ~tf e juridicalrelatio~. · is · only between the . les~&--1and~tn~issig11.~e (Manlapat-v. Selezer, G.R. No._ L-822/;fd.anuary~~~ 1956). ·· .. . · .. - f . . . . . . . ·. . . ~ : \ .-

• ---~r-erriain in./_orne.}: :_' . . . -: . -. . . ·. . ,, }. Ast _e exiltellfe.bf_ the subleasedepends uponthe ·. lease, th~?ublease is. terminated· upon, .. the rescissicn oJ the . lease contract .(Go · King v. Geron_,.·m~.91 _.NC?:: ~---=2.·12 __ 6., A_ugu_st ~-,7._.·.1.·9_;1._ 8). . . ·. I . , ,Subl[as.e . Assignment pf_ Lease __ : .

: . :.-·

. . L-,,,...... ------.-.

~ff._. f':

~I

,

. .. .

• ·· _ : ·. ~..;.;..-_;,;;~-:.,;,..:~,,;.+-.-.-_.....

: · . lfi~·.~· separ9te 'and· dis~i~ct ~ci~tract of le~s·¢ ~h~reih . .

a. ·. . .

. .

. . ·.. :

. . .·. _,: . .' : : ·.: .

.

.

.It!e~wo-lease~ and two~e\s~inet. jllri.dical r(:llahonsh1ps .. although immedi.ately . conQ~cted· a0tnhder.· -_-r:lated

the( original 'lessee becomes. a sublessor . to . . sublesse~ of. th~ thing, in whole or in part, .. wi\hout .. pjejt,Jdice' to his r$spo~sibjlily fo'i- the_' perfixmanc.e qf . , '• .• ·the·.contract toward the.'.lessor (CIVIL c6oc;· Art. .

. .. . {650)....

is Prohibfrect but

Subsequently Entered. into by the Lessee: . 1 .. Rescission: and darnaqes; cir· . · · 2. Damages 'only j~o~tract will be- allowed- .. to .

1

.. ,·.· ·-..

Accepting. boarders is not equivalent to subleasing since the lessee does not relinquish or surrender his lease. to them, He did. not cease. 'to become the · actual occupant. and. possessor ot. the· ·demised . premises (Malasarte v -, GA, 'G.R. No. 17-8 SGRA 310, 19~9).

. lessor or owner of the' leased property (Da°ki.i.dao v,' : . Con~ola9ion,.,GR. No. L-5475.3, June 24, 1983)· An assignrrlen(:of lease 'without. the consent of the . lessor _is.~ ,~iround'. forIhe rifscis~ion_··.o.· f the :1eas.e . . (Cc}C9 v. CA, G:R'. No. L:46295; December 29 , 1977). . . · . · · ·._ .. · _·

·..

=.+sew,~_.

'Reason: .The Jessee remains a ·party (bound.by the' terms· and 'conditions "of .the contract) to the lease even if he-has already created a sublease thereon (DE LEON, supra at 744) ..

lease·, ·although it is not entered upon the certificate of sale (Lao v. Lap, G.R. No. 149599, May 16;.20_D5). . .. Assignment of Lease by Lesse.e . . . General Rule: A ·1essee,.<;:a_nnot assign ttie.[§lase-·. without coiisent of lessor (CIVIL _CODE, '(\rt .. 1649). ··

.. · Exception: , I~· t~ere is stipulation· _ tcNIL c_oo_E_,_A__ /t.. 1_64_ 9).-_· : . .. .

•.

iP@¥f?:t42tmtt4§%ftH't'JE•0M?

There·. 'is only.· _on_e . .. ju'ridical.--relaHohs. hip, that of the · lessofc. and the assignee, who- is.

.'~O ·- ~acti .~c:inve1~d ii'l!P·ci __le~se~: .·......

. .. .

: . ·. ·'

l

As the· existenc~ ot-tbe. suble~se depe.nctf upori'the.: . le;3se,. the ·.:sublease : is.· ( terminated ·-,µp9r:i'-. the · . .. r~scission ·. of the .·.lea?e: contract-". (Go. ·K(ng · v. Geronimo, G.R._No: L-2126,-August' 27,~ 1.948) .. '

. . ,.

·..

.

.

.

.

,A;,subl~~se c1;1niiot·liave · a ---t~rm 1cinger .than lhat,-bf the leass .. on ·.which 'it is~-d~pendent-.:-lt terminates .. upo'ri' the termiriation'.,of the lease, \.ft,less "t~e le,ase is _for. a .shorter term (Blas_ 11. CA, G.R. · No. 82813, · .December 14, 1989},; ,_.

to

Rights of the lesse.e Sublease .. . 'LJnli.ke. ir:i assignment, . a less'ee r.nay. ger:i~rally . sublease th1;?' property in the absence of ·express· prohibition "(CiVIL C.ODE, Art. 1650).

The. .. .sublessee, .fhe assignee, has·, .a . ·gerierally:.cto~s no.(navE;) d_irect a"ctiQ.1:) cigainst ~he _any dir~ct gction against .lessor. .

the Jes$qr .. ·

·· ·

(DEL-EON,- supra a( 74_4-745). '·

2019. SAN SEDA

LAW CENTRALIZED

BAR OPERATIONS

I.

543

SALES AN-·D LEAS·.E. SAN DfDA LAv/cq'_fTflALIZED DAR OPE{VlT_IONS _· MEMORY AID 2of9

Responsibility of a Sublessee to the Lessor General.Rule: The sublessee is directly· liable to-the sublessor and not the lessor (Manlapat'v. Salazar, G.R No .. L-822.1, January 31, 1956). ...;-.

-

. W~rra.nt~ ?f the ~es~_or (CIVIL, CO~E, Art: 1653) . The prov1:51ons governing warranty, contained in the Title on Sales, shall be applicableto.the contract lease. :• · .. · ' , .

Reason: There is no juridical .relatior;iship,. befween the lessor": and the. sublessee (CIVIL COOE Art .. 1311). .

:.

.,

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5.44

2019 SAN B~DA LAW CENTAALIZED BAR OPERAribNS . •. ! • ~ •. • '

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·S·A-LES AND: LEASE .'SAN BE[}A LAW CENTRALIZED BAR.OP_ERAIJONS-- ME;:.,ORY·AID 2019. . . ~ . ' .... ~ .

Rules in Case of Useful Improvements and · Ornamentaf Expenses · . . · 1:· Rights· of· Lessee . in. case of ·1Usef~I · Improvement · . . . -· · '. a. TO r'ex~ov.e the improvements should-- th~: . lessor refuse. to reimburse- although the principal·may suffer damage; ·or · · . b:. To be .. rei_mburs~d by one-half (1./2fof the vah..iii bf said. improvements at" the .time of. ..teqnination of the ie"ase ?bould the le.SSC( · choose·to appr.opriate it (CIVIL C_QDE, Art. ·· 1678:par.· 1). ··.::. . ·' ...,. . ···, .

· . 5: Making of: Nec::essary repairs, unless there is a stipulation to··_the·.contrc!ry 16.54, p,ar. 2). . . .

(CIVIi- CODE,· Art.

. N.ote:. In ·default·.of. a special stipulation, the · , custom of the pla·ce shall· be observed as to the . kind repairs·(C/VIL C_ODE, Art. 1686);. ' . . , . "'. The word "repair" is the restoratio119f things aftec ... injury partial . destructign, without com"plete _ loss of identity. of t~e tni'.ng repaired, putting ..ba9k of .som~thing in· the condition-,in which ·'it' was or.iginally. Wtiile c1n "improvement'' ·i? adding of something new ther.eto (bE ·JEON, suptc1 at 753), . .· . :. .- . . . Where Lease Contract Contains Right· of First R.efusal' . -. . . . . . . . .

of

or

..

. Purpose: :TcYp"reverit unjust: enrichment bf the lessor. ·The lessee is hot ·a possessor ..io qood :· . : faith in the 'sense he· believes'himselMo'.be the . ; owner; b·1,1rne.ither is a possessor in badfaith. . ·,. He.is: in' 'possession· by'. virtue. ot 'contract, so. :-:. his _POSs·es~1on is-la\WuL. . ' .:. .

·1-

.:- ..

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)

The lessor is un9er aJegal duly to the·lessee·_not to sell to·anybody"at any price--un_til after·he:has made: an offer to sell to.. the-latter p.certain pric~·c;!Otl lh~ le·s~ee,has failed to· accept it (PUP v. CA, G,R No ·143513, November.-14,:2001). · . \.. .

at

a

;~y,

. '. The" lesson.is. to orily ~n1e-ha1L(:1/2) of the . · · valueo! the-improvements attheJfme-ttier·1ease · terminates because the lessee has enjoyed the . -·· ... .sarne. oo the other hind,' the lessorwilf enjoy ' ,.....---·~-'}heril;,indefinitely thereafter (Report .of ·the Civif · Code eofnm,ssion· pp;_ 144~1:45'.' ·:·;; ··. · · · . .

ThE: _$1a.1e:-in v;ioi~tion of ;ucli _ri~ht is Vali~. lt"jY_ D.$) rescinded or rnay be. the. subject of an act,o.n for

Ji\" .

·. -5! ~~'.~ci:~~':;;-~~~e6~~:;~c~ ~~~iit;/on_:ReaJ~ -sc. . ', Right of L~ssoi' ·ro C~"n_tin\*.' S~~-usine~~. Of.·

' ( .

I

. '· ~artie7f Qla~'. ~~ti~~l;t~ .. · th~t ,th~;ile.ss:o~ may -i re,~bl_!rS(n~. \he l~~st · ~~oulelt~e- la_tterJatt~ :~om ply. with tht; Industry ·Engaged. In by Lesse~GOpE, .: . · ~s ~~leases. contract.. C_ourts, may . · . 1656) . · .., ~--, · .· _equrta.lmy ,r,e(!uc~a: stipulated penalty rn- t_he .'· · · . · · · · · · · ·· · . . · con~_r:~cJ§._(1)!iMheprincipal obligation has been . ; . · R~ason. ~ lease is·~o- W~·rranly ~Y'. the "le~~O~··t~. l~ . . · .·. ;. . partly qr irregularly" complied\vifh;··ar:id.'(2)"even· ·. lessee '. ttiat rttJ~- latter's · i:)U$1ne-S_S., W<;)UJ
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-. _ 1~54) ·_'·:--:·-.~:-···( · , . . E~ception:lf,here is a stip.u_lation to· th~ ·co'nt~ary.~ ·

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.:'To. be. ·e·ntitled ·to·::either· .two:. remedies-;. the ·· . ." .. .. . ~ ... >.: . .· . •. · · . . fo1iowfng must .co_nc_i.J~: :, :.::. · ' · : ·,.· : . •. 1 Ruh~t on·'.~1.teraJ_ion. of the ~p.rni of t~e. L:~~~,~ . ·a:. L'es$ee .must be· a considered .a.:builder .in ·, L7~sor:c_a_~{,~!ter provi?,ed, tn,el'r:. is no: i~p.air~ent .•of· ... , ., .· good faith (Fl6rentjno·."V... Super.vaiue/,fnc., the. Use·:~o w,hrch, th~ !b!ng·,s devo_ted~ under tb.e terms . • ~. G.R. ·Nq .. ,1 ?2384, Sep.teinber 12, 20Q!); · · oftn~-:lease'(C/VI{.. C,ODE, A[f._-1661). . ..'. . ."· . · ... ·...,;..,; :.. . - , . :. ...... .1 ·.·. ·:: -:- '" . ' .. ''.' ''. : : ' .. i . ' : . • ·N~te: ._:"·Th~ ._ ...im.provements; . _can·· be. ,Right '~f. t_h~.J~s¢ee'. to b~ ·maintfuintd '.iri. . . . . . . y. COr)Siclej~d ·made in. good. faith· i( they .,are 15e'a'cefu[ enjoyment ·to(the- ·e·ntire·.duratlon. of·the · .. not in.. violatio_ri,of the ·1ea~e contract (DE; . c"r:,ntr~ct.(diVl[;'.GObE, Ail: ·.16q4, par. -3).' :,.: .. .'. :_< . . LEON, supra at·BOB)'. ·.:. ·_ . . .• , •• •. ,· ·-:-··.~ ., ~·· • • • ' .r • • ' ...,.. . " . • •. •,t:· !.. '. . . -;. . . . ._ ' . •· . ·. . b .. lmproverr'ients)nust b~ ~suita_bl~. to:-the use ... Lesse~ cari fujf~r so 1c:h1g·as th~ valqe·of th.e"rfrbp-e"rt°y . whict, the iease·is intend.ed; and-·. . is nbt .substantially. impai/ed (OE 'LEON;. 'supra. at .. . . . . . ,··· ·. : .. · .. . ·. . . . . ??7); .:.. . .. ;- : .· .. ; .! c:;. The form and s.uQstance of: the ~pr:op:erty.· leased should nor.be ·aitered (Inocencio v.. To.c:;ons_titLite ai~~r~tion.". tl:ie(mo'ctific~tio~- inusr : · ·. H_ospjcio :de·,saib Jose, G.R- ·No'.,201"7BJ,- , . '-be'. in" "suet, in~nner. thaf. it" viould. destroy. the · September 25; 2013);· ·. · . substance of thing leased"Unserviceable for.the use . i . .. . inte'ncfed '(Id.J. . . . ·: · . ·. :: ·. . . ~. ·.. --:' ._.

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Rights of Lessee in case of.· Ornamentai Expenses The lessee has no-right of reimbursement, but .. · he may remove them, provided:; '. a:. No damage is causecfto·the. principal thing;

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)f th_e l_essor refuses to make ,urgerit repairs . de.spite notice, th'e remedy of the' lessee ·is to make urgent -reppirs themse.lves and td Gh;3rge the .cost:. to the ·.lessor -and riot· to suspend . . pa'yment of, rentals (Banzon v. Ubay, G.R. No. L-4q464, November 21, 1979). ·.

.

Lessor does riot ch'9os·e ·io retai11 .them· by paying their vai_u~ at the time. of the· lease . {CIVIL CO.DE, Art. ~678, par.-2):

Rules in Case ·of Urgent Repairs · .· · ·, The. lessor has the 6bl1gation't9 maJ<e n~cessc!_ry . repair$ {CIVIL CODE, Art. 1_654, par. 2); and the · lessee is obliged to notify -the:--lessor of th'e urg.eni:;y of.~µch repair (CIVIL CODE; Art. 1663, par.2)., · ·

-~s~ for rescission, in case of substantial _ctamage to .him (CIVIL CODE, Art .. 1663).

Trespass in.Lea~e 1 .. Tre$pass in Fact (perturbacion de mero hecho) . A pnysical disturbance. on the property leased · such as ah intrusion without any leg.al claim to . 'justify en.try into· the property (CIVIL CODE; ·Art. 1664): ' < .... _· ·: ~- _ '. · . : ·

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The Jessee. is obliged to . tolerate the· work although it _may· be :very 'annoyinq _to· him and . lllustration: Forclble entry . alth~ug~ du_ring the same: time . he,.;ri~ytfe }::;.r:ef,sor.will.not be_ he~:liabl~. · , deprived of a part of the prem1ses·;~f 1:!P.al~~ast 1. for. less than forty (40) days~(CIV/ C~ODfi_;._ArJ ,~E:asp~ T~ duty to maintain the lessee m the :· _1~62,,par."1).. . I' · • ', :{'~-~ • ." • _ peaceful e:nioyment .of.the-)e~s~ is a wa~ran!y -... . . . . _ .· · .· -. . . . '""-/ -~~_the~ssee ~t,~11 not be d'.sturbe,d his · The burden rs on the l~sso.'i1o~r0v~the 1.irg~nq~) "'"'t: legat.; a. a~ol1/'1ys1cal,p,oss.ess1on-.(Bercero v~ of the repair (DE LEO,Y, sopt:;$afj69).t, 1r . ~ -~ Cap1Jo_J.Dev;wpm_ent Corp., G.R. No. ·1547.65; J . , : Marer 29, Note; Article: _1642 f.~aks..,. of· repairs. ~· .. : .. . . · \. · ....,....;·.\. ·r · . · · .. • Modifications. or improv~m.en_t9 hich .the [ess_pr"?': Ii'.! r.t'~;.J_he Je?s~e · 1s":au;hfnzed by law to p~_rsue a niay want· to make on· h~tOJ~erty dJring ttie... .I • _d1.reet act19r:i1 pg_a)mst--\he·. usurper or intruder, · · . . · . . . , . J.l ~- _.;..,-n • . ~.1, · (Cl /{;-r,;;ODE -Ail 1664).: . · · i:1e~1od:of. the lea_se _canr.io -Be.. _~one ;;1~1nst the ;3. ,:::::: -t:-¥:{JJ objection of thelessee (fd ..,a!,rl..69). :~."·.'i· ~-~ ,~ .. //v/ . -~ . .. . . . . . . . . . · .: ·.- : .v) \.,. _. -, ~spa~.s/m -~aw/ e,:turbaeon de derecho) If forty (40) days~or.more ~· the:!e{see c8n a ~ ~ ,-~ . ·. · , · · ,~. · . . . . ·. . · - fc:i~-~edu?tion o(the rerit in ID{oportio9'_t? t'ite. t~ . . . ·.. · . ~"'t_o_1~.d;_e?o/. c aims '·:gal· rtght to enJoy 't~~ .-mcJudmgthefirstforty(40)·days~anrlth_ R.'?rt, , \~ em1s~s · :' · · ·_/ · · · rt · f h ...1~ h h · ct ~(fl'J.'..,, J-.... · · , · · · f th :0 . e·.12:ope y·o w ~-·, .-,Tti·1 '-...._ ·11 b;. h' Id 1· ·bl ·t· th. I • ,., Th . .. ,· .·:. . .., : . ·,e is· ,epnve~ . _ :-(:C>u~,"'--:"\ _.~ ~e~~~~o~r . e: e 1~ e o_. e E)SS~c. ... e . · · · ··' '\ · · . __,_ . YA-,· . -}\_~sso.i;,fnaymaintain,an action ·to reco~er title.If less than fotty..:.(40) days~ the_l~ssee ca~no.t >'. _.,.. .. . a· t . ). · t t bl' h h. ·ask for reduction _of-the price ih- the absenc~f a ..L v.,1;,l. -~_;,.,;pen; rei!Jvm. ,ca ona_ ·· :. or O .• e? a. 1~ • · is , , · ··" ,:. th.· • t ; t · .. h' ~ · h. -.:.~o,e,tt_er- rlQ8};.C!f po~$~$SI~~ (acc1on0 P1!/?hc1ana) . . pro~~s1on m f:,Con rac g1vmg 1m sue ng . or .. . . . . (DELEON supra at 773) . .- · , . · · · .. · for rescission· (Id.). : ·. ·· · · . . . . .. ... · · · -. . '· · • '· · ·: ·

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The· act- · of,· the · Japanese armed· fo.rces · .in . · evicting _tt,e lessee f.ron:i. 'the -lea_§ed, premiie~ arid_ oc¢opy_ing.fh'e sam~ was_a_,fresp~ss ir] iaw_ . ond~r the' _r.ol,es ,9f · ."b,.e!ligeren_t .ocs~J>,~tloi:i·:. (Villarue! M?Jni{a:Motor ~o., .G'.R.'.:No.103~4, December 13,. 1958): ·

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2. -To.!J.se. ttie thing leased ~s a diligent father ·of a family ~ould, devoting it ·to the use stipulated; and in the absence .thereof, to that inferrep.irom the natur_~ -of the thing leased· accorpirig the · - custom of.: the place (CIVIL CODE, Art.. 1657, ~.

A .lessor' is not re'sponsiole

for the le~isee's eviction through_ conde[llnation proceedings ana _cqn°not be held. liable ~o_r dani~ges ·therefor .. The l~ssee must _!ookJo the expr.opria_ting, plaintiff for his compensation·(Sayo v. Manila RailrofJd Co., ·G.R. Nb. L--17357, June 21,. 1922).,. · ·

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. . P;esurnpti~·h _of·Rec.eipt. Thi~g -Leased in G;od ·_Condition (CIVIL CODE, Art .. 1666) . . lh the .. absence. of a _sta_tement(or rewe.~entation), . wri.lten or oral concetnif)g the. condftior.i-.bf the thirig at 'the . tfcne fhe lease - was constituted,. the._ law presumes . ~hat - the . less\')e received: it in. good condition, unless there is a ·proof to the. contrary. · .· - . . ,

·The lessee is liable for any deterioration caused by. rT)emb.:.:ers· ·of· his household; guests . and visitors (CIVIL C_OPE,.Art, 1668)...

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. Respon.si~ility _oflhe. L~~_see for D~terio~atio:n or_' :,. Lqss _ofThing·Le~i"s~d (91.'{il,. ~Of?E, .. 1667:J ,:_ . ,. The lessee i$ respo'nsible-for the deterioration.qr loss of the· thing' le'ased,. ui;iless h~ :.proves --ttia~ [t tobk _piace~wiihoul his' fault?'This. burden of proof on the · . lessee does n.ol'apply ·wheh th~ destruction ls·due to : e?rth'quake, 'nob_d; storrri',·pr other natural calar:nify.

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.. Basis! He ·made· 1egallY, resp~n;i_ble fpr tne1r ads a·s in quasi-delict$ (CIVIL COD_E, Arts. -217.6 and. -21!30). under 'the .. principle of comm~and responsibility.· .The· law; m~kes ho ;distinction between intentional or· n~gligent act~ of third persons. The lessee may recover·fr6.m the t!lird persons wt:iat he hc:1s -paid .ir, satisfadion;of "th~ claimoJ the les'sor}DE ~~ON, supra at 77~)- .

·3.

To make.urgent Repairs even ff a~'noying 'tq him (CiVIL CODE; Art. 1662, par. 1) unless the place . be.comes. uninhabitable (CIVIL CODE, . ~....__Ari. 1662;_.par. 3}.. . . · :- . / . · · . · · .. ·

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-Obliqations oftheLessee: (Pl.JRE- )2 _ • . 1 .. J_o J~.ay._th_~- price.of the l~~?~ac_corqjng_to. the terms stipulated (<;!VIL OO~E Art; 1657 per. 1)'\

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·Notels'j; ·agreerne~t. the. o~lig"ati(!n. may be _a7_:s6s0~_m_ ep·,b,Y th_e __ 1!3_s_s._or (D:E L.E·ON, sy_.P~_a_a_t 'J·

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l~s1or- hc!~G:e_. ~gnt.tlo fix,th~. 5.' To J::!otrf¥..._tn.e l~s~o;- of ~surp~tiori ~f untoward: ... rents. T_he _court c~n!19,t d~~~_rmm~n~ rent a1°. · -: acts. which ·· :any" .third pe(s.~n · --~ay have : compel the- le~S?r to QOhf?r~ _ther;JO c\rtt_..a_llow · - · committed or may be openly preparing to carry · the lessee to ~nJo~ theyre~!ses_on-Was1s pf .: . · Q'O upcntrre le;:isecf.thing (CIVIL _CODE, Art. the rents fixed byit (Lim Srv:·~1ro, CS,f!:r!: N-. ~66$)... · .._. . ·. . · · . -· · _ · · - .· -·84~6, April 25, 19!j6).. . -. . . _ _ ·· · . . . . ·. . - ·. · .. . ·.. . - .' ·.· . .. . . '·. -. . -. . . :· . \. · Reasons:.~ . · . · The lessee ·is, ~blig~d ·t? pay_ ~en_ta.!~. tl~riflg·the . . · \ ·.. a:.,: Sp that 'the, lessor may bririg__ pYoper action" .... · pendency _of:lhe.~ct1on for rascraston of.the lease . . against the· usurper (Simpeo v. Dizon, G.R. · . · .. (~f'& M Managemept A_iC,s,. l~c. v.· 9A, _µ.R. N_o: , _No. 452, April 3C(_1902). · . . . . .. .. · _ .. - , . .-L-53924,. J'!_ne_ ?fJ;1982f.). · · · b. · · It is unjust.to ·compel the lessor.to star:id idly . . ' . ' .. . . and trust'the defense' of his property to ·a Proper rat~ back rental; is- 6% (BSP·Cir .. N,o.. 'mere lesse'3 (Roxas !V, :,...,iijar(}S, . G.R. f!o'._ !99, S. ·_2013) p~r a'nnµm comp~ted frofh_,the . 3823,)Jo.v.emb,·er:23; .1_907)>: . time ofdeinand. Back ·r.ehtals :a.re _equivalent to· ·: a :foan or ·forbearance· of .. money:(Castro ;v. To J::!o.tif~, the lesior .of~ f~:>r rep~ir~· (CIVIL. ·.. · ·. ·. Palenzueia, .. Q.R, No.. -181698, January::. 21,'_ .. . CODE, Art. 1663, par. 2). , .· _. · . . · · ~ : · .. ;. 201·3).- .. .. . . .· - ·. ' ., · .. .. .\. . t,

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·.. Th~ lessor has not only the. right to. te~m-inate· tlie . :·.lease' ~pon lhe ex.pfration:of'the' t_errn _but.also to. · . · ·. in.crease· the renriri case ofrenewaL The lessee ·,:. ' '. has an ·option t~ ac~ept'th_e - nev/ rat~. or yacate . . · t.h~ p.r.~mis~s:-:_ot~'3f\Ni_s~; he ·will p~ consid_ered~a. possessor in bad faith of the prope_ttY (De ~eon .Vda. de R_oxas Ii. CA, G.~ .. No. L-39146.'March -25,_ 1975).

Reason:- Because· tt:ie. lessee. is,i_n._pos~·ession. and_"the,:1essor no 'quty'to 'make co'nstant· inspection (Gregorio Ar~n-eta Inc. Lyric. Film. fxctiange inq:, G..R.... 37730,.. NoV(}(rJber 14, '1933). . ·. · ·. . . . .· . · . ':_ ..... . .

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Notification is ·not es.sentic!l .if the·lessor. actually knows the need for ·the ·repairs (Johnson f:icket .Rope Co. v. Grey, GA, 40'0.G: (Supp. 11) 239). . .. ~

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To, Return ·the property leased upon termination of the lease in the same condition as he received it save what has been lost or impaired by: a. · Lapse of-time; b. . Ordinary we·ar and tear; or c. Inevitable . cause/tortuitous event (CIVIL CQDE; Art. -1665j.

The. -followinq cannot · be successfully_ claimed: · a. Profits· plaintiff could have earned wer_e it · 'not for 'the- forcible : entry - or' unlawful · 'detainer; . . - . . . b .. Material injur/to theprernises: and c. Actual, · -mqral, · or exemplary damages · (Baens v. CA: G,R. No: L-57091, November . 23,_ 198_3}: ·. . , · · · ·'.. · · . · · d. Futur'e.·renis where the termination of' /. . .. .... - . . . the . · 'lease _abrogated liability for future rents . (Rfos 'Jacinto; Palma y. Hetmenos, _G.R .. No: L-23893, /yfarch 231 ·1926) . •... ,.: ; .···· .·-

Note~·lf thelessee fails· to comply-with.to) and (6), he Would be liable .fpr damages which .the - lessor would suffer and which could have been avoided.bf the.lessee'sdiliqence (CIVIL C0DE, Art._ f663;-par. 3)

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Immediate Term.ihatian· ·of lease .. with Notice under Art. 1660 of th~ Civ11 Code App.lies: a. Only to dwelling place o~·any.oth·erbuilding intended for:. human habitation; and · · b, · Even if:, at"' .the time the· .. contraci. was' perfected,"the le.ssee kl).~.w of tbe dange~ous' . condition or waived th·e right to rescind On · account of such condftioh. - . ,· ..... -~ ·..

the lessee, - in ttie peacefur qnd · adequate ·. enjoyment of the· lease for the duraiion of· the · ~ontrad' meritionea. in [N]o: 3 of·[Article.1654] is . merely a wa~ranty t~at the· lessee sn·a11 not be disturbe_d, jn :.. hi~·. ,~~al, and. not: .ptiysical, po~session." (Race_lis v. Spouses Ja.vier, ·G.R .

No. 1.896Q9, Janvaryi29'. 2018). Effecti:v.ity of the Suspension : 1 The right begins, . · · •• . : . 1. In the- 'case ·of repair(. from. the tim~ demand ; made upon the 'les~or and·· tlie· ·latter- fails perform his obligatipn; ·. :-. · ': . · · _ . , : ,2: · In ·the -case.bf ·eviction-,· from. the-ti~e· he · ~ ·unlawf~lly dispossesse_d ;(DE LEON,. supra

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ThE:. rule can. apply c9mmercial · bi.Jilclir:,gs . · ·where workers pe_tt_orm their) jobs (PINEDA, 't.

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R·eason: The right or° the ·ie~s-ee °is·a pre~~iu.tiori for-public ~afety ,whicti ·is abbye:any stipulation. (R(jport of )he' C~de Com_rryission, p. • 1.42).. It · · cannof_be waived (C,VIL CQDE;-Art 6),.. ·.,: . ·

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'• .. ··' Duratfoi/of the'Lease : ., ' . . - . The; peri_oc1 .may aefinite. or indefinite.-but. in any - · · case-, the pe~iod is only.temporafY, not-perpetual If ther_e-!Sia determinate.time or period.fixed (definite),. the'lea·se will bEi,fo'r' the safd period·a·nd.endiion the . . day fix~d without tl:le need of demani(C/VIL CODE,· · · ·

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Note: Howe-v"ef; in the Barizon case; .the SC rufed that t'he r~medy is not to-suspen.d payme.nt . b"ut to rnake )h·e: ·urgerif-~9p~\r· an_9 charg~.' 9,,~st thereof against~tne. _lessor. (G.R. · ·No. t-464!:i~ ·

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· ··: 'Accord[ri}l"t? th~ "<Sode CommissiQri (Repod,_p:-142),. . · Artic~1ej649ji.~:i~s,f}i~.a.·s~.t~ 99 y~ars.becau~e it is:.. • ··an. unso~na econom1o'pol_1cy to allow ownership and • . . enjoyment t.QJL~separated for a "very°iqng time". - . _· ,_ _ · . ·,t~\~ri~~ ·i: -~o;~:u~-an n:lh_e~-ni_n_e._(9~)· years, th~ lease-is considered .as hav.mg expired at theend of 99 . years. :nie \~xces·s·, .1$ -considered. to . be .an . indefinite period should an implied·new lease arise - . p'urel~,-~oie~~;ti~e ~~-nd_i~i~~i·· '. '.· . , -, . Note: ~su.sper,d~~for the'lntervehinq. petiod; the· · 1essee· does noj.havefopay the ·ren}'.~n"!_e'ss the r: . . lessorcan prove . that the suspension' v'.(8$·. not .. r, .. · legally·justifiable'(DE LE.ON,· suore.e! 761/ . . . . . .' ..; .. . . ·.: · ·: Atticle-1658 the· Civil .Co·d·~--~lj~~!i les~~~ to""':' • . •, postpone the 'payment of rent. i°f the, lessdr.Jails: - ... 1either (1) '!make the"necessary'repairs''. on:tlie';. · ·. -' , p'i-orerty 'or, (2) "r,aifltain:-'the lessee in p~aceful . . . . and- adequate. enjoyment of :the-:· property.· . . ".:"' · leas·ed.'' 'This·, pr~)Vision :· ·irnplemehts,: the.. .' · obligation·. imposed on· fessors· i.m.der Article : ·_ 1654. (3) . ,of.;tlie · Civil ; Gode> The·. failure .. to ·.· maintafri . the,: lessee .in· _'.'the . -~eac.eful ·a~·d '. adequate.enjoyment of the property leased:does · .not contemplate all acts of disturbance. L:esse.es . m:c1y suspend the ·piiyment of rent .under,:.Article 1658 · ·of . the . Civil Code ..-only · if · their ·1egal .possession is -di?r:upted.· The duty 'to m;:ii8tain. .

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. As a rule, a le·as·e contract providinqthat the ·lessee .. : cah stay in the premises for as longia.s_:n.e-wahts and · for, as - lohg as; he. can'.pay- .the . rentals'. and its· ·: · .iricreases. · are .' not. permissible as.. it:' is. 'a purely potestative .condition.: leaving . the · effectivity and' -, - . enjciymeiit of -leasehold. _tights ,Ji:f .the .sole ·_"i:1nd ·. exclusive will otthelessee.However, the,SC. upheld .. tti"at ·a lease CO'!tract. which ·provides· that "the leaser c.on.tract . shall .. continue·:: for an . indefinite .. period ·provide.d that,1he" lesseeJfu"p-to~d~te in the payment . ·of his. ~onthly r.ent_als1'· f.9rJti.e·contrad is·9r,e_ with .. a · .. · · period: "subject to a~ res9lutoiy ·cond.ition:. (Jesp_ajo · Realty- \i. CA, G.R. ,No,° );13626, Septem,ber..27,.

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If from. the circumstances,, it, can ,be- inferred. thaf a perio"d w.as ihterided;' the court maiftx th~ dura.von ther.eof under Article 1197 .oOh'e.Civif Code.. ,;·. "/'· . ,·.

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A lease of things during the lifetime of one of the parties.' as the lessor OJ lessee may please, is one . for .life, ending upon the death . of- either party (Eleizegui v_ The M~nila Lawn· Tennis Club, G.F?._ No. 967, May 19, 1903)...

Basis: Relativity of.contracts

Rules on Extension of theLease Period: 1. · If a lease. contract for a definite term allows · lessee to extend the term; there is.no necessity · for lessee to riotify lessor oJ his desire to extend ·A month-to-month lease is for a definite- period. · the "terrn.. unless .. the ·confrary. is stipulated · Where the .parttes · agreed· that upon the thirty: (30) (Cosmopolitan Ballet. and, Dance School; et. aJ. day notice, either: party . may terminate the · v. Teodoro, G.R. Nos. L-7838;" November 10, agreement, the lease is· tor a definite period (Rantael 19,42). . · . '\ · v, CA, G.R. No. L-47519, April 30, 1980). · 2. "May be. extended" as stipulation>- lessee cari When -the action is to terminate the lease, notice .or extend without ·lessor's consent but lessee must · demand tovacate is not necessary.Demand isonly notifylessor (Kohy. Ongsiako, ·G.R. No. 11106, 'a prerequisite' to an action for unlawful detainer wheri · January 2·7: 19'11;. · .· . \. ·, . the action isfor.failure topay rent.due, or to comply 3. ."May be extended for six (E3) years agri~~ upon with the conditions of the lease (Co Tiamco v. Diaz, by both parties" as: stipulatlon.iThis· must be G.R. No. L-7, ·JfJnuary 22,1.1.946). Thus, the absence interpreted . in_ favor.vof the · lessee. · Hence,". of demand does not- chanqe the fact. that the.Jease ordinarily the .·Jessee at theend of the ·original contract ··has- ended 'upon- thEttermination ofthe period r:nay-either:. . ·. r: .· . period fixedforits existence. . ·, . : , u·. . ·:-. a. Leave_ th_e P.,re_mise~; or . · · . . ". . : ·- :-.- '. : .; ·:.- ·: . , . . (\.: ·. . · f\[b.}':.~m~m m possess10.n_(Cruz v. Albe_rto, G.R.lf there I~ no f1~ed peno~(mdefm1.te-):~-f~·..( "i_';;t_13'!f!..1,.!4-ugust ~, 19:ff}.). · ... _1. For rural lands-. · · · ·_: .fr) co.:-?~_efsh1p,_ assent c!,11; 1s·;_ne~ded,, ·. a. It shaJI_ be. for alt the ll~J .ne~~sary;.!?J.,..the~. -J~· ~o~~-t·'L. ',i\\01d or; lneffectiveaqalnst . .nongathenng of f~u,ts · wh1ch,...the wliqle ,estatt . ,_ )("'"' _ ,-IT. con:ienb~g1o_wters (Leonzon v. L{mlmgan, et al, inayyieldino'ne(1)yJ'aF;&r,.J/ .. · / .· ·Jr ~ ~ G:R.\No:~~55~Septem~~r~O, 195-7). · · .. ·. b .. · Which it may yield ~n-ce althoug~ two. or _5. · Wh:le accer®g)o~~~e tefms of tt:ie contract: th.e . in ore years have ·e~ap~-(C1VIL C©Dc,Art. ·' t: leas can ~b~ten~ed . only by · the .wnt!e.n . 1682). .· . -~. -''~e~r:i~,en~· of:tli~. pa[ti1$,_ no ·~ight of exten~!0n_ car:i 2. · For urban /and~·· . . ~ · : .. c;)r~si~H1ou s_u~~:~ntten consent (Te.odora v. ·. a .. ·If. r,~nt·.!_s.:p~,?-da1ly,Je.1s'e...l$ f~~m~~to,day,;.~-::-' _- MirpfQJD~-A-_No.-}.893~-_fv!ay.,:1.8,-,:1-956).-·,-·.. . b.. If r~nt I~ pa_,? weekll ~~a~e\5:f?q~ ee. oi2\ ~ ·. ·· -IQ9/]it1c4_1s ..~ien·to, the 'IE~ssor, ·lhe lesse.e . 1 , week; ::· ·. : ~°(-{J;fi@fr~eJltN•.·tne/iease,··aga!r:ist-_the ·form,ers .. c. If re~.t i~ paid tnpnthl~t lease.is frbm~o[lt ,,_::.a ·".-;,/-~NJ1.:,}'1e·.~~asf_is' geemed te~nii~a!e.d (Qs tP m0nth;·or, -; · :\ ·'\.. •'., y~(ON, .supra a~.6.61).(:·: ·.. ... _ ... ·.. · · ,.: · d. If rent i?·paid· yearly, le~e is f~ig~\h~h~e'(a less~{is given~th.~ _optio11)0 .continu~. •. _.yec;1i" (CIV~[;· CODE, -Art: ··1687).. . 7~ ~ ~2Ji:tene~~-~G..cintract o( leas_e. ~nd is siler:i~ _upon ~i~J-~fclJftne·::o.lq_ term_s,-a~e t~>':be(.folloyved. in . · N_ote_: Article 1_687 do.~~ n·ot apply where fb.e-5:e _is /\.~.~,r~ewed. l_eas.e. (Gu_st{{Q v:· CA, ._G.R:.,fVo. L. ·a fi?<ed·peri'0d, whether sy¢h pexio~_is defifiite or . 0-~083, F(tbr:uary_2$,. 1.983)., . ·. _; . ·. . .. · ::i!:,definjte··{P.E LE.ON, ·supra ar·820): · '._ ··: :"-. ·. rrThe· 1e·!i-so(-'inay_: iinp"os.e . additional. co11difions _ ·. a:·. A-lecfae· c'Ontract' on.'a-month-to-month ·basis ·' . after th'e ·exl'..li'ration!of the originaJ·,p,eriocf' · . .. : . . (.Junson v. Martinez;.'G:R; No.1°41324, ;July ·g_ ·Article;rnsf'par.. i'or-the-Civii ·c_ode 'provides'. ... : . ·8, 2003){ · ;. '.:.. ', .- .· · :. · · .. , :·/ . ·' . th~t in' the·'everit that.::ihe leisee has'·occupied .. I;,: _A leiise stipulatJrig .that, t~·e,lessee wiH'va,,.c~te · : . the· 1ea.se_d .'f.ii-emise,~forn.v.e~/~ear, ,c·ourts· IT)iY . . . ··.·a~ s9.9ri, as,_the(lessor.heeded·.the,premites · ' . ·n~· a ·.longer _.tii~m lease:: Th~ 'powe.r· of the· · . · {Lim_'v. : b.egarda. Vcfa.· de ':P,riefo; GR. No. ·. cciurtsjo •eslablish :a gr~'t°e period· is pote'stati"'.e' . _ ·--~/ 89;: M_arch'30, _ 1957)i-.· . . . ; . : ,. ._, :- .. q_r ,disgretionar:y,,. ,depe:n_ding. Pfl · t~e partic~lar . . c:- : A lease· conJract with a:.periqd· subj~ct.to: a . circ_uinstan~!:?'s of the c~se'. (Matar.an Realty; Inc . . ,r~soJufofy co~ditic5,n'(Je_spajo·-Realty v.'·.CA; v.:uy:Han' Yong, G.R,.. 'f;Jo: 1'63763, Nov.ember· :,, . G.R .. Nb. 1~-~626, ·septembe'( 27, 2002);. :: JO, 20.06).~ .... · .. : ·' r • • -·.. ·~ • , ,' ' · · · .. . . · '- ;., . ·. ' 10:. A veroal c;1greememt . to.· extend the l~ase'. is . · N~t~: In ~-~ses,·whethe;:.i~r.aefini.te of...ind~fi~it~.. ·::adnii.ssiBle 'itci. q(Jalify- J~e·'.terms·.'of a·,:writte:n. pe_riod ( exc~pt. for: th.e ,la.s:t :patagraph m~oti.oned· .in · . ,c;:Q(ltract.(.f.l6i:ehtirf.o~ v. Sup.ej?ialue lnc.):3,.R. No. nutnber 1· .apove),. the, !ease is not terminated' by -. 172384i ..Septed.,f?er .12,:_QQOl). · . . .. · -_:· reason· of the -death. o.Leither ·the. lessor.·. or· lessee , 11-. The ·extension granted ·shall ·pe· co.mmensurale (lnotencion. v.. ·Haspicio· de· San Jose,· .·G.R. No. .. . -~i~~- t~.e. ·peri?d. occupation JAjaneta v: D~ 201787,·sep°fem~ei2~,·-~0:13). · ···. ·· · Mesa, G.R. No. L-21912, September.30r.}9.70). ' . . . .

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Note: The lessor. has 'the, right .to· increase rent fbr. each period subject to existing laws in the same way . · that._ the lessee has all the right· to refuse - lo' acquiesce. Upon such refusal, the contract otlease between. the. parties is deemed terminated:(Chua ii. Vi9!orino, G.R. No. 155768, May 18,·2004)._ ·

lrfstance~ When there is:NO Implied N~-w Lease;.· Wher:i before or ·after the expiration of the. term, . tile re is a notice .to vacate ,given by either party (CIVIL qoDE; .AH.. 1670t ·_. · . · 2. . When there is riQ definite: or fixed per'iod ·in the· o"rfginal lease contract as in the'• case of . successWe . renewals:, of !he·. lease under Art. 1687 of the.Civil Code; Rule. if the Lessor Objects to · the Le?see's 3. There is a stipulation. against renewal (Agalo-os Continued Possession v. /AC, G.R. ·No. L~.6~220, May 7, 1987); · Requisites: ' 1 4.",. Invalidity .o(·original lease (Estate bf San(os v. L · contract has expired; . · De 1.z_eyra; G.R .. No. L--30027, Ju/y-31.,:-1969); 2.· Lessee continues enjciyin§·ibe thing; ·a11d · . 5. · Acceptance· of rental? beyond ·origini:11 term (DE 3. Lessor objected to this enjoyment (CIVI_L CODE; ... Art: 1,671). . . · LEON, supra at 669); : . · 6. Accepta~ce of . rentals·. lfi')SS·: tlian a·mounts stipulated (DE LEON, supra at_,788); and·. · . Note: if}ih·e three requisitesare oreserit, lhe lessee . ·7. Nbn-payment'of rentals (R£vera. v.· Romafl,-.9.R. shall be considered a possessor in bad faith·(.C/V/L . · No., 14240?, 20, 2005). . · CODE,.. Art. 1_671). ·. : . . . ,. September. . . .. ~ . . . . ' . \ . .... . : . . •, · Effects~:,_'. .. , .... - 1. 'The pe~iod. of the ne0. iease is :n1;:i'{ that stated in . the ·original 'coritracrbut the time established in Articles· ..1682· and 1687' of the Civfi Cede (CIVIL gooE;· Art. 1 q7Q);. · :.. · ~ .. · .:. , , { ' · - 4§~esso~~· oblig~tio-ns CQntra.cied ·Dy th_ird · _. ·per::;on. f.e extingu,ish_E;l~ .(CIVIL QODE;• Art. · · 1672); an .- , . ; .. ··, .

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·. No~~/Jie-rene.wa1'of. t~~ !ease·_:is, in -~tt~ct. ; novatio.n of t~e ·original contract of. lease·.(CIVIL ..: , ._CO@E, ·1291f-. . . ·. - .. - .· · .

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3.· . otner:...te;rq,s...et't~·e: o~~igin~1.contr~ct -~·f.e .revived. ·_(CIVIL CODE,

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~ote: i-er.ms ihat are·, revived are o;n:iy those A4,i:,~..:..i~-,...w_~i~~ are g~rma·ae the · enjQym~nt of· ·· . . pessession (e.g .. emouni of. rerit, · dat.e- of -Requisites: -a · . .. . ~ . . . payment,·' cere .ottiie property,· etc.), but not . ~1. _Jhe term-of the.oriqinal contract bas exQ1r.ed; . . those, with-respect .tQ. special agreements' which 2 .. :fhe lessoror le~see has not_:pre,i'jo~sly-given' a · . are .PY ·~at0re' fo_reign)o: the ·:right .:.of occupancy ' <nottce to vacate; and . ... .. . :... . orenloyrnerit inh~rent in a' contract of lease 3.' .The .less~e,co[itiriued .enj_oying the ·tj,Jng leased such as an .. option· 'to purchase the' : leased . for at- least fifteen .. (15) days. at the- end 'of the . 1·of premises' (Dizon -'"'.', · Magsaysay. ·G.R. No. L-. contract with the acquiescence the lessor. . 23399;-May31,.1974): . -; ·. · . , ·(9tV/L CODE; Art. 1670). . : . . . . . . . . .. . . . . . . . ' . ·j .. ', .· '. . . . .. .. . ·. . . • . <: 'Puith~~~the F'rope~·y./CIV/L .. . .Note: Thenotice required is .the· one given. after the. Art. 1676) ·' · . ·. · : · . · . .. : ·. · ' ·. ·- . expiration .of the lease periodfor, the purp<;>se' of . ·:.. . . ' . . . ~ . ., . . . . . aborting· an Implied renewallea~e (T.agbilaran General ...Rule: : Pu~cliaser of·,·thing. leased can· . ·: · -tnteqretet: Settlers Assoc v. CA,. G:R. No. ·14$5$~: terminate leiase (C(VIL,cc;5pE, Art. 1676; p_ar. 1). ·November.25, 2004). · . . . . ·. · ... . ~:Exceptions:· ., : A lessor who gives notice attei--the 1 s~day· period iias. 1. ·, Lease is rE!corded·ir:i Registry 'of. Proper.ty;. .. no-:cause of action unlawful detain.er as there· i~· ' . . ' . '··. . ·. . .. ·.. .· . alteady' an implied iiew.' le_a·s·e (PE CEON, supra:~t. _787). . . . . . . . . . . 'ReaSion: An .uJrec;ordecj_ .1<3a.se .is ter~iriable at · the will of the· new owner. who is· an inhcicent p'urchc1s~r. for value·:·. . : . .

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There is a stlpinanon.fn the contract ~f sale that· . purchaser shall · respect the . lease untll termination otits period:'> .· . · · · Purchaser· has aclual · knowledge of the existence of-the lease;" ·· .· Reason: Such "is equivalent-to . '

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Sale is· . fictitious: · there is .. disputable presumption that. it· is fictitious if the· sale is not reqistered (CIVIL CODE, Art. 1676,. par, 3);, Sale is made '.'Vith right of repurchase (CIVIL;. CODE, !1-rt. 1677). ,. . . ·,

. Note: The b~yer-may make:~ie'.ofthe.~6;er t~-~ust - the lessee if 'any of the ·grounds for: ejectrnerit under. Artide.1673 is present. "(DE t"EQN, supra et 805). .

cul.tivation -~Y the tenant; and (f) there Js sharjng of the·, harvests . between - the parties (Quil)los v. Department Of Agrarian Reform Adjudication Bbard and Kanl!!_rang Mindoro Farmer's Cooperative, Inc., G.R. No: .. 185838, February 10, 201'4). ' . f>reliriti_ri,ar.y. Mandatory Injunction to Restore Possession ." ·. , '. . · .. ' ' . . ·111 ejectrnent cases where an appeal.is taken, the lessor is entitled to a writof preliminary injunction to restore him in his possession in case the · higher court is satisfied that the-lessee's appeal is frivolous or_dilatory,(i.'e. without merit) or the lessor's appeal is prime facie meritorious. The period Qf ten (10) days shall be counted from the time the appeal is pe~fect~d- (CIVIL CODE,: Aft. 167.4).

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to sell the project within two· weeks from the registration of such project _(P.D: 9J7, Sec. 5).

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::.CONDOMii~TCJM BpYERS : ·PROTECTJV;E DECREE (P .)).

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Performance Bond No.license to· sell subdivision lots or condominium units. shall be issued by the NHA unless the ~owner cir dealer shall have filed an adequate .perforrnance bond approvedby said Aut~~rity: !O g'u~rar"!tee the . construction and maintenance of-the roads.iqutters, · 'drainage, seweraqe, water system, ligh~i(lg_systern.s, . and full development. of the subdivision oroiect or the . · condominium project, and the compliance by the· owner or dealer with-the applicable laws and rules and requlattons (P.O. 957, Sec. 6). . ..

.. '

Da.te Approved:.July 12, 1986 ...

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Purpo.se · . . . . . . . ., .. ' . l;o afford its inhabitants'th.e re_quirements of a decer,it ru:man settl_errient an.9 to prpvid_e them. with ampler ,6pportunities .for improving ttieir quality of life (DE.· ·[;.EON, supra ~t 5~1). · · •·

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, Natlona! Housinq Aµthprity . . . . . · ... > It shallhave exclusive -jurisdiction _to requlate real· estate trade· and .business in accordance with the· provisions- at ihis decree .. (hereinafter refer~e-d' to as /ttie:authority") (P.Q. 9_57,: 3J: ._·_ . ·· .' . ,· ' ... '( . " Note; Under E.C>. 648'-o'f 198.1,. the imple(Tleritation . . . . •. . . . t of. P.O -, _ 957 was=transferred ·trofr;i 'the Nali<:Wrl Housinq Authority '(N~A)·.tq the Housinq and Land Us'e R$gulatory Bpar9 (H~URB). . . · · ·· -, · · · Registration of Projects . ·". . : .

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Exempt Transactions ,, '. . A license to sell arid 'i:i!')rform_arice bond shall not be .requiredin any olthe'.following)ransactioris: · . · t. : Sale of a subdivision- lot resulting: from the 'partition of land arriong 'cc-owners-and .co-heirs, 2 .. Sale or transfer _of(·a ·sub9ivision lot- by u{e,.. , orlqinal purchaser therebf _and any subsequent . -sale of.the .sarT)e lot. · · . ··. .. . . . . . 3~S~le o~a subdivision 'lo~-.or, a c~ridominiu9:1 unit , .,.a.!'.._··~ !5-:_''f ·-0~ :tor the .account of a mortgagee m the ordinary course 'of business necessary to · · ljquida,te a ~ona fide.debt (P.D: 957 rSec. 7J:

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Sus~e~sion ~of l!.icen.se, to Upo~ -v.e/fi~~-~?'.~_--p\ai~_t_"~ia'_buye'r of a: sub_d,vis_iOn: : lot or_a.con~ir_ii ·unit in any interested party, the. A_u,th"ofJ@a,(.:m,its.)scr_·e.tio_n_, im_mectia. tely_susRend the owner'~aealefs· license·. to sell ·pending· inve'stig'atioil arid hearin. g o_f tti'e ca.. s.·e.. ' . .,.. ,· : . . _::. . . .

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'' COniP.I\~~ with ,.th~: _Subdi\.'.~sictn~Sta(id\c<1si· Ragyl_at1ons e~fq_rce.a_bl_e · at _t~f ~1rp~4he ~lan'.f)S · . subm!tted;.The-same·_procedure shall.'.beHollo:wed in.. ~· · ·· · · · · · ~ < · · ··· ... _. t_.he ca1;e of~ plan for.,a c'bndo,:ninium.P._rojecf.exc~Qt · Th~ Authority may inotu proprio suspend the'lic;erise , , ·' · -i~....-..._-t0 sell· if, in . its ·opinion, .any":l~formation in·. the· t _th~t; Jn :..addifiori, ,~aimplete or:· ~he:,sale'Of offering' fgr- sale· of -the accordance vyith.,.the N~tional Buil~ing Code (P:D: · ·,subd.\v_ision tondoi;riin_ium· ptoje¢t. IT!ay'"'work · or · .f}5l,·Sec. 4):_>· :_ \.,· '~ ·.> ::· ,'tefid:to_wor~ afr~ud upori°P-!9SP~ctive:bu'yerf" · :'· . 0,

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.:·,TJie 'subdivisio_r:i plan;\:is s~- app_rovec( ~-hall the~ -·be · submitted to the." Directo(of Lands; for-- appr_oval in . . aci:;9rda11ce with .the pr9c·edur_~ prescribed i.n· Se~tjon··. :44 ·· ot::·_the Land:· ~egi~fration_:_J\ct. (Ac(-· 496, ,· as _. amehd(J;d by R.A._ 440):'P'rqvided;' that in .case of ·, complex subdivision:p'lans, court-approval shall no . longer:. be requirecl. ~-The . condominium: .plan. ~ls · ~ppfoved· shc,\ll·.:.be .:submitted to ·t~e Register of . · Deeds of-the province ··or: _cjty in which the- pr,op~rty . . lie.!'farid stiall,_be ade,d:upon sobjec_t to' the cbnditioris ' ' a_rd in c;1ct:cifdance,with therproc~dure·'pre~cribed in 'Se<::ti.on 4 of the Cpndbininium Act (R.A. 4726).. -· · · · . : · · .. · .-. · . pcense to .$ell . . ' _Such· owner. ·or, dec;iler t0:, ""._horn · a. ~egistratioh ' cef1ific.ate _has befinis~,t:ied.~hall noJ be a_t.ithorizedto_ · sell any subdivision: lot or condominium unit ·in ~e registered project unless he:has ob_tained a licens~ ·

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The suspension· ord_er·· ·may b'e lifted· if, after •riotic.e .. and: hearing, the: A_ufhority is:. ·coiwinc~d · that · the · -.r~gi$tratioi:i: .~tc1te'me~t--:is · acc~rate , or , that' any_.· deficiency· · therein_. has. been '-corrected· · or . suppfemented ot'.that the._sal.e .to.the .public ofihe . subdivision or· condominium project will neither be !~a_udulen(riot .result (n' fr._au~: }_t .s~all. alsd be _lifted _u'pon: disrriissal of the complair.,t · for lack of l~gal . basis. (~D.- 957,· s~-~---8/ ":. · , . ·. - -· · ·. · .: . .. . i_

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.Grounds. for the Revocation' of;Registration of. ·the Certificate~and License:td Se.II-of 0wners or ,. ·pealers: (Not~M-i-VIBE) ' : . . .. ; ·1. D.9es Not "conduct_.his b'usi~ess hi 'accordanc~ with:law or sound busines~·'prindpl~s'; ·cfr · . ·.,_ 2. · . Has made. any · Misrepresentation ."":in . any_ prospect1,1s, brochure, circ'ular o_r other literature

2019 SAN BEDALAW CEN.:rRAL1zfo BAR OPERArioNs

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553

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SALES A-ND.LEASE. SAN BEDA LAW CENTRALl?ED BAR OPERATIONS ~ MEMORY AID 2019.

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about. the subdivision project o.r condominium project that has been·distribut~d to prospective .RENT CONTROL ACT buyers; or· · ·' .(Il.A~ ·No; 9§53). 3 .• Has Y.iolated any of the provisions of this Decree or any applicable rule. or regulati.on of- the . Authority; or any · undertaking· of. · his/its Date approved: July 14, 2009 .. '. ·performance bon'd; qr, 4 .. lf'lnsolvent; cif Purpose: To encourage the development of 5. Is -of Bad business repute; or affordable housing for the _lqwer. income brackets 6,--· Has-been or is _sng·aged or is about to engage in . and other. beneficiaries and ·to· protect tDem from fraudu(ent transactions (P.Q. 95°?, Sec .. 9). · unreaso-nable rent inc_reases (R.A. 9653, Sec. 2). Registers of Subdivision Lots and Condominium Coverage:': Un its. . · i• 1. All . residential . units· in the National "Caplta! A record of subdivision lots and condominium units R~gipn. and otherhiqhly urbanized: cities, the shall be kept in the authority.iwhereinall ord_ers of totalmonthly rent for each of which ranges from theauthortty shall be entered. The reqistersshall-be one peso. (P1 .OQ) to ten thousand _pesos qpen .for. public· inspection. within-reasonable hours (PfQ;QOb.00). · . . . . -· ·· ._ .. ·as.promulgated-by the authority (P.O. 9"57, ~e~ll'resi9e'ntial u~its in al!·.o_ther a·reas·t~~ t_ofal_ 1 · ·I ·irr:io~ly rent for each ot which ranges from one Regis.~ratipn of DealerssBrokersj and ales~nen.· . _ p1'so .OO)"to five _th~usand pesos (5,000.00) . .. No· real estate- dealer, . broker' or :J.ale,fi1n~all . !;t,cep~lreai:Jy existinq con_t~acts (R.A. 96~~. engage in. the ~UStness 9f selling-~urdiVlSjp~lots or. .. . . $ec.f5). ./\.. · .. , . _ : · .. · c.~nd~.m(n(uni u_nit~ ~nl_ess'he,_ha/[egi~erea:~sel~~-0-'. ··. , . . · .wrth _the"A,~thorrt~ 1~ accordance~th1tne"pr6vrsrori5/ :~.ce~f.~~~~-G:>w_n ~chem~ _-at the option of. of thissection (P.O. 95_7;Sec._.f,1J..~/. ·l( ~\\. ~_lessor,.he o,rsh_e may engl:lge.t~e l_esse_~ ma· .F; .i, wrr.tt~n-r.~~t:to-°'-"'r·~reement t_~a_t l;'{rll ~.esu_lt t,~e _ Grounds for ~he -Revocatio.~ of;,Reg'istrft1on a~. tr~nsfer-of owner~~~ ~f.the _pa~1cular dwellinq in Dealers, ~_r9..ke? or _Sale.sf e.n_:-.(f'fMa-~Ufh_)~ c:a~l"~f .tbe.1~!!:~ ~!f4.9 653, S~c. n).: . .. . . 1. .tlP.s Y1olated, any prov1sron Ofi>tlirs Decree _or ai;iy'rnmrrrrrr, p . J~ · . .. . . · J ·· · I · ·d 1 · -~ · -~'\.., ~\l.w,~ 1m1t-op1ni;geasem Rent · · · !t(O~a:~a~f:~:e~s,:~~(?~r;~~'"r· . -is :-~. ~~- Fof'a"2p.eri&.'~c1of (11) year effeciivity, no.. · · -.· t' "../'! \Hi ~·1~. .f',t.(.-....,.;. II b . I.. d . h . f · application for registr.ation;\0r . .:: ~-~ · lP..c;r1.a~"".?.. a · e '·· gose. on ~ ~ rent· o any. 3. l:i~s !;.leen-guiity ~?fa Er~~d.ulentact in co~c_t~ :: ·:_. . \r.e~~i~~I 1.uhi ,c_over,ec{ bY,.t~is_~ct.. . . .. , _ with aoy ~~1~·of a subd1v1sro{lot or condompi~r:ri'~ ... 1./'. · · ·· : . · · · . .. .- ·. .. ·· . .,

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.. th~ bt,Jsmess .of dealer. ·bmker, & sal~aQ as- ' . (W~) ~{11u~u/slo~g- as. the Ul]Jt.1s occ.up1~? t~: .the,c<:3i>e-may:~e .. : ·.. Ka ~e;~ee.,. -· ·. ._-. : .. · . _ _.·- ·.,. . . 5. ln_· ..~a~e:of.C~~.rg~s:ag_amst.a··saJe~man,. ~e~esiden'tial unit. becomes .Yat:ant. ·Yhe. -thereof ,s_hall- also·be g1y~n the broker- or.'de~ler · . .. ,: ··· · h' · · ·. ·1. ·· f h · · ·'.·. 1 essor may sett e 1rnt1a rent or t e next lessee. ·· · ··1· · · h. · · · · · TP S .1 · . . , · .efT)p o_yrng S.U~ .'Sa 1 es_m.an '; 0-. 957 ! ec. -12·/· · · ,. . . ,· . · . · :_._· · . a,. · ·. Jn"c~se-o(ba'a·r.dfng houses •. dormitories; rooms, and -Pending hearing.of the ca~e. the.Authority shall have bepspa ~s,pffered l_o st.uder:its, n?)ncrease in ren_tal the po~er:.to order .. the · suspeqsion of the .dealer's, ,more -than once per yeaLshaU- be allowed ·(R-~, broker's, .of sale~man's registra.tio_n;.'p'rovided;.th•9t, 9653 · · · .. · . · .. , · . 'suc,:h -.Ord.er shall stc;!te:,the;.cau~e for. lhe.~·usi;iension · ; Sec::4), ·· · . . ' · ,·. · . _

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_· N~~JJh~i~r;iding th_~:lc;!pSe the peri0d;"the.Ho.usi9g arid l:)rban . Development, ·Coordi,:iating,.- CounciL . · · (HUDC.~f is gr~nted. the·. authority to continue {h~ reguiatlon-.of r.erital ·cif c·ertain residential units, to . .determ'irie··. -the .:p~rl9d., re"gu_l\3tion::, a_nd .·. its· .. · subsequent.ex_terisioris ifwarranted·{R:A:':96q3;: Sec . ·· ··

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.D~finition of T~rnis (RA 9~53, ·se.c: , R~nL-- il:1.the amount:pa.icf for the t,.1se. or oc·cl.Jpancy :-,'' of a.resid~ntial unif w.bethe(payment is made ..on· a· . monthly.qr olher basis_ -

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. Date Approv.ecf:~une 18, 1966 ..

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BAR OPERATIONS

SALES

AN·o· LEASE

SAN BEDA LA\-Y CENTRALIZEDBAR ?PERATIONS - MEMORY AID 2019

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Resjdential - Unit - shall refer to an apartment, house ·and/or land on which another's dwelling is located and used for residential purposes and shall include not only buildings, part or units thereof used solely as dwelling places, boatding hOUSeS, dormitories, rooms and bed spaces offered for rent by their owners, except motels, ~otel rooms, hotels, hotel rooms but also.those used for home industries, · retail stores or other business purposes if tiie owner· thereof and his or lier family actually live-therein and use it principally for dwelling purposes. . . ' ~ . Immediate members of family of the lessee or lessor - for purposes of repossessing the leased . premises, are limited to his or' her .spouse, direct · descendants or ascendants, by consanquinity or affinity. · ..

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Assignment of Leas_e or Subleasing. Assignment of lease or subleasing of the whole or . any portion of the residential unit, including the . acceptance of boarders or bed spacers;" without the written consent of the owner or lessor is prohibited (~.A. 9653; Sec. 8). · · · ..., Grounds for-Judicial Ejectrnent: (Ex-AURA) 1. Expiration of the period of' the lease contract; (R.!,. '965:3, Sec: 9) · ..

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Lessee .::_ is the person renting a residential unit. .

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, Owner/Lessor -· · includes the -owner or administrator or agent of the. owner of the residential unit. . -· · · .

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Sublessee .: is the person who' leases or rents out a resideritialunit from a sublessor (R.A. 9653, Sec. . .

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4. Rent and Requirement of "!·_Bank be'p_gs1r , .. Rent shall be paid in.advance within t)Je first-riv~=!' (5J days __of every current month "or the b'eginning of t~e .. lease aqreernent unless the contract Rrovides for a laterda~e of paymenf(R.A. 9653, Sec. 7-).·

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Any and all- interest' that . shall accrue shall be . . ·• '-returned to the. lessee at the expiration of the leasg contract. · .!• ·

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In the.event that the lessee faiis to: . . t. · Settle. rent, .electric, telephone; or 'other utility,_ bills; or _ · · 2. Destroys any house , components or accessories, . · The deposits and interests' shail be forfeited in. favor of the latter in. the amount commensurate 'to the . pecuniary damage done by the.forrner (R.A. 9653, Sec. r- 7).

Neea of the lessor 'to make.·neceS$a~ Repairs . of tfie leasea premise~ which·is the,subject.o(an existing orc;ler,;of condemnation 6y ap'propriaie' authorities concerned in order to make the-said p~~mises safe and habitable . Conditions: a. After said i'E?p9ir,., toe- les,s~e ejected :shall . ..' . have. ·(he '{irst 'the' s'ame . ...preference to lease ,,, . . , ·-"- premises; b. The new . rent shall · be -: reasonably . · -commensurate·wi'th th'e· expe'11ies:incurred for the rep~ir of the said res_idefntial unif; ·c. That if the residential UAit is condemned or : complet~ly c;lernolished, t~e-lease of the' new building wlll n·o.Jonger be subject to .'the aforem·entionetl first rule.· ~ preference . . . . ..

Lessor is. prohibited:' · . . - 1. To' demand more -than .one (1) montli atlvan~e: · · rent: and . : . · 2. · To demand-more than two (2) months deposit, .which shall be kept iri a bank under thetessor's account .name during the emire duration' of the lease agreement · -· · · - ·. ·'

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Conditions: .. . a. The lease for a definite period has expired; ti. The lessor has given the 'lessee formal notice three' (3) months in advance bf the lessors intention torepossess the property: .c. The dwner/lessor is· prohibited from leasing . 'the resid~nlial unit or .allowjng its use oy a thira party for period ·or at' 1e·ast one (1) _year from the time of rep·ossession · >_

Sub lessor - is the person who leases or rents out a · residential unit leased to him by an owner.

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of lease or subleasinq of residential units . in whole or .jn part, including: the acceptance of boarders or bed spacers, without the written consent of the owri'erilessor; · · . l.eqitimate, need: of the.'- owner 1 lessor- to repossess his share or her property for. his orher . own- !J.se· or : for the .use bf any immediate member of his family as a residential unit .:

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~rrears in· paym~nt of rer.i_t for,a total-of _three (3) . _monfhs. In c?se of refusal b_y the lessor to-accept payment of the rent agreed upon, the -lessee . . may:either 'depcrsit, by way:of-.conifgnation; )he . amount in court - or- with the city· or. municipal treasurer, as the -·Gase may be, or bara.ng~y chairman, or in a bank in· the name ·of.and with notice to_ th_e lessor, witnin one (1) month after· the refusal of the le.ssor to accept ·paym·ent . ,

. 2019 SAN B~DA LAW CEN1RALIZED BA_R OPERATIQNS

I. 555

SALES AND LEASE. SAN BEOA LAW CEN.TRI\LIZED BAR OPERATIONS - MEMORY AID,2019

Lessee- shall thereafter deposit the rent within : ten (f Oj.days ofevery current month. Failure to depostt the. rentfor three months shall constitute · a\gr6und for ejectment. ··. . The lessor, upon aulhority of the courtin case of 'consiqnatioh qr upon.joint affidavit by him. and the 'lessee to· be submitted. to the city or . municipal treasurer or baranqay 'chairman and to the. bank where deposit was made, shall' be allowed to withdraw the deposits: ,· . . . . .

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SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AiD·2019 .. . ·. . . .. ' .· .

unless il is shown that the legal fiction of a·'different juridical personality is. beirig used ror a:;fraudu.lent, unfair.ror illegal' purpose (Aguila, Jr. ii. CA, G.R. No. . 127347, November 25,·.1999): · ', . . . ' ~ ~ General Profes'sional.Partnership . . .A .protession ifd_efined .as~"!'i· qroup of men. pursuing aIearned art as a common· calling irJ the· spirit of . public. service -:- 'no less a P,_Ub_lic service because it ·. rpay incidentallybe a means of livelihood",(DE LEON, Comments an.d C'ases owParlnership, Agency and .' Trusts./iof4{p. 9), [ti_ere(nafter, DE LEOl'j}: ...

PARTN~RSHIP-" Partnership By the contract of partnership two or more persons ._ bind themselves to contribute .. money, .. property or. industry to a· common fund; with the .. intention of dividing the profits among themselves (CIVIL CO_DE, Art. 17.67). .

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Two.(2) or more persons may also forrna partnership for the. exercise of a profession (CIVIL CODE; Art. . 1767). ·.· ,.i ~ : . ' Requiiites for Exfsten~e ofPirtnership . . '; r . .'1. ,.:Ther.e\vas a0 intention to create a ·pa·~r:i_er.ship.;, · - 2.- .Th.ere ~,s .a common -fund to ba.obtained from contributions; and 3. "Th.er~. was joint interest In

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The Pf~Ctic.!:) of. a profession is not a bus.iness or an .. enterprise f!)r·profit.- However, the law.allows. the joint pursuit-thereof by.two-or.more, persons as-partners. : In. SUG.'1 Ci3Se, iri~J.h~· individual partners, and.not the partnership, who engage in .the practice: of. the· : profession and ar.~. responsible for their own acts as su~h.(/d. at 10).. · ·

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Part~e"r~hip the P'ra~tic~ ~!~aw' . . · . It. )s,._.-not a'r Pjrtnership ·_form·e~ .tor. :the 'J:?~rp,e_se: ·of .. .ca'rryi,ng ,.!n tra_de ~(business o.r of holdi'r1g prgperty . but ·i~attwbLcht.slnJim·af~~y __ ar:id- ~~c~lia~ly relat~d .to . the aclm_inistra.ti0n~Jastice. Th\,!s, t_he. u.s'e .of a: no~ · de ·plum.~ssumea,: or,trade n~me_1.n la'vV practice. ,s. ·jmpfoper (DE. LEON, silp'i'a,at 11). - · .. ·":. · ··.. . . -

A~ an: m~ep_~nd~~t. Jun,d1~al ~ers?p a ..part~rs91g. m_ay enter _mto ·_contracts'. acRmre an(f'pos~ess pro_p.e~y .of all kind_~ i~. i_t~ n~h:ie.• a~~II inc? obligat1o_ns a~d . bring c1v1I 0¥cnm1~~(a,,ct1on.s _in : . c9nforrrpty._ w1th . the.· laws :and reg~lallp,ns'· of 11\ organization (CIVIL CODl;, Art: 46). . . :.· ..

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Partnership as Separate Personality"< . · . The· p_a1ner~hip· has a jur)d.ical, pers'tmality -~laP~fa~e and d1stmc_t from that of ea_c~ ·oM~e part~ers e~nlm · c;,:i~e. of)a1lure. to comply y.1th the· requ1r~:91~~t.? of ·. Article 17-72. first paragraph (C/Vl~€0DE, ·.Art, 1768). . ~ ,

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Whil~ strictly ~pe_c_1king the exerciseofa profession [s notabusiness undertakinq noran enterprise fofprofit - l~l:l. 'law, considersjhe joint. )?,u_r_su,it _th~re~f .. for ll]Utual helP,~s.a p_artnership ~~ PARAS, Civi/'Code . of th~'2ifjppim}fs· Annotated (201 fj), . p, ,580) · · . [hereinafter 5~ARASJ: ,. . .· · 1 ·

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EXECUTIVE COMMITTEE· ,.- SUBJECT COMMUTI;E . MEM}3ETI,S . : ·. · ADVJS~RS . · . . MARY 'cYRIELL C.SUMANQUI MA · CIUSTINA · D. - ARR0YO · EllAIN G. PEPITO, MERRIT ))can ED VINCENT .S. 4]3ANO, Over7alf Chqi;pe_rson, ·. ERICA · SiibHct Chait, MARY c,:I;IERWYN , KJU~ . M. : FRANC£,( ; .Dcan\h~IANO P. SARMIENTO MAE .c. VISTA Chairper~onfor . i.:·· CASTRO' ·AssfSlfJ'!l $11bj~ct·. Cl-IA1Th11(. ROSE. ·b;(NE' .R. :m:_Atty.-MANUEi::· P .. cASjNO, . Academics; 0 BEN . REI .E .. Chair, 'JAYSON P.-:·HIQuiANA·. 'R°OMANO,' · ... - '.. ,· . . Atiy.';DANTE 0. DELA CRUZ, · B.AimERd .Chdirpers6n.f.or.·!iotel Subject Electronic. Data °i'rocessing, . JANINE:··. 'CAMELLE :- _T. A'tty, ROWELL · D .. Il.AOAN, Operations,JHEL:SEA LOUISE B.'--:" M/1.RIA ANyELICAR. J.:9VERIA .GASCON, .MA. CHERJE JANE·· .Mty, JOS~H:F,ERD!Ni\NP. M. . . DllvtA.i\NO· Vice Ch~irperson]or '.'co;,jlic/ . : .of'' "La,v;; . SOPHJ.A ,1.ABANGCOi' Ml\.R1ELA DECHAviz.: Atty:: . Se~retari~t. EARL JUSTIN M.. VICTORIA,. E. MINA Pe;sons 'and . MAE B: ,MAMARIL, ]EMMA GENEVIEVE.NUEVE-CO, YAfvIBAO \fice Chairperson for .family . Rela·tions, JQANNA-.: 2. O)'ALES, · BENISE .D. ' . :, .· .. Operaiions; MJL ANGELl~A B: ~ ELIZ~E1JI · -' . ~ · .. c. MADAME.'\ :OQNNA ~S. ·DE LEON Vice Chairperson· for ~COITT'ENTO . Property . and : B. , GOME~/· JA:SO.l'f: Fin.once, ARRA. OLMAYA, ]. Land Tit/es: ·and, Deeds; · KEVIN JEREMIAH G. 'RlJNES, ':· . :..BADAfm~ ·Vice _Cha.irperson PA_SION · GplARD ·· .. ~EASAR , .. S. "forAuait,JORD4N N. CI-IA~Z. , Suc~ession, 'JAM!L· P. DALrpIG BAGUIO, CAMILLE C. vice Chairperson for~DP;lfANZ · . ¢~/igatio~s ·: . and · . · Co.ntracts, .c::'ELZC( .!v!ORRIS fytEDEL F. · D.'\RRYL· Q ... TIU . Vice .KEIRVIN ANTHON)' B. 'VIADO SOLANO> jbSE :MAURJCE Ch.~irper'SO_nforLogistics, ~mi , Sblef and Lease, KOR.JNA. CES .N):: . ROMEO . v.. SALV ACION; DOI-~ ALFRED E. AQUILJZAN CUEVA Partnership. anc{ Agency, J;OIS ·. RENEE . R. TUBON, . Vice C~airperson for Membership' ~' . ANA.,- ANGELA · T. · CZESKA . JOI-~ G.. Cb, · SIMPAO · Credi.t Transactions, JEANNE. · ~AUUNE· F. · GIZELLE KARINA D.C. RESURRECCION, . · MARIA ·. MON1iRO Toris and D~mciges · · -A. SIBAL, JERIUC B.. • . Cms'fOBAL

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_PARTNERSHlP AND AGEN-cY SAN BEDA LAW CENTRALIZEDBAR_ OPERA[JONS.- MEMORY AID 2019

2. 3.

freparatory - entered as a means to an end; Form Profit-oriented.- purpose is for profit and not just . . The reiation is evidence_d by the terms of the · . c_ommon enjoymetit;·: . contra,ct which may be.oral, written; express 4. _g_pmmutative. - undertakinq of, each ·on~ ls · or implied· from the a~ts or declarations ·pf the considered equal with the others; .parties, ·s.ubjecf to the provisions· of. Articles 5. _ _g_o_nsensual - perfected by· rriere. consent; .· ... 17.71 to . 1773,. and to':the Statute·of Frauds. .. \ . ~ ' . . . 6_. · .Q_apable of suit - endowed with legal personality, unless it is an 'unlawful partnership. · It can sue No forrnality" is . require.d. in · ?etting up a· and be.sued. . general partn.ership unless it falls within the 7: .!}ilate_ral -~ entered· by twp· or· more persons ,and . , Statute of Frauds (Art. 1403). Howeve"r, there · .the righ.ts and.obliqations arisinqthereirorn are. are formai requirements for creating a limited .always reciprocal; : partJJ.ership~(~d.). 8. Qnerous- certain contributions have to be made; and · · .·. . . · Articles of Partnership 9. Nomi_na.te.,... has _a specialdesiqnation iri law (DE·. No required form is generally necessety; , t.EON, supra· at. 11-12; PINEDA, Pertnersnip; however, it'is cu~tomwy to embody the terms Agency -~ · Trusts (2006) -p.8-9·· {herein~fter · ot tbe-eqteement in. 'a document known as . PINEDA]). . · · "Articles of Partn.,ership'~·sta\in_g the- name; · ~- ." · · · ' . . . · riature or purpose.and.location 'of thefirm, A 'partnershlp contract, in its essen£_e, . au· ~.and· defining, among members. the powers, contract of aqency (se_e Art: {818; DE &EONt.§PPra J._"'J/right~i~ties, and l_iatljlities· ofthe partners· at 1_2). . . . ·_ · :_, .. afJJ)g~E:m.s~lves'. _t~ei_r__ centrioutlons, the m_an~el''fY, which the profits and· losses ar~ -. Ess ential Requisites (C~OP2S2).· ,-~ . ' • /;, . tO: b~ si}\req, and . the procedur_e· f.or ·· . 1. 7 The~e m_tist~be a.\~a_lJc! _g_~n). ~~ . . .. 'll:ll · \o/. rs9.9{~~e\P.artriership (Id.). _.... . .. 2. . The parties must have legaJ §.at)fi, 1ty to enter 10.t9 -~ -4\\ .\ '. the contract; .· .~ater q1sagr~ments among the partners will 3. There must be a .fontri_b~tion-;0f; moneg; ptc5))~t ' Ji . _ nit . autojfatioally destroy the, partnership. , 9r i_ndu~try.-to a _c.om~1io~f~~ _. .· . :{ · "."~{'---;:~ -~~-ha.t-is is_.the unariimous_ ass~nt of_ 4:' ·.T~epbJ~~t ~ustbe lawful;~ · : l/)e· p~rt1e$'s'!~·}he t1_me .o~ t_h_e agr~emen!. to ·· 5. ·, Jhe, !n\e_nt-~ust be. to O~.rar~rof1t~\_o c;J1v1d~,· . a~Jlati?.S partn~fS at the· creat1.on. of. the . , the sam~ a,mong t~ey~rtir-9(-al\d .-,'~~ . . ··[if f~~1o~s_Jii'p~('.!d. 11). · -:· · ·., -.. -6. · The~e:~ust be~at lea~t o\e:.§e~~ra!:_E~JQ~~,~ ~~·"c .fr . 7. . There-must be affect1.o.§pc1f:)tat!s · .. !iL:._ ~ ~~~s1~.l.ther- cases of: contracts,_ 1rn:irc;!er to 8.. _ The· ·articles of pa'rtn~r5:ti1 : ro~st. -not ... e__ kep . _ · . . . ~~e a~· ag1e,m_~n~ for .~artn~rs~ip_ ~a!id,_ . .§.ecret-amqng the me,m.ber.~ .. · 'ere·mu.s;t~ a val1c!:cons_1de_rat1on existing .. , . . _· j . · · . · ~ . .-· s -~~~en -t.h~ p~rtn1::rs.: Ea~~ p~_rtri~r l;ssenfi~I Requisit.es.:(~3QP2_S~)'. "'to...,~s~~!}Je_rs t~)h.~- pa_rt_n~.r~h1p. an interest ·!n · 1-.-· · 'rhere ~ust?e .a valrc:j . .Q.ootract: ~ - · ~~rop~r1_Y, !ab?r, s.~~1-~~· or. _ei:ie~g¥'.,.- in · · . . '. .-. · . · · . . , . ,- u .1...f"\.~acq).rdance- . with' . the ; express or . implied .. . .· a: The: parJn?,rship. re'lati6n. ·is fundame:n F'l ~ . stlp.ulatioris'of their mutuafagreernent (/.d.):' . . . contra~tug]. Th~ ess_e!jtiaf-elemei)ts .(ca1.ise; . ·., .. ~bject, and considera~io"n)'9f,a c.qAtra¢t·musl'· ·. · · b: · It is fiduciary- in na.tqre. · . bepr.esent(OE_l.=EON,·supraat13-:14)., · · · .. ' · ' . . . . . . . .. . ' '. . . Partnership ·iS."g personal ·relation in. Which ·.. : . Th'ere: is n_o :such. thii:lg ,as- a:. partnership . ·.Ah'e ·elemerit:of- delectu.s' personae"·exists (Id.... :· created by law,orby-op.e'ratior:i oi- implicaticrn ·. a/)5):_ · :·,:· ~ . :·:··. :. . : ... ·:_. . ., :. , . .-· ·of law alone (ld:~a:t "13). :-__ . ··;~ . . . -- . . . . . ., .. · . . . . . De/ec(us .Per.s·onae-· (cho_ice of P'1rsons). ~ . .. E.stoppel does. not cre~te. or esfablish a real. · the ·authority-~9.f o.n~ partner to qincj_.another' partrieh,hip between a·lleged. partners. It is , ~y contract or--oth~rwise: It involves trusfand · ooly insofar".as thir~ p~-~soris ·i:m~ rn_volv'~ti .an8 · . . . . ~_2.rifi9enci{ ):i_etwe~n .ti1e partri_efs .. No for thEl p\.jrpose Of g]viog them-protection tJiat· · ..... · ·. . ·· .. _. ca_n. b.~-C?m~ f [Tl'em~er _th.e partner~hip· · · .' the ··equitable prir;i"ciplif"·.of ··es1~ppel ·is:·· .. · . assoc1at1on .without, the .consent of all . .the · re~·ognized in the !9v./ (PINEDA, a.t . ·. other associa_tes. (Id.) .. '. • · . . .' 1.44)." ·, . . I ..

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.. 2919 SAN BEDA Lf!,.W CENTRALIZEp BAR OPERATIONS

-OnEl sel_ects his partners on . the basis 9f their· pet~on~I q_~ali_ficatipns and qualiti~s • ,. such., ·as soJvE?ncy, ability, honesty, a·nd · _!ru~!WorthiQeS_S;among oth·ei-s. . ,,- .

PARTN . ERSHlP;AND AGENCY··· SAN BEDA LAW CENTR('iLIZEQBAR OPERt:,.TIONS- MEMORYAID 2019· ·

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· ·· N.ote: · This element' of delectus personae applies only to generaf partners (DE LEON, -supre at 15; CIVIL CODE, Art. tB.66). : . .· Power to Dissolve Partnership. Any one of the partners· rnay.: at his sole ·· -., pleasure, dictate a ·. dlssolution of the partnership at wilr. He must.however. act in· good· faith to avoid liability for damages (DE LEON, sup'rp at 16). .c. · The ·;principle 'of estoppel ' CODE,:,Art .. 1825). - .

applies

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. . Partnership liability may be imposed UJ)OIJ a .. - p~rson .under this ·~rinc)ple where ne1,1t11s .. . himself. out or- permits .himself . /.to be. held out .. as~ partner inan enterprise (~f:J.,).. . .

2.

-. Partnership as Partner. There is·· (JO prohibition aqains] a ~i=JrtnA(ship. b.~ing apartner in another partnership ~:· . . . . . r-

.' Corporation 'as Partner

, .. , Unless authorized'by a statute or by its.chartei..a. corporation is without capacity or power to enter ·. into a contract of partnership (Mendiola v. CA, No.. 159333,· J'-!IY 31; 2006). . · :,,.,,.

- ~ ·.

Money - must be· in legal tender. Checks, ·arafts, promissory . notes and · other mercantile documents are not money. There is no contribution of money until they have -been cashed '(C IV/L CODE, Art .. 1249). b. Property - may be real, persona], corporeal or· incorporeal · property, Thus;' credit and goodwill. may be contributed (DE LEQN, supra a(19). · · . '· · -c. Industry - means the active cooperation, the work of the party associated, which may be either· personal 'manual. efforts or intellectual, <.' and for which he receives a share in the · profits (not merely salary) of the business (Id. a~ 20): · .. · · ·. . .· 0

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. ' : In such case, there .·is no actual or ·1egal· · partnership but merelya partnership liability imposed by law in favorofthird persons (DE ·LEON, supra at 16). · · ·

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Reason: -Public Policy ~ .The mutual agency between the . partners, whereby the ·.c~rporaiion .... would be.bound by the acts of persons who are · not its duly-appointed 'and :authorized aqents and · officers, would' be inconsistent with: the policy of the law that the corporation shall manage itsown affalrs separately and' 'exchrsively (DE. LEON,. · . supra at 18) . . . -.

-

3.' There must be a mutual _g_ontributior'i of money, property, orindustry to acomrnon fund

A limited partner in a . contract of partnership cannot contribute mere industry (C!VIL. CODE, ·Art. 1845[ . ·, Note: · Proof is · necessary that '. there be contribution of money, property or industry ((DE LEON, supra at 20).

1

4. .:J:he Qbje t or, pu.rpose ·.must _be ·_lawful· (G_IVIL . CODE, ArJ 1770)

. ·

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The objec 1s unlawful when it is contrary to law, · morals./g~o~ custom~,, P.ublic order or: publio ·· poljc1CJ''I/IL G;ODE, Art. ·1347). . - · .. ·. S.ubjeci tot·hi~general .!imitati~n ~n contracts, a pactnersliirJ may l5e. or_ganizeo for 1,my. purpose except th&ilmay not engage in an enterprise for whicn the' law requires a specific form of business . organization, such :as banking which U!l_der I.he General Banking Law of 2000 (R.A. No. 8791, Sec. 8. ), only ·stock ·corpor9.tions may un_dertake. .(DE LEON, s'upra at 24J. . · . . ..

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lnstahces of unlawful objec't. are!. to.create illeg.al ·" monopolies or combinations in. restraint of,trade;' . to carry on gambling, to. engage in smuggling, IE:lase furnished apartments to prostitutes, to r:i'reyent competition in.'-bidding for gp~erri_ment . .con'trads, tq.,confrol.the pri¢e of a commodity in the int~~es~·of its rn~mb.ers, etc. (ld.j. . .

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N~te: ilh:;;ga.1ity· of ihe·· obje~~ ~rn not be ·presumed. It ~u.st appear tp b~ of-the essence qf. thihelatioriship ((d.' at 5.8):. ·· ·. ,, ·

f urpcise must be to obtain profits IC? · divide the·san:,e among the parties ·(ld.:at 12). . . .. - . . : . . .,, __ . .::-. A partnership is °formed to carcy on a·busin.ess for profit. All that is needed is·a profit motive. He'nce, ev.en . al'.)· . unprofitable business . ·c;an . be a partnersJiip provided the goal of the. business is · fo 'genera.le profits. ar:id to return thes.e profits to the partners as owners of the business (Id. at 24).

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2019 SAN BEOA LAW CENTRALIZED BAR OPE~ TIONS I· 559

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Its purpose must be for profit -and not· just for - comm.on enjoyment of the property, money, etc· .• . or el?e ·it is· one of co-ownership. Pecuniary benefit, however, need not be the "only purpose ... ; It · may have .socla! moral or· spiritua] aims · (PINE()A, supra a! 9). ~ . .. ' Sharing of Profits Since th.e partnership is.enqaqed for the common benefit or interest- of the partne(s, there must be -an . intention of cfjvidirig the profit. among. the partners (DE.LEON, 'supre at 25). which excludes one or- more partners fron'\ any. participation in' the' profits or -losses is void (~IVIL COPE, Art.' 1799/

A stipulation.

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. . There' is contr1b.utj~n· There~ is- no contribution of of capital, · capital. althouqh fees. are usually, -colleictetj from "the members to maintain- the] orqanization. :,~.-· '

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. Otherwise, the . .- association .shall have . no' legal ,. p~rsonal)ty: :and· : shall _' be .. ·govEin.ed. by : -. the

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560

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·stockh~id.ers· · are Iiable • only to the· extent of the shares· . subscribed by them. ", : ·. . . ' ·:-,.

A partner may not A co-owner- can dispose ·of dispose ' of <.. his his ... share without . the fndividw::il interest in consent of the others. the partnership ~o · as · "'·· · • · . 'to make· the assiqnee · a ·partner · without . · .. unanimous _c'6nse~'t. ', -. · ·(DE LEON, supra· at 48-49;. PINEDA. ~upra ai 18; 5 · PAR(\S, .supra a_t, 5_88-p?.9) .. ''. ~. -. ·' . -. .. j

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Partner cannot transfer Stockholder his interest · ln : the partnership ·sq·· as to rfiake- the: transferee -a partner ., y,.(ithout ,, .'.the . unanimousconsent of-all. _ the existing partners.

·. has ·. generally" · ·the right to transfer .·, ·. his e- shares · with61,1t "prior :c0hsent of the.other stockholders; ·.

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Partnership may be .S.ection ·-; ~ 1 Ei$tqblisf)e'i:l :;- rf.or an{C9_rporatiQn° .: . -Code .. · ~ioGJ:.'of tim~. stipulateti provides . ·, -by tne part_nerrs: ·· · · corporation _may 'n.ot ·_be . . '· . . . formed" for a . ter,m iri ., . ex,cess . bf" ;so'· ·.years .· .extendible to ::no{ m
v, Corporation.

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..-,~· Revi~~.Q: .__ ·. 1 Gqrporatioq · . · Code which. to9k. effe.c~ · . on F.ebruary 23, .. ·. 201 g. · · provides . . . · that· a . · .. ··-. co.r.poratici~ <"shalf .·• h'a~e . .. . /' .•- •. , ...... ,'·, --·.':• -'--'......_~, . "· .. ·, ~: · 'perp(;)tual · · ,. exi·stence · .• · unless:.· its' artiele1 f ncorpor9,tion . prov[des .. .)

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,M._ay' -~tircis~ ·a[)Y~ powe'r exercise :·~>Aly.: the. authorizedby , the powers . <;. · expressly . partners'> ·.-i · • · :granted Dy law o(irr1plied . <, -. : . 'from , thos~·;'g/anted'.: or . i'n.<:f~ent _t9:iKe.xlsten'c;e.,

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L)~i~~d ~ya~tn~r~_~i.J?..° i~ ¢orp_oratlori .: _rriay .'.a:ci"opt ;. ~ requtfed. by_law to add the ·_any nain·e· pr.ovided it is word.l'ltd."· to.its'name, :.. not the s'ani
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- ~ 'partner. as such, can .Jh.~ .····suit· ·. again_st _ _.,.. a sue a · co-partner mismanages. .

who member of the board of . directors .or- trustees who ,· mrsmanaces must: b'e. .in the . name of"' the corporation.

· Gov_erned. by·.the ~cintract .Governed ~y ·: the Civil Code: . . Corporation Cod.e. · 9rid . ·.• .

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(PE L_EON, supra at 55-5'7; PINEDA, supra at 16-17;. 5 ~ARAS, supra ·at 58~~586) · I. /

2019 SAN SEDA LAWCEl'JT°RA\..IZED

BAR OP_ERATIONS

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PARTNERSHIP AND.A.GEN(:Y .

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Partners are · "i-DJt_uai 'aqents one another, however :a partner's power' to bind· his·:·copartner is not subject to the .. co-partner's. right to control, uriless there. lsan aqreernentto that effect, ' ' . .

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The· a'gen.i is. merely legal extension of the personality of the principal, and thereby under the complete -control of the principal', .

of' partners or in propoi-tiqr:L. . to their . · respectiye · · /capital . I.,. .. - , contributions. · , · ·

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Partnership beglns--fr:.~~ .C6mrr,r~nce~ ~ -, precisely the . moment · of. the onthe date.of celebiation .

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:co-partners. .

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(VILLANUEVA, supre ·at 429-430).

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2019 SAN 86DA LAW CENTRALIZf=Q BAR QPERATIONS ·

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None ~:of_.; th~\ venturers can birtd. the J?irr~erit~ri his venturers. .

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Rufes to Determine the Existence ·of · a Partn~rship (G,VIL CODE,-Art. 1769) (NCR-Sha.re) 1. Ge.neral R,ule: Pers'ons who_ are Not partners as to each other are not1769, partners as to third persons (CIVIL cooE::Art. p'af. 1).. · . . . '

Joint venture · An association of persons or companies jointly underfaking some commercial . enterprise; ge'nerally, all .ccintribute assets and share risks. It requires ·a comm~uniiy of interest in the performance of the subject·ma_ttei-, a 'right to direct and govern the . policy in conn~ction therewith, and a duty which may .be altered by agreement to share both in profits and losses·(De/ Marv. PAGCOR, G.R. No. 138298, June 19, 2001). '. .

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Requisit~s: (C.RiSP) . ; ., 1. AComniuniti of interest in.the performance of the subject matter;-. . . . . . .· .. A Right to ·direqt and · govern the policy in · connection-therewith; and . ·· . 3. Doty ~hare .Er6fits·. and lqsses (Del: Mar .J./ PAG90R; G:f?. No: 138298, June 19, 2~01). ·

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· Illustration:. If. A and-Bvare not partners as to .each other, neither will they -be partners 'with . . respectto C, a third, person,. But if A., with the · consent of B,)epresents to . .C that'.·th~y· are , partners; then ,A and .B· will be considered . partners as to. even if. they are not really partners '(D!= LEON, suore. at 31).. . ·

A jofht ve·nture, .belng a form. of partnership, is to be gove·rned by the·:· laws· ·on, partnership (Marsman·· Drysdale Land, Inc,· v. P-f:lilippine Geoanalytics, Inc., G.R. No: 1'8'3374, June·29,- 2010). . . ·· .

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~o-po_ss~s?io~ of ~-: property . does QOt of itself establish a partnership, whether 'such co-owners Or Cb-possessors do or do not share any profits made by the use of the property · . (CIV~L COD{;, 'Art.' 1769, par. 2).· . ; . - .... . ~ .. . . ~

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Reason. The- law does' riot imply partnership : · ~w~~? · co-owners co-possessors. because ---b,f the fcJct · that they· .. develop · or operate a • . . ..... ·' comm&,i~roperty'; .since.they may rightfully- do · . . thls oftheir respectivetitles 9r common · . dominion .fve\ the property (DE LEON,, supra at . 31). t, .· .

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th~re ·~a/li~~e ., c6-~wnershi~·.or- co'possession of items and/or any· sharing ..of .. · jiroceeds bf wc!y of .advarices received by· both .' -- . plaintiff" and .' the defendant, these are not · · indicative ·anp supportive of the existence of any ·· i:,artne,rship between them: .Article 176_9 of the ~,:;........,_.;...;..·..I.NewCTvil Code is explicit (Nevetro v.~CA, G.R. -

· · · .. _. .

-·In -a- contract .. otpartnershtp, we·.said tfiat .the . purpose. 'of registration 'is to ·give ,hotice!t0 third parties: ·that failure-to ·register the confracfdoes · · : . -. not affect the liability of the partnership arid of the 'partn1;rs fo third persons;·ana that· neither does s.uch failu·re ~ affect'.·. the_ ·pahn... erslli'p's. J··u.rid ital ·

personality. . An. unregistered confract of . '. ' . . · partn.ers_hip. is valid ,as_. amon~ the· partners, s_o · ·. · )orig as it has the essenticJI requisites; .b~cause. . . . tt)e ·mai.n of re'gistratio'ii is 'to_g1ve notice to· third parties, ,arid if can. be assu)lled that the . . .. members th_emselv_es,_kn~w.o(th'e ~cirilerits_: of . .., . their contract. .The lion~r-~gistr'ation of a· de!;ld of ·. 'donation : does. not'· also affe<::t .its .. vaiidity. Regi~tration .. is no(~. r_equiremei-fr.for'fh'e ·validity . . of t~e contra¢! ·as betweeri the parties, for .tne · . effe9t of regis!rcition _serves.chiefly to bind. third persons· (Ca6i!ing Ma v. -Fernandez, G.R. No.· ~ 183133, J(!iy26,'2010): . . . . . .·-.,. 2. Under Articles 1773 and 1775-~·The partnership ·sh.all no't acquire .any juridical personal\ty because the c·ontra'ct its_elf is void (Id.). .

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· . No. 1'~1847', May 27, 1·993). ·: '. . ·'. .: . ·; . · '. ' - .. · lllustratlon: A aridJ inherited from theirfather .. an a'p,artrnent which. is leased "to.. third 'persons .. / They are. rn.erely .. co~ov.rners and r:iot partne'rs· .. ·Ttiere .ma~t b~-a d~a_r" intent 'to. form'~ par:tnership . . .. (DELEON, supra·at321;·_. •.•• .. ''.: :.·· . . . ' . .I . . \ .. · Co-own-~r$hip Converted i.ht<;>-Pa!1h~rsf;lip . . . . For tax pu°r'poses,. ttie · co-ownersh.ip of ·inh_erited .. properties· is automatically converted . into an .·un"regisferecr ·. partn'eiship- the . -m·oment . s_aid ", <·co.minon 'prop~rtJ~s c;iridior.the· income derived . . -ttierefr6m·are used as a common' fund wittrintent. · · .· to-. produce profit~ for't~e _heirs in propqrtion to. -~ their respective shares: in·. t~ei'°. i11heritan¢e as . determined in_ a project partltion .. (Ona v. CIR,' G:R_. No._t-19_342,·May ~5,.1972).:

Not~:.

Th·e: property:_.of ~ .man at1d· ~ woman--whq liv~ together as ht.isba.rid. and.wjfe without the ·behefit?f marriage_ or untjer a.void marriage shall .·be ·governed. by the rules on co-owf)ership· (FAM!f.Y CO.DE,· Art. 147} ·

2019 SAN BEDA LAW CENTRALiZED'BAR

OP.ERATIONS

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that· he had received 50% of the .net 'proflts does riot .conclusive).y establish that he was a partner ·of the private respondent herein. Article 1769( 4) of the Civil Code is explicit . that while the receipt by a 'person of share of the profits a-business is-· pfirna .facie , · evidence that he is a partner- in the business, R,eason: When-a b_usiness· is carried .on in ~ehaltn.o· such inference ·Shall .be drawn. if SUCh of a given person as a partner, he· is conceived profits w~re received in payment as wages . as bein~ interested in. i_t~ faily'res as yv~ll_"as·_its· of an employee. Furthermore, herein succesi,i'es; it is the chance ofgajn or loss·; which petitioner bad no voice in. the manaqernent ·c_h.aracterrzes a busin~·ss_..:. !ake r)ot~ "'tha(ir:i ·a. of the· affairs- of thebasnlq, Under similar .·partnership, the· partners . share. p"rofits .• !after facts, this Court in the early. caseof Fortis vs. .. satisfying all o_f-.th.e parfner:"hip's. li~bilities _(DE Gutierrez Herrnanos, in denying theclaim of L.:EON, suprcf__at 36). the plaintiff therein; that·he was -~_-pa·rtner in the.business of the· defendant, declared; · . . "6r:oSS returns" -rnay ) .be. paid over as ,· · _.... _ .. .. . .i·.~·'" .... :- _ • · t · ·'. : •. .. ~or.11m,i~·sion,~ es: .i-~nts,.inte~es"t_on a)~an _(ici. , . -. This· contention ~an not- be sustained. It_. was. · -,' . . af3.6). . .. -. .. . mere contract of employment. The plaintiff · · ad 00 voice nor vote-in the-management of lil_!.lstrati":'~ry , ·: -~ ,det~rmi~d _.with .re(~r~nce __ to th~ . pr6fi~s- .: · passengers .. p~y . for, g~·s;11nex_~~~~nd ~ma~~Yt.tle defendant 1~ th.ei_r,; business q~d . shoulder th~. CC5St _of r.ep.a1r_stg~d .,lb_aq.l_ie_g\Oir& .A ~l' . ~Ol_t_Q.. a..p~en~E: make. hima partner therein receipts are- to. be .d1v1de-'a:·oe~1'een. hem. No ..6\i~- ~ 1Sardane"v.·-0A, G:R. L-47045, November p.artr:ii{~sh ip is_ e$ta~lislie{~s s1i~ring 'of profits 2~. 1988)(/) .' 1,s.cqnte_mplat.1?d at I"' . · ·.. \ ~;\ · . . · · · c.-,7~d'.'.' 1)s -~n. 8~n~1ly:'lt~ ·a widqw p~ ~epre:S_enta!~v~ .. '- Note:. T-here must b¢ a_; cle!=iri intent. o form1~ -rrff~ .. {lfg~iJa~~·Presu1~tiqn of_Partrer~lt~p :_ ·. ·. · . : ·: ·. ' thereoy .. Under· the .c1rcumst~ces·, .tb~~n0~fJ:fle~ann~ drrof1ts. and losses 1s pnma fac,e _ _.: . ~e -~o~sid'er~d to' hav.e for.ryi.ed _.an.-~[~~~~~~Y.~(§~.(~j}frile~ti.o~to fcfrm·a p~_rtn$_rshiR __ bu_t not partnexship"(P'!lsqµal, i:-'.· CIR, G.R.. o.Vf 33;.M.COnfl.USl)l~ev1.d~fl.C~: T~~ .. pre?umpt1on. may __ .,be . 0

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Sharing gross Returns al0ne:does not of Itself ind_icat~ a partnership, ·whether or-· ·not_ the persons sharf ng them have: a joint or common right or interest ·in ·arw property" from which the . returns are derived)C/V/L CODE, Art.· 1769,: pa[. 3). .. . .

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,• .. ,~. '• .' .ic,: ·. '·.·· . ~.. ·.... :-~·.: .. ,2 , .. , . ·1e~t,otP.ar.tpl;l.rsh,ip, ~).Ci~t.en_ce _:, ·. · . . . . : _b:LJM~es~;,.~·~_arjng }~)He· net p·rofits·,presup-pose,s , ·:_ 1 /:'WpeJbe!'r ., or, )1ot )h~r~' is ?h c!gr.eeq,ent · kt _ sharing· in the. losses: (CIVIL.· <;;.ODE, Art .. 1769, , · ..... contrjpute ·.moriey;\.,pr'.op~rty, o.r industry· to q · . p~t:=4)'.::.'i _··>:-= _ (' .. '· · ·,· :_-~_,:; ·-/\:· .. ·:/ ::· ·: cbmm.oiHuric:f and ·· ·. ·: ,- . ··. . -· . . ,. ;· ·. ··: - . . \ 2. -: WtiethJr.'.6r' not th~~i·f~ \nt'3i1t pf "the:·f:Onfr_acting ... . Howev.er, ne-s.uch.inferen¢e,will.be-.drawn "if sucn . :, ··pMif:l~ to\di:vide.'the profits ·among .Jhein~~lves . · pr.ofits.w~r-~ ~s;eived- ir·.fi~ytnehf (DIWAQ}: -·.. :· :. < _.. JJURfi;.:£;?¢;;'. Ci'{il .L~w_ -kf;1iewj.f °(i019};: 111,1 a>;'As1a'Debt ..byinstaflme'nts,or·o"therwiset ,. .. · [he_r_einaftery JU_RA_ DO, Civil l:.?JW Rel(i?_'{Ver]): . ·· b; .'.Astin~rest· on. a 1oan,.:it1c;iugli the- amhi.mt-ot . .. - ; . p~ym_~flf .. V9ries;- ..~~i_th. 'the. profits :.0f Jhe· . . . s·urden.-of.-Proof. . . ' . ,, ,,:b~~ihess_; ... : :_.. . :<·-_. . .;· .. -.~ , :. : .- ~-- .,.: . · · ·. · · .·· · i:tie b~rtj~ri:_·oi, p~9~ing:,t1;1:~ .e~,s~en_ce· 'p~rtr.ier~hip_ '· · ..... c ... ts:d~':i~.~~:: ~~~. a_~:_..;~rnt?.~~e or~_ren~~-=_t_°.·. a·- ·· ·.rn.~.!~ H.rfth.~!t.\~~r_t._x:9-$iD..~,!b-~}1,ff-i(maHv.e·ofJh:afis.sue :· _;;:in or.u,, .... : . ·· .. ,. ~, ·_-. · · ·,, ,·· (.PEJ.cEQN,.sµpra.at'4{5)/ .. ,. . - .( .· · .. ·· ..... ·-·., . :· . . . . . - . . . . . ;. :''. · · :As·manag~r of the qasnig, Sarcado na_turally · · ·. ln'?:idents ot"~ Partners.hip :· . '.· , .. ~ Ti.as· ·some _degree ··~f·.'control· 6yepthe .. 1-:.' The parth~rs'. share.in,p"rofiis and)osses (CIVIL· .. operc~tre"ns and _maihten~nce thereof-had- .to .. co·D·E.. . . . .. . ' .. 7· .1798 , . d . . ,i . . . . . . -. ··'. ._ .. ,Art::;.1"767,179,. _,an 17991; ... · '• q_e··exertised· by· herein· petitioner_. The'fact . . . . . . . . ... .. : . ' .• . ·~·-. . in the,prpfits is·~

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PerSQJ'iS who. contribute property or fund.s. for a They have equal ·rights ih the rnanaqernent and common enterprise and agree to share the gross . . conduct of· the· . partnership. business (CIVIL_· returns of that enterprise .In proportion to their . .. · CODE,· Art. 1803); contribution.rbut who severally retain the' title 'to their 3 .. .Everypartner.ls an agent of the partnership, and respective contrfbution.: are not thereby rendered . I entitled ·to bind the other partners by his acts, _fqr partners. Theyhave no common stock or capital; and .. · the purpose of its business (CIVIL CODE, :Art. no commCfriilyi ofinterest (Jeientilt« v Jaraniilla, G.R.. · .1-818); , .· . . .• . ~ No. ·154486, December 1,· 2010). 4. ·, 'All partners are personallyliable ·for jhe debts· pf ·the- -partnership with their separate property {.CIVIL CODE,. Arts. 1$_16 and 1822-24) except Co-ownership can be converted into a· partnership.in . that limlted partners are not bound beyond -Che· case. where the helrs, ,agreed.: said common amount of their investment ·(C/YIL CODE, '(i.rt. · . -propenies and/or "the income derived 'therefrom are 1843); · ·.-· · .· used as a common fund.(E:)fia v .. CIR, G.R. No. L-· 5, The· books of. the partnership shall be· kept, . 1934i, May25, .. 1f72). -~suoiect·to any aqreernent between 'the.partners,' : / . a_t' th~. principal 'place ~-.· <;?f .. business .of . tlie Object orPurpose ofPartnership . . partnership.-(CIVIL CODE; Art. 1805),:' · A partnership musthave a la'?v'.ful object and must.be . 6. A fiduciary. relation exists· between .tbe partners established forthe common' benefit.or interest.of the (CIVIL CODE: Art. 1807);· ... , partners (CIVIL CODE," Art. 1770).· ' 7_ A caplialist-. partner : cannot. carry, on · any , • • -. 1 competing, business .venture: unless· there is a When.· an · ur:ila.Jifur. partnership is dissotved -by a . . stipulation -to .the contra,:y'.J(CIV/L CODE, Art'. . judicia_l. decree, the' profits~s.hail be confiscated. i"i:i · 1808),:.whiie·an· industrial" partner· is: absolutelj' favor.of the state (CIVIL copE; A1. 1770). prohibited from _engaging in any kind of business . . (CJ.VIL CQDE,. 'Art, 1789); and ·· ·: , , . · The provision of the· first. paragraph Article 1770 8. : 0119i5s~l~tion, th~ pa"rtrj_~rs~!P i~ ~~!.J;Jminate?, re(terates_ two essential eler:nen(s:of_,?_·. contract, of , ;:.-bl)t ~ontinues until the windin·g.tJ_R qf,,partn~rsh.ip~ partnership: . . . . . . . !:' · affairs is 9ompleted: (CIVIL C_GDE, A~. 1828).r, · ·· ,-1: . Legalit~~~tlie·object_; and, . · .: · ·_: . ·.... · 2. Oomm,,unity ofi.benef1\ qr. interest
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. ir:i _good faith, ·de~I ·wit.h th~_m in· their ·apparent· Note: A 'partnership -is c;li$~olved by operatioQ of-law· ·relations.4CIVIL-CODE;; :Art: 1825;· DE LEON, upon the .. happening of-an event which makes if. ·.. :.,.;suprqaf30).·.··". . / ,:,., _ UAlcj_WfWLfor;the. busiQe~s-·:of t~~ partn_ership. to.be · .·, ·· .-· car,riec;I 9n;. or"for- th~ mElni.tlers to'car:iy it-.ori.in '2, .·-P:et~ons~ li~ing. :tog~ih~r . with.o.ut . ben;fit "of .. partnership,(.CiVIL CQDE, Art. ,18.30,."par.'3);(\;:-.:. · .. ~;r-;~:g~~~nd ~~lari~~ sh.all~; ~wn~cf:~~ them. ---

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. in equ·afsha_res and fh~·pr_operty·acquired by'both . A··judiciai: d.e6ree is-:h:qt :nece~sary .to--dissolve an' · of -t~eni 'th.rough their· work or indl)stry· shall. be .· · ·unlawful p~rinership. Hqweve()t _inay sorjletirne§ be .. : g9vernyd by: th·e rules on co-owner.ship (F,AMJ{Y advisable that. a jugic,iaf." decree ,:of. diss.olu.tion be. ·_'. COQE, Art .. 147), · _ :·. · .~. , ·_ , ·: . secured,. for the · conv~nierice . of the: parties . (DE ·: LEON; supra· a_t 59-60). -· . .... ·... · ' P.artner~hip· vis-a7vis Go-ownership . . The pa'rtner~·mu·st be ·r~imburs·ed the.amount of iheir. ·. T~e_.cpm_rhon" ownership ofpn;>p~rty d_des not.its~lf , . respective contributjonsi Any_ .Qthe(solutions· wquld cfeate. a· pa_rthership · between.)he OV:Jner~ .. though be .immora_l (Arb~s v. Poiistico, . G.F\. No. '31p57, theiy ._may us·e it for the purpos"e of rr:iaking· gains ..

2019 SAN SEDA

[A\f./ CENTRALIZED

BAR.OPERATIONS

I ·-565

AG.ENCY

PARTN:ERSHIP AND

SAN·BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019.

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as other declarations: In deterrnininq whether or not . a .particular transaction constitutes . partnership.as between theparties, the intention· .should be ascertained (Id. at 65). · _ -

September 7, · 19.29). A.share in .the partnership can be returned only after the completion of the latter's · dissolutlon, . liquidation- . and . winding . up of the · business (Villareal v. Ramirez, G.R. No. 144214, July 14, ·2003). .

. · wnen an unlawful .partnership

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Registration of Partnership Failure to comply with · the requirements shall· not affect the llabit[ty of the partnership 'and th.e members thereof to third persons (CIVIL CODE,.Art. 1772, par. 2).

.is dissolved

by a judicial decree, the, profits shall be confiscated in. favor of the State, without·prejudice to the provisions of ui'e Penal Code ·governing the confiscation .of the instruments· and effects of a crirrie (CIVIL CODE, Art. -1770 par; 2-). · ·

Purpose of Registration: ·To set a condition for the ... issuance of licenses to engage in business or trade · Effects of Partial llleqality:" and to give notice to third parties. It can be assumed . t. ·when~ a part· of ttie. business ofa partnership is that the members themselves knew of the contents of ' leqal and part ilfegal, an account of that which is their contract (TOLENTINO, .Civit" Code' 'ot the : ~ .;· leqalmay bebad: and · _ ··· Philippin.es, Volume V :(1992) p.326)·[hereinc!fter 5 2. Wher~;.wlthoUt knowledge or participation of-the ·- TO_~ENTINO)).· ·· ·. '.. z.. · . partners; the firm's. profits in: a lawful ·_qusiness , · · ·. · · · have been increased by wrongful act~u--.l:he business purpose of .the requirements under . innocent partners are -not preclU<;led_·rs against /f.rtsl 1'7}. a d ·1772 'is to prevent _evasion of tax the guilty __gart_ner?·from recoveririgA~~'')s_pa~ o,t-·1i~~1lili~s ~~ig,Qartne'rships and-~o protect the _Pu?lic the profits. (DE L:.EON, supra-attjzi~- ·. ~ :: · . ~y en~~ng t.b'qfe· · who deal- ~1th p_artners~!PS _to I""'~ det~rmine jCGurate!y_ the membership and Eff~ct <:>f S~b.~equer:,t IIl~gahty~ . · [: __ :..,,':[))_ c_ijpital contrib~o_p},(VIL~ANUEVA, s~pra f!f:479).. The-hap?ening of an_event sufsequ_~Qtto·t~_e-rnakJ.~~ ~ ~ · . ·\ ·. of a valid· partnership contract which woul~ render #'(>f.\Recording .of _P.:r~lclefs); 0f. Rartnersh1p rs ·not for, the illeqal.thebusiness of the pa~hefsh(' as pl rrfn-~a:--will"". ,111. purpose"~f givir'it nfe_ga'rtnership juridical personality riot nullify the contract (Id: ?3163)""'{ · ~--:\ 111. dD@,-i!EOf, supr'l ~t

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~6rrn of'P~;rtn~~ship 9o~tract-~· '"'~~~artn~;$~· with ---~o,·tributiori. lmmo~abl~· G'etJeral Rulf::: A' partnershipJ:laY. be:c?$s itu e -,11;b"'? .~r.ope~iQ; ,~ · · ·' .. any form (CIVIL:CODE,_Art:\·7,.iJ)? ·_ ·~~- .. ~ ·.Ofi ·P,~rt~,e_~s.hip . i~ v~i1, wh_E:~ev~r- · · _ _ .. . (P~ ,. . · 1~,~ble ·p;9perty -'~- contribute_d ·tnereto, · 1f. a0 Exc~ptio_ns: (~SL)'..· . · . · : ·. . ·;. · : . i~~n~(y. ~-f ~~id pro~~rtY. is not r:n~de, signed by t~e 1. If Eeal prop~rty or real right 1s contnt:5 red' af1t~. 1. _an/aif)'ttac~ea t_o the pubh~ instrument ·(CfYIL · .. CC?~E, Art:-1771); a~d .. ·:\._ ]_: -~~'eDE?'"AW,\ffi3 · . -·. ·: ·_. · . .. 2 .. lf .it 1s covered by !he ~ta tut~ -.oi~- Fra~/~C \1!~~I.. . : . .· .· . . ·. . · · ·CODE, Arl.,1403, par. 2 (a)).· . . 1\."'Fo..r:rn~P~rso_na,I Prop~~y_i~ Coritribut\:?~'\... . . ·-, .- , . · ~ILcapital is less than P3,000 - No·._sp~ci~I · lllu~tratiqn:. Today, ·A and J orally agreed to forn:i · · for.m.is- required _for.·its·vali9ity or. e~istence, .. ·. : ~·partnership;orie and ·one'hal(y~ars Jr:o.m today.,:- · b.: Wh~te -'lh.e c.qntrac/ of. partnership·· has- a . each· one to contribute P1_;000. If at. the arrival 9f capital of J,o·oo pesos ·or more, ·in money. qr ... the' period, J ·refuses to go ahead · witn the . property~ it: sh~II '· a:ppe~r . in ·_·a p'Ublic agieenierit, can A enforce· the agreement? ·. · ,· . · instrument ·and must·. be· recorded in· ihe .• -~ ·• • .. •. • • ' ..• ,· • : • ·,, I . / • Offlc~ .bf the:. Se~iJ°rities·' and·· "Exch~nge No .• Slnce-the agre'ement is to·be enfotced ·after . , Corn·missiori .(OE LEON, ·supra .at 66). ·-· · · one ye~ir· from": the riia~ir,g ,·thereof, th'e. same · . 2 .. F~'n}i'°:if Property.is· co'ntributed·(WIP) .. sl:l?uld _qe>in writing under the SJatute· ofFrayd~ Wh~re. immovable property or 'r~c;1I .rights are ... (5. PARAS, supl'a~at 6-10). · ·· . · ·· . . contributed, regardles~· of the value there.of The ·co_ntract- itself' _must be "in Writing in :;3. A- ·1;imited ,>partnership,·. however,·· cahriot be· .E!Jblic"·instniment and. : '. · · ·.. · ·. ·: , ... c9ri'st1tut~d orally. : The·:_ requirements . -of.·, the b·. An- !riventor.y\of : the property . contributed:, ., ' st~tute' n;iust 'be-, su~stantial_ly. comP-lied '. ~ith. .·. sigr:ie'd, "by: the. partie§,··-is attach.Eid. to. the (CIVl?:;_copE, Art: 1844); 6tlierwise,Jhe liability· public·instrum_enr(CIVIL CODE,-Art.1'773~: · of the Jfmited partners becomes the-same as. that of gen.eral p~rt_n·ers (DE).c.E(?N, jupra ai 285). . _If, there: is. n_o .inv~nfq~Y,: the co:n_tr~ior p~rther~tiip' is void and.has no.jarid_ical perso.i,ality. Moreover, .to be · · Note:: Partne~ship's ·exi~ten'ce may be. imp.lied: , effe"ctive--a_gair1'st third parties: the pc;!'rtnership ·must·. from the acts or cqn"ducts of the as.. well
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Classificati~ns· of Partnership: (OLDER P2) . 1. _ As to Qbject: a.· ·uniyersal'partnersh\p · . i: · Of all present property_(C/V(L CODE,· Art. 1778); and • ii. Of profits (CIVIL _COD{=, Art .. 1_780) .. -. b. Particular partnership - one which has for its object: (D-FU!;,E) - · .· :, i. .. Qeterminate things; ii. 'Their Use·or)::ruits; _ · iii. : A-.§.'pecific urider'taking; and .. . iv. The gxercise of a profession or vocation (CIVIL ·co'DE, Art. 1783). ' 0

. Note: Inapplicable to immovable property which may be possessed or··even OY.,fled by the:partnership but _not·cbntributed.by any of tt,e par:ties (Id. at 69): Note: The formalities mandated under Art. 1773 are meant-for the protection of third person"s. the lack·of ·an· :-lrwentory · of. real property will. ·not ipso, . fa_cto·rele;:ise the. -contracting ,.partners from. th~]! . r~spective obagatf.9_ns to each other ari!: rel="nofollow">ing fro!Tl acts executed in c:1ccordarice with their agreement (Torres· v CA, G.R. No. 134559, December 9, 1999), .. .

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2 .. As to .!:i9bility:of partners: .' a,' .Genera! 'partnership- .(CIVIL CODE~.· .A;rt·. 181.6)_ :---·wh~r~.all the partners are lia1?!epro"· rata with cJII their' property after· ·the ··

Ae.quisitibn or· C'onveya·n~e · of · Proper:_ty by Partnership r. . . . . An'y imm'oyable· property or an interes.t therein may be acquired· i_n · the ·. partnership r,fame·. Tille ~o acquir~d ,can be cci"nveyed. only.'-in ·the. partnership name (CIVIL CODE, Art. 1774). .

partnership .assets have Been · exhausted; and · , · . . ..·.· . . . b. ·. Umited·partnership (CJ.VIL CODE, Art. 1843) . - where the limited partners 'shall not. be . bound by the obligations of the.partnership in ·. excess of his capital contribution. .

Transparency of Articles of Partnership . . lt is also required that the articles ofpartnership must not be kept secret amonq .. the members; otherwise, . the :association 'shall have i;m legal person~(Y _aQ,d sh ail be_ qoverned by the provisions of the ~1vil Code · relating-to co-ownership· (G/VIL ·CODE, "/,\rt. 1l75). ·

As to g~j)ion: . _ . . . . . . a. P.a.rtner\ship_at_will;._. . . . . . _ . . .' ... · · /• · · <.. . .' · - . -· · ·. ·. : . · N~te:PA.P.;~ne(~hi~ that does not fix its:·t~r~ . S~cr~t Partnerships Withoyt Juridi~I Pers:911ality. · is pJr:tn~rjhip .. at.1iU. T?.e: b~rth_ and lif~ ofa It is essential that the partnE:lrs·are folly informed· of all Rartnershi~ at will.is predicated· on the mutual matters ~ffectfr1g t_he partn~:.sfiip}C/Wu CODE, A~ .. · desif~ §"rid..,~onsenl of the _partners:· Verily, '1806). A partner is considered .tiJei ageJJi._l{,hi_s~o- '. any .. one of the partners may, ... at his sole partners .and of the partnership in ,~esp_e,9\.. 0 all p'reast:Jre~ctate" the . "dissolution . of. jhe · partnership t_r_an.~acti?ns_.(C/V/L C~DE4rt, 180~):f partnership ar will. He must, hc;,weve"r, act in. · · · · · good faith, not thaF.1he ·atte_ncfa_rice· of b.ad · ., Associatibns and -s. odeties, ~whose '·ar.t.ieles·. · . . , . -,- _ . ,. or·. fait~ · can_ ·. prevent .. the: dissolutiqn of the : .. _agr.eer:nen~~ are·kept.s,ecrE;)J amor,~ the m.~mb~rs $)na -....---""'""""p_a_r'tnership .but. that it.can result- in:a liability .. w_here1n:·anyone _ _gf them .. rnay cor;itrac in ~!S. own-.·· . for·._-dam_ages (Orl~ga:. ·v. CA, I3:R:.· NQ . . · . namE3 Witl,. _ . · · th_ird . persons shall .. t,ave . \..oi..:µr)clica·I ;.:_ . . . . . .. . . . . . · 109248, July)., .1·995). · ... , : . .' '··. · · personality arid shall be go_verned by th~ provisions · · · : · . relating to·cio~6wnership (CIVIL.:. CODEE, Art. 1775). b.. Partnership with.a fixed pe[lod\.ClV/l: GODE;, .. ·. . ·; : .: . . . . A.rt. 18301 par. 1 (a)j; and . .. . While they· ca~f'_lot sue- for la~k of judici?l ..pe·rsonality, . c. ·- P.artn~~st:ifp<·for a . paHicular- _und1?rta.king .:._ · .they may, howev"er· be sued by thir.d persons under· 8_\.ltqmaficaJly disioive~ :· · upon ,·. the . th'3 name· by wtiich they .are g'en~rally .or corn"monly· achievernei:if. of th~,. particular ,u~cje_rtciking ' '1
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Classification of Partn~rship · . As to. its objec( a. partnershjp · i_s either· unive~sal· or particular. As ~egards ihe liability of .the partners; ·-a partnership rn·ay be general or iimited (ClVlL CODE; ·' Art. 1776). . . .

5 .. ·· 1:. ~ to" B.epre~entatio.~.-to others:" . · ·a~_· Or9iriary'or"real partrjer~hip; ·and. . . .. · · b. · .Ostensible or partner.ship by estoppel (CIVIL CODE,. Art .. 1825). .

2019 SAN SEDA

LAW C_ENTRALIZEO.BAR

OPERATIONS

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PAR:TNERSHIP·ANl:JAGEN-CY . SAN BEDA

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CENTRALIZfD BAR OPERATIONS - MEM_ORY AID

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to ,Eubljcity: Secret partnership; and Notorious qr _open partnership (DE. LEON, SUR'ra at 73). -. to ,Eurpose: Commercial or _trading (CIVIL CObE, Art.

'b.

Professional Art. '1767).

The following become.the common property of all partners: .. 1. Property-which belonged. to. each of them at the .time of the constitution of the partnership; _and 2. Profits which they may acquire from the property . contributed (C_IVIL COf?-E; Art.. 17>79) .' ( .·. Rule After-acquired Properties ~eheral ~Rule: Future · properties cannot· be ~ contribute.d. Th1,1s, property s_ubseque'nt1y acquired by, .inherita.nc'e, l~gacy, ·or doriation ·c.~innot be ·incluq~d. l:>y stip01a~ion·.. . _. ··· ,_ ·

1767);.

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(CIVIL CODE,

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Common Fund Co-ownership by the partners of the property and business of the partnership: and· which implies joint powers of management ari9 control of the par:tnership and iri sharing of the profits: and losses (DE LEON, SUP(8 a__t 63). _ . . . .. · · A pactAed;hip be deemed to exist arnonq parties--': - h ·· · t b · · - . t ·b . . d . w o_agree o. orrow money o pursue.a usmess an

Exception: Fruits of the subsequently' acquired · properties (DE LEON, ·supra at 77). . .However.' p.rofits .frorn·:·Qth~r,sq~r.c_es ·will _b~come . . common property, only.ifthere iS. a stipulation· (Id). ·. -· _· . ··. · , -

may

to · divide the p~of_its_ or losses that _ · m~ar!se Rro~erties s~bs~que-~tly . acquirerf -~y lnheritahce, _ there!ron:i, -~v-~n_ if l!-.is show~ -that !~~;•\?ax.? notu 1C'g 'cy)'~donation, cannot be., included 'in thif cont!:.but~ta~y .capi!al -?f their ow~t~_a,c~mmo~{ti~l.fitiorfb~fl~e fruits thereofican be included in the . '.u.nd, . as (he_1r_ co~Jn1?_ut1on. __to ?~~. fur~fr~~~-e . sfrtrlatioJ(5 f?'ARAS,. supra•at-620t. . . . . . intanqible likecredit or industry (Lim«ong.t,m v. ~-.-,~ >; . · . ·. .: __ .

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Fi.i_~iQg -Geer }ndus!~ie#, ln~lt!!...~yi Ntf,1364~8,_-· a'eriiwdi~in4~a u~tve~salp~rt;;ers1Ji/o_r.:a1i . ,Yov~m~e~ 3'. !999). . . p}~s~nt-r3[op~i:1yff!ps(tpulalton_ was.ma:de ~egar?t~g _ Salient Features ~f. Ordina[;Yi Partners!JiQ /V, ot~er. p~~je~1e& -~equen_tlf)·!'-. rec~1ved a. parcel · 1 Community oflnterest i]~p~s,and losses· · . ·. of la'"ff'a py-mhenta~fl:om hts fa~hf!r, 8[!d another ·. . , _· . · . · 'f"!-4 f oJ _Ian~ - ff!71'.t-r.e· San . Beda .ynivers!ty. as. _ _Note: M!:lre. p~arinQ_, of profits.wtself __9oes<'notfo{§_ill~munerplto!7_for. ~J$-,W~r~ 85'.8 ~rofe_~sor_theret~-:,Are ·: .. , n~cessity. 9~~stitut.E1· a~pa~r~t\ip. ~-~ · .,.::).. _.,.?tbe. tw.o ~ ls.~JlarJ.~sar.,_<}:thetr.. fr'-!tis to- ~e. enJoyed. · · . · · · ' •·. \ F\ ~ · "· · py e pa'ffhers_f?Jp?~ / ·· · · ' · · · . · 2_.::- ·c_~mm!,.lnity._of·i~fe'rest-_inft~':e~caj>(i~.'.\~ ~,oye·t .. -.!· - -_·. · ( · · · and : · .• _. ·_ _ . . •.. · . \. _: "2.tJS.)!}{;!1_.a(be~_usether.e_ ~as nq_ st1pulat1owrega,:<;1,ng . 3. Co11'!n:iu,r.11ty · of ·power 1.n ad1:rurnstr~t1o~F.J . ·· ~re~(op_eH,es.. 9.~/thefr _frwtr If_ there .... was_ '
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In a ~ljiversa'i pa~n~rship. of all .prese_nt prop.erty, th~ prop~rty.'which' b~lo'nged;tci:eacn of·the·psi.~ners a't the~_ ti rue >of the. CO.f'\S'tit'l.ition '·. of . tfie·- partnership, _ )~~-o~e(t~e'_~o:mM·~~_p~OP.~~y-_'of_~H the,,pa_~.t~e:r~. - . well ··as all . th'e · profits· which ·th'ey · may,. acqu1r.e _ _. tH'(:)rewith. , - . :--- · . . . .• · , . .. . --

. : -~·-. . ,. ': . · ·. · ~ov~r~g~-,. .. ,. > • ·_.:., .·'. ", •••• · ~: ur.11v~rs_9I partners!}1r,;~f. profi~s ·;S,Ompns:s_:_a!J. th~t. tile· partne_rs may: ac.qu1r~ by,.them m~u.str,: o~· wo~k: 1t . b~c9!1}e~-- co.mmon prpp_~~Y. e.g. _cef!J';1!?S(Qn tn q tra,:,sactt9..n, salary or, wage~. Tti,~_:9.cqu1s!t10_n m\,JS_t ,Q~ · · .. , ... ! . .... __ q_u;li:i9 ..:!b~ 53.xi,s!~n.ce of· tl:le .·m,n:tn~.r~t;l11L(ff/}LfDA, 'A-stjpulatfon,forthe <::om~on 'enjoyment.c:ifany.~th~;, .. :~upr.~_a(44). - · ; _.. . ·-_- · . · ·. . . , . .· . profits may be made; b'ut)he propi.rty_ .which the .· ... ·. ; \-· . partn.ers may. acquire subsequ·ently .'tiy' iriherit~nce: , · Acqulsitioo not" by industry. or wot!<" ar.e npt io<::luded 1· :legacy,· or tjor,ation 'cannot _ be inclu~:f~ct · in .. such winning lotto, {egacy of interests derived.from siipulations, except the· fruih,;thereof (CIVIL CODE, .. ·. a· bqnk:cJep_osit (Id.); · ·. · _· _ · , · ·, . · : : - Art.d779)'. , . _, . · . . . .. '

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· Persons Prohibited .from Engag'ing in Donation . and.Universal part11ers'1ip·(CJVIL CODE;,_Art.1782): 1. U;igally. married spouses (Ff\MIL Y CODE, A_it. · 87). W~ile·spouses cannot·ent~r into a universal .. partnership,. they· Cc;!n enter- int6 a particula~/ partnership ·(CIR v. William J.'-_$(!tei & CTA, GR No. L--255~2. Febtuary'28; 1969). · . · 2. ·Common·law spouses (FltM_ILYCbDE/Art. 87). 3. Parties guilty ·of .. adultery or concubinage (CIVIL CODE, 'Art: 7:)9;. par:_ 1). · . · . , · :

P~ofits acquired by. their pEirtners . througt:i ctiance such as 'lottery or•, by '. iucrative -· title·: without . employment of ·any p_hysicaLor intellectual efforts.are not· inclu-ded (f?E LEO Ni ·supra at 78). . . ·~ 'Partners retain their ~wnerihip over their pres~[lt a~d future prope.rt.y.·yYhat Rasses to. the partnership c:ire t~e·· ~mfits and hie use of the_ sarrie U?.J· .

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Q: A-arid'B :entered into universal .partners.hip 'profits. Later; "A purch,ased· parcel of Ian~ .. Will the frui(s.ofsa'idtc1n,d belong tc;:> ttie partner.ship'?' · :· ·' . . . . AN$: As a rule;. NO, t>ecau~e·the,usufruct grantee/ to the firm under Art. 1780, refers on'ty -to that of' the property possessed by tlie·partner.-.at the time of. the' celebration of the . ·.. . . contract. . . . ..Ir follows . . . . that ., fruits .· of : after-acquired.property do no.t belong to the firfJ) as a. . matter.ofright (5 PARAS,. sup,:a at 62J~622).· \ _..

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· ·, Note: Conviction is riot a condition precedent, the . quilt of , the 'parties ·:·may· .. be :proved . · by · preponderance of evidence ' (lf)sular : Li(e Assur'§ince Ltd. Ebrado, G;R. _No.144059,: .October. 2§,· 1 f:} 77). · · ·

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convicted ··for: the same . offense: in. :· .··corik.ideraiion-'·of the. .sarne (CIVIL GODE.· Art: .. · · 739, par ... J).' · c·' · :, · . -- _·, '. . • . . . 5_:: Person- and public· .officer (or his .. wife, descendants and ascendants), by reason. of his . 'office (CIVIL:. CODE,·Art,. 739, par. 3).. ·

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8eas61').:.f~r.· Dis.q4alifiG.atjon: To. allow.them will be like-'pefmitting themto do lndirectly what 'the law .exp;.e~s_iy'p/hl\s_'(~?EDA'. ""

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Effec;t of vfol~tion · .. ;' · : · , . . .. . .. ·The -~art2lr~_hJ~}i0Jati!1g:~~-, '178,2. is. n'L!II, a_nd:'void, · . and· its nul1Jty1, rn~.., .be-raised ·anytime:- No legal

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-Al! . ·.. pr~:ent · .• P~ope_rt~ Property, ·. whi_ch·:·. !,ti.e · actually .be!o1_1g1ng t? the partners . owied' ~t Ihe partners are contributed, time 'o.f-the-c~ebrafion·of ,,··, '..'",',.,•·; -~ to the part~ership! -whlch )he!, .: : contract, "·. ,.shall _becom_e · ... ·.c
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· '.. Uni~~,rsal_ partnership v, Pc1rti_cul_ar~artner~hip In.: a universal. partnership, the objectIs. vague and -, )_n,9efi.ni\e:4eo~t_e_rrjpl~tin~- :a._gepe~al bu~i~~~(:w!l_l:l ·: ~ ~pm_~:d~gree .of continli!ly.Jri. particular partnership; 'the.~obj~t:t is well .deflried·.·. and· limited, being c.o.nfined ·. ",···. . ,· t?"an; Llndert_aking 'oJ'a);irigle,',femporary·or a'cj. hoc . : : : ~atu.re ([!EEEON, supra)1J 82}':, .'· .. ~ · · · .- · ., · , · . . .,.Ex~n,~j~~: ·To· constru9l' _bu_ildinii°; \o buy.'~nd .sell_'.· . , r'ea_l. es.ta\e; ~O. practice th·e. lay., prcif.essior:t.· ' :·, ·: , . ··.Here.~ln-'q sense, :it is:as'·if all"Yne' members 'are ··industrial partn~~r~Jld.).<'.: ... ·.,··. · ·· ·. '. . . ' .\ . J

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Only~profits der.ixied fr,om· .t_be property /s;ontiib~tea· bec;ome · . ,·_corrfrnoh . p~~~er\y 'bt{ _n_ot__ piyfits . ansmg_ . . from · :. 'other • properly ot'the,partners. . T.he:. .J latleF ·. .. ·,profits,. however - . may . by stipulation be considered ,as corrirnon property for· the" e·njoyment _of all. ·

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All . _profit,S:·:J·.· a't'cjuired. through· I.he. '.'ftidustry or w9rk'.' .= of the 'partners b~come-. dor,_,mon . property. __..< _.;: · ,' ; . I' '

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riiete;mi~ate/ ·. th:irigs · .. ·ui'ejr: Ll§e' or ..fruit~:~·o(~ .. spectfic.:undertakmg:, or _ .. 'the·' · 'exercise of . ,.,,.. . : .. ~ profession or v.ocation: . . ~ .

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. (VILLANUEVA, supra ·at 5,0q): · ... .'

: (CIVIL-CODE, Arts._ 1779 and 1780).

. : 2019 SAN SEDA: LAW CENT~LIZEo'BAR ~~E~TIONS

I 569

PARTNERS:.Hl·P AND AGENCY. SAN BEDA

0W C~NTRALIZED

BAR OPERATIONS - MEMORY AID 2019

The· Practical· arid Legal .lrnportance ·of Distinguishing between Universal and Particular Partnerships: · · · · 1'.· :Usefulness ·of·the distinction isthat persons who are disqualified from donating to another can riot' · 'enter·if'lto·a universal partnership· of any sort. · 2.· Riqhts and ·;~bligations: that may arise · from subsequent. ventures pursued by the .p9rtners. would be. determined . whether they are .bound · under-a universal or. particular type of partnership ·

(Id. at_ 50°7).

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First, the. stipulation as to losses; . 2. If none, · the · agreement as. to profits; and . 3. If ncine, pro rata to contribution (CIVIL:. .. ~ODE, Art. 1797). ·_-

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in··· tti_e-~:-.p~~.riit Receives · ~. 'just"· a·rfa according. to i::1gre~ment equitable share (CIVIL ther.eor\ if none, pro rete. COOE, Art.' 1797). to.his contribution (CIVIL · ... Art. 1797). . ~ .

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Exempted ·as to losses as between partners/but is liable · to third persons, without · prejudice to reimbursement .frorn- the ... capitalist partners (CIVIL CODE, Art. 1.816; La cbmoent» Maritima . vs. Mufioz, ._G.R. No.. ·L03704, December 12, 190_7). .,-

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As fo the Value of. <;:ontribµti.on (PINEDA: sLipra . at 9J:.. · .· a.·, Majoritt. pc.1rtner .-. one whose. contribution · · · r_epreserits the ina'jo'rity ci'r controlling interest. ·Q.. Nominal pa1ner - on~ whose contribution · · ·r~prese.cits only .minority. inier.efat (PINEDA ~upra_.a't 9). 0

. . . Relations Created by A Contract of Partnership, 1. Relatiof,s.among the partners themselves: : . 2. Relations of the partners wit~ the partnership; 3. Relations .ot-the partnership with 'ttiird persons with whom it contracts; and . . - .. . 4. Relations :of the .partners with such . third persons

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(DE LEON, supra. at 8'5).

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. . . '). 10/· Incoming · partner - one .who ·becomes • •. : -c.member subsequent to the esfablishm'eri,t of ··· . the firfn or' one .who is. about to be .admitted . ·. : . - 'by the con_s~ht .of all .the-r:nem?bi.~s ._ctiV
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~ot_~: In th,e ca~e of an in~oming part~er, '}i..s . '· · . · liability IJl.'.ll_h · respect to . tlj.t-\>a~e'i"sliip ,. .' ·. obligations· wpic)i were J~urred~i:irio ..1:=.to his.. · . · admission: into : the 1fiartner~qiR:t. shall' ,be1. .' · 'satisfied only. out -of i:iartners.'1!? · pro·p,erty, unless it- is. otherwis~ stiRufated (C).VIL · · CODE, Ait.1826). :'.. ·

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Not. to convert firm money or property.forhis own use (CJVjL Art, 1788).. · · · · 3, Not 'io enqaqe ·in'unfair co~petltion with his own . firm (CIV/8CODE; Ad 1808). · . 4~o accoun for and hold as- trustee.unauthorizeo · . person·af,wofits.:(CIVIL·CODE, Art . _1807). , 5. · · P.ay_ for/q},:~ag~s_·~ause._d; by: his fa_.~lt (Cl\(IL · .. 1'794). . . • .. . . r .. . ·• 6, . Duty to ~redit to the firm, :paym·ent. niade by a · .· . de?~tw.hi~~m and.the f;°rni.(Cl\(.IL,<;;ODE; . · .. Art.· 11-92). · · ' · ._ ' -. · 7. To shar~ ~~ oth_er_partners the _share 'of the . partnership c_red1.t which he has.received from an .,___·..:·jn~oiv~nt firm ..cjel)tor,(civii. too~; A.rt, 'fi93).- ..

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Continuing partner:... one wlio11continues the . partnership .. business after !.he.1d1ssofution of Some Rights of Partn.er · :.·,~. · . the partr1ership ·_due 'tci': the· r.eaktms_stated-,.,.i;:..n-.~.. --1,__....._.""''P,.;..ro""p""'"'erty'Rights' (CIVIL Gb_QE, "Art. 1810J . . · · . . · Art. 1840.'(PiNEbA; supra at, 9); ot . · · '· Ri~hts'.in :spe,~ific' partn~rship '_pr9perty interest" in. .,·d. ·. ·Retiring ·.Par!ri~r -: one· withdrawn. from· the t~e partnership (s~are;in .the profits·_and su,rplus) . ·: partnership cir·t});,.~- . : · . ·.. · · . · CODJ=,:Art: 1840 an·d 1841; Plf>JEDA, supra. • 3.. , Right to _participate in the ,rrjanagemeri't (Cl.VIL · at 12). .· .,.-. ' .. ·. . ·. . . . . ·_ . • CODE, Art: 1803); · . ·. . . . .. _ . . .. , . . .. 4. Rig!it to .. ~ssociate ·_i,:vith anoth·er.' 'person·· in· his . . share.,(CIV!L ·coqE, Art. i 8d4ii · · As:t~Jhe'Stcite'oL~urvivq_rship:(PINEDA, supia .. 5 .... Rjgh.t to i!")Spect. arid·. ~opy . paitne'rship books at.10): .· .. ·. .. · _: ~- .· ·. (~I.VIL CODE, fl.rt_.: 180~);' . , _ . (.'' · · a. · Surviving partner -:- · orie who' remains. alive 6. R_1Qhqo demc!.nd _a.forma) aci;:ount (CIVIL CODE, · ·.while-one o_f th·~ partn~rs dies' .o·r one· wh6 Arf. 1809):. · . . . . . ..., ' . . -cpnti_nues_ to, ~~ in. t_he partrwrship after its · , 7. · Right to ask for th'$ dissolution ·of the tfrrn at the · . · dissolution by· r~~son_ of.. the- death 'o"f a proper.tinje (CIVIL coo°E,.. Arts.·:1830-:'ti331) .. -· , . partne_r (C_IIJ_IL t;ODE, Art: 1842) .... · · . . . . . ., ·. ·. . . , b: Deceas.ed. p~rtner. :_ one _yihQ . died · .while . . · P,ai-tn-~rsh.lP Term~ .. .. being, ··~ef)1b'er of the. partn~r~,liip '(CIVIL General : Rule: A partnership begins .·.from the C(?DE, ~r(.1840). ' . moment o'f the exe'cution ·of th'e con.tra-ct (CIVIL CODE, °Art.' 17.84}. . . . . . · . As ~o the Effect of-Expul~ioti (PIN.EDA, sup'ra at . M):.. . · ··, . ·. ·. Reason: _"The birth and)ife of-a _partnershii:r atwiil is . a.. Expe\l~d p_artn~r -; one .who is expelled fro'm P.redicated on the mutual deslre. and consent .ofthe the ·partl")ership by the other partner/s for a · pa'rtn~rs (Ortega·'v: CA, .G:R. No . 109248, July 3, . valid cause (CIVJL CODE, Art. 1837);• or '1995). .

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Some. Obligations. of a Partnet: . . . . . 1. T() g_ive his contribution' (CIVIL CODE, Arts. 1-786, .1788).:_ .. .,

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OBLIGATIONS OF TH-E: .. PARTNiRS ·-

~ 7 .. As to-the Nature ofMembership: a.: Oriqinal.partner -· one who is a member of · · ; the ·· partnership from. the . time· .of . "its commencement as a juridical person (Id. at

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b. . Expelling partner - partner who caused the expulsion of a ·partner for a valid . cause (CIVIL CODE,'1?,:rt. 1837). ' ,.

As to Membership (PINEQA, supra at 9): .. · . .·· a. Real· partner . - . one : who is really a contri~uting- member ·of .an existing legal . partner-ship. b, ... Partner_by Estopp(;)I ~ or quasi-partner.· O~e who is not r.eally .. a partner but. repres_ents 0t90E, , himself as one- (CIVIL Art. 1825).

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PARTNERSHl'P AND AGENCY SAN BEDA L;AW CENTRALIZED BAR OPERATIONS - MEMOfW AID,2019

- The're is no s·uch thing as an indissoluble pql'tr.ership (Id.).

Hence, as a rule, even if.~ontribµti.ons have not been made, the. firm already exist~., for partnership ·is a ··consensual contr~d (5 PARAS,.supra at 627) ...

Note: Presence of bad faith can still cause .. dissol_upon· but results in lia.bilily for damages to other . partners (Id.). · · · ·· ··

. Exception: Partners.may stipulate some oth $i;::,9ate for .the comme.ncement of the· partnership ;,CG/VIL CODE, Art. 1784).. . :-..-- .. 0

.Obligations of Partners Amorig Themselves. L Obr°igation with . respect to contribution of · property: (CoW-DADI) ·a. To Cootribute what had been promised "(CIVIL C.<)DE, Art .. 1786); ·. . _,,,. : Reason: ., The. mutual · contribution to. a .. ·common.fund is the essence, ot.partnership. . for without the contributions the 'partnership · is\1s~less· (QE,.~E,ON!-~.~J_Jr~ at ?-3)., ..

Agreement.to Establish Future Partnership · · The contracting parties are authorized by wa'y-'.!2f exception .. to 'stipulate on· the, date thecontract partnership -shall b,egin to exist": However, . if the· contracting parties aqreed 'lo become partners not at the ·tim~ of the execution ofthe contract but, at .: t~e same future time, they do not. become partners unti! the- appointed · time.has arrived. (PINEfJA, supra. at . 48-fJ9). >'. , -_., ·

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P:artnern~ip ·~ith ~· F.i~e.d.Te~;,, ·.- ,: .:~ ,'. . ·.· .: . ' : · .. ''T_~e money .9r property 2p;~tr.ib~led: becomes' Q'ne which the term of its existence be~1cigr~he,~r()p~r.t~ of t,h_~ p~rt,~~rship,:~s- ~ropert~e~ UP,On expressly _or impli_edly. The ~?w~onJ~f .the .]f the p,a_rtnersh1p, the sam~ C.?u.ld not b~ term · or . the · accomplishment- oy.tn~e "P.a~lar___.. I: '\,/ · di~pised 9t by th.e con.tn,b~tmg partne undertaking·will"cau-ie the autq'matiG d!SSdl0ti61f'of . .' ~~J!ho.u~~e consent ·or .. app_rov.al of the. the'partnership\DE'L.EON, supjla.'f8rlr9lJ r . -: . . I - ....• - ,,Pfl~IQe~~-19-~r other _partner:5 ({...o~a?a y v. .,. $,c,, .. .· Depakak1b_o, ·G.R. No.. L-13q8p, Apnl 27,

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R:ights a'l),d Dut1es.,9.f_ Partne1s· ~ _: _· -· ·. · · ]p.) -~ ]:[ ·. IJYhen a' partne·rship for. a fixed te~rri ·or't_1:articular t \ i' f'), . .· -un'der\:ikir1g is cbritinu'ed afte.Hfi]H~frnina~1o.n~Fs'Oc~·· . . . "'.'!=ff.~.c~ 0f.~~Jl~.e to Conlribute ProP.erty_. lerrn _or particular undert?kihg1.:'0ftfou(a,:i~·ex~r11,_s:,:, !1i ---~.,;>'· . .f?tom1s,e~rr'='-'.~r;y.part~er,.1s a.de.~tor of lh~ ,.agt~~m·e_nf. 'the_ 'ri_ghts ~ a~(i of·. lhelr..a~n1e~~ J~~· ' ') ~?,rtner~.li1~1 wh.ateyer .. rriay,' hav:

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. COQE~ Art. 1-!85, par. 1): 'J \" Jg\· fe.~1'~~r,1s n(i)J je~c1ss10.n_ b_ut af1 -~~~1on for · ·... '· . ' · -" ··-. . · . \ - · · ,,:\ . , .. ~ .. ~ ~~., ~r.,e.~1f1{ p_~rf~_,vn~nce;_ ..i,y1th darr:iages . and. · . New -~~rt!".~rship _is Cr~,at~cf O{~rtners ip. ·~Qi\t~: . .. . mt~r~~:··(Sa.n,qh_o v. Ltzarra!Ja, . G.R. -~O: L~ ... · A·co.~tmuat)on ?,f the ~u~m_e.~,s ~Y.{ p~~.n.:r~/(~f,li~ .. !>-.. .. }!)f3.0,: Febj~ary~ _61: 1 ~31): Howe~er, _it ~~e .,_ <;>f ~he~ as, ha,Mua.l_ly ac~~d,_th~.r~rp d_unn~r the~.m~ /de!ault.1?9la.r-tner 1~ ~lre_~.d.y d_ead, ~esc1ss1~.n . . .. . w(fhqu_t., ?~.Y-. $~tUe~en~''. ··-or · liqL1rctati:o2'Qe~t~~i'\~a~~sp,~r,(Pab~l~(J v._ '.Vele.z, ,~:R .. No. L- . --:,· _pa~!~.~r;,~!f- _aft'.~!r~. '!S,. Rn_m~,. fac,e. . contmuatien .of .th,e partn~,r~fup COf~·~·9.~ri.riot,~however, be comp'elle,d.to·recider . . 178,f,,P.ar,__ 2). -' · . ·. -. i -.'. :.-_ .' · · .· .. · tifs·p~rioha.1 s'e'rv1c·e by::s~ec'ificj)erfor,maljce, ... ·-. . ,- ',. ... · ,. . , · ·. . ; · . . ·' . because.·lhc\t is· tantamou,:it ·to:-involuntaryi ,;: ,~': . :, '-'."Jth _su.~,~-·c9.nt1n~.~.119fl, . t~~ R,a.~ner~h,lp . f°.[.? .fi~ea servitude '(PINEDA .SU r'a at 531.1 . . : . . · .. :-: ::·· .. ;ferm 1s-d1$s9lved c;mtl.a new Ofl$)S created by implied · · , · · ::,. ' , P · · · ·_.·.: · ag(~em.enf(D,E'LEON;supra-,3l_90): . . . -· .. · ,, b ... To·.· Wafrant .' .$P,~ciffc .. and. aetermlnc;1fe'i ·. . · . .' r· · -~roperty_ c<2~tributed tci.p~rtn·ershi_p·· i.n' ·· . : -,· :. Instances ... :'· '... ·.. · -3 ·:. . · . · ·:·, ·. ·. . • · ·o f ev1.c;;,1.o.n ·· t' (CIVIL. ·c·ODE ·.· '-. · . . 'of P'artnership: atWil.1 , ·.pci:'e , , ·A. ft. ·_F86); · · · · . · -:, • ·1, Wheri"at the onse!,·there'is rfo':terr(l·express or· . ·_:: ~ ' .'·' · : . ,J.mplje,d; ai:i.d.' ·:. . ,. . ,: . :-\. . .R,ea~·o!i:·T,he ·ol;)ligation' of warranty.against: -,_ 2.. Wh'.en ,cl" partnership f9r fixed term 'or pa.rticuJar .. ~_vidiorrts.!he n~ce·s~~·r,y consequence of the ... " .. · '· . •. undertal
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PA.RTN·ERS·HIP AND·-.AGENCY SAN BEDA LAW CENTRALIZED B.A.R OPERATl9_l'fS- MEMORY-'AID 2019

Note; When specific and determinate things had . been contributed, the contributing partner is· bound lo warrant the things against. eviction: but warranty' is not applicable where the contribution ofthe partner (ih.clustriaJ)· is personal services. However, he ·is .liable for gamages·: if he. refuses neglects lo render the · services . without. valid justification. . · (Plfl!EDA, supra p. ~2-53). .

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.' . lf rnoney has ,been promised and fails. to do. ~ so, a partner becomes·debtor for interest and. ·. damages· from- the' lime he should 'have complied withhis obligation phoula be given (CIVIL CODE,,Art. -1788}: Here.. aqain, no demand is needed lo put the .partner in default (5 PARAS; supra at 629j... · · ' . ..... d.

Wnen contribution is .in qoods., the amount thereof . must ' be determined' . by "proper 8ppraisal of the value thereof -at the time· of . contribution (CIVIL GODE, Art 1787); . .

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. · The' warranty· referred to. includes.fhat of .. against' hidden 'defects: the contribution to ·the partnership is .an onerous contract of ..... · alienation, .and tre provisions oqbe law on sales, s~ far .as pertinent, should.:_ be. applied

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· If. what is contrlbuted.. is . credit, th~ , .. · confribµting .,:partrer . w,i(J.: only · w(rr'ant · existence but not ·th~ solvenc;~ of{he d~btqr.~.

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Neces·sity.:ofln~4?i:itory':Appraisal . ~roof j~. needed .i_tp_ d.et~r[:)_inef ~o'k . much . goodslor money .ha9 .been coritnbuted. An· \ inv_e~tbq' is ·therefore ·useful' (5 PARAS,· ·

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Reason: To· determine now much has· bE!'en.' ' . c~ntributed (5 PARAS; supre a/630). . /: . . ·.: ·.. . Manner'of·Appra_is~I:· ·. . . .. . .. i. >that which is 'prescribed by the.contracb . or .. :· iC - In the.absence of stipulation, byexperts . chosen by the: partners: 'according to . current prices (qi; LEON; supre at~°?). _

If what is prcirnis.~d is only .the "use" of ~. specific -. thing . which- does not -include its· owner.ship, the contributinq partner must still warrant. the. thing against. eviction, lihe situation is· akin to· a "lec;1se" agreement

(PINEDA,,s11pra at .. 54).....

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; : ·._.Ehfor~e-ability. of Warra l · .. · · .. ·. · ( , ·.' Pr,op_e. y~subject ta,a·ppraisal ·,\.. · . · ·· . , The· warranty cannot.be epforced unt,1 a fin~~ · c·ast_ot immovable prope.i-ty: the·appraisar ~.. . . juggmer:it has: been. '~aeced~i-te1eb~'\e ,....,,,~T~~~.e')/i'~~iinve~tory.ot.said prqpert_y.rsee ., : vendee )asses. the· lhifl.g a~,.qaired' or 'Ar.ts.. 1ZZ3r.17J5);,othe(Wis~., it r,n.ay.be ~ade· t~.er,e __ of_·_r_c_:l.VI_L P_E,A_11_·_·\_._11!i5~5.:l.)._ ,. , . - .. as·prqviqed in .Arl,icle 17.87. Tl)ere ·is no· ...~~.....__' ·-·1 · • reason·why the rule.fn.Article 1-787-sho.uld.not .. ' . ;- . · T~e. part~ers shall_ n~t be ob9_ged""t0_make . also' apply . ..yilhi ·respect to ·other.,ikinds of · ·, ; · .. ~~od .. the pr _c.· 10:QEllhier the fruits·of-lhe properly from 'the. ·cha_nges.'ii:i ·-their' value (CIVIL,. CODE,"Aff. ·. -tim'e_ !h_ey. ~~ou1cr ihav~. b'een. deiliv~re_a: .1787) ... ·... ·: •. .•. . . . ·- ". . . w.ithout ·the· need · of ·any der:nand·· (CIVIL·'.' ·· · · · .--.... · ":- · .. .... ' · CODE, Art .. 1786)i . . .. . Any su~se.quent ._increase.· o~ ·..q~c,rease in . ;·. . . . .- . .. . Xlalue· pft_he property_ cont_rfout~d V:,ill_ o.e .for · .. Note~· No .cie~~nd ·.is- ,ne~ess.ary to put ihe . the ac~oµnt of the''tirm (PINEDA, :sup'ra·flf '. .. partner in default (DE LEON, ·sµpra.at 95).. 55). ,~· . · ...

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. · ··..'a\ If° prop~rty h~s· t?.eel"! prorT)i~ed, ·tt,e.fruits ·. .. · thereof should also . be· gi'ilen. · The fruits ; .··.-··,referred.to· ar,e· .those. ·ari~_ing.,from lhedim~· . .. · .. they ~hq.uld~·hav~ ·i;>een ·delivered·,· without· . ·· need· .of a.riY demand. (5 PARAS, supra. at .. .

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:TQ. !n.decnnify f9r.a_~·Y in.teiesi· ~-~-d .d~rri~1~~s .cau!3ed by the 'retention.of the properly or by del~y iii its. qbiigation lo. contribute. ·a. sum of money_(CIVIL.CODE, Arts. 1788 & f170).' ..

If th'e partner .is in bad:taith, he is iiable· not·, 9nly .(or th$ •fruifs act(Jally produced, but also for tho$,e that could have been produced (Id.

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·ora goqqfathEk_o°f. a fc;1rn,ily ti~ndini(deliQ'ery·· to the partnership (G_IVIL. COD,E;-Arl:_.i'16J);

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2019 SAN BEDA LAW ~ENT8AL.IZED BAR OPERATIONS

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PARTNERSHIP··AND AGENCY SAN BEDA LAW CENTRA_LIZEDBAR OPERATIONS- . MEMORYAID

Note: The guilty partner is liable from -the time he should have complied .with his obligation "(CIVIL CODE, Art. 1788). Even if no actual· injury r~sults, the liability exists · because ··Art. 1788 is absolute (5 PARAS, :. supra·at 632). . 2.

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-the legal interest as stated in Art. 2209· of the Civii · Code (DE,LEQ_N, supra at 98). . 3.

Obligation not to e·ngage in other business for hi_mself,. . . .

· ..,lndustrial_p:artner . Contributes his industry or labor. The partnership· ·. therefore becomes the owner-of suet"! services. The partnership will be prejudlced if the industrial partner will -be allowed to· engage in -separate business for.himself asthere willbe diminution of . his time· needed in the 'rendition of his services ·(PINEDA, supr« ~7--58} .: : . . Note: · Liability arises. from. the . 'commencement of partnership, that· is, upon Industrial partner' cannot enqaqe in 'any busin.ess .perfection of the-contract, unless· otherwise for. himself · unless · the , partnership · expressly · stipulated .(DE LEON, supra af 98). permits _hirr:ijo .do so; -~nd if he shoulddo so, "the -, . · capitalist partners· may either exclude him from b. To Reimourse any amount he may. lia_veu fv.tlie firm" or- of avail themselves .of -the'·benefits . · ·. taken from . the partnership ·coffer~ aric Wliich-,.,.h'e may have obtained in violation of this': ' · converted to his own· perso~~~us) l7CJV!4,,,;;;,~ .e· .. ;._~p.r6visio9-~·th a rig lit to d~m_ages in either case . CODE, _Art. 1-78~); ·.. _·Y.., .: ·. =" '. , . (GIVIVCO[l)Nrt. 1789). _-' ·. . . ·. :~.-. . ' . . . ~ . ... c. To [ndemnify the paftl)er~ip Jfor · tlie "}( ·w Capital.~t P.artner · : · · · · · darnaqes caused · to ,1t (~e delay in ;/fi':,. -The rohib1t(on extends only· to any · operation contribution· (CIVIL d10DE,Alft. 1.7~t8); 'and .v().-\ . whicH is_ q~!Jl{: $ijrn.,.e··_or similar kind-of business · · · - { ~ / -- . . ::-•~-irflNlif~ _t~e 'f;/ ~shi_p is engage_d, unless there d. To fay t.b~ agreed ~rtlegalJnterest _if ~e~ilz:j~(,,..iWas,.tipulat_iof to the, Q9ntrary (CIVIL CODE, A,:t. · · to:P~Y i~ __du_e-time (6;/Vl~CODE, ,:1 : !7~8)~-~·1808 .-r . ·-:,

Obligations with tespect to contributi9n of - '!TI Oney and money converted to personal use: · ·. (CRIP) · .. a.· To _g_ontribute on the· date. due the amount · : promised to be. given (CIVIL -CODE, Art. · 1786)

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- Sanctions.. .. · . · ·--~~\ a.: ~ibiti~·n. ~-o~ -- --~dust~if ~2% 1i:it~rest{~}l'lit~.»'~'\('~~~f'!; supr9. at·101). · · -:· : ._: .. · contemplates· _in~erest on·.a .forbeara.nie .of "\: ~ money. (PJNEDA; .supja _at'56{ .: .~A~ a~tion:forspefJfic peiforrh~n~e to comp~1· .. · · · · ·. · ·· · · the p'artner tO' periorm·the promised work 1s · coverage"'ofuability _nor a.v.c;1ilab1e. as· a_, reimeoy because:-thi? .-will - .._ Liability-covers alsci ir,terest and damag~s·:. a_mo-urie\o involuntary ·serv_itude ·(PiNEDA; a_.. ·.- ln_teres"t at fhe ,agr.eed rate; ·if none·. at 'the· si.ipra 53): : ·' . ' . · ., , ·. · ... ..,· · ,'legal rate .Qf 6% p_er annum;· . · ·-. · . ': tf· ::D~ma__ges .that rriay be :s~ffered the Reasons:· : : . --·:· · .r · - ·. ··P.artriership:(5 PA::?"As,· si.fpraa{ 631),.__. .. . . • . ·. r. · To-· p_reyerit the' fndu~trial -p'artn~~ from . ' :~·e~ploi\ing. hls '"services·. for . his: owri . . ·._. p.~rso°rfo1· benefi(wi(hciukth'e permission . '· D:9_ubhi F(e_SJ)c)n'Sif?ility_ _ , . -· ... /·., .· · :· · ·· · ... ·of ftie'.'.firm (PINEDA supra,a1,58). · · . TAis'aouble respdnsibi_lity (interest and·damag.es). ii". To· prevent·. c·onflitt of ·interesr. and tor. o'f a pa_r!Aer i$ ih harn:,ori/wi!n the pi:incipfe (hat .. . . ·. ensure·
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the firm is . engaged only in. one trade, otherwise, the firm will be prejudiced as the industrial partner will be· using ·his time and expertise which are· intended exclusively for the firm (PINEpA, supra a( 58).

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Obligation to con.tribute capital · and c!dditional capital a.· Cor:,tribut_ion to partnership capital General Rule: T-he partners Shelli contribute equal shares (6/VI~ C?f?E, Art. 17,90) .. Exceptions: _ i. When . t~~re is a stipulation to . tbe cont~a(y (CIVIL CODE, Art. ·1790); ii. Industrial partners

Business prohibltlon . on · capitalist partners . _ "The capitalist partners cannot engage for. their·own account in ·..arw operation which is· of the kirrd of business · in which the partnership is engaged,. unless 'there, ls' a stipulation to the contrary. . Any"sapital.ist partner yiolatingJhi_s:prohibition !?.ring tothe common- fundsany profits accrulrrq to him from his transaction, and - shall personally. bear. all the. losses (CiVIL . CODE, Aft. 1808).. . .

Exception to Exception: unless besides his .. -services.he has:¢ontributed capital pursuai:it. ~ to an agreement to that effect (DE 'LEON, supra at,_101}." · · . - · .., .

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Prohibition Against. Partner:" '=.~-~aging Business . . . Prohibition relative: The. prohibition aqains] the capitalist , partner to engage in . busines!) is relative, unlike· the .industrial partner who. is absolutely: prohibited . from . eng'aging in. an'[ business for himself ·(DE LEON, supra at 143~ . 14.4):.

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Appii~ability . .. . The article applies only to capitalist partners (PINEDA ~upra at §9) .. · · . . . Contribution of Additional.Capital · Ge°ieral Rule: A" partner is not· bound to contribute additional · capital (CIVIL CODE, Art. ·1791 ).;. · .

Exceptions: · · . : ., · When . \here is. an agre·ement to . the contrary; and · in qf an imminent l9s? of the business, and there is:. no agreement to ... lQe ·. 9on.trar.y; ·capitalist" partners are urfde"r ·.the' obiigation· to contribute an _.L·--additi~n~sb~H~ to s-ave the ve~ture. If.he . refuses. tp contri~ute, tie shall be oblig~d. ·lo sell· his interest in the partnership· td ot~ei: partners (C/Vti C.ODE; Art. 1791). : ' . ""' . . ..

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.. Reason: The law aims to ·~e er:it a partner from -availinq 'himself personall~ . o~information 'obtained by him _in t_he ~?urse of theJr.a)sa_ctio~·~ ·. of the partnership businesJ or p~reason of lils ·. connection wit~ the 'firm ·reg9rafng_tpe bu~ioe,ss . · ·. .secrets and chentele of the firhfto· its preJad1ce . (Id. at 144~145). . ' . ---- ........---R~ason:·. Tne refusal of the. ·partner to A. partner occupies a fiduclary po~ilio? with· · ··. ·,: . contribute his' additional share.reflects bf his respect to his co-partners imposing'-duties 9f . lack· -of interest in the .continuance the . .utmost -qood faith .and .he rnay hot carry o.n· ariy . ·. · · ,.. : -, paytne_rship ·(o~.LEON, supra a! -102). . .. other business in rivalry w~h. the buslness.of the ' • · Re.qliisi~es; (~.IM.AY..,. · .~· . partnership· whether in his: own name or for ·the i. ·.. ·Capitalist partner· Refuses:. ·deliberately account .9f .. another at. the . eXp.!=)!']Se. of: the (riot due· to financial. diff.ici.Jltyr to partnership (OE L.EQN, suore at 144): · contribute;· · . . .:ii. ,· There is !mlJlinent los.s to be suffere.d by Effect of Violation: The violator can 'be ousted · the business; · from the firm qn the ground of loss of trust and iii..~ Majority ·of. the capitalist. partners are of confidence. This would of course 'result in the : : the · · op.inion that an < additional· ·· c)i:'~oll}~ibn of .the firm. (~ f'~RAS; supra at 6~2) .. ·... cqntribution i,ypuld ~ave the. business;· and· ·. ·. . · ·.. ·:. .>, ·:'· Remedy.also Available to_fn.dustrial. Partner.~: ·, iv. There is 'no ~~reement thal even.in c~se . Although··Art .. 1789 -mehtfons only . .the: capitalist. of an imminent loss of· the business the partners; tne ind·u~trial 'partners a"re" also entitle'd p.;:irtr:iers .are· nor obliged to contribute to the remedy since· they°are' etju-~lly prejudiced . (Id.). . ',by the of their. : c.o-partner- .. engaging in bu.siness/or himself (DE {EC?_°N,supra at-101) .. Note": An industrial' partne~ is- exe~pt~q as he is · a,lready . giv.ing his· · er:,tire industry. Having . c;ontributed his entire industty, he ~an do· [IOt~ing _, furthe'r (Id).· 0

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Oblfgation of manaqinq partner who collects · debt· G~rforal Rule: Where a person is separately indebted to the partnership to the managing. partner at the same time;' any .. sum received by the.latter, shall be applied to the two credits in proportion .to their, .arnounts everithouqh- he 'may . 'have given receipt for his own 'eredit only (CIVIL . CODE; Art._. 17.92). · This is · an instance ..of application.of payment (CIVIL CODE, Art. 1252).'

Requisites:· (RIC) a. A partner. has· B_ece,ved, in whoi'e or ln part, his sh9re of a partnership credit;'-.. . . . . . b. The · 'partnersnip debtor has :·b'ecome · !nsolvent; and . c.. The othe.r pa.rtn_!:)rs have not folle_cted th'eir· . . shares'(DE LE.ON, supra· at .105). _-· ·.

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Exceptions:· a ... Where he received i.t entirely tor the account of the partnership. in which.case the whole Art. 1792 v ;Art. 17.93 . sum shall be app lied .to' thepartnership credit only. ~/VIL CODE, Art. 1!9?);. and ·.. , · b .. lfJhe collecting· .Partner"is not a rnanaqlnq -: : 'J)~rtiie;; _Tli~re_ iS·'.nQ: basis (or. .th·~: suspicion . , . . • . • _. . . . . , ,.. ~ .;,, 1. , • , : . J , . that · the · ·partner _. is·.) in' bad . .faith · · Two .distinct. credits .- Q)'.lly one c.red1t _"':-in favor. (.5 PARA§',;-suprg_. at 638)._ · · _. . ~ofr~'1.Q._ .favor. of. the of th.~ partnershlp. panl')er~~IR and a·~ather : . ', -; TIJ~·d~.b~or rs gtv~n th~ n_gnt prefer.-~aymegt ::_f _: -inlf.avor ~n~~nag·ing . · the-credit .of. thepartner only 1~1H~Ji!~~more : onerous to him (DE tEON, stJbr~a,t) 104f). ~ _. · ,· ~ -"> ' · ·

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_ .. , ··/ , . . the ·-Slim·· Of P.2/000 ~n~ .. if al1(0:-1ndebt~~f ~- nolbi;in£rthe 'same t9 lhe pa~n-ership:c~pjtal. . : ·' .. · . _. ~a_rto~rship:in tq_~_-~ym'-~f. P4,0g?,: _!3qtlfdeb,ts c1re .. _ ... ·. Art. -1 '(93 _l)restippo:5e? t~at tnere e:X(~ts a.r:-, .. .. _.. : , .. qe~~~q.able:_-f _collect~ the -arri~unt of' P_1,500 . ·..' partn~.c~ti!P capital; Up~_n-_di~}()~i..Jtio~_:'_9f_._the._ . . : : ·. I··... from G;, · · ' ·i . partnership ·and the .return. to, ea.ch pn_nc1pal . .. . . ' . ' . . ~. . .. cif V,'.h~t: he 'contrlbLit!,d, 'th~ .co(Dmµnity- of If K' is~~e$ ia ·.ce·~eipt:Jo·:th~ . ett~ct.. th~-.t .it li. irn . . ~: .. inter~st betweeh. lheni· disa.ppears ·d1rog~th:er· payment of. his~ (A"s). crEidit, P500 \;.,iill he appiied ·. ·: ..- (lcJ.:a't 106)'.· "· '" ;- .. -'. .. . ·.·._-.•" _. .. ohly--to.his cre'dlt(tfie pa·rtriership,~ein'g entitled t.o . . . . . ;. . ..- . . : . . . pr:~port(cinate'ambunt-o(P{OOO _ir-i'the p;aymer\t : '> 7 .. Ob!!gati6l,1 ·:·df. ·:· p'artn~r·· :tor - da;,,a·~:j'es' -io:· .. ; ·. -:\. ·-:m$tje}'l.Y-.,C:Bu.t_iC~~:t~~sare,c~i'ptforth?account: partnership . _.. .. . ·:·· '·1 •• 6f th~ par-th_ership cr1:d(t,,Jhe· ainou'i1t of P\500 -·Every pa·rtner is responsible-to the pa.rtnershi{fo'('°' vy,tll be.·fi..Jll.y applie~ to the _lat_te~ (BE LEON, sup(a·. . . ... dam·ages suffered by it through 1.h)s 'fault arid he . , .. 't 103) ·' ,, .. · '· · .·,,; , · •, · 'i ' . · · · .. , . · ·, i · . .., • · · · · • ,_ .. ... ~-- :::~':·. ·.' , / .. _:!:.._ ':' .· __,: .·•. -.· . :· : . . .· ·.. '·- :·· .' . C9nnot.:compensate ·them :with:; liW · profi.ts· ,anf -' .. 6,. : ~.blig13t\0n·: of.-partner_..'('hO recii'yes--share--in. . Oenefit~.:,wfiicp: h'i:Lmay~··[fav.e :~),\'roed .. for.. the· · · pprtnership~c(Efdit. : . . , · _ . -,'parth~rship-:by ·hk 1n'dbstfy '(GJ.vll CODE; Art.· · 'su.ch · partner''.·is. ·obliged~ if • the debtor stiould !~ !794).' . ,·.. I . ' • .bec9n:i.!:l'/ins_qivent, to .. bring to the p_ar-t_ne·rship However, the c;ourts may equi'tably ·1~sserf th\s . . capitai- wha·t · he_ receiv.ed'.'even• thoug~, he. may -reSP.O,ns_ibillty. ·'.,,if. lh~ough ~he' .. · partner's. . h_a.,~e: f{ivE;l~ r.ec~ipt ·(or _his share .only (CIVIL ., extraordinary ~ffo~ts in-·. cith'e( ·activiti~s of me· · .. CODE, A.rt,__ 1'793): .. . .

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PARTNERSHi"P·.ANb-.AGENCY SAN ,BEDA LAW CENTRALIZED.BAR OPERAT/0!"5 - ME{\'IORY AID 2019 _ ,.

partnership, unusual pr,ofits have been realized (CIVIL CODE, Art. ·-17.94).

Exception: If th.e taking' by the-partner is with the · consent .of all 'the other partners (Lim Tanhu v. Ramolete, G.R. No. L-40098, August 29, 1975).

- Need for Llquldatiori For the purpose of adjudicating to- plaintiff . damages whichhe alleqes to have suffered as.-a . partner by reason of fraudulent management of . the_ partnership, it is' first necessary that a .... . liquidation "of -~he business be made to the· end - that · .the _ profits and losses - may be known (Soncuy£ v. De Luna, G.R . .No. L.~45464, April 28, · 1939).. .· . / .' .

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Mitigatiop of liability W_h,en Allowed . General!y, dc!r'nages are not sl!lbject to set-off. However,· the liability of the' fauiting partner may be mitigated if thr61.lgh his el'.(traqfdinary efforts.in . other activities of his' pai-thership, i.Jn"usual profits . J{ave been:c~alized (DE (EON, supra a{,108).:'.:.

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Duty. to render ih(orm·atior;i . Partners 'shall - render on demand tru~. and full , . /. in~o/.inati\:m of a[l th.ings-'attec~in'q,J~e p~rt_n~hhip .-.. · to any partner· or. th~ legal representaJ1ve of ,any .. ' dee(;la~ed partner of any partner- under legal -·:;·disability "{CIVIL CODE, Art. 1806). .

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The dufy to account continues until the ·partnership relat,iori is t~rminated; i.e. the winding up,·of partnership _affa/rs is completed (CIVIL CODE, Ar( 1829;DE.LEON, supra. at 136). . ·. Risk. of L~ss of Thi~gs C.orltribut~d . 1. · Specific and determinate things which are- not fungible; only the usufruct is contributed-The risk of loss is borne by the partnerbecause he remains the owner of the things; . 2. Specific. 'and· determinate things . the i. ownership. of which i's. ~ing· the· owner: · · · ·. 3: Fungible thlnqs=-The risk of.loss is borneby the partnership since use is impossible without the things befng consumed'or impaired; 4. Things contributed to be: sold - The ·· · .partriershtp.bears risk oflossfor the!e cannot be · any do'ubrthat the partnership was intended to be --=theowner; a'n·d , . : . ,· .. . -Things ·ti ou-ght'' 'and appraised in · the _ : invent_ory-ihe partnership bears the risk of loss becaust_ the intention: of the . parties was, to . ·contribute to the partnership the- price -of .llie - - !hingsf contrib'1ted'.' ~~ith .an appraisal irr.. the . •fn:'e~tgry.:. f_.her!3: [s -thusan implie9_ sale (CIVIL .

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_, \ ·; . Re~sori: · -. the_re ..:~,riust , .be. no ·cor\cealm~_i:it rt~t~r·lhe: .,c:1bo.ve pr~suppos.~s _: .that the( thinqs · between- .partners in all matters affecting· "the· cont~1buted · have ._·b_een delivered'- actually or firm's. intere_st:(p°F'A~A$, supre _at._655)!) constructively·to,the partnership. Before the.delivery, ,·'.< .. _.. . , ·. ". . ,)- -, ...-.:~-"-the·ri.sk~Qf·loss.-is borne bx the partner ('[d. at t°09). E"'.~n without demand, - honesty demands the. · · ·· •:_ · ·· .' ··-·· · R_esponsibility of. the Partnership to- Partners: ~v~n~ of vital inforrnation: the· r!'!f[ainin-g fror:n .~11 : ,. (ROR) ·:. .-_. . ...-:-· . ·· · :.. · · . , . ,__,. _. kinds.. of·. concealment (Id.}. _ · ·_ . . . .· . . . 1-: ·To ·Refui:id- amo·a~ts disoursed~by,the. partner in· .. __ ., . Notei Jhe:duty tq give:ihformation is distinct from : · bet)alf-~f. Uie- partnership plµs.ttie corresp6naing · ·. . the:quty to acc·o!J.nl" und_erArt. 1807 (Id. al 656): . - · .interest from. the.)ime the exp'~nses -are ·made. . •. ~ .. ,__.. .... ,· . • . .... .. . > . · · This refers: t(? IQ~fl~. and advances _made by .the . - . -. ·: ·g_,,. obligation·ta' ~ccount for.any.benetit and hold· . .partner other than capital. (. . ' . .; ': .'_. _. . . ',. . ': c3:s frust~e µriauthorized personal profi_ts ·: . 2 'To· answer for ·the ~bligations: tpat -~he partner·. · Ev_ery partner rnustaccount. to th.e paJ1nershiP, for ·, · _ may have·Gontract~d in.good.faith in the interest . ahy _berie_fit, an.d, hold _.a~,tru~tee' for it a:ny. profi_ts · · of the_ partnership business . . · _. - · . · ·.::, . derived by"him witt,out'the,cpnsent of-the ottief 3. ·To ·. answer for - · .Risk·s . in coris'equence of ,partners,from ari)Ltrc1nsaciion. conr.iected wiih .ihe" ·, - management (G~~lf.c;ooE, Art: 1796}."- - ·. :·: .. , ~ ·:. : formation,. - c'oniuct, "-. 'or- : liquidaiion of. the . , . ···r·. . . . ~. ·partn·ership or from qny use by him'of its property .. Note: The partner is not pe~~onally liable, provided ·· · (CIV!L, C,ODE,'.'°jl.rt. 'i 807).':~;' _ - - -·: . ·: . .howeyer:.that h"e is" tre·e all ·fault, and he:acted· - within th_e· scope- 9f his aµinori~y (PE LEON,. supra ai Genera_! Rule: The par!n.er ca,nnot use or- c1pply · 110). - ·. ·. · · ~· .· . · .. _ (;lxclu_siyel¥ to his py;n benefit 1:>artnerstiip assets . . or re~i.Jl~~·of \he knowl~dg·e. ·o_r inform.ation gair)ed. , .. In the. :a.bsence -of a~ agreement t<2· the c_ontrary, no . ._ by ·him. as._. a. partner· to. the detriment of the partner 1s entitled to compensation for his. services to _partnership (OE LEON, supra at 136/ · the partnership witho·u.t the consent of all the partners. ·unless it can be implied from:the circum.stances that. _

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Note: The ind~?trial partner shall not-be liabie for losses (CIVIL CODE; Art. 17~7). Stipulation_I~x.cludi~g a Partn_er fr~m any Shar~ in Profits or Losses .. · Ceneral Rule: A s.tipula.tion excluding a partner from. ar,y share in' the profits or losses is void {CIVIL . CODE,'Art. 1799). : . . ,.

The paying partner cannot exer.c_ise the right of . retentlori "if he is not reimbursed because;.unlike an ordinary ageQt, a pa_ying partner is' not giv'en. th"e authority to retain the 'thing_ which· are the objects of partrtership (PINED!:,, supra at 69). · .

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Reaso.n: The paAnersh'ip,must exist the·com_mon Rules for Distribution·.of Profits and Losses benefit a_nd interests ..of partners (DE LEON, supra at 116). . 1. · Distribution of Profits If there is.ar.{agreement. The 'partners shallshare in· theprofits and - Note that only the·· stipulation .is void but tlie losses in. accordance with the terms 'thereof. partnership. subsists- and the profits/losses shall be (CiVt'L CODE,. AJ. · 1,797).· However: they . apportioned as if 'there was·' no stipulation -on the ·· cannot stipulate that one or IT)Ore -partners s·am~:(ld.J... · · · shall be excluded from the profits and.losses . .. ;-., •. · ' ;::,-::r::-:;:~··r' ·-:;,-·7"."'~;z:;;~;;i:;-;:=:7'1 .__ {CIViL,CODE,'Art. 1799)'. · ·. . .. · . ·

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If there ;~ no. agr~emen_t -· · .. ~ ;~S~_Wls~i ity.· towards -Re~ponsibil[ty i. · Share of· capitalist p~r1J:len"sfi_alf91r in~~ ~d:pe.r~c,m;.. . · · partner$· .. -. proportion to his·.c·apita"ebntrib0ti'or'l~ · .'' (DE)~E0' 'sV~a at 175).· · ·.

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·1~da~!'.rja!hic~~n;;t~~fj~~~~~;o/~~~;;~\ri9,i par_;n-er ~hall ~~t,be ~li~:bl:e before.the cap1ta~st pal¢~ers sliall-d_1v10e ~ .fcfi:-los~e\ (Clv1(coq.E, Ar:t. 1797); but he is not . the pr?fits,.~s-mJr be:j~st·;md,~ui~able_·. - -~ exempted from~,~~\11sofaras third petsohs a~e under the circumsfa'bces (CIV t: COD , · concerned. He. may_,,.b,qw,ever, recover what he has · Art. 1 ~97). ·.: ,~gi'Je°r(t6.lf.ird ·per\6ns ff~m the _other partners, for h~ , ". . ·:. -~-: · · ·... _ ,,w_ ,,'ij~~xem~ed by lai!v"fr9.m-losses (PWEDA;· supra if . the 1ricjus~nql ~f.Bfl~~ ,aJs1~ · trJbutecf-.,--. ~20 : ·. ~0/; ': -r .. · · ·.money.or p_roperty't!· fhe>1s:-._;:cqp.s1 __ ere . ?,;ri·. ~}· .... ~ -~. ·_. _ .. . . . ... . ·- "double ..contributor' ~r.. i:~a-~1t~l.1s · d~{t~,iil;.· J;{ie·aso~ hy · .lnd_~st~1al_ Partner · _is . Gen~rally · ': partner: As far a~ .~\cont_nBu!10~_,ff<>~~1taf:W · 'Exf111i)tea.: From_ 1 los!~s: While -~ap1tal_1~t-.p~rtn~rs ·1 1s .c~ncerned, h~ sfi~.l. m ·addJtJ6A~?\v)(hdraJ thefr}apital,. the industrial p~rtner . ,· . re~eive share ·.irr the -~rems, in. pr<;>~O~~ioJj(_0 th1rayv any labor or_ ii'idus"try lie' hcld?lrea"dy , . . _ th_e amount.of the_cap_~ta~e· had'lonir~~. . Yexert~d~f;-1oie9-vertin_a--certa~n s~n_sf:l, ~e alf~~dy.-ha~ - . to th~ firm {PIN.EDA, supra_,_a~1J.:.Q11 .,.,1 rs~d~in\..tb~ofse,?'in that, 1f th_e_P,artners~1p·;,R_ows · · , · . ··. ·-.'. · · Vt ·· .. l.. l:rto trdfi~This-means that he has:labor~d .in ~am (5: Note: A pc;lrtne_t is· enti\led _to ·receive ooJ.t'nis lVllpA'i;,g.s~praat 64'4). · -.. · . · .... :, ...... share' .. of 'the . ·profits actually reqlize.d , by~ ,. ' · -. . .. ,- . · ·. ·. · · . · .. ;· . vei:ture .. (Moran; \Jr. V. · c;:(". G'.R.'. No;· .L:59Q56, · , ·.· · i:J:Je -~xe:mptic;h of th~ "ir,du.~trial .i:>'ahn~(tQ,pay . ·.-- · -. 6."&tot.er 31, ."1984). ·: · :, '. ., '·· .. .~ ." . 1o·s$es r¢1~tes exciusiveJy)6 'the settlernetit 9f)he' ..·· · · · .,·· partnership· affairs.;:1mong-fne parthe~ th~i:ns.elves: · 'Non:appiicabir'ity to. Strangers -_-: . arid has . ~_qi~inQ tq .~~: \~ith :tqe ~i~b_iii~-8.s. 9f t~e,. . . Articl_e·17.9y- aRplies only-.to·ttie· partners,. not wt:ien - . . partner~_to thircJ-·persqn_s (DELEOfl!; supr~ 9!-175).: . · · liabjlity . iri favor· .. of ·strangers·· are· conc~rne~,. · · ·· · ; · : ·- · . ·. · .· · · ·.. · ' .... · particularly with reference to th~ inqustrial partner .. ·.Q:'.A a;d Jaje partners, ·the former b~lng an _in_dus{rial. (La Co'rr:,pania Maritima" v:' ~Munoz, GR._ No. L- . . "ej}rtner: During the".fi(Sf .year.' of operatia·n, 'jbe firm . 3704, Dece0ber 1.2, ·..i907) ·.-.... · ,ifade· a. profit or P29, ooq.-_ If/ ··the second· y~w· qf . . . opera"tion,.ci"'loss.9f'P1Q,900\y9 s11sta"ine~. S(lou/d,. · 2 .. · Distribution of. losses . · . ·;: ·· · · . -~ . . .. · the agreeinerit·stare'.tha(A _woDld g_et ~ of-(h~ 'profits,.· : , ··a: :-},c~or.dirig·to;agree"n,ent s\ibj.ect. to i,rt.: 1799;' .. · "how much is he enfiiled to'rece,_ve?:" · . •' C ;: , •. " 1.on · b:· If · none·,. -based· · th£3ir. _profit-5.haririg: agr~e-ment; and . : .-ANS, P5,000. Take.note thafthi ~~t"pr.ofit for th$ two ·No:·profit-shj;lring agreement, in proportio_n to· re.art is·, only P 1 o;.do9. wlij1_~_it· is 'true . try:?t. ?n -· his ·capiial- contribution {CIVIL CODE; Art .. inaustria/'partner does riot share. in' the losses,: t!Jis ~ f797). · . · ·. .. ~ · . only means- that he will not $hare in the neUosses. It. · is und~rstoo.d th~r he shares in the 'Jo~es, Insofar as_

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these· can be accommodated in the protits (5 PARAS, supra at 644-645). ·

ii.

If iri bad faith, .he cannot (Id.). The- power . of 'the m·anaging partner appointed in the Articles of Partnership is generally irrevocable. It can be revoked only; . ·' . . :· . i. upon showinq of just and lawtul cause -· ( €/VIL CODE, Art. 1800); and ii. upon the -vote· · of the partners representinq · the controlling interest" (s:;JVIL CODE, Art. '1800) .. · :..

_Designation by a Third. Person of Share in Profits and Losses (CIVIL CODE, Att. 1798j General Rule: .The designation in .the share· of the profits and losses may be deleqated to a thir9 person t!Y common · consent: such delegation· is generally binding: -·· ·

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Exception: · .. When_ unreasonable .. ·

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When-. _a .managing . partner has been appointed. after - the constltution of the partnership · ·

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· Exception to theexceptiorr: 1-: When the partner' has begun .to execute the . decision of a thiri:l person; or . 2. When thepartner has not impugned the-same within a period· of three (3) mqnths. from lhe time he had knowledge_ thereof,, complain. of such decislon, ~:

Power to actmay be revokedat any 'time for any cause "whatsoever (CIVIL· ·cooE, Art~1800). . ·, , .:- , · .

Reason:" Such appointment _:·is a mere · ·· deleqation of power'(P~RAS, supra at 6.46).· It is· not founded- on a change of will on the "Fhe designation of losses .and profits cannot be part .of the partners,- the appointment not entrusted to one of the partners {CIVIL CODE, 'Art . beif)g a condition of the' cdritract, It is merely . ·17_98):. · .· - . . . ·--....... a simP,le: contract of aqency, which may 'be ·. r.~volfJ°d at any time. Removal, 'however, •. . 'i . Reason: lt-_is necessary in order Jo guarantee the sho~d'\lso be done by the partners having utmost impartiality in the d_istribution pf st,a'res in ~e . : .'thejontrollirig1nterest (DE LEpN,.,s,gJra a~ . ' ' .- 119)'. . . ··. .'l . p:ofits and "" '.D~_LEO~'. _s.u~~~115). ·, ' -, Management of Partners hi~ ~ · ,;.. . · . · xten . of eov.ie~; -As.Jong -as he-.r~mains 1. · When 'jhe' manner p~ · manaqemejj )}as .b.een . .. : . ma.nager, . Ii~ 'can'. perform. all· acts of . - .provided for' [n 'the partnerahip J)greement. . . 9-dministration,:b'ut if others opp_ose· and tie .. persis\s, .. ~~··~an.'. be . remove·d : (Tai. Tqng · . ~- - "'I.hen· a.. ma.nagin.g par~r h.as bern . · · ·· · . · Chuache. &,:Go: ·'v. · Insurance Commission, · · appointed iri the articles of partnersliiP. ( CIVIL G.Fi: ·Nd. L-553!}7 .February 29,· '1f188). . . CODE; .Art. 1800). . Note: -fh·e partner generally is-riot e.ntit1e9 to: ·c0mpensation. other than .. ·his s.hare in_ the profi.ts. Although· in proper cases; the law . . ·may imply, a contract for' compensation (OE LEON:·sup.ra·a(1~1). . : · . . '

_- · General Rule·: Power is irr~vocabJe· without .. . jlfst or'iawful cause : . . . ' . : . . ·: . -. .. . . Exceptions~ ..=· . .i. remove. hii:n for just hause,: vote ·of . partners . Q~Ving COl)trolling inter!:?St is·· ·, necessary (G:IVIL CODE, Art. 1800) . · .. ii. · Ta, remove him witAout just cause or for' . .· ·
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R.easof! · for '(ii): This· represents · a . change· in the will of the·: parties, or noyat~oi, their .- contra-ct: r~quir[ng .... unanimity .(Id: at 646), ·· · '

2 .. When . i or. more managing partners have '. · ·oeen e~trusted-with the management (CIVIL . · . CQDE; 'ArC1801) . _ . . - ·_· . . · ·-:"·- · - : . a: Without 'specificati6n --of ·)fieir respective duties. and without stipulation that one of lh~m· ·shall nor?ct witho,uf the· consent .of.,all the others: . · .. · .::. "' """: . . -·· General· Ru.le:: Each one may ~xecute · all acts of administration . . .

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!=xtenf of Power:. . .; . i: I~ he .acts )n good faith, he ·may perform all acts. of! . administration, despite o'p.position ofhi.s partne.rs; ·

· . Exceptioi'ls:. If .ANY sut.h: partner. should . . : . . . oppose, . · ·. . ·· i. Decisfc5n of th.e majority (per head) of the : . managiri~j'part'ners shall prevail;. . or ' .

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ii. . In case of.a.tie, decision of.the partners havinq · the controllinq interest (holds 'more than. 50% of capital investment) . shalt.prevail, provided· that they are .also rnanaqers (CJYIL CODE, Art. 1801 .: 5 . · PARAS,· supra at 647-648)>'

weirds, unanimity. is required in the execution of the intended act of. a. man_agibg partner. , Only managi_ng. partners ·are supposed ta. concur. There -. is, therefore, a .. joint rnanaqernent (PINEDA, supre.et-Bt) .. . '.

Requisites: (?;-S2) · i. Two (~) or more partners have been appointed as, rnanaqers: : ii\- There · is . no" .[pe.cification of · their . respective duties; and . iii. There is no ~tipulation that one pf them shallnot actwlthout the consent of all the .' .. :· others,(DE LEQN, supreet; 125).· ·

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presume. that- the- manaqinq partnera.with whom he ~o~tracts has, In. the; .ordiriary and, usuai course .of business, · the 'consent _of his co-partner· for otherwise he would 110.t enter into the "contr~ct ( Goquiolay" Ii. Washington Sycfp, 'et al., G.R. No. L~ 11840, July 26, . 1.ft$0). . . ... ·· . . .. ·: .;

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'Bur if the refusal . of cqnsent by the other. ·'. partners· .is mar.i_ifeslly. preju.dicial. to the . interest ... of the partnership; the court's intervention may be sought (CIVIL . COQE, Art. 1803,··Par. 2).~. · ·~· ·· ·- ·· '· The consent· need not- be expr(:lss: It may &e · presum~d from the fad of ~kn<:>~ledge of the · ·alteration. without interposing any ot:ij_ection (DE LEON,· supra: at· 130), ·· ·• . '

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c. Manageme~t Participati~n 2. .Right to Beim.burser'neni for amounts advanced·.· to the partn,!=)rship and.to indemnification for risks · in ·conseq.iJence' qf management' (CIVIL CODE, Ari. '1.796); , . · . . 3: · Right·· to· ~ssoc_iate _with "ar:iother per9on io: his share ( CIVIL CODE, Art. .1804); , . -4. 1 Righf of 8ccess and inspectiori o~ par'tnerst,ip. · books;. ·. · · ,.

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_Reas'hn: _ In' comparis9n with ~-per~pri.aliy: immovable property is of greater importa~9e. -1.n a,p·rope'r case, immovables should be-r~turn_ed to pa·rt_ners in the same 'con'dition· as .'when \hey a·re . . · delivere9 to !he· partnership (5'?ARAS, ·supra_ at

652). ..

Note: The partnership" books . shall- be , kept, .subject to' the aqreement between the partners, at the·. principal place of business .. 'of the partnership, and every partner may- inspect and . 'copy them atany reasonable hour CC/VIL COf?E,

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Person 1~. J:iiar~e pt Keepi,ri~ P.artnership I · Books . · · -: · · . · : . Th~ d(Jty. ano obligatio'r;i _to 'keep tru~ and· correct . · partnershk» .books showinq ·::-the. partnership account prirnarilyrests on the managing or active p9rtne_r'.·.J:h_e·.'par\riers .a.re presumed. to know the·· , contents of thebooks ~·ri.d itis further presumed · that the .books accurately, state the _partnership· . ~~co~nt (RiNEDA; supra at.8?J: . . .

" . : :.'.. .. . . . -· . \. . Alteration contemplates us~fu!-1e,enses, nr;/_. . neces~a_ry ones oc1.-1. • ~_ .,..!. _ . 1 . _ ~ · f · .· .i. ···. .: 0· ... h ... rt. >Ea~h .. g_a"!-~-er h_as a;rig~t to free acce~s_t.o .. thef:-1 If the re usal to give consent Y~l e ot er..Qa ner . ·. an_d)?~hsi~fl_,~r. C?PY ~~ he sees: r1·.~_ny.of_ tt.E).m . ~ . aran.f re~{_qn~Bj!'l. time, ey~!1 after d~s~olut1on.:-A ·. · partner is-? 96!qwner , of . th~:. partnership · .proper:tie..§.;_whi'6h· inclwde · the · oooks of t~e _;p_a'ftners[1ip.-~ndt{as a right fo particil?)ate equally. ij\' th·e manage.me.n't of its affairs.' They should not; · lf..the altera,tion. is ·ne~essci_ry fci'r \he preser:vafioh therefore, be in the exc1Jsi.ve custody, or co,:itrol : Qf_thf P~?P,e:.IY_;it ~.oul.? SE).~~,!~a},.t9PCOnsea~t·... ·o_f_· -~-,i:if-a~e P,artn.er, .and):;ho,Llld'.nbt b'e:remo~ed .. the'other partners 1s··not_requ!redpa,J .. ·, · fr.om'. the ·principal pl.a.ce:,.of bLJsi(less · of_ ·the

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. ·Cohtract of SLib-Partnershi°p . · .· -. . pa_rtrier~~ip;with?l!l.fhe consent.of.all t~e P~.rt~~r~:: ·Every partner· may associate an.other person wlth . . · ·: _.. (DE LEON!. supra _at,1-83-134).: : him~iri h:is-sh-are, ·but the asiociate sti°~II not be '-:: . ·. · · ·.··. · · ~. ·:-" adrriitted into. tbe· part~e.rsf)ip. ~ithout' ih~·con.se·nt - -Acce_s~ to· ~ooks Must. Be At Reasonable .'· ·Of· all 'the· ·oth·~j- ··parfners, . ev,eri' .if· the partner Hours· · · • · · ·· . hiving ~f.l.c:1?,~o~iate s~qu.ld b_e,a_ IT18n.~g.er. (C~VI~ . "Reas.prablei tjou~s'_' me·~:nsjeafo·nablE/hows ·on _.· · ..c_qoE, Art_\ 1804.)._· · · ~.. ·, business. dc1y.s, thr6u~hciLJt, thE{ ·ye.$r_ ·and. not . '• . ,.. nierely_during some arbitrary period of a.few.day?.·. Righfs of. a.P-~rtne~: '(pR:t\~ID) · ... · . · .· , · c~·os~n: )y .the ·._rrianagin.g. partn·ers . (~arcto· v.· 1. frqp~rty Rights_of. a',Partne·r (CIVIL -GODE, Art. Hercules L4mbiJr Co., and.Ferrer, 'GR: No. L. ··1.810) (SIM);': · · . . • ·. . . . .,. . 22442, 'A_ ugii~t- \ 1924). _·. . ·· : a·. · ~p~cific. Parther~·tiip.'Prop~ft{ , · , ," • • _ •• 1;•.• - .. • · -~ , .· • , Right to 'a fo~ma1. Acco~nr of. partnership attairs .. ·lllustrat_ipn: A'a.rid·J each'·contributed a car_. . . under· c~rtaii;(cfrctJmst'an·ces)~tV/L: CQDE,· Ar( . ·16 th.e partnership:-Thedwc:i cars .-are ·specific. 1809t (WAPO) _:. :··· . . · , _; . . . .·. partnership_pro~erty,(PARAS, suprfi'·at 664):. a. 'If· tie' :is. Wrongfully· excluded . fram··.th'e partnership bu.siness or :possession of its· b. Interest in t~e -Partnership 1. ,- prppe~ty by his co.:'J?clrtn_ersj. .·. ·. . · . b. · If. th_e ·rig~!. exi$1S - ~nde~·- the· teems_ of_·any' Illustration:. ,Th·e·. par.iner's sti~re of th~ . · _8greerriei:'it; · . . . . . . · ·. profits. and - losse.s (without mentioning ·any c .. 'if a partner has derived frofits· from any specific propertyf (IC!·. at 664}: - · · tr
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c6nduct, or liquidation .of the partnership or . from. any use by him of ifs property as provided for.by Art. 1°807; or d. Wheriever Qther circumstances renq_er it just c1nd reasonaple (e§.if a p_wtner has bee_n assigned abroad for a long perfoq. of time in ·, connection partnership business). . . . . with . .

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Specific Partner~hip Prop·erty (C/\,1/L . . Contemplates -iangible property (DE LEON, supra. at.153); . .. · ... The specific partnefsliip· property belongs to, the partnership. Th~_partners havi:i.no actu.al_ interest in it- until aft~r dissolution (Id. at 158); and The ·right over·a specific partnership property is not. subjecL to attachment' or execution e~cept if it is based· on ·a claim. ag§insf the partnership itself (CIVIL CODE, Art._ 1 ~11 ). . . A _partner _is co-owne~ with his.- partners of· specific partne"rship property (CIVIL CODE, Art. 1811): . ···· ·

·coDE, Art. 1811). a. b.

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· General Rule: No formal -accounting is d~m-andable . uri,ti! after dissolJ:!tiQn :(PARAS;· ·-supra at 662)., Reason: After all, 'there is access to the books . (Id. at 662). . . .. . . .

Exceptions: a. In Art_:'180~ (-1 ): sq that h'e may have a~cess to the books .. ,, · . . . . Non-Princlpal' Rights 'of. a." P.artrief>· (f:iNEDA, b. · In 1809 (2): there is no express stipulation; supra at 1.01) · c. In 1 ~Q°9. (3): lt°i.s unfair if .other part~~~~_ean_ ,. ••--:r_he principal rights of ·ct partner are, the thre_e t~ke undue advantage of partnersn1R funds N"'lgp~indicated, in Article 1810. A. partner has · Qr partnership. tran.saction (se~~-~IT 2~1tiE:~Jr,.r\s . (_non~princ~p~I) . granted in_ . o~her . . Art. ·180!). . .. ·. . -pr.ov1s1ons. 0~ttie· G1v1I'. qode on partnership such . d. · In 1809 (4): as· wh_~n-9.~e patt9/zha~f.l_.7;..,._;...,..}is tlie·te~!wmg: . ·. . . .. · . . . ·. · t!av~liirig. f~r ~ lor:,g _pi_l"iod .' 9.fr"time· o~: a . ;51":... ;"~ignt to-~~.?Ind reimbursement f~r. amou~i~ · . . 5.usme~s mvolv:mg lh,.f1rmijARASf.su~~apt aa;nce~\ to 't_h~ · partr:,_e~s_h,p · ~nd_ . to _6,62). ··; ·. · r: ., · . · ,/~/\.. . 1iqemn~y(fjr)tfle_ b~rdens ans1ng"from risks · -i~managem~tl(CIVll.: (?ODE: Art. 1796); . Prescriptive Pen~Yd . 1•1 .~~?iJ;.b( Right t1·'fnav~\'access -, _a.nq . to _inspect · _f;,s lonQ·_;:is the· p~_r:t.~ersh1p· e JSt~, ~n')'_._qf ~-.:.:::n-11.~;~ ·, ·!~~ners~P.~b.ofl<s,(~/V~~ COD__!!=, Art:.1~~~);: ·· _.-. _ pa_rto~rs _rJ1as. ~rn~r:i9l ·~~-e-~0µ1:1t!Qt of t~~ - c. '3J9Jl~_to a~r;nar:1,true- a~? fu_l!, mfor91at1on _of .. · pc!rtn.ersh1p _.b~sme~s·.:1~;sc _1~t1?d~QiJ~sa1d /;2:',Q~1ngh~ffe'ct1.ng the · partnership affairs . · right starts to r_un_ onlY.\.JP{JQJ. s3;01SSO~R_~f th@ ~\-.,, '_#..~6jVIL
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~- · !nh~rest in·H,e p~rtnership.' ., ,, -... 3. · · Right' fo R_articip_ate ;in the management {CIVIL · CODE, 'Art:-1810):·, .. ,, . . . . . '· . . These/ constitute_ pr~pef:ty . being ···suscepti_ble of . . ·.appropriatiqn exercise bY.. the owner. T.hese are .. also referred'to as principal rights (P.INEDA;. supra af· ... 10~.-. . :

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([!E~EON_, sup~a ?f 151)_., __· -.: ,.: . · . . . . · · , '. .. ,· -: ·. , ,· · · To ~olve- the confusion that ma,y ~rise,. the inlent of the parties ..- v.ihethe~ 'tn.e "pcoperty.'in ' . question sh.all" Delong. to the. ·partrier'ship or· themseli/e~.:-: is the ·cqnt_rolling.f.ai::tor (ld.. at

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Incidents of this· co-ownership (CIVIL CODE, Art. 1?11): (REAL) . · . . . . · ~: Equal Bight with other partners. lo possess··: specific partnership property for partnership, purposes; · · b. Not. subject . to attachrnerit or Execution . . : : excdept on a claim against the pa(lnership: . an . · . . · c. Not ~ssignable',. except in connection with · · the assignment of rights of all partners in the same property; : · · _ · d.: ~ot-subjett'to !:~gal support ·.' Reasons for; non-asslqnability of rlqhts of a .. - . partner (PE; LEON, supre at 155): .. . a. . 'It prevents ·,nterference by outsiders .in paitnership_affairs; . . .· ." :>< .. b. It protects the riqhts of other partners and partnership creditors ; . c.. Have "partnership ·assets~ 'applied lo· firm debts; and· · · ·
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. . · Thus; in the fqilowing cases, the pa.rtn~r·s in~er~st :,n partnership property is assignable: · .. · · , .a.> Wtien· any hew 'partner ·is'_admitted i/·an . . . existing .cpartnership .or when .any partner . re!ires -and assiqns hi~ r°ights 'in' partnership · .· :prop~rty t? two q~ more of the_ Pfrtners, or.to on_e ?r more of the- partners and one or more .third persons, if the business is continued ·· . . . · · without liquidation of t.~~ partnership 'attai~s-. . . b. '{Yhen all but one. partner retire _:gnd as-~ign: thelr rights in-partnershlp property to· the· rernainmq partner whci . continues the .buslness without .liql,dd.a\ion. of: partnership ,affairs, either alone cir with 'others· ,., . . : · · c .• WherJ -all.. the . partners 'on- ·. :t.heir ·., representatives :· assiqn · their rights · in · partnership · property. · to one orthird .' . persons .who promise to pay' the 'debts· and · · who continue the business of the dissolves · _partnership (CIVIL CODE, Art: 1840). ··

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Nature-~f S~ecific· Partnershlp Property. A s~ec1f1c partnership property contemplates tang1bre prop_erty such_ as. a ~uilding (;Jr a parcel of land, It dowh not cover an intangible thing like the · _benefic[al· right.t_o _a.fishpond. (PINEDA, supra at .. 10_5). . · . . . . ·

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Its value is constant. it is not : a_ffected .. : . . by.. fluctuations in. ttie value cif the property,. .· . . ·

lts'value varies fro~ time to ·lime . ih . accordance with the fluciuati6~s ·in. -the market" value of.the partnersh.ip-.a~sefs.· •

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It ·. . represents · ~~~r~gate . . o,_f .: . th.e' original . . d~pilal ina1v1d(!al · contributions contributed· but also all _by_. th'e p,:irtrr~rs in _property .I subsequently establishing . · .or. acquired on ·account of · continuing . .'.. theHhe ·partnership. partneq,hip. ··

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.Profit - ·excess. of r.~turns o~er exp·e~dilures ... · · in ·a. transac:ti~m. or series oHransactioh;. or· th~ [)et' i~coll)e of ·the partne·rship for:a '.given_. . perioc;l.of.time "(DE_LE9N, supra at .159). · .. . . . . ~ ;

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surplus. · -_· .a~sets :: of .. partners after· . · part,nership·· liabiU~ies are paid and the -rights·· . of',th.e, pa~rrers . aniorig !hemselves are .. adiu.sted Ud).. · . · _ . .. · . - ,,, ·: . ·L~ss· ~- th.e'ciiffe~en~~ thaf re~~iti(when the · · .. · liabilities of.the partnership a're more than the · · ·;-assets ·(PINEDA, ·supra a{ 107f - · · · .· ·_... . . _Whil~ _in g~iieraf, · .a'"' .P~·rtne'r'~ . inter~st. in. spec;ific; _ _p_~rtnersh.ip· p_roperty' _c;a.nnot . be.· gi~~igned and;attacl1ed; an~. i"s not suoject to . · 1egal .·support,-.: a partner's interes't in the partnersflip (his share in the. proijts and : :. sllrplus_) i,~m .. in.·. :general be ·.· assigned, · attached, and be s_ubj!3ct to legal ·support ·(5" · f ARAS,. supra at 6_67). · • · . ·.·

2019 SAN'BEDA LAW..C.ENTRALIZED BAR OPERATIONS

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A- partner's interest is,not a 9ebt due from partn_ership and therefore, · not subject to attachment or- 'execution on a judgment -recovered against the indi,vict'ual partner (North~mpton Brewery_·v. Lande, 2A.· 2d 55.3, ., .. Dicember 19, 1939).

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Eff~ct ·of Assignment of. Partner's · .Whole l_nJer'esf in the Pa~ner.ship {CIVIL COOE, ht. 1813) . : . ··A-c;:onyeyance partr.1er ·of his whole:interest in the partnership does of .itself dissbive the· partnersnip. , ·

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'and then apply to the proper court fgr a-"charging order," subjecting the intere!,·t of. the · d,ebtor partn~r in the partner's.hip with the:payment of the unsatisfied . amount of such . judgment · with interest' thereon with the least interference with the partner.ship_ b[!~in.ess and the· rights. of the other partners (DE LEON, supra at 1_63-164).

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Payment to Judgment Creditor· : · By virtue of the· ·eharging order, any amount or portion ther~of, .which· the partnership vyould otherwise .pa¥,' to',. tl:ie· ,debtor-pariner . s'hould instead 'be given _to the_judgment creditor '(id. at 164). ·. .·. . . . , . .

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,.' ·. · ln 'the 'absence of aqreernent, the assiqnee canriot-(IRI): · · , -· 2. ·Preferential Rights .of Partnershi~ Creditors a .. !nterfere - in . the _man·agement · or · Partnership creditors' .have preference in . administration· · ;.: · ·.. . . .- partnership -asseis (5 PARAS, .supre-ei 672). b. -B~qui~ti irifor~ation, and ~C-~Q~nting; ·. . . . : . _ c. [nspect -~he partnership ·b;r.;o?ks (D: l!_EON,u ]\·fep~1rate·or indi~id~~I- creditors_.h~ve,~re.fe·r~nce. supra at 161 ). · .: _ . . ~ , .. . m :,5eP.arate or 1nd1v_1dual properties v:ih1ch are . :I~- se'rio't.1ncluded in.·the firm (to.e: 672)._ Sta~us-~nd-R!ght_~. of-A_ssigiee ..~. 1he ass1g_nee 'd9_~s _not ?e?ffer;n~a pg;;t~~- the:"" "'3~.A.Qpomt~_e t f\.~ece1ver · -. . --. ~=. · ~a-~nE;rSh/P· ~~- 1~ _on[Y, ~\}tJ~led~~ne_pr~fi_t~ir).? ')f · '\Vi }he"'fo~tk~JJH~ or-~ater appoint a r~ce_1ver of w~1_ch- the assigning part~er~o!J.Ld. othferw,se .be a partn~r1s sjlc!re !)f..the profits, and of·any other entitled _t9 (PINEDA, ~up;a·at 19[·J_. . . mo_nJy due' o(!fial\que_to him i1\r_·e_ spect of the · . " . i: : . r . . . . . t·· 'l!Hli . . pa~!~rsh_ip; . a~- make .. all.· Other .. : Orders, __ .: . B_ut the Assignee is title<;I o the '·t_:;:",:dir~c~ion~. accou~~ts ~an.9 · ingu!ties Vo(hich the ·, f_{ight~: (P~IA) . , _. ·: · - ~ debtor. . part')er~mjght:, h_av~ ,made·, . or. - which ·'·· aJTo' :Eicei(;e ·in: ~-~c0~q~n~e~i!t_~ei~~:~.FJ.P ·ci~cp~~ln~ts-·,9( .th~ case mpy 'require ·(CIVIL __ · , agreeme~t. th~. fro{i!f 1'.t.uch ss,grnng~ - · !.'f',· COD ?Jr~.18,14).;;..-J_ ., · . · - . . ·. ,· .. · · · · partner ~~u_l??the _.. 1sel~~ er.it1tl. d;JA~ . ~ ·. ~1- · . / · -Z . · · · ·_ • . b. To pXa1l h1ms~Jf of, the :usua!/f(~~s~l I ~&,Re'd~!.Til?~'o_n·of.znere~t .Charged-{CIVIL CODE, ,provic:f':ld-·~Y. -law in tne ev~nt t}'fraud~-~~·: 'A 'ft.Bf}{ ·' . · · :·. ·... _ · . : . . .. · managemen_t; · _ , . ·. · · G1neral pa nershtp, ""Tl)ay r~d~em ·at,_any ._'. c. rece!ve_th_e a.?signor's !nt~~es)in €.a_S~~t:>f~~~ime,~fo/e foreclosure_.or sale i~·ordered.by .· /'. .... \','." d1ssolut1on; a~d · . ~ +-On~i\l~~r~rt; - , . . • .. ·. ~ ·.. · , . Toj~8u,[re·a_?'~cco~n_t gf pat!n~r~t~.ffai~s ,~eral p_artnership,_ ?fter ~oreclo~ure .. _may, -. , : _ ...... . . ' but : only : in c~s~. Jt1e.' J?af1nef_s~-1P..: 1s;· +, v.J.Q-~redeern w,t_ho_ut,.caµsmg .a d1ssolut1on: ·. · · :- -: qissolyed)~_nd -such a~c;~\,Jf:)_t-$[)§111 cove~ i. -With-separqte' property ~f? pa~~n~~; or .. pe.rioi:Hrom ·_the d?!e Jin,_ly''of the: l9'sta~~o~.mt·~-ii. _With .. p~rtnership~- ·;property,::\~itti_" th,e. . I ,· .... ,. / . agreed· to-.by all· .the~partner:s ~(DE LEQN, ,consent-_. of- :-all .the--:partoerswhose ., · . '· · ... sup'.(fat'_162J: ." - ·. . . ·. -· .•: y . '• .- int~r~~ts::a~e n~t -~o; '.charg~d. or , . ·. · / ·· . ·· . PARA$, supi:a at 672). . - - . :..'· '~ ·. 3.< Right to Participate ·in thJ refinage"~enf .. .. ·.: ,·c .. Limited;Partnership ... -,_. ·,: .·. ·: . ·: - . .-.. · · , . . . . ·. ·_,n._the_ ab_sence of ~ri" agreerri'en\ 16. ~he C"p1trar.y,. •,. .·1/Yith 's·eparate ,'. pre.perty . of. any.· gene'ral \ . . all ·p·artners have equal rigli~s iri-tne· m_anagement ... · pqrtner t but )tot ·. with.'.:partri~rs_hYp · property · and corduct of- partn¢r~hip .. 'bus_ine'ss ._.(.(;IV_[L_: • ·. -,:~,- (CI_VIL-:CQDE; Art.:1-~6f)- .. -:. .., .,_.

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_ !3erJ;1,~_d/f{ o,f._;~-ep~_i-"ate -J~c!a~ent~.r~_~jto~ qt a.-, . : -:.' The))artn_e~ can_ a~~il_;·hirf1s"~lf'_-Qf.the.,~)S~rn~ti~n. ~artne{ (Glv'IL: CODE;, Art. 1811)-..:· · · _ :. '.. . : · . Jaw insofar ·as·.h1s 1nteres.ts ·tn· th.e partnersh1p.1s · J .: .81foucjiljQi{__ fol,.)~~--:after .. ·· .:.', .. --~o.ncerned, beca'LJ~e in" a.~en'se, ·th_is:ls_his private.. ··s.ecurirg )tidg!)'.lt:!J;!-ton}Hs: s.c~dit :. '. ; . . . . · . property (5. PARAS, ·~upra-at. 672c6Z3}: · Wbile a ·separ~te. cred1_tcx of: a partnE!.r cann_ot at(;:i~h br levy up_qn -~pe¢ifib_partn~fahip 'property' , -,._ . 'Note: He··cah~ot,. howev~r-; avail_.hini's.elf of the ·-·ex~rnptio_n·Jaws. irjsofar ~s his .interest in specific· for. the satisfaction of his cr~ait ~ because partnership. prop'.erty is coricern~d. {CIVIL CODE, . partn'ership ;assets .are- _re§erved 'for_p.artn~_rship . '·J:,rt.1811,pai:-,3}:' ·· creditor's; _he can secure a-jl.idgm~ntv'on H1s-cre~it

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PART.NERSHI.P.AND,AG.ENCY. ,

SAN BEDA I.AW CENTRALIZED BAR OPERA'f/ONS

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. . . . \ . . . . . . Illustration: J and G are. partners. J personally owes· F a sum pf money. F sues_ J.and obtains a ', final judgment in. his favor. However; J 'has no money. Fmay go to the ..same court (or anyother court possessed of jurisdiction) and ask 'that J's· .. interest. the partnership be '.'chc;1_(ged" for "the payment to her of whatever has not been paid by him. with interest -thereon (5 PARA'S;- supra at ~71) .. · -· · . . ·. ~.. . ...

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~EMORY AID

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· Liability of Partnership and Partners for Partnership Contracts . . . · =r>, It ·is _non. sequitur that a. suit against the .. partnership is.necessarily a. suit impleadinq each and every partner.': A partner 'must first be .impleaded before: he could be prejudiced.by the judqrrientaqainst the· partriership (Guy .v'. Gacott, ·' G.R. No. 206147; Januaryl3, :20J6):

. Partnership creditors. shall be . preferred as . · regard.s partnership property (C/\(11.:. CODE, Art. 1827). ) -. Firin Name . ; Every partnership shall 'operate under ·a· firm. name, which may or may not include the name of one or . more.of thepartners' (CIVIL CODE, Art .. 1815). · · .. . ..... . ' ' . . . ,' ' .. Reason: A firm· name is,.necessary to distinquish the 7 partnership' from the individuals 'composlnq th~' partnership and-from .other partnerships and entities {DE LE.ON, sµp_ra at 168).. . . : . . ·

"The. partners': ot>if~~tiol). with respect to.: the partnership liabilities is 'subsidiary in. nature .' , it , . provides that thepartners shall only be-liable with -; . their property. ~fter · al] the · p_artnership_ a~sets . have been exhausted. Resort to the properties of a -partner may ·,9e: · made · only, after. effort~. in . : exhausting parfnership 'assets: have failed or that . "such.partnership .assetsare-tnsufficlenf .to cover 7. the. entlre obligation (Guy li:,.Gacot( £3,R. No. 20614i;· Jaquary 13, i2_Q16). · · · inc;lust~·ial )'ar:tner- . Not ·· Exempted From . .Liability . ": · , · .. · · · ··: : . , An industrial partner is "exempted from - losses •·.(CIVIL:. CODE, /,J.rt: -179,7). However, neither on - Ql'indple. l)Or on .. authority ~·can the in'.austrial partner be\relieved from. liabillty to. third. persons for' the d~bts of the -oartnership (La Compania .

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· . L·2~~i ._:~J1C;~~~rtn~~~i-i_;a.biliti~·s

..,c~ncer~ _third. person$ (PlfvED1'l. .supra.at. '120)'. . ·:. · : . ,.··

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.

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.

:U.se Na~~es-~fbec.eas~~j- Part,ners .~. . ~ Th~ industrfcipartne~:'c·ar:i recov~r- tt:ie.ari1QU.~t h~' ; / · . ' The CQr)tinu~~ use pf. !l:le n.a.m~. qf _dec'?ased partn~r , 9as,paia ·fro·~ ih~j~pitc;llist pal'tners tJnl13ss there. ·. is p~rini~siblE1 pro.vi~ed'(hatthe.firm k1di~a_t,es 1n all i{s · is an agree.meht to:the contrary (Id.)._ t :, , . · communications that · said partner is. deceasea ------,v ·i • • · . ((!?'rj~· . OF. .. PRQ:f~SSl0t,JAL''.Rf-112©_N_SIB(Ll1Y,' Nature··pf.tiabjlity of. Partners t<;> Credit.ors .. · . , Rule 3:Q2). _ ·. · ' · 8art.n.er.s\oblig~tion 't~)hird persons With.'respect .: . . ;. . . _,, . to t~e.. parti'ler!5hip.)l.aoifity is. P(O rata .or joint:(.Guy. > .. Use·.of l\l~mes.Who are NOTP.ar,tners·: · -< . ' .· · · v.. Gacgtt,' G.R No. 2061~.hJa,waryJ3; ~OA6) .. ·..... . Pe:r.sons y;h~. not peing part11ers, inGlt,ide th.eir names . . . · : .· · · . : ,· . .,. ,: 'i_n,th_e fi~fi:i ricirne'dci n6lacci0fr~·the rigbts_of .a_partner.~ · .. · . Bas.is ofPr6.-r~ting · .· . .' ,...,_ '.: . ·, . . . . . . (DE: LEON, ·~ypra·.a(1~1j.- Those ·y,;~o.·.not· being · ' · Pro r~t?J·.(in Art. -1816·of.the--Civil.Cqde) must·be mempers of the. P,.artnership, inclu9e~their nani.es i.n .. ~ndersto~d..to·rrie.an' etjually.•or jointly-;and nbt its . ·t~e: fi_rm ham~·. shall. b~ s~~jecJ .to .ttle ·1iaqili'ty. of a : literaf f!1e9ning .. In t~is·. c~se, each· of the. f9ur partner(CIVll.;_CODE. Art.· 1~15, par.'?).: ·. partners will pay. 1/5 of the:debt'(lsland Sales;. · . ,_. ... inc. ·V. ·;Un1te_d· Pionee(S·. Geniiral ·constr~ctioo· · -,.. Oblfg~ti'cms ofPahners.to Third Pe~sons ·. Cq,, G.R No.·L~22491,.July 3·1, 1975)., · ..... . 1. Liab.ili~y: for Contr~ctl,!c!L Obligati.oris ( CIVIL · · · :. ,.. . · .. ·' . · · .. · · · -' -, cbbE, Ar{ 1-81'6) ..... ·. ., . .. · .~ · - < . · : . l)abiiity of lndustria·I P~rtner fo'r Loss~s \. ·. · . . · . . , .. -. ·.,. Even. ~he industriafpartn(;lr who,. O[dir,arily, i~ nof . : .. All p~rt~~r'?, i~ci~dirig '-irJdust;ial part.~er~i· are ~·· ·Hable for loss~s would have:·to pay but, .he ca.n · · persona fly _flpbl.e \vith :all t_heir. property.. ·Their .. · recover' -.the ··amount h~ ,. h.as .j)aid from the· . ihdiVidual ,liability .is·, pro· ralfi and .subsidiary;., .capitalfst partner~; .unless' there·[s ·a.stipulati0n·io .:: unle.ss othef"".'ise stfpulat~q. · · · the-contrary (DE LEON, s~pra at 1!~}._ · -. ,· · L.

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·,

.. , · . Note: A~y sti~ulation against liabii°ity laid dowri in Art.1816 shall be· ·void except as. a.mong ih'i~ p·artners (CIVIL CODE, Ait 1817). . .

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iii. ·Qispose ~f'tbe goodwill of thebusiness;

Liability of Partners'hip for Acts of Partners (CIVIL CODE, Art .. 1818) . a, Acts for Apparently Carryinq on i11 the Usual .. Way the Business of the, Partnership

.Re.ason: Goodwill is a-valuable property; it is a disposition of an asset of value (PINEDf!., supre at 126). · .

General Rule: Every partner is an agent of · the!' partnership. The act of every: partner . binds. the partnership (CIVIL CODE; Art .. 1818,par. 1).

iv.

~onfess .a. judgment; . .

-.· .. ·.

Reason; If ·done before a cas·e is filed null and void; if done later, th.effirmwill b~ . jeopardized (5 PARAS, supra .at 683):-

"Usual wai' - means an -ordinary activity for . . the particular partnership or similar partnership. ·

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v ..

Submit' a partnership claim or liability ~rbitratiqn; '. · . Reason: (Id.).

Ex~mple: A partnership engag~d. in real : estate is us.u:ally involved .in · the. sale and purcbese of tends and buildings. It isunusuet. for it to ·sell fish or animals ·(PINEDA, supra at 125). . . . .

to -,

This·is also an act of ownership

. .. vi. .Be.noun~e.a-~1ai~. o.ithe partnership; a~d .

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Reason: A partner cannot renounce a

Exception: Partnership.is.not bound iJ'!J,;.- · ···c1airi:i that doesnot belonc tohim {Id.).· i. Acting partner has- in. faeC~o':'<Jutfiority· .. and . . . ·Z . ~ ·~ A~k~rte~1nt~ a c?mpro_rn1~~· .conc~rnmg a ii. . Third . pers.on· . kno,(.{~

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Acts Qf Strict Dominioti'or,GJwners CODE, Art 1818,

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th~ctlrig~,~~e:rsh1~~la1m. or iiability.

partner has ~·~lay.J!iprr~ty~(D,fi L:E°i~ supra at 18?). ."""V · l! b.

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e~~~,hisis.an act-of ownership .and inay{be eHuivalent to alienation (Id.) .

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· c-.-;a;c\s in Contrav.ention

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Gener~.,, ~ule: ThJ.~does no bind. th~ partnership. , ·\., \rn

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")Jt~ct.,af .. a p_.a ner i~ contraventiorr of -a ~1tt1og1,~ authority :.shall. bi_nd .·the 1~1 , . . · V . ..,, . () ~ ·. J;t;~1 . t.P~.~~e~)fllP, tOfQ$rs9ns having. knowledge of· ~xcej:>ti~n: .Part~ersflip:is bol!lna i ~} lt'.fl :sV. /&ffie restri.9tio~lC/VI~ GODE,-Aft. 1R18). , · 1. . Act-1s,·authonzed ALL llie parfnfs· o · .~.) .. .. ii. ')'hey have·abandb~d the ~sfne sJ,Y5a p:~rtn~7 ip·[s.:n:~t'lia}~l~Jo thifd,r_er$o.ns · LEOtJ, supr:a ·at ·181), . .;,'-.~EN'_JJJY~a.~~ a.<1.Pc!~.:~~;P.re_su~pt1ve kn?VJ.l~dg~. of .. 1resj!:1c\1ons .• ~t,.~the.r, or. not the ~~s a.re··· . . Whether or n~r t~e thii:?. party. knovh,?/ the I\~ \{c>r;;'.,ap~~rently.carryn::ig on :in ~he ~usual w.ay· _ .. · lack o.f .authority 1~ _not ·1mpo~c!nt as"-long as ..1.. v .1.(\-__Dhe 15usm.e,ss of the .~a.rtn_~rsh1~ ([JE LEON, : · there 1s:no authority, the firm is not bo~(~ .. supra aJ 18!):. ... . .. · . ·. PAE
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.· one· or. more .but fe:s~ th·a; all. part~~rs ... · ... C .: . yv.ti~n· toe .otner'pirin~ri do :·~q[o6Ject, h.av.e NO auth(?rity to:' (OAP-CARE) '(CIVIL . .. · although ihey't:iave knbw'iedge of the a°'ct· . ·CODE! Art: .1~18)~, · · :: ·. - · . . .. , '.i\. '.-,'-'.\'he~.:the··acfis7'.f~r·"~ppar.eptly carryfn~·. · i. ·'Jio any. oth~r act which WciUlcf make it ,-. Of) in. the,y_,sucJl.'Way t~fbU$i.n'es$· OJ!he .. · Jmpossible .to· carry. on· ordin~ry pa:fnership.";This ·is binding on lhe"(irni :. bus!~~s.s of.13 partnership; : . · .... . . .. . . . e"'.e.n.·. if .. \he partn.er. was. n9t . re911y·· . ·. · -Reason:. This is,evi.dently prejudicial to · . . ~u.tl:Yotized, prpv!ded.Jhat .the:ttifrd. party- . the pal"lnership (5 PARAS, supra-at 683). ' ·· is m:good faith '(5.PARAS; supra'~r681) .. . . .. . .., . . . . . '

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i1: · :~ssi.g~ :the ':partne.rsfi1~ ~ro~~rty· in\rust ··. . ~o~~;eta~_de . ·of' Prap~·rty.: . si1o~gini · '_to for .. cr~ditors or the -, assignee's-.: ·· Part!)~n;hip.-(CJV/1- 'COPE;, Arf. 1819) · · · · .: 0·n Pr
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The buyerhad no knowledge of the fact. that the partner with whom h_e is dealinq has no 'authority; or · c. Unless such property has been conveyed by . . the grantee, or a person 'claiming through such -grahtee to a- holder for value without knowledge that the partner in making the conveyance; has exceeded .his authority · ·. (CIVIL CODE, Art. ,1819, p-ar. 1).

-

;

•.

.

.

Title: in PARTNERSHI~ NAME Conveyance: in PARTNER'S NAME - Buyer gets only the equitable interest of the partnership provided the. act is· one. with . authority of the· partner' and is in. the usual course of business of. the' partnershlp (CIVIL C~DE, Art: 1819,· parf"-2).

3.· 'Tit.le: in' ~anie of-ONE.OR fy'IOR.E PARTNERS BUT NOT ..ALL.:·'1ih '' . Conveyance: NAME OF. PA~TN~~- OR PARTNE.RS IN WHOSE NAME.TITLE.$TANE rel="nofollow">~ and the records does not disclose the riglit of the partnership= passes title to the property QUt ·the partnership may recover. The ·effect is same in parn~rnpti 1 (CIVl~--~~D~,.

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4. Title: in the name of ONE OR MQRE OR ALL

·. Admission After Dlasolutlon ·· An admission made. by a_ partner after the dissolution of the firm will be binding upon the partnership only if connected with the winding up affairs or the firm (Id.at 133). . •

•

•

•

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Instances where knowledg_e of a partner rs considered knowledge of the partnership: · . 1. Knowledqe of the partner acting:in ihe particular matter .. a. · Acquired while a partner; or _" , b. ' Then .. present to his mind· · ( ., . · 2. Kn.9wledge of any other partner wbo reasonably could and should have communicated it to the actinq.partner (CI.\I_IL CODE,'Art. 182J). . Note: ·S~ch knowledge .operates as a notice to or · knowledge of. the partnership except in case of fraud onthe partnership, cortjmi~te<;l'by or wi~h tlie cons~nt of that partner (CIVIL qopE; /\:f.-1821). \ .

.

'

. N,otice to a Partner . · : . Notice to a pc1rtner while already .a. partr.ier- is notice . to the . pa-rtnership if the· matter is connected to ·partnership afa.fr'~· _Notice ·'!~ -one_ partn~r is consid.erea a·suff1c1ent and ~ffect1ve notice tq the firm (PINEDA, suw\at 13~-134J: , . .

PARTNERS~· or. in a THIRD l?ERSd ·,,- TRUS;T-"· A careful relJr:ig of Art .. 1821 ._sh?ws that·. notice· to tor-tnepartnershlp; · · .. ·,. ' ·. any partne7, ·qpde{ cert,ain circu:msta!:)Ce?.• operates ·conyey~nce: in PA~TNERSHIP'NA~E orin a . · .as notice/to or Knowledge to _the partnersl:Jip only. ~A~TNE_R'~· NA~E. :-- ip,a~\pes ~t~.., equitable . t .. ·. -~vkh\~.lli. . J.!. 9.8@.§.,D.Q.t PJPVide for the r~Verse situation, . interest provided ttie act rs. one auJhonty of or' that notice to the7partnership is _nqtiqe to' \he the partner and is in the usual cou,rse-ofb~$irfes\ partners._ Unless tliere is an un.equivocal · 1aw which . of the P.~rtnership __ ?CIVIL CODE;--~it. 1819 f?prsta~es .that. a partner, is· automatically charged in a 4).. . . . . . . . . . -: .... ·.. ·.- . -- . -; GOmplaint 'against th"e ·p·artnerst-iip, · the constitutional · rightito due Rr'6c·ess'(Guy v. Gacott, G.R. No. 209147, 5. Title: in-name of ALL PARTNERS,. . "Jar:,uaif,13, 2016). · • . .· · ... ·conveyan.ce:: in na'me of ALL. P.Ar{TNE~S .: . · ... : · . . passes title' .to the. property (CIVlt:. CGDE, Art. . ' . K~owle<;lg,e Without Notice · -1819, par. 5).· ·' · . Knowledge ofa·,pa1in'er_iS,c!,ISO knowleqge of the:firm . . . under the following: . . . . .' . Noter.Under paraqraphs 1, 3'a'nd 5 of /Xrt. 18W, what. 1. When knowleclge_.is acquired· by c;1 partner·wfio is is conveyed· is title" or . owriership.: whife . under· . acting in'tj,e.-particul~r matter. It may' have been paragraphs 2 and 4·, what is conveyed· is merely · acquired while. he·.'fo-'ali'eady.·a· partner· or even equitable. Before ,his. becoming a·partner provided that {he . . .· . interest . . (DELEON, eupreet. f84/. ;· ... , -, . . matter is'presenf to his min"d which means; he still Admission by a Partner . . remembers the partnership matter; An adrnission or representation made q'y any partner ·~ . 2. knowledge is acquired by a partner not concerninq partnership affairs within the scope of-his 'acting1in. the·particulcfr matter, but with: reason to authority in accordance with this Title 'is evidence believe that-the matter would become or-has the. against the partnership (G_IVIL CODE, Art.· 1 ?20). possibility.· of . becoming _the subject·. of the. partnership bysiness, and tie" is situated iii such t . When Bind!ng Against Partnership: (CWD). a waY.,lhafhe:could communicate it to the partner' 1. AdrT)_issiprV[epre~entation connected is. actlng in the.p9rticular matter (PINEDA, supra ~t_ '134j_. ·. c: . . . .. . .Q.onnected with partnership affairs; 2. Within scope of authority ' · · Liability ~f Part~ers 3. Quring the existence of. the·firm ·(PINEDA; supra . at·133). . · ·: :··with regard to p~rtnerships, ordina,rily, the liability of the · l)artners is not solidary, Only in· exceptional cirGumstance_s sh~II the partners; lia_bility be solidary.

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· 2019 SAN EiEDA LAW CENTRALIZEDBAR OPERATIONS

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in nature. Articles .1822, 1823 and.-18-24 of·the Civ.il Code provide for these exceptional condit_i0ns (Guy v. Gacott; G.R: No. 206147,- Jan·uary 13, .2[)16).

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Partner by Esto.ppel and .Partnership by Estoppel (CiVIL CODE,· Art.1825)'-. . ·:.. Estoppel . ' · . Ar(ses··. when a ·.person · by any- meani represent?, himself 'or consents to. another represeritfng .him to anyone:'as partner in an existing partnership, or·with·· one or.·more persons not:actual partners; he is liable to_ar.iy such person to whom'sufh ·~eprese'ntation has , be~n made, who has·, .on. )he.· faith of such representation giv~n credit to tre actual.'or apparent partnership.(CIVIL.COOE, Ait·1825F . . ,

>

Liability Ar.ising from P.artner's Tort,Wrongful Act or·Oriii'ssion · ' · -Where, ·by· any .wiongful·'act; or· .omission of. any partner actin'g in. .ttie' ordiri?ry, course -of'bus'iness of .. the partn_ership or :with auihority of his co-partners, loss ·or injury is caused· to. a non-partner: or ahy . penalty is incurred . (C/VIL·.CObE; AH. 1B22J . . .. ' . .. .\

~

...

Requisij:es ofArt, 182-2 (GOLAP) Representations , .1. The' partner· must be. Quilty of a wrongful act or lf-he. has made such representation' or consented to . ornission.: · ' · _: · · · its p_eing made in. a public manner, t)e _is. liable· to such -- 2. · Hei"l.nus{ be.jsctinq i~· th'e Qrdtnary course of· person.whether tt:ie representation 'has or has not. · ·. business or· with' thidi'uttiority of his co-partners. _beeri made ._or communicated to such .person so . n6(cor1necfeci ~\'th-the busin'ess; · . giving credit by; or-with the k~o_wledge-or the apparent .. ·3. to.ss·or ·jnjCi1:Y is. ~a1er~d· 9 J~i~~- p~erso1_1asa _ -· Ra~ner ma,king the representation.orconsentinqto its·-result of the. ':'>'(ongful·act or ormssion: · . ·• ~mad_e (CIVIL,COQE;-Art .. 1825),_ . ·4'. The:·~g·grieved third person i~:p..oJ ~ar ne~~Jh.!': _ [\} ·· f'.inTJ;,a_~d ·. . . . , .. ,/,~.f~~~~r-b'.r~~teppel.. '. . ... · .... , \ . 5. J~er~--i~. no ·.!:~e-e):{js\ing ~~o~racJ t~e . A -, p~rsoninot ayiart~ec may beco~e. 'a partner bX : P,<;1r;tn~r~hip c1,nd t~e ~h_i_~9,Pe;so~y.e,re~~P.~;~~it- :1::"""e.stop~ and~l}~ ~~~leJo·tt:iird. persons asif hewas. ~.~.s ~r??sly ar1~ .?el)_be,ri:J!Yl,:jd101.a;~.·.thi:3: iJ~rN' i=i- a~art~~\ w~~.P¥J's\Word_s orconduct he:' . . ·. , .. constitutes quasl-delict c7fl/NE041J~urmfat1 1~ 91rec,1y represe~~- . himself to anyone as . a J\... -'.: .. partner-in ·a~;;ti~g'partners_hip.··o(in- a,:nonCrim,i~a.f Liability fpr_.Crini~na -~ct~. . .I: · , .,'"" -.. · ·1 ., :~1st~g pa~~~ (~ith one or morn persons ·A no~~~~t,.~~ partner. m a i:iar~1Af11p.(=:nga~ea m 'a:, l!:ri c,-4~not.aetual par,t E!rs.; or. . . , : , . .· '. . 18;~Ulbu.~i_l)8S$;:,~ ,:mt 9rirT1.i.r)1'al\~,Ji_~~l~/or~i·frif!l~,\1_;I'~·~ lrd~,~11¥ r_Ei~(~se1t1 ~i~se_lf by ·CO_nse0.t)~g .!O _gft~~Lg,'1:0l'?-e~.f?.cl.BQ.e.J.~l!t.tif.-LS~c.q'!ltna{IY*-~le_1Ube-...::.:JJ.:..:. ., .. • an<:J~epr~s~r.:it1~~ h,~- as_. a ·partn_e_rsh1p. _m _ao · partne.r_s~!P-1_s 111~ol')(ed· 1i;1,af!(Opl~~f~1.)enf~ri2n§~-)'Y'tW,-i' . . :;J'Y: e~stm~1 part,her~f!'P p_r a: __ non-existing ...

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.. E~t~-~(o~ ~-i~~Hit~,\of th.~ ;F,)r!ll an9 qo-P~a~n:ir.~ . ~P§p)lefsl'iiiyo.y-.E_stoppE'.ll : · ·. / . · . . ., . , .. -:r~e, fm:n ·'~,liable. to the· san:ie -~ t(;!f)t as t~. ~ctq.err-: :- : l r{i~) ?~tffo: mem?ers". of the_ ,ex1sti[)g · P.§rtnersnip _vVh_~ ~-~m~ittE?.? th~ torti~~s ·act. ·A.:l~P-~:tli,s ?re ~Isl:> .k-:N}e~tjti~!~~dP.resenfatiori, ~:parti:iership:a~t.'qr , soJ1~-~nly \ia_b(e :w,t,b th~. fi_rr:n·. whe~er"'~o~y~P~-l!1Jf\tlo\y~~s.-(.?,rVILGC?_D~,. Art. -:{?2-5). This 1s a·.·. pa~,c,p.at~d- m _the-co~n:i~ss,on:of t~~-":'ron.gfu1..:a~rs9r M!,:'a~{~b~~tirersh,p:·by· estop8~1 . _cq~posed.-.of th~ .. om1ss1q~. 11Ylthm,1t· pr~Jud1i;:.e ,to _-!.b'e1r- right to .r,,e~er ·~g·ed:"J1artper and th~ partnersh1P. .\ts~lf (P-INEDA, ·. frQJ:n ~l'.11ltypartnec (Plf'IEDJt: ~upra at--136~1·36) .. , .·. .- 1• _stffri.:at 14.3). ·

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The ·culpr{ ; is . the. The culpri(iS" any partn~r .. ~~cei~in9 partrie'r .. · · ~ ·

(5 PA~Si

58~

Sl!_PTc! at_'694) .. '. ·

20l-9·SAN .BEDA LAW ·'

CENfRAUZED_BAR

,

Resul.~~~:~::~ia_bil)t~--~· ·:-_.; '<,.:.-_·:· :: : _., . ..., ::; . '. ::_-:: _:~·1 ;. W9'en -partnership..liabiHty:-r~·s.ults _: if,\~IJ:the act_µa_l p_artne·rs .c.orisente:d. to.the repr,esertation,. 'tlien~·the Jiabilily bf.the per.s·on Who-represented ..... hfm·self.t.9' be' a partner O[WhO:Co.nsentea·t.con~idered ,.-- q· . part~ership~:-. _,, -1iabijfty (CIVIC CODE; A'it,J825, ,Par. 1(1};'-DE: . . . :~ ~fkfa_at-199);-_ '.:.. . . ·.' ': .:/

.} :/·. - ..li~biHi~ Ar.ising·f~ohl {~tst ·.}·, . 1.·, ..Whe'ntone partner; ~cting 'within tbe·scop,e of his · · .. ·c{ppar~i-1Vautho.rity,. r.e_ceives ~on.ey,or pcoperty of. ; (-;_.. _..' : -.a '.thinj.p'ers_on ·c:1od: m_isappJies :it; -ai.1.d.. , · . : . ' . ·'.··.:', . 2. ' \CY.hi:!rEt the, ·pa'rtl'lersl)ip, . irj. Jhe.~ C.OUrse·. Of:- its. 0 . •. bl.isin_e.ss, . rece1>J!3S money- 0( pr.operty, it i.s . · ,'.. . - ·,ni_is.appJied. by. ~any-· par;tner.···vyhiier· it __is in. the ·. ,cu~t9ay·?f. the forme.~ (~(VIL'C?~E; Art. 1~23j.. .), ..

.

m·

2.

~hin·l')__o: partne_ts!:)).~ .li9biiity' r~l?ulf$: ·;· is, p,:.o rata -.'when -t~ere ·.is_{np _.. ,., ... _exi.§.ti.Qg -~ .P..~tngj-~gJp.:-··: all --~ tb_ose . - .. ·. . represente.d . as· pactners cor:iseoted :·to - the represenfa1tion, 9r onry,spme. of the·.J:iar:friers -~ of an ·existing. partriership• coosente.d to the represeritati'ori, the liabiiity. cit ~I.I those.- who made and corisented to . . . th.e. represeotaiion·is . ...

. :a, · ... U~pility

.. . ,·· ..

QPERA TIONS

.a._o~r '.

.

.

.

PARTNERSHIP AND·AGENCY SAN BEDA LAW CENTRAL~ZED BAR.OPERATIONS - MEMORY~ID 2019.

.

joint (CIVIL CODE, Art. 1825, par. 1 (2); Id. at 199); . . b. Liability is separate.·_'when there is no . existing partnership and only some "of those represented as partners consented to the . representation, or none of the partners of an existing . partner.ship 'consentedto .the .. , representation, the liability will be separate · (CIVIL CODE, Art. 1825, par. 1 (2); Id. at · 199). ' Noter Art. 1825 does. not create a partnership as· between-:"the alleqed . partners. rhe. law only considers them as partners and the association asa partnership-insofar as lt is favorable to third persons. However, partnership liability is created . only in favor of persons V{hO .on the faith of suchrepresentation given credit to the p13rtner~hip.(DE LEON, 'supre at 199-200). .: .

because he. partakes' of the benefits of . the partnership property and an· established business · (Id.at 208). · Preference . of · Partnershjp Creditors in Partnership Property With _respect to partnership -assets, the partnership creditors are· entitled to priority of payment. However, the private creditors of -each partner rnay ask the attachment and public sale of !tie share of the' latter in the· partnership assets as provide in Art.' .1814 (CIVIL CODE, Art. ·1827). · · .t . .

··

. i

,

Note: The case arising under Ari. 1825.mu_st,be distinguished· from the. situation covered· by the last par. of Art. 1834 which· is not a situation ... · -where partnership by estoppel results. It is rather . . a ·partnership iiability which continues for lack 9f proper termination (Id. at 203). . ·<· .

...

The partnershiphas creditors which are different from _ that of. the individual. partners. When both 'kinds of , creditors -are {laimfng right~." against _partnersfiip property or assets, ._the creditors of the partn~rship are pre.ferred. ThE!Y a'rfi) en\ill.ed to priority of payment (PINEDA suprEi a( 1"5QJ.' . ·, · ·. · . ·Reason: The partnership,ha~ a-separate and distin~t . p(;)rsonality frqm: that. of'th·e individual p~i;ners.' The . partnership shoultj apply _its prop_erty to the paym~nt first of its debts to its own creditorsr(ld. at 150) . , ·.conversely, tne privat~· Pr~perty of the· partners cannot. be taken ·as payment' for partners.hip de.bis until the copif qn prcip.erty of the firm. has been cxh~rnsted (Id.at 150): · · · . Pr~p~hi,.r~firen~.e: .. ·. · 1. · PartnerstiiR~Pr~perty

·., preferr'ed:'

.. .. _. · , ·' : , .: ~ · · .·

;,-- ··

·

.

. ·

P·art'rier's . Individual Property ·-. Partner's ......__.,.iQdividua(.. qreditors_ are preferred ·(DE LE.ON, supra at_211),. ·

2.

...

·.

.. · -: . . · :·' - Partnershi)? creditors,are

:

,:

Remedy in Case.of Insufficiency of Assets:· .· 1. "Partn~rs~ip. Creditor· . ...: · After ·~xh·austion, of · partner~t,ip -ass~ts;~thfi) creditor may cam·e 'after '( the private prnpe,rty ~f. the)artner~- :. . . . .. 2. Partner's~--:-lndividual. Creditor ~ Ask . for atiacJiri1ei:H ·_and ·public safe 'of the snare. of the ·partrietin the. partnersn_ip assets (Id. a( 212). : .· ·

~f

l!.jability Incoming Partner for' Part.ner~bip · Obligations · ~. . A person admitted as a partner" into" :an 'existinq.. partn·~rs.h\p 'is· liable· 'for ~II .the obligations· of .the . partnership arising before his admission as though he · had been a partner when, such obligations . were . incurred, except that. t~is liability shall be· satisfied only out of partnership . property,' unless the.re. is a ' · stipl.Jlat!on __to the-contrary (Cl~iL CODE, Art._ 182_6). ,

·.Rt~~.o_nt .'Th~ r&~ain9ir· .~after lifi°uidati9,n or·· paying of partn-ershrp oblrgatrons) really belong to partners _(ld.at'212).. · ~-•

: "·

'

However. as r~g~rdsi"obiigatio.n of the 'partnership , . incurred after his admission, he is liable -as an:· · ~ ordinary origir.af par_tn~r:(PINEDA, supra· "cit 148f ..

... ~ Reason:
-.

.!

.

'

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..'

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: ~oth .the partnership and the separate partners !bereof may be.joine:rd in.the same action. But-the priva!e p~operty .of .the' partners ·can·not b~ taken i_h payment of partnership "debts.until,the common property' 9f the concern is exhauste·9 ·{viuda de Cban Diaco.-v. peng; G,R. No. 29182,\c;>ctober 24, 1928). . '. . ... · '· \~ 1. ~ -

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•

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: .The .pu.rchaser at public sale does n~t become ·a partn.er (DE ~EO/V, supra at 212). ·· ,;,". :. . . . . .

20J9 SA~·BEDA LAW CENTRALIZED.BA.R OPERATIONS

;"'

I 589

PARTNERSHrP.AND.AGEN·C,Y SAN BEDA U\W CENTRALIZED BAR OPERATIONS - MEM()_~Y.(110 2019

3.

DISSOLUTION A partnership does not last forever .. When it ends, .it involves three (.3) separate ,· stages, namely dissolution, winding up, and termination (DE LEON, supra fll 214).

Termination _ Polnt in time when al! partnership-affairs are wound up or completed and it siqnifiesthe end of the partnership l_ife (DE LEON; sup[a -at 215).

Effect of Dissolution (CIVIL.CODE, /1.rt. 1829) ·· The partnership is not yet terminated; it will continue to function until upis completed.· . the winding ( . ..

1. - Dissolution Change in the relation.of the parther~ c~used by any."partner ceasing to b'e associated in ·carryii:,g on. tt,e business (CIVIL CODE, Art. 1828).

Effect o.f Dissolution on the Partners 1. As to previous obliqations: The.dissolution of the · , partnership does not relieve any 'of its· members .. · for existing-obligations-(Testate Estate of Mota v. . . · . · . . · Serra, G.R. No . .L-22825, February 14, 1.925). Note. The dissolution of a partnership must not A t · ·br r d. · · · ti 2 : . S O new O iga ions: .c6 ener~ 11 y,. IS~O 1 ~ I.On ." be understood in ·the absolute-and strict sense SO · t. · f th. bi t-f hi -h -1 spares.the . . former . . · partners from. new.· obliqatiens <, h th a t a·t th e t erm1na ion o _ e-o Jee or w 1c _,_ . rt hi ·· · • - t· · ··h' d entered into by the partnership to which· t ey was crea t e d th e pa ners 1p [S ex ingu1s e • · · . . . d · -1 di th · dl . · f · · · '·d · t ,. d . have not-expressly or- impliedly assente , un ess pe~ ~n~ e win mg up O, _spm(1- '.net_ en S al'] · these new obligations -are essential (or the' _ obligations of the partnership, but in such case, -.. di f th rt hi ff · (T t te l\Win tng Up O e- pa ners Ip a airs es a 1 _th~ pa~~ership 111 be ~ep1,1t~d a? ~§,ttn~ u~ · Esla~of- Mota .v, Serra · G:R. No: : L-22825 · the [uridical relations arising out~f)be ~pntac~ F&b -~ ~,4 .1925) . -. ·' · are djssolvedf Testate Estatejr..Meta)·""Serra~~ - ... rV"',.;.,,_\:..---.. .. _.. ·. . . · ... · .._ G.R. No:·L-22825, February }4;1'JJ-?.5). :. ·-,~Eff t f 8:· A:" ,1)~-~t.M- . .b. shi . . . . . ·. ec -o , isso u ton.on em. ers jp: . ·. Th~ cr~.ng~ in· .the rel_atici,n~Jre parJri~rs- ~j!i 7 A~han)e(!rpt:i_~e~b.ership_of.the partn~rship dissolve the- partnership j>ut will riot disturb tife A\\ will r sul~ i'i_ 1,ts_d!;_solut1on and. in the formation:°~· cb~tinuan~e by the rem_ji~ p/rtner{?r by the ·A·--/:\ ..;,;.._ a ~~w ~a.rtne{_sp1~'5o _ long as the course of its ·ex1st1ng ~and new-partners· 0f {the busme.ss as 1 ·I ·- bus1~fSS .,s_ '\'~~~~~ 1nte_rru~ted. , -- , : before ·(f?E LEQN, suprJ -!,;.:All p~rtners G~ns~, i v.~ng. the n~w. pa~nersh1p ar:e 1 . · . · · \ ~ . ~\ ... ~. ,.;:::;~ consJdered ~l)_co_m1mg partner~ · · tf - "ther~ .. -,~ 'Legal - . Parson_ality N0~1< }\Oto atic;;_al!~~u.Li!:::' ·-ad 1~ of ~e r:i~v.1par~ner even if t~E? business -- T~rmirated·. : . ., /'"\ .. \ \~ .·· 9. ·?,) ~ ~~jn th,er.et:e!
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. . Partnership Still Extst~. ·. · . ·~ Th~ pa.rin~rsliip:.-altho\1gh d.iss'olve_p; ~ontinu·e·s to.. : . . exist' ·until·· its terniin.ation, at: which_ time the winding. up of' its·. affairs ·should. have''be~~-. . cor:np.leted··and the riet .partnership .c;1ssets :a're . . pa_rtition'ed and" dis(ributeq\tO tne -~artners (Sy V. · CA,~_G:R. .No. 9~28§; Augli_s/3.J,° '.~99)... .

2._·. Wjl)_ding_ l)p . .,. -·- .•. \,!

. . . . ., . ~ctua1-::· plo~ess. · 6(_._~~tiJlng. :.the~ pa"f,tn_ership _business o_r affai_rs after ·diss!)lutjon (DE LEON, .. Sf.!p~a at 215). · · · · .. :-~ . ·, It invol.ves:. :·a. ,.:Coliedion and distribtition·of-assets;· · b. . Paym_ent of debts;· . _· . · c. D~term.inati9n· cif the value of each partner's - _. interf:')St in the partnershi'p Ud.); and. : . d. Defendlng claims against'tl:ie firm (PINEDA,. · .sufiri:rat 152) :. · -

....:.,

.

. · ·- · · - . - . - :. . _ ' · ·. - Dissolution doe-s not automatically result. in: the: . . . · -1. ·Termination . of. th~ ., !egal .. personality.· 6f_. ..the, . partnership; o'(_ . . 2. ,:.cessation ·of his,business ' .

.

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·relat[ons of the ·_·partt1ers amon11· themse.lves . . remain .as .. to.:partne'rs" . until. the paf.!nf:')rship is' t~rminated-(DE. LEQ_N,.supra_ at21.5).:. · ·.. ,. '. _ , . .. . ' . . ., . ,,: '

,'

. Tra.nsaction of- n~w busi'ness p;~hibited . Afte.r p)sse>lu'tion,. J.h.~ _partriecship. a.~ a- bu~ihess .. . ·. eriterp~is~. :remains :viable only.'fo( the.· purpose of ·_. . . _ · wir,idin'g: up )fs . affairs. Jhe 1prin'cipar ~significance of i . . disi;ofution is. that thereafter, rio. new~ paitnership' - ..... business· should be undertaken, but affairs should be liqui,da~eq and. dis_tributipn made tc{those entitleclfo th$ partners'. interest (Id: at 216), ~ . ·. ·. : . .-. . ' i

590 I ·2019 SAN BE_DA LAW.CENTRA~IZED BAR.OPERATIONS

·. ·,

. PARTNERS.HIP.AND

AGENCY·

SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2·019 . .

The expulsion has theeffect of decreasing . . the number of. · the partners, hence, the ciissoiution. The· expulsion must be made in .. good faith, and strictly in accordance with the power conferred by the-agreement between · the partners. T~ls power may be vested in . onepartner exclusively. The partner expelled in bad Jaith can claim darnaqes '(Of= LEON, supra at 2Z1).: ·. ,

TYPES OF DISSOLUTION. 1. 1;:xtrajudicial Disaolution .. The parties may agree to expand the CAUSES provided .under Art. 1830 but not to 'delimit them ...

causes of Extra-Judicial Dissolution: . (WovCET-DeCIDe): . . a.·. Without violation of the agreement between ··the-partners: (TJ°=3) . . . •• i. By- the .expiration of the definite Ierm pr particular undertaking · specified . in · the. ·. . agreement;_ .

Reason: : Apparent lack: of, confidence, without prejudice to the liability for darnaqes {5.PARA_S,, supreet 705)'._: ,. ;.. ,

I

The contract is the law between the parties, if- the firm still continues after. said period, it . · - . becomes -partnershlp at will (DE ~EON,'. - suere at 2.19). · ·

b. · in contravention of the agreement' between ... · · thepartners, where. the circtmistanceS:- do not . ~ . permit a. '. dissolution' under. any other provision of this article; bythe express will of. . 'any partner al"any time; . .. . . -

a

. ~.

-

ii. '. By. the gxpress will of any partner, who must _ act · in good· faith, when no definite term or particular undertaking is· specified; ' . ~

.. Even. if there is .a specified term, one partner . can cause its.' dissolution .by expressly . . wlthdrawinq evenb.efo_re the expiration of the · period, -. with cir without justifiable- cause. If .,_...._~ ther.eis no cause-or the cause Isnot justified, t!Ditftdr~wing._partner.is liable for, damages . but i'}'no ~ase.·can. he.be compell~_d to re~~in iri the iirm. Jt.1s a' power .and not_ ~ec~s.sanly ~ ri~_hJ to dissolve }I partnership (Ro~a~ v. Jytjglapp(· G.R .. N_o.· 3061-6, December=tc, -

A withdrawal by. a partner is a _dis_sollltiq9~ whether 'or not· the agreement allows s~ch , conduct.' While' the ,attendanc~ of bad faiJJ:!" ca'nnot . ~ prevent the dissolution .of J .. ·partneJShip;_ · it C~n· • reS!Jlt iAf l(~bilily_ .for . damages. The gu1l_ty partner wil,lld be l1a9.le .. . for wrbngful·dissolwtion (Id: at 22,0). . · · ·. ijL . By ..'th~,gxp;~~s wil;_o~~l~artn~;s ·wh~ ·. :ha.ve not. assig[1ed their 1htereit§...o'}sufi'ered. _·. them to. b_e · charge9 .fo,r t~ir ~~~arc=Jje debt~,· .. . ~ither -befo:-e ·or, a'ft~r .the fermina_tion ?tapy. .. · specified term or particular undertaking;.and ' . . . " . -

\

. . ···

· Unan.imous·_.Agre~ment · . .· : ~ : All-th~ partne'rs. r:nay d.ecide t9 diss·9.iyefthe: p_artnersh.ip -~ven qefpre the. tE3rmi~on\ .of th'e specifiep term or. particular undertaking. ..;. The .a.greemeri_t. musr be unariill)ous·. · ,he I major.ity · c,1lone · . · "cc;1nndt disssilve -· the partnership without breach of account (Id: at . 220~221). .. .

1J?90)Rj.

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.

. · ·· ... · . · .

J"h~ wii~dr?al_:of·a partner will-~lways 'result in dissolution· of the firm because-the _number ·of;.r\artners_·i~:--feduced. Any ·9ha_i:,ge. ln the . relation of the partners will cause dissolution · .:.-.o..., (,RfNEDA1 SL!P_ra,at.162)'. ·· · . .,.....,....._,.__ ......,_ . .. . ·- . ; . No ·particuiar fbr_rri of~notice'_.Of.withdrawal is necessary and i,t i?. s0fficie.nt tt,at 'i:mequivocal · acts : or-. circurnstances. are· ·q_rought to - the· knowfedg!:'! of ttie.·.other partners th;3t signify .. '' . :· the' ~)5e'rc!se . of. th~. will or purpose . to .. · ·. ·· .. · -: termjnate·the partnership (~d.).' ·---,·

c., By·a~y gventwhich~·akes i_t.un(awful fo~_the· That the· co.nsent' of'the partners who have . · -. busine~s of the.· partnecship to· be ca,rried on :· .assigned lhej( interests or s'uffered. the I)')· to . ' or·. for' ... the . member_s . to .. carry_ . .if on ir:i , be chargec{ for _their separat_e· ·9ebts is not · partrier~_hip; · .. - . . . : . ' required io. effect' dissolution witnout breach . . .· ' .. ,· .• . . """ .. ·. . . . . · · •.Note: IHh~- pusin~?s or- the qbject had beefl.: . of parti'i°ership ·agree·m.ecif They are not given : ·. - ·. unla_wful fcb'ni the· Very. q_eginning, the firm the~·right tc:>' ·have, .vote or yoice in.
a

-·

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. supr.a

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2019.S~N BEDA

.LAW CENTRALIZED

BAR OPERATIONS

·I· 591

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PART·NERSH·IP·AN.D·AG.ENCY .

SAN BEDA LAW dNTRALIZED BAR ~PERATl(!NS - MEMO.RY AIO 2019

!L~P· ?!i!i?i a;;w !¥?i#MWt%1 i-MW@!dii?t r_'?3'AA·t>it:#

ii.

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When the partner has only contributed the usufruct of the property

g.

Reason: · The partnership is dissolved because the partner has· hot or is deemed-to .have not; given his cohtribution (DE LEON;. supra-ai ·2221). · ·

•

-Tiit:R;

M:

11': fl<

E'':; 51

By the Insolvency of any partner or of the partnership; Note: The insolvency or the partner. or of the "partnership must be adjudg_ed by the court (Id. ai 227). '

.. -.- · Reason: By the insolvencyof the partner, his NoterIf lost after the delivery, the-firm bears ·•· · credit is impaired. It-would be impossible for the loss, andthe partner remains, since after . , .. him to P.ay for partnership liabilities in-case all, he· hadqlveri his contribution ·(5 PARAS;. . . 'the partnershipassets have been exhausted. supra at "706). · Insolvency of the . partnership results· to inability to continue the , business Which , . This provision refers only to specific thinqs. practically amounts to-dissolution (Id. at 228) .. When. 'the thing "to be contributed is 'not ··' .. . h. By Decre-e of court under Art, 1831 -(CIVIL specific, Articles 178€f-(par. 1) and 1788 .shall qoverh (DE LEOfj,: supra f;!_l 2"24:): .. / CODf, Arf.18_30) ... · . . . ' . . ..... Note: The mere , failure b'y a partner to . . The> decree . rnust.: be 'a '. fina] : judqrnent . . contribute his share of the capital p.,w-.suan~U. end_~rec1 by' a court or competent jurisdiction . an agree·menno form a_yart~_e,V~!£_ d~ not , J-v:J(5r1:1ARAS:s'-!pra:a!_ !tJ9).: . ,· .· .. .: prevent theexistence of·a fir_rn1"~u h.[.fa'ilu~~ , ,;,.~· -· · . may ~.aiv~d .: by Ihe' 9t~e·r. pa~es,-to""the -~ ... ' . :~ntler . . rticle: _183 \ t~ere._. are . ~ev~fel aqreemenr (Id.). .:: i_. . · . cf!, · 'C1_r.c~ lances !1ke insanity, 1_mbeql1ty and, .. · <, ··/1:f-..V... .· · '-· ·"","'" · :-··· 0the;,,-in,etfr,iacities· which· may .be .used as e. By the· Death of any·P.a~i/ . ,: , i\isis~tff. j~didal · : dissofutiorr of the prtnersh~f;i/NEDA,"supra_·a~ _1 ~.5). . · When a p~rtner d1es,~re IS an jfu!irmabc )'W .· • ,. ' \ ;.....,. ·· . • . dis~oluti_ori of tbe pJr.tner9t-flp be·cause'll:t1:i.ere·\ l~\ ~Ldmiting the Causes 6_f.D.issolution · ·, is.a r.edu_ctior-i""in 'thr !JH_rl)~er of.th\ origffi·(~ The /partners}-t!=l·r:9.Jt -~·nt~fr in_t_o.'a'n. agre~-~ent partner:5 (P!NED{\, supPa..fl't 16~[] , ,:-.J.;_/if/ · ·.wh r~.9;e··a~!om'atf diT9olu!!d.~ of p,~rtnetship L~ ·' ,ourg®'out t\y>the f!=lw Will-be h_m1te9 or restricted ~he,·. survfving partrnerJ -~~I- ·_cdi:fUn~, thtT~ :b~si~_e.ss_ ?f t~e--·part~ersh1~~~.def0c?_ct~ .'.. - . . c.ir~_~mstances. 1/- ..t~e ?~rv1v1~g- :: p_ar,t~~. · , 2, tlj?!c1al f?1ssol_~ti<:>n .:· . . ··- .. - .. · · . desist from CO!)llnt;lln~-. th~ ..,~'l"'M N:O.IS~e~rs to 'd1Sq\)IUt1ori by·pe~ree. of 1he ?OUrt . _ . -· c;led~e to ~iquiqate : thE:1 ._ pa.._rtrie:sb~a~\sl.EN~PAR-is.,.. si{q,a·a,t_.7-11 )., ln-a ..suit. for dis.solution, J_he. firn:i· .i~ ·n.ot ·in the s;~t . cif
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.Gr;ound~ . for JudiciafDissp!uti'ori:·.(1\:112LP). . ·. The,towt.shall:decree dissolutjori, 'On:applicc1_tion . ·.by or- for: a:par{ner,. wheneve(: ·. :·. , .·. · ... · . : . · . ' a .. Any· partner. :commits ·Misco6aucf or . : . .'· . persistent breach of p_artnership:agreemenl', . .. :- . '• . s:·uch ·as (BG) ... ·'( . _· ·.-. . ·.. . .. · vivps"(REVl~Ef!J'ENAL':CODE;:.Art /N/ . '{: - ~ · •. f: .. Apann'er'Willfqlly. or i:ii~sish~ri~·y i,onir1iis·' · , . , .. · , , . ··:> ,_·. -:-~. ci'§.re<;1ch,-.of ttie partn'e.rship agreement,: Civil-. interdiction· _which ·.is .a mandator-y . ·,. ,or o\her:wis~ ·co.~tju_cts'.himself-!n·m·atters - •·' acce$SOl}'·j:Jen~lty impo'sed·wh~n the p~n~lty relating to··the .. panriership. t:fusiness·that .. is·- at ie'ast"fecl_usiori terri'porat,reslricts·· the it rfot reas,6nab[y ;practi_c'able .. tc;i,·ca~ry: ' c~.P~C!W<~o:a~t·of:a Pc!rtn~i-~ Thi~.i~·,15,nown qS· . .. ·on the bujin~_ss" i"n,par:t~~r~h-ip-~with him; .. civil d(;lath '(Pi NEDA, ·suprEF?,t-1'65). · . . .. ii.. . A_. partner has . , tteen . Quilty- _qf :S\JCti · · ·. · · :· •• ~ · '· · • ·· ¢9rJ,9LlJ;} .. ~~-,J(;lJJPS: to: a![_ec(pr:ejudic,ially . ~e~_s.~°i,·: ·Qne.i,.whq is ·. withou\: _q:1pacity' t_o' . · . : · U:ie: Cc!rryir:ig 9ri. of·t.he" QUsin~ss (CIV{L .. · .. . . manage hfs. ·own property\shoufd (l:ot. pe . COQE, Art. -1B3_1). : · .allowecl t.o manage·partnership.property:(DE · .. LEON; supra at_229) .. :. · .· · ) -~ · · · · · · · . Ci~.i1 i~terdi~tiq~. depriv:~¥ _tt1e\:iffenci~r: -·the· ,time ·9.f :.hi$ _se·n.teii"ce of··th.e . right to , _mariage .his p):"opertY. ~nd .dispos.e· of such.. . . :prcip~[!{b~ a.¢1:9r.'ariY, ~011\/~YclJlC~~ inter··.

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.Reason: .;J'hey 'defeat and materially affect . ano obstruct the purpose of the partnership (DE [EON, supra at _232). · Temporary . grievances, discourtesies, . disagreements, .or. mistakes· of judgrrie.nts· that involve. no-permanent mischief or injury . will not suffice as the basis: for a judicial decree o:i 1i~s~19.ti?n}WJ--· . · .·. :. ..-; Where · a partner» -is guilty of, ·. serious . misconduct; the' only remedy available lo copartners is-: to ·apply to the 1c;:ourt for. dissolution:·. BL.if the partnership agreement may expressly confer the power to expela _partner· under ~pecif1ed.coriditio~s.\(Vhen th\s 'power is ·"exercise.d ·in:: qood -faith, it -causes dissofutiori. . witfiout · violation of · the •". "" '• . " . I' , partnership aqreernent, although n'?' suithas beeninstituted .to ·lhat end (Id. at 233)'. -:·, . ·.. . . . .:'.. . . : .. . ~

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Sincethe purpose of a partnership is carrying of a business for profit, it may 'be dissolved . · by .decree ·of court wh~ri· it becomes apparent that it is unprofitable .. with no reasonable .. prospects o( success (DE LEON, supra at 233)'. ·,· . ····' Note: A- court·: is' authorized to .decree dissolution notwithstanding the. partnership has been makinq profits where it appears at the time of the application that the business . can qnl~_ becarried on at·a loss· (Id.). . -; . _......: e. "Other circumstances: that render 'dissolution · e'°quitab1~: _,.... · · . · . · . l.e. Abandonment of the business; Fraud in the .meneqement of the business;' Reiuse! .. ' without justifiable cause· to .r.en.der act9L1hting of the'partnership·affairs (Id: at-233 - '234). .· ,·,; . . -~ .. ~·

On the appli'cation of the purchaser .of a partner's in,terest: .: · ·. 1. After the termination of the specified_ term .or / p~rlicul~i~c:l.e,rtaking; •. '·. ~. . . , .. :· . ' :2 .. At any hr,n~ 1f. the ·partnership was·a partners_h1p at · . will when the interest was. assigned or when the · _::_ .. char~/~i drpef: ,was iss~·ed·.(CIVILi'. ·coo5; Art. .' ,: 1_831). ·, · . .::__; , ;- ·. ..

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Note: The.partner .m~·y have ~een P. .e~io.ufu . declared ;· ihsane in -a judicial pro'ceeping; 'otheiwis'e', ,hi~ insa~ity, m_usJ b,e'jjuly'p~ov~. .. II:,· mu_st materi,ally:· affect .. therca1:faci£y of .. . .,. -~ · .. - . : . . - .· p_art~efr.. to :Pe.rform l:ii~:c0ritrccctu.af duties as . ' . 'sLich·(/cf."at 231). · · .. .' . '\

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EF.FECTS..©E D SSOLUTION·. . . ,· 1. •. to- _.Par!ner's :A~thority, .tc{' Act for the· . . Partnership · · · .. .· · · ·. Geneuil · .Ru)~:- · ,Pissol4tion __\eny1inates 'All · . incap~cit;· < .:. . - ..---a.uth~Fity ~f any.partner fo'ad'fo['t_he pcjrt'nership. '· .. A partner impliedly und~rtakes ~o ·ad/c;:in,ce ·· · . (CIVIL cjOOE, Art. 1[},3:2) ... · ·. . · · ~he su_ccesq. of t~e par_to~~s~i_P ~' ~ h~·i~· · · · - ·. . .·· · · · · .. ·a mer:nb~r l?Y. devo.ting to 1t, w1tl'1in,r~a,sohaole , ,. ·. . ··Exceptions: .. : .. , . ... · ·· ( :·_". limiis,.his._time; 'effort, and abflity. Hence,' the : ·: . · ~.·,. Ac.ts o_ec~ssary to ~ind · partri~rship \ . . ri:Jle }hi:lt.',c.ourts hav~ :the' povi~w to decree ..: : . \.:._· 'affai.rs;;qr .· •. ,· .... : . . . . . ' . . ,. · ~. . . ?lsS(?ll,!.t.i_o~: ~. ility tc(discharge;·t~e ·d)..!ties Arf.. f832}. · · .'. r. ·.. : .· · • -· ·. , · .. - :: ir:npose~.:by''his .partnership con.tfact'(i9 ... at .: · .. ' :· · .. ~ · · · -/ . :· ·. 2_3h' 2,32). . · - .: . .. . . · .· . . . Qua.lific.ati.Qn;·to. th'e G;ne~al.f~:~le: .. -- · · a,. .. With·'~e$pect.to the Partners: . . Th~ ·,in-~.apacity ,cof1teff1plated i~w' is . ,; i. ~ [?i~~o!u,t!on i.s.·i:1.Qt by _Bet, !n.s_olvei:icy or. . , jncapacity. which ·is )asting;· fr0m which t!ie .. . . QE:iath :(A,ID): qf a partn.er: ger:,eral rµle · ·.· · prqspe.ct·· of) -recovery .·is· reino'te: If . the ... , ·'. f!pplies.·. ·Hen'.ce·,. dissolution termir.ates' · . disabiliiy be. of'~)einpbr~'ry n~ture; if i't be ', ·. tn~ 'act,ual' 'a,utho~ity . cl ~' partner· t'o . . merely an' occasionai malady' or. accid.e.ntal . :.-· . ,,und.ertc1[<e, ·,,new . business . for the . illness; .if. ~here·b~ a fair' p'rospect.of recove/y. . ... .· · par:tl')erst'\ip (CIVIL CODE, Art.' 1832);.· · witliin:cJ·Teas9nc;ible time; then; ·and'•in such· . ii'. . D/ssol'ution is by act,)riso)v~noy or.death .. Ca$~S. there":·is ~o. fi:C gr.ound to · deer~~· a . . of a. pa'rtner': authority of part_ners inter se . _dis$oluti.on; for eyery. pa:r-tnership .must :be to .act for,·t~e partn.ership iis·._not deemed pre.~umed to be. entered into, subject to the termina1ed. Thwf.each· partnj:!r ls li~ibl!:! common 1ncid~otif of life such as ~emporary 'to. his co-partners. for· his. share· of any illne·ss, infirmity, or: insanity (Id.at- 232:F , . )iabilily created by:any partner acting for

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3.) Any transaction . which -would bind the partnership if. dissolution had not taken. place provided the' parties are in· good · faith, meaning the other party is: · . 'a.) A previous· creditor and he had · ho knowledge or notice of the 'dissolution; or b.), Not. a previous creditor and the - fact of dissolution had not been published . in newspaper of qeneral circulation. - .

the partnership as rf the partnership has. not been dissolved (CIVIL CODE, Art. 1~_33).

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Exceptions to·(ii): . 1.) The-eause of dissolution is the act of. a partner ·ana the acting partner had knowledge of such dissolution:'. 2.) The cause of dissolution is the death or insolvency of a partner and the acting . partner had knowledge or ·· , notice . of " such dissolution (CIVIL CODE, Art. 1833).

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Whe.n · partnership . is::.bound. to' third ··~ per-sens: after· dissolution. ((;WIL C_ODE; . Art. 1834) . . · . . · . · 1·.) Acts' appropriate for· w.inding - up ·' partnership-affairs - . ~ . 2.) Acts . for · cornpletinq unfinished transactions, · ·

2019 SA.N !?EDA LAWC.ENTRft:LIZEp

BAR.OPERATIONS

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Person's· Who had kno·~.n . of 'partnership existence -. publlcation is.sufficient·(ld.) .. ·.' . .·• .

· -Note..The tad thatthe dissolution hasbeen . : published 'wou[p b~ s~fficien't even. if they.did .. . . not·actual.!Y read the ad~e.rti~ement(/d.). .

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Dormant Partner Need Not Give_ Notice The liability of a partner unknown as such to the .. person with whom 'the contract is made or. so far unknown and inactive. in partnership affairs" shall _be satisfied put of partnership assets alone (Id.) Third persons, · not having dealt with .the partnership in reliance UP.Oil the. membership· of ' tt)e dormant-partner, areacccrdinqly not· entitled to notice of his· .withdrawat. The 'principle. or' estoppel cannot operate tocontinue his liability or. his authority after dissolution since prior thereto, . he was never known· or held out as a- partner. However, he ·.wiU be personally liable for 'parlnership debts arising at the lime 'of hi.s retirement (Id.). '. : ·

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Llabllltyof Pr~tender_ · :. · . .. If after dissolution of the firm, a person pretends · _to be a partnerthouqh he is not and eri'ters into ;:i transaction in behalf of the, firm, he ·will be liable as partner -by estoppal under Article 1825.. Similariy, a partner of an existing parinershiP. wpo· consents to: _the representation made by\ltliE? pretender, is also liabl_~- to the persons with~h.o.v, the pref ender has dealt with' '(PINEDA,· supra at' . · 175)... . ..

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(PINEDA,

DeathOf A Partner: The.individual propertyof a. deceased partner.shall be liable for all obiigations of. the· partnership incurred while he was. a . partner; subject to prior payment of his separate debts. (CIVIL CODE; Art.r 1835, par. 3). The · outside or personal-creditors are preferred to the. -··firm's creditors (PINEOA, supra at 176.). . Rights of a Partner Upon Dissolution (CIVIL .CODE, Art. 1837) .. . . ·. . . 1. - ·w_h~n .dis'solution- is not in Contravention of . .".tile Partnershjp Agree,!l1enf .. . . · a. Have partnership property · applied to .dlscharqe-partnershlp liabilities; · · · :b. 'Receive in cash his share-of the surplus.. . ·. Note: ':If· dis~olutibn is caused - by bona fide . expulsion, . th.e ,.. expelled partner ·,.may be . . , · discharged from· .. a11 'partnership liability in the . . same -manner as. above. but lie shall receive in . cast, ·onlx_·.the net amount due him from the . Qartner.sflig (C:/\1,IL CODE; Art: 1837). . . l!_d~~q_is prop~·r.:n~ pa-~n_er_;~:lia~·le_ fo~ any - loss sustag,ed asa resultof the _d1ssolut1on (DE ·. LE?tv,(s.u~:alat ?P.3).. . . .:.. .. . . · ·.

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·:·. ·p~~~rsnip-.A:~eement" (CNIL- CODE, Art. : . 1[137par.2,(.1.J). ~- . · "a. · Rights_ of~ .partner who_ has not <::aused the ~ di'ssol0fiori lijr0hgfully:- (1~p7RC) . ·.. · · i. i:6 be lndemnffied .for damages ciiused -by' the; partn.e_r guilty of;.the. wrongful a. . . dissolution· · · · . ' ' : b,. . . . ·.ii. ·.Tei.have f~rtnership property'applie·d."to ~ .·· ... ·- - . discharge pa~nei'ship.liabilities; . . . ·.·,--iii. .To fossess part~ership_prope.r:ty shourd ·· · ·. · -th·ey decide to continue·the business;: iv. To··. Receive i.n ··cash.,,his. ·share of the . · . DissoluJion .9rdinai"ily Doe~ Not .Discharge! · · surpl_us; · _ ·. Existing l,..iabilhy:o.f Partners V: To ·continue' the business Tn. the. same· .' · General Rule:)ust because the firm·is dissolved . . '. na·0.;.,·during·. _thi agreed term , of the · .. 9oes no{ autqma.tic:ally me.af) that the, existing . : · · · · .. liability bf_ any partner i_s·i:Jisc~arg'ed. : , ' • . . . ,'. I • partnership, by them'selves or jointly witn : :others:- . . . : . . . Oth:irwise,· ·c_reditor~ W!)U-ld . be·. prejudicee,r,'Ri~hts··~r ·-a· ·partne{·w~ci· .h . othe'r"partners:_. . .. . ~- '--. . ,· . .between .hfrriself, the partn·ership creditor and .the .... · 1.) . To have partnership property a·pplied petscin Qr partner.ship continuing the busir,ess . to_ discharge partnership-.liabil!ties; . (CIVIL- CODE,.Art. 1835)_._ . 2.) JO ·receive in cash his sha{e ·Of the It" .oeen. h!,!ld .that ·a partnE;lr who · hi,1s .~urplLJS. less '·damages caused by his wrongfu.1 diss9fution (CIVI_L with<:lrawn from'.tt1e· partnership is released, from . . CODE, Arr1837, par. 2-(3) (a)). liability only' when th.ere is liquidation ·and his,

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Business is continued.; 1.) To have the _value of his interest in. the partnership -at the time. of the - dissolution.' surplus" less: damages. . caused by his wronqfuldlssolution to his, co-partners; . ascertained and paid in· cash or, secured by:a bond_ approved by tlie court; ." . 2.) To be.released.from-all existing and future liabilities (OIVIL CODE, Art. 183!, par." 2 (3)· (b)).· ·

Right of. Retention of, or lien ·on, the surplus of. partnership property after satisfying partnership' liabilities. any sum of money paid or contributed by.him Art:, 1838). . (CIVIL CODE, .

for

Manner of-Winding Up , · ~ . 1-. Extrajudicial .-· by· th~ 'partners themselves - witboutthe.intervention of the court; ... 2. - J.~dicial -.t,Jnde~ the control and direction of. the. · court upon proper cause. shown by~arjy. partner, · his le.gal representative o_r bis assignee_ (DE LEON,. supra at248). ' · · - ·'

· Note: Pc!rt~:~r.~~ip_ c,reditQ~~ ·s~~li .. h~v_e P._riorit'y -on-. · partnership property. and;t~e .separate ~re9it9ts on . lndividua] :i:>roperty, ·savi~g, the rig_ht~\o(H~r:i _o(. : secured creditors'(CI_V/L'CQDE; Art. 1839;· par: 7). · .

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. Where a Partner or His Estate Becomes: Insolvent Claims against his separate property shall rank ih the followinq: order: . · ' 1. T~_cise owing to separate. creditors · 2. Thoseowinq to partnership-creditors 3. Anything left to the <partners by way of .. contribution ·(.CIVIL CODE, Art.' iB39, par. .9).. ; . ··

When Assets Are Not SufflclentTO Satisfy The Firfll'S Liabilities . ' . I. \(Vhen the firm's assets are not enough to settle the - llabllltles; the partners are required to -contribute to fully satisfy.its liabilities. The. amounts of contribution will. depericl; uporr the partner's contrib.uted .capital, that.is, pro.reie {Plfl!EDA, supte et ·188): : · 1• (

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. . · Return pf Partner's Shar.e is; Dependent on Discharge·of Creditors: Apartner's share canncit be returned without first- dissolving· and liquidating the partnership, for· the. return is dependent on the discharge of. 11,e .. creditors .. whose claims· 'enjoy · preference. over- those. of the partners.rand it is· self. evident · that ·.all . members . of the 'partnership are interested in its assets and business, 'and are entitled to be 'heard 'iri. the matter. of the firm's· liquidation. and .· the· distribution ·of its property (Ma·gdu_sa. ii. Albaran, · . G.R. No. L-17526; June 30; ·1962). ' . .:.~ . . Rule:When-- There: are Claims 'Over Partnership Assets and Claims .Over Individual Properties of Partners, which. are B~th.ir:i c·u.~tody.·o't_the Court . for [?Jstr,ibution: ". . . ·,. · . · . '-· · 1. Partnership creditors. are preferred with ..regard.to partnership property: and . . . . 2. · individual .creditors are preferred with respect to individual properties ·of partners (C!Vli CODI;, Art'_ 1·~39, .per. .. 8).' ··.· Ru'1~0.1i, ·case~Of ln~olvency Of A Partner Or: Thaf · Of His·.~stat~~ Cas~ Ot?eat~: ··· .. . . , . · ·. J':he claims against the private property. of.·a' p'artner · '. or his-estate .(i'l qase· df hi~·death) wh\ch is insolvent · shall-be)i_aidf~ th~ f9_ll9wiri~ brde_r: . . . : - 1.. Separate cre'd1tors; :, · · : . :,.,, · ·.. · ·2-: Pc1rtn~hip c edifors; ·aric:J: . ,. . .,,. _ '3.. ~.arti11~r~ J110· ~av~ ~ontri~:utions. (PINEDA, supra_ E!l 190).· . ·. . : · ./ 1 .• _ :;- : • ;:_ ;

Limited Partners·, Not Liable; Limited partilec~·who' ' . cannot .participate .' in the -rnanaqernent. ot. the . partnership are, riot · personally liable: ... for the, partnership otliigatioris beyond their contributions· (Id. . at 188). _ . , ', . ._ . · - . 1 .

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,lnstan·ces W.1:!.fil1,....Credit6r. ci(. ©Id Paiine'rship - · Corti.lJileS to._ be'(:;re.dit_or·of Ne~ Part_nersJJiP. .·· I (N:;.M ;R-3'd-W-_Ex)· . .· . .. ·· ·:' ·. ·. . . The creditori of the· ole. pa·rt'riership are a·lso. cr,editors :.,...1~---0Hf:l~-e0ntin1.Jed_ parlnership after'. dissolution when; '. · 1: · Wheii .. any 'New. partner' is ..adinitted -. into-· an· .. .. . eJ;.r~it.h.o.th~r~; _: ... --~ _..·~·.: .. ,·. · ... - and .·: . 3. · yVher:i · any·. p~rtner· Betirefs or. di~s· -~nd the .. bu~.iness: of •. tii1:i'_ dissC?lved .partnership, '..is. 6 .. Those - owing· · td 'continued ·?s set forth Jri Nos. :1 · and 2 of this general, partners in. . .. artiGle, ·with th.~ conserit of.the retirefd -p~-rtners -or respect to ·CAPITAL : the r~pre;,eht_ative of the deceased'.p9rtnei; but (c;JIVIL CODE; Art. . ' : without.a'ny assignment of his right.in partnership' '1f}63}. -c ' property; · · -

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PART:NERSHrP AND AGENC_Y SAN BEDA LAW CENTRALIZED.BAROPERATIONS- MEMORY AID 2019

4:

When all the p~rtners or their r~presentatives assign their rights in partnership property to one or more third (3'd) persons who prorn_ise to pay the debts and who continue the business of the dissolved partnership; 5. Whe,:i ;any . partner. Wrongfuily causes • a . dissolution and the-remaining partners continue ·the. business. under th·e provisions of· Art. 1837, second paragraph, No. 2, either alone .or with others, and withe>ut liquidation·of th.e partnership affairs; 6. When a partner is Expelled and the remaining partners continue the busines~ eiiher alone or" _with others witl:lout liquidation of the partnershiP. affairs (Cl.VIL C_ODE, ,A.rt: 1840), .

creditors or the retired or deceased LEON, supra at 268).

Continuation of Dissolved P..~rtnership Business by Another Company . . 1. When corpora·tio11. deemed a mere continuation .. of prior· partnership - the weight of authority supports the view that where a corporation was formed ··by, .and -consisted of, members of a partnership whose business and property was· conveyed and ttanslerred to the corp9ration for the purpqse of :conti.nuing its· ·_business, such ·cori:,oration is presumed to have assumed partnership debts · and is prima· facie liable · therefor. (Id.· at 26_9). · ( .

Applicability: Article 1840 '. applies wt:i~_n a partnership is dissolved. but .the remaining partners continue the business without- liquidation or ,settling_.:.,. .its acc:unts_ ""

(PINEDA •. ""

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partner (DE

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The members of the.partnership may be said to have simply' put' a new ·coat,. o"r taken "on a corporate cloak, and the corporation is a .rnere '

f?rinuatio~ ~f:t~e P~rt_nership (Id at 269)..

-

Any cliange In me,mbershp. d1s~olves aparo..~~R .··. tV'N._ne~1gallons of c.or:npany bought· out and cr.eates a new- one. ~s the the cons1cler~~ssumed by vendee --.·"':hen one 1{ann~r~~1s result of a contract, .a chanle·n tlte{"i;>"art,es to the .1t' - compa_n(_buys out another and continues the 'contract necessarily- results. i (Of= ."1(' '\'--?' bu_stti~ss-ot...t~att~r company, the-buyer may be' LEON, supre.ei 26(5). . .. ~j '··· ,. s?.l~ to aS~[lle o~ligati?ns _of the company . ' ~ . ,;Q-. _ ·· bo.ug~t out ~el) said obliqations ar_e not of Change In Membership, Cause':.0/·Dissol_utjon: tu[I consirerabl~ amouit or value. especially-when Article 1840 states six· ~ittali0ql where~- there'l·1~ t~'""'~n~rced in th~i~c!fY course, and when the . dissolution · by re~son. of _fhanglin me bersbi~~~ bµ?jness of t~e-lr:1tter. is continued. (Id. at 269). . caused by any of the followm~ _· . · · - · ::. .J. · ·. · . ·. 1. admission of new,mem~e~;- £\ . · ~ .·· . fbr .1 rt) wq,eti saicl1obligati~n i~ of extraordinary 2. -retirernent of a partner; ,1 • -~ • ~: ~;_@~";ala~and the C~pa~y V:JaS bouqht out not to 3. a_ssignment of rights in p~ner~h,~ ·prop§.9 , tt..:,1- ~""~finue its business but to :>top .its operation in 4.-- death ?fa pa_rtne,r; a~d ," · ~- . \.: · .. _ .. . ,~r:p{r to'._elip,jnat{cor:npetit~on_. ·it c~_~n?! be sa.\9 5. _ expulsion of a partner (PINEDA, Slf~a-at ~thaJ~e~en~dee assum~d all the ophgat1ons_ of the . · . · . . · · :, \.... i"'I l..__ • r~al _co~~n (Phil. A_ir Li'}es, Inc. v.. Balinguit, When the_re _is-a. chang~· m_ the mer:nber-&.~§/P..~<\th~ .. '\~~ 715, June 30, 1956)., · , .·.partner~h1p 1s s1mply:_c9ntmued w1thout~q®:f~t1on, the unpaid old cre<;lifors of the dissolved r3tittners~ip ,Use of~Partnership Name l)p.on Dissol.ution: automatically . be~om~s. c;reditQrs · of. the ·new °;L\s· :~ ger:ier-al .:rule,· upon- _the 9issqlution~ of a pa~n~rship•.(/d.). . com'i:nercial· partnership, the, succeeding" partners or .. ::: parties have the· right.to~carry _on the. business Linder If-. this were. not ·so, it is easy to decei.ve. the old the ..old name, in the absence· of stipulation forqidding c_reditors ·· by .. simply. causing _a . change· in the it., sinc~J~e'-_name:.of.a c9mn:ie.rdal P
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Prior Right Of Dissqlved Partner~tiip:·cre.ditq~~ A'f> Ag_ai,Qst P1.,rcl)as_er.. .. · . . .. When a retirin·g or de~·eased. partner has sold his inJer~st i~ tfie partner~hip" wit_~out a· fihal"settlenient with cfed1tors of thE: partnership, sueh- creditors have . an: equitab_le lien _.Qn the consideration paia to the. retiring o·r d~c~ased partner.by the pu.rchaser thereof Jhis lien comes ahead of.th~ claims of the separate

a~lcJe-, snail. not extend to .. his' p!3rs.onal. ptop~r:ty, . uril(:lss there' is a stipulation.:tq _!he contrary· (CIVIL" ·C_OQE,__Art. 1,8~0 par:·2). ·' Cortin,uation ·o(Partnersliip without Liquidatio~ The remair:iing· partnerl, (and/or new- _partners) fnay continue the· bQsiness by simply· taking over · tlie busi_ness enterprise and. cont.inuing tli'e u·se of the old name (DE LEON, supra- at 266). . ' . .

598 I 201s·s~N BEbA ~W-CENTRAUZED BAR oP_ERATioNs ·

PARTN.ERSHIP -AND AGENCY ~N

BEDA LAV{CENTRAUZED BA{? OPERATIONS - MEMORY AID 2019

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Rights- of Retiring, or of Estate of Deceased Partner When Business is Continued · .. 1. · Have the value of the interest of the retiring or .deceased partner ascertained as of the date of dissolution, i.e. retirement or death; .. 2. Receive, as an ordinary. creditor, an amount equal to. his share to the value of his share in the dissolved. partnership with interest, or, . at his : option, in li~u of interest, the proflts attributable to . the use of his right in the property of thedissolved partnership (CIVI~ COD~, Ari. 1841). . . Persons Liable to Render an Account · 1.. ·The.winding l}P partners; 2. The sµrvivfng partners; or . 3: -The · person or. partnership· continuing · the busi~ess (CIVIL ccoesn. 1842) .. Right t~ Dem'and AccounJing of Partner's Interest. Th!=! right to demand accountipg of a partner's interest· · • shall be reckoned from the date of dissolution of the . partnership- unless there is a contrary agreement (CIVIL' CODE, Art.· 1842). . .. Regarding the .prescrlptive ·p_eriod· within which tq,e private · respondent 1n·ay · 'demand an ac'countirig, Articles 1806, . 18Q7, and 1809. show that the. right .., . ;{ . -~ . ·to demand . an · accounting .:~x.t?ts' as l,9,1g · as !!Je partnership exists. Prescription begins-Jo o~ly ~pon the dissblut_ion ··of the partnership wn~n the final accqunti1Jg i~ done-(Dan Fue f-eung -v.. lAC; G.R. N9. 70926, :. . . January-31, ·.. · : . . . 1989). . . .. .

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The limited partners may ask for the Retu.rn of their· capital contributions under the. conditions prescribed by law (PINEDA, supra at 205-206) .

· Advantag~s ot"a Limited Partnership : 1. On the part of the ge·neral partneris - They can . secure capital from others for porposes oftheir. business-while. retaining control and supervision of the partnership q_usiness. . · 2. On the part of· the limi\ed· partner - The limited partner . shares in - the profits without risk of · pe'rsqnal liability (Id. at· 206). Contributions of Limited Partners The contributions of a limited partner may be: 1. Cash; or -- · 2. Other ·pr_op~!1,Y,·

__

But. ri~t servic~s (CIVIL ·CODE; Ait. 1845t . . . Effect. if Limited Partner also. Cont_ributes His ~ervices lf'he does so, with th~ knowledge. pf his co-partners, he becomes general and limited partner 'at the . a~ tirrie. ln,sRhcase, he wil! be ~xposed to_ a!I the _ liabiliti~s of a general partner · (PINEDA, · supr~ at 21;3). . . . .. . ·. . .. . . . .

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Name of a imited Partner : · · ·· · Generar ifu1e: The surna'me·of a ·limite~fpartner shall not app~~r · in the partnership oame (CIVIL COD{:, Ari; ..1'8g6). . ·. .

.·

Exceptions;' . · .. :t .:_If it is also the 'name of a general partner, or .: 2. Pr.ior. to the time wh-~J']· the limited partner became -~..,.;;;...1,_......., __ sueh: the businesshad been carried on under a · name in which h·is surname appeared (CJ.VIL Ar_t. -1B46). · ' Limited partnership _, · ·' One formed ~by two or more persons . havinq as . . · members one-ormore generc(partners and one or . 1;:ffE?~ts of Violation of1he J~ule: . . . . . ·. ·: · more limited.'partr:ier~. the latter not beinq.personally . The_ lin:,iteq partner will be· liable. to· partnership.· _ liable for partnership debts (CIVIL CODE, Art. 1843). ', creditors. who have no 'actual knowledge that lie is ·n,ot· . ; '. -_.,. · .... : ---::·· .: ·ageneralparth-er(C)VILCODE,-Art,.1846r. Characteristics of a Limited Partnership: (Co3·LDR) 1. · Formed. by substantial'Comp!iaoce in qood-faith c. . Although· 1,abfe. as a g~neral partner, he. does NOT . wlth thestatutory requirements; ·· · · acquire t_he rights of a. general part~er (PINEDA, · 2. .One or., more . general.- partners Contro_1 · the supra pt 214). ·, ·' _... business.and are personallyliable to creditors:" 3. · One or more limited partners ~ntribu_te money Reason for Non-Inclusion , . . -orproperty to .the-capital -and share in the profits. . Th'e· surn~me of .li'mitelpart_ner. shall not appear in'. but do not participate if) the. management of the . the- partnership r:iame'because he._is -~xempted from .. business; · · ' gen_eral liability. His liability is_ limited, th.9t is why, he.· . 4. Limited partners are not personally Liable for is referred to as limitetj partner (Id. at 213). ~. : .; : . ' ' .· . partnership . obligations . beyond the amount of . their capital contributions; · Liability for,Fal_sity in- Certificate (CIVIL COD~, Art . 5. The . partnership .Qebts are paid out o.f the · 184_7.) . . common fund and the lndividual properties ofthe . Requisites: (!.{EL). ge-ner_al partners; .and ·· · 1. He _Knew the statements-to· qe false · a. .At the.lime he-signed the certiffcate, or_ . -'

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2019 SAN BEDA

-

LAIN -CENTRALIZED· BAR OPERATIONS I 599

PARTNE.RS.H1·p AN,D AGENCY. · SAN°"Bf.DA. LAW CENTRALiZf.D BAR OPEIIAT;ONS - MEMORY,A/0 2019 . . . . Subsequently, but .having sufficient time to · cancel-.or -arnenc it-or· file a petition for its . cancellation or amendment; · 2. The person seeking jo _!;nfdrce liability-has relied - .. . upofl ,the false- statement in transactinq.business ·--.. . with the partnership; and · · · · . · ·. 3: The person·suffereq):,oss ·as a result of reliance upon false statement, ., ~

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Note:' A_ limited· partner whose capital contribution qreater. than that specified is not liable-for making a fals!:l statement (DI; LEON, supra at 291).

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When thebusiness Is.carried on by a board of directors chosen · by · the · limited · partners · . (PINEDA, supra a{ 216).

. Admission of Additioria!. Limited Pa~ners · After. -the formation of the limited partnership, additional Iirnited partners may be admitted upon filing an amendment to the- origina.J certificate in accordance with the requirements of Art. ·186p (CIVIL CODE, 'An. 1849).. . ·. · . . . ~

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600

2019 SAN.BEDA:LAW

CENTRALIZED:BAR ·,

OPERATIONS .

A.ND(AGENCY

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Rights;. Powers,. and Liabilities Of A Gene_ral Partner . · · .· . · . The essential feature of a limited partnership .fs the union of two classe.s or:.. types 'of :me'mbf)r.s'. - . the.limited partner and the general partner.· The law ~xpressly requires that th'er~ be ·at least one_g(;)_·fl~ral partner with unlimited li'ability (Id: at 294). · · Right of control .or unlimited personal liability: ·A general partner in a' limited partnership is with the entire control of. the firm's business- and has all the right? and powers and is subject to anthe _liabilities and. 'restrictions .of a· partner in a . . -, partnership · without _ limited partners .. It· ·is· in . consideration of his unlirriited' personal liability for .. the obliqaticn ofthe' p'arfnership that he is qranted ··-the _.gen~rai autho'rity to· manaqe · the firm's. business. (ld:)1t '294-295).. ·. · · · ··

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2:--:. Acts of\adm;~istr-;tidn. or acts of strict domi~io~: ..

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ariy act of administration-but lie tiad .ho power to.do the ·. specific acts. enuinerated in Article 1 $50 ( even if agr.\3ed to b.y allthe general partners) withou~the . wntten consent or .at least· ratification of~W' tQ_e limited partners.,0viners~ip The· said acts ate of strict dornlnion or' ind :are, . thereforp. ,-.beyond :~he scope bf the a~thority-ofro_ gene;.al. partner (Id: at-295).. 1 As a rule. h~imay bind the partnership

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The certificate is cancelled or so arriended as -to set forth the with.drawal or reduction (CIVIL C
Exceptions: _ . When letter (at and _(c) are complied with, the·· ·~ return of the.contribution is a matter.of rig)1t: . . a. ·on the dissolution of the paftnership; . b. Upon the arrival of the .date specified in the . certificate for·th'e retu'rn;. or . i - . a c. After he has. given 6. months' notii:;e in writing to all ·other partn.ers, given that Jho. time is . specified i_n the certificatE:! for the'r'efurn the contribUtion or for the dissolution ... of · the partilerspip (C/,VIL CODE,-Art: 1857): · . ' . . . ~ " . ~ .. ·

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partners:· ~f course; ;-;ve 'no po~~·- f .·-~·a~~=~Qla~ ~e: a .~\:miled. pa.ttn~~ ... ~:· the. lirriited .partners beyong,..tfie ·latter,\;.. . the same ·fime ffi1':tfie same· partrtership provided that: 'investment -(Id.).: . . . .. . this fact is:._statfilLin'tbe certificate, signed, sworn to, · · · :·( .. · .' ., and' recorded in the· .. omcethe securities:· and Riqhts.of a Lfmited-P~rtner: (Bl F2J.\R3} . -Exchan'ge .. Cciminisskm (CIVIL CODE, (',rt. ·1.8_q3)'.° · 1. To 'have the· partnership . !!o6kS kept at: the . . ·· . · · ·. · · .: · .- ·. · "· ~ 'principal· place of business 'ofthe i:>ar'tnership .... &,..; .. --Allowabl,e~i:rarisactions of a Limited Parther · - . . . ·2. To ;Jnsj:iect; _af a· _rea'sona'ble houri part.lersliip 1. · ·f ransacting'piher'hysiness with tl]e, 'partr:iers~ip;: ·· ··.books.and/copy'.any·of ther:n-;'" .. :.:~ ·.· .... ·., . 2 .. ~e~eiying a 'prq· ·rate! stwre of the,-partnership · · ~ ;3-. to'demarid true and .Eull'.iriformation oftheJhings. . ~- . ·. assets·~i.th _the gen·\:)r-al ci-e'cJitors· if.he is n·ot alsq· ' . ·affecting the' partnership; ' . : ' ... ' . . . . . .. ·. a· gen_ercil partner; 'and· - - · .. :, ... ' -~- . : ; . '. . . ' 4. ·. ·Jo: derriand::a foirnal"·account b(the. partf:iership ,..:-'. 3.. µ'ranlingJoans to.the partqership (Cl.VIL. CODE, . · . affairs wt)enever-cir_currn,tance.s .render it just and .. .:.,_ .·. ' · Ait._.,_1_8~4}:~ : .... ·.. · .. · .· '. :· ' · . . · . , : . · reasonable;. . .- : . . . Prohioiteci Transactions:. _-. > . ..... ·· .. 5. TO:-~skfcidissqlutionand windin·g. up by- ctecree · · 6f·court (C/Vlf 9-0DE, Art. 1851);· · · · · · :··. 1·., _Re~·eivin~(or: ho1drr,g. as co11ateral secu~ity c!ny partnersh(p prop~rty;· or · · ;· ~ · .. · . '·. · 6, · To:-·Receive ·a share. in·· the profits ·or· other· . comperisatiqn pyway of in.come provided that the 2.. Receivir'.ig· any·paym~ni. \conveyafic~ ... or release '.p'a.r:triership as~ets _a(e' in eicess parmer$hip . . · from lia~Uity if the partnership .. assets. are less lia.bilities;,after-c~l,lc.~· p~yment (CJYlt. GODE, Arts .. .. · than i!s]iabilities (CNIL -~QDE,· Art. 1854). \.· .

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Reason-. behi,:ld "tti p;~hibited'. tr~-n~actio~s:. .prevent. illeg_a1· . competition 'b.etween : the ;Jimited p~rtner and creditors of tt)e. par_tnership for.'the assets of'the P.~r.inersh°ip (DELEON, s·uprc! 303)." .

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Effe~t of Violation the Prohibition: -There is· a . presumption . that . it· "h'as . been made to. defraud partnership creditors ..

2'019 SAN

SEDA .LAVy CENT~LIZED.BAR OPERAT-IONS · I 60 ~ ."

PARTNE·RSHIP AN-D AG.ENtY SA":J BEDA LAW CENTllALIZED.BAR

OPER(ITIONS - MEMORY AIO 2019

.

general partner by reason o(his ei<,ercise of rights· of. limited.· partner, provided that on as_cert_aining the mistake he·.promptly renounces· his. intere~t in the profits of the business or other comperisation "(CIVIL CODE, Art, 1852). , ... '-.

. Note: The prohibition is not absolute,. there is. no . such prohibitio·n if _the partnership assets are sufficient (DE LEON, supra at 302). : Preferred Limited Partners Preference over onEl or more'limited partners is mqde by agreement of all partners· as stated in the certificate as toih..e:· 1. Return of contributions; 2. · Compensation J;)y way 9f in(?ome; and 3. Any ot_her_ maHer (Cf VIL CODE, Art, 1855). '

Conditions for Exe_mption: (RAP)' · -·1. On ascertair,ing the mistake, he· promptly . Eenounc,es his interests_ in the prolilf' ·O( lhe business or other compensation. by -,way of income (CIVIL CODE, Art .. 1852),;_ . - '· 2. -His surname does not ~ppear in the·.firm· name (CIVIL CODE, Art: 1846); and ··. 3. He does not ]:articipate in the management_o.f the ' business (CIViL CODE, Art:1848X:

Note: In the absence · of such statement · in the certificate·,· even if there is .. an agreement, all the , limited. partners ·shall stand on equal footing in respectof these matters-(CJ_VIL CODE/Art,' 1855). -. . . . Illustration: A, B, -C. D arid E decided to create. a Liabilltie.s ofa Li111i.ted P.arther · : . .limited 'partnership, with ·A and. I? asqenral-partners General Rul~: A limited · partner is not liable. as a · .and " th·e res~ . as limited partners. · However, as gen_eral partner. (CIVIL CODE, Ar{ 1848). . . ·ric°ta_e·d in th_e·!3E~ ~nd in the s;er:tificate,.only C and . . · · .. · · ~ . -~~iertn~,ri.ed as limited partners. E, who ·a~r~ed to Exceptions (M_~GES2): · : .. . f_~o~~1m1[:J>,:P~ner ano -ha~ already ~ontnbuted · 1. Wh~r:i he takes part inlhe.cori~9..,,0~ M~J~eme~t · , mon~y. was left'.§lut of the certificate and m th~ SEC of the. partnership (91VIL CODE~(1:)8'f§J~......--;r-ree_ords. 'r~t.\E:sfi0uld · not generally be considered Reason: It· contemplates /r;IJ_ye.,PJl[licl~tion~~ a,§11ia~~as g~qp~partcie'r (~ PA.BAS, supra.a\ 749the busir:ie~s ~f the partners~fr,;>r'.-/1).t'f~©N; supra -~. 7:.5.0). . . : at 292). 1!· Cbmpeff~ation of~ifed Partner . __. . . . 2. · In 'the ~bsence of, re~i~tra\ibn -ot, lJile· firni~ ,111 r,l'fig;rig~tpf the li1nited_f\rtner to receive his share of. partnership -with the -Se<:.!W~iefs · and ~xchal1g~=~\p~ · pro~ts : or . cotnpe_rsation by way of . income .Con:imi.ssioo_(SEC); · : { ~ ~~· ··~~\ll1{f,'stipu!ate~9'li inf. the· ..ctrtifii::ate_ ·_is·_ subjecf , to :~~e · ·· · - . \· :0 .~, · _ .. ~· . ifi~~~f-p~r~~~tti'i: assets.will s\i_l_l be in excess Reason: If ~h~- t~w-.1~ ·_nbt~··c(o. ph~~fb~Jh_!\. ~J,:;P).rfl)erfup!1a.b1ht1~s ~fter·such p~~m,e_11t. In ot_h~r ~ttempt. to, IJm1t, hab1hty Of hm1ted p~~~r IS'...!il '~2~'W1r9~~!rt~-- C~(rtors: h~V~ l>rl~>nty .. qver:the

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·a , General ·,)Jclftl:)er .. 'Jru-l}...:~ermm{~9 the hab.1ht1~s of the .•partners~1p, t~e · . '.:_. _ -~· ,(.9A~lia!Jnft(ef~)P~li~ited partn~rs for !h~ir-_~o~tri.~liti_o?_s· ~~Qtgenera'I partners, wheth~I for .contnbut1011s ·or 4. W_hen he is _srr.cmeousJy·~~~!gnat~d as a· 9~?1 ·included. lciaoiliJies Jq ·Jimi(ed p·artners : partner and fai)s to corre~t_such e~ror.(5.PAR..4~nei: than ·on- ac;counf of their-.co'ntributions arising supic!\J_t 750);:. . . ·. ,:·,. from. bµpjn~ss . tr:.<;lnsactiqns · by-. th~m'. with· ·th~ ·· . partnership·, .·.enjoy. prnte~tion, subjeci~- ·;to~: t~e · 5. ·when h.e is a· g~netal. pa_i-tner at."the ~ame time pre_ferenffal rights. of part_ri'ership'creditors (/dJ · · (CiVIL_CODE, {f1t ..1_853j; , . . :., -"..:,. -··· ,. ,; .... · ... . . Wa_iver o~ C~mpromis·e-of Lial:iilitiei. ':-· . 6. When his. ·~urname' app~;rs. in \he· firm_· ria·r:ne · Th~·liabilities,ofa dimited'_pa-r:tn~( may .be··wafved,or sul;>ject to the exceptions·pr9vided by Art., 1846 ·compromised, proyided: Tl)e waiyenJr- ·compr-omise .of the,~ivil Code:·· , . - : • · ··.is made· with. the ·conse.rit of_;;ill the:p~rtriers; and the..... waiver~. or_·· compromise . ~oe~_ not ·, _prejudice partne~sfiip creditors who extended.credit-or wtiose As limited partn~rs they- are riot principals- ii)· the transaction _o{ a pc.1rtner~hip; .their li~bility_; as a- rule; is ·· -_claim~ arose be for~: the ··cari~elJation pr -arr)en~f)'len~ (C,V/L.COQE; Art. 1858, par,3) · ··· to the paMnershipj¢1VIL-.CQPE:· Att.1858),.riot to .the· . · ot the-certificate . . . . ·. . .... .:( ., creditors ·of t_he partne.r~6_ip: · , · . N~te:· ,l\n ·heir of: a dece~s~d'pa_rtneir"9_rd1n:arfly (not. S.tatu_s of_ P~rson Erroneo_~-~ly B~lieving Himself• necessarily) becomes a limited partri'e~· for his. own to be a Limited.Partner · · . · · . protection, .but ~e may_ later ·Off ~)ect .f<;> become·-a'. A person who: has · c~-n-tribt1t~d- Ca Rita I to. ·-the gen~ral pa'rtner (Goquiolay v. Washington. Sycip, · et · .al., GR. No. L-11840, July,26;-196Q):· . partnership, .. erroneously be.Jleving that. he has . . . . . .. Qecome_a limited_partn~r is not personally liable_a·s _a

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Substituted Limited Partner A person admittep to all the rights of a limited partner who has died or has assigned\ his interest in the partnership (CIVIL CODE, Art. 1859, par. 2) .. I.

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~~neral Rufe: He hc1s all the rights and ·powers, and is subje-ct ·to all the· restrictions and ·liabilities of his .. as.signor (CIVIL CQDE, Art, 1859, Par.6). Exception: Those.liabilities which he was ignorant at .. the.tirne he becam~ a lim'ited partner and which could no_t be ascertained fr.om the certificate (CIVIL CODE, ·. Art. 18~9). , .. · . · _ , · .. , Requisites in. Order · that the. Assign.ee · May Become a Substffuted Limited f:'a.rtner: (CAR) 1. All the rtiembers must _g_onsent to the assigne·e becoming a substituted limited partner; or the limited . partf)er, being emp·owered by lhe certificate must give the assignee. the right to become a limited pc1rtnet; 2. The certificate must be ~i:nended in ae:cordance with Art. 1865; arid . 3. .The. certificate as· amended mu.st be .Be.gistered in the- Securities and ·E)5.change Commissipn . (ftv7L CODE, Art. 1859). Note: An assignee merely receives .the_.:§hare_of the prqfits or. the return of the contrit:\'utigp5"to whicli the · assiqnor .would oth_erwise be ~~jj.tled (Cl~/~ e9DE1 . . Art. 1859). The assignee acqu1re~all th1N1glits· of th~ · llmlted partner only when he •hasJbecomey ·

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By agre~ment of all partners before-the lapse of the-period of existence (CIVIL CODE, Art. 1830, ·par. ·1 (c)); · · · . 5 .. Misconduct of a general- pa.rtner fraud comi:nitled by .. a . geri_e.ral partn:er . against•. the limited partner/s; or· . . · 6. W_hen the limited partn~r 9emanded the -return of his contribution . !;>ut same . wa·s unjustifiably _denie~ (CIVIL: CQDE, Art. 1857, par. 3(m.

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Note: The above li~t is NOT exclusive:· .~·

Rights of Executor or Admini~trator On. the .de·ath of a ,limited partner, his ·executor- or administrator shall accjLiire all the rights ,or a limited . partner for the purposf of settling th~ estate. (CIVIL . CODE, Art: 1861, )Jar. 1) ... , . · · .· . Liability of the E_state·. r: The· estaie.' of .the deceased limited: partner.. shall b.e. '. · liable for all his obligations. or liabilities to the partnership· as a limited·. partner (CIVIL CODE, ~rt. 1861, par. 2).

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Righ s-of Creditors of Limited Partners- to Charge ' ( . . thelnterest'qt the Indebted Limited Partner .. . The creditor, oQ a limited.partner may file a petition to charge the i~terest of the indebted limited partner in the partrie9hJi l~h the' payment' ofthe unsatisfied amount or· th1 .~reditor-'s claim. This is a sort of a forecl9.s.Jr'e - ~e irit_erest' of. the· indebted limited . : partnerfor ffie satis ac ion. of the creditor's claim. A

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receiver _may,...@ ...appointed by the· court to· preserve · the said interest. The court may issueother orders, . . Causes of. Dissolution of a Limited Pa(tners.n1p directives-as maybe necessary under the attendant fPINEDA;.supr.a at 239): . . . circumstances (CIVIL CODE,'Art. 1862).- · .1_.·· R~tirernent, [nsolvency, ·Qeaih,.!rJsr.,.nity, br/§.ivil----~-""' - ·' · · < . interdiction (RIDIC} of a gen~ral partner· Settling ofacc·ounts·o~ liabiliti~s after dissolution . Of a 1.imited partnership I . Gen·eral . Rule: The. retirement,· death, .. Article.1863-states the order of priority in the payment . in;olvency, - \~sanity 9r: civil. interdiction of ·. a of the liabflttles'bf the limited partnership: . ·.... genera.I partner dissolves t~e partner.ship ... _ ·. . 1. '. Those· owing. to creditors, in 'the· order of priority . ·. : .. . . ·. . .... - - . . . ·. ' . as provided· by law, .. except .those. tb limited .. Exce.ption·: If the . bu·siness is. contin~ed :.bY : > partners on -account of their contributlons, and.to . cemaining general partners (urider. right' scno · . : .. general', p~rtners:. The pertinent' :laws.· on · .. do siated ln the cectificate or'wiih the"con·sent - · Concurrence and Preference of Credits shall'be . : . applicable; . ·. .. . . all me1;1bers} (SIVIL CQDE, Art. 1860}. · · · .': 2. Those owing· to limited.partners inrespectto their N~~e: The aqovementioned caus~s in r~lc!tipr:i t.9 .= · . share of ·th'e profits a'r1q other compensation by a generaf,partner dissolye the partr)ers~ip·,. while · way of income on their contributions; · ' · . any'.of such : causes affecting a lirnitecf partner . 3 .. Those owinqto limited partners in respect of the · do.~s not result in its dissolution, unless ofcourse capital of. their. contributions;" : · · .: ·. if there is· only one limited. partner (DE LEON, 4. Those owing -to general. partners-other than ..for · .. supra.at 314). · . . · . ..,._ . ~ capital and profits; . . .· .. . ' 5.. Those owing to general partners in respect. of '. 2. When all limitecf partners ceased to be such profjts; .. (CIVIL CODE, Art. 1864, par. 1); 6. T~o_se owjng to g~neral partner$ jn respecl to .. · 3. Expiration. of the term or period of existence of c·ap1tal (Cll.(IL CODE, Art. 1863). . - · · the par:tnership (CIVIL CODE, Art .. 1830, par. ·1(a)); · ·· s.~~.stitu.ted.· l.im.Jte.d~pa_rt. ner

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f2#¥¥!fi4UiMR@WWRA@M+SkApS!§@tttit!U !SWM dWMii 3\&\kbh-#1¥3sew+eassan,c tk<9Mii, ,8 ®&'iW~dWi?fiikii@f! . . Note_: In -a.. qeneral partnership, the claims -ot the general -partners · in · respect of capital. enjoy . preference over those in . respect of profits (CIVIL CODE;, Art_.. 1839, par. -2 (c&d)}. .

If.the court findsthat the petitioner has a right tohave the writing executed ·by, a person· who refuses to do . •

Cancellation of. Certificate· or Articles 'of ·, · Partnership · 1. When the partnership is dissolved; or . 2. When all the urnited partners ceased to b_e. such . · (CIVIL CODE, Art. 1864) ..

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1. It shalt order the S.EC where· the certificate _is recorded, to record the cancetlation or amendment .o·f the certificate; and 2: ·. When th.e certificate-is to be amended, It shall .· cause to be filed for record in said office a certified · copy of its decree setting forth. the amendment (CIYII:. CODE, Art .. 1865). . .

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Note: -The approval by. the Commission of the · amendment or cancellation is 'not required (DE; LEOfl/;..supra at ~?2) .. .·.........

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of. a.': qeneral Insanity of· a ·general · .autornatically partner be.ing a judicial' the partnership .9roun.d_ foF: dissolution . (CIVIL~ -. <;OOE, ·, Art. under Art.· J831 of the ·.1860).: .: .. _qvii I-c~de:· it ""'.ill_ ·110~ . · ' automatically dissolve , the-partnership. .. . ~ •. . '

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bu~iness in which the partnership . · .~ · is . enqaqed; or · · . 2. Industrialpartner - in ;- . ANY of. business for . ··himself: .

... Insanity ·- partner.·. dis~olv~

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limited · partner · has <no share.in 'the-management of, a. limited partnership and renders himself liable to partnership creditors as:a-gene~al partner if he takespari in thecontrol of the business.

· Retirement, ·-· -- · death Retirement, death, [nsanity-or insolvency of a insanity or insolvencyof ·limited partner does not a general:· partner dissolve· the partnership dissolves . . . -· •..:, the' for . · his. executor · or partnership. ·administra.tor· shall have the rights of .a limited . partner for the. purpose of']. . selling his estate.

Lil)lited partner's ~bility ·extends:only·t0-Mis·cti"pitaL contribution. . :- : .... ._., __ . .

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Gene(c!I · . partner . 1s pe.rsorn(llly ·· lia.ble . for . 'partnership' :ob'Jigatiifns . ~' after. . exhaustion . of partri~rship asset$' . . :: . . . .. . .. '

(D'ELsON, supra a~ 281-282; R.INEDA, sup'ra a(207.29.8) " . .. .' ... ; '. . . . : ... ·. . ·. :. . . . <. : ... : . ·~

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tlrr1it~d::p~rt\1er>1? not.· pr_op.er .:.. ,:pa'rty, •, .to ·. · proceedirrqs ·.·. · by · · or aga'inst ' a . partnership, · unless; '··-· 1. He. is also a· gen.era I · · partner (his liability is .. !~-·the p,artners not.td the creditors); . ... -2. Where the 'object of . -:' . ·. the proceedinq ,is te' ·. -·::E;inforte :,a ·fi'mhed .: tiartri'er's.rigtit agai~~t .l. : liability .. .to" partnership. . .

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(.CIVIL CODE, :Art. 1868) .. -~· . . · .. ·. ' · · · - . .

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Nosuch ·pro,hibiti~~ in the 1. C~pitalfit partner prohibited · frorn case of. a iirnited partner for' he'. i;. con~iaered"'a ~ngagirig in. a . mere· contributor 't6 .-the business which ls of . the same kind . of partn_ership:

· · Cha~a'ct~ri$tics. of. Agency". Contra'Ct: (PF-· . . ' BORN-CP) . : v,. : ... • · : ._. . · 1 :· · .Erepiratory; .-·. · 2. ·fiduciary;· . . . , · · 3: .§.ilate:ral (but may be unilate.ral); . _·. 4. Qnerous (ge.nerali'y); · · · . -5. ·. BeRr~sehtative. Relati'on; . 6 .. Ncimir:iate; . · · · .· · - 7. ,g,onsensual; arid : . .'~. frincipal (q PARAS, SUPT?/ at 770-771) ..

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Nature of An Agency . It ·is both contract and a representative relation (DE· . CE.ON; supra at 328-~29Yr."

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Distlnct.Characteristlc of a Contract OT Agency 1. -·Repres.entative. Character '- in a contract of. . agency, 'the- agent acts as a representative of the . principal, and not.for himself; · 2. · Derlvative' authority (Id. at 330); and ; 3.
Thus, even one under legal disability (e.g., minor) •. whose contracts are not binding upon hlm..: may act.as an aqent and bind . his principal. But in some ·instances, additional qualifications .rnay exist, the' lack of whic_h · may void a relationship' (e.g., Iawyer to represent in legal. -matters) . .. . . .(Id. at 336J: .. .

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Par.ties the-Contract of Aqency: 1.~ Principal .:.:one whom the aqent represents and. · -~- from whom he .derives authority; . · · 2. Agent - one who acts for and represents another . _·(Id.at 331).. ·.. . . .. ·. ·.

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A principal ·must be capacitated or have a· · legal capacity to enterinto a contract. The aqent's" capacity is· usually immaterial;' he ·qoes not have to possess full 'capacity to act for . himself insofar. as·· third persons are concerned (DE LEON, ·supra et 334-336):

e. Insofar as hisobliqations to his principal are _ : concerned, the 'aqentmust be: competentto · bind himself. The extent to which.an agent is .. a fiduciary and is subjected to duties and 7' liabiliti~s .to his principal d_epends _u.pon, his 1.'V/c1,~(lp._at_336). .. . .

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~~~;x~:~it~!np.~r;~~~ri~y.of·th~pr'~·ci·~~ug~ · .: : ~f.. ·1m~~ge~t-·p~i_0~ip~_r _r~latf?nshi~. the_' fac!hty ?f the-,a~enr. It_ ~na?le~ th~ch~!ty~man~ pe~onal,tY. of. _Hie_- pnnc1p_al. rs ·exten?ed 'A'.h1ch IS naturally limited m ilS\.erc!se by ti& .t.hrcill~\~ f~11ity of the agent. In so doinq, _impositio.ns _.of. fiis . p~:ysiql~~rc_~?,on''cli~ici~s ~0 .tle J~\\ ~ . . t\~ · ~ep_~; b)\ _legal ·fi_ction;- becom~s :~he __ leg_ally · extended_ by· ·pe m1tting/ ~,mf tO' be P.t~c,pal,~'fi!_o'hzed to perform all acts which constructi~ely p_r_e~e~t.in. maoy)!te~ent p~ahrs-c!11~~:,o Jml ,. t~e :1att1f. · woutd_ have_ ~i.m .d~ .. s_u~h a pe.r.form d1v~rse .1und1_cal · a[ts-alJ)d carty on "'fT1.enJ;i :r ...... ~ relc;1t1ons~1~n1,only be eftecte9 ~1tli the 1:l! diff.ereQ~- ~~ti~_ities ..1~rough anol?Jr .y-.ihen ~bys~~ - c!onserit ot,.thel ~ji~~ip_al, wh,ich·.must not, in ~re~ence 1s·.. 1mpo.:3s1ble ~or ~n~~abl a . e :sc1rpe·--: . ..r..-'!J !~ay,Jbe -~ohlpelled_?Y !aw·or by ~ny court time ..(DE LEON, .supra at 33~)?·/"\\ .· ~ : fu"i . ~'i'°'i.'{5jj/nt J,,:JJ.1p{ Serv,~es and . Hqfel · . ·. . . . .. ._ \ V ~~ ~'B,1;p_res~,:,tatWe; v.. CC!urt of Appe-~ls, G.R: · El~merif~·.of,_an ~-g~-~cy:'(Cf the:i;.~rin_cipal,· '1 : • . . . . - . . ' .. . • 1/'{i_t~fri,the ·SQtipe '·or his:'aulhority· ( C_JVIL CODE, b. , It: is. essential, for ? ~ontract of agency· to Art. ·1 ~81), produce _the same legal ·and binding exist; that the, principal 6onsents· th.at the · ,.. . ;;-. effects as .iHh~y' were p~"rsor,ially don_e 'oy the. . · agent-?hall actfor hi~:and ttie'a·ge.nt:aecepts'. ·. princi'pal. .. " .. . . . . ·. ·: .. . aut~oritY..ahd · act~n it (D~ '[EON.,.S.Upra ·. · · ··· at 328r . :_.:Th~~·::~·~;~t ..~tti.~iuii·~.the. ~top-e. ~-~th~;;·ti. .(D~~EON; supra·at 331-332): · · c. Any p~rson or ~r:itity having ju'ridic"I capkcity . . . . . ' ' . arid. capacfty·. to c)Ct" a·rid . not otherw.ise . -- Th~ agent musLc1ct0as .a rep(ese'ritati\te ·and .not- for. d1~_qua!ified, may enter lni~ an agency.-_·. _ himself, and mus~ act within:the scope of his· authority' · {CIVIL G_(}DE, Art. 1881)~ . - :· . . .

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Acts that may be. D_elegated to an Agent. . General Rule: What a man may do in person, he- may· do thru another (DE[.:E_ON, supra·at 337). Exceptions: . 1. _ Personal Acts (e,g., right to vote, making ot a.will) 2: Cnrninal Acts or acts notallowed by law· i[ done. by tlie princjpal (let. at 337), N~te: The relations of an· agent to .. his principal are · fiduciary in character since they are based ·qri trust and confidence (Severino v. Severino, G.R: · No, 1805[{ January 16; 1923}: ... ;

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Knowledge Aqent Is Imputed To 'prJn~i~al Generar Rule:-· The know)edge · or the· age_nt is imputed. to the principal even though the aqentnever , · communicated such knowledge to the· principal (OE· LEON,,supra at 346). · · . .. · · . · . ,~.

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·, N t K · .'. ·I de ' r···th .•... ; . 1· . t be . . t d~. Pr~'p;r;tory.(oAt~act.. . ipal contract.' o e: now e_ ge o e princ1pc) can no e· 1ryiP.~ e . ·· · ... · · -. · ·. · · · . to his· agent (Sunace International Managemf!n . (ld . .ei 350; PARAS, 'supra at177). : · Services, Inc. v. NLRC; .G.R. .No. 16_1757, Janua..ry, . . 25, 2006). . 0

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name ~f The··trustee~~a{~ct . ·· _ his· own name. · . :-•, . . ,,

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Agent . has. authority ·tci, The trustee does not represent the .principal. have.authcilty ~-0 bind the· · , .trustor .. · · · · . ..

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M~Y. or may" not involvea Trust always .' involves property. -.- · f.° control over J:Jr<;>pe_rty. . Bound to ac{~ccorclfng to The buyercan.deal'with . the jnstructions of his the th.irig . as he. pleases • principal. being the ,owner.

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Couched in specific. terms:.

As to its Nat!:,Jre and effects .. a. , Ostensible I representative - agent acts in the.. name and in representation of the principal; • b. · Simple I commission - aqent acts in his· own name but tor.tbeaccount ofthe principal (DE .. LEON, supra at 375). · ·

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'As to ~cithority c~n'fer~~~- -. . .; .a .. Couched I in ..'gene~~~I terms - one-- which ,is· .. created in-qeneral terms and is deemed to -cornprise only- acts of administration (CIVlL C(?DE,. Ari.· 1877); ·r . ' .:

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a. ·When the prineipal. transmits his power of attorney to . the agent: . who· .. receives it withoutany objection; .. .. b. Wheh · the principal entruststo him by letter· . or telegram ·a power of attorney wjth',respec;t · to. the ,qllsihess in 'which' he is·''.hab.itua'lly . engaged as anaqent, and he did not-reply ·to the letter or telegram (CIVIL CQDE, Art. 187)). . Article 18.72 ·applies only when the per.son~ involved ate 'both absent u·nlike in Article ·1871 where they ar~ _both present (PINEDA: supra. at 263) ... '. ; · ,. General Ruf~: Acceptance cannot be implied from -·~.-: silence (CIVIL·. CODE, Art.' 187-2 per. .. 2).. · . ·. .. oftheaqenf . .. · . . ' : .

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Exceptions: . . . . · ~ · ' . . . . 1: 'Principal: -transrnits 'his po'wer -or attorrieyto the ·. . .: .. a§ien't,:who receives.it withoufany objection; . '. . 2. _ Principal entrusts to' hi~ by· lett,er. o.c;tel~gr_aji .'-. power of attorney with respect to the business m .. : wtilchhe ishabitually engaged asan ~gentt arJ,.d .. '
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. Acceptance Between Persons Present Th~. agency . is . impliedly accepted if . the agent · · receives a:··power· of· attorney. from the principal himself personally-without any objection, both being · present'(DELEON, ·supra, at 382):. -, ·· . · .' ·,-. . .· :, . . . . . . . . . . "Pr~sent"- meaning "face lo face" orconversmq.with each .. other through mobile· cellphone (5 PARA.S suprf'l at 787). ·.. ...., · ·, · ;·. · Pqyyer of-Attorney . .. .. It is' an .instrument in w'riting by which one person, as principal, appoints another as his aqent, arid confers upon him th:e a_uthorily to' perform. certain' specified actsor: kinds': bf acts fo behalf of theprincipal (Os LEON, supra'at-382);' . . . . . . . . >._

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Purpose: Not to define the· a·uthority,of the ·a~ent as betweeri,hims~lf and his princip;:31:1:>ut to.eviden'ce the · ~uth9rity the ag·eni tcr lhtr,d, ~arties· 1ith whom the agent dea]s.-(ldl'). · . . ... _ - · · · . . . -: ',• : . . )

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A power' ·atto/~;~. -i~ ·~alid even .tho.ugh··no notary 'riL.Jblic.interv_pne.d·in its ·~~ecu_ti6f1. (Reyes· v. Santi~go, G_R. Nos:r ·47996,:·November. 27, '1975; Ang.~[es v. '( , • •. . • Phil. Nati6nal· ailways, G.R::NQ. )50128;August 31,

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Th~i:pbyier ..of .·~ttdr~.ey{ id P9-.Y~f.~f- atfr>'i-'11.ey-·is- . . : . PJ1d;ori~lly._ ,d~ljver~d..i by ,riol-p~r~:o~ !1Y de.lJy~re.q:: L-'---'-,---,--'-'-'--'-"---1....:.---'-~-'--·"-· ..:.·--:...:....._ ·, • ·..-. the. principal t9·th_e agent There' is-.transm~ssion by · .· . . ' , : •• .l.__': "-. ·• .. riies~~rige_r,· 'Qy' I~tt~r. . P..r.esymj:{tion df Agency _ . ·· · · · · · _, :.::-~· .. . . . ~ ·or.telephone·:.:_ . . : :.:. . .· : ; ... ,: •, G~neral Rule: Agenfy is no!:presurried. · ·. · : :·· : · . . .. .• . . : .. (PINEPA/sup~a· at' 263) ..,:-. : : · .. ,.·. · . ~. . . .. . ,, . : '. ....· . . . ·'. . ·. ( ,·· ..... . ~~-· E~~ept_ions: ·;.. . J • -: • . 1. By .operatfo~ of la·w . ·._ :· . . :- : . · ·Eff~ct·~ /_of s~·~ci~;--. 'in~~~hlation . P~pli.~-Advertise'merit · · . ·. · ·.. · ~ ·. · .' : ·, , . 2: To prevent unjust enrichment (DELEQN, supra ai :}79). _ " .. : · ' , · · .· · ·. .1~ ~er~ori; ;,pe,~ially·'info~rn(~.no.tH~j 9\ sJates: bY. . p4plic::: ad_vertiseh'1e.nf'that h'e:.ha~, giv'~ri a p_ciw!3r of AP..POintment of'Agent'. .. · · ··· .· · · "·· .- .· attorney to. a:third ·person, th~·latterthereby:be'cornes . ··· 11. is'.no.t, essential tti.at,Jh~ ag~nt ~hpuld .. qe clppqinted · a. d,uly. 'authorized ag~.nt, ,n ·.the for.~l3r. case· .with' . . ',. · directly.by the. principal, bur the·app6intme~t may be. - ._respect to . ll')e, per~on who re.ceived the' . sp.ecial: . mad~ through anothe(, as .bY referring ari .i:lPPlicant to i_nf.o'rrriation, ·and Jn the lalfe~ 'case with· regard t9 any ' .; person: . . .. . . ' :·. ' . . : . . ar:_ioth'er and !epresenting ttiat he hc1s .. ai,i'.thority to J1¢t; . or the ;relatipn. 1'11aY:. :aris,e .-~u.t 9f an· agreement tO. : . .· . . ' . ' empiOY.. the. agenf of.' anotner,'._s'uch .perso.n. then .The· pbwer sh!311 tontribute fo.'be.in full force until the· .. · becoming .an agent of t,lie, first party.(DE LEON, .supra notiC$ is rescinded ir. t.he same mar-10·~.f-· in. W,hich it at 378). · ' · · was Qi.yen (CIVIL-CODE; Art. ·1873) .

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Rule on Agency by Estoppel . One who clothes another _with apparent authority as . ·, his agent, and hol~s him out to the pub!ic as suc.h,. .. · . cannot b~ permi~ted to deny the authority ·of such person in good faith, and in ·the hon~st 'belief that he is what he· appears to.be (C.uison v. Court of Appeals,' G.R. No. 88539, October 26, {993).

An ... apparentaqent has Agent . has actual none· the rights of an authority to act on behalf . agent, except where·the of.the principal. · . principal's conduct or representations are such tliat the . '. : aqenf Estoppal to.Deny Aqency . . 'reasonably believed that - 1. Estoppel of agen_t - one. professing to act as . the principal intended agent may be ·estopped to deny aqency .both .. .: him to-act as agent in the . against the· asserted principal c!.Qd _thir.d persons. matter, · · ·

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(OE LEON,.supra. at 3_90-391). As to -agent-·~ if. he .knows .that another Is ' actinq as his ~g·ent and fails.torepudlate his · · acts or. accepts the benefits of them. . · . ·M,an.n~r of Termination :~_r, Rescission of. Agen'cy· b .. As to sub-agent- he must haveknown.or be · The power of-attorney created under.Art. -1873 shall . -charqed with the ·k.no.wledge 'qf the- fact of. continue to. exist ?Inf be effe~tive.. until the notice . · transactionand terms·of agreement between (information cir advertisement) had be'en rescinded in the agent a.ndsub-aqent. . . _ t~e s;:ime 'manner in which Lt._ was giv. en· (PINEDA, Est?ppel _of t_h~rd_ pe_rs~,r:1_s - A th1rcl:- REli.son, . ~67J ., . ... · _· . . . ·· . having·_ dealt with one as .a!')..,a{e~nj:.ay)"be . 'i >,. . .: · . -··. 7 . -· • e~to~p,ed to deny . th~ · agencvas ~g~r;is~fhe~gJACY ~a~ee~ entrusted for t~_e purpose_ of pnnc:1paJ, .~g,ent,. or third perfonsli'rv mterest:"_l=le~~o~1ng 4fti. ,~\ _s~'(c1fied · p.~rsons, its reyoc~tio_n will_ not. however. be eswiped,~trer=6e h·a.s -~!J.Jll_ nQt prejtrd,ce\tne. latter- ,f they were .not given_ withdra":'~ . from the_ ~optra~,facte'-fwith \tWil · " . Q.OJ1c.e_tbe\reo~(CJ"lfL_ffi\ODE, Art. 1921). ·• : · unauthorized ager:it _before rece,v.mg any b_enipfits i'o\ ,. . . . . . . . ..\ '( .thereunder. ·' _ Iii'! ·:·1f-the-ag1nt ha_d·~~~al __ p_o_wer$,.reyoc~tion_.of· the Estoppel. of the gpverAn'ient - the governm"ffnb i ~ r- ag:~ey.d0es not 14>reJucl1ce third p,ersons who acted in . is_·n.~it(i_er e$t?.'pped,;by~ti~-!1l~i!Kc _o.r. e~or_ ohi,the'.-J' ', -'.;:;.°)qg_ct}~it~nnq_.~~?iiu_t}k}_9_w!~~~6 of .the ~ev?c.atio'n·.. : pa~t o_f.1ts agents. Bt~t it.fI1~'.~~e.sto~a\tr[0''0~~~ot,_c~ r~v,.~:c~t_,?nlm.a'n.~~SP?P:e~ of g_e.ner~! affirl'l')atlv~ ,acts .of its- d"[f1pe1~~\ctl~~~il~iil\1~ · ~,X!.~rc~ulat1cwJJ9 .a 1:~ttrpie~t warning .t9 ·.lhir~. perso~s ~1.;upe ur ll 1ei1_ aL1 ~liority f~'.FO( ,l:~(f.jW.1 Art. 1 a.

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_A~e·n~~- by'.E~o~p-;1 v i\s~~cy,. Sbz~,"1:t~;~~e;t:r~r~~~q{et~0on~;:t~i;g%i1tt{¢ :~-~~~~~:. , : .. : .. , , . --~.-·- ' \· ...-t, : :.- . ·-: ·: :.'."'~~~e!uaµ~Q~~g~tne~efor.;·otherwise, bad fa_ith_ and_ , •. , , ••. ., • ,. ~~~\.~~e.or:nrn1tted (PF; /:.EON,. supra.at:38]).··· .

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_Shoul~· b~ -r~str1ct~l fo To .... be' ·.p'rbved: fr;;;----s~~I~, effectiye ·a§ainst -::ill .persons h~vfrig actual .C~Se$ where' ai.Jt_ti6rity)s d'eiuc\i9ns.-9r infereiice_s . ·.. _knowl~9ge t_hereo!, (5 PA.~AS, suprc3 at/?9) .. not rec!I but 'app.arerit/ - ·. ,. from othe~ fact's.- . . . . ' ..... ·. ·. . . . : " : . . '. · · - • . • . k, · · -. . .. Agency for Compeh_sation·.;~ , . :·;. . : . . Gen«:?raf'- Rule:. Agency . is: 'p,res.umed to b·e: for co~·per:isation (.CfYIL (;ODE, _Art: 1~7..5). · · . ·· · ,.· :

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,Th~re is ~o ~ge_~cy aJ all,. There i? a9tual agency._ . · . but _th.e o_ne assumin·g to The ··Principal' a'ion'e ·is act . as. age11t ··.. ·tias liable ... ., ' . · . ·. . .-_ .. . 1 , '· appare.nt_ · or ostensible · · .. aithough _., not .· real: authority' . to· represent another. : ·

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Necessjty of Cor:np.ensatio·n .· The /Ellation 0f p,_i~dp?(9nd ~gen(_ca~ tie created . -althOUQh .. _th~ agent receivrs nq _c;;omper\s'ati9n (DE LEON, supra·at 397)'. · · · · · · . . ... . ~ . . ;.' . . ..... •,· }

Grati5ito·ys~AgEfnF ' · · person \vho agre~s. act as :an ag·ent without . : . c~n:iP~~-s'ation.' The promi~e c,l a gr.atu'itous agent..is ~rdinanly not e·nforceabl.e but th_e fact that he:is such has no effect_"· upon· hi_s · rights: and:. duties ,;..,ith reference to· the pri.ncipa_l ·· and third . perso(1s.

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, However, the fact · that· . the agency was for compensation or not, shall be considered by.the court in deterrnininq the extent' of liability of agent for fraud· or negligence· {Id.}. · Liability of Principal·to Pay Compensation 1. Amount - the principal must pay the· aqent the compensation aqreed- upon, or.. the reasonable value of the aqent's services. if no. compensation was ·specified {Id.).· · · · : ·2. Compliance by .9gent with his obligations - the 'liablllty . of. the. principal "to pay · 'commission presupposes that tlie agent has complied with his obliqation as such to the principal {Id. a(398). !

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to .cornrnission for unsuccessful efforts. Even if the broker is . responsible for making·. the. owner: and. the possible buyer· to meet and 'discuss the terms. if no sale was consummated, he is not entitled to a commission (Id.): . ' ' .

3. · Procurinq Cause· of the transaction ....:,_Governing ~Ul(:1. The agent must prove:that he was.the gufding. cause or the "procuring cause" (DE; l.!.WN, supra. 400).. . : .:j

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. _A. cause · o~igin~~ng ~ seri~~· ?f .events'~ "."hich, · without ·,br,eak in their: r.oritinu1ty, r.es. 1lt in-Jhe , accomplishment of the prilne 09jectiv~ ofl'the · employment of the broi.::e, .... p oduclng ,a . purchaser. r~.9dy, willing. and able t_cj·.bu"1 on fhe owner's terms (Id.). . · . · . . : 'J .

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authority. ·A general agent is one authorized to do all . acts pertaining 10 a-business of a· certain kind or at a particular place, or all acts pertaining to a business of a particular class or. series. He has'usuany authority either expressly conferred in "general 'terms or in effect ·made. general by · the usages, · custom's or nature of the business which he is authorized . to transact. An agent, therefore, who is empowered to transact all the business of_his pr_i_n~iP.al t>.f a p;::irti_cular kind or in a particular. place, would, for thi_s reason, be ordinarily c;leemed a genera! ~gent. A special ager\t is · one authorized ·to -do-some partic\.)lar act. or to ·act upon -so{!le particular occasi9n.-lie a'cts usually. in accoraance with · spe.cific · instruciiolis · or under limitations neyessari!y implied from tt)e-nature of.-the act to be done (Siasat' v: lAC, G.R. No: L-67889, October 10, 1985):' · · · Classes; and'Kinds of Age~ts 1. Unive.rsal Agent - one employed t9 do all acts .that the: principal· mpy perso.n~IIY, do, and whlch he can lawfully,:delegate to 9nothedhe powerof . doing (D'E LEON, supra at 407) .. Genera1,J.\gent - one employed to- trarisact- all Uie bu~iness of.the principal., or all the business ofa particqlar kind or in a. particu_lar place, qr in oth~r ·~~rd~ to do _all. aqts, ~onnected witl:i a particular rade, bus1.ness or employment {Id:. at '4Q8). . . . . Special 9n Paiiicula_r Ager:i~.:.. ohe ·auth_orized·to act in one or mtre specific transactions, or. to do . "" i-i~,,nr1:.,;Jnqr.e, . ,§f1Cific, acJ?•. to· ~ct upon 'a.. particuJa oc..cas1on (Id: at 408).

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broker us·u.ally.authorized to.do Authorized to. do :only all acts· co.rinec:Jed ":"lth a·~ts · in · pursu.~mce ·of · the . . ·business .. , ... · or ·particular instr\Jctions or employrher;it. fri ·which he ·with\ ·restrictions is epgaged. . . necessarily irriplied from . . the acts' to be' done.·~ ..

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4. · Evasio~ ~o~missio~ in-b~d·faith 5. :cornpensation-co·ntingeAt on profits · 6. · Reduction by principal of overprice . 7. Fermination ofaqency contract . . .. . 8. G.rant o.f compensation on equitable ground : 9. Right of agent's companionto compensation· ·10. Validity of exclusive sales agency aqreernent (ld .. !]t 101-403). . . . . . An aqency is either general .or special. The former· -'. . :- . ·qom'prises all the business of the principal. The latter, · ·. · oneor.rnorespecitic transactions (CIVIL CODE; Art. . 187_6).· . . Ari agent may 'be (1) universal: (2) gen.eral, or (3) special. A universal; agent Is one.authorized todo all . acts for his prlnclpa: which can lawfully be deleqated to an agent. So far a? such _a condition is possible, .. such. an agent may be said to have universal

Bin.ds. hLs Ptincipc:il. by an act' within the scope· of his authority al~hough jt may be contrary to his· special· ins.tnJctions. . . . .

Cannot bind· his p~in~ipal in· a miinner bf::}yor:id .. or outside the specific acts which he is.a'uthorized to per:form' o~' behalf. of the principal. ·

Condwcts . a __series. of Usually involves:a 'single trarisactions , .involving·· a transa9tidn. o.r a series· of continuity _of service. tra·nsactions not involving continuity.

2019 SAN SEDA LAW CENTRALIZED BAR OPERA Tl9NS

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Article 1876 to' 'Article 1··878). Specifically, the apparent authority of Atty. Parulan.. being ·a special aqency, .was limited to. the. sale of the property in question, · and . did -not include or extend· to the power to administer the property. (Sos. Aggf}bao 'v. Parulan, G.R. No. 165803, · September 01, 2010). <. · ·

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. _st·ateme.nt .· cit" principal Aut~o"r:·ity. of agent rriust . with . respect. to .. th·e be strictly pursued, aqent's authority would ordinarily be regarded as . advis?rY:6nl_y. ·: . 2. Apparent authority does not terrninale.by the mere revocation pf his authority without noticeto the third party. .'

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.: r~vocation · is . effective to terminate the authority as to third persons '.. because the third: person has aduty ~o in9-~ire_._ ·

Couched in specific terms under special power of · attorney (CIVIL. CODE, Art. 1878). .

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Instances Wh.ere .SPA Is Necessary (CIVIL:CODE, Art. 1878): .(PECWEM-LlB-BOCARO). · · ·1. To make.Payments are not usualtyconsiderec as actsofadminlstratlon:

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To .Q.omproinise, submit questions to arbitration, renounce the 1rigJ1t "to .gr:i"p~al. from -a 1udgi:nent, . . -~?hte -objections · to .trie .venue-of an- action or . '. ~tianqon·-.·~ a . pr~·script\on.' '"alre.a~·y · ·a~q"t}ired

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No.te: The a·bsence of- an ·SPA _does n~t me.an that the com·promise' agreement is void_ for it is' . merely. une_nforceal;,te ·(Dungo ·v. Lopena, G.R. · No. L-18377, De'ceinber. 2·9;· 1962). · · · ' . . -. . . .. :.. ~ .. ( . . . ', . An .agent cannot waive: th~. righJ to ·.~pp_eal from a judgment; ._obJe<;:tioh~ tolhe veriue 'of an ac,ti~n; prescription, alreai::ly · ·acquired· by .the principal· (PINEDA, 'supra at-293). . . . 4:· '

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, " . .- . : ·, . \. Thi.s _is condonation or _remission .(CIVIL ~~DE,·. · Art. 1270),. The ·agent cannot: w~ii/e ;grigbt belonqinq to the prihcipal without cbnsi,deration · (QELEON, supta at 421).. . .

·. E~pres~.'con~ona.;l;~ ;hall-comp~;with fhe.fqrms « -.o(~_onation (,C/VI~ (;ODE, AJ;J;,1':270):ifhe,waiver ,, .. .. is "' _act.of ~wnertip

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confer'the right upon i3n.·agent to sell real estate.·.·. When there· is any reasonable· doubt that the _ lai;igu~ge SQ used conveys SUJ;:h 'power; no s_uch construction :shall · be.· given the document . ~- (Yoshizaki v. Joy_ Training Ceriter Aurora, Inc., r G.R. No. 17..4978; July 31, 2013).· .·

co~pro~ise It is a cont(act whereb_y the parties,' by, making reciprocal cor:icessions,, avoid .a .litigation or put an end to·one already'co·mmer:iced (CIVIL CODE, Art, 2028).

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· Absence .of Written Authority ! . -_It h'as been repea\edly l')eid'that(he absence of a written authority to.sell a piece of land is ipso jure, void·, precisely to· protect the'~ ii,terest of. an un~uspecting owner from being prejudice<,l by the ' unwa·rranted·: act of anothe( (Pahud v. _9A, G.R. · · · No.· . 160346, August 25, _200,9). · · ,; . ~ ,To Make gift~. exe'ept cu"st'omary on~s fo( 9harity ·, .. ; . 'qr tflose made to "employees, in the _business · managed by th~ agent;·_. . . G~rieral Rul~: Gifts are donations: A donation i~ · an act-of liberality whereby a per?on disposes of . :a thing or·right.in favor of.another who-acc~pts it. · It 'is. c!n act of ownership. Hence ·a sp\')cial power . of attorney is· necessary. ·' · · · .. ' Exception: Gifts which ~re· customaryfor charity' .. or give_~ to employees in thebusiness managed. ·. by ~M·agent '(PINE,DA, s'upra.af297). ·. .

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_ To · .!;nter into any . contr~~1.ch ifthe_ · _own~rship ._of_ an Jm.~_oyable is tr:3n~mittec;1 . .,.d'r '', ·· · acquired either gratuitously or f~a aluable · · cons_i~_.e:rat_io_ n_ '. .· .. _ : . ·. . ·• __. _ · ·.. :... _ .. ·

,Wha. is.JDyoLv.ed.here is onlymoney.Tbe aijenf . mayhave ·ih his 'possession f~nds or: money.of · · his principal. He.rnay lend thls-rnoney to third ·.>\. person~ He ;rryay .~b~se .the act ot""loanjng. A ,....gr..:. ... ...,-_ ........ --.....s•r:>eeial power- of attorney is necessary tocontrol . ;_ .. · _ .The co~veyance of an immovable] r(heth~r for. a 'this act as 'the principa]: will be placed at .' ·: · · valuable consideration .or g_rafuitousl~is· ar:i -act dtsadvantaqe'jf there is 'no- limit to the discretion, ' .. · of ownership, · not.. an - act: 'of .13dn1iifistration .. · -~ of the agent· If-· the aqent, loans money without ·: : ~p-~ci~I rfower. o(attc,rney· is· 'n·eed_~d to v~·lidly _":·, ... ·.SPA,. the loa·n_ wili ·no~·be:bl~ding l9_ the p_rincipa~ effect _such conveyances (PINEDA, supra at . ·. · . . (PINEDA, .s.upra atv297): . ·:-. , 2951· . ' . : . . · . v . . . . . ·, :T~-~.m-er~ ,act of\he p.riri~_;pal' of,giyin~~~r;-signe~

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. - .... Nc;ite: T_he. a~tho(i(y. of.-c1f) ,~gent.)o ~xecute 9 · che.cks to. the agent is'not 'e.LithPiityfor:the ag~nt cont(act_ of sale oheal estate,must'oe con{.~rr.ed ·· · ·. .· · t6._'16an i'n ·the_ nam·e of.' the prihdpal;: In Jhe '· in-. wri_ting· and rl')USt- give .him. specific·, authority,. . ,. . . · .. abs_en'ce of any a.uthorizatio.iJ:. G_utierrez COUIQ riclt ' . either. to conduct _the general bu'siness bf the .. ' er:iter- -into a. contract loan in behalf. of the principa'I. or : to ·-,execl.)te a· · Binding 'contract ., ,, ·. · petitidner (P.atrimonio V; · Gut(¢rrez, ·. G8. ·: No_ containing terms· ~nd. conditions -whii;;ti-a~e.in the._ ·, ·· 18_1769, Jµne 04, 2014).·· .· · · · · · · · cqntracr he. did .~exec\_Jte} .(9osm.ic ~Lumq·er. . ' . . .: · --G_9rp9ratio(i.V CA; .G.R. No .. 11,4311, Noi/em/3<;r · . The. same. ···principle _ap.plies .to'. the· :aqt of, 29, 1996). . ·,. ~ · · ·. -.. · _·. . .b9rrowing money.-, \iYi.thou.t .?··SPA, "the· age.nt .. _ .. . . cannot· lend··ot borrow:.moriey ·1n .behalf. of. the .The speqial·.p_ower attorney m"andated, by law .· . '. ·p~1ncipal (Rural B~(Jk .Caloocan ·,¢.4,. G.R. · must_ be one that- expressly m.eotions. a sale.or -~ . No. L-32116, :April 21, 19EJ1 ). :that iriGlu.des a .sale as a ne'ces~ary ingredient of , . ·· Jhe .p'o~er:· to. borrow' fTIOfl~Y ~n~··o(tho~e the' ·authorized act, A· special · pewer of attorney case:5 wher~. corporate· office~s as ag.ents-qf_ the must express the ·pov(ers of. the agent .in clear . corporc=;1tion neecl · ~ · specjal··power .of· a.ttom·e_y. ·. and unmistakable· 1ariguage for th'e. p,rincipa_1 ·to.

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11. To Qbligate the principal ·as guarantor .or'su.rety;

. Therefore, there was no bas\s t9 . hold the corporation liable since there was no authority given to borrow money (Yasuma v. Heirs of de · Vil~a, GR. No. 150~50, August 22, 2006/ ·

B.y the. contract 'of guaranty., the. guarantor binds him·self to the' creditor to .fulfill Jhe obligation of the principal debtor in case the latter should'fail to do so (.CIVIL c.ODE, Art. 2047). A tontrc!Ct <;>f .guaranty is unenforceable-unless it is ·made in writing (CIVIL. CODE, Art. 1403 par. 2(b)). ,This i.s . an ac!. of owner.ship becaus~ to fuifill the obligatio,:i, there may 5e a need to pay in cash or : property (PINEDA, supra a( 299). · ·

The rule is that the 'i1Qent cann·ot borrow money' :with.out. a . SPA except· when the funds are necessary and indispensable for the preservation of the. property being administered by the said agent'(PINEDA, supra a(f97). · 8.

To .. Lease any real property to another person for . ·more than one year; The· special power, of .attomey is necessary -because .. a. lease for more than one · ( 1) year creates. a. real ·right. To: bind the principal, !he agent must- be possessed· o'L:a-~pecial 'power (PINEDA,'supra 298). : · . ·

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1(1 suretyship, the surety' binds himself solidarily .with the principal debtor.The creditor-canmake the surety personally liable. for the debt· of. the . principal debtor' . - .. (Trade · end: · investment Development Corp. of ttie Phil .v .• Asia Paces Corp.; G.R.· Nq_:. ·181403, .February :12, ·201~)a . This.is.an act of strict ownership (PINEDA, supra

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-~rincipal is the. lesz·o ··~d, n~t the"~~ .. A_n agtrni~c-~nrfot ~;eate real rights (i.e. ~~ufruc( .' . · . · · _. · . ~/ '·{ Jf' ~ .IA\ mortgage, \~nt~{Y· easement 'etc.) ·ove( the: imn:o}ab.le of' his. principal without. _a The requirement of .spec~power orattomef.' ,·. sp·ecial power ,of attorn~y .. This is an act of strict extends to- renewal or Jxterisi.ot of lease of:'[eal'.::, ; ~ t.......,1/rownefship. yt,itnruple_r~ason, an ~gent cannot ·property':to another (DEUL:EbN, supra J\?5)4'~illf~.'lii co'nvh::_am~:r.~al_~,g~ts. B.o.t~-a:cts con~titute acfs . ;::Ll:... of s{r~IG:_ wnersh1p1 special pow~r .,s· .needed Note: The lease here does no refe~0 lease o ~ · · J,,..;f .. · · · r~a1· property ,r~m-anoth~rrptrJon ·an~(o);~ase perso:c"I pro~erly.(ld.J \ \ ·. cept oneppd,ate an;nheq]ence: •. , 0• 9. -To J!m<j" the. pnnc1pa,I to re~ei ~e, ~y ;>erson ·hal.ng. the free disposal. of· hos . wit.h.out comp~n~ati?n_; · ' . ·jX~til~p}>J1ert~·maXia;ccept-or repu~icj_te ~n inherJta·n~~ ··.. . ... : ·. . . -.· ./. O~(QJ.111~'?fjJ.f;)E,0A_rt.: 1044). "(hr~ act 1s1one of.strict ,... . Whll.e th~ ag·e~t· may : ag_re~ to · .1 J\~dd)~( tie_~i::e,.'·the .: neces'sity .9f ~ ,special .. · serv,c~ w1t~out ~om~~~sallpn; he Gannot"-~?t lV.lD-au.1horrty·(DE_[E.ON, supra _at 427), .· _ , author.rty.,bmd' hrs prlhc1pal to·do so, u.nless he 1~ ·· · ·. · .. ! . .. . gi:-'eC1.' a· speQia1·.- power: ··to,-t~a_t ·effect'. This· is . ·. 14. Tei ._8atify or. .re.cognize obl_igatio'ris contracted · - tantamount t(). bind:him,to render se.rvice without· before the.agency·; · comp~risatioh .. This· invcilurita:ry servitude An. ag-ent cannot effect ·novation-'of obligations (PIN_EDt,;;· supr5!-·at 298). .;··::.~·.:· ·. ·.·:.. .... :_ ":-''· .. ··· . ... . :·. .... exi9tini:i°. a( .th!;!, !irne:. oPhe constitutio~ of: the . ' .. ag~ncy unle$S he":be,'spedally ·authdrjzed fo do· . 10, ~, To ·§ind u,e· principal in·a ton• • tract of partnership;. I . , • • • .. · ... Also,, the :.agenh:::annot..:·ratify or reco~nize · . . '(?y· th~ ~9ntract,d{partri~/-~h';p, fhe 'p~_rine'rs· bii:l.d . . . 'ob,ligations.co:}tract~d·bef~i-e the agency y/itho"ut . . therriseives . to . contribute· mor:ie'y, 'property or .. . special power qf a.tt0mey (ld:J.: · :.. industry to ccimrnon fund .with the· infention of .. ,.divii::ling·. th~ pro'fits '·amo6g.: thim'selve~ (CIVIL. 1 .-, .. 15;-An'y Other act of,stfict doniiril6f(:.... . . ··. ',. :, .,:.. . I CODE, . Art: .. 1767).i Tti~: cqn_tract. of p,art.nership .. . . lricl~ded. in :the· gen.era! provisibr:,s ·are ~II ac(s ~f . thus: ·creates·· obligations the fulfillment of. which· . . strict .dominion nof mentioned 'in the first cases ·:re~·uires an· act. of strict' OWrl~rs.hip. (OE LEON,-. ·eil~rr\erated'. in: 'the article. (PINEDA;. Sl.!pra at supr~ af.425). · ,· 300):· ·· · · · ·· _...(Id..}.·

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Note: A third person with whom the ·agent wishes to con.tract on behalf of the principal may ~equire the presentation of the power of · attorri~y or the instructions a? ·regards the agency. Private o·r secret orders and instructions of the principal do not prejudice third persons who have ·relied· upon the power of attorney or.instructions shown them (_CIVIL CODE, Art. 1902).- · . SPA Under Art. 1878 Need Not be in Writing · As long as the mandate is express, such· authority may be' either oral ot written. In um· Pin v. Liao Tian, et al., the requirement under Article 1878 of the Ciyil Code refers-to the nature of the authorization and not . to its form. Be that as it may, .the authority most pe '. dyly .· established by competent and convinci_ng ' eviden~e other. than. the self s~rving .as_se.rtion of the party c(aiming that sucli authority was verbally giv.en, thus: The req!Jirements of a special powe_r of attorney in Article 1878 of the Civil Code ·and of ·a special authority in Rule 1,38 of the·Rules of Court refer to the nature of the authorization and not its form. The requirements are met if there is a clear manda.te frqmf the_ principal specifically authorizing the ·performa,rice of the act (Patrimohio Ii. Gutierrez, G.R. No. 1871769 June 04, i014). · · · "

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Scope ·of Authority to S~II · SPA to·sell excludes the power to mortgage; and vice versa (CIVI[ CODE, Art. 1879). Tli~· ·power .or authority to- sell by virtue of th·e e·xtrajudi_5::ial foreclosure .of the REM could not be necessarily implied from . the t~xt · of paragraph,'·expressing the petitioners' agre!;!ment to the extrajudicial foreclosure (Baysa' v. Planti/la, G.R. No. 159?71, July 13, 2015). _.,, Scope 'of Power to 'Cornpromlse Aspecial power of attorney to compromise does not authorize submission to arbitration {CIVIL CODE.-Art. ,1880). . Rea~-on: A. special p·ower to compromise does not authorize submission-to arbitration because while the principal may 'have the .trust and confidence in the judgment of .his .agent, he may nothave the same trust and confidence on the designate' arbitrators .· {PINEDA, SU(jt:a at 301), _To autnorize · a, person .to .subrnlt the principal's transactions in .question to arbitration, theremust be a..,.sRecial _power· of attorney to that effect. {CIVIL COQE, 'Art. -1878, per. 3): Thus 'if the principal' has desiqnated y,e~ames of the-arbitrators to 'arbitrate, the ,agent cal'.l~_ot submit the matter in controversy to the .other arbit~ators (Cox v. Fay 54 Vt. 446). If there · is.no d.e~iefn~tion, the ager_! may submit the matter in. question to any aFb,itrator (PINEDA, supre at 302). ·

Special Pow~~s of Attorney . . .. ., Even if a document. is titled as a general power- of · attorney, the requirement of a _special power of . attorney is metif _ther~ is clear rriand~te from the · principal specifically authori?:ing•the'.:p_elformance oflhe a?t There "':'as no need_~o execute ..a sep~rat~np, Wh~n a P,ri11gp_a1 i.s· Bound by-Act of th'e Ag·e~t: special power of attorney smce tn,._eg_fil)eralJiower,of_ · 1. :Age11t mustact within the-scope of Mis authority .. . . attorney . had expressly . authorized, the. agent.· or: (CfVICGODE, Art. -1881); and. . · att9rney in 'tact., the power . to sell the subject . Agent must act in behalf of the principal· (DE · · property. The special. power of attorney,__can )5.e ......----h,·EGN, s_upra at 4.39). · . -mcluded in the general power when it 'is specified · therein the. act ortransacflon. for. whlch the special Note: The limits _of the· agent's authority .sttall not be. . power is required (Bravo-Guerrero v. Bravo, G.R.'No. considered exceeded should it riavebeen performed 152~58, July 29.- 2005):. · · · · in a manner more advanfaqeous to· the principal.lhan thatspecifled by him {CJIVI~ CQDE,-AT!- 1882). Effect of Lack of $PA.Where _O'ne Is Required It is unenforceable' (CIVIL· CODE,:Art. · 1403). Authority ., . ·.' ' It is th.e power of the agent to aff~~t the legal relations .. . Scop~ of Agent's Autbority .. -. . . ' of the principal 09 .acts done iri accordance with ihe The _sc~pe of_the· a_gent's ai.Jthorhy fs' what appear~ iri principal's -rnannestauon . of consent to .hirn -ro_E the written terms of the power of ~tto'rney. While-third· .. LEON, supra· at 433).. · · ·pers6~s are bound to il'lquire iriio the exte·nt or.sc9pe · of the agent's ~uthority, thef are n·ot required to- go Note: Authority may be consici"~red as the sou·r~e ~r . beyond the· terms of the written power of· attorney. · ca.~?e, ~hile power is the ·eff~~t {Id.). · -. . T)lird· persc;ms car:inot be ·adversely -affected t;>y _an. · understanding between the Rrincipal and his 'agent as Authority po~sessed' <. . . . t~. the limitl:(bf the latter's c!Ut~~rity. ]n the s'ame way, 1. Actual Authori~y- may b·e expr.ess or implied;. th({ third persons need -not concern themselves with · · principal is bound by the acts of the· agent"on ·his . instructions given by t~e principal to his agent outside behalf {Id. at 439); or·· .' _the written e_ower.of attorney (Sire,dy Enterprises, Inc. 2. Apparer/'Authority_ -·The.doctrine ··of appaient v. ·court of _Appeals; e.t al. ·G.R. ·. Nb. 129039, authority provides tl}1:1t. even if no -actual authority September 17, 2002). has been conferr~d o~ an agent, _his or her ..icts, as long as. they a_re withfn ·his o"r he~. app~rent

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scope of authority, bind the principal. However, the principal's ·liability is limited to third persons who are reasonably lep to believe that the agent was authorized lo act for the principal due lo the principal's . conduct (Calubad . v.. Ricarcen ,

Illustration - Exception: P authorized A to sell his (P's) car. A then sold the car in his (A's) own name, without' disclosing who the principal was. Ordinarily, the agent can ·only have recourse against the buyer, and the buyer can have recourse onlyaqainst the agent under Article 1883. However, in this particular case, since the car belonqed lo the principal, · P can have recourse aqainst the buyer and the buyer can have recourse against a·gef'!t P(ld.) .

Development Corp., G.R: 'No. 202364, August 30, 2017).· .·

., Illustration:

Irr his 01-:-m namev-, apply, Article 1883; generally not bi!)dlng 'on':the,principal;\:agent and stranger are the only parties, e)ccept regarding thinqs belonqinq to the princjpal pr when the 'principal ratifies the contract or .. _derives benefit . . .. . . therefrom. . . ·. b.

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If P. authorized A to°Ji.n9 for him (P) a singing enqaqernent <;1t the Manila. Grand. 'Opera House, and A acts in his-own (A's) behalf, that is, A wanted to sing and _he got the· job, only A and the Opera House would be ·bound to each other, · > · ·

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... f.).~ith9ut·al!thori\y from P. and representing . himself. to.be the owner 9f P's car, soldit to a . , buyer. , Here: A acted . without·. authority. 'Moreover/ he' acted 'in his. own behalf. It is . clear that 'the· -transaction . (sale) 'is . valid . provided. tt}a~ at, the) time delivery is to be .. . made.' the "agen.t"'.~ari transfer legally the ownershlp of the thing. Otherwise, he Will be· he.Id liable for breach .of war'ranty against evictlon .... lt~is.al~o..clear.J.bat. only A is liable, to- . .an innocent purchaser. Here, Article: 1883 does pot · apply ' because· Article· t883 · presupposes authority {ld.1a( 812). . .

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Doctrine ot'Agency by Necessity _ - If ther~ _is an ~mergericy to meet, the authority of ~he·· agent· is expanded to cover the exigendes -of the moment. · · · ·

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Req.uisites: (ERICA) 1. _The) real existence of"an smergency; 2. !nability the agent to com_munic;:ate with the principal;· ·r . ·' 3. Exercise· of the _ additional .Authority for the principai;s.- O\Nn protectiq~·; · · 4. . The c;1doption. of ·faifly Beasonc;1bl~ ·rreans, premises du_ly considered; an_d·'· . . . . .. I ' . . · 5. - · The .Q_easing of the autt10rity the mqment the . emergency'. no longer _aei:nands · .. the . sam~

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and Valid (CIYIL · (CIVIL CO,PE, ., Art. C.QQE,. - _Art._ 1883)• . . · . J~9!)._ ·: ·--<··· .

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Note: Strictly_speaking, agen.cy can never be created by necessity; what is 'created 'is additional authority in an 'agent appointed · and authorized before the - emergency arqse-(5 PARA~, .supra-pt-819).~ \ . ,.;·. ·.Lim.it 'of Authority' N-of Deemed' Exceeded · . t' . . . . . . .. . TfW limits, of the. agent's autpority sha_ll not· be · . considered exceeded' should It.have beerf performed . in arnanner advantaqeous.to. the priricipal that

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,Age11cY witf-1 an U dlsclosed Prlnclpal . _ _. -_General Rule. AgenUs:dir~G'.tiy liable t_o the person .will) ··w~om h~0ntract~q: as "if.the 'transaction ~Vvere his own. .. -. :, :· ·-'--- _ -; _. _ - __ , . , , , ..•.

- -. .' ·~~t~! ·lt'th E{ ~ar:ty with .whom_"th~ agenf,c~_n\tactea is" . . aware' of the _!~its. otthe pow~rs granted the. ' ,-princip~I. (in bad faith),.fhe contract is Void; of~rv.tite (in 990<:!._faith'), the contract-is unenforceable · (CIVIL 0

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Q~casio_ns. Wh~n ·~i"ln~ip~i' Is _Bound 6y Jhe--A~ts · ·, ·.of_ t!')_e :Ag~nf b~y~n.d Jhe· Latter's Powers;· (De- , liBRa):, · . ,,· t._· Where: the .principal's _acts have: contributed to .Deceive-third person:s; . - - ' .... :. - 2. Wh~re the Limitqtions_ up"o~. t~e pqv.,,er crec:ited QY him . coulq . riot. have 'been. known-" l)i the third. _ ·person· . . ,. ·. . . . , ,. 3 .. - Wher~·_' the p~incip~nia·~- placed in the fia·~ci"s. of ·. · the agent ins"truments sigQed by' .-hi~' in Blank _ JStrong v. ,Repid~, ~.R .. tyo. L-°7,15{ February21,

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. ~- · W_h.e.re. the' p,rincipal ha_s. Ratifi~d "the. acts of the _. .ag.eht (DE.LEON_, ._supra at.44_2}. · _ ·

-Ex~epti~n: Confra~t th~J i~volves-thi_rig's b~-lo_ngin~ to . the principa (CIVIL CODE,-Art. _1883,-par. 2). · ~ -. :·" Ary._ j ~83. pert?i~s Jo .the ·<1st· of an .-a~ent. who- js _.· .· .a~th~r:'~~d.--b,ut .m.ste~d of .acun·g_-·in beh9.lf. of' the · ··_ pnnc1pa1:. ~e acts 1~. his o~.n _ !;>~half .. Art. ·1~88_3 _do_e_s not applyif the aqentwas unauthorized or he.actsin exc.¢ss ~Jof his -autliqrity' (~ _PARAS,_ supra .~t ag2~-

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Undisclqs~d-P·rirtc"ipal .. , · _ Is 01-re whom tbe other p·arty de~ling with:the ·agent ·ha~ _no notice -of the f_act_th·a.t_ tl')e. ~aid.i3gent. is acting fo'. ~ principal (PINEDA! supra·'at 308).· ' - ·-- - . . .. ·-. . . . : . . ·. ·'. . . . --(- . . ; -_ :· :· ·' .. · Rea~on:. To - protect tQ(r~ persons. against possible ' coll us.ion bet~e~n- the agent"' a·nd· the principal.: It .applies only when · the agent' ha.s·, in fact been autho:ized by jh-~ princip~l~t_o e,nfer in"to.'the·pa'rticular . tran~aclion_, but t_ti6 a·gent, instead' cqntra:cting Jor . anq. 1_n1. be~alf o.f the princ_ipal; acts- in his owri_ name·

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PAR.TNE_RSHIP AND AGENCY SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

·1

OBLIGATIONS OF THE AGENT

agent or sub-contractor (British· Airways v. CA, G.f:. No .. 121824, Jsnusry 29, 1998) ..

.1. 3.

General Obligations of an Agent to Principal (ObAE) 1. To Obey all lawful orders and instructions of. principal within the scope of the agency (Duty of Obedience) 2.· To ~ct .with utmost good faith and loyalty for furtherance of principal's interests ·(Duty of Loyalty); and 3. To §xercise reasonable care, skill and diligence · (Dul}! pf D_ilige_nce) (DE LEON, supra 'et 453-455).

To finish the business already begun on 'tne death of the principal should delay entail danger (CI_VIL CODE, Art. 1884);

4.

any

To Qbs~rve diligence of a good father of a family irr the· custody and. preservation of the goods forwarded to him by the owner · in case he declines an agency until an agent is appointed (CIVIL CODE, Art. __1885);

General Rule: When. a person declines the offer to make him an agent, gener-ally, no contract of agency arises and thereby; no obligation is assumed by such person-to the offererbased ori _ the ~bsence of privity. ·· · . . .. E ceptio_n: Art. 1885 provides for an. exception ~ ls ~w~en the offeree, in spite ?f his ~efusal to .1-' 'V~j,c~.P.t- ""-t~ ~ppointm~nt, assumes certain . hab1ll~e~VILLA"{UEVA, supr?. a.t 129).

Specific Obligations of 'an Agent to Principal: ·(CAFOA-~ALAR-'-PAID-BIR) · : . ·. 1.. To farry out the agency which he has accepted (CIVIL CODE, Art. 1884); . ,The provision is clear that an ager;,t.is b9und toU carry out t~e. ~gency. The re_latio~hiR \Xis ting .. be~ween_ pnnc1p~I. and agent 1s;i fia~ia[Y one, ?emanding conditions of tru~fand·co~_ficfence~ltll, ~ .~ rs the duty of theaqent to ac io_g~ faith4or°the ""' . • rhe.cThty,or c~e over g_oods qiven to his.custody . advancement of the interl~ts '-v'th{ principal.1j'ti 1{ can ~nly c~'~i.r..\:i 're~sonable pe_r(od" .because thiscase, BPI ha~ the,._obl)gatio'}(o carh·o6t the ,r,{""-">- , th~ I~("' prov,afs trat the_ow_r:ier·s~all as soon as . agency by . informing / !h~~eneficiary.-'-'.'ho.iW( _gr;.act1pbl~ e !lier ~ppoint an agent or take ~ppeared before BPI to ,w1tqdraw.-(unds oJ!;\he-;;-j II ,,....rJJJ3PargJe of the ~oods_,~l_d.). · insuredwho-was BPl's·de~tf:ir. not o~yof&iLL"\r..: . ~ · ·~;<J~tence o. ~ the insurar:ic~1t~~ct··bt .. ·a1s_o _th~':.~llill~P· To..~.J.a~ce. t,pe neFissary funds ~tio.uld t.here be. ~.ccon:ip~nym~ ·t_errns, a';.ct.f.:~ondil~1\ ohth ., .~n/t~~..5/0 {CIVIL COD.E, Art. 1886); ,~~urance policy in order.J~.JJlhe ~en~Q~r,y to b~ ~ · Z ~r,.....1. ... · ·"< : .· · : able to pr~perly and timelY, claim the beti~fl~~l~. E)(~~p ,_on;Th_e a_gen~ 1s__ not b9und to P.rov_i.de tlie'

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. Excepti~~: ~n ag_ent ·.sh.~ot ca.'}.y ~t .... agency 1f ,_t~ ~xecut1on ~o~ld -m~mife.._stlt):e~ull iQ~tN1{9 <::ar_cyj) _t the_ ager:i~y-1f its e~~cu\1_on would loss or damage to the prn1c1pal ·{Cl'vl eOPf=!Art. I\.~rt~~y,result )n loss: . or Qamage .. to the: 1 l38_8) .. .. . . .. °' . -:./. . . . ['),.' J..?!"!ric1. .al {CIVIL CQpE, Art. 1888); • : ~· . . . . : . . . . . . . . ..

M.

-

2.

.

To .. ~~swer !o~ ·dama_ges .\'.'>'hich through his non· performance th~· prir:icipar may· suffer ·.(CIVIL ·coDE; Art. ··1884); . : . . . .. 1

· · This rule is ;;in:application of the· general·wle in. contracts. that .any person guilty. of. fraud·n.egligenc~. ·or·· delay in ·the fulfillment of- hi~ · · obligation, p~ ·who in. any other mar:mer fails to, . comply ·with. the "terms th.ereof shall be· liable. for d~~~-ges {CIVIL.CODE,Art;·1110).· .· ' .It is· a weli~s¢ttled ruie .. ttiat ·an· ~gent is also . r~sponsi~le for i,!ny -;. Qegligence . in- the . performance of its. function "arid is liable for damage_s _.which _tl-ie principal ... r.naY::suffer by . reas~n of its negligent act. Hence1 the Court of · A~p~als ~rred ~hen it opined· th~t BA,. being ·the pnnc1pal_. _had no cause o~ action ag~insJ PAL, its ·

.

··N~te:_"Notice th-at t~e arti~le.covers only acts ttiat would "man.ifestly" l~ad to" IQS$eS, ·in other words, !he agent 'cannot be .c;1 guarantor that the princl~~I would. suffer no, 16.ss or· aama.ge in·."the pu_rsu1t .of_ the·. agency; the sustaining ··of losses due to.human error .is p_art of the risk that eVery ·owner·. 0r· P~j.ndpal a~sumes (Yl~t:ANUEVA, ,supra at· 134). ·· · . . . : . .· . 7. To ~nswer for.dai:n.ages if there.being a conflict betv:e~n his intere.st .and tho~e bf.'ihe principal,· ha sh_ould prefer his' q.wn'- (CIVIL . CODE ·.Art. · -1889); · . -· - ·. . · . · . - . '. : . Ar~. 1889 ·does not. declare the contraci or t_ran~@stion .the agent entered into as void but merely makes thsl agent . liable ·. for dam~ges . s_uffered .by the princ;ipal (Vltl;.ANUEVk sup·-;.aat

139).

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·· Note: Where the 9gent's interests are superior, such as where he has a security interest in goods . of t_he principal in his possession, he may protect this tnteresteverr if in so doing he disobeys the principal's orders or injures- .his _interest (DE ieoi«. supra at-469-470). ' . Remedy when an.Aqent Wishes to Prefer His Own· Interest: He must timely renounce the aqency. provided his renunciation is not for the purpose of" pr9fitirig from . · the transa'ction, (PINEDA, s_uprci.a·t 321) .. · 8.

Not to J:oan to himself if he has __ been authorized . to lend money at .ihteres_t (CIVIL CODE, Art. 1890); . . .

Neither would the· rule apply .if. the aqent er broker had [nformed the principal .of the gfft or bonus or · profit he .,..,received from · the purchaser- and his principal did not. object, · thereto (DE,LEO[V, supra.at.4-77). · · · , d. The duty.embodied in Art. 1891 will not apply _if. the_ agent. or broker acted. only as a Midd_leman with the task' of merely. bringi,:ig · _tog1h.er the :veridpr_ an~ the v~ri~ee, 'JV.ho -themstlyes- thereafter will· negotiate on the · · terms and· conditions· of the -transaction · : (Don;[email protected] v. _Domingo, · G.R. _No.: ·L-30573,"

. . ' ( ;.~ . Exception:. When the principal consents IQ ttie. same (CIVIL co9E, Art. 1890). . Agent may lend money to the principal, but the . .interest h"e may charga cannot be high"er tha'n the c;urrerit rat~ c;if interest (DE; LEON_; ·supra .at .¥1,70). Reas cm: The. printiRal' will suffer no. pr.i;jutliS,.e · because the principal, just the sam~~; .. will'be liabl~ to pay interest (Id.). . . · · ·.' ~

. . OctO~frt, 1~7:?J-_.- · .

To rerider. a~ Act~i.Jnt o{ his .. tr~ns ctio·11~-:-ah~ '. d<;!liver to .the -:-principal- w~at~v&:tie may.-ha~e. · -received by virtue of \hff~r.y; r,ye.~:tho~1gh it . may not .b!;l owing Jo _th~ i:irmGipal;t'(Q:Z.WL COJ;>E, , Art.1891); . . .

-9.

by .

All profits made .and adva.ntage gained· the ·-. r, · agent in the-execution 'of th~-_agenc_t belonq 'to· ._Principal.- And iJ ·matter_s 'not ~ether r$1Jch:-:"--. It~-~ profit or. advantage. be the ·· result bh/ the 'P.erf9r,:n~nce or, of -l~~- vio_l~Uon. of._t~e~.~iii:if:the agent 1f 11 b13Jhe. fruit of the aqency (Dumaguin v. Reynoids, G.R. No .. L~3572, September 30, ·/952) .. '. , ·. · · · . Stipuiat_lon OE°xempting Agent. from ..·o·uty to Account is· Void· · · · -: · · R~_aSOf1: It. is c_ontrary ~o public policy (CIVIL CODE_, Art. 1306)_ as _it. would··encou~ag~ fraud. It i~-in_the natµre of an.action for future fraud.which · ·. is void. (PINE.DA sup_ra_ at 326):"· : , . 0·_ / ;" . · . The'a.geilt_·has·i;ln abs9iute duty to make a full.. diselosu·re or accou_riting· ·10·. his princip~I all .. transactions and material facts that may have.·. ·some·. releyarice. ·vyith the agency (Domirigo v. . Domingo, _G.R. Nq. L-30573; Oc!ober-29; ·1971). NOT ·. Applic~ble:·. .

1.n' cases of'§.olutio 'indebit((PJNE;DA,' supra at 326); . · . - · ·

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N9(e:in Jge11t who takes a secret' pr6firis· guilty . ·. of b1dach lot hit loyalty and forfeits: his · ri('lht"t? · : cQ]Ject.tl:l_e corrrrmssron. lt"?oe_s not even matter. if· ·the'agency· was~ gratuitous one, or 'that the · p_rincip~tained·bel\er results, or that ui·age or .custorn allowsa receipt of such.bonus:(Obmingo · v, It_qmingo, G_.R. No. L'-30573, October ·2~; -..J1._~]1): ... .· : · _... ·. · · ' Report Distlnquished, frorn.Accountinq .' _- a.. Reportimports a.staternenrof collections, :· . • · .J), .. Ac,~qu·n!ir;ig· means setflinq of, :~_c\:ount of' adrnlnistratlon or ·age_ncy,·-.:.which. includes ... payment (DE LEON, supra ai 47B)t. ·.· . . . . : ......... .; . . .·

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Oblig~ti~~ .. to : Acc"ount (StllVI) . . .

Where a right of -_bien exists in f9vbr.of the. . agent, the· rule is· not also applicable (DE LEON, supra at 477)-. . i. The agent.may, u·nder Art.1914, retain in pl_~dge the_ things which are the object of the a·ge~cy until the principal effects tl_ie · reimbursement and pays.·the indemnity proyided in Art~ .. 191 i and 1913.. . ii .. A lawyer shall h;:ive a. lie[) .upon the·. funds,. documents and. p·apers of his ciient and ·rila.y retain the sa·f11e u_,:itil his lawful fees and disbursements· have--been pai9. (RULES OF COURT, Rule 138,.Sec. 37):

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increased . or. higher supra at 523).'

10·~ To be Re'sponsible in certain cases for the acts a. ·Of.the substitute appointed· byhim when: · i. He was not given the power to appoint one;and ii. He was given such. power, but without designating the person, and the person appointed was notoriously incompetent or insolvent (CIVI~ CODE, Art. 1892); 11.

commission

(DE LEON,

16. To [ndernnify the principal (or damages for his failure to collect the-credits of his principal at the time that they· become due (CIVIL CODE, Art. 1908); Note: Not applicable to guarantee (CIVIL CODE, Art. 1_907). · . , .

To _Eay interest on funds he has applied to his own use (CIVIL°CODE,-Art. 18~6);

commission

17. To be .!3.esponsible fo[ fraud or hegligence ( CIVIL Two Cases in Contemplation qt the Rule: a. The sum belonging to the principal which he · applied to his own use; and b. The sum that the agen_t still owed the principal· after the extinquishrnent of the agency (ClviL.CODE, ArJ. 1896).

CODE, f!rt. 1909}. Obligation· to Carry Out the· Agency ' . , .. The agent is boundby his acceptance to carry out the "agency and is· liable-for the damages" which; throuqh his non-performance, the Wi_ncipal may suffer.

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Th~ ·dui-y_ of-tli~

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. also 'on 'sale, a ··gl.iarant~e "cornrnisslon GOQE, A.rt. 1907); . . . ..

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Guarantee · C~mmission Del Greder; Comrrii$sion · · It is. one where the factor or commission agent guarantees to the principal the paymentof debts· arising. through his agericy in conslderatton .of an .

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: render service for the beriefltof' the-principal 'and not to .act to his .detriment .(DE LEON;-' supre at 468). Hence, an agent need not proceeo wiij") the agency if .·~y ·d9ing so., loss. or damaqe would· rnanjfestly be suffer,ed :by·the principal" supra af .320);- . . ~. : . .. ~ (PIN~DA, .. . ..· . . .. . Authority to Borrow or. t.end Money · . · . ·. 1 ,· · 1f he- has heeri expressly empowered }o bor~ow money, he rrfay. himself be- the lender at ttie · c~rrenFrate,.of. rnt~rest (CIVIL C.QDE, -~:rt.: 1_890). · '

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Reason: -The principal will suffer because even if the aqentfinds a lender, the principal just the same pay interest at- the current rate.or (PINEDA, .supra,/t 321)..

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Reason: To protect the principal. The agent may not be.a good payer.or may be msolventormay . not be a good risk. More, conflict of interests is bound. . to arise, (PINEDA, supra et 322). · . -~

·- .

Exception: When·. the ·, principal- gives his . consent, either orally
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Exceptions: .-1. .VVhen prohlblted by theprincipal: 2. When the work entrusted to the agent to carry.out requires special knowledge: skill or competence .(Id.}: . . .v

no- prejudice third personas will be liable to probably more . , \ ..

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· Effect ofDeath of Priricipal/Agerit It will' depend from whom the 'authority bf the sub-· .. agent was" derived:. . . . . · 1. . From the ·principal -· Death of the agent who · · . ·appo1nte'd him does 'not,affect his authority 2. - Frbrr1 th~ agent_who-_appointed him - Death of the . . · agentl~.rminates his _authority (D_E LEON; supra . - · at 481f . ·· -

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. ~ · The . agent 'may · appoint a. substitute if the . principal has.notprohibitedhim· froin -, doing S<:); · but he. . s hall be responsible for· the. acts. of .the I '. 't . ' . ;--. ,. ,' substitute: · : · . · . · 1, · Wh~n_· he wa_s not give'n the' p~we_r, to.appoint ~Q1; 2. -' When he was. given such power, but w1t11out .... desig"nic!ting . ilie . 'person,' . th~·< i:iersqn -appointed was notoriously inccimP.etlnt . 'or . 1insOIV¢nt.. · · ··*·. •• '

Effects of Substitution . 1 .. Substitutjon ex'pressly prohibited:' . ·. · a. · All acts of "tne· substitute,.shal! be void (CIVIL CODE, Arl.189?, ·par._;?.); .·· . -

c.-- .... )

"and ..

. · .. .· ... . .

.~ote: Alttiou·g~ · Art. 1892 provkles t~at ·all .acts orthe substitute ~ppointed aga_irist th.~ prohibition of _the principal shall· be void, the ···cqhl~c~ are real!X unenforceable in~ofar as· . th~lprjf cipal _is cpnc1rne~ and. subject to his· · · . ralificatioli,. ·. pursuant. 13.1-7-. . . . .to·- .·Article· . - of· the-. New Givil ~ode (VILLANUEVA, supra al 15.1-

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. In ~µatio~her~· th.e -~~A to ~~II a ·pi~~e empower.the attor.ney-in,., ..____ . fact to,aRP9int:a· sub,stitute, but nevertheless .. the agenfappo_ints'a;substitut~ w}:lo e?(_ec;ut~s : : -•-.="'--,---!h_e.de~d·.of.sale in .the ~am·e ofthe princ\ri91, . . :. wti"ile if.may.be.true th~t the_agent·may'have . ,. ' ·.. acted oµtside the,scc,pe 9f his· a_u'thority,' th~t . : _._,.. : : did .not,makt;J".the'sale-"'.9id_,.·:but merely . lo the. cases mentioned in Nos. 1. and 2 of·Art .. :1892, ·· - ·. une.nf¢rce;:ible under Art. 1317.'A!though·the ... the principal may furthermore. bring _an action-aqainst ,,- · ·: . ··principal qenied:-the/sale, his.•?,cc'eptarice· of the substitute ·with_ respect to _"(he" obliqations- which · ':. · .-, the· _proc.eeds t~e~eo_f 'we.re !,ant.amount to · the latterhas contractedunder the substltution '(CIVIL ,. , . r~tificatio"n thereof (Esct.ieta ·· v.· Lim, G.R. COPE. ·Art. 1893). .· . : _ _.. . . . . · .. _;· · ·. · No":_13~1621.J9nu~ry 24, 2007) .. _.:

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Sub-Agent· . .. Aperson -~mployed .orappointed _by an aqentas his agent; to assist him in the.performance of. an act for· · the principal.whfch the agent lias ·been··.empo'wered · .to perform .(DE LEON, supra a(480).' ~- ,; . - ......) . . ... ' . General Rµie: .An. aqent may appoint a -sub-aqent J:he agent in t0.\s situation is aprincipal with respect, to the substitute. (Id.) · : , - . . · Reason: For convenience and practical ufllity (lei.). . . . . . ·. . . •'

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Ag~nt· i~ persqnally liable for the ·acts of the s1:1.b.s1~tute, a) tho~gh th_~·9ontracts"of. the_· subst1tvte were his. own; and .. ,, .,,. . ·. •; ·.-:- . . •., ":" .. ·... · ·C. __"Priri~iP._al ·\,voulq : ·have .!JO: cai.J~e :· of : actiqn :." against .the··substitute · (VILLANUEVA, supra. at 153). · · · ·· .

2 .. Substit~tion· authdriz¢_d: .·=, , ... a. ·· The_.substitute was d_E:signated by the agent . -. it.has _the effe.ct of releasing the .agent-from. his . -~espo'ris'ibility unless· . ttie ·person'" appoi~ted· is notoriously incompetent ' or i~solv.en((CIVIL COD~; A.rt. 1892,_ par. 2) .

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b. · The substitute _ was designated · by the princip~I - absolute exemption Qf the a·gent (DE LEON, supra at 483). 3.

Substitution not authorized, · but not prohibi~ed - if· the substitution has occasioned· damage to the principal; the agent shall be primarily responsible for the acts of the sul:)stitute (Serona v. CA, G.R.-No. 130423, November 18, 2002). . ·.-

for interest from the date the agency is extinguished (OE LEON, supra at 487). L_iability of an Agent to Tliird Pers9hs General Rule: Agent is not personally liable to th.ird persons (CIVIL CODE, Art. 1897). Reason: The agen~ acquires no rights nor does he. . incur. any liabilities from the. contract entered into by . him on behalf of his principal (DE LEON, supra at 488) ..

· Responsibility of Two or-More Agents The- responsibility. of two or more agents, even though they have · been .· appointed: simultaneous.ly, is not -solidary, if solidarity has · not been expressly stip·u1at~d (CIVIL CODE;, Art.

t894).

·

Exceptions: Instances · when Agent rt:)ay ·1!1cur Per~onal . Liability (FOi-WEEP) (CIVIL CODE, ftrt. 1897): 1. ·fraud and neglig~nce by a·ge_nt (CIVIL CODE, . Art. 1909); - . .

· .· .

Joint Agents . Note: Although the agent becomes· personally Agents appointed by one ormore principals unaerTLJ X_ 4able,· this does not m~n that the, principal· _is such clrcurnstances as to.induce the inference that it \lexem12ted from · liabiliti Since the acts .of the 1 a9,~n_t:t'~e.by: law _those oqhe principal, both_ t~_e wa~ the_ pri~cipal's 'intent. that a_y§ould ~I: in . conjunction m consummating . the/transathon for · _ principal ·ana the agent are· deemed joint which they were appointed (DE-i!EON, sup;r at 481- ·, -..tortfeaso~i--~na,. are. deemed solidarily · liable 485) ', · - . . 1t>) _insofar \as&iird pe~sqns are _ ._concerned -· . · 'Y ·· . lf" .~ lft:.·(VIWfNUE'{A, sulfa a1162-163)_. Liability of Joint-Agents Thelr responsibility ·is jointf~epll if. soli~arit~ ha~m1~1 -T~remedy or'ihe_ Rrincipal is. to SU: the a~e.nt been expressly stlputated (CifVIL-q;qJD_E,"·A:ft. 1l39JJ£.Lil r;··-<Jfor_ .1~ma_ge1 ""ciwj' to agents fraudulent or *\Tlf ~ !:)egl_rgent act_s ~Id. at 163). - . . . If solidarity· has been .. agre\ea... uR,ot ~c~~gent i~ ·f . _ J · . ... · · · •· · responsible for the: · : () ~ · r,m ·tr_. -Agf ri°tg~{s ]if his 52wn narne;: · · 1. 'Non-fulflllrnent of-the agetcy; -an · £) _· ,lm.l, 2. Fault or neqliqence of hJs,fellow agen(~T}l~sf 1 ~~~ ,.$~ep!ion:. Whef the ~o~tr~ct. involv_es !hJngs the fellow agents acted beyond, the scppel\o .t~ir .· be)6ngmef to · Ui~ principal (CIVIL CODE, -~ut~ority (~/VIL COD,E, A1:t.rt8_9._5).: sciEN1i~t1~.1883,~p~r-;t r> ·. - • ' .

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Note: T~~ Ii.ability r~ferred _to in A~_894<(n.c3}-1~95 is _ ~c.ts as an agent of an ttie hab,hty .of agents towards pnn~ar~q not_M IVI A,J ..tn::7'~apac,tated principal; towards third parties J5 PARAS.r·s_upra et 839)~~-...i; · · · ·, ' ' - · ·. .- .. - ' · · · Exception; Unless the third party was aware of .... LiabilityofAqent .for- Interest the incapacity 'at -the :-ume of th~ m~king of the , Tbe agent.owes interest on-the· sums he has applied coritr~ct (DE LEON, supra;at 496). to his~owh use from the day on which h~ did s0, and 4. When. a per.son· ac~s · as c;in agent -Wi'thout_ 01! tho·se whi~h :he still owes ~fter the .extinguishrnen! of the ag~ncy (CIVIL CODE; Art.' 1 'EJ.9.6): · ·' . authority"or without a· principal (Id.); . ' . . . .. ' ' . The agent yvho conyerfed · tq hi~ persona.I;- ·use th·e· 5. Agent . .!;_xpressly bin~s himself;: funds of the· prirrcipal· is liable for interest by 'y,;ay" ofr c_ornpensation or indemnity (which is different tr.om The,; .. individual ,liability of the agent can considered ·as -further security in favor of. the " interest .for-delay) which shall be computed from ·lhe cre.ditor. and. does not affecL or : preclude ·the . ~ay he did so, Without.prejudice lo any ciiminal adtion . for the conversior1 (DE LEON, supra at 487). · li~bili~.y of the, p~incipal; ~oth ·are ll9ble (Id. at 1.91 ): , r.. . •• ••

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While -there is n6 _li~bility ·f~·r _interest.on sl.11:n~.which have hot b'een·converted for._the agent's. o,wn us~ (De B_orja vs. De Borja,- G.R. No. L-38479, November 20, 1933) the agent who is found to·owe. .the pr.incipaf sums-after th~ exti~guish'ment of the· ag'erie:y is.liable

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No_te:· 'If J)1e ~gen~ .co~tra~·ts ir:i 'the name of the prineipal,._exceeding .the ~cope.of his 'auth_ority,. and the principal does 11ot ratify the- contr.act,' it ._ . shall be void "if the party w!Jh whom the agent

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.. contracted is aware of the limits of the powers granted by_ the principal. In this ~ase, however the agent is liable if he undertook 16 secure the princlpal's ratification (GIVIL CODE, Art. 1898)". •;·

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Note: If the party 'i.'.itt") whom the agent contracted is unaware of the limits of the powers granted by the principal, the contract is unenforceable under Article 1403 of the New Civil· Code. . · ,. . Theaqent is·not bound or liable: ·· ratifies the act, in ~hie~ 9.· · W~en 'the.principal · case, the principal becomes Hable.· .. b. When the· aqent, has· g_iven the. third person . ,., • sufficient notice about,· the extent of. his • power• . I.· -·"· •• 'to put him oh guard; . . . . . c. When the third" person ·is aware ofthe limjts .of the a·g~nt's.powers·· (PE-LEON; ~upra ·at.

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When authority.ls not in writing - ~very.person dealing with an assumed agent is put upon an inquiry and 'must discover upon his. peril; if -he woul9 hold the principal liable, not only the fact of the agency but the. nature _ and extent of the authority of the agent (PE LEON, supra at 500).

Note: If he does not make such inquiry, he is c_hargeable . with .. knowledge' of the .. agent's · authority, and his iqnorance of thatauthority .w_ill_ not be any 'excuse (Bacaltos Coel Mines v, CA, G.R. No. 114091, June 2~, ,1995). . - . . . ..' .~· ... ·- . 2. ·whe"n authority. is in _v.iriting ,:.".such person is . .'not required to inquire fl,lrlher-.. th~n the' terms of . the vyritten power of attorney (DE t.EPN, . .supra_ a.t

'502).

·If the aqent acts in. excess of. his authority. the princlpal is not bound insofar as }tie excess is concerned. It is unfair ii the · principal bound.ina contract'which he. ?'d not• authorize (PINEDA; supra at ·~.340).• • ~ t . •

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. "lf".the duly -a"utti'orized ager)! act~ irr "accordance with Hie alders of itfo. principal, the.latter cannot set_up the igr:,oranci ojr the ;;i'gent as lo circumsta'nces whe(~Of, . he himself was or ought.to have been, awa~e (Cl\7IL CODE, 'Art:"'! 899): · .. • . . . . .• ~ : " So. far as --~4\P~(so"ris:~r~·,con~~r~e~; an aci·.is deemed to;have !Deen performed within the scope of . th~ -~ge121ls aulhor~ • ..if. ~~ch ~ct i~.within !h.e terms of the power of attorney; as written,. even ·i.f the agent . h 8S :the. lim!ts. _of ni.s 'a_u_th~rity .· according to a uq~erstanding. b_etween the 1;mnc1pal and th!:)_ 'agent (CIVIL COQE, Art. 1900). • 0

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·Agent:;(CBIT) _. . . . . . . . .. - . .: . . 1. :· \fl.(.her~ the agent_ .Q.ontra_¢t~ in his own .narnefor : .. an-undisclosed princlpalsln which case, the aqent .' . . : may 'sue thethird party to enforce the contract" ·. _.·_·.(CIVIL ~OD_E,Art -. 1$83); .. I_ • ••• • ....... . 2.· Where- the aqent possesses a ·~erieficial"ir:it~rest in.the subjectmatter of the agency (CIVIL CODE, . ·- .Att. 1927);0.: · . : .· .. · 3. vvtiere. the agen_t pays money of his principal to' a . _thi~a party- by mistake -or under a- contract which proves.' subsequently to. be :!llegal, the .aqent being·.ign"ora"nt with respect to its illegal .nature: and .. . ·· · · . . 4.- Where-ttie third party comniit$.a-Iort.ag9_inst the· agent (_D_E LfON, -s~pra at 49£{.,.497). . -· •l"\,

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Met~ods oi·:sroadeni~g -~nd Re.s.trictiti~g Ag~pf'.s Autho~ity. ( NDIE)"(DEL~9N; §Upra a_f508;;,[5.11). _ ·f· · 'By !J.sage,a_n~i:c_us_t~rri;. . .. . .

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Scope-of Agent's Authority as· to.Third Persons Includes not only· the actual authorization conferred upon the aqent by .)lis .principal, but also. "that which . w9s, apparently · or impliedly delegated to him . -

· · .. Exceptions, (VsDEC) ·· . . :·. a .. Where it ·is .. sought to Y.ary the terms· of an. · express a·uthorlzation; ' · · ·. · · . b. Where. it is sought fhereby-fq' .Qispe_ns~ with . .. '. ··a·. l_egal: requirement ·'enacted.' for.: the principal's c. Wh_e're it is squght to.vary an _ssse·ntia!'qµality ef the ager:icy·relaticinship;:and. .. - . d. Where it is· sought there~y:to -~hange- a rule of lav.i'" or as: lo" qispense with a formality .: ·required.by law (DE LEON, s'upra-at SO?)· -· .. -. It .is)equire.d· that fhe ·principal must have notice .. of the alleg.ed custom·. before the agent'.s ·acts . m'ay bind_ the former:· However,· ·a p.rin.cipal is· · ·cje~med to have. ·nofic'e of a given. USJ3ge: ( 1) .. where the principal" ana the. agent- reside i1fthe . same comniuriity, the usage i!id_efinite. and well . known; and (2) where the agerids atif.horiz~d tb deal· iri a .. particular .market or exchange (DE · LEON, supra at"5_09-510): . .

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Instruction v. Authority_

By N~cessity; R~quisites: (PERU) -a.· T!Je agent's enlarged authority is exercised {or the prin'cipal's .Erotectio_n; b. The gm~rgency really exists; c. The means ·adopted are· Reasonable under the circumstances; and d. • The·~gent is !:!_nable to communicate with the · principal (Id: 51,0).

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_By c~rtain Q6ctrines; ·a. Qf,apparinf.authmity; . b. · Of liability by esiopp'el; and :· c. Of ratification· (Id.) .

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o'irects'the. ma'nner /The . sum" fot~I : ·of the tr13ns!:lcting ·· the ·ppw~rs committed· or authorized : bus.iness 'pe.rrriitted'to t,he ·agent by and contemplates' only the··· principal;may . pe a . private rule . ,....of limited in s~ore and S\JCh guidance to the ag~nt limit;:itioris are themselves !:Ind is in_dependent and part of the aut~ority ( CIVIL ·distinct in character.' · CODE, Art, 18.81-.and Art. r· -1~_82).. . .

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··' ·Ratific~fion,by-Princi'pal . · · -~- · --~-·- ':r· · · :·., · · . ... : · . · A. thirq p~r.s~n·,~a~no~ :set ·th_e fact\~at tb.e"~:~!J)[~r~~~~xpfac}e9 · · b'e: _cont~mp~ated t~ be _ma~e ·h · d dhi ·f'th· ·· h-. '--t-~f.n ;rn'crde,_knq~Jo~those known.to the third person a~, excee _j'! · _ rs powers, 1. e.pr_1nc1pa_\#1 as1ra _1f.iih , __ fi-,/1/f!"".rt, •.•. '°t d. -1 . d 1.with t'h 't· · h · ''fj d hi 'Ii' · l · reth'-·l;Q, t' - W 0~\t~e;; gen ea S ea mg vvl . e agen . • ~-. . or . a~ s1g_rn 1_e IS WI mgness O 'ra I Y'--e)Jn.s 1'.··.A. Third· ,. persons must -~c-ts _(C/Vl~._C9£?E,, Art.1991). _-:: , __ ·. . ".' ~~: ·... _ .. -.,-_ ~ !ti~r~f?re- ·. : .Y~,~i.f~ ~.. ·. - . . .. _.. .,": · ,;~ · .·.. ·: · ·. ·· .. :.,, . -·. ·\. investiqate theauthority . . :..~. · Implied Ratification.. -~- ... . . . ·.. . . . .... .- ..... :· .· .. ·. >. .,.·:.··~·. _A; princ°rp}1l0:i~ .~ee(De'd. tc{have /atifi~d act of. ah . . (PE tEc5N;·supra af::4.6?;4?}):;. . . · aqent. where ~h.e:. receives .and retains the. benefits ·a( . , > . . . · ·• · · ,-;. _. . _ . ~, ' the.transaction with know)edge of the, material facts ... Whe,n Oeparture from-Princlpal's' Instructions Is. :, .''. , · sum;il!nd[i:ig:~he s~_me,.(DL;:. L_l;ON, supra at-.517}'.· . Jus~ifiedi'.(~A.l)-·;:. · -· .·, --:·. ·.=~ · _';. : :i · ·: . : .'~ . ·: · ·. . . c-.-'' ... , · · · _· .. · _1. · ~ud9err Einergen.cy. -. Where some unexpect'ed . -~resentattoi'i,of;lr,isfruct_io~s . - el1)e'rgeric;:y dr,unforese~n ·eve'nt oci;;t:frfwhich.will . . ·.:-:.· . :. ·. - . . . . . - ':- '. . ' .' . •. .. . . .. . .. : . _admfr·· no, .. delay.: ~or ..· cominun_ication. --~ith the;,: · Ge-9eral Rule: 'A .third:pers9n i_s beund_.to ir:iquire as . ·.. _' prjncipa[, the' agent .is 'ju?tified· in adopting: the , tQ: the extent", of !tie ag·ent's ~utt)ority. A third' pe'rson . ·' C?urse _ .'w~iGh: s~~n:is ··best t6 h.i~ . under : the . de-i:i(s\vith··an age·nf at l')is peril· (CIVil GODE; Art. · - .. circumstances: · ,, -' · · . ,.. ·.' ·. ·. · · ·, -.- . . . 1902). 2.' ~mbiguous' ln~!ru8~icins -_-Where,.instructions are:··· amb_igu_O\;iS; . tbe '.agent.)s ... n0.t.c)l_s1(geable . .-with disobedience. or· 1ts'· consequences 'in'• :c.as'e he E~c~l)ticin·: ~;iv~te o·; '~;~c·ret o~ders :o~ in~trudtidns makes . an. hbnest . mistake ... and adopts. a·· the p~incipal d,o not' preju.dl~~ 'third. ·persons CIVIL · · coristructioo- ditterenUr0th .. triat intended _by;thi CODE, Ari. 1902). . ' · ·. . . .. . .: . principa1;.1t ·is· t_he duty: of1he• prin,cip_al id couch his. ·instructions-in. clear terms. . . . •, .. '. .

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!nsuqstantial Departure -,An agent may not- be ·said to have· breac::hed t_he c)gency "contract ·by reas'o'n of a·n insubsIBntial departure from the principal's instructions, which dcies not affect.the re.suit (DE LEON, supr:8 at 466-467).. · · '. .· .

. Illustration: If an ag~nt was authorized to sell a Godin electric acoustic guitar for P100,000 cash,:·· but he sells it on credit P120,000, the· priri_cipal ca.n demc\nd fro"m saicf agent the sum o(P100,000 . in C?Sh. :However, should the agent,.eventual.ly ·collect the entire $.Um. of .P12Q,00p: h_e -9,~ls· an Liltimate ·personal gain of P20,QOO ·(s: PARAS,

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FactorlCor:nmission- Agent _ . . .. ·A person whose b.usiness is t_o receiye andsse!I goods entrusted 'to ·him- by ,the "priricipal for" a .comr'nis"sion. 'and i? ·usually selling in· ·hi:row·n,_name: (PINEDA, :

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·2 .. -He may-ratify ,.the ·sale on ·crE;Jdit ih ·which c~se_ it' ·.: _will_have·all the ·risks and advantages to him·(DE

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The commission agent shall. be responsible tor ·ttie goods received by hirri in the .terms .and conditions . and a·s. describ!,ld. i'n the co"nsigl)rhent, ·unles~~upon. ~eceiving them h_e srould make 9 vYritt~n ~fatement 9f. da.mage· aQ,d ~-~t~!ioratig_r)-,S~ff~reg 'bt I~~ s9rne (CIVIL CODE, Art. 1903): .: · · ·. . ·· .

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Rule \Nhen. the Commission AgenUs,·Al)thorized to.Sell-on Credit -::-.. ,. . , . ../ Should ..the cornmission:agent;with· au~ho~ity bf the . principal;: sell on:. ?redit,. he" ·shall.-,so·' inf~xm· the :- principal, with . a· _:statement. ·of the, nam'es. qf- the buyers. Should.,he ·fail to·do so; the..-sale ·shall be (·:. ·:: .· . \.: : '·.·. ·., . ' /.,·· '-i.'. deemed to have been made for·ca;h insofar as. the · '?rok·er . ' · .: : r : ." : ·;. <. .. ( . · principal is coricerried. (Cl\(IL."CODE; Art.;1.906)..A mi.dc;Jlem.9_n 9r.)nte~me9iary_ y.i~o,._in:b~half ~f_otherp· . . ~ .~ . and for a COmn:JiS$iOn f)f fee,' negotiates or:-contracti' ·i . ... Guarantee Cornmisaion ,.· . _ . . . .transactions. relating .to real- or.person~! property an Should_- the ''com)i1ission · ag'ent receive orr sale, in neveri acting ·in his own name.b_ut in ttie l_lanie ofihose · . ·addition"·to t~e ordinary commission, another calleda . ~ho_emplo~e-d ~i~ (~_E_LE:O~'. ~u~~a ·a~··.;·: quarantee cqmmission,. he': shall . bear. ·t~.e- 'risk of_.· cql~i,i~ti~m·anjthall _pay1he P[inc,ip~I U1e· proce_eds of .. · Commission Ag~nt v: Ordinar.y Age t-y. Brok~r. ·' . .· If,.... ·. ":; ., . .. ·!he _ _-sale _o_11f.tt'ie,sal}1e. terms '.§lgree?: UP._On with .t~e _

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Purpo"stf the lmmission:-/o compensate the . ager.if'.f0r- ttie inc-or;\~71J_encesand. risks he has _tfridergb. in~Gollection· .. of. ·the. purchase -prlce . payable to the principal.jDE L,E0N;·supr:a·a(523). . ·

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. Lial:lilitiof the Del Creiiere Agel]( Fr • • . ifhe' llabllity .of'the;dl:i/"cteaere 'agen(\s 'co'ntingerit. If. · ,. . , ), ... · :·'.. ·,·.: .. , . ·: ,: .... , · · .. · ·;.:·. ·: · r-" .. · ." . thebuyerfails: to.pay, he. shall pay "the· Pr.(r:ic..ipaL He -· Sells in hi_~ .o~~ ~TJ~:n:~:~cts.tn the: .. T~~_nsa~t~1n, the_ .··. / · has no rig_h~ to invo_~e: the benefit ~f ex~Lis'sion (C_IV.11... name. .· .. . n~r:r:1-~- . ?f_ ·!_he name qf Jh9se . . . . C<;JOE, Art?.. ~20.58-2059).becausehe. 15.. nap~ally-_a, . :· · principal'. ·: "".ho _e~ployed · · ·1Jt1ara·ntor. Precisely, ·he. is:",,giv"e_n· ari. ',idditi6nar . · .. ' ... hill)., ·'.·, _. . commission for, this obligatio"n ,becau·se· he. assumes. I. ~....,.-~..,-----'--,,_,___ _ -'-··--~--'--~-~----' . the risk of coliection for:thf prirtcipai (Plfl/EQA,s.upia -~

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. !he _conini_(~sion a~f~'~:f q~n~~t i~~--~~p~Jss · 11:nph..~,d corn~en~ _.of t~e pnn~1pal!;se]I _o~ ~~ed,1.~, Sho~_ld · . ·:_he_ ·ao S?, ., th.e . pnn?IPJ?I: .may_ d~.n:iand ._-frqn:i him · pa~m_ent _m-:_cash, but.th~'co_mmrss1on ag_ent· sh.al_! be.· entitled to .any -interest or- _benefit, y;hich mc!Y. result from ~uc~ sale·(C_IViL,C<;)QE, Ari. 1905).. · .·.: · .. •

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th~~~~{c;~deie ·ag~~!\~:ji~tte~ _;;. th~ . · p_ayment- of ihe purctiase price. ·It does- ri~t- extend to the 'oth·er obligations arising fro,:n the coniradsuch·aS . .- damages· (Id.)'. .. '::.. ·.: ·. · . · -: · . ':._, : · . ·, · . ·. . . .. .- ·. .· ·\. ··. _.. ·. , .. , ·. Illustration:· _: :. ··.· .: ~ .... •·. · · ... ; ..... · · .. . : I The .a~ent w'ai.auth~riz-~ci on..credit·an:_-lbanez: . _· el~t;:tric 'gU!l~r for P.40,009 with 1 Qo/o . ordin.ary. · ·commission (P4;000). "He was-also paid gLiarariteed. commission-of 5% ·(P.~:ooo):_'·His foiai, tfrofit wo·uld. , .tl)erefo.r~ b~'. PEf,Q,00. However, =.ev.ery'· tinie: the .. ·.· cu~tcimedails to ·pay:ar:r jn~tsilirnent lhaUs ct"ue/the. ·. _. ag_ent_ -h_ im?el( pays said-·am'ount, to the principal. (5

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. . Note: Art. 1907 includes both credit _and cash sales be.cause the I.aw did not make·any distinction · (Id. at 851).

Commission of Brokers The brokers are entitled to.their commission bec~_\Jse they were instrumental in the sale of the prbperty. They set the sale in motion (Tan v. Gui/as, G.R. No . . {4397~, December 3, 2002).

If. the age.nt- receives guara.ntee cofnm1ss1on, he carmot put- the defense that the .debtor~third person. possesses property (Id.). Who may Sue the Buyer who Failetl to Pay · Either the· P.rincipal o·r the. de/ credere agent may the buyer. The suit.of one will bar the subsequent of the other (PINEDA, supra at 357).

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In th.e absence of an e·xpress contract between the· broker and· his principal, the implication ·generally is that. the broker beCOrl]eS entitled . to the USUal· commissions (Medrano Court of Appeals, G.R. No. 150678,· February 18, 2005). · ·.

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v:

Factorage. . . Comper:Jsation of a factor or. commission LEON, supra.at ~19). ·

Duty of Cqmmission Agent · . The commission agent· who does -QOC collect. the credits of his principal at the time when ttiey become due· and' dernandable ·shall be liable for darnaqes, · unless lie proves that lie exercised due. diligence for

· Article . 1908 does not. apply to 'commission (DE LEON, supra at 52j)~

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DEDA LAW ';ENTRALIZED DAR OPERATION_S - M~MORY AID 2019

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_OBLIGA.TION_S _OF THE. PRINCIPAL

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Gen~ral Obligatjons.of Principal to Agen_t- ,·. ': / Specific Obliqatioris of a Commissi~}:9;,W...--:" i..;. Duties~nd ~1~oil~s _of .the prlncipal are 'primarlly (Q.RIB_-ND)· . : · I . . . l()) : <= ~~se_d up.or:,· tqeHolitractan? .: the v~lidity of the 1. To be .Responsible for th~goocl~kece1ved.by hutl _ ~ contract petweiq them. In add1J}on to his contractual 1n the .terms and·cor,dilijns and/as describe~ in duties. the pri~cipaf]s under an obliqatton .to dealthe. consiqnrnent; ~nles~~~·r;ceivinrt~~n:1-~e. l:j'.1 fairJr.,andj.in go~a-'faithlwith his agent (DE LEON, . should-make -~ wntt~n statenient_ Of lhl· dam~~e~ ~· efup_ra,at 52~·-·. -and deterioration su~erncf bs,- ft.he. sa~. ClVI_ .~1 . c .. -· . · CODE; Art. 19.03); · cSeecifip~"]ligation.s of: 'Principal-: to. _Agent.:. 2· ~e~inir~n:.!~-sd:~:~-t O i'ltr;(J~lp\y/;~i" ., · 9.~;i~~ti~~~· ~~i~h . ~h~ by". Qm.tnterma*?· . -·and_·. des1gna.t~")~h~_. .. aien{may.-have-coritracted within thescope of . i:n~·rc_handise. re,specti_v~ly beloh_~_ing-_ loye~~~.tw1itYll:1_¥~.CODE'. A_·rt. 19tQ)·and.in-the, · ·_p~inc1pal_ (C,V/L CODE,,Art. \904); ·. . '-,..S(;)'_EN1'\(IJ.i3me·oUh~.prmc1pal; , . . .. ·. '-, . · 3. To _Not s.ell on,- credit, ~it~ot.J,t'the · · ·impliedc~nsenti)f the principal. .Sho~f~e::~o ~o~ ~\!dvi;lnce to" th~ -ag·~nt, should .. tlie lc!tter .. so . .11:ie p~incipat ~a/<;!ernanct" fr?ni -him P.a/[Jltit in "'re\~e¥1te sums necessarffor,~he execu:tioh_of ca_sei but· the C~O"!r:i:iiss.ic?n age_nt shall o~eiili!!_ed :-l.~.1.~a~ncY, {CIVIC CODE; Art: 1912); ·: ·. ' · to aQY. interest or" benefit, yvhich may result ~ , · . · .. · - : · · · · · · - sucn sale _(C(VIL ..COpE; ·Ar,t.. 19,9!3):~.. .. · · · . . · "' Not~: ... Compare· t~is' wit.~ _Art:_1·889· where :-the · 4. : If H.e is authQJ:ized to S<;!II 0n .creait, to !nforrri"the·.. . a9ent- [s bound tq a.dvance·the $Urns necessary. . priricipa( with a statement of the names. of the. . to .c~rry . o"ut t~e . agency, shqul<( th.e"re"_'be . a . huyers. ·should· he. fail to tne :sale shall be· . _. stipulation _and if the princip_a! is ·s9lvei:it. ... l:leemed to have b·eeri made fo(cash insofar·as .. . .. ,.,. ·-~ ',.- . . . - .,, . ' : ... ·•,. ttie. principaf"is. concerned .. (CiVIL" CODE, Art. . · 3. To"..Beimburse the agent ro·r .what ttii:f latte_( has · 1906);.·· · ,.: \ '.9Qvancea-·(pJus int~rest), e<,en if busiri~s? 5. T~ · ~ear the · risk of colle=:ctio.n. and· pay the · ': ·was n~t s~c;cessful/pr9vide_d the .agerif _w_~ff.r~e pnnc1pal.the proceeds of the sale on the·same from fa.1:1ltJC/V/L COO,E, fl.rt. f912J;· .··· . terms .. }1gre~d. _upon with.· the purchas~r. i~ he · · · · · shc;,uld re
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As for any obligation wherein the age_nt has exceeded his pqwer, the'principal_is not-bound except when·he . ra~i~es it expre$.sly or t~citly (CIVIi- CODE, Art .. 1910).

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. Prin~ipal Bounc,l by Agen.t'.s Acts bone .within the . Scope· of _the Latter's Authority . . . G.~neral-Rule: "'Y,hatevel has been done or ex.ecuted. by the agent .within the scope of his authority qnd in the name of. the· principal, · is binding . up_ori the 'principal. Con_sequently, We. principal -must comply . ~ith all the oblig~tions -a'rising from· the authorized· . act_s of the agent (PINEDA, "sf!pra 364). _ ·· · ~

3. ·In" respect· of property ·received ·~ in the . _abse'nce of a .Jaw or th~ possession by the agent of . appar.ent authority . or circumstances o( .. esto.ppeJ_agajrist . the . prin'Cipal,. t.h1e latter may . recover property from the agent's transferee (Id.

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Reaso"n: The act of such ·a-gent .is· th_e- clC.t pf t_he prtricipal (DE LEO"!,' supra at 530). . ·· c66vers·e1y, .the principal($. n9t_bourid __ by.the_9cts of, the.ag·ent if the l;:itteracted withoufor ih:excess of his

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Where tHir.d· p~r~o_n induces the . agent. tq_ violate- his .contract with the principal 1to · l?·etray the·. trust reposed upon him by the . princip9l (Id, 536):" . . . . .

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Ex.ception: The· principal· ·may· be b9und if he : expre_ssly ,or impliedly·. ratifies the contract· (GJVIIZ , COO,E, Art. 1 f)1.0). · . · . ., . .

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. ·N'ote: · lr:i:._negotiabl~ instrument, the law protects: third . parties who are hoi_ders_in cJ\Je course (Id.). . . .. . ;

-· ... · Liability qf Principal \

for Tort of Agent Rule ~h.e principai "is civilly liable' to.third p~rsons for forts of ~n·_ag~nt_conimitted at·tne princip_al's direction.O:r Jn the. COUrS\'l ahd withih the 'scope of the agent's _employln'ent. Whether-the tort is committed \,\lillfully or.. negligently has 1"18 effect on:t~e extent or degree of · .the. p'rincipal's liability (Id. · . .. at . 542-543): .

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Based upon th~ principle that he who does Blndinq Effe~t ~-f · Contracts" Macie -.~fio~t ao act througH another does it himself The agent is . . .Aµthority- or Outside theScope of Auth~ify . alsg:·-liable wjlh · -tl)e · princlpal=and ..their liability _i~ General Rule: A contract entered into,rrf.tne .narne oft solidary "(/d}Jj 5t_3);: _.-... .- . : ·__.a~o_ther by_. one who'.:h~s- no"_ a~t~~f .or·· lei~I ·: · · .: . · r~pre~entJ:\t1on, or who acted beyongljjs,po_wers""°sh~II._ -- Motivatio'};Devi tlon.Test · : • ·. . be unenforceable (CIVIL ·COD(?"'· 'fifr-13.17~: ·· · , Th-e b·oi.i'neH; oijth!:l ~genf s:: authority ·~re -not the. li~its · ·: _ · :- . • . ,. . ~. · ".. "_9f the pr_wcipa~s-t9~ja_bilitr.;.bulrat~·er)h~·"s.cop_e ~-f . . Exceptions: .·- . . . ., • .. ·. . ·.. the.,emplo,imert" w~~h. may or may not. bef_w1th11:i . 1.· . w11e"n the principal ratifi~ .. :§.i:iCh c911t'1zf,. the: ~~nds ]~.tt;i~rity,. Scope of. employment is . expressly or.tacitly (CIVIL COD~191P); _, muchwider tfian scope of-authority (Id).· · · 2. ·When the principal has _allbwea ,lhe -P.~JPO fed .. · · . . . .· . . . ·. ·. ·. · · : agent. to act asthouqh he h~d full ~ewers·(CNIL. · E:q u.s_~es for Vrc_a~rous L1ab1hty for Tort;.·. . ·CC rel="nofollow">_DE_, firl,.J9~ 1 );· and _ · . ::. · .. , , . , · ... . . 1._ ~~t1_sf .9.!9ry_ ~y1den~e _t~at the. employee m ~oing . 3. Whe·n_the. tri~cipal hi;i,5.-re~ok_edJh~t~genc bu_t . _:_ ·. · the ast, '·~ d()ing._ofwh1ch·theJor~-was ~~m~1tted,. t~e :third .party has acted, m good, faith J.iithout · . . .. w~s. m9tivate.d lfl -~art., at least: b.y a desire to .. no,t(c:e _oftne·revoc§tion (CIVIL- GODE,;n·t 1921): . ser::ie h1~:~mpl?yer;_ ~nd _ ,: ... · _. · · · . . . . . • '-:. ·. l . .. .. ••. . . ·. . ·· . . 2. ,$at1~fa~t9ry ey1dence thi:!Ul;ie ac;:t,,1.n the doing of : ~iability_cif Th_ir.d·P.ers_on~__to Principal · ... · :. ·_ . · .. ·-. : _· ·._:whiSh~th~:tort·_is._cof!imitteid, .was ·.r:ot a9 e~_\reme __ · :1. Base_d o'n. contra'ct':... third.person is liable to the ' dev1atl_on from: th~ normal_ ·conduct of su_ch , . P~indp~~ up~!1: cd~tra~~s. ~:n-lfr'~d: · .ib_fo by hi,s .·, ·., ·_e~~pl
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Reis~n:. As· ··the h~ture .. q_f. . agency · is ·professed. ·~o. be, .O!l hi); a.CCQU_flt;' ihu.s · gi~ing '·. repre~en_t_ative, the- rel"clti9nsh[p ._of t~athird ~~:rt?·. t~~- acts_ as. if ci'rigjn!=lliY ,i:!Ulhoriied {ld. at . to the. principal is the.-same as'that- in a contract- · __ . :. · · · ·• in ~hich ther~ is nd ag~nt (Id.), .- __ . ' .. · Condi'tiQn~ f~r Ratif_ic,ati9n: (C~BECl<) -~ • ··_

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1_. Princ_iPcll _r:r,t:Jst have tapacity and.pow_ er to ratify; 2 A . '. . ·. . ct n:,ust: be .sior~ in f!eha_lf of the principal; .

· t. · · ·· · · · · . \ · . ~ · ·· 2 . ' 1-n ort-: third_person's_tort liability to th_e-principal . arises jn""three.main .factual° situations: .: . .

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per~on ·: dam~·ges .or ifijwre~.. property or intere~t qf the principal in agent's · · ppssession; · . . · · · · . ·· · · · ·I;).~ Wher~·third person· colludes\vith lhci. ageot to. · i,:iju~e ·o~ ·defraud the principal;

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. ·:_. Note: A:principaf ~arinorratify -;he uriauthori;ed · : act__ of another .. p~rson .. unless :that. "person: .purported to act as·agent for,--and in the name,of . . the·· principal, and .. no~-- in his own behalf (Id.· a·t ·.561).. ~

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PARTNERSHIP AND AGENC.Y SAN BEDA I.AW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

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3. ·. Principal. must ratify the acts. in its- gnlirety;

To be effective, . ratification need not be communicated or made known to. the agent or- the third party. T.he act or conductof th~ principal.' rather ·than J,fs cpmmunication is the key. But qefore ratification: the. third party is free. 'to revoke the una~lhoriz~d~~ontract (Id.). ·

.The acceptance of .the result of the act ratifies the whole transaction, including the means whereby · the result was achieved,(ld. a{556). . . . The ?.ct must be ratified in its entireJy or not at all, . The principal, cannot ·accept. the benefits of a transaction arid· refuse· to accept the obligations. '(Id.).·· .· . . 4: . Act must be _g_apable of. ratification; and . 5. Priricipa] must have had Knowledge .or had reason to ·know of material facts about the transaction. (Id. et 549). · ·

Ret~oactive Effect of Ratification General Rule: The-effect of ratification is the same as_ where the princjpal allowed .the agent lo act as though-the latter had full autho'rily from the beginning (Id. at 56?). .

Exceptions: (DWCW)' 1. Where it would Defeat the rights· of third parties Acts That'M.ay 1;3e Ratified: . ' ·:. , V.:hich have ·accrued between the lime of the 1 .. _.. Valid acts; ·., · · ·,L' · ·~ · -: .... •.. : ·. · ,· • •. ·: -rnakinq otthe unauthorized contract and the time 2. · Voidable-acts, · . :, · r. · · • • ,. ... ·: • ·. -· ·· 1 . . of r.atificatibn:.(ld.·af 563).:·. . . - ,· 3. Un revoked acts: . . . 2. ·.If. il will render Wrongful an otherwise rightful. act Nor omission which has taken place between the The act must remain capable of ratificatio~-~ the ·. . fuaking of the unauth.orized contract ahdtmc1~af wtiom fie\1s suppose_dly. representing 1s . ~. .Wjt~, resp_~ct ~9 ~~-e".t ::-- Rat\ 1o~~io11 iliev.es th~ot~u~n~\'Jb~re y. The ~o~trqct _ is.. 9onsidered .,''!g~.n_t._ f(~lTl_ l1?b)li~,Y t_o. the. t.h,~d p)a..:..fy)io'.lfth~ _ -u~~?rce~9Je c:is lorig a.s-1t 1s not. ~at_1fie?:!?Y the ''i •··• .· un~u.th~~1zed. transac~1?_n~:~nd to~ gnncipJ!..for_ i_ .( pnnd1¥1 ·f$,J.YIL CDD.E, 1.317, par. 2)..:Such·contract. ' • a.c!mg :w1th?ut ~~\hon~~- ap~: he·n:i.~Y rec9v~~ · lV LJ51n~of1l_y , t~~ agent· (CIVl4 GOOE,. ·Art .. · ·1 BQ7; ·~ , ·,""\.: :-. '. ,. ~ :·.. compensc1t10.n c;tue. psr:forming ac,t wh1cn-PIN_E_D~, supra. · • . . for ''· . \: ,. ,- the . . .. . . . at 371). -· ·,: . -~?.s.b~e.n.ratifie9 (Jc(. ·af562}:. · · .. , ._... ··: . . · · . .- ... ·,:.•, ... - ..... : .· ·...... ·.-:. ,.. _ .. , · .• ·-·-· /'· .'. · . · · . .. . ·. -' · · ,. · · , : · . fjoVv'.ever, a bankmg,eorporallbn 1s liable. to ·1nrio,cent 2: .· Witt'i respe~t rto tJie ., principa( hims~lf - . The . ... ttii_rd'J>.~r~ons w~ere t},e repre·s~niation .is. ma~e i,:i the _, . · . ·. P._rincipaJ. , ·wbo_ .. ra.tifies-: ·H1e·reby_ .. a?.su'm'es:: .GR~u_r~:e.:qfits .~.usin~~s by, ~-n a_geht_ a~ting. wi\~.i,D t.he ,. . ,. ·'.:\'. " .. _ ··r~sppn.s"i_~ilit{for th·e.iJ..~c!.uJl'].~f!.?;ed 9d·a~ ~.~p-~r~I. ~~q_pe of· -~-1.s.?uthor!tY., eve'l -~hoqgh;, i~Jti.e· ...: .. :.' . -' I · (~if t~e ~gent had}:l'c~ed ':'rJd.er.origina~·.c~utl'lq~_ty. !?ut, pary1cu_lar c?se1 the .. ~Qen_t 1s .: ~~qetl~ .abusing his ·· · -j,s .!lQt lfcj~le· _f~r. ;'ac_t.s .. _oL:Jtsid,f tt,e. ~Llthorii'y . a~.t~or!ty .and a,ttemp~ng to P.ef_pe~rate, a·.fraud ':'P,On . ~: . . $pp_rov~d. ~PY/ h[s r,atiryc·9tJori: ·''J~t,J.s;' .ra)fficaJiori . h.1~. pr\n.~p~I ·9r s·ome :ot~er ~_perso!'li . f?r ~~.!§- ;owh .. "·.· '· _ ,tloes .not fender the principal lia,ble.for' traoduleht · u1t,~at'? be_11efit. Tbe bank.in it~.capacity ~s P~.ncipal, . . fnisrep~esentafio~·? made by tlie '.\rgent without_ m.ay_· !:>e ._ adj~dged !ii:!t51~ . Under 'thf dcictrin~ of 7 · ::-his .khowle~ge ·ttd;). · .... ':' ' .-. ,·. _· ·':: .·. _. . · · l:. .' .. . _appare~t authotity.- Th.e pri_nciP.~!'.s liability in_ I.bi~ ·case . .. · , W1_t)1 ., ·· •· · · · - is solidary ,with· that of· nfs ·· em·p1oy'!;!e (Citystate ·,. 3. r~~;ec;:.ft~· thii:_d p·~rso.nf..,. Ordi~arili,. a third · . Sav_if)gs. Bqnk v Tobias, G.R. No: 22ZQ90, March 7, . . pers9n''..is bound· by a·:.ratification to the same 2018).. .:, . · . . · · -·· . · . ·.· . '· ···extent as he woufd. have .been bound if the ratified . . .. . . . . ~ .. '· . · ,-ac) _had· ·au.tho~ized in th~ fir£t instahc;:i; and. !)oct~rine. of, Apparent P,uthorjty . . . · he ~.c.~nn9t rai~~ ··the· questl'p.n of. the agent's The ·doctrin·e · of. apparent_ a-i:ithp'rity or what is a~t.ho~jty. t9,do the ratifi~d.'act· (lqJ.-. · · ' · ' . ~9meiti~.e~. r.~fe:rced .to. as .l~e· "hoJding ·_ayf' theo_ry, or th.e : doctrine .of . ~stensible cige.fi'cy, imposes

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liability, not ."as .. (he r~sult. of the .' reality of .a contractual relatlorrship.: bµt .rather because of the -actions oLa -principa_l or a·n. employer in- somehow misleading the . P.Ubli~ into. believing . that• -the· relati_c;:,nship or the a.ut_h_ority exists·....

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granted· ·-ta him, and· \a justifies oillers in b.~_lie\/irig he possesses.the. requisite authority. ·

·. lt . .i~- define'd ·as .lhe poV::er:.\o,aff~ct th~ l~gal relations . 'a(another persgq by transa_ctidns with th_jrd persons. · arising' fr.om th!:) -0\h·er's' man)fest.ations to suc:;h third '· persdf.l\iJc:;h--that·the lia.qility of Ltie ·principal for _the acts and~ contracts of his· agent. extends to· those . which ar~::withi~ the1ppp.are~t- scop·e of Iii¢ auth?rity . confe~red him'..; alth9ugh._ho 'actual authority to do SUC(l. acts· . Ot to. make. SU Ch·. cont~9ClS . has be~n t6r-iferred (Citystate Sc!_liing$ Bank _v .. Tobias, G.R. ·.·. _No~· 221990, March 7, 2918).: · . . .

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'.The pdncipal'.~' '.li9pilitY: .. ~hoyve;er, . limited . i:m,.y. \o . . third persons ~ho bave b__e~n led_ reasonably to . . :believe.: by' the ·conduct.- of· the ·prin~!pal )hat ;such_ .. ad~al authority .ex'ists, .al_th.ough no'ne ·wa-S giV\:!n4 In' · oiher vJords',apparentauthority is.deter[)'lined only by~ · the· acts ·cif· the principal··ana not by;.the. acts of the .agent. There ca_n. be nq apparent" ci"4thority .of an . ~g·ent· .wit~out ~ct:5 . or ,conducf. ori. ·the p;;irt of!the · · principal;. ·si.Jc;h ·c1cts··or ·cc;md_uct_rnust_.,have b~enJ 'krio.wn andrelied.upo'n in_gqod.faith'cis result cif the exercise· of reas.onable 'prudence by a.. third, party a§; ~lain\art; _9:Q_d. su.c~·- ac!s. '_o_r. ~on~!:J~ i;i;iu~J:;,:ha_~e proc;luce9 . a. cl:i_a~ge. of ·P?~~t19'}.)9,the t~t~":.e.arty _s,. ·detripie_rit (Ba:!ate· v.. ~t11!1ppme'7_,CouQ1,ys1d_e Rural\ BahkJ~:R: :J..u!Y 13';°'201 o]..~ -... . .,·.'. . ·. No. . 163825; . ... ;,. . .

· · Is retroadive . ari~ makes· . the; · ag~r\t's un·auth·orized act ·good from the beginning. ' · · .,....

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---("ld._c}l 56~=566) .. · ,: : .:----':. · :---., ... · .. ) . .. . .. : . . '· \ •', . . . ·' : ·: . ::. ':·· ... ;. . . Note: In-implied' ag~n"cy,; there Isaclual.aqency. The : . ·.. ·· .. principal .{ifo.0e )s: ·1iatiie,." In. ag~~ey. bi"e-sto'ppe),. the· J\u}hority-~iE!~op_r.e( . · authority" the aqent is,· not real but: only appar~.n~,- : • .. . . . . .. ·., 1, 'If the· estoppel is caused by the ·pripcip?I; he is.· . . . liable. to pay_. third:" persons wh:o_. relie~f on; the .. misrepresentation; · :·· : . ~.. ·: · .. . . ,.. ,. ,.. · 2, .: lf'it'i.s caused by the agent, ttien:6nly the aqent is· . !b~ :princit:i-~f; b_y ·his . _; ., liable (~d.. at.571):. - . ·. ;_..;' . .·· CUIRable... :peglige_nce, . p_e"rm,its _his ·. agent tc;i . · - Obligation to-Advance Funds : '- . · . : ·.-: .. v , .- .' exerci~e-power'not granted. · ." The prirjcipal ril,ust advance .. to theaqent; should. t~~ . -to·' hi_m; . even thdugh th'e .. · latter so request, sums necessary prihcipal :has no· notice-()( . . execution 'of the.aqency .... -· . : . . . . . ·,.,. ' ·l<nowle.dge- of- tfi.e .conquct . • . ••. : . . .,/ .: •. .~ ... . •••. 't., ·). .• . • • • : ~. '-.1 ag·erit. · · · ·. · · · · Should the ·agent have advanced them,' the principal . mustreimburse hirritherefor, even if-the business or. ' . .. . . . . . undertaking· was not successful.. provided the agent gased neqliqence of the . . . is· free fro·m allfault. . . . • . . . . principal" in failing properly . _ ' . . ·· . . . · '·.! . :- ... . . , . . . " to'. supervise the affairs of · .· The r~lmb~rse~e~t-shail i~~lud~ int~re·st·o~ the sums aqent, allowing nlrn: · to ·. 'advanced,' from the· day on which the advance was exercise powers not made. (CIV!(CODE, Art. 1912). ' ·

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2019,S"AN BEDA LAW CENTRAL.IZED'BAR-OPERATIONS

I

629

PARTNERSHI . P AND AGENCY SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY A/9 2019

In the absence of stipulation that the agent shall advance the necessary funds (C,YIL CODE, Art. 1886), the principal must advance to the agent the sums necessary for the execution of the agency (DE LEON, supra at p. 572).

Nature· of Agent's Right of Lien· 1. The right is limited to· the subject matter of the agency (DE LEON, supra at 575). · 2. · The right.requires possession by agent of subject matter - To entitie theaqentto a·lien, the funds or property against-which-it is asserted 'must be in his actual or constructive possession.rand he must have . acquired such possession lawfully arid inhis capacity as an ageht (Id.}. . 3'. · The right generally only in favor of agent --In the absence of ratification of the 'sub-agent's acts oy the principal, the right of lien exists only in favor of the agent and carinot be claimed by one to whom the agent delegates his authority where no privily exists · between the · sub-agent and his principal .(Id'. at 575-57~)_. ·

-

. · Failure of the agency, through no fault of the agent -rnust be "borne solely by the principal. It is unfair to hold this failure against an innocent agent (5 PARAS, su_pra· at 8[?8}. · , Even· if- the agency be gratuitous, this Article still applies: hence, the agent will · still be entitled to reimbursement and interest. This is· so because the reimbursement and interest Article 1912 does not refer to compensation or commission (!d.}.

in

: The. right ·of. the agent to be reimbursed is 'not dependent upon the success of the underU:1~ing 9.f;.....the transaction. The reimbursement shalJ,.include

r 1

Joint Principals Twq· or· more· persons who appoint an agent for a cornp,on transaction· or un~e.rtaking JPINEDA!_:supra,

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:~:!=~~1'.~~:ea~~f:~~~c~fn~(~01r;;1~(,:E$~ba~~ ?;- .. : . . . - .• . .. . ,374-375). · ·~ •. \) N~t.ure_of•l'..1~b1litY, , · · · V /~ If two or IT)Or~ersons have appointed an agent for a QblJgation to lhd_e11Jr1ity f5>r 9:¥1.l!'agey · 1 · · 'll'i) . ..ii' "c~f.1mon· fra~ac~ or. undertaking, they shall be The principal must also in?emniffth1/p~en~for all th-e ~ sdlidarily ,iab. le,/~ the agent for.all the consequences damages which the execu.tion of tHe agfn~y -rnay ,A;"'\, of the age ~y·1cl'(jf"'<J;0DE, Art. 1915): · · ~-~ve caused the.latter, withqut ~ult or negt·genc~ on . ri, '·c,·, • . .. . ~~\ . . . . · .• · h~~ part (Cl'f~L CODE, _Art. 191:B)·,; !Ji/ Sp~~~nty~1sth~ r~I~ uncl_jr this Art1~le.because of the rireommon tran._sac~on .. even if the agents _h~ye __ The_ liability of the principal f~r"'<:lafr\age~Qsri:'tr.~ed only~~geen aP.,fffiJi.~d~eparat~/y, the r~le should apply in to that which the execu_lion ot tbe·~ehcy:~·pa~:rcause :lY. :Jfie:'in£e¥e:s1;of juslite,i(PrEfJA, supra at 378). · . the aqent. Thus, no promisJ-..i'o · indem @\~~ implieq for losses or dam~g~s cause -~~~. ot~j~nsacUon .'?fJ. riderta.~i~g is .c~m_n_,on .to a!I indepeodent and unexpecteq_~r.o~gful\§lcts'o,V~9l!:_a~,ci~al$.if i i~ OQ('.;l,;as·to whiGh their)nterests __~relri pE;lrsons for.. which the: principal-· is in nq~~J·E'N.-,ac~qi:9a_J.-dfiri'tiarnic!~y (11 ·¥anresa 561 as cite"d [.n . responsible (DE LE_ON, supra at 57.4). )' _ ~Dl?(l;J3N,S..IJWa p77). The_rule in _1;-rt. 1915 ap~lies 'e~"\w1ie1;,t}e'"a.PP.ointment W<;JS rrya~e by. the Th·e rule is ~a~ed o_n _equity ~ind appl1~s everur;fre if. M~fiRa s:1~sepa~ate·acts,_provided th¥1t they are for th_e agency 1s gratuitous (5 PA~AS s~~ra a~~~~~~9c_~10~-.(/d. at 577):. . .• . . .· -· ..

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Kinds .. . . . ,.__ . . Legal pledge or. pledge by operatior:i of law. (F:(NEDA · supra al 377). . · · · ·

. . Reql!isites:oJ·S61i_d:~ry_t.iabilfty: .(2¢2)'·. 1~- ·: There are two· (2) or more ·principals 2. .The _P.rjnciRa)f'. have all <-~o~~ufred) in~- the .appointment.of the s_ame_agent; an.d ·. . . 3. . The· agent i$ appoinfed fqr'a fomm:on transaction ·or uodertaking (ld:·a( 576·-577): ·= • · . -: ...: --~ -· .. ,· Note·: ·Any .one of .. ttie princip·a1s may revok.e · the· ag~ncy (C°IVIL COD~, Art.

For th~ prot~ction of the ager\t; lhe law.'provides'that the agent has u,~·rig~t to retain rn pledge the objects of· the · agency until Jhe: · principal. · shall'- have · reimqursed, hi.m {or the. atjvances,.tie made with: · interest as.well as the amount of indemnity for the· · losses and damages he .su_ffered while fulfilling the·. . agency (Id.).· · · ,.,

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Right of Lien . . ... The agent may retain in pledge the things which are the object of the agency until the principal effe"Cls the reimburseme'rit and· pays the inde·mnity- set forth in-. the two preC:eding articles {CIYIL CODE, Art. 1914). ·.

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." l_llustrc!_t~ns: . , :--.. · · · . , W, X, and Y e_mploy:A ?s agent tq s·e11 a "land owned . in . cqmm(?n _ ~Y, the thr~e •. with A_· ·._rece_iving .a commissi6n76f P1, 500,000.' If A"is'·sutcessful, kcan· cbl!ect from.,a-~y'C)f {he t~ree·t~e s~m or° P1, ·sop,000 because of their solidary liability. Of"cowse, if X pays P1. 500,000,. h!il can recover ·reimbursement" of . P500,00 eacfrf.rol)i Wand Y (5 PARAS,.supra a°f.85~860). .. • I . ·

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630 I 2019 SAN BEDA LAW CENTgAUZED BAR OPERATION~

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PARTNERSHIP AN·D AG:EN.CY SAN BEDA LAW CENTRALIZED-BAROPERATIONS -·MEMORY AID_2019 l

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C, D, and. E appoinl F as their·agent_ to sell their, . separate houses. Tbe liability of C, D,. arid E · are . . merely joint and not solidary even if the appointment is made ir:i one instrument. This is because .this fs · NOT .'a co.mmon tra.nsaction or· undertaking {Id.· at 860) .. · . . . Two Perso.ns Contract Separately wit\i Agent.arid Principal _· : . ·. · Wheh two perso'ns contract with regard tci the· s·9me tbing, one of them with the 9gen~ a·nr;i the .ottier with the· princ,ipal, and the. t~o contracts .are incompatible with each other that of prior .date shall b§:! preferr'ed, with,aut. prejudice to the· :provisiQns -of Article 1544 .. . (CIVIL (:ODE."Art.. 1916J: . . . . . _,·

2.

Wheri th.e expenses· were due to the fault. of tbe· ', ag~ht (CIVIL COPE, Art. 1918 par, 2): .. ·· . Reason: Fairn·ess dictates· that where the. expenses were incurred. be.cause of the fauit or negligence'of the agent, he alone should bear tbe· . exp:n~es (PiN_EDJ\ supra at ~82): ~. ·

3_.. When the agent "incurred .the~ with Knowledge that .\3n· unfavo~able.- result. would ensue'; if the .. principal. was, not c)ware ttier~of JC/VIL COD~, .. · · .4rt. ·1918 par. 3). · Reason: To punish the. agent.. H13 'should not . carry out the agency· if the··.execLitior:i · thereof w~~I? manifest~ result in los~ or darq,~g-~ t~ principal (CIVIL CODE, Art.1888):' However, 1f the principal .ls aware· oUt-i"e resulting effect of the .. execution and die:! not stop" the aqent, the c'igenf · is excused from liability (PINEDA; supra at 382) .:

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'{Vher:i: tpe . principal · and the a·ger).t ·. Sel?arately contracteq for. the sale' of.the same pmperty _which is . .ttie object·of the'agericy,Jtie following n:iles shall be . observed: . . ' ;· ·,: . ·. 1-. Th.e contracfoi prior- date shall-prevail. . _2·: · But, if the- rule on double sale··under-Article .1'54 . ' . is applicable, said art.icle applies.·;

.When it was .§lipt,Jlated b~ borne by the agent, allowed only a certain 19"18par. 4),·- · ; ... ·

Liability to Third Pers~n of A,gent ~~ Principal WQ.O • · '. . • --· .. : · · Contracts Separately ·. . · . · : ~' : Reason: ...ifshe stlpulatlon of exe.mption·.ex~1;1ses· In the-case referred to in.the precedi~~rticle;.if the)._. : the pririr~rF~I fromexpenses. The parties.are free agent ha~ .a~led in ·good f_aith; the pr~ci~ai ·sh~Hj))~· · , to entei;.mrO"~al!Ol(vable stipulations (ctvu: CODE, _lia~I~. in. dc1~~JJA::i tn the thirct f)fff~9.~h';..s~~G~fllract .. -~~ Art. -v. - · .rnust.be rejected .. If the agent a~ecf.in l::Ja~d f~1th,. he . · . · . . . alone_ s~all_ be-re~p9n~ible·(q~~~;JCQDE,,,-A...(_t:-:1917)"'.· Uabilit¥.Jfor ~gent's. _111icit;_~.cts . ·.... .> · ··: ·. , 1:J!. Gene. aif'RUJ :''Wi,l~.r~ l.1~ I aull u, cnme ccmmitted by Whether' theprinctpal .orthe -, agent ~ill be ~h·e"rone ... '"Lthe ·agenr_f's tiQt in.ffie_performc)nce of an obliqatior; of li_a~_!e ~or da~ages. to~t~e third ·p~ 'wli.,..ohas 'beph . , : the princi~a.1, -~h~:l_atJ~~-.iS n·o_t b~und'by t~~ illicit_ act ?f . preJu .. : ·. .. ,· _: · · b,y the.ag.e_nt in.the foll9wing,cc:1se;,;: (CF-KS)·· . , :_ 3. Wtlen the. crime consists in the p'eriormarice of .. _. · 1. · )f' the i?gen"t. ··~ci~·d in _ _g_ontrayention .. :of the -an ac(which.is ~ithin the powers .citthe' agent/but .. . . - . prin_cip~l.'s iri"strtidioris, unless. the lattE)r "should . b~coriws·.~rimi~a1:only because df the mann~fr in"~· .. wish"-'tcr.·avall- himselfof ttie benefits derived from : whicti·the ag~nt _has performed' it;:ihe .. principal _is .. :· !he:cgntract (CIVIL CODE, Art .. 1918 par .. 1). · _., .- . . . . : ·. . . ·-: . . liable toJhirdp"ersons·.wlio.act.in.good faith {Id. at. 429-4~7)..'. ·. . . ·. . . . . . Reason:' To penalize the. a·g~nt. fqr tji;obeying the instructions qf the· principal. However, Jf the Not~: Principal" IS still liable fo~.. misn:ianagement of . pfincipal'will receiVEi the benefits derived from the business·by tlie_ agent (Commercial Bank & Trust Co. contract, there ·is- ratification and theref~i-e": he is . .v. Repubi(c.Arrhore.d Ca/Service Corp.; G.R._No, L- . bound to pay the expenses incurred by the agent 18223, "June '2f}; 1963).. . (PINEDA; supr.a at"381-382).

116)1 \ · · ·

... ·. . . , .

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that the expenseswould or)ha"t" thelatter yv9µl_d _be . sum (CIVIL CODE, Art: · ·" · .. · ,

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2019. SAN BEDA'LAW GENTRALl:ZED BAR·OPERATIONS

I 631,

PARTNERS.HIP.AND'AGEN·cy .

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BEDA LAW·C~NTRALIZED BAR OPERATIONS·_ MEMORY/!ID 2019 .'.

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the pJincipal has had .the rec1sonabl~· opportrmity to take necessary steps tc:> · meet .the situatio11 · (CIVIL CODE, Art. 1[!29)'.

·,~

MODES OF EXTINGUISHMENT . . _'·
a'

Modes. . of Extinguishment of Agency: (EDWA~QO) 1 .. gxpiratiOfl ofthe period}. . \ . 2.. Qeat~ •. d~il lnterdlction, Insanity or 'insolvency of. .. -tB·e prin<::ipa1 .o~.of the ag1mt;· '. . · · s, • _ •

. - ·.

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Dea.th. Gen~ral Rule: t,.gency is extiriguish'ed ipso jure · · ufion the· deat~- of:either principal ·or agent ·(EJE LEON, supra at 584). The death of the principal terminates the agel')cy; ~'ven 'it period has been ~tipl)lated and· such peri9.d·has'·not yet ·ended· (5 . PARAS;supra at 895). . .-

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Under'Arti~i'e 19-1~; New·Givi( Code, -aqency is. extinguished by th_e·q~ath of the agen( 1-:\is.rig,hts arid obligations arising fromthe contract ar.e _0ot: transmittable-to-hisheirs··.(Sp$:.pTetrad<'.i~v.,:-GA~,: . G:R._N0:; 'L-58794, ~ugust 24;',J984): -· .... -. ( ...

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R~-a~o~:· A~·e11c/~~q~:ire;~hi·w~ser;ice, capafi~ia'nd. ,so.l~en.~y_"of both.the principal.and.the aqent (Jg;...-, at-583) ... · ·. · ~- .

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Rea_son: W1th:the deatb .of the-principal. the . .. , · : .. . ~. j · . · .,. . ,.. : .. -~ ., · . !our.~~~ut.~o-~jty is ~Jttinguis.~ed; ..where9S if th~ 3·_. Withdrawal of-the agen.t; . . · - ~ -~-.....!~n.tfcl1~~e .~an no longe~. ~~t .for· the benefit. ,L~ and r~prE:_~entat1.on .of th.~~pnnc1pa\ (D~ LEON, Note!·: A~ent. may ·wjthdr~~. byj~i~in,Q;]O~-~ce: t~~tli~ ~~, --~ypra -.\_~~): ~. .. · . . _ · · .. 1• . principal, · but must inde~ii.m'rt~~n ~al. t@r T w •. .: ., damages-that :he·: may suff@r ~ .easo of sufh _i,ftl\. · /&. E_xte. ~ions:((KID'f\CE) _ ._ . . . . · ·. · · · withdrawai (CIVIL coo Arl. 1928): .. r: · . /,~. a. J e c;1~e{i_q,y)i~/c9upled with. an. [nterest 1 ·.: • (®WI~. 1,1:·193.0l: ,. · ·: · _ · · · 4_._ ~ccpmplishment of _the· 15Jeof or. th_o ·n ·1rrr1~~f;'!. ·I[.,~ ·. i. the~ .9.e~f>fhas: be~~,~~l"!st!tu.ted . .in \IJ_e .. t):le agency;.·_ . : ~ { ·.. . ·- ~ ~-~~ · .. . com,1~dn mtire.~t of·tl!l~ ~in_c;1p_~l,and the 5: Revocation· · · · ~ \~· · "-':;::.:.--" ·~· e;agenl1 •1 · · · · ·' ·· · · ... 1 QiS.SQiutiori'.'ci, the \if ; ort50{P~·rat10 •, ,whic-~· ,··~~, . ·. , ·· : .. ·.·;:_···. .· .: ,· ·. ·antn.1sted, o_r..ac.cep_tEid th \GA.· ...-~: ~'...{(~!' . '.-Y!i:-ttir~st.iJi}.he s.~bJec~ ~?~t.er:,. · .. · · 1._ : Other: r)')od_es ·Of- e). · subje{t/matter;.lor-.th~-'.powe,r. ~?nterre_d'_~ ··

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· -': /· ..• : ·A~eficy.a_ri: act · ~f..:_trust .. a11d _co·n.~~er.~ is . c·o.~_f]ne.~ i~,·\ ~~r.ning _..·ti}~: · a~'r"ee'd. ·. · ... _ '·. 9e.ases ~hen,the trust c1.nd.confiqence d!sappe.ar. . · · comp~n~aJ1on., Jhe· . agency 1s nc:>.t ·_one .. Conse_qu~n.tly: ·.:th'~_, ..: prirfdp~I '·i.s. ·· ,allow¢d"·. to. ·· ·· : . :c.Ciupled;w_itn an:ln.(~~ei;;t/sincEi .cl~ agebt;s . " . ter:minate.then:igency wheri h'e loses"histrust and· . . . . · •: ;·inter.est inibbt~inin'g,hi$ c6"rnpensi:ition1:i's ·. · cpnfiden9e: !s;ltie :a.gent·:: Th~. ~niJaJer:-an,,_G.R. .. r~~-~-~ti1g'ui~~.: cc;mtfact. 'oi<~:igeriqx. (Pil'Jf~PA,. ; : ' .. : . ._· JV~j1~~7:.20,:,pec~mb~r.16;~ 2004) ... ::· .. . ·supr;a:1at 383).. :-, ·'-.. i :: . . _.: . :·:. ;·, <' . · '. • ... .....,.-,:.,~· • '- • : ... · : '· · ,·, :;- · · · , ·, lllust~ation~~.?eriaid~ borro'W.s:fr.om\lose;: · .: .- ., : . · . B,ut th~,r~v·oc'atipn mus(not,'b~ ao,ne in:ba<;l faith,. . .. :,. : ·., af)j;l'.ij~·?. s~~,.Jrity-:e.ntri:iits. to.'.Ja.se. c;1;dijg~ ..: ·c,. .•.• '.\ :: :: · • ~' '. .... :_ · .. ·.. .· · •. : .. : ;-. . :.'. ,· w.liich·Jot~;d:irfseikjn'.c~se.Zer.iaicl.afails ·.., ·.. The .poy;eqo-.rev9ke ·agency is an excepti9n to . : tp'pay ttieaebfat.lhe .t)mEi'o(th'el'mat0rity.' · . ·. ·: . t~~:-;gen~r.a(.r'ule .on"·n1utLia,lity . oC Gon·~r;c1~ts Jn : ··.: . : Even.;if.4'.ei;ia[~a- dies;,the agef.!~Y. of:J9s~· · .. Articl~d30~ (Id). . :_ . . .. '-· · JioUid still" r.e.mal'n· :(5 PARA§, 873)· · 2. · Withdrawal of·!~·e'Ag~pt · '' \ ·.. ·· .· .. - ' . , .

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. .. , .. . . . · . ·. , ·. : The· .. ag:en.t may :withdraw Jr9m ,the, ·ageii~y:--by . givin~.,d~e· rioti_i:::e.. to the. printipal .(Cl\llu' CODJJ,. .

ii. . ·, If it"has;be~n ca'n~titut~~f.~~~th~·iri te~~st of . .. .· . a )J1ird ·per'so.n ··who,' accepted· .. th~ . .· s'tipul~iOR' in his~favor·(C/V/L" CODE, Art ... 0

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b. , _The .act. ofthe ager.it was ex~cute.d w(fhout .. : !S:now1edge of theoeath of tile .priri'cipararid ·.:c.: the third . person who contracted with .the .. agent in good faith (CIVIL COpE, Art. _1931) ..

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'

. .Note: Under. Act No. -313~. the power of sale in ?I deed of rnortqaqe survlvesIhe death of. . 'the'principal (mortqaqor) as.it i's pr[rn_arily ari:: . §3Uthority.,C9l")ferred 'upon the ·mortQ'agee .the agent's 'own .protection·.· .The right to ·. ·. foreclose exists independently and is. dearly ·rec.og·r:iJzed: in Sec. 7,'Rule:ifo·aqhe'Rules'"'of. · \ . . . · Court (DE · .. ,,LEON;.'supra at 585):. · . , .._ . . . . "The aqent.rnust finish the business q:egun~pn the. death of the principal.vshould delay tail ·any danqer. (C/Vlf,. CODE, Art. ·-1884). · ... . . ·,; .: . .

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·- At least as between' the parties, principal and . '/;:igent, the' fulfillmentof the. purpoae forwhich · the aqency is. created 'ipso facto terminated ' . the aqency, . eveh. tliough 'expressed to be irrevocable.,(DE,tEON,·.'supra at- 586). The. agency. becomes tunctus officio. 'It has no. , more basisfor its existence (PINEDA, ·supra et 388). ' · ._.

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e. _ ~·ccompli.shment of object of purpo}e

lllustratlon: Melady sells his land ·to Bravo· and · appoints Bravo his agent in p~ying .with. the purchase price. 'what. Melady· owes Arellano, · a. third person .. Here, even when Melady, dles.: the . agency .of Bravo continues to exist (5 PARA~, a(8~3).

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. \Nh~~e agency, 'by._th~ te'rm$.Of the· original ·a1Jn=£~.men('is created for a-fixed period or ls ··. ·to end.'at a certain time, the expiration of such per1od or the arrival of that time, results in the · ter'minati.or:{ of ·the. relationship; even though the· · purpose ,for· whictv the · agericy · was created- ·has. not been. accomplish_ed .. The parties .may· c_on$ent to the continuation of ·. ttie ag~ncy rela.tionship beyond thi period ,. -~-..:·· .· · originally fixed. · · 1

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Givil;intei-dtctian:d'epriyei~the off~~decadu;ing . : . the: period· of"" his sentence . . of. t~ right ·ib\ : ' . 'man-age h'is. 'prqper:ty'\...9~ d(sp_g~f). of \uch .; '. · · ", · property. by anyact of ~ny cooveyahce'1nter. · ., · ·. _' vivps .. A P_~r_sorj u~der civinnt;fdfctifi c.~?11,.6t_. · . . validly · give. consent (CIJJJ.L'·. CODE,·' Art· .. · .. 1327}.' ., : · ... '

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. :,·A$.·?Y a!l·?Ct ofinsplvency theRn.ndpaJ'_l9ses·:·.. :.o~ty to N_o~i~( · . . ,. . . . · · · .·.,. :· _ _ ·..-. ·: controL:of the !:iUbJect m.a):te.r of;'-lt'i~,ag~n_cy, · · If th~·- a gen~ die~! -his heirs have the duty. to notrfy·the . ; • tp~ -~!Jthority_·: of thf agentl-lo:: a~t _ _f?r h)s . · : p~incipal th~reof._.~~9:: in ,the -~E:1antime-, ad ·. · ,,,... ... . insolvencf The ir:is<:>J.vency qf the. ag~nf ~ill '.; : ·_, . .· . . . . . . ,. . \'-'. . · · . , _ · ·: •,'). . ·put:an· e:nd·-to'.the agency, if·it'is in ·any \vay.. Note: Art. 1932,doe·s not impose on ttie heirs of the . . cbiir:iected~ith-.: the age.nt's bu).iness;- wh'ich . principal the. d~'i"y to'. notify the agent of :the death. of .has caused!·h_is·.f.ailu~e (DE ·~EO/'{, ~upra:?.f . ·the pr.in_.c_ipal (O,E L_-_EON,·sur:tra.at. '62.6): .·. ·. · . ; .5841-_ ·. •,.. .. ' . . . ,. . / ··· .. .:._.~:~·:.:. ,:. ··: .. . . ·, -·. , · Ac;ts Dor:ie \yithouf ~11owledge · ·of Principal's .. .: ·. d:' ..·,.Qissolution "ofthe firm corporation . ; I.. . • Death . . .. · . . . . . . ·'' ... - · ·. _. · · . · -· "' · · . ·_· .. Anything done by the agent.' without 1<no0iedge ot. th·e . If ttie _a.gerita_p~oin~ecr ii .a\orpprati6~. deat~.· th~. t?rincipaJ: Qr. of, any other cause that : · · .. ·. · fjrm• (partnership) .. which:_ has· a ·juridfcal e·xtingujsh·es the ag·en·GY;:,is. :valid arid sh.all'. be. fully · . persona.lityf once it is·. dissolved .rt coulc(no .. , .. effecti~e with respect to.third persons whcHnay have· . ·Jonger :funciio~:,as _a,ptin'cipal· ~r an. agent · contr?cted-witll him in-goq9 faith (C/Vlt,COf)E, Art exc~pt for. winding up of. corporate affairs . 193_1).__ · . .' , ·. ...:. ·. _. · · ,~··: .. . _: . ·'-:. · '(COR,PORA.TION. CODE, Sec .... · 122; :,- now · REVISED . CORPORATION ''CODE . Sec:: · _139).or_paftnership affairs (CiVIL CQ6E, J..rt: . 1832). ... · . . . . ·:. /

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PARTNERSHfP AN·D·AGE.NCY SAN BEDA I.AW CENTRALIZED.BAR OPERATIONS - MEMORY AID 2019

Reason: 1. Since the authority of the agent emanates .from the principal, it is enough if he wishes· to withdraw .' or terminate the agency (DE LEON, supra at 595), . . .

Effect of Death in· case of Multiple Agents 1· .. In case of several agents constituted for the same business or property - death of one or ; more, but not all-of.them would not'extinquish the ag~ncy, with respect to thos~ ":'ho remain living·: -·.

2.

-

. Note: The same rule· applies in case of civil interdiction, insanity or insolvency of any but not .all of the corrimon agents (VILLANU.f=VA $UPrf3 . .et 227). · 2.

When it is clear at the constitution of the agency that the common agents wete intended to be considered as having capacity as a group and not individually - . death. - legai"" . incapacity.." or. ' insolvency of one would ·legally terrninate the agency (Id.}. · · , I

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Revocation at Will is Proper 1 .. Even if theaqency is Qn~rous; , 2. Even if the period fixed has not yet expired (5 . PARAS, supra at'°866).. · ·

·"'

Loss or destruction of subject matter. General Rule: Agency is terminated (DE' l!EON,'l supra at 589)" . .: Exc.e~tion (~~P)·,

The trust and confidence of the principal may 'have been lost (Barreto v. Santa Marina, G.R. No. L-8169, December ~9, 1913). 3. -The: princlpal-aqent .relations~ip is consensual . and personal in nature and no one can b0e forced· to retain another: agent aqainst his will (DELEON, supra at 595). · ·

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When done· by the principal, it is called "revocation" a.(l~. V.:hI~n don'.: by,,the ag~nt: it .• (s usually spoken of js Ft~dra\xal or renunc1_ahon (CIVIL CODE, Art .. 19~9 parpD't,_L~()_N; suore at 594).

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1. _l:;ontrary agreement. ·. •~Exceptions"c<.(_COMBI) {CIVIL CODE, Arl·_.1927)_' · 2. · If it js possible to be §.ubst,.it. tep·~~oiner. 1ID Wher ~gene\ 1~ fou~led with interest: (DE · 3·. · Partial toss or destruc~orNobs nbt always LEON, supr9i.tt't·608): · terrninate the agency., It cofti~u_e· in-,.~~ . , e ( ,) •' . : ·• • . · existence as to other ·prorlefty,,n~t affecteci-(la): . :ii . fl'e""1~terest possessed P.Y the agent is not m the · . ., ,~ (· \ ~"-~ ·:;] t .,,..C.:proceeds ari:3ing from the exercise of the power, Change of Conditions .. -~. · ,\'. · :; : ••· ~ ~ l5'L!t -i~ter_est i~~the}subject matter otIhe P._ower-, Gener:al J~\1le: W~ere there i~..qa~sic in {D~j_~~7rioJet al. ~ Abad- & Abad, _G.R .. No. Lcircumstances surroundinq tbert1ansac~d~~li1clj~ ~ . -'f'D,.Bf~Septembei130, _1958). . , · _ . was n~~ co[ltemplated·_by t_he p~~ies~and ~ul1 J;jr_Ji);,~y,'e.me'ans of fulfilling an Qbligation-already · rElasonablyTead the agent to.!;,'ielleve tfiat. !l:~Jm~{~A ·1 ·-z~tractedf · .would not' desire hiro to .a,ct, tties'_.authority 'of a~~r~lff1. is app_pint~;d_ par~(r Ma_nager of a partnership terminated (Id;. al-5_89-5~0)._ . . . .· i:1 d l)j.s IE:rminatio.n ~s unJustifiable; : · _ f ~§.il_~~I contract dep~_nds, upon _it;· . :. Ex~eptJ.o.ns:: ~R2q: ._ . .· 1 1. · If th.,e or~gmal ~1r~umsta~~es_ are·R stor.eg.,~1th111 J\".:11~ tra!10~:- ~ wanted to make.A hi_s swety so P . ·a reasonable:penod of time.:. . . , ~,:____ t"\--_ln.ade··A h1~ ag.ent. a~ a sort of- induce·rnent .to 2. Where · c1gen~ has.-.-Rea~on_able· doubts .as to : . safeguard·- him· from eventual loss·· (5 PARAS, wt,.ether tt,e·pfincipa_l w~uld.desi~e-·hii;n ~~ act;,his . . ~upra at. 820); and · authority will _nor l;le terminated if he acts .. . · · . ,. . • reasq!Yclbly.: . . . .. . 5. If it .is cre.ated ·not only for the !nterest ·of ·1qe 3'.·· Where the-pr_incipal·:~ntf agent are 'in clos~·a_aj!y priryc,ipal.buf also for ihe int:erest·o( third-persons, · fonJact, th~. pgen°t:s autho'rity ·to ·act Will not . Who hc1ve acc·epted tJie s.tipulation in .their..fc;1v.qr.. terminate upon a change'. of cir.cumsiances.if.the~ . . ·; .;:igerit knows the p'rii:,cipal _is-aw~r'e oq~e.,change. Note: Ag!=!ncy COl,Jpled .\~i.th . interest . may. be· .c1n-d · ~foes not"'give him new in"structions: (Id. a"t rev9ked. for a just ·c.a·use (DE LEON,· supra_ a"t. · · 590). : '• . ' . . . .614). . . ., :

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· .Rev9~ation:of ~gency by _Pririciipal·- . . 7· General' Rule: Agency is revocable at will of the princip_al, regardless of tfie le.rm of the agr~ement, at. ariy tirrie, Vflth ·or withotJt reasot1 (CIVI/.. COD~. Art .. 1920).. . .

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A p9ityer

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of attorney can be made irre;ocao1e contract only in the ·~ense that the principal may not recall ,it at . ~is .. r;,leasure; but· .co~pled with (nferest pr not, the authority certainly can be ~evoked for a just Cal:.lse'. Such as when· the · attorney-in°fact . betrays the inte.rest of the princ.ip·a1. It i~ nbt open: to serious doubt that the irrevc:icability of the power of at_t9rne·y_ ma'y not be used to shield the perpetration of acts in .bad

.·.··

SAN BEDA !AW Cl?NTRALIZED BAR.OPERATIONS - M.EMORY AID 2019.

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Note: In ttie i3bsenc~ of any notice. of revocation, the principal may also be held liable.eve·n·to third . persons who never dealt wit.Ii _the agent previou~ to the ·revocation, if'they; in .. common with the' pu\ilic at la.rne:. we justifiecl in believing that such · agency continu·es to.. e)_(ist (Id: 59[1). · : · .

· faith, breach of coofidence, or betrayal of trust. by the· agent for.that would amount to holdir'ig that power CQUpied with an interest authorizes the agent to commit .frauds against the principa·1 (Cole,ongc;o. v. Claparols, ·G.R:· No. L-18616, Mfrch 31, ·1964). ·

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Kinds of Revocl3_tion: a .. Express revocation; and · .. b .. ·Jmpi'ied revocation --:. ... .· ,· .

Liability of · princip~I for damage caused by revocation·,· . While th~ ·prirdpal may h'ave absolute power. t~ ~ revoke the_agen.c.y at any time, he rriu$t respond in . damages for qreach of contract where the termination .· is wrol)gful,' ~!though· Art. 1920 does not expressly provide, -in those cases wherein not 'having the legal . right to. do so, h~ s.hQLild .disct:iarge the. agent (DE· .. LEON,- supra at 595): . ·. · -

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Agency for the Purpose .. cit Contractinq with Specified Third Persons . If-the aqencyhas been entrusted-Jar the purpose-ofcontracting witb specified· persons, ifs revocation shall not prejudice the, latter. if. they' were" riot 'gb)en notice thereof. ((;;/VIL CODE;Art:.1921 ); : ; . · · 1. ·Fix~d .. period - p~ilicipal sh~·II be. liable· by the · ·• · ' . · · .. '. . ·... ' -, . . - ~- · wrongful discharge of-the aqentbefore expiration-c--c- _.Tbe_revoca~ion~ of-this_kind ~of~ag.eqcy ~;,hall.,.not_. __ of the period (11 Manresa 573; Id. 5~6). prejudice· specified persons. who . were riot timely 2: Nb_'fix_ed_·~~riod --:-: the principal is at. liberty to:t: · .notifieq_.of the act.of.revocation. The_y'_mus(pe given· -terminate -.ai:Je_ncy at will subject 'only to thy"./' · the opportunity to meet the situation so-that-they may requirement of qoodfaith (Derion v. Brimo & Co., beable' to.. protect. their riqhts and interest. (PINEDA;

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·rs:23, S~pt~mber 12, 1921 ).

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Noticeof Revocation . · · : · If the .agent"'fa1ls or. refuses. to. return. the pow.er of . :1. · T~ the agen~. _ .· . · . . · "' . . . · · attorney, i! ilJincumb~nt -upon ttt_e'. princ(pal to giye Express _not1c~.- to the agent is Jl~Ot a~ways. . proper notice: o the memb~rs of t~e· p_ubl_1c who may . necessary. If the: paftY: Io : _be no~ified ·aetually -~,.... be al'.fe_ctefb~the r~yocat1off. Und_er. Article 1921 ~n·ows,. h~s reason to ~~.,9-~acts1 inaicatif}g · the t;Je~ 01_~11_.@od~ if the ~gen.c_y has b_~en er)!rusted tha~ his qutri~rlt~ _has.tl5'e$?n terminate? . ~or:tl1~.Pf of 0\!1tract1!1g _w1th.~pec1fie~ µe1l:>uJ1~; suspended, there JS suff1c1~nt noti~(DE LEON ... its_ re~oc.9t1.on~~-hall-n_9J11xeJUdt~e thelatter who were ... sup,;~ at 598). . ·. · .' - · ,.~ · not g_1vem . n0~th~reof JVILLANUEVA;- ~upra at

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. Jfote: A rev_oc_ation.without notice,to the ag_ent will · · · -· n·o.t render invalid.an act-done in pursuande or the 1mp11Jd Rri~ocauri~ · ~. ": .-. · authdr.ity (fd:). · · . . -r.) ,..,.._......_,·o...._l~-tt'l~agent. h~d .gener~I: powers,:,rev0catton of. the· . -ag~ncy does _riotpr.ejudjce third pers~ms who acted in. "Z : " . . .: . goQd f~iJh and. W(thol;Jt knowiec;l_ge_ Of .the. revocation· .. -2. To thircJ persons·· . Ne>ti~e_.of the r(!lvocatioi) i_n a.·ne.wspar.er. o(:"g'en.eral· .. · · Actual.nQti<;;e must be'brou'ght.home t~ tlie fo~mer circul~tion. is. a, suffici¢nf warning to third· p13rs·ci~s · gustomer,. Wh'lle notice by pu_biication is sufficient (CIVIL CODE, Art. ·1922):'··.- ·,, · · : . · , .. ;· ... · to other· persons "(CIVIL -GODE, Art. 1873· DE ':." _ ._

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, Thei · a·ppointment .. of a· .new.· ag·e·nt for: the ... same ~usiness: or tranJact,_dn:revok.es,tl:)e previous.agency, . from the day _on .'!"hich)1otice th_erec:if was given to the · former agent, .without prejudice. to.-the ~rovisions of the two prete'ding ~rt.ides· (CJ.VIL:C,O(J.E,Art. 1923J... . :__ :. .

.. In a c~se· involving a gen'e~ral. power o( attorney .. pe,rmitting the ·agent" to. de.al.·with the general ·. ·. · public, -tt:ie· Supreme Court held that: Evidence .. . had be·e.n"adduced that notice in writing had been ... serveQ . n,ot only. on :C.hqithrarri, but also on · qttig~s. of the· revoca.tion· of <;::hoithram's power · ·. _lmpli~d.·R~voc~tion may b~'Eff~cted·;. · .. . . · . ..._ of·att~.rn~.y .. by lshwar"s la"Y)'E:r, on M_ay 24, 197( -1.· ~y th~, acC.of the, principal. in appointing·_ ~nother ·, A publication of sa.fd notic~ wa·s.made i_n the April·, . ~,. · agent· ~or the· $am·e. · tmsiness transaction ·- 2, 1~71 issue· of· Jhe · Manila Times ·for· the···.-~ .·• · (C/VI~ ~OPE,.Ad .. 1923);.. ·.~ · information ·cl the general public. Such notice of ' r:evoc~tion in_ a. newspaper·.· of general .... . · ·- . :.A _specicil power ot- att~/neigiv(ng the son the ·. · authority _t9 _sell. the· principal's: Qroperties is circulation is ·sufficient-warning to third persons d(;lenied revoked py a subse,q!JE:mf general. power . incl!-]ding~ Ortigas· :{f?amnani v. CA, G:R .. No. of~attorney that .does not give such pow.er t6 the 85494, May 07, 1991). son,}md any sale'!=)ffected thereafter by the iori . in the na.rne of the, fath~r.would be vojd (by · · ~ .°'

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2019·5AN BEDA LAw cENrnAuzEo BAR oPERAi-10Ns

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PART.N:ERS.Hl'P.AN.D

AGENCY

SAN BEDA LAW CENTRALIZEO'BAROPERATIONS- Ml;MORY'AID 20_19 , ~ :t~lld:#'fy9t4tSM##_'iMM5eS¥iffi_&PM¥£·ifittiPi4i&.Z¥UIP!##&*!WlWWEtSt\~4#fkfli&it8 itf!W,?4ta:ZWRM!*5 t#HNAiWb4iii+i&W@'5;1 .

· Buncio · & Co. v. Ong Guan 406f31, October 2, 1934)

Can, G.R. No. L- · ·

- Hie revocati.on does )lot become effectiv·e as betwe,en the principal and ~he agent- until it.is in.some way com.inunicated-to the latter·(OE LEON, ._supra- at 603). · ·

Note:. Revocatior:i of the -agency is oniy . with r(;lspect to, the third persons , with· whom tl'}e principal deals directly; ·as to th.ird person who. , have previously known of the power of attorney of the. agent and .who, have' not dealt with· the principal, the agency cannot be corisidered reyok¢d .(Id.): · · .. -·

It is also apparent that unles·s the agent is·aware The rights of third persons who acted in good or .given .: ncitiee that· tt:ie · princ;ipal · has directly faith ahd without k_nowledge, of 'ihe revocation will . managed'th·e. business which ii, covered by ~is '\. not be prejudiced thereby (Id. at 603). ~)ower ·of attorney, then insofar· as. the agent is A special power revokes.'a .general one as.'to ~he ..._ cqncerned th·ere is· as yet no revocatron of; his · special matter involved i.n the latter (CIVIL CODE; · P.o,w¢rs (Ip.). . .. · .Art.1926). . ' . . . Note: There isno proof in the record that thefirst Wher-l'ihe·agf!JlCY is stipulated to beexcluslveIor- · agent, theson; knewof.the power-of-attorneyto. whe.n' corripensatioh is 'anchored on the'. success 'his mother. It was necessary underthe law for' . of 'the tr_-ansactibns entrusted · to 'the agent)', the .' the defendants, . in· order to establish their ·- ·;, principal. is depri.ved·. of the ·authority to appoint a · .· counterclaim, to prov~ that 'the son ha_$..00ticErofu·· . 'f?r t~~s~~e tr~_risaction .. whethe]. the · the seco_nd p0wer-of:-att?rney J~rc,a -~- De fief·ap.poin\rne_nt 1S')Oln~-yv1th the first-aqent or_ by Manzano, G.R.-No. ·1341'4, F~brua~~l9~y··_r;if:rrvo~a.t1on.(!mp!1~d)_ o] the. power of first ... ·.... . . . -~.. ·. c _age.Jfrr:t~12~:suer~.at ~96). . . ·.: -, But there is no 1mphed.relo'~tropjw~,..t~~~:X~r. -~-. . · ·. ,.·. arpointment._of a~~_ther ag_e~ti~:i:loyn~~~pati~~J. ~<:~~f~t-~~ One_ of. the Ty.,6 or More .·-with the continuation of a;ff
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. }~lty~b~'}upr~ fyJA)~tJ~~t~~s/~~-.t~-~~i -~u~~?·:.at-~06!:,:~:-: ... ·, .. _,·. ·. : 1 But-the 1Atery~r:,t1on pti_bili_ty,_ be~ause it .may be''t_ha,f::lhe or:ily . : ·_ . h~~-· preyi'ously: grariied·.g'ett,er. lri' ¢pse _.pf'true . . . . ;• ;. . . . . . .,., . . . ·. ·;. . ~, in~onsi$lerJi;;Yd_lie ag~.nQy.~ i.s~ reyo~ed.~·fqr ·there·. . . ~--w~!=:i,·~~ ~g~-~~ :i::;~~~~e·d:a ~~tiei~~;~o~_~;Xq ·cl~ 'J . · . yvould ..tie· :'no lqnger.~ any , oasis. t)ler'efor: :: (11 . . c'e'rtaip . §!clS, by · his principal. and the latter ::· .M_cir1r,esc:r..94] a.$._.ciJed.in.pE_LEON, iµ_pt,k pl·B0.5). , . ,. sutisequeotly_grcihte,d·a. speciai powe.r l<:>.anb!h(3r ·· ~ ·

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. :_ a.9enf-t?:c,:io 11:i~ rna_tter or tran.sa~tton;__ t_tie Alf.hough. the ptovision:.d, e,es.·n.ot 's. late. wher'i'the ... , . , for.mer· ppwer IS 1mpJ1edl.y revoked. There· IS a ·pa'ralleli$ri1·, y;ith,·lne. 'r.ule. that ip13cial; law act"of:revocation tak~s pla_c"e, it can be presumed . . thE?refore.'"th.aHhe' moment_ the 'principal directly'. . pre.vai!S'Oyer' a .general 'law. lmpliedly,'a generai' . man~ge's ·hE( b:usin¢$s l?Y 'dea_lirig di'~ectly 'with~ power su.bseqU:e.ntly- gra'nted/ to... a.n0ther -~Qe[lt third _pers.ons .. t~e agency is:- rE?voked·.-· does not revoke the._special·pow~r;,unless it is (VILLANUEVA; s_upra a.t-201j. . / . .clearly _stated that th·e~special'"p6wer: is· re~oked. ·

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I 201s SAN ~EDA LA"'! CENTRALIZED BAR:oPERATlbNs· :·. ~ · ·

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by the subsequent supra at·.399).

general · po~~r (PINEFJA,

the necessary steps CODE! Art -. .t'.929).

Note: A special power is not. revoked by ·a ' genera.I power ' subseque_nt of attorney given to another_"agent, 'unless the latter refers also to the act. authorized under the special . power (5 TOLENTINO, supra at 436). .

. Revocatlon at Will · "General • Rule on • Revocation:-The • . revoke the agency at will. .

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Exceptions: (BFA) . 1. When a !!ilateral contract depends upon it; 2 .. "If it ls means of fulfilling an obligation already contracted: · · . · 3. If· .a partner is ~pp.ointe9 rnahaqer or a · partnership in the contract 'of partnership and his removal from the rnanaqernent is .. unjustifiable (CIVIL CODE, Art. 192!)- - . ·

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Even when the agent·wit_hdrayvs from the agency for a valid reason, he must· continue to act until the· principal has had reasonable opportunity to take the · necessarysteps like the appointment of a new agent to remedy the situation· caused by the withdrawal. · The· purpose : of . the law. is to prevent .damage or ·· · prejudice to the principal (DE LEON, supra at-618) . The agE;!ncy shall remain in full force and effect even after the death of the principal, if ·it has .been constituted in the.commoninterest of the latter and of the agent, or in the "interest of a third-person who: has accepted the stipulation in his favor (CIVIL CODE, Art,.1930) ' General Rule: Agency is terminated instantly by the death.otthepnnctpal (CIVIL COOE, Art. 1919, par .. 3). . . . . . . Exceptions: · 1.· ·if the ·agency has been constituted: in the common '.interest of the principal and the agent (CIVIL CODE, Art. 1930); 2.

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W_h~n A 'partner. Is Appoin ed ·M.anager of· a partnership and is Removed Unjustir@bly · · . if· a partner __ W?JS. aqreed to b~e ..ma"nager ')0f a partnership as i~~icated in· tfie ·certifica~e ,&f Partn.ership,'fnd f6r which he would devote lime a_nd efforts and was thus induced to resign fromthlsother professional works so. he couJd render, full tim~ rnanaqer, 'and has been dealing)vit!i, tHira :eerso11s as. a representative of the' firm. his app9intment as rnanaqer cannot be revoked without valid justificatio"r:1 (CIVIL CODE, Ari. _1800).,

_ If th~ age'lt hk~ already b_egun the .buslness and tliere is an 1mperat~ve need to finish the ,same to avold . dilng~r. prejudice. or ~amage __ 'to the · principal '(CIVIL ·coDE,.Att 1881-) .... . _

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The agent. ll}a/withdra0 frorn the· agency by giving due notice to the prindp~I. · If.the latter should suffer any damage by reason ofthe withdra,wal, the agent must indemnify" him therefore, unless . the agent should base his withdrawal upon the impossiblllty of continuing the · performance of the aqency without grave detriment to hlrnself (CIVIL,_CODE, Art. 1928).

If it has bee~_.constituted 'in the interest of a third ·, .. -person .1,~hp~as accepted the stipulation in his favor (Cl~,L?ObE; A~. 1930); : . . . .

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Validity of Jhe· Acts of the Agent . after Extinguishment"of Agency Anything done by the aqent, without knowledge of the death of the principal or of any·other cause which exiinguishes the agency"is valid and snail be fully effective with 'respect to third· per.sons-wh·o may have contracted with him in good· faith (CIVIL ·cooE, Art. J9,31 ). . , . ·. . . . . " ., . An a~f done _by the ··ag.ent ·after the· death _of· the p~incipal is .. \talid and effective only· .ur:ider t""'.o conditions: ; . 1~ That the· agent ·acted. ·wittiqut kri.ciwiedge of the death of tne principal; and 2. ·The. third person. who cbntracted with the agent ac.ted in. gbod faitti · (Rallos v. Go Chari & Sons, G. R. No. L:-24332, Januc1ry 31, 19.78). . ·. . ·

Just-as, toe principal may, at' his will, terminate the representation "conferred by. revgl
Note: Both the ·agent a'nd· th'e third person-must be-in . good faith (PINEDA! supia- at 41 ~):

The agent, even if he should withdraw. from the agency for a valid reason; must.continue to act uritil . the principal has tiad reasonable opportunity to take_

Duties·of-f:leirs Upon De~th_of Agent If the agent dies, his. heirs must notify the principal thereof; and-·in the meantime adopt ,such mea·sures

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Confra~t ·bf Loan A contract wherein· one. of parties. delivers· to another, either something not consumable so that ../ the latter may use the same for a certain time" and return it, in which case [t is· .called comrnodaturn: or money, or 'other consumable things, upon . the condition that the s.ame amount ofthe same kind and . quality shall be paid, in-which.case it is simply called a [can or mutuum (CIVIL CODE, Art.-1933).

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(ARTS: •. Corttract' · .for .:- ,.th~ delivery by one party. and .receipt of other party· of given sum of money," or :'9th-er .consumable things

Ability· of a person to borrow money or things by virtue the . trust or confidence reposed. by the lender so that tie Will pay what he may' promise within ·a· specified upon · aqreernent, 'period (DE ·_LEON, supr.a -et e~press or· implied, 10).' . to r~p;:,.iy the. jar:ie . : ,-: · -. . .. . . ,,. . amount of. the· same . The con_ces~1o_n of "credit · .. · kind and g-u~lrry: ~l_!,h ..n~c;~,~S~fily;, _ ·.inv~,l~es ~ the · . or wlthout: interest granting of· loans up to the . .·(CIVIL.. GODE,.'.Art. lirnit-oh_he .am·qµrit f)_x~d in ,/ 1_933), "'.' ·, . · . •; · ."• · "the at 10). •, "credit" • . • (Id. • . . . . . . .I . •... ' Credit in· Relation to-Debt. ' . . ~ . - 'Credit is a sum credited on.the books of a company a· person who appears to be. entitled. to )t. It presupposes a creditor-debtor relationship, and m~~ be sai9,·,tojmply. ability; ~by .reasoru of prope~Y, or estates, to. make promised. payment (Chinatrust· . (Phiis.) Cominercie; Bank v. Turner; No .. 1.91"4[58, .July 3, 201:7)\ · , ·~ :. .

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be . pa.id Th~. discount does. not . .· >: ·.· ha\,'.e- .. to, . be .. repaid: · (Herrera · Pelrbphil Corp.,. G.R. No: L-48349, · f!icember.2£1, 1986~.

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Q_rdinar,Y. 9of!1m_od~tu,rn-·-u.se_ otthe. t~ing bY:.tn'e . bail~e· is> fo.r··a ~~rt~in.Ji·e_i:iod-· .. of-. time· . (C,VIL ·· · 'copE; Ar:t: ·19~3).; : \... ·. ·. · . .- . .. ··•· . i.. Piecarium· ~ :one·· whereoy · the· bailo.r 'may."· . ,.demand the thing -loaned at will. A cmntr~ct is.pf'ec_a'rium-:when·: . a> The duration a_nd·purpose_'of the contract are ; not stipulated; or ·

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Cause. The cause is · the liberality of the bailor .. Commodatum is· essenti.;1lly . gratu_itous (<:;iVIL. CODE, Art; 1933). . ' In . Pajuyo v. CA, the contract · was 11ot . a commodatum because the ·bailee was
(DE LEON; ·supra at 22-,29).

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le~d c_qnsuinable· goo·d,s' ai,d to _hay~thef~saf!le•: ·_ . -. '---,,""coJi~- ~06); ahd ·... · : ., · · ·. , .(Pr0d_u_cers: Bank ·of. i{ie. Phi/s., 11:. cA: '.G.R:~·,··lfitiere:ar-e two-9r,rn"qre borrow~r~,Jhe death . ·115324,_February"f~; 2003). - '·: '! '· • ~ :qf-one,.do~~npt"e;tiriguist:i."th"e qonfracdrf· · . , , ., ... · · ·. · JhEi· a6sence· ..·cif,~tipula_tion - .tc:Hhe, contrary.· Com.~odatum v. o'th~r Type of C,ontrac~;:; . . ·: _. ·. "(D~ i...Eof.!,-supra ~t 28).· _· . .-. __ . :· ' · · · ·

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CREDIT TRANSACTlpNS . . . ~AN B.EDALAW CENTRALIZEDB_AR OPEf!ATIOf',,15- MEMORY AID 2019

· · 1;:xception: The.bailor who, knox','ihg.the fl~ws of : the thing loaned, does r:iot.' advise the bailee of · the same,. shall be· liable to the latter for. the . damages which ·he may.sµffer by reason thereof· (CIVIL CCJOE_, Art. 1951). . .

Exceptions-to. the exc,eption in (b): : a. If there is a contrary stipulation;,and . b:· If the nah,rre of the thing for.bids such us$ (fd..

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Obligations of The Bailee· Princjpal Obli_gati.ons:, (TUP~R). . 1. ·Take earl:! of th'El thing .with di.ligence ·of a good · father of a 'family. (CIVIL [;'CJDE, Art,. 1163);: .

The bailee·cc1nnot lawfuliy sell t~e thing.I~ satisfy · the damages (DE . . . LEON,·$upra at 37). . · The mere failure. 'of the , baii°e.e. to ,.re~urn·. ttie· ·~ubject ·matter of com~od~tum tp tpe. bailo'r does hot constitute advers'e 'possessiorl',on the' p9rj of the bailee who h¢1ds the·sam~ iri {rl!st (Id. at 36) .. - · . ·· ' . · - . · · ·.

Re~s£n: . ~h~- bail.~_e_ i~ _suppo~ed,.tP r~furq:·th~. idirntical thing .(CIVIL' _CODE, Art. 1933). . . ..

2. · !,!se the thing loa_ned .. only for .the.,·purp_ose for . · WhictJ i.t was .lo'aned. and 'for no ·othe·r purpose . (CiVJL. ·CODE,.· .. A..rts:'-1935, · · 1939;. 1940): Othe.rwise,- he will com.mit'a breach .of contra.ct (DE_ LEON, at 31), . ,. . .

Inthe case ~f CattioliC ·Vica·i:Apost6_/i.c;,of the Mt. Province 'CA, the. petitioner was fri possession .

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supra.

.' of. ·the . disputed. . property -as ., borrower i in . . com rnodaturn from private, "respondents . since . . 3. .e_ay. 'ordiiiary expen~e~ ·~ for' the use ·a~d · 1906 but.in 195·1 petitioner repudiated the trust . - preservation of.· tli'e. thing and · a portion of '_.wben 'it oeclaredthe jiroperty for.' tax purposes e·xtraordmary expenses ari~1ng tronfthe·actuaC · · under its narne. Tfi.e Supreme Q~urt held that . . use Qf the thing"(C/V/L CODE,· Arts.1941, 1943, when it fi\ed its, appticatlon fo~je~[si~.ation· of the,· 1945'. .1 $49, .. 1950);. .· . ~ r.......... ~·said p'rQP,erty in 19'q2, petitioner' .had. been ')n adverse·-tosses·siori of-the. same forat least 10 . ---=years.. t.Jnqe( Par.. 4, _555, of.tb~ Civil Code, it : :- . CODE, Art. 19~3; DELfON, supra at ~2). ·. . is clear Jtla -~he ~eal,'.right,/ofpossessi?n o(?a~lor · . ·. ' . -. -. · · . over the r:iro~erty wc1s 'lost' or. no longer· existing Lial;>ili!y·f~~-Extra(!idi11ary-~xp~s.es _.. · .. _ afterti!e 1ppse of 10 years.that ballee hadbeen · If extraord1~ary expense~. ~~~011,_thei~c.cas1on . .. . ., .' in. ~r;_e.er~e. Pf~ession 'thereof (Cat~olic. vicer of the actual use of the. thing~ th~)b~e~. ·~veR\: Apo,ptotidrJ.f .tne Mt. Province v. _CA, G.R. No. : thouqrr .he a~t~d .without" faul.t.::th~ shall ·be. . . '·bo294='95";&arcfi'j23,.. 1990). - · -. . · · . · . . borne equally by· both ttie l?ail~·ncl bai,Lee, · .. .. · · · .' . ·.. · · .. .\ ·' . . · .· unl.ess there'. is. ~ ·stipulation. ~e. c;;onl~9jY . . Other__Obli~atio~s: '(LPE)."'' · .. · . . · · , .(CIVIL CODE, (',rt._ 1949, Par. 2); · ·' :E Liabilityfor toss _due to fortuitous event'(PV/L . . 6DE, Art. 1942); . . . _.., . ~.....,.....,;:-.,...:,Ger:ieraf-· ·Rule~·· -He . is .. ~ot .Iiable -because .. ownersh_ip .,r~main$ with. t~e b.ailo{ (P!= LEON~ . ~upra a(-34). : -. · . ·. . . . . .:· . . - ·. 4. ·Beturn · an<;t not'".to>ret.9nCtne· ..ic!~ntic;al :thing : :. . . . ··, · ..... ,.-· . . . ·.' . ... . . . · .. - . "., . . ( . 1.o:a:ne9 · exce_pt unctef - ¢ertaf!:J, 'cirturri~~ahces · Exceptjons; ·He is liable forJos~ 'eyen if it ~tioulcl .(CIVIL CODE, Arts.1933,- :19M,. 1946; DE· . be· through . a fortuitous ·e.venf in' )he fciilowing r. LEON, sµpfa:at-30); :_ · .-. ·: ... : .-~·:···'· ·' · . . '.casJs '(CIVIL CP[)f=, A',i 1942J;''l~LAS•O( . . l/l{hen' ~e· _!See_ps it.19,nge( than·· the:· period :·· ~ight'of R~.t~n.tion ... ·. stipulated, 9r after t~e a.~complishf"!'l,ent of its . ·General Rule:- ~a11e,e has no· right to retain. the thing. Joaned as'secutity the ground that the . ,.- .... ~. . Re~so_ri:. Delay (CIVIL CODE, A'rts. 1165, · bailor owes him something/even .\h9ugh,:ifmay , _be -.by. r~asqn of exp·~ryses. (CIVIL, CODE,. Art. ;.· :·116f\~~C!,/1ZW- . . . . ·.::'··' 1944).. · :: . · __ :.," ', : .. :: · .. · . '.:· .'. ·:. · .. b~ · When he.,bends leases ifto third p~rs.ohs · ~ who _are not.membetS:Of _hl_s household; .: ; .~~asons;~·· ... · /.· · :: ·i:. :: -;-: .• ·:. _; __ · ·. . ,,_.. : ' · a •. Owner$hip remains in the bajlor; ar:id . · . . .ReaSO!"!: ,{;Of!!m.odatun/ ii;'pJr~ly 'personal·. t> .. teinpora_ry use is giyen :to .the pailee (CIVIL GODE, Art,,1,9~9).. ' ·. . . · : (DE LEON, supra at 3.6). ' . . . ' ' ·.. . ·,:. - . . . ., . •.. .. . ··c:-· Whe-n'.Jhe~thing loaned tias bee1i' deli"'.ered · · ·, Cqmperisati6rt shall-n~t b.e prop~r when on.e· of· with Apprai$aLof its value ·unless ttiere is a. th~ d~bts arfses' fr0m ~i'. depdsiti.rm or from the . 'stipulati.on .. exemi>ting . 'the' .. bailee : from . obligations. of 'a d~positary .. or a bailee in responsibility in case of fortuitous event. cominodatum ·((?!VIL (?ODE, Art. 1287). . .

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SANB£DA L:AW CENTRALIZED BAR OPERATIONS - _MEM9RY AID 2(_}!9

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.Reason: The law presumes that the. parties intended.that.the borrower shall be llable.Ioz the. loss of the' thing· even if it is due to a fortuitous event for otherwise, they would ncit have appratsed the t~ing (DE LEON, .

supra at 35).

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General Rule:- He· cannot demand return before · expiration of ·the .period or .accomplishment of the use (CIVIL:. CODE, Art.' 1946). Exceptions: . . · · . In case of urgenfnee,d.ot-'the thing, he may demand its return or-temporary use (CIVIL CODE, Aif "f946l;· and ' .

a:

Reason: . Cor;rmoc(atum · · is ~s~e1:1ti.ally ..gratuitous (PE LEON, supr« at 18). · . · . ·.. ~ .. ~ ';. . . ' ·. . . ' . ~ . . '. ,'; .. Effect: I( for a temporary use, the contract 'of. commod~tum, is": suspeJ:i.d:e·d • while" the lhjng f_s in th~-.p9ssessiofr of the bailer (CIVIL CODE, Art. ·1946),_ . . . . :: .

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-.· .· CllEDIT.,-TRANSACTIONS SAN BEDA LAW CENTRALiZED BAR OPERATIONS-=, MEMORY AID 2019

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E;:xception: If the extraordinary expenses arise on the occasion ofthe actual-use of the !.hing by the. bailee, even though he acted without fault, they· shall be borne equally by both the. bailor :a.nd .the.bailee.(C/V/L COD{=, Art.1949; Par. 2}:

MUTUUM··

(A.JiTs_ /. i953~19·. 55)' . . .Contract ofMutuum . A bilateral -contract whereby one · of . the · parties delivers' to another money or other consumable thi11g with the-understanding that the same amount, of the same 'kind and quality.rshall be paid {CIVIL CODE,

Exception to . the Exception: Stipulation providing for- a · different. 'apportlcrirnent 'of . expenses, 9r those expenses shall be b'orri~· by bailee or baileronly (D_E LEO~,:~u~rf) ·af45)..

·. ·- ·~·tne

Art ·1~3.3)._(: ·, .

. Notice i"s required because it is possible tha·t the . . bailor'rnay not want "to incur. the· extraordinary . .expenses .. An exceptionlies where theyare so . t.frg~nt that thereplyto the 'notiflC?ti.611 C?nhot. be· withot:i°t"d~r;igei(Id~ a_(4.4t. ' ·. . ·. · awaited . : ~.. .. . . . -. ... . \

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. . ' . If th~·- baiieehs at f~ult, he. alone should.'. ~~Y-. .. ~

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. ~ ... ~ ~ .·• . ::~ . , . ~. 3. '. Be _biable to Ihe bailee, for darnaqes for known · . hidden-flaws (C,JVIL CODE_, ~rt, /95!), ..... ..

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i~v.;li!es the return bf the equivalent amount only : and not 'the: id~~ticaf' thin'g because ·the borrower acquires ', ownership of. · the money or· .other consumable 'thir;ig_ !baned. J~is qblig_a_tion "to. pay" . mJ;1Y:in.clu1de the accessory obligatio_n topay interest (~E L,EON, supre at 48). .

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Consumable or fungible goods

. Fungible.~nd Nqn--Fun~ible: . . . c : · 1 .. · Fungible· -~,~elongs to a common -genus whic.h .· ~c_i~_ge;,5_ ~e·v~;al species oJ-the-same kind (e.g . gram, wme, 01D (Id. at 58). · · . No'fl-fungibl_e - .specificatly determined. and . : ~annot,p~ 'substitµJed by others (e.g1 specific. , . land,.building,'.par.ticular nousev-: r :·· ...•• · •·

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a.'.th*g .is ~~nsu~~ble~~/n~~-d~-p-end~,-~PoQ. · its natur.e··and.wheth:~r it is fu.ngible cir not.depends upon the intention oftlif parties (Id: at'58-5.9i : . . . .· : . ' . .·· ..... ~ . .·. ·, . . _),· -~~ The lo~s 'pf_ t.he thing loan eel. does not exti,ngufsh · 6''5e·s·.-· 9.~ligatiori . t_o'· pay ;,(urjl_ess it is "·stipl.jlated)'° ·becaus"e his. obligation.· is. not tb :rett.frn the thing· . -----,1oaned but to· pay a. generic,thing:. Genus nunqua,in .,oe(if'(Ge·neric'tniiig ne.~er peristi~s}(ld.:at.59):· .. ,.- ... . ' ....; . -

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If the defect is. ~ot known to the' bai.ior,' fie ,~· nof ·. ·," Hab·I~ bec~ui;.e coinm_od,at~ifi-is" gr~tuitous.'(ld. at. ·, •', 47) ... " . .-.. ·. . ·. ;._ • . . . .,·:,. ,. • I •

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.·· .. No.-Right- ofAbandqnrnenf · ... · : ;, . ·. t-h~~· bailor -~cannot exempt .himself fr.om the.. payrri.ent : ·or: . ~xpenses· ·. 'or . dam.ag'e·s .. by. . : abanclo~irig .J.he. thin~ tq the bailee· ·(CIVIL C_ODE, Art~ 1§l§2). ··:: ' · · · ·

- .:·. N~t~::. If the-bqrrowe.r· loses. the money or ihe ·goods, tt:iis doesThiS.·IS. ndt affect, ·his ·.obligation t.o. reP.aY. Jhe 'c'redilor. in aC.COrdance With the rt.ile· Of°reS pe;it d[!mino (fd. ~t ~2). . 0

Illustration: . : ~orrower placed· his rnoney loaned inside his . c·c!binet The·n:ight ~fter,. rts house)ogether with the · _nioney;,was turned into ashes .. :-:_ : , · · :

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da_rnage~ :'~ rria·y. _·. . . Xis ~-Jttx;~~:.~\;·~-~y· i~:~ihiAg: loa~-~-d ~.;c~u~t~~ . exc~~d tret.yalue''.of.'. t~·e-.:t_hit,g_-)i:ianed, }ind i,t . . i$ not required to'ret.urn the bills y.,itl'1 the,s·anie serialwoulq,. iher~~ore, l;u~:unfa,ir'to the.ba·i~r to •( · · riumbet{ but the'sa'm'e·'anio0nt·ofthe.l'o'an: .-. • _, _ _.just~b.and6nthe.thi,:-ig.ins_tea~ofpayingf6rsaid . , '., .... ·· .· :.· ·.· . .. .. ..... · ~ ·expenses _and/o'r dc:unages}D.E Lf-0/IJ/supra at N.o c.ri~·inal. liability f~rfaltu're tO'~a'y · · · : . · ~- . ·· 47). · · · ·· · ·. NQ estafa is comm[tted by a person who refuse·s to. I pay his. debt: pe'r· ~e :J:IS the borrower effectiVely .' .acquire~ qwnership and being .. the oyvner1. tie can dispose of the thing borrowed ·an_d hfs act will not be ··conside~ed'misappropriat.ion thereof (Id. at 55). '

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2bi8 SAN BEDA LAW CENTRAL.iZED BAR·.OPERA TIONS

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CRE.DJT TRANSACTIONS SAN.SEDA LAW CENTRALIZED BAR OPERATIONS.: "f!Efy10RY AID 2019

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Basis: A person who receives a loari of money or any other fungible thing acquires the ownership thereof and is bound to pay the creditor an equal amount of the· same kind and quality (CIVIL CODE;, Art. 1953). · .

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Note:. No person shall be imprisoned for non- .. payment of de~t (GONST. Art. Ill, Sec. 20) .. -· Mutuum v. Lease - .

Barter A contract whereby one 'person transfers ownership of non-fungible ·things to another with the obligation on the part of theIatterto give things.of the same kind, quafity and quantity (CIVIL CODE, 1954).

.Art._

Commodetum/Mutuum Delivery of money dr some . . consumable thing with.aprorttise to ·(epay ·tan equivalent of the· same 'kind 'and quality. - ·

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Note: If the property is "sold", but the· real-intent is only to give the object -as security for a debt :... as when the "price" is comparatively small..: there really is a contract of loan with an "equitable rnortqaqe" (CIVIL CODE, Art. 1602, par. q).

v. Barter

Delivery of. some '·.non'consumable . thing in order that ·the other may use: it during a 'certain period and return it to the former.

AIV{ays onerous, and is actually a·_rnutual sale.

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Gene~ally: . · -, ·~nilat~r~i° . . . . because. ·· .. only. ·. the. ·t. ' I 'd . .' · I : ·• borrower. . · has- . 8-:1 _I a era_ an r~c1pro~a . · 9blig~ticms. · .: -, . . (5 PA'RA-S,.supra at.88_5).

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2019 .SAN BEDA LAW CENTRALIZED BAR.OPERATIONS

·(f the ~bing loaned .. is -9.)ungible, other _t~an money, the borrower' is under. obligation- to pay . thejerjder anoth'er:thing"of.the same kihd, quality' . and quan:tity-'ev~n if it should change (ii value.In case i(is'impossible todo so, the borrower shall· . pay its value atthe time .of the peirfectki'n :of the .Ioan (CIVIL CODE, Art. '1955,_par. 2). '

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CRE-OIT T.RANSACTIONS SAN BEDA LAW CEf'!TRAUZED ·aA.ROPERArioNs - MEMORY AID 2019

Sti°pulation· of a Partic~lar Interest.Rate If a partfcular rate o( inferest has been expressly stipulated.bythe parties, that· interest, not the.leqal rate of interest, shall _be applied · (Casa. Filipiha Development. Gorp v. · Deputy Executive Secreta_ry, G: R. :No. 96494; May· 28, -1992). '

lNTERES.T

(ARTS. ~95·6~·1961)

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· interest may be paid- either as compensation- for· the useof the money (monetary interest) oras damages . (compensetory interest). Article 1956 of. the- ~Civil" . Code-refers to interest for use of money (DE LEON, . supra ·at (?7). . . '

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Kindsof Interest:' .. 1. · Simple - that"which is paid for the principal at a . -.. certain rate rbced -or stipulated by ttie partles.: 2. · · .Cornpound - that 'which is lrnposed upon ' ·. interestdue and unpaid.The accrued interest. is . · .. .addsd. to the' priricipal sum· and the ·)whole. · ·. ·. (principal and· accrued- interest) .. is treated as a new principal upon whichthe interest for the next ··, period is calculated. (Id. e! 67). · · -. _ . ,.. 3. · Legal....: that whichthe law-directs tobe charged in the' absence of any aqreernent as to the rate ·_. between the parties (Id. at 68), '

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If the-Interest.rate agreed ~pan by the parties a~e found.to _be .. unconscionable, the· legal interest rate prevailing' ·at the time.the agreement .was entered -in\o sha] .be applied.The l!=Jgal rate.of interest, ":'hen ... applied as conventional Interest, shall always be the legal· rate at the time theaqreernent wasexecuted · and. shall _not be}usteptib{ei""to -, shifts· in rate '(Isla. v. Estorga, -~-R-. No. 233974, July-2,-2()18).·: : , · · '

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The. ruling jn "Eas"tein --Shipping. Lines· (G.R, No. : ' 97412,.July 12, 1994)/has now been-modified · 'Banqko $entr~I ng. .Pillplnas Monetary Board ' . CircularNo. 799', Serie~· 9(201_3,':whichJ>rovid~~· . ' that "the rate. of interest for loan or.forbearance of any money :. "gooc;ls or credits an a· the .r~te. allowe·d in judqments, intheabsence ofan express contract as. · tp such rate· of interest, shall be 6% per annum." Said .._cfri::uJar:_took effe~t onJuly' 1, 2013. · · . ··. / ..

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Applyin~ ~W, .€irc~l~.f No. 799, the s_upreme G.ourt. , su_mmarjzea·.ir lNc!y~(_v. 'Gallery Frarryes (G:R; · No_. -1~~~71, -,i1.i9.I.Jq~_13(40·13),.the nev(guideli.n.es··_on · )egal interesf.;,as{oll0ws:. ···. ·.. ;. ·· . . ... · · .· · 1. · WhJh~ anfo_bli~ptior), regaraless.,9f its s9urce, · .. ·.. Ji.~·7iw~tr~s,q'ua~r~con_tract~. cfelicts _ Q'r . ' quas,~de/JctsJ..,s breache.d, the·contravenor can- · . : be h_eld liable for damages. qnd· _the provisipns < ""'""--"'-·'under Title ~VIII on Damages.of th.e Civil-Coae. ~ gove"rri . in· . determining . !lie . 'measure· .. of and·. ~omperisatory . interest. · Interest as·y~a~·;;..... r~co~er~ble-dafT)age~; · , -.-- '·, . :-. <. · · · . corripensat_ion fixed by tt,_e ·parties for tbe· use· or .. · · ·2. 'Fo_r-tne-c!vVaM:·o_U(lterest in:ttie concept of acluc!l ·· · ... · forbear.arice _of_msiney is referred .to as'mo_netary ·. . and-compehsatory.dam·ages, the_rc!te ofiritefest .. interest,- while in~erest. that i_mposed by law ' : ·:. . '.- and its .accrual is· imposed as follows~:. ·. .-·' ·.' · . ' _ . or' by courts as· "penalty for cfamages is ,referred· to as" --· . . ·a.~. For' br~i:lcti _of. obligations· consisting ,"of, loan. · compensatory -"fhter~st ·(Hun "Hyurig Park' v. {=ung , · oj_forbear~nce:pf 1')1oney; 'interest.due .shalt.. ·won' Ch9i,' G.t?: f'!_b. 2_20826,,.Maich 27; ·2019): The .. . be. tha,t stjpulated in writing. ·_Jnterest-,dG§ ' right to :interes_t arises only "by virtue .of contract or . . - sh·a_ll ,itself earn- legal interest from.the time·fi . "by __ virti:re of damage~. for d_gila_y. failure· 1~· pay. . ·, · : is.ju_dicially d~mar:1decl'.-- ·. '.. ::· · .. . . . ':principal_. Of) whi~h·ir;iterE:st is<dem·anded ·(5 PARAS;-··. b.- · :!n ·th~·- absence .of- stiplila.tion,. the.""rate of ··supra at9Q6;-Bf}ffe1to v. Santa Marina, G.R: No. L-· . iiitere.st-stiall_b.!3 6%·per··annum:; co,mputed 1_1908, Feqruaty4;- ,19.18).. . . ,. . ·"frolTI d~fauft; :.(i.e.\ judicial _or extrajudicial 0·• •• . . • ...,·. •. ·• · •. . . • . • _demand) ·subjec:;t- to- .the provisions .of...Art: ' . No inter!:!st sha_H be due u_nless it has been expressly. 1169 of°the Civil Code; . ·, , , .· stipul~le~ in viti_ting (CIVIL G_ODE; A._rt 1956). : . c; ,For breached ··obligati9ris' ,:iqt consisting of:·. · . , loan or forbe~rance-_of money, interest' ori' ,:he requirement that the payment of.interest must amount. of · aamage?-' .·aw~rded ·. may be . be expressly. stipulated. in. yjriting applie:s" onl/ td . · ir'r)p9s~d at th·e discretion:of the court at the m_ori~t~ry_ i_nterest,. hot·to compensatory inferest (DE , rate:of 6%· per annum. N.o interest shall be · /:..EON, supra,atlO). . . . ., . . .. . adjudged>- o~ ·· unliquidated:..·.·claims: ·_or -.... . damages, E:!xcept when or until demand can bei establiShl;ld with . . reason~ble. .certainty. ....

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2019 SAN BEDAL:AW CENTRALIZED BAR OPl:iRATIONS

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, Where '.demand is established with reasonable certainty, interest begins to run from time claim is·made Judicially or .· extra judicially; · When certainty-cannot be ' reasonable established at the time· demand· . is -. . . made, interest runs from date judgment of · the court is ·made, at which time quantification of. vdarnaqes may be deemed. to have · .. been · reasonably ascertained. The actual base for· computation of legal. interest shall.be on the amourit finally adjudged. ·

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Persde, -;G.R. No. 183804, September J 1;2013; Nacar v. Gallery_Fraines, G.R. No. 189871, August_ 13, 2013/ · .. ·In Advocates for Truth-in L~nding; lnc., v. Bangko Seniret Moil(Jtary Board, G:R. No. 192986, January 15, 2.013, the-Supreme Court affirmed. the; authority of the· es= . Monetary Board .("BSP--MB") to set interest -rates and to issue arid enforce circulars when it· ruled that the BSP-MB may prescribe the maximum rates of interest for all loans or renewals theretoror the forbearance of any money, qoods or credits,includlng those-for loans of low prlority such· as consumer IO~flS and loans made by pawnshops, -, finance 'cornpanles and .similar credit institutions .. Tlie BSP-MB is also authorized to prescribe different . maximum.rates: for .different types · of 'borrowinqs. incluEIJng deposits and- deposit- i;~bstit~tes- or loans qf financial .lntermediaries, This' ruling wps· again Jffi'F-1:d. by the Suprerne Court ln Necerw. ~allery z1me$, G.~. No. ~.8987'., 2013).... •

When- judgment of court· awardiriqsum' of money becomes final . and executory, .whether the: .case talls-son.forbearance .or · non-torbearance-of-money.fhe rate of legal · interest shall be-6%~per annum from such . , fina_lily u_ntil its_ s~tisfa_ct_ion, _ t~i1terim period-beinq an equivalent to f~rbe~raJJ~ of money._ . . · . /"(") !.~ . ./. {/.': . -; ., ·· · · · e: ·" Effectivity ?f- new. le'ga~~te -o iite~_est: . . In. $p_s; An?~v.. ~ilippine fJatio~-~~ Bani<: (~.R.. No. 'Judqments .that have , oeGofn~finj).-an~.-194;201, Novem'ben 27, 201·3), the issue rs whether executory' prim' to. Jull1(}0~~sh~II; not ;~f)'otq~s shal~1 lia~(e f~r i~tere~t op a. lo.a.~ after_-1!'1e . ?istu.rt;ied. Th.e 12% aRd _6_% per ~n~1um leg~'. ~ _._exorb1tc!n} S!IP~~~ 1nteres~ · thereon .af!~ the .interests shall·apply until June ~O; 013. . / A. ?,ubs~quei:i_t fortf.l9~ure of property that ~~cured '<*,~ . , :· ~-~~1o~1we~e nu~.in 9~other case that· becal'}'le · Note_: The right to _re·cov~r 1_nter.e~:t:fr~ses ..o~ly __ e1l0Ji7~ .. ~, .~fi~aJ.fan'}'..execurort~ Tre.. Sup~_em~. Court !ulc:;q t~at by -:virtue of a contra<;:t (m_on_ruary !nter~st) 3oryr ;- \CTi'JJ.W~e f_'.3.~that th~J (?t~·pfi mte_res~·was· ~~b~eque~tly damaQe~ for _the delay or fa~~.t!j>~~~~ 1.nc1p~1--. -Zdeclar,~,al _a~~-~.1fonsc1onab~e doT.s not e_~t1tle loan on which interest is dernandei:I (COQJP~nsa 01)'~ f_p,sa1'cra.el3'to~'. to/st9~.,.Pc!Y.me0t: of .1nte~est. Only the . . interest)'.· R~cove~y of. .rr:onet~~y!.in~r~l0>~i{e;~& ~~{[email protected]~.~yw~~·'cJ~cl~r~d'vbid~.th~ stip~la'tion ~o ·. express , · st1pu!at10n : m • w~tmg; . r<;?cov~~of·.. • .... "-t ~~te~e?t-rel']1€Jl,!1~.-,lhe 9~~tor~-are. ~ons1de~ed. m ~om·p_ensatory''interest is su15j_ecf to g id.eJine9f!a1 : : defavJ(f~o'.llhe_d~!)6f.· fi~~Jily of the other· case _an·d , down .in \,~aear v._ Gallery. Fraees. (O~ia'[ef~,S~EN-r.q9~~ring th.e . time..... they:~ere -Uf)able to ·pay )he v_atencja, G.A. No: 21358~, ~ep~f~~f':.12(20~~~~~9· l~~e fas;it w~i's. exorbi,t~nt··a.n_~ h_eric~, . . . r ... · · ·. • ·, ,. ------de~I rect vdid .. . . . . ../ . . . · ·. ·. · F.actors. That.the.Monetary ·soa~d .Gdnsid.erl in. M'·A~ .. . Fixing'·!?'e _M~~imdm._Ra~e~·.o~-~:qtes):~flhte're~t.: .. _·. ~nc.~s '«_h~n lnt·~~e~~-~o~~.N.~t·l!t~gJ~.~~~~1;1n· · L · The-~1stmg eco)Jom1c cood1t10Qs·m the·countr.y. 1. .Dunn·g Jhe. effechv1ty of the .moratorium law, . .. , and·:the .generaf-requirerne~ts of; t~.e: naf_ion~J .. .i -, . v.i.b_ich-:h~s'.the.~!fec(1:iiu.~.P.~r1oin~J°~~c,9,1i~.c\(?~. ,economy; ~ . ·. ·,.,. • ,, . :- .. . · : •. :ofr payn:ient. of. the· .pt_in91gi:!I· 9bhgat19rn w!:i.it.J;i 2. ·.T~e sup~ly. ?taQci.de_ma.n?J~t._credJ.t . · the 9c;c~sseiry pbliga~ion iriJ~.~ P,aym~nt ' 3. The'i'ate.of.mcrease .. m·the,pn.ce-lev.els;- and·· ... · · · · . of interest; . ·,. ·.:, · .. , ·. ·, _. , , · : ·, _. · 4-. , Sl'.Jc_h. o_the(rele\lant crit~ria .as ·the' ~o~etary '~- '"ln,.cas(.of in.soiveqc/.9f. th~ ~~·af!k;. wti.~o~· !h_e Boaro may ad?pt (P.D. 116,_ Se9.- 6). ·· ·· ·' Bangko: S?fllr:c!l pr~hibits)Qe.--g:a~k: fro~. doing,,

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lnc~eas~ i,n ·!nte_r.es~Rate ~ · -,_.. · .. . : .. . ·. , :. : . No increase, in interest shall-be due .unless such inc'r.ea~e ~lsB: b,e'en. exprissly ·i(ipula]~d . ( Security Ba.nk &-.ETrust Co .. RTC·Makatf, G.R. No . 11392~. Ocfob~r '.23.~_ 1996;:, Spous~s .: T6ririg::v: _ G~nz9.n-~tan, ·GR No. 16~7~2;· Qctobei.10; 2008).

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Liability for Interest in theAbsence ·stipula.tion . 1. · lqciemnlty,for,Damages. . ;· · :'·· · .· · ;_ ·\ · A"debtor.in· delay-is' liable to pay- legal interest (DE LEON, supra at 72). · · · _.. · · - .. r The:bb_l_igatio'n con~isting in the paymen.t of S\JITI -ot money. referred to irf Art. :2209·· of the-Civil _-·: .. "Code is Mt ccif'1fi(fed to·~-lqa'l orforbearance of · · -: rrj_or\ey butatso'covers casesirivolvlnq defaultln · . · the payment of'prlce cir corrsideration-under a .:contrad:orrsale; action'fordamaqes for injiiry. · to_:p~rsons;,'alld- loss qf property -and ari' action ·. dam.age'~~ arising'-from' .'unj!la.id" jnsura~ce . clairl)S (Cast~lo. v. CA, G.~. 'Na:· 963Z2, ·May 22,· .' _ 199'5). · · · '_ . · ~ ' · -,: .. ··, · . . . - . ;' ll)tE;fresi·'as indemni~y:--fbr -.damJge:>-· i~: payaple. ;:only·in ·case _ of default "O(~on-p_erforr:nance,of the' <' col')tracr· f5s ·f~ey, ·are distinct .clc1ims, th~y may ,· · oe aerrianded :'separatelyr(Seritfh.el Jnsufa1)ce· CA;'.G'.R: .tiJu:·L~524-B2, Febiuary'23;-,.·f990). : l

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lNTERES-T == prin'cipa~ stipulated interest x number , of years from auedete until firia(ity·_ of:judgmeni, .: INTEREST ON INTEREST,;, Interest computed as ofth'.e·fiNng ottbe.compteint x--6%x.f10:-ofyears,until finality'ofjutlgmeh't-- . , . · · · · . .. . . .,. / . . ' '. ; ' . Note: Total 'amount due as of thedate ~l.the fih91ity of judgment will earn. ·a_n _interest-of·.6%: .perahrium until fully -p.aitl '(Nacf!r v. Gall~ty:Frames,- .GR: No .. 189871,: August {3,. 2013;. $angko. ·sentral nq • · Piiipinas 'fy!cinf}t~ryBoard Cir"cular~No/_799,i Seiies,o't. · 2013) '.·. · · ... · '~ · · · · ··. ('' ·:: ·-· · -. . . .... ': <.. . . _.. -_:, . --:·:.·' - .. . . . ..'·,. ' . _-_,: .. 1lilustrations: _ · · ·.·.. ' '.;; · · . . ·\~. . · Under a written contract of loan; B obliged.himself to ··pay A t~e surri of P20,QOO·al'the end ofthe ye·a/. ir:no .payment qf irt~rEist was· _me~tipri~d; then· r10 . interest;is·due. :' ·· · · -'. · ·. · ·:·· ·,:.: · · ·- · · ,, · . ·. Bincurs·ir'fclelay·, is lii:'lble t~ pay,jnfer~it: at· th~'leg?tl rate_w~lcn, .. 1,s 6% per,c;i~nu~ or p··1;200 froT the date-ofdelay.i . . .·· · ·:.· · .' .

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.-_ : . ·._:_sile.. n·t ~,P__ o_n__ t_his_..~-~-~i_n;t_:_fC. -~Q&J __~~_2i_}2).~ . .:. . all ·t!:ie r~§Li,\i'E;rr,,ent~to_; ~ntiUe ·A to ·re3co_v.~r intei"e!,t .. ~ · J,,f. ,1 . ,are pres_e(lt.Jf...13:--i~_cur~ in delay •. h~ is·li~ble.to·pay · .. · -Exception.·. · ·. :·:·: . · -.: · :/ · .· · ·-the-interest·;:1gre_ed upor;fas·dc!ma'ges·and notforthe · ~-Where~ ihe court's judgllieht, which' did. not .. ·.use o_f/h·e money.:· ,; :. .:... 1 ·, • :' •• ·: •• ,.: ·- ,; , ··, • . provide for the payttjent bf -int~rest ,t;\a?J_ire.ady·' . . -· .... ' . '. ~- . ', ·. . . '. ·. . . .. ___._, . \:. . .. . . · .._, ·. ~ec~me1final,.)~9.,inte're.st,-m:a"y·b~"a~~9 ·(Ry1~ · B incurred), delay-for·or;ie year:·1he_.·icid_emn_fty fo:r ... . . ·· _. v: Caneb9, GR: No1~4BB,4;:p~ce~l{e(_3, f!i?90): · · ... , ?,~m.ag_es ~-h~ll _also: ~e,th.~ stip!Jlated i~Jef$~t bf 18'.'fc_o . . .-_·_ ·.· · .. : · . . · ·, .· .--·"··'~--- ·· so·th1'!t B.. ~h.a)l_~e··t1aple·t?:-Paya;totalof_P-7.?'200: . :: R~le on Accru1rd -lnterf!!st.. ·.. · . ·. · · · · . p3·,500, as ·.compen:3~tory_:i9terest.'.f~r_. the, first ,Y,ea:r · - · ·., , ·:Ge~erahRule:··.Aq~rued <'interest (interest ·:due . and.,anoHi.er· P3,f:50_0·as iiidern_riify..fcir:th~~dam_ages and ·unpaid) wi_H n·o_t bE:?af:interest (CIVJ~. G(?DE, . for t_h_e one-yea{ciel~i'y: ,:: •. ;-(.. ·'. '. . : .• :, . \ .._.: . ·... ~j -, - Art. 1959). · ·· ·· ,·· .. ,·· ·· · ... ·. ·. . --: ... ."·.. · · · .---. If. ·the ·interest,was·:judicially:-demarided six m·onths . · · .. · :-E~ceptio'ns: .:._._ ·: :_,:· ,··:_ ·· .. -:.· ;_,. ·:r· :: , ,.·· ·: .·after. B-·lncurred"in· defay,. th~ intejesf due.;(P3.·,6Q_O. +''. : · .. e~·,aoo _;::..p5,4oor s~alLE:9rn a'J~gaJ i_nt~re~_t. of 6.%; .· . - ~- ~ t~~re"T~. agreem~'nt thfr 'effe.ct (CIVIL · fr,om the time until-paymenris- made . .-:; · · · . ·" -· .'.:. .·C,(J)Of;; .. Arf.',195.9)._: ;·' '.: . '\. . ,,/ . · .· ,' :, ' . ; :' . ,\ . . ·' · >_ : · . . ' . · ~ . /t, __ :\,. · , .-' . ·,. _::::·,. :..:,;:,;-\· .. . . . ·>.::.. '' :. ."-:··· ~-· ~ ·-1.• • . ,Drscountmg·,\ , · . · ·,. · ,: , . ·::"' ~}-,,,. -· , .. ,_, · ·. ·'.·,:· _-·compoundihg lriter~st .· ,·.- .. :: . ,. . . An ·exptess:stJpulation..wheteoy the int~rest -- · .... "(.; lhteres.t -~.is'• -~de.ducted ·:in·.' ad~ar1ce. 'from :.,the ·. ' procee~s of._the_prindpal. o~lig~ti9n._: ; ··: ..;,;,--.·;·_ .. . due,• ·and "unpaid :shall be added. fo. the .... • ·• . . . ·.. I ·. -... a· . ._.· . . .· .• - ·.: · , -· · · prin9ip~J: obligation·· and::'.resulting_ ;_to.ta!. _ . ··Illustrations:· ···.~·-. :.- · ... I<·., .'-. -·-. ··T .• ;,·.· :. . · . . :·amount.?hall ear'n.interest-(9'= l.iE0N, supra· ·,.,_,Th_~:-::stipuiated "rate .. inter,~sbJsi '1i . .-the' . -· ,, ... -at:6"7).' :, .,,.,. ·._ .. ,· -· .·.·. ·: principal amount io~ned is~Pf0,000,: how m~ch. .:. · s.ds th~ inter.est? I. ..: •·. , . . . .,,,:.-. ,b:'. : When- judjdailY: demii"nded.' uridef.. Article ' 22-1.Zbfth~ Civil Code·(id. af68) .. ·_-·. ··_,·: . . .. .. ,· · _. .AnsV:,~/pfo·,obbx:c:i.05 ~ .. . ... ·' .

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Instead of givi_ng P10,000 as proceeds, only P9,400 ·was given. P600 .was deducted in advance but the amount. to be· returned is P.10,000. What js the inte.rest rate? i.;-

However, C.B: Circular. 905 _did not repeal nor in · anyway amend.the Usury Law.but simply suspended the latter's effectivity ($ecurity Bank and · Trust Company v. · RTC· pf Makati, G.R. · No. 113926, October 23, 1996). · · · ·

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Answer: Divide the amount of interest by the .. · actual amount received oy the borrower. · 600 I 9400 6.38%. ' . . __,,.

Validity of --unconscionable Interest· Rat~ in a _Loan · · General Rule; lnterest_stipulated.by·the ·contracting · patties is. vali~. ·

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· Exception:- . .lf. the· interest is 'unconscionable LEON, supra·at 102).

The Suwet:ne Court said that nothing in said circular suspendinq-the Usury Law gfants lenders authority to. raise interest· rates to levels which will either enslave their-borrowers or leadto a he.morrh::ig(ng of their assets' (Sps. Almeda v: CA, G.R. No. 11-3412,

LiabiJity for..· Surcharqes and Pena.lties The· essence or rationale for the payment _of interest is separate and distinct-from that of surcharges an9

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A penalty stipulation is not necessa~;iJ~lu~or..,........... ]ri tvtte{;,>G~(G.R.No. ·131622, ryovember_27, interest, if there is an· aqreernent t1ttat- ~·~c, the · .. .. 1~98), it-wa~lslfd=that wh_i\e a stipulated interest of · two (2) being distinct concepts-whicf ~~l-~P.2rately .,52. 5.5% per ~ont.h._op ~ loan is·not usurious pu.r~uant be. demanded (Ligu.tan v. GAf 1,,§R; f)/o. ,1386~f.n ·\9--8:B, Circ~~.~~~, th~. ~arne ,mu~t ~e equitably febryary 12, 2002). . 1;!1~ .r.educed for being m1gu1tou~ •. unc;onsC?1on?ble and . · · I. · p~•'\,,. exorbit9t It is e,'&rart to.rnorals (contra- bo_nos Usury . · . . :·•1 ']J...?,!.~/~·. It. W~!, ~ped to ~2% per- annum in

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something in excess of the amou~t allowe~. by. la"\~o.~ : .. · .. .. ~ . . . : ·-' .. . foe. the loan. Qf _forbearance~-.,.fll~~ y; goods or··-When .. -~ agr~ed: rate,· ls inlquitous and .ch~_ttels (DE LE,ON, supre a~r4~) . ~ Jgi. J...~uncq9sc1&ta~leiftn~ rtsmay reduce the sa_me as . : '.·· · ~ · ·. '--: · . ~- . ~ ~, -~o..~~-eq~ity.-dem~nd'.(lmperial\l. Jauc~~-n, G.R .. Ele~~!'lts of .Us~.ry-. . . . ~. (5) . . Jpn~.1 f,J20~4).. .: . . . . .. ~ 1. Loan or forbe.arance, ·· · ···f· " · · · · 2. An u~~erstahding· be'twe~·n he p~rties thatilll.~iEN\~t~~~e[Y otUnstip_illat~d Interest .. , . :_ -~. loan_sh~tl or may,~~ returned;;_ . 7 ~l~,~.rw,~~· _the·debt9r may recover as.(n t~e 3. ·A'r) unlc,1-.yful i~t~nt ~o \a~e_.mqre tha11 g~I"? ·. •.c.~s~:d('s21uJ.i:o indebfti: or u,:idue P8.Yrn.ent, (_GIVIL · . · ·rate fo'r _t~~-.US~ of ~oney·or its equjvaTe_nt;,,51?d . {G;0ffi, :P.rt~96~). ·. .· .. . · ... 4 .. ,:-_he. taking or aw~~mg tQJa.~~ for.the _use...ot tb~. I ~~ · . . · ·:-: . .,: :._ · , . :·· .., , . ~.. Jo.an of.squ,ethmg· ,n exce.ss pf what !S all~Note~_lf,yoluntanly-pa1d, th_er~_w9uld be no recovE?ry : ·. by la~· (DE LEOiy, ~upra at 9,4-95). . . as'. in thE'( ca~e of natural ob)igations (CIVIL~ CODE; •: , . .· . . . . Art. 142:3): · . .· · · · The ·nature· of \JSUry law is both,remedial a~d penal -... uncf~r Philippine jurisdiGtion. (DE ~EON; supra 'at 96). 'Escalation·. Clause , must·:· have de-escalation · · · · · · ' ·' · '· · · · ttatis~ · . · ·· -: : · · . . ·.· .

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Contracts and stipulations; . urider · any cloak ·,or. :' ·. Escalatio11 clauses ·ref_er to stipulatio·ns.' allowi!ig a_n d.evice whatever, in_t~nded to circumvent the law~ . . . incr.ease in the ir:,t_erest rate c!'gre~d upon. by the against. usury_ ·sha~_qe v~id.· The bo·rrowe_r·. may : ·cqntracting parties. (J.uiqo ·v.-_._CfJina:Banking Corp., . · recover iri ac·corqanc~ -«ith the laws. on usury.(CI_VIL · G.R:·.No. 187,678, /i.pri/. 1 o,· 2013). ' · · CO_DE, A,Y. '1957). .. '

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Pur$Uant to:. Central . Bank.' 'circuiar· . gos: adopt_e~ .ob_ Decembet22;.1982, the Supreme Court dedare:d. tl:i'at' · tne. l)sury. . ~a.w is·"le·gally in~?
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650 , · '2019 SAN SEDA LAW CE-~TRALIZED BAR OPERA TiONS

De,:escal?tion clause is a s.tipulation tbat the .. r~te of interest··agreed upocvshall 'be reduced in the .event th.al .the maximum rate of interest is r'educed by law or by ·the Mt;inetar{Boar9 (PNB 'l. /AC, G.R:·No. 75223, March 14; 1g90; °Villa ·crista·Monte Realty & Developmeqt Corp. Equitable PCIB.ank, 'G.R.' No. 208936,.1>/ov.ember 21, ?018). .

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The presence of escalation clause :wilho~t the· • f •. correspondinq.de-escalation clause in the event of a '; ·.·. reduction of interest as ordered by law, makes the clause .one-sided as. to rnake.it unreasonable, Any increase . in . the interest- rate pursuant to -an. escalation clause must be the result of an agreement between the two. parties. Increases unilaterally imposed by a bank are in violation of the p(in9ipl_e of. mutuality of contracts (PN~ v: G_.R .. No. 109563, · July. 1996;: !Equitable PCi Bank v.: Ng .Sbeunq , Nqot, G.R: No. 1·71545, :tJecetnber 19, 2007). ···: . , . ·. .

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It becomes inescapable for the Co1,1rf to uphold. the . validity anti enforceability of the: escalation clause involved. herein despite, the- absence .of the deescalation. .clause.. ,The·. actual: gra-rit by .. the responderif of the~dicre9s~s: h,}the inter~st rates imposed . on. the "loans extended fo·..the petitioner r.t~ncfered inexistent the ~yil of i_nequ~lity.:sought tobe thwarted by the '. · ~n~cti:ne.nt 'and application'. bf ;,_ Presidential Decre:.e No, 1 ?84_. w,_e. do nc;,t see._ here· a situation 'in which' the. petitioner. did not starid .on equality vi_i_th ·. the ·-1~nder· b·ank' (Yilia. ei-ist8r ..Mon.t,e Realty & Development Corp: v. Equita~l5/e. PC/ f3aqli, G.R. No. 208336, Nove.inber 21, 201 B). · · :'' . . - . . . .: . . . . _··,·· : . . . . . - . . . _..... -

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.!,!nilateral-- when deposit is gratuitous; because . only the depositary has an obliqation (DE LEOf.J, sl.lpra ·at 145). · · · · . ;. Note: It becomes bilateral .if compensation is paid because it gives rise lo o~ligations on the pi,irt of bgth the depositary and depositor'(Lct: 145):·. < ..

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Nomin9te - it has been given a specific name by . the. Civil· Code (Id.. at"145). · .. · · 4, . frincipal :_, its existence is not dependent · Ori · · ·· -· another contract (Id. at, 145). · 5._ . Jnformal -· no particular· form is required for the . contract (tel. at 145). _ . ~- . Qratuitpus -: the bailee does not pay the baller . 'for the use of thethlnq (Id. ~t 145): .· Deposit v:·°Mutµtim·: '

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. . If '·safeke~ping~ is ript the. principa_l purpo_s~---it1 be: .- ·1..' .Commbdatum; · . . ~· . . .• . .. . . .. . ~. . .. ·. _2.. [e_ase; or . . _ : .. · . .. . _- . . . : ·. 3.· Agency:(DE.LEON, supra at-150).. . ·, · .·. ·. I•

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.Gharac!!:)risti_cs_: (RUN)'JG) .. · . · . .· . . ., ' . t ,' ~e·c;:i1_-co'ntra~~ ..::._·p~rfect~~fb(the_ de.livery qfJt,e '"· ·. s~bj~ct ma_tter.(CIV/L:~ODE;·Art. 1-316). . . · . .-

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.. : . An._agreemerit to.constitute a_-depqsit i~:bin9ing, .... · but the deposit. its.elf is· .not perfected· ·until the .. delivery of the. th'ing (CIVJ'-· CQDE,:Art. 19q3) .... • .. -. . .· . . . . .. . .

_G.ehe'r~{iy ..• ,:·~-g~atuitou~~ ·. -~ay . be:.' grati:ii~ous,; ··9r ex_cept by,; · · mutuaJ· with a-slipul_9tion·to, gay _€1gre~me,ni_: .. · .,- or. -int~rest·:(C/Y/L' CODE, c:ieP;~sita_ry' i~ ,engage:d_: Ad_ 19,J~, .3J:" · > · ·. ·. in 'storing. goods· (CIVIL. - ··: · .,. . · 1965)_, : . '. . . ' . .

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W.here there- has .been ~o delive~;. th'ere '.is. merely an ag"i·eement to deposit, wh.ich how~ver is binding ancf_enfo.rceqble on the parties. Suc·h. agreement. is· cons!:!nSUc'il (DE. LE;ON, supra at 152) .. ,·. ·.·. ~ ·. ,,·

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stipulated, and :_.-can· be 'required to return.only · .ease 'of urqent ~eed or wheri ' the bailee · has ... .'· committed-any of,th"e··acts: ·,; '-:·,' . ef!.i jngri:itlu.de,; 't'.inder:..:'Ari. 765 of the: Ci1/i1· Code.

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' :{!~:t}::~J;:.~ _.;_ ':~\_',.:~: ~: '. .~; ~~-:<_>:.:_\;.: '\?:·'. ):,-<_\· : .G1:1nerat Rule:'" A: dep'osit is: a grat'uir6us co'rHr'act .· (CIVIL CODE, Art.1965). . - ..... '.; ..-:... :· .... '~· .- . . .Exce'pt_ions:

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Obligations of -a Depositary . , . . . : Obligation. 1: To . keep -the thing ~afely. (CIVIL COD~, Art .. 1_972). . . . .... : . ~ :. . -Rules: · He is liable. iLthe· ·_I_O$S occu_rs thrcfugn: his f~ult. or neg_ligence (CIVIL G_ODE,- Art .. 2207), even if the ~ thing is insyced ·(CIVIL COPE,· Ari. 1170);

Property i_s §av.e.d . from destruction without· knowledqe of the owner {CIVIL CODE, Art. 2169). . . . "

. , Note: I~ case two or inore persons each believe that · he is'.ent\tled to thing deposited witha U-1ird person: the depositary shall deliver it to the person to viho"m ifbelongs_:(CIVIL CODE, Art. 1.968)., The remedy ot" .the .depositary is to 'rne .. an· acllon .for lnterpleader . (RULES. OF COURT, Rule 62, Sec. ·1). ·- , .

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Note: The. depositor need not b¢ the owner of the thinqdeposlted because the purpose of the contract issafekeepinq and "n.ot: transferof ownership.. The r-: depositary.cannot demand that the depositor prove ' hjs:ownership of the th_ing deposited iS (CiVI& C,O.DE,· .: Ad.-.19,84, Par. 1 )." The depositary E/stop'p.ed tCIVIL 'CODE; Arf:.143p). . . . '· . , 0

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A'co~tr~~.t~,f deposit may be made orally or inwritinq (CIVIL CODE, A_l;f. 1"969). · .. · ' · - . · .. . , . ",

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Reasons~ · . . .· ·.1.· . )t is.an.esserttlal requisite of the judicial.relation .· . : whipri__.'.inVOlyeS the depOSitor'.s:~-C~nfidence. in ·. ·good faith and. trustworthiness. . .,, 2~1?re?1/mptio.n·g,at"the depositor; in choosinq ttie dep~rl too~·irit
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Reason:' ~o written form is 'required 'b~~aus~. ttie ., · contract ·1s . real, and thus, the delivery. 1tselt - . ' ·, co~sthut~~ performance· which will e.videnc.if:the .. ·: pert,ecti~.n~of the Gontr~ct (f!F=LEON; sup_ra·at 159). . .

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:~6:,.· Pa:Y- t~-~-- deposit.or the'hmount' by w't'iicfi he. .. . . · . . .m'aitiav~: benefited hirj,seH with ttie thing:C:>i· . · _.- : : : .. ' its p'ric~·-,subject" to· the'·. rfg~t· of ·~ny tl)ircJ . . . . person 0tio··acquired_the.thing in goor:J faith,'· .. ·, . : in whiGh case th~ depos.itor:"riiay oniy bring ... ·. . _ .. a_n .acti_qr:i:c:iga1n~t,him fd~ its ·recoy,ery (CIVI~. : __ .CODE, Art: 1971): .·. / · ·:.. .. . . ..., Note; A third per'so.n is. ~onsid.er~d _to.have act~d ·i~ bad _faith if he· has actual knowled.ge _of the ir:icapacity" of-the· depositary and if. he has_ knowledge that the to the contract .of deposit.. . . . thirig is subject . .. r

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;· ~6ntract (CIVIL ,COPE~.Art.. •1972);" · ... . . '· ·.: · · . . . · •.. ;.. ·:· . . . .Nbte: If 'there ·are· two· or .more persbhs each . claiming·to be entitle·d'io'a thing; tlie·d~P,OSitary , ' car:ic..fjle" an action to cOnfpel the ·de'po!';iiors .to" -~- inte.rplead . a_mong' t)leinselves · (RUL.tiS .OF :_cbURT, Ru{e_ 62,·S~c .. 1f ~-: : ·.. _,>_ ...: . ~-: . 2·.. _-. Guard)an· ~r · aci_fn.1rfistrato~; ·of '.:th~_· pe~son Vytio . · _made· the depo$it ·if the_ tatter Js· incapacitated at the lime of deposit _or th_e latter himself should he · . ; ac_quire· cai;>_acity (CIVIL CODE, Art .. .'1970);: . · ·

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Reason: The period is for the benefit of the depositor, but it may be. validly waived by him (5 PARAS, supra at 951).

Reason: Deposit is founded on trust and.confidence (OE LEON, supra at 169).

Exceptions: 1. It cannot be .returned upon demand when. the thing is judiclally' attached · while· · in the depositary's possession (CIVIL CODE, Ai:i1988, par. 2); . Reason: The property will be subject to judicial orders (5 PARAS, s1.1pra aff!52J: . . .\

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The depositary is liable for .the loss under the ' toiloY.,:ing Instances: . . · · . · 1. He transfers .. the deposit 'with a 'third p~rso.n · h · h h h · · ' · without aut only,. at1 oug t ere rs no -negli'gence on his partand the third person; .2 ... l:!e deposits the _thing with a third P.~rtq~.wlio is

The deposit ·cannot. be returned upon demand, if. · · ,<manif~stthlycabreless or. ufnfit, ·1.~l!~ou~h a~thorized, the· depositary ··has been .:notified· .of the . · .~=wen 1~ ~ a__ sence O neg 1gehce'. an . opposition of a third person to the ,J..et~~lJ 3._ :r~e th1~g 1s_ lo_st th~pugh the ~~-ghgenc_e ?f h1~ - removal' of the thicig ·deposited (CIVIL CODE, . /-( 7employees- whether the latter are m.arn!estly . Arl .. 1988,_par. _2); and' . 'J fareless o~ot. (Cl~IL C9~E'. _Art. !_~,73).

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Exempt~fr~'l:.iability: Thedepositary .ls-not Reason. The oppositor _m~. r claW1 t~ be'."'th~nsible in :c~se the thing is lost without. owner (5 PA~ASJ $UP.r.a ~t ~~,tf~g)ig_e11,.ce. 6(t~third person with who~ he was . . • . • , _ • ·.-c. • ~ iillowed fo deposit·the thing if such third person is not 3. If the depo.?_1t rs gratu!toi1s• th~ "depos\tary ._may • V ,; ·"manifestly care~ss)0-11 _unfit" (OE LEON, supre at ret~rn the th!f)9 depos1te11cl -~~hst~~-d/ng)i_~-~ ~-: u\1 _ .1,ZP).;. . penod has ~een nx~d for tn~ ctepos1t ,.~.JL.~ti_tia~lV, :·1 t ~',?. . • ~ .:._i .... re~sons ex~.st ._rur __ ,ls ~f t~eposifo 'l,lUt.1.:l.!!!..:Note: Yl1~uep0~it~-r.y i~ .respof?sjb.le for the loss ~efuses ~o re~~1ve 1t, th~ cfepo_s1t~r~-~~~ secu~e ::::;..--1::. bt.oug).1.f ;e). raJi1t o.~is erpployees _under· the

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,.~~f~_he i~p~_si_ta1 u~ge_n~IY_f)_eeds to.?~posit.the If t~e: depos,t 1s··for? v_~luabl~ c_9_n~,d~rjl~g~t!'f111gfndj.here.1s.9ro m?r~:t1.rne to o_bta!n co11!:>ei:it,. penod ~rwst _b~ !?IIO'A'.ed ev~n. ,_If t~~ a~po~~~,tY..'JE}tt.tb~d_eiq~itai:y sh~I~ be'aj:lle to transf':r th~ q_eposit _suffers inconvenience as _a co_11seqll1-1~~ (~~~Q..lilq, ge,~r91!Y _n?t~be li~_ble fot the_ tr~~-~f~r of CODE, Art.-198~)- • · .. · ..YC,t'J., . the· ~eP.b~if (dnless Jhe·. !~ird p_erson, is .manifestly_ M-/cat'iJes~' 0i'unf)t) "(Of LEON, ?U.Pfc!. at. 1_70).. ; . . ... Note: In cases_un_der O) a0d (2), the deposi~ .:· ·. ·. :.... · . · .' .. ": .. ,-:· -. ~~st irr:im~_dia,tE:IX i~fo~m t~e. qepp'positjon (CIVIL CODE,;-Art. . u,r;:der the_; ci_r~uQis~an~.~~. _ the clep9sjfaiy · in_ay .. · 198?, par. 2;. ·_ . · · · · ·r~as~nably .. p~resµ,r.ru,~ ·'th~qJ,e :c:1ep~~itor. Would · · · ' ··_consent t9_ the Ghange if h-e~kn.~w o.ftffe'taAts of. W!iat.to ~~turn: . -· . .. . _ ·,· the." situation, p,r.ovi.d~d, thaflh"e -forirjer notifies 1. The thing deposited with , all its products, , the ·deposit.or· tfiereof v/ait for' his/ decision, accessories,.and-accessions (CIVIL CQEfE>Art> unle.ss 'c!efay would.cause d~nge~ (CIVIL CQQE, · 19{J_3, par.".1)i · · . .· · . · . . · :, · · · Art: 1974( · .. , · · ,, · · ,.· ":· · 2. · 1f hy ro·rce maj~_we or gpvernment or:deJ, the • · ·· depositary loses the thing, •and receive·s i;noney Obligatipn 5_: If th~ thing ·deposi_te~ sh.o'i.1ld, ear.n ·.' or ~.nether thing in lts place, h_~.s·h~II deliye't the interest: . . . . I . . . · Sl}ITI . or- other thing ·.t9 the __ depositor (9/VIL 1. ·T,o coliect· interest andjhe capital iJself as CODE, Art .. 1990)., . . . ·· they.faUdi.i'e;--and. -·· ., · · ·· • 2 .. - To take-steps to preseive;jts' value_.and,rights Where Return:. ,: · w_ith regard to 'it (~IV/[ COpE, Art. 1975): · · 1. If ther~ is·a stipulation, at-the pl~ce agreed upon . , · · by . the ·par:_ties .our the··--dep·ositor bears the lf"a pron:iissory note has b~en dishono~ed. by non-. . . expenses for .trpnspcirtati9n: . ~ · payment, the depositary must give notice of dishor:ior. 2. If there is no ..stipulqtion;, at the· place where the tc;> -the indorsers so - tha.t the'_ latter WiHi not be thing deposited·mrght pe even'i~_it should not be dischargeafrorr:i liabi)jty (DE LEON, supra at 171). . :

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or other

.

Prescription ·of Demand to Return Thin_gs received on deposit do not prescribe, for the depositary· cannot' clairri that ownership :of the·ihing depos.ited was lrc!nsferred 'to .. him, but simply .the custody thereof: · The- posiession 9fthe dep9sitary is· not adverse to.-'that. of ·the 'depositor (Delgado~ V. Bonnevie, G.R. No. 7097, October'?3,19"12) ...

r

Exception.' Depositary ·can only comrninqle if. the ' articies a.re: · · .: · · · · , 1, Ofthe same kind and, quality; and , :. 2 ... · ~~e!e is ~o-contrary stipulation. · .. · . If: C.9[Tll'Tlingling .is -~llo'~ed, .each 'depositor shall 15e. entitled to 'each portion· of· the entire mass as the 'amount deposited ~y'hl~ bears to· the whole, If i ~179).~. "

;:it~~i~t

is money

-

Obligation 6: Not to cornminqle thihgs of 'the same kind 11nd .quality deposited if so stipulated (CIVIL CQDE, Ar( 1976)·. ·, J

If the thing deposited co.nsumables:. ·

The permission to use it will result in its consumption ·an~ . converts the: contract into a simpl~ io·an or mutuum (DE LEON, supra. at 180). .

v.

•

~

, Exception:. If safekeeping is ·still the principal purpose of the contract, ·

special kind of deposit. ~11 is not . to be strictly governed.by.the provisions on .deposit. It cannot also be characterized as an. ordinary contract of lease because' full and· absolute 'control of the safety depcsit boxes was not given to the joint renters .. The relation between the bank and its customer is that 6f a b'ail.or and bailee: the bailrnent b~irig for' hire and mutual benefit (CA Agro · Industrial · Development Corp CA, G.R. No. 90027, March 3, 1~93).

•

•

:. :cv;:!ett:::1:: ::12ft'4ft.·2:t n@>~m?-'~

1

.-

.. , .

Obl_igat.iori 8: To be liat?le 'for loss· t~rough fortuitous event: (SUDA) 1 .. .Jf §tipulate-d;. 2. If he. y\~s tbe thir:ig 'vvithout _the_- aeposjto(s. •.c-"' __ permissior:. ,' .. -. . . ' ,...., 3. : lfher.Qela9,s 'its return; ~nd · .. . 4. ·1f .. he· Allows other~ to use it, even though he .. himseWf!iajl ·h~ve b~er:i authorized to ys~,.tbe

·. ·:~s~m,(~~~f.L_ GOfJ.E'.·Art.' ·

1.~79). ,_ .

.

· ,, ..

, , ,. 0Qligat,<w,jl: · LiaoJJit .. when the thing>d_ep<>~itecl is delivered closed ~md sealed (RPS) · ·. . . . 1.. .To Be~uro the thing· d_~posited in . t_he $amecondition; . · .. · · , . . . . . . 2. : .e_ay for damag~s shou.ld the: sear or' lo.ck be . broken· through· ·his· faul't, which is presumed unless' proven otherwise; and .. --... ' . . - . 3 .. T~·i<e.ep the·§ecr~fof the.deposit when ~h~ s'eal or loc:k is· broken with··or without hiS' fault (CIVIL ·cob~; Art. '1981). __ ,·. · · ·.-' ·: ·

To

Exceptions: .. 1 . . · • • _ 1. :· Even without · the· express · permission of the · depositor wbenthe preservation ·of the thing deposited requ-ire~ its,. µse; • . . or . a . . .. Note: ltrnustbe used only for that purpose. . .· ', . . .. . . .

',·,

l/ll._hen expressly permitted __ (CIVIL COPE; Art. 1·~77) .:

by the. d;posit6r.

1,91)."_ · · · · ·~ "'· ·

"'°:

I

. •

.

'

i,

The depositary is authorized to open the 'thing · .9ep·osite9, which ]s' closed· _an(sealed, when there. is; . _ • . ·1. Presumf]d au1hority, such ·as if _the key has t5een. .· .. ·.delivered.to.him; or-. .. . · · . 2 .... Nece_ssity .tq .do so wh.en t~~· ir:,structions a·f .: the depositor as regards th~_depositcan'nofbe .' . .executed without opening the box· of.re'cepTucle, . . (CIVIL coo'E, Art .. 1982). . . 1.

'

T~e. permission to.use isl not ·presumed •except ~b._en . .._/ . . such use is necessary for' the. preservation. of the . thi11g deposited·~.119 the. burden IS;On the depositary to . prove. that" permission has- been . given ( C[VIL CODE, Art. '1978J: . -., .

.

· Re-~s·ori: Without the ·nile, irresponsible deposita'rfos . may" .violate ~heir= tru'sts:w1th impunity .(DE' LEON, . · · stipr_a <Ji .

2.

I

~

••

as,

Effect.if Permission to Use is Given: · 1' .. If the thin~ 'deposited is. non-consumable.. The contract loses the ~haracter of a deposit and acquires that of a commodatum.

2019 SAN BEDA LAW CENTRALIZED.BAR OPERATIONS

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Clt6:DIT.TRANSACTl"ONS· SAN-~fDA LAW CENTRALIZED DAIWPERATIONS - MEMORY AID. 2019

. ~.f#M:ii~SsMwmm~'.'?'*!4 ±Mi-±:'»¥1:9*,&*,M&' g:_~t& H~« ,.;•;aw :sPN> w» Obligation 10: Obligation -to -return .products, accessories, · and accessions (CIVIL CODE, Art· 1983). Reason: The . depositor is the · own.er ,or-. ·at least represents tlie owner of· the thing deposited. The 'products. > accessions .: .- and accessories. . .are consequences otcwnership (DE LEON,. supra et 191)., .. . . .

•

•

'

s;:s r.4@7a~ :**cU!·;

aMtif:Hi·WY@PS2"%Stidltrnz1

'A bank can compensate or set .off the deposit in its hands for thepaymentofanyindebtedness to it on the part.cf the depositor (Equirabl~ PC/ Bank v, Ng .Sheung Ngor, G:R. 'No. 171545, December 19, 2QQ7)., In 'true' deposit; such compensation or set-off is not allowed (Cl_\(.[L COD~,-Ait. 1287). .

Obligation 11: To pay interest· on sums converted to .personal .use from .the day. of conversion . if the .de posit consists · of money (CIVIL. CODE, Art. -1983 end 1.$96j: ,. ••

?A:W:?

1•

.1

••

lrreg~lpr De~_osit~: Mutuum

The- consumable.' thing _Tbe .. · lender cannot .deposited . may- ·,- be demand 'restirution until demanded ·at will b9' the . the time tor payment, 'as . depositor. ·. . ." : · . , -t , pro,vid~,djn.the, contract . . 'has arisen. --. - .. .

. . -··

j

.-656' I 201\3 SAN BEDA

LAW tENTRALIZED'.BAR_QPERATIONS

. ¢R·E·orr TRANSACTJO:Ns .

,

.

_SAN BEDA LAW CENTRAilZED BAR OPERATIONS - MEMCJR.Y AID 2019

J':WI# @,m:· I? c,;c:• .. \ M\5il!i'?'fl21 E ¥ffi·~§,: ¢4 .''' ::?¥ \Wt!,·$iiMUS $-q;ill WAm\ ·#N

Rl!.re·Wh.en There are:.Jwq _or ,M9.r:e D~positors

-Divisitile

.... ,

· •.

R_eg_a_rdle~s ' .. s~·lid_ary' ..·.. . of divjsibil1ty/ ·1ndivfsibi1ity .., . ·....... ·: ·'::.: ~ t ~-..

. ":''

,·;·.

...

I

{

.

...

.

~ote'. Art. 1991 m~ant ~depositary's he.ir, as:-~hown·. in Article 1178 of the old Civil Code (5 TOLENTINO . · sup(a at_ 468). · • Ob.lig~_tions of The Depos:itbr . . .. · .. 1. Tc:> pay. expenses for preservation if .the ..c.!e.po.?i! i~Qf~tu_i!~~.? (9Jl(LL C_QOf=,.A.i!.)992) · (contemplates ·Ordinary_ and extra_ordi.nary neces~ary expenses).· . ·

~Not somr~t,;-~ 'E~6h-: ·::· oiie~ "·. airi·

l

demand o~ly · · his share ... _. · ; -· ..• · ,J ·_. .

> ·

T0e law refers to nece_ssary ·eip~nsei ·u;eful expe.nses or. those_ for p1.Jre,·luxury-:9r:·mere.pleasl!.re-ar~ not covElred (OE LEON;-.supra·at ·. · 201). ,. . . ..

Th~' .de~dsitary' ca.n return·· the thing to a'ny'' .· qf_ . 'the ~ep~sitors'::.

. , · ·, · · .- . "·· ll; . : ~·. .. a·,,<· .. .·.: .

_Except: · \1,/heh · the/(f·has··-'b'een. a dem·and j'udidal or ..'.extraj~d1cial, ~for -itsretiJrn ·~has'. . tie en .made' ,:by.· one 6( th'eiri ... _·,; ·, p1yment · .. shoUld·· be. made to . · J1ini. (Cl~IL CODE, Art,),214)

·:.

... . · . ·

2. ·. · .

. ... . . . Nate·: 'If · the -deposit. · is . ·for a -;\valuabl~ consideration,. ,expenses for .·preservation are borne . by .. the . depositary- ~ec~use. th!:)y°' are deemed included' in-·the compensation, unless" there is a c0ntrary stipulati?n (Id: af'202)~ . ....__ . · ...... . . . : ~: To pay for losses incurred by the depositary d~e to the character_.of- the thing· deposited· (CIVIL CODE, Art. 1993). :. . .

' '·'Gener.al- Rule.:- The depositor 'shall reimb~rs'e . -:the cleROSitary for any loss arising 'from ttie ' . character. .of the/ thing deposited_ (DE -, LEON_,

,· /.. :. -·

~u~~,~t.20~!·· ...

. .

.

· · _· ·

.

·_·

. : ·.

;

.· .. ~·;_-

Exceptio s:" · At tfie time o}.the deposit. the depositor was' n~ta_~a~e-of·the danqerouscharacter-of.the thinq;' :J .;·· , · · · : ,· .:.- , ., -,

. · (CIVIL CODE, AtJ 198p):._ .

·

$¢Ill!* i @l9Pllt§KtaW&l,# k~~-A-18YJUffi J

{·.1

N'~te:. l_f there is ·;::i- s_ifp~lati-~ri)hii tH/fnj~g ~-hould -o·~pqsitor was. not .expected to "know the· .. · . _ be _retu_rn~cl _to one bf, ltiE:_'~ep_osjlqfs: tpe'.deposit~ danger.OU~. Character of. the thfniJ; .. ·' .. · . ·. . · ~ti~U return it .only to the person qesigJited · (9/VIC. ....· Depositor ·notified the depositary ·of the _e.ODE;.'Art. 1985, par. 2). ' :- -, · , . ., · · . sam~; a~d . . . . · , , :_1 --~· .: .- •. : · .-.. · .. ;: . . . · · · . --: ' - . d. , The depositary was=aware · of it-. wfthout ~ ',d~p'osi.t~ry's'Rigt{tof1 ~-<:1~Vi~e1 fr'~!)) the· d~pos_it(2r ·(CIVIL COD_E, . The _d~_ppsitary ·ma/retaJ'~ 'the: :t~in~{ in·'·p_l~·dg~ until . · Art. 19?3).·:· ·' : '· · .. · '. 0 ftJI! . P~Yn:i~_n!: of_ ":'Mt ~9y. l)e due.him by reason of . . -· ' · ·, ·•-. · :' · · -. ' . : ·' .' ', .' • • t~~·.qep.
·Ret~rihon.·: -:

.

. . Rul~~

vyhe~.·- an· He/r:..of'the; · · Thi.ng·Deposited ,· ~ ·

t~1i.c~fP.~sfi~~·s·~~\r,_~n·o

i;:,e.Jositot · ,; · .

(. _.· , . . -

s·~·,ci tt:ie· · ...

· :

.. ,,

. . _

·

< · ':

. .1. .E.~Y.r,:ie~t ~r Pe_rformanc_e'; . 2. · BemlSSIOffOr Condonation;

.

. •\- .·.· ,

..

in g~o{;(f~it11"/1~ay ha~.e·sold : 3\_Be.~~is?ion'. _·:'.· .. - .· · · · .. ·i ·• ... I w_lJ1.ch .~e- q, n_ot ~.n'?'v'{..W_~.'S d¢JJo~iteq,· shall . .. 4. ~~flul~e~t,:,. . •, . ·.· bound'·to; retaf.ri· the."price· lie \may have .. · ,_ 5 .. .E~es~,npt1on, . or to assign'. his _right qf ~ctiori against tti·e . ·, 6 ... M_erg'~'r: or- Gonfusio_n; . './ · s· .. I case the- ·Rrice has nd!'. bee~1-i;>aid to· him 7 .. !iovatipn;' · : . · '- - ·· / .. "(¢1v;1fcbbE, ii.ft. f9?J1;:,.·.··.:·-·'.'·· · - ·.· .·· .··, ·; · . 8:. ·_boss of:th~-thing due;·and · . , ..... , .. ., .i . ·:· ·:' ...\ .. -·· ... ·,-, · .: .. ·,.. ' · ·-' , .' . 9. ful.fillment.of.a r~solutory·condition.·· ·-.· · .· 1' _Re.a.s:9}1: • ... ' ... ; : • .. • • • • • • '·.·, ••• : .. , , ;· .. · .. ;, · . ... _. ·., ·-. :- /-· Not~:· Corl]peAsation as tncide· of: extinguishment If th~ heir acts. in. bad faith, he is liable for dama!ie's: of obligations _is not applica~le to deposit (DE.LEON, . The s~le or appropriation 'of . the thing d,epqsited. supra -~f 203). Compensatic>n is not proper when.one·· constitutes estafa (DE LEON, supra· at 199) ... · · of the: debts arises from a deposit or from the ' ~ . . .

-

9

th\'l thing ·only._ be: rec'eiv.ed· 'buyer .in

l;q.w,ity

> · . ' ·. . . :. · a

. 2019 SAN SEDA LAW.CENTRALIZED

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BAR OPERATIONS

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SAN BEDA LAW CENTRALIZED BAR OPERATi0/1/5 - MEMORY-AID 2019

obllqations of a depositary or o.f a . bailee commoaetum (CIVIL" CODE, Art. 1287). ,

'Note: A_ deposit made in cornpliaricewith law.is · governed -by the provisions of such law and, in . default thereof, by the rules on voliintary.deposit (CIV_IL' (;ODE, Art. 1:997, pifr. 1) .. · .

in

A deposit is also extinquished: 1. Upon the loss· · pr destruction·- of the thing deposited; 2.

1.

-Made on the occasion _;ofan"y. calamity suchas fire, ·storm·; flood, pill;:ige;. shipwreck or ." other similar event {CIVIL CODE, Art .. 1996 par. 2). This is referred to as involuntar;y bailment or involuntarydeposit. Another na~e is depositb miserabJe (DE LEON, sµpra.at.206-207). . . ··..

In case of gratuitous.deposit, upon the death of either the depositor or the depositary {CIVIL· ·cope, Art. ·1995);

.

· Reason: Gratuitous deposits are personal in nature . . (DE . t:EON,. supra at.. 204).: . . Deposltfor Compensation A deposit for compensation is not extinguished by.the death of- either-party'unless-thedeposit is terminated _by the-hetrs.of-the depositor. This is. - . 'different -frorn the rule in gratuitous depo~ whic~' are personal in nature (5 PARASfl"supra · r at 957). · · . ,/"' ~ .

,' -· .

.: '·:.

r.~- . .

'. /. Q

-Z ~

By'the. conversion _of lnto a_nothlW' · contract if the depositor ~ILows.l,e ~~pos1tary to · ·- .. use the th'.ng (CIVIL 19'.~). ~ ':~-..,. ..

COf~t

.

...

.

.

, ..rticle

, (~_/VIL C~DE,_ A~.1996 P.ar..

... ·

.. . .

. .

\995

are';\FJJ~~

<

·Necess~ry Oeppsit · ·. A d~pos1t 1s necessary when:

,

_%ther Jtn~~~f'- ;c)ssa,ry.'-~eposit~:. 1. Dep9s1\s Mp~1th_ Common Carriers: -?~_ep0sit _by ,~!irs in Hotel~ ~nd lr1ns:

I sqpr;;i. .fi\2p8~. ~). · :.::-·· ~~· r\ .· ~ . ".'~ Hi"" V.-' , ·. .'4-y :' L.. "-~,J Et~

N~te:· -The, ~au:5es menfo{~
: The-d~_pcisit:mac;Je ·on anyof the- said.calamities shall .be requlated by the provlsions concerninq " . voluntary.deposit and by Article-2168, i.e., when · -,aur.,ing a calamity, property is. saved- from ~estr ctiofl by another person without the .k.[l~•\f~ge _of·tt:ie owner. the "i,atter is bound to pay the: ~o ~e~u~t c~mpensatioi:, (Cl~IL CO~E,._ ~-1~~ Par: ~' : _ . ·. , ..

· ~~ . i rv·~

a:fi~ .

4 ..

_

:.~A

·-

~

·

.7.

,

,_

The ~~~_Pet;•0fl io~el~_ ... _or;. inns .. shall._ ·be rest&.,e,§}bl~ •a~ 9<;~os1tan~.l>~h_e.-?epbs.1t o~ . e1fe l§;ma,efoy'"t'.avelers. _. .

~:~-

ent_s,.:

:(D)

'

f?r

,:,- . ·. ·> : · ·. · · _ · · ·

· .

·

- :

. . .

SczEbrt\h. _ · . e • plo~eE;J pf t~e- El_ffE;i_cts. br_ou,g~t. ·~,Y, the .. gyest~;.]11d . ,. , . . ... -• ·-<'_9/)-, b:'\~~~.;(srfaRe · the ~-!°~~auti?11l wliic~. ~-aid

·_ ;._ .

. . .

'

v1 1.}\_y

3 ..' By:Jh_e. return- of. the th'.ng. b¥<,~~t:··--~e ositary . , · , _(CIVIL_CO{)E,_Art198.9);

.-:

.

Note: There must be a causal rela.tion between·. the calamity and the constitution.of the'deposit (Id. at' l07). . · " . '

..

. . ._Exampl_e~: . . . . · · ~· . . a:_. · Ju~Jc1~J de~os1t ?f- a ·thm_g -t~~ pes~essi~ of -·Mr i\:t,t~~t~f-ke~~er~ o~ their su,bst1futes ~~v1~ed by_. .·• . · which .1s bemg,~1$puted'm-a h\!ga~b~the1r ~elaliv,e_ tp _t~_e. c;:are.:.a_[id.'"'..1~.!1,aqc~r.9.f or ~ore_'pers?ns. (CIVIL ~ODE, Art,_ 938); . . . th.eir eff~cts.,(C,.Vf~,GQDE1:flrl. 19,9~)., · . ·b. · :oeHo'~it y,.,ith_ a bank :or public institution .of · :'-. ·· · :· .. · ·., O, · .. .. ._ ~-· .. _ ·. ·, ' ..... : .: · pu~lk: . ~on_ds· ·. o·r ··'ihstrun:ient~ · ·of, e:redit. )_l)is· als_o)~P.plie~·- ~9 the passe11g~r·.s· ~a~gage . _payable·to or~_e·r or, b!:fefr,e_r. given in·us.ufruct w.h)c~.is· i_n. hi~. personJil custody._(Cf:V/L .90D_'F_, . , wh·en-the usµfr.uctuary qoes notgivEJ proper · Art. 1754). · ·. _ .•. · . · .·i· · . - · : · · -securjty their con.servati'o'n.(GlViL= CODE; . .· ·. . . .. . . Art.586);. · .··.: .. _ · ..... , , . "Tr~yelle~s~'·anc;l"'.°gu.est_i('rett:i.rt~.tr~_~s1~nt~,~h_o'' c.-- Deposifof a· thing'pledged wrieri'.the creditor - . enter hotels or \rins.se~king lqggi!'}g, arid'.not to . u~;e·s the s"aQle.wUhout ,the authority of the: boarders in dorni_it0ries anc_l lodijirig l:)ot,1.s~s. wpo- · owner·or misu_~es it in 'any' othe[ way (CIVIL. s~-l~~t. their:· b?ifrci.er;s_'_u's_u~lly f~r. :~. cpnfr;39l_ef! . . . . CODE, Art.' 2104); . ~ .. . . period (DE LEON, supra a( 20~). · d'.' _Dep·osits··r~qui.red in:suits as.. provid~d.in-thE:l -· · ' · ·, · · ·. , ..' · : · ·· ·. · · . . . ·Rl)les of Coi.frt; and,: ' . ; . . .· ' . ii~~i!ih1 · .. ··.·.:. :' '. ·)··' ;:·.:-.- ·.:·. :-:_·- .: e. Deposits CQf!Slitut~d to guarc!f)tee coi'.itracts · Noflimited_ to bagg,age·or a~ticle~ ordi_r:i
for

'Ex_teni"~f

658" I .201~3' SAN BEDA lAW CENTRALIZED ~AR OPERA TIQNS · ·

CRE.DIT TR.ANSACTION·S· SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

Right of Reten.tion by Hot~'l-keepers: rhe hotel-keeper ha_s·-a rig:fit to ret~in' the thin'gs brought into the hotel b.y)he gue$1, ~s a security . - . for credits on accoulif of'lodging·, .and .supplies · usi.J~liy furnished to hotel guests (CIVIL ·CODE, 1 .Art. 2004). · ~ • ' • . . . ·-.· . . ·.: ,. ~ .,

A hotel-keeper .is liable iii the · following instances: When· the loss or injury is caused: . a. Byhisservants or employees as well as· by ·-strangers provid'ed.that the notice .has been given and proper precautions ta~en;.and · b. 'By the act of a thief or robber qone _williout the use of arms and irresistible force, tor:in .. ·. 'this case, the holel-keepe·r is apparently :. ne'gligent (CIVIL co6E, _Arts. ·2000 & 2001):

.·;, · · R~~~on> The r_igh~ i~ giyen--to. hotel-.keepers to· . . :..compensate th~m dor. th'e liabilities . imp,osed upon tne,:n by.Jaw. LE;ON, supra at 2·15). . ~ (DE . ~. ·

.J

is NOT liable in the folro~ing instances: · ·. · wf-ien th.e 1oi~or injury is caused by:. -~ ... a: · Force inajeure, theft by a· s.tranger witfrthe . Lisi arms or imfaistible · force (CIYIL · CODE, 2000), unless he is guilty of fauit '· or nl3gligeoce ag~inst the ::..,". .. i,n . failing to. proyide . . loss or. injury from his cause (DE LEON,. supra· f:]t-211); · · . . b. 1he 'aets of guests·, his family; .servants ...b.r visitor's; ~ind-· : . · ·=.·>,. ·- .• · c .. The·. ch~racter of' the :thin·g·s • (e.g: -'it is . consumable) brought into the hotel (.Cl'Vif..: - . . · C.(!DE, Art. ;2062); :. . . . . -~ ..

Note: A safety d_eposit:~box · in 9 hotel .i?: a _ contract · of nec;:~ss'ary · deposit. ,. The existing . .. relation_sh.iP. i~_.one of depositor' anp deposit?_ry ,.· . ('YHT'Re_aJJy Corp. VS CA( supra.):··. . ·. -. '·

. _A hotel-keeper

"or·

Arl.

.· :

. : ,re

Rule.in the occurrence of theft or:. robbery . -~ . Th~ a~t qfa ·t~iEici(rc;ipber,· "Yr\?.t.a; lilt~d_.i~e.. · _hote,l ,.1~ not d~.emed.(orce mi!J~ure,LfDte 1t JS_· . · done-with t~e ysfl of arm$· orrthr9.4gh lhe~istibleforce (CIVIL CODE, Art. ·20<5''1]:_,,;;.:_ .

./

J.U:ciiciarb~posif.. ·, Judicial c;leposit- .sequestration. tQl<es place when an attachme'r1_f dr seizure of property in litigation is of.dered (CIVJL CODE, Art. ~005). .. . . - .. · . ·....

o~

Movable·· as well as imm~vable propertY:rriay be the . object of s_equestratio'n (CIVIL/CODE, Art. ~906). . The d_eR.9;,1tarw 'of property or objects sequestrated cannot. be relwved of his· responsibility until the . · c_orfrov,e~syli,H,ch,gave rise !~er~to has cometo ~n -, . end, unle..s$·. tlne\~urtso .order$·(CIVIL CQPE, A[(.. · 2007)

t ·:_·,\ . . · · - ·. . · . .

... Th~;d:po§:,a~'Of'pmpert/ seq~e~tra;ed_is bound to ·

. _comply, w,m~ect t~ . t~~ sa~e, "Y'th ··_all the ·.,-Rea.son~ ... Th.~ 'irmkeeper is ~bound- 0 ·. e~p his obiiqations of a gc,od father-of a family (CIVIL CODE,.'. ··: house safe: f~oril the in!rysian··<'U ·t~_iel}e and/ft . _.Art: 20.0?).. , . : · . · · . '. · they areallcwed to gain access t~~).Joµ;,e.;· ·. : ·. : '. .: . .·., .: . _ . · ... , . . . . . · without the use-of such forte as"tll _showiit~ As_to~matlers·-ncitprovidedin the Clvil'Code, judicial . . marks upon the house, it is' fairl,rpresumabl.e. .sequestratlon shall be qoverned by-. the Rules of ·:that the innkeeper i? at fault {5 PARAS,,.sugra·at . . · . ·Court··(CJYIL CODE, Art. 2009) .. ·. :_9.: 64)_. . · . - ·-·~· . -: · . ·..• /. · .. ·.. ·'.. - ,, . ; . . -"··· ·:--.· . '... . . . ~. . . r,J_atu_re. and.Purpose, of J~dJcial Deppsi_t . . . , · . The_.~eposit- js'judici?.I because it.ts _9UXil\ary 16 a E:xe~ption-or.-Dimi.nut:on ot ua6i!ity: . · · . . . . ' .': ,; .: . :The hotel~kee·p~r cannot free himself frpm·:the. · · :: caseq~ending ln court: .- . ·: : : -~ responsib_ility by p~stihg notic_es to.tti.e effefl.that .. . Thepurpose is to.malntainthe status quo du_rir:ig the ·, J,e i_s· no~· liable for th·e article~ ~rougbt by· the. · · · pendencyof the-litiqationSrsto insuretheriqhtof the " guest: Any stipLilc!tion·to such effect shall'be void : parties to the property in 'case of. favorable judgn:ient (CIVfL COD~,. Art.. 200J). · . . . . .. · (DE 4~oN;·sapi-a ·at 217)> :::· · , . ·. · ~. · ., . :- . . ·, . ·.. . . . . . - : ..· .. . '. .. . ·.. ,, .. ,;, Reason:: Public: policy, The hotel ·pusin~ss ;is·. , CustodiaLegis . . :·' ;: ' . · . :Jmbued.\vitn public interest (YHT, Realty Cqrp. y: · This· occurs when tl'ling:is_sho.wn to have-been arid - CA,. G:R. No. February. 17, · 2005): . ·. : . 1.26780, ·. . . . . is·.·:subjected fo. the 'offidal.'ci.istody a··juditiai or. . . . executive officer in pursuance 'ofh.is exe~·ution of a ~ate: It is not r:iec~ssary i[) order fr, hold ,afl inn- .. legalwrit (Id. 211y" · · :,·. keeper liabl_~. thar'the ·e.ffects of t~e guests -~e . .- ' actually delivered to him or hi_s ·employee·s; .It is· . .. ··. :-,, . en,ough.tl:iat··they are: Y{ithin· th-e inn _(D~ Los · Santos-v: Tan.Khey; 5[} O.G. No. 45-53;:29 Am: ·~ . ..~ . . Jur. 89-90, .fuly 30, 1962J: . .· .. ;.

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LAW CENTMLIZED.BA;ROPERATIO;;S- MEMORY AID 2019

. 'accessories inJ;luding ju_dicial costs (CIVIL CODE, Art. 20q5, per: 2); . ·.c. Specific =.covers a particular obli°gation; or d. .Goritir.i.u[r.g_. - covers subsequent .or .additiona! obligations. (C!Vlt. CODE, Art . . _2053). · -

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w,•;w w :ws u&o+n·+ . e&&s :ZW&d&Me,-s,,:@ "'!ltllr:-..,,..,..,_..........,'"""" . . . ·.. . .. ' ... · ..' .. . assumed by the surety (F.<3U Insurance Corp. v. ~ . · Note:. The creditbr may.sue the principal debtor . Sj:i'i/-Roxas,· G.R. No. 189526 & 189656; August 9, and.any 'of the sureties separately· cir toqether 2017).. r · , '-· . (Na(ional Shioyerd and Steel· Corp .. v: Totrenio; e;;g;ga&sW2 @':fi¥W?i4iiBSii!:iiztt

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.. Natureof.Suretyshlp's Undertakinq: . · l. · Liabilit:y is contractual and accessory but dir:ect; · -, ' Although the contract of surety .. is. iri essence secondary only tcta:_vaJi<;l principal obliqation. his ~ liability. to -the :'credj!bf is 'direct,·- primary and · -. .absolute;' he· 'becomes liable for the debt- andduty of anether alihoug):i he possesses-no direct .... or personal' interest -over Ihe obligations nor ,. does he receive benefit therefrom i(Trade · and investment Development Corp. of the Ph ifs: -vs. iisia· 'Peces · Corp.,- G,R.-· no.. f874_03,.

·G.R. No·. L~2-110_9,·June 26, 196·7-): ·· . · · . ' ·. .:.;. - ·' ·· . ·i · · · . In 'suretyship.; the oft-repeated -rule is that-a surety's liability is joint· and solidary wjtH' that of . the .principal debtor:'Thjs·'undertaking·makes· a ··. surety' aqreement ari '· ancillary contract. as 'it presupposes' · ffie existence : of )·8 :, principal· · contract. Nevertheless, although the contract bf .. a .surety is In-essenee.secondary onlytoa yali~ . principal obligation, its liability/to· the .creottor or 'i "promise': ofthec'princip'al .is, said. tobe- direct.. · ,:primar;y .and absolute: jn other, words, surety is · .c. directly andequally.bouno'with theprinolpal. He.' . becomes liabJe:'for:ithe debt "and 'duty' of· the .. · ·,prindpai-: OQl!§Or,'.;even· 'Without possessing a · - direct pe'rson?i· · i1Jteresf.'in the. obligations. co_nstitutec;f.by._the latter.' l'hus;·'a_'surety-i~ not · . entitle~Uo a·;separc~.te. nqtice of defai.J_lt or to .the . .ben.efifof.:excuss'ion,.'. It "m·ay iri' fact: be· sued. · se.par_ately, o/-';t,ogethe'r_with t.h~ pr.in~ipa1: tjebt<;>r ·

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· . · · · ' bl~nc~;~b~i~g'. arj_;~c~essory.,~ont;a~t, ~n·. , _ .· exte·nsior:i 'gr.a(l.ted by_ the-.credit9r_ to~ g~afaQto~ ; · . with.out theh::611.sent of debtor's- surety, does not . ·. . · extinguish :the ·surety (Trade and Jrives(ment:

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developme{Jt, Corp: of the F?f!ils.. ,V. (1.sia P.a,ce.s. · .. Corp.; supra) ·.< ,_ ,, .. ·

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(G1/at Satel[lte•Networks, L(d .. v. UePB'G~neral' ./hsuranee·OiJ.,';.'fnc:;··.G.R. No: 189563;.·Apfil 7, ·

. .. ...

2 .. UabilitY. is finiit~d -~y- ~erms·,ef contract; ; .

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ln~;h~.:~~ie~~:Qf_ ~oJlusio~ •. ~W~t~ :i(b9un~ .. by aJutJgment against the~pnnc1palidebtor even ·. · ·, ·.thouiiJh;:he·. was:rn.ot(a rel="nofollow">p9rty:,:to, th~1prqceedin·gs._:: : .. · ~6.
·: ·, :··:,' :w{sayam-S.yrely;&,Jr1spranc:J,Corp. v.,.FA;>G,R:. · . ·· No, 12,:726.1, September:-7', 2001). -- · . . ,, · · · '. · ·. :,, · , : :../ . · · . Cr~·dit~r~;· how~~er,. ~ay reJb;er trom1ne ~µrelY. -· ~s; P.art p_f ttteir .d?rj)cig~s. i1{terest-~t he iegjl. · .rate, ·even if the ·surety would. lflere'b'y become·

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~0!4).. · 'i._ ·:/ : :. ·. : ':. · . :·; · . · ·~ '-:- -~_·1

~t_~a_.~ ~°.r~t~~-·the .aMo:untt,6.1.~(ed.

\ .. ,..Reason: _NP! by-.._reas_o~ oJ_ c,;o~trag,t,.. .,P}l.,t ..bdliiy;..·~""""'-,.1 .. ·~·:-.~ .. , ....~....,e..,_'...ao-'"':· .n;.·;·u;~~;.:~:s;~meJi~/~:~lid~:~~;1;_~~\1~yfor. re.ason.of'1ts'fa1lur"e_to pay whe!l dsr(ianc:J~.'.,and. . the fuifii)m,!3Q(of the prin~ipar obiigatf.o.n:(rowers for 111:iyirfo compeUed: th.e plainliff:Jo, res9rt·ia 'the:~ . ·. Assuraf?Ce C.o(P~ Y: Oro'rarna SURermart,:_'G.'f;<'. · . coi.Jrts ..to obtai.n payment(5 TOLENTIN6:~supra '.. ·. No.·L.-.4!58'48,·.Novj:Jmb_er_9,.·t.977)... ,. · ...

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s'urety,.. bO\Neve~,, is ·r1'0t'relea'~e~f by,'.'a cpange. ., · .... · ir:i t~e.'-~9.ritragt_1,yni,ch doe.s· not have:.th~ e.ffe'ct cit·. · ',: ·. n:i?.king ifs: obiigatioo more,.oneroLis' (ln.tra~Strata .

. . . ' . , .. ;_ i[\ss_~(f]hCe C,ofr(V~:: Rep,ublic~o(the Phifippines,.. . · .. · : G:R. Nb. ·156571, July ·9, .2008). · ::·, · . ·. .· · · · '· · ·. ·,,.,·: · '. · ' ·· ,. : 3. ·.:.Liability .c;iris;s. only_ if princip?l.· .debt6r is .he1d· .. : ,_li~blf··. ~- ':--i ·. ·,, :\·.:._- .· ( ·

:> _:··\, . _.\..:'

'1t th~· pri~cip~· d~btor ~·nd· surety. ~fre h~1d"iiable-, . their liabili.lY:~P J?.cW,ttie ,creditOr:;WciUld.be.soJidary . . but the nature ofthe surety's underta_king is ~ucti -that it ~qes .n9t incur- !iability .unl~ss arid until' the _ . pr-inCipa1_,deqt6r:}s.he(c!.li~ti1e'{Gov~rnment.'~(the· 'Philippines ii. Tizon, -GR. No. L-22108,'-Augi.Js(. 30, 1967).

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·,Undertak.ing··.is to~th·~·tr~d;t;/a·~}~~\~o-.d~btor:;:.··--. · .. -i··

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.e:xpre.ssly.proviqed,, tAE? .surety , .. m9k~s-;_ coyi{ra~t Qr· ,agree111ef\t: WiJh, · the . principal '.that.,: it;' ::.wil,I ·. ftJ!fill· :,th,e. . ,Qbligation .. guar;,uJteep. f.qr:. th.e _b.enefjt of the priricip'al (DE

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.

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__ -r·_ ,, .. ·.. · < ·. . . . . -., · .· ... ·>···:- . . . , : ff,· Surety.is ·not,.e·n.fitied·_t.o. n_otice .ohpr.ih¢ipal'.s ~ ... ' ·aefault; ·. . ··\ ., .. : •. ',:· : .... , -.. ,.· .· ·. : - .. ._.: .....

R~.a_son: The.~urety-is };:iou·nd to tc1.ke ·n.ofi.ce bf· th.e; ;;princ.ip,al)~: d$fault a.rid. to· .·perform , the ·. obligation,(ld _at'295) .. · : ·;

i _,' ,Priqr;de.rn~~d

by' th~,,~;edito.~ ~~on .~h~ p~i-ncipal ._.' , is,r:i?t requi:e_d (Id: a1_295); and ·

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, Note: As ~oon as the··principal is in default, the surety is likewise fn default (Id. at 295) 8.

- MEMORY AID 2019

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Note: A guarantor {Tiay bind himself-for less, but not for ·more than the principal debtor, both ·as regards the amount. and the on'erous nature· of the conditions, Should he t,ave bound himself for m_ore, his ob!igatiohs shall be reduced to the limits of thaf of the del;>tor (CIVIL CODE, Art. 2054). .

Surety is not' exonerated by neglect of creditor to sue p'riricipal (Id. at . 295). ·Reason: There is notning to prevef\t the.creditor from proceeding againsrthe principal at any time (P.almares v: CA', G.R: No. 12649_0, March 31, 199(}). . .

Security of-~.Condition~I Obligation· A conditronal- obligation may also be secured (Magdalena Estates Inc. v. Rodriguez,-G.R. No. L.-1-8411, Oec;ember.17, 1966). This is be~ause it i$. ·valid an(binding ,just like a pure one (OE LEC;JN,supra. at 317) .. ···...

Sureties do. not insure the solvency of the debtor, but · rather the debt itself. They are contracted precisely to rnitiqate' risks of nonperformance on the part of -the obliger. This . responsibility necessarily places .a surety.on the · · . ,If the." principal obllqation is subject to a same- level as that of the principal debtor. The suspensive' condition, the guarantor is liable only effect ls-that.the creditor is .qiven-the.rlqht.to after the .fulfillment of the condition,' If itis ·· . directly proceed. to either . principal debtor or . subject to a _resolutory_condition, the happening surety. This is the reaso~ why· ~~cussjon. : cannot Tof>t~ condition. extinguishes both ~he principal be i_nvo:ked . .To require the cr.edito~~ifr. r:nay ie _eqtered _int? even. without the ~r.ec;l1to~. · (.G1/at ~ate/[1te~'Ne,,.twqF~s, Ltd. \.,-Umfuq,~ _lg{,;~ · ·· rnterveQtr6[1 o~tt:l'e principal det;>tQf,-in which, C-~~onut'flau~ers.. Benk Ge~e[~I. ~~~~nee Co., ArtJ: 12~6 an9 1237 shall apply (CIVIL . lnc.,._G.R. N~. 189563_ Rc:t'Yt,on!;_P~,o~r!r . \fl)~· fLGQ.DE'./H.«050). ·. · . 7,2016)., · . ·· · · G~· ~

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.Characteristics of. duarant~· a~-d. Sure lfsf'liQ:l!J, · ~: ·:~~' .. f~_t;/_.~orit;a~t ~ila·t~ral:·. if (ASUN-.<::256) t · :· • ..... ~ · . ·; ·{:8, . ~- :·.~omp_en_~a~or IS -paid _to the guarantor (D_E, 1._ ~?ce.sso,ry- it cannot exist by itself. Jpere ~l:sQN• .::jP,:-a at 283).. : _ . · : · .b~ a·VaJid principal oblig~tion (CIVIL·43:00l~q4'rt~v,(\: .. · 205?):: ... : .. ,, :·-

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If .the- principa·r obliga~i_0~:is

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also yoid (DE t.EON, supra at 31Q). · ,

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." , : . · . · · . . ' ·. . • · It 1s a fontr!3ct be~~en the gu9raator or surety

·.· Tl:1e ~cinsideration whic;h suppo"rts the obiigatio~· .. ·. .· al}d 'creditor.·(Jd. at 285); . . as to ttie principal ·deqtor ::is .. a sufficien"t . ·· · ·· · · -. , · · · " · · · . conside"r,atipn . to··. supp.art: tHe ·ob.ligation: of a. . . :·. Not:'e: The. co'htract·'exists~for-th~ b;nefit of the guaranto_r o_r sure~y- (Id. a_t 306) ... ·. · ··. · , . ; cr~.9i_to(c;1.qd_,not fqr the)lenefi.t of the principal0f . debtor who is n·of'a party. to. the. contract . _gua.ranty. · · N_ote: _Guaranty mqy ~e.coh_stituted,to gu_i:jran\ee the pei:forman~e .of a_ voidablfl· cir unenforceable . !~'natural obiigatibns:'the creditor may .proceed c"ontr~ct. It may ·also. g·uaraiitee a ha.tural . • · . against: th_e. guarantor although he has no tight obliga~ion·(CJYI~ C_ODE,Art. 20,52)_. However, it" · · of action aga_lr:ist tile' pri_ns;iP.cil debtor'(ld.' at 313j. n:iust .t?e c_oriside~ed. binding only if the guarantor . kr;iew ".tb.e aefective character. of the· principal 7. _Falls _ur:ider the :§tatute.of Frauds; obliga~i{1n._(5 TOl.,ENTINO, stiptci.'?f'504). . . . .. .. . . .. 0

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§ubsidiary, an.q ce;>_ndjtional·-·it takes effe.ct-or:11y·.when the 'principal ·aebtor fails iri his 'oblig'ation, · ,. subject to a limitation (DE LEON_, supra ~t-283).

662 I 2019 SAN BEDA LA.WCENTRALI.ZED BAR OPEAATIONS

lt· i{Q_,qt i:ifesu~ed .cl.rid "must. be in writing enforceableJCIVll

CO.DE,Art .. 140:J, par.:

to be

2 (b)).

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Guarantor Distin·guish.ed from the Debtor Whil(;l ·the guarantor is subsidiarily-liable, the' debtor· is principally liable (Id. at 1024). ·

. Re'ason: It is "a special promise to answer for the debt, default or miscarriage of: another" (DE

LEON, supr
· • .... :

8_: ·. Qratuitous (CIVIL CODE, Arf.._2048) . ·

Guaranty y. Sure,tyship

. . If· there is _a c.ontrary stipulation

Exceptiom

·

(C/VJL COD_E, A~: 2048): C~nstruction of a ·Guaranty Contract General :Rule~ . Strfctly interp,reted. agair:ist th.e ... creditor ant;J. in favor of .the· guara_ntor o'r .surel_Y. It i~ . not to be exten·ded beyor:,d its term_s or specified limit

'' . Liability depends on an Surety assLJmes liability · independe.nt, agreement as r~gular party tci tt,e to pay the obligplion ·,f un'dertaklng. · ' 'primary debtor· fails to . do so.

. (Magdalena Es_ta'tes Inc: -v. Rodriguez, .G.. R. No, _L~ . 1841~1; ,December _17, 19,66):-· . , . .

.

·...

Reason:" It is ~ special obligation, (DE LEON, supra . ?.l _322).. >, . . .

,. '•

is Surety .''· is Guarantor'·' liable. . secon_darily liab,le; He. is ··an· G9lla.teral undertaking.' promis9r.

'•,

· Strictissimi Juris-Rule·

. .. Pertaios to, 'an accom~o"dation- surety because. tlile latter acts without'. motive of pecuniary · gain and - hence; should.be protected.aqairist unjust p~cuniai;y ., _i_mpoverishment by imposing on Ihe principal. duties . akin 'to those .ofa. fidupiary. (Erma- lndiJ_stries:)9t._v, .

prima.rilY_ : ~ . orig[n?I.

,.

Security Bank Corp., G.R. No, ·1 f}.127.4, Decemf?e(6, ~017). _.·: .' ' ·.. ·.· . ·,:, .: · -~, .. ·· ,tf'~j E~ceptioo;, In case o(.c~mp~nsat~sure i~st i~ rules of interpretatlon appertair:ij,r\g to c9ntfact ·_qf '.! insurance applies. (Erm9 lnqus'trtis, Inc: 11 Sec,urity \

_B~nk ~01p.:· G.R. No., 19". ~~:f:~ecen::lfic;~;-~~1~

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Compensated corporate sureties ire busiries.s. ,,,,.,·":,,,,:, ,i,t.,_'. •~·~~., -.:.,:·:. -~---. ,·, - ·,.... ,,·.,• •,_., .• · associatlons- oJgahized_. to-~ assurrre <:;lassifia·d . ~..:1 .,,·-.~ •• •••• rlsks=ln -1arg_e: numbers," for profit and ··on 1 Guarantor),~an avail of Surety cann~1. ayaJ1 ot. '.• impersonal basis>' the benefit of excussion t)lfbenefit 'of excussiori 2 .. They a're:·~e'cured frorrf all possible .1J[; by ·.and division· in .case. 'and division.:._.' . , .' "adequate .·. counterborids . , . '. proceeds ' . ' _.- J ,' ._ . --·.'ag_reeme_nts.(DEJ-EON;:silp(~(_at_3$·1). . ... .aqainst him.

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' 'the rule~ i~' th~t th~<~eb.ts .', in·~~/r~d' :by -di~ec,tors, -offlcers, and employees acting ascorporate aqents . c:1re' riot-. th~ir,d_irect·JiabiliJy _but qf the c;brporatlon ·tbey · represent,' ex.cept ·If _they· .contractu·ally agree ·o( . - a~surr,ie. to'_ be ·perso'naliy. liable for.the' corporation's debts .. Th~ · p_etitio.ner President; in·. lhe case of Crisolog.o v.:Peop/.e, signed. the· ''Guar~nte·e Clause'.' Of' the=:· ~rU$f receipls·_. 'agre~ments in hi13 personal . capaqity. ei/en·.waived the benefit· qf ·ex.cussidri against -the· Cqrp.or~ition: As .sucti,. he,' is-persohaHy. arid solidar.lly. liable with. the_._.c:;9.rporatiori (Cr1sologo

and

v.- People, G.R. No: 199~l}1;·. December 3;: 2012): .. . ~ •

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:. ~ ~· ' .-i #_,_ ' Pften.-disc'~~rge,c/by·ih'~' _mere- indulgeric~· of 'the' · creditor- or_· · want · .of -notice of ... . default· ,:-: ..

,_Noldi~~ha;M{b.Y q,er~ . indulger\c.e ... of .. tbe cre'ditor. or by--warir of notice of default · ·. . ..

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Surety:'Dii;tinguisheci'from a Sqlidary· Debto·r. ·. A si.Jre.ty is 'almost the-s_ame as a solidary debtor, except that the iatter 'is hims~lf principal debtor (5

PARAS, -supra at 1024).'

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(DE LEON, supra a·( 296-298).

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. CREDl·T ·TRANS·ACTIO·N:S SAN BEDA

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BAR OPERATIONS - MEMORY AID-2019

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·Guaranty v. Warran.ty

'. - Eact) ·is :~n· u'nde~a'.king bi one party-to. another to indernn°ify ormake good._tl:le.as·su'red aqains! some ' possJbl~·.<:lef~iJ.lt i;,i- defect.Jn the· contemplation of the· parties.' · ·

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· · A guaranty . shall be construed as continuing _ when by the terms-thereof it is 'evident that the object is' to ·gb,e a standing credit to the principal debtor to be· used from time _to time (either indefinitely or until a certain period, especially if tti~e right to. recall the gu;:iranty is expressly · reserved.· (Dino·. v. CA/ G.R. · No. 89775, November 26; 1992):

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(CIVIL ciOoE; Art. 2053) 1-, Co,ntin-~rig ·qu.ii"rapiy ~f:,~urety~frip. ·:· .. . .. ' · N6t- .limited ' to .. ·a, · single ·transaction· but . . / .. · _cqn~erJ,plates a · future-. ~ourse. of -dealinqs, · coverinq 'a series of-transactionsqenerahy for an · jnd_effnite time or until revoked (DE LEON, supre

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SAN BEDA LAW CENTRALIZED BA_R QPERATIONS -MEMORY A/~·2019

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. Excjp·tio·~·: i·h~~ gi:ia~a~tor ·s~seledted~by th~ , .· :prjne,ip~i'-_debto'i-"because the latter"\:1ns;e,i for the4' ~OIV~ncy 'of. th~ )?rmer.. :.(n)h\s C~§>e~tfl.s)/~Uaran.wr.: most possess-the qualificatioq_s,Rre$c;~ib'ed no.t_ oqlY: atthe moment the quaranty.fs g,i1en·~c:!1So·until t'}e exlinquishment of the debt (!d~ at-:pn). : · ·

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Effect of :_ Subsequ,~nt ··.io~~· (Required" J:)Ualificattons' ::~ . ··: . ·_. :,:·· . . . :..: . . · ·. . The supsecfuent los~ ot'the)ntegr_ity' (conyicti.dJI in first instance of ~ crime involyirig dishon~sty)." or. Pr
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c·apacity··oi a Marrie.d<Woman ·· : · · ·.: ' may guarantee -an .9pligation. without the husband'.s consent, bu~_shall Qot thereby bind. the conjugal partnership, . except. in cases pr?vided . by law- (i.e. · when._ the guaranty ·has·

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~ .· ·: NQt~: · t\Cceptance . ne(!!d . not: necess~rily. · · express· or in writing, but may· be··indicated·

c;·~n~r-~1 ·. ~~le};he_ ·qu~[i~tati~~s present 'at t~e~-~ime of the perfection of the contract: Ll;ON,.'.su~ra_ f!l' 3:}_9): _ ..~

Reason:' A·guarahty_is :f6r the b'einefii ..o'f(Jhe c_red~~. n~t·~h-~ ·?-er.to~; _h_en_c~ t~~-.Jorr11 ..~r ITlf\~·;.vaive t~.e qualifications .(5 TOLENT/NO;supra a(-5:toJJ ,· .

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Reason: Being secondaril~ li~ble, 'th.e guarantor .. . is entitled to kriow the:nature and 'exterit··of his. · 1iability (D~ LEON;- supra at 335).:·'· ·

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Liability of Heirs ifthe Guarantor Dies ·· . . · If 'a guarantor dies. hfs· heirs are still liable to ·the. extent of the -value of the. inheritance because the ~bligation ··is ~-not purely personal and is therefore transmfssi_ble (5Pl:'_RAS, sup.ra ~t 1040) .. ~. .. ' . Acceptance of Guaranty·and Notice·Jhe_reof by. the Creditor · .. 1:- 1Whe~ Ne.cessa!)' ' · 1 · •· .. , ·· ··.;_ · . · . IJl!hen _there.is m_~rely'. an o,~er of_~ gua:~nty, or . merely: a ~ord1t1onal guaranty. requiring an. · - as;_ti91) by . the· ·credifor befo~.e t~e · oblig_ation -. . · .. ·bec·omes . fixed· (Phflippjne National' ~ank v. · .. Garcia; G,R'No. 2,3175,·Marctf)8; 1925).. -

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Oualiflcatlons of a· Guarantor: .(PSC). Has ~i.Jffici~nt property to· answer for the · obliqatiori which he g':]9~ante_es; · ·· .' '· 2~ _Eoss'~ss~s integ~ity; and. .: , . ·3. f·~pacity' to .bind .himself (CIVIL .({ODE, "Art'$ ·2056_ t¢r205!).· ·· · . ·· -: · ..· . _.-,

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. . redounded to the benefit of the family)' (CIVIL CODE, Art. 2.049). .,

Effect of Penalty Cl a Use · . . . ( The penalty m.ay be .dem_anded in, the proper case even if its'varueis..>more' than the 'aniount cit 'the· p~incipal d~o((G~neral lnsur~rice &·Sur~iy-corp. y. · - Republic, G.R. No., L-1387'3; January 3, 19,§3),.. • .. · . . :~.. . . .. l . -·

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Extent of Guarantor's Liability: .. 1. Where the· guaranty ·is defirifte: [t is limited in whol.e · or in part ·to the principal debt: to the ·exclusion of accessories. (Id. at 333),'or 2. \fVhere guaranty is indefinite or simp'le: J.1 .shall comprise not :only ~he'-:rfrindpal bhllgati_on, but_ . also all 'its ace::essories·. including the judicial costs, provided with respect to the latter.'trat·the guarantor shal_l only be liable. for those costs incurred.-~fter. he tias been J.udicially required ro pay· (CIV.IL CO,DE,./J.rt:'- 2055 ·par..

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.. 9~;LJl_Y !fdJ ~!l~~6).. · . · .• .. '. · ;_;,: : ;.·. : _ . ·. : ·. ,;Exceptron: I\J.~e,,of .. aq:ep_tance rs'. made a · · : ·conditiOJLQf..th.e guaranty'('Texas V; Alonso, 'G:R:· No: 47495; 19,41); · ·· · ~ August.1'4; . . .

Selectipn of a. G.u.aranto.r· ;... ; :.. · .: . -· . · ~ .· .· . . .Required<'an·d.· stipulated 1by. creditor · .-· · substitution of guarantor may not be demanded . .. ((;JV/{ COD_E, Art. ·-20Q7.). · > . .-.: .: • • · • .. 2.;' Select.ecf:' !Ji :the.'.,. principal .debtop: ,.:. -the · ... .-: · .: · principal ';'de~tor ·: 'answers .. for.' the:~ integrity;' . . . _ :._ ·. capacity,,.:an.cFSC>IVi3ffdY,'6fthe· guarantorsiietted~ . . · . · : . .(EJJ=,.LEf.ON, supra at 341).' ; : ·1· • • •. · . .. 3 .. Personally ·designated.J:>y:·the·.:·creditor, :· .':respon.sibility:.for-, lh'e._seledion ·shal~_ fai1.·up·on· the. ·. ·. ,. . creditor and nnt·on.the de'r:itor.(ld.-~f34·1J. >.' . ·.> ·.' ," .-:. Rights of A:G uaranf9-~ (ED.-CIGS) ... · ::· · . . . • . 1. · · Ben._efjt of gxcl_Jssion' (CIVIi:. c.ODE,·Ait: 2058);-: ·:. . . 2: _-BenEJfit of Qivision' (C1VIL' CODE, Art 2065); . 3: Right to;foritribufip~ of a. gt:Jarantor-,yjho·pays if. ·:' ··. there. is'. s'olidary.'li~bility- ·rc1VJL ·:.CODE;. Art: 2078);' · .. · . ·. ; . :· _. ,... : ... - .:· 4. ·.. Right· ·of !ndefnl"!IIY ~ or reimbu(sement: (CIVIL 0:. ·CODE,.:Arl·. 20~6); · ;\ , ,- . . . . .. . 5, · Right Qf. Gu.aranfor. fo· proceed against debtor·. · · before.'payrnent (CWIL GODE,-Art. 2071fani:J .-. 6. Right to ~i:J~rogation.-(G/Y/L CODE,··A_rt: 2061).

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CR;EDIT TRA·NSA.CTIO·NS .

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B~nefit of-Excus;ion · Right in· ·which the guarantor cannot becomp_elled to. pay the creditor_ unless the" latt_er has e)(hausted an- the prpperties o(the principal ... . debtor, and h~s r.esorted to aU.: ..of the legal. · reme·dies against such·debtor (CIVIL CODE, Art. 2058). ,

. Note: The creditor is noJ required to go a~er a debtor·who is· hidin~j'or canndt be Sued in our·· courts·.- and ·10. ·incur the-,dela'ys and .. expenses incident thereto (QE LEON; supra · at 346). "'· · ·

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Reason: Character of the·contract as accessory · and subsidiary (DE LEON; supra ~t 342) ..

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Note: It is not r)e¢essary that the debtor. be judicic;1lly declar.ed· insolveot or -~ankr1,1pt, but · the insolvency or inability to pay must be actual (DE L~ON, supra at 346). .

·How_E.xercised: . a. D.emand for· -payment upon the guarantor· only after judgment upon the debt; and b. Point out the available property (not i~ litigation cir encumberedrof the debtor. within . _ the Philipplnes, -sufficient- to .cover the · · · amount of the debt (CIVIL CODE, Art. 2060) ·. . . . · , . . :he credit~r ~ay. -~rior to ..-e~haustion. qe-~re - a·

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· ·--· · .» ·. · ·· d · t It personal nght recoqmze m a guacafl_ or. : s _ · waiver is valid (DEtEON, s_u(Jra at 345). · ·

Reason; _The· benefit of excussion -is a

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··.·JUd~m·ent_ aqainst ~he guar_a~t~-rrw:_~$~bg_~ ,.\JJ.pd~r·t~e'.t~~-~t.re.c~ipt d~te1(3Q 8eQte0ber · entitle~:. ~o":"ever, to .. a. a;~r9:.e~~of11'1h~ ~~ . . '"'~ 981¢'~et1tioher .. Jose ~ - Tupaz- _-w;:i1v.ed execut1?n of Judgmen~ a~~mft. nim_;,y]J-11 ~!!§1:-tt:ie - .1} _-......._. ex~ssi~ll.wjlen he aqreed that .his "liability · properties .of - the pnn~ipjl&ebt~~hr,11,. h~"f~; . ~. w - . . \n _[the). gi~lanty- shall be D(R.ECT. AND been exhausted, to_ sat1se the l<jllte~ S ~bhg~t1~n .!&. . IMME~_J,\.TE; \,ithout any· needwhatsoever C!upaz_ v. _c;;A, G.R. No, 455!7-Novem[?er18, . . · . . . Jn ... _[tifeJ'~fl [of respondent bal')_k] to take. 2005) I , t t. ~ ~·h t .. I I ... d ... ,, · ; . : _ · . , • ~ .. .c.-'"~...,, . ~ny s e~§. ?r ex aus ~ny _ega__ rem_e 1es . -· . · ·. , . - ·. · • , 7 F if;h~. clear 1mgo-.,tt.. of t~1~.)~\1p1,1latJ9!:1_-1s. th.~-~ Effect of. Failure of the Cr,e ,ttQr to. Exhaust,,m..--177,,, ~ ·--t·t· ~ ~J d th b. ·· f"t f . , ·-11 ~ • :~~ . . '':.:.:.··~-.. • ern~oner ose upaz wa1Ye . e ene I o and-·Resort to AII.Leg'.al.Remedi;_e5.inle.shall"· ~ --/. -· · · .-iJf.,.,,.. ·-:.,.
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r-i~te: lfis n?J.neces.sary;··b·~~~~~r, th.at de.Qtor "be jud}c1~11y declared ._insolvent b~n_l
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Wher:i th~ d~bt~r has Absconded, or·cacmot, · be:~Lied,within ttie·Phittppines.unless he.has left . a manager .. o.( rep_resentative · (CIVIC CODE, Art. 2059 par. 4)); .

· · · · . Reason:·.- Be'callse in these~ 6ases,-, the _. creditor has· rio a~d,on" against the priricip"ai d~btor (5 TOL.ANTI.NC?,.supr.a~at 514f_.

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h: , If he fail? to !nterJ:Jose it as' ·defense before · judgrperir. i's . rendered_.'. ·ag$inst, ·.him·. (Saavedra ·v. · Price; ·:G.R:- ·No.-- 46-702, .

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· If the guarantqr_ does-_not:.set up the ~enefif_ agai~st .. it:ie - _ ¢(ed.itor upon: - the la.tte.r's den,and . f_or ::_Raym~_rit fn;jm, --hiin .. ·(CIVIL·. CODE, Art. 206Q); and · ,, .. -

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SAN BEDA LAWCENTRALl7ED BAR OPERATIONS - MEMORY AID 201.9

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Art. 2_060 imposes · a: condition for· the. invocation of the·defense of excussion. Art. 206-0 of the· Civil Code clearly requires that -inorder-for the quarantor to-make use of the benefit of excussion, he must set it up aqainst ··!.he·. creditof . upon the· latter's. . demand for. payment ··and point out to the creditor." available· property of the debtor· within the Phillppines sufficient to cover the amount of. thedebt. It ·must he stressed that despite/having been served ·a d~mand letter at his office, ·petitioner.still f~iled'.to pojnfci~'t to "tne respondent properties of -Macroqen i · · ·-. ~ealty su~icjent'to:cover.itfdebt as required , '. .Lll'}der. -Article .2060' of the C,ivil Code. ·Such . ' -·. failure on petitioner's .part forecloses his · : right to set up. the defense .of 'excussion ·'(Bitanga v: - . Pyramic/ Consiructior: . Erigineeting ··corp.,, ·G.R ... No. 173526, _ August 28, 2_008). -. . -. · . .· '· ·..

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.Right to· Contribution of Guarar:itbr W,ho Pays ifTher~ is a Solidary liability . . · ·

. General Rule: Guaranfor nYay demand bf each .of t~e.,others ·the shar-e· which proportionally . ?wes f(or:n ·him;· p'rovi.ded: any of the 'following · conditions' ~re 'm'e!': . ' . . . . . . : a:· Payf!1ent' hc:1s been made:· by virtue of a . ju,dici~ldemand; b. p·~incipal. de,btor ts· insolvent (CIVIL COD&;

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Accrual or Basis of..Right: Acq!,.Jired ipso jur~ · by .-virtue oLs'aid paymerit · without- any prior cession of-rights to·~u·ch ..guarantor' (OE LEON, supra.. at.374). · ·... _ ·, : · ·

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. Note: Dem~·nd must be ~ctua1.·:Joi~i~g the guarantor in. the suit aqainst the. principa ~ debtor is not the; demandintended by lqw (q·E--L~.·o.N;.s.up.ra _at ~4_7)._· '. ·.'-... ·. ;/ . ., W~ere the· -pledqe oc mortgagejfhas beeri giv_ e.·n_.. · ·_by him.. -~·s §.. pecial sec. ur'_i't,C/d~ a.t 345... 1. __ tr ~ ':I. .-. .T . ·· ·. · · · ·: .C:· · · N. _ote: . he ·guarantor of a guarantor..lfshall e~joy the ;_b_enefit of{excussicm;· }oth·. 'witii' . respecrtp the·.guaraoter ar:idqi!)jeKinciRal.. .

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l . .. Exceptions: ''· . . ·The insolvent guarantor cannot be made-to pay.Tn' StJCh case. his'share sh:..ill borne' t:,ithe.other~'jr;iclilding·thE: paying quarantor . ' . in tlie_ same jolntproportion; 'or · . · . . b. W.hen .co-quarantors t:i'cive.~defens~s against the_ one who .paid the same which .have . ·'·ger.t~i9ed. fotl\e. P.rir:t~.ip~l-d ~btot-ag~inst the· creditor and which arenot purely personal to, ~he··~ebtor. (CIVl(CODE, ·Art.:2b7il); . · · ·.

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· , 11 · • ' : · · · '--r~sponsio}e · to the 9,0:guqra·ntors . _in·· the .. s.;:ime · ~erofs·as_th~guara tor (CI.VIL_(;ODE; A,:t: 2075) ..

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: ... · : de?_for.(_C_IV·l·L _COD~: Aft. 20.~4)._· ·: ·:. ~';r, ~ ·. . · · . .- ·· ·' ·· :·. · ., · . .· , .-. Right to Co trib~tion and Benefit o.f Di~ision . 2:· -Benefit'of Division· ~ · . : · · . · .. · Distinguish~d · · .. · · ·. · · $hould th.ere bi:l. sevec.al ·guara~tors-~~n!y cine·.· ---1n""'the b~nefit Qf divi~ion· ·(CIVIL° CODE; /Art. debtor and for· the same· debt-the obligation-'tto _ 2@65J~ther~ · has: •.bee.n. ho . paymerit by the answer for t.!1Efsa!11e:is·divided among air (tiVIL · . : ·~uara_ntpr. Yet, iri the· rigl)t't() cont~io~tion (CIVIL .... CODE,Art. 2065),· · ·:: · _ ·, CODE,.Art>,2pl3), the pay_rjier:i(has'°been.incide · · ··bec_al:JS~ ·of-judicial· proceedings or. ir:isolvency of · the princ\p~I- de.btor:(Caiho·· v. ·Valle'~;· GR.· No . . ·..'.· . 19493,.Augµsf-,27/192"3)_!_' : . · ·~ · . ·· .... . . . ' . ·~ ··-· .. ·Exception's:· , Proce~:h.lre When Credito; Sues:'' . · . w'hen sbl.idari~y is expressly"stipulated; arid,' · a .. · The· credi~or must sue. tre princ;ip~L.debfor . . b. . If af!Y. of the _:circumsfances eriuinerated. · . q:1lo'n~·. :.The guararitor ~annal be . sued.,-With · · . ,Arf..,2059.o(the Civif Code shou.ld,take pl.ace .. his principal·~·xce'pt in the case' mentioned in ' · (DE LEON,· -supra at 352-353). · '. . . . · · .. ; .~ . ; . . '. . ... . . . . . . . . Art .. 2059 of the.Civil CoHe: ·, · ·· '· . . :'·. . ·b,: Notice tc?"gtrara~tohjt, a'ctfon; ... Not~: "The guaranfor. is not required to .'point ~ut ...._ ·. · the prop·~rty of ·his- ·co-guarantors· sfnce their .. . "": -Th~ guarant9r mu~~t "be N9TIFIED .. (9/VIL obligation witi,. respect. to: each. other is· not · · . . CODE; 2062):.· ltth·e gu9rantbr appe~rs: 's4bsidiary' but .direct. If d.oes ryot depe.nd ~s to. · · he· is still' ,given the be.Aefit .of . exhaustion their solvency,. although if o.ne· of. them· should even J_f j9d.gment should be rehdei'ecl against . turn out to "be''irisolvent,' his share has to be'.. . . ~im' the principal debtor: . .Voluntary 1 • born~ by the othe·rs (Id .. at 355). . . . . . .. . .. . . ~ appearance -, : 'does . not -_.·constitute a ·-· , r~riunciati,~t:1'::o.f his ·riQht t.o :excussion (DE . ~EON, supra at 3q0). · · , .. ,•·

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The guarantor cannot set.up the. defenses. lf he 'doesnot appear. It. may· no lonqer be ·possible for him to question' the validity of. . the judgment (Id. at350): · ·1 · c.

A--gu.ar.antor is ·~ntitl~c:i" t_a.· be heard before · · execution can be· issued. aqainst him. where .he is 'not a. party in the ·6-ase involving his. · principal 'since thjs constitutes, procedural ·ql!.~·process·(ld. at 350). '.,. . .

MEM_GRYAID 20 19

Effect of Payment by Guarantor: a.

Withoutnotice to debtor

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-· · . · The. debtor -rnay:' interpose ." against the ·. · . gu_arantor·. those defenses which he "could . . have. set up against the creditorat the time . the ·payment .was made ( e.q. uie debtor can. - set up- aga}nsi the gu_ara,ntor the defense of 'previous. e~tinguish_([lent"of. the opli<jcJtion by -: · payment) (8/VIL CQDE,·Art:.2068).

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General . Rule: . Guarantor . has no -right to 'proceed aqainst the principal debtor _iintil he has " adua_ll.Y paid the_ ?·~bt (I~. at 396).

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·Exceptions: (SIB-D,-TRI)·· . ' a. vyhen he is §tiedJor payment; · .·. '. b.. [nsolvency oftheprjnclpal debtor; . c. ; Debtor has f!ound· .. himself to relieve. him from the quaranty within a-speclfled period, and this period has expired; . d. Qetit becomes. dernandable ,by. -reason of .. _ ~xpira!ion .orperlod.of ~pym~nt; .· : . e,,. Lapse of Ien (10):yea..r~; 'whenthere's no fixed period tor.lts maturity, unless it eannot r. be extinguishec( except within a period lonqerthan ten (1 Q). years... . f ... ,BeasoriaQle 'grdunds' to . tear-: that the priricipal will abscond; arid . . . . ,. . . ~ . -a.. ,· .. . ~ ./ .. , • . · g~ The, -debtor; ·is. in" !mm1nenf danqer; of. oe,coming Insolvent. teivu', '.Art. 2071) ... ;~:. · ··: ·,.: · · ·· .s, .. .-.. \• .

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Right to Subrogation · Subrogation,transfers io the person subrogated· the credit '-';,'ith all the right::, thereto appertaining either against the debtor· or · a·gainst third persotis, be they. guarantors' or. possessors •of mortgages, subject to stipµlation:in ccinveintional subrogat_ion (CIVIL CODE, Art. 1303) ..

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It is no.t a contrac;tual ·right. . The · right 'of _a guarantor- who has ··paid. a debt pu~suant to . subrogation does not s!and 'l:lpo1:1 a co'ntract but upon t~E:l principles of n~tural just_i~e (Id.). ,,

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Obtain release from-the gu~rc;1n_ty; or ; ', ;. . b. Demand a security that shalkprotect him .. · ·' .. -. frorrr anyproceedlrrqs - by the' .creditor. afld . ;, . from the darig'~r ',of insolvency,of the de_b'tor

"rtiese remedies .are' alternative; ~e:)ias th_e riqhtto i::h~cise· the -action to bring (.DE LEO~, · supra at 367)'. :

I~ the.;rfar~~tor paid a sm.aUer ;-m~uni by -~irh.J.e· ,,. of a c,9_mgfor~ise,:he _cannot. qe~ahd·r11ore:lhan . · what he actually paid (Id.).· .-· · · .. - .:

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~ot~·:;:ri:~enjfil- of ,.suqrogaUo"~. ca~;ot b_e · inv9kecldg\\.,.eases whore th.~- guarantor has .r~o ··• · .right to be reimbtJrsetj (Id.' at 361). . '-

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As · long· .as consent:: to, the:·· gt.iaranty was _......, __ oqtainea, 'the' right of subrogation is ·abs"olute . · . even if the: debtor refu'ses' the. subrogation (5 · · · 'PA'r~AS, supra at 1049): · · .·· ... ·· · · '/ . ·. · ~. !'"· -·:

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The .'guarartor · satisfies the: ·.-debt fi:lay' . deml:ind paymen.t from:· : · · .. . .· . ,: ·. . ;_: ·· q. . The. perso.n: who · r.e'qu~~ted . him .· to· be a.· guarantcir; or-, · .' ·" . ·.: ·: :· · · . ·., b: The . deb~or.(~IVIL COQE, Art.· 2072) .. .. . ·'

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Effects of C~mpromise : '. . , .. . .A compromise between the cre.djlor and the principal c;l_ebtor benefits the.guaranto"r but does. nbt p~ejudicl:l

hirri. '.Giv~~ .. <3:. ~ig_~t~· a~~io~. Protective·. . ·: ~~rpedy after payment which 1s a before ·payment. This - ·:~_ubsiaritiv~ right. . . . remedy. is preliriiin~ry;

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The g~arantor is. ~ubrogated _by virtue of . the _.-........,payment to the rights of.the, creditor, noUhose of tlie dE:l~~or, (Id.): :.. · · - · .· · ' . : ·. ·.. · .,· .. <

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of law upon paym,ent. by the guarantor'.~ . It-· is not l')ec·ess"ary t~at 'the . creditor ce'des to the gu;:irahtol 'the- fornier's righfa ag_ainst the debtor (fr;J. at 360)'. ' ·

. .: .·,n all .. thes~ cases: the ~ction.of the gu,af;n!or is

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··Npte: This right of subrogation is necessary to enable. the guarantor to er,force the;ind~.mnity ·. given in Art. ·2066 of the Civil Code:(fJE LEON, supra at 360), . . . .

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That. which is ente.red i~t~, b~tw~en t.he guarantor :· · and the. creditor benefits but does not prejuqice the prin.cip·a1 .debtor (CIVIL CODE, A_rt .. 2.063). · . . ·.. ("

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Extinguishment of Guaranty . Guaranty. being accessory and subsidiary, it is also terminated when the · principal obligation is extinquished (DE.LEON, .supre at 377):

· The theory behind Article 2079 is· -that an extension of time given tothe.principal debtor by the creditor witholitthe' surety's consent would deprive the surety of hisriqht.to pay thecreditor, a~d to be immediately. .subroqated _lo' the creditor's remedies' against Jh~. prfncfpal cf~btor upon the orlqinal maturity date.'. The surety is said to be entitled toprotect himself. aqalnst the ......,~':nttc9~ncy of tt:ie. pri~cipal .debtor. or the \JmpBrrJ._f'l!lors, _P~~ommg, i_nso_lvent . durinq, the . exte~a;.?· ~eno.. d... Th~;..und~[IXmg ~at1ona~e rs not present 1_w.l~ 1~.stant case (9oqh1_ngya'lt· Jr. v: R .-...~·$ur~tyar;,fUnsuranGeD~.; /~c.,.G._R. No. L-o/7 47369~uq_eWJ;.1987). . · · · .

Causes: (RA2CE2) 1.. · Release in favor of one of ,'the quarantors. . without the consent of. the others, benefits all to. the extent.o! share ofthe guarantor to whom · _·it has be~n granted (C!ViL. CODE, Art. 2078); _ _ 2. If the creditor. voluntarily ~ccepts immovable or.., other prep~.rties in .payment of the de,e!, evehif y he_ s:houlq" afterwards . lose. the ~e th,~gh . eviction or conveyance" .of prop':,lilY\ (PJV{l,. . CODE:,-Art.-.2077); :, . /./'

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sue~·~ d~~axf!1? ever, ··exti~.~u_i_s~es .• the. 1111;1 .• guar~a ty'. \ :~ \' . · .... Y,.,:heneve~ by so.me .. ~ct ~·f'{ the - creditor~ t9.e·7~ t'I(! t, When the ae!a~i~ for: such 11::ngth of time ;:is ~uaran.tors,. ev!,ln_' t_hottg~~n~y. -are Joli?aril~~~= .. ~l,ow~p~eses.i~tion pf the a_cti,on to enforce hable, · c;:annot· :be . sul: rel="nofollow">(9g_at~d t_o, J\~\;~~h~s.">---~ : : ·· :~2YJ)1enr.-:and / -'. · : · . ? , ·, . ·. . m·b.r:tgages._:arJ.d prefere_n\~~fi~tl~·fo~mt'fur (CJV/Lrb"i. 6· . WJ;)en u}.9A[i~a ~nty, th~-g. va... r~ntqr,r?q· uires CODE,. -Art. 2080); - \ ~4~ ftib_e cr,a1to..r folnforce ·payment- against the h'tJ _. .;;:;/ -~debtr;~.b.ut:~he: cre1itcir f~i!§. to ..~ct and t~e. Ra~·~~ale; Th_e crl:ld_1tor must not worse9 f.je .· ,. .- ·dE:~.tor .~ub1l'q.uently· bec;om~s m.so.lv.e_nt (5

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...f)'()~G/At. ~I so R e_1·E:,ase· . df'. : ',. . . . : ·.. . . .. · . :·- ' . uasaJ-1519. . ro~· h"J~ .0 'bl"1ga r·ion .m .. N~te: "Act"·should_ inc!~ae . .','.inactio·n~C5 P~flAS, \. J.lli1'-F-:<;>l~<Win~·lnstons;. ·· A .. Fpr the sarne,·~auses ~s. all othe.r ·obligations 2.- ObJ!g9(ioos pay;:ible· io .in~t13llrneJ'.it.s. (DE~~{=ON;' ~ uncfer Art,'1231 (CIVIL f;ODE; A,it-."20.76);' . -, ·. suprti'a{385); · · -:_ ·:" . ' · ··~· .... , · :. · ·i- . ·. :a.': -P~yrri~~t:cir,PE§rform'ance;. .. . . . ::~ ·: b. Loss o'f the'.ttflng:due; General· Rule: Extension· of tim·e as to ·ori'e or· ··o. Cc:mqonation· Q'r Re-,.riiss(on oftl:le.debt; ·. morE;)'. will n'9t1~ff~ct- the ii~bilit/~(the: for · ·d. ·cohfusid.n or _Merger of the .rights of. the. .· the othe,rs (Id. ~l 384~385). . \ ·· . . -credito"rand'debtor;:· . ..·.·· .·· •' .;··· .·,. ;'· ..

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Exceptfo~::.-lf t~?-~h~le un~;aid :ba.lar1ce has b'ecome' · :·a()tqm"atically" ' ·due ,: '(uMer°'.': gu~rantd(s;;i?n~e~t; (Radi9:_ ·di~gba,rges fh~ "guah1nfor ~oip. ·. of. the · .Phil.,. v:Roa, G.R. .Np_.' 12(329/ Septemb(jr 30,: .1'93_5), . . . . .

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. . Extension grantee!' to first-tier obllqors, cannot prejudice second-tier parties (.Id .. at- 387); · 6.. Matertal alterations, which essentially. vary the terms of ·the contract without consent .of the · surety, will release the surety from. liability (Id. at. 379): .·. .

Bondsman· A surety offered. in virtue· of a provision of law· or a judicial order. He must have ·the qualifications required of a guaral'}tbr (CIVIL CODE, Art. 2056) an·d .1n special· 1aws liJ<e ihe·- Rules' ·of-Court, Rule 11 _,( . Secs:·12 and·1.3. ·\ · .

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Reason: This is tantamount

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.Quajifications· of a P.ers·o·hal Bondsman: 1. He p<;>ssesses integrity; . . 2. He has: cap9city ~o bing him·self; and _3,·. f:le · ha·s 1s.ufficierit ·_prop'.erty to aoswer· for the _obligation, which he guarantee~. (€/VIL CODE, Art. 2082 in relation to>Ar(. 2056).

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Requisites of Material Alterations: · a: Change which imposes new obliqation; '. b. Added burden on the party prornisinq'" c. Which takes- ·away some obllqation already imposed; and · ·· · . · · . . . Note: Judicial bonds. ~onstitute ·merely. a. spe_cial . clas's°of ~ontracts of gu~ranty by;the .fact.that'they · d. Changing the legal effectof a contract and ·, . 'are'· given ·' .i'n "'.irtue, of_ a ju~ictal order.' r0.erardo not merely the form thereof' (Id. at 380). . . . . . . . -:. ~ P_Jaride/ .Surety and , Ins.'. .-.Co.,· G:R., No.. ~.-7807, . • I·. '•· Diligence Required of Creditor . _ October 31, 19.56). · ......... : .... "\ . The creditor -is under no .:obl_igatjori. to · display ?nY: . Pledge.·o·r'Mo.rtgage in lieu of t?ond. · . . . diligence 'in the en,forcemerit of hi~ rig~ts . as 'If th~· person required ·1a· · g i\/e' a legal or judi_cial bond c~editor (Id. at 388). · . · · . . . ·: · -· ; -should not be able-to.-"c;lo so, a pledge or:.mortgage · Reason: · Nothing can prevent th~ creditor from , Sl!ffi~i~nt to coyef. the. oblig~tion .shall .be 9dn'lifted in· lieu,thereot (fJNJL.qODE;Art. 2083). . . ·. ... j~~Oedingagainst the principal at any

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·.. No-benefit of excus~io~ for- ju_dici~I bondsnia~ AJudiciai!11tn~srnan and Jhe .sub~sur:ety are NOT ~. . :in~itl~d, b~_(ie~t. Of ~-XCU?Sion ~8,C~·us~'f~ey are . s.ui].11es· 1hose h~b1hty 19 · primary and_ s~hdary. (OE

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Duty of Cntdilor to .Account f.~ Lier} ·. on Principal's Property . . . . · #{_ :.: ->·· If th~ cr~ditor ha~ a.c~uired a lien ~~~th_,.e gr~perty . o~ principal, the cre?1~0~ at onc~e~om~r,-chatg~? . · w1th'the-du_ty ofretaininq suc~1sec1.mtyu · ..

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· .Any r~l~:se ~r impai~merit, 0t'.theAect,1~ity ~ .. . discharge th_e surety to the exten ofi-the-ValJe.?f.t~e ·· -g:: property or hen (td: -et 390). . · · -. . .. &:· .

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· Legal and Judicial Bonds' • Bond • • An undertaking that is sufficiently secured- and nof · · cash· or . currency (Cornrnis'sloner of ·customs·. Ii:' .. · Alikpa~, G.R. No. L-32Q42,"Novem/Je'r 26)1970). · .... . . . . I·-

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Nature of Bonds.· . All· bond, including Judicial bonds, are contractual in nEiture: . Bonds . exist only .. ir:i'"::: GOnsetjuen·ce · of a· m~eting of m_inds ·under the.·conditions essentiai to .a contract (DE_ LEON, supra·at 399).

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A . boruf merely -stands' as guaranty. (solldary' guaranty) for ~· principal. obtiqation, whlch exists. . ~iridependently°-of said bond ,·the· latter being mer.ely ·ari accessory obligation (Valencia v. RFC, ·G.R. No. · [~10749, _Apri/.25, 1958). · ..

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koown Persona/' Propfi}rty ·. Security .: Act · ·• (hereinafter._~J;PSA)., Ar(~.. 20~~-29_92 ,shil(. only be··. · relevant tQ real estc1te, m9rtgf!ges··"i1S·d_efjneaunder Arts. 21,24-21-31 ofth_e Civit.Co'de.'.. , ··. ·· ·,.. .PP$/.,- was passed on August 17," iiifa· and do'ok . eff~q't on Septemper: 7, 2018. ·Natwith~tanding of entry into force-of'R'.A. 11057;-the implementation of· this c1c·t sha(l·be. condition.ed .up:on-1HeRegistry"heing established-'.and operational under' Sec,· 26._of the PPSA_ (R.k 11'.057,.· Se};. 6E3/". The- Implementing RU/es and Regi.fla.tioris of PPSA; f9r.-the ·effective implementatlon of the statue-has not bffenjssued'as of the date of printing of' this Memory Aid.·. . .. . . .

SA'N AF.DA,. AW C:F.:NT~Al.17Ff)

RAR OPERATIONS I

671

CREDIT .: TRANS-ACTION·S· SAN'BEDA LAW CEN_TRAUZED BAR OPERA.Tl,ONS -.~EMORY•AID 2019

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Pactum Commissorium or Pa'cto Commissorio Stipulation-whereby the thing used. as security .shall automatically: become the property of the creditor Jn the event of non-payme_nt of the principal oblig_ation in due time (DELEON, supra at 424).r.

Common Provisions of Pledge and Mortgage First Co~monafity: Essential. Requialtes (CIVIL 2085):"(SOQA) .: 1.· Secures the fulfillment of a principal obliqation; 2. Pledger. and . mortqaqor must be the absolute . owner of the thing pledged or rnortqaqed: third persons' can .. pledge. or . mortqaqe 'their' own property or . ctherv-person's property with authority and 'consent bf the' ownE!r: of the .... property: pledged. ormortqaqed ·:10 secure the principal obligation'. . . .-

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·By such. a stipulation, the cre.ditor would be able to acquire-ownership of the property qiven as security . Without need of public sale or foreclosure. required. ·by law • (Id.). .' 'j ~· -", . I .

Pledge or mortqaqe constituted 'by impostor .. General rule: l:he!"pf!:!'dge or nfortga.ge'iS vofd·. . . ... ·. .. . . :· . ..

General Rule: Pectum cornmissorfum is forbidden

to

by law: ~nx.stipi.Jlatf9n th~teffE?Ct,.is declared' nulJ ·_. and void (Sps. Pet; v. sos, Sentos, G.R: No. ,160'108, Januwy 11, 2p16):. . . . .

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The mortgage_e_ may ·1egal_ly. fore.close th~ re~I estate. _ mortgage · extrnjutjicic;1lly · .. arid waive ·Jhe chatteJ "mortgage . "f<;irecfos~r.e: "and" maintain. insfead. a personal. action : for .the ··recovery··~of the.· unpaid. 8a1arici/ qt. the credii" (Philippine ·aa~k bt comriierce · ·v. Nfac_ada_eg; Q.R. ·N_o L-14:17_4, October 31,.1960)-:

·. stipi.!lated period (La_nuza v. [)eJeon; G.R. No:· · · · .. L}2;33J, Ju.oe .6, 1967)". · . · . ·'· 3. -Mortgage.e'$ act __ of registe;)r1ng the· mortg~g~d prop~rty if) -~is o.wn name upon,.the m9rtgagor'.s . faflure to 'redeem. the property- (Rfiyes 'v: Sierra, . . · G:R: 1979) .. ·' .. · ~ . No.. t-28658,.Pctob(;!r) . .. . .

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. . . ' . . . . . . \; " "fhirq ,Commpnality: Kinds of Opligatior:is _that Can J3e Secu_red ·.. ·. · · . · . r. .. · Gapabillty tq'se¢ura··a11 ki,nds· ofobligatio.f1s (i.e. pure· . or conditional,' voidable;. 'urienforceable and ·natural) (CIVIL °CODE, Arts. ~052.and 2,.0fi°1)._ . . . . .,.

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fifth ''.co~mo·~~iit/ Conc~·~t. ·oi' P~;s'e_;~ion ·of Mortgagee or P,ledgee . · . . . . ·Posses·sion_of:·!:l mortga_g~e .or_plec:lgP.e-is not_in the concept .q( an. owner;. th'u"s, .... !tie~ .9ubject". p"rop_erty_ . C~l)ho\oe· acql.)[red \~~oQgh}cquiiJtive 8rescrip_tiof,1~ ·. unleS.:s, th~Y. ren~ur:icf !~eir st,atus as such: (CIVIL CODE-. Art: 2103; DE LEON s"upra at 480). . .

,

Fourth .<;ommorw!ity: l_ndj_yjs.ib_ility · .· . A pledge _or-mortgage ..is indivisible, even though the . · · d'eb:t .may )e· . qi_yid.~d 'anjcir,Yg '.' the -successors: .in : tnterest.ofthe debtor: or of. the' creditor (CIVIL ·coDE,

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· Sixth Commor:i~lity· Retentlon of ownership. '·. . F,?J~~gor.:an_d-morf~ag~)I: ietaifl'.ci~n~rs~\p·._ofth~~ l~ing ·g~v~~:as· a'_secu_~itt~ld/

A, mortqaqe- tffr~-~ily. ~i~d.-imme.dia_tely-·subjects:._t~·e pfopertiupo_n ~!"licfi h is.imposed, ~fie -sarne qeir:ig · . iilcliv,islble even though tliedebtrnay be divided, and ·-. -such indivisibility likewi~e· b'eir:i_g u.riaJf~cte~Lby, th,e fact that the debtors are not soliaarily liable: (Dayrit:v.

- ~ev~~t~. .Commcrialityi: Promise' to · Co~s-titJte - Pledge o.r (Ylo.ftg.age .. , . · ·· :,... -, . <, , . . A:· promise to constitute a pledge -or. mortgage, •if ac¢epted;;,give_$ rise.onlyto a-pers:o[)al-Jight bindin_g ·UP.On'.,the: parties cjnd' ~reates no. 'real_.right in the

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~ · f.Jott;?.: ~h~~tlts_~sy; only a n_g~~ of: act1~n .to_ compel ' _the fu,!fil~i:tij!J~O tlieJ?,:om_1_se t~er.e 1_s nsi plepgE! . '·co~·siq~eri~es ci'ltic(ivisibility:"~::. . · . :_. <.-;. · . . :_~rfo~~~;l\Y.~\fD~/~~-!",'{~P~~ at__ 14D):r : .: . · ... 1.,· ·singl~. thing'.~'..._'Ey.i&,J>9_rfi.G~ .. of. t~efpr.p.pe_rti , .... ··,. . ,, ·fi·... · pledged ·.or m'ortga,9ed is answerabl·e for"' th_e· . ,. 'Grfrninal Resp~on~il~HiW 9(Pledgor-or Mortgagor '· 'whole obJig_ation a·s it f9_11s1due (BF/g.0N,_'supr:a, ·· ·.Esta~iffec:i"6y"a·.pers6n'.who"; piete,:idingJo . . at 4_3.6)., : : . ' . .'"': : ... . . 7 ': •. . ' ;b·e the OWl'l.e 9f.ar:i~eal'pr0perty';,°shc!II. conVey{sell,r· · 2. >S.everal-'things 7 ·.-all :of them. a'fEi li.aole ·for· the .,; . 'eric~mb~r or. ni6rt(:J°~9~' the·same or kn·owing thaf'the · .·. ··.:_ ~9(i)i_t~.of th~'1eof'_a:~d··(~itct~·d!tq~?o"~s~~j·(i,_~ye. i:e~l "pr9p.e'rty -is:en.yhIT)tier.e.9 _.shall clisppse 6{ tne : · , ·: :to· cl1v1de .h1_s :.~~\1on:. by. ~1stnbutmg,;;Jlie debt, sani·e~as .u'nencumbered·(RHVISED PENAL C.ODE, · ·· ·.<;1mohg th·e vanous_thmgs pledged or. mortgaged. . Art. 316, p?rs: 1- anct2J... ·-· . ,:· · , ,., · _.~· ·- · ·. ·' · · ·· · •i

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_noYcrea,~or's h~i~ V>(hq' rec'eiY.~-~:l::hjs:shar~ "of Ui_e,.. . ·. _ :debt to.return t~e ·pl~dg_e. or cance:_I the m6rtg;:ige : ·: as· long. as 'the- debt i~ :no(complete"ly sati.sfi~d : . :···· : _t<:;iVIL CODE, ArC2otf9;· Pa/s. -2_iirid°3): . -~-·. '-..

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··Exc;~ptions-to:th·e .Rule.of lndivisipility: · · .·.. : , · · · 1 .. , . \,yh.ere ea"i;:h _one of ::iev.eral things guarantees· a0 : . :· : · de\ermfnate''portion of'fbe .c~eclit; .· ·· . .-· .· ·:·; ·--~~ · . 2·.. 1/y~erifohly. a p,ortiqr1''"of thE;J:foari>W8$ releas.ed; . ·- 3:>· Wher.e there was failure of.co"ri'siderat°fon/ . .. . . ·4: ;Wh:er~·.there_:is no debto'r~cr~dit6_r r~lalionship . v.ih'en·a third pa~y·is the pledgoror:.•m'ortgagor. 5. Wlieri piecemeal redemption is allowed after. ·. · ,foreclqsure tDE LEON; supra at 436:438): · '' :

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·"Rul~."on A~c.orr:ini:~datlo·~~-Pl~dgor-:~r·M·odgago~-th"e accorrfrnodation pledgor ·. or m'ort_gagor ls :not .solldir.ily:'. B~~nd:'.'With·:-.ti+e:.priniip:at~obligor·"bti_t 'bis . . ·1.iabiliW~e~t~nd.~: :0.nLy,, to·,:the; pr~p~rty .. _pledgep ,or ·.mortg.agect:, In .'case.of defitlericy\the ·credifor:has . _t~~ourse':io·th.f;}~ ~f~btqr :Who."r~ry:iainf to' be :primarilY,bciuria.Y:·:_·:·,. · .. ':.-··. -:;:. ··: . ~.: .. ··, ... , '. · - '· . .-!.-_-: :: .:'/·-: ·.: _..:._ :~ _'i:\ ..:~. .· . :' . . · ''. ·... " N"ot~:: TheJn'lalidity, of :a_:pledge or mortgagefdo_es. , not affect-the princfpal contract of:loan:'While void·;.it. . . _C_fl,_n:~'fill_ ~e. considexe~ ~;£an_ rr;,.s.trumen,t evidencing . i~de,~teqf"!fSS. U:hilippine/.JY.a.tio'f1al Ban~ _v. {:?ey~s .. .G.R .. No-21.2483;c0ctober'.5, 2016): ., _ · . :·. .../ .. .. ,.. . . . . . ·-. ' ,'· ., .. ·or.di~;ri1/: ;~· ·-~~;omrii~d~tl~:~ inortg~g~;,\~· himselta recipient of· .the ldan, otherwise: tbat;would . .be contrary to his _designa'tfon a~such (Sps, Ramos .y. Obispo, G, R .Nol 193804, -F~·br.uary 2?, 2013)., .-' ' .,• i I "" .· ...

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2019 SAN'BEDA lAW CENTRALIZEG>-BAR OPERATIONS

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·c.R.E-DI.T TRANS.ACTI..ONS . SAN·BEDA LAW CENTRALIZED OAR OPERATIONS- MEMOF?Y AID 2019

If there ls a deficlency, creditor js not. entitled to: recover notwithstandinq any stipulation· .. to _ the contrary. - .

If there is a. deficiency, there can be no action against the purchaser to recover any unpaid 'balance. Any ··agr_eenient to the contrary is void ..

(JURADO, Civil Law.Reviewer (20t9),··p. 1228) . .. Pledge V.-. Real_M?~gage

found under Section -14 of· Ac£ No. 1508, as

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P.led(Jee.· may. ·cau$J The . vendor~mqrtga.gee· . the sale ·un'Eler Art 21· f2: may' foreclose the, chattel. .ofttie Ci,vil:.Code v..itieq .. mortgage, on ---the .. tkihg ' the, pledqor :failed 'to sold; i( orie has been satlsfy., the . principal constituted.' should .Ihe. obligation. . vendee's "failure - to . p_ay covers. · two O]", more · installments.

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SAN BEDA

ottietwise ~ngwn /JS._th_eperSO[l_ar Property .~ecurity' . Act, ·eff.efF~fJ.-Sept_einb~r 7,_· 29_1a;· e;xcep( ih$ofar as lh,e~e :pr_ovisions apply to. Article_ -2121' on legal :pfeq_f!es,-_whiq~ are ·c.reat~d:qy opereiion ofJa'v'!.·.: . . . '.' .. . . ·., ·.:·-. . . : ~ f P.S.~:_.IXa~_ pa'$_~_(}g_};J!l.A~g~§t §.ry_<j_ too« ettect. on September 7, ?Q1 ~- Notwithstanding of ' ~ri_try into torce o[.R.A. 1_-1.057, the.1f11p_f£:tjneritalion9f · ffJi$. ~ct s~a/J be c9pditfqhe,9upon the R_~gistry beJng e.~taljlisheq -. a./1d operetione! under. $et·. 26 of the' s PPSA (R.A. rt 057; · Sec. 68).: The lmplementin_g Rules ·and Requletkm« of. PPSA, . for ttie effective

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and if negotiable, CODE, Art. 2095).

imptementetlon-ottne. statue hes.not been issued as of th~ date of (?Tintingottbis Mem__ory Aid .. .Contract of Pledge . .. - Acontract wherein the debtor delivers thecreditor or to a third person a movable (CIVIi.,. CODE, Art: 2094) or document evidencing ·incorporeal" rights.· icivu. CODE,. Art. 2095). for the purpose.of securinq . - · fulfillment- of-. ·a- principal ·_ 'obliqation with the .. · understandlnq that -~h_en. the· obligation is fulfilled, '. ttfe "th.iri"g delivered 'shall bereturned-withall.its fruits and accessions· (DE LEON, .suor« at 442); .

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special R_1::quisites . . In addition to the. common.essential requisites under' : Art. 208? the Civil_Cod_e: · . . _:. . . . . 1. - Necessity of Delivery . .. · /. -: Possession o_f. the .Jhirig pledg~~ust b¢ . transferred to the creditoror-a thira~per_s·on b.Jl

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'Effectivity Aga_in_st Third Persons The description of the thitjg pledged and the date must appear in a public instrument.to bind third persons.: but. not for the -valldity- pf the' contract (CIVIL COQE, Art.· 2096)." 'r. · ·: . Object of "the Requirement: To forestall fraud . . because a debtor might attempt to conceal his .property. from his creditors when he seesitirt .danger of execution by simulating apledqe {DELEON, at 151). ·. ' -

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·-Nature. . . . It is _{real contract which · requires i;l_eiiv~ry for its : perfection (CIV/l:CODE,·Art: 1316). >,.. ~- . . ·: ~ ~--An aqreernent to ple.dg~ only gives. rise to a personal action betW~~r:i · the contractinq parties · ( CIVIL CODE; ,A·rt. 209.2)~ · . . ·· .

3.

-

Note: The 'execution of", a .public. lnstrurnent : S8rYeS ~S a deterrent ~eCaUS8 thitp1e·dgqr-may be held criminally liable for. perjury (REV/SEO PENAL .CODE, Art. 182)~ .

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Kinds of Pledge- ·· · . . . . . . 1. Conven.tional or-Voluntary - created by cont~act 2 ... l,.egal - created,by operation of_la·w.(E,:c~mples: . -.,!}(Is; 5j6; 612,."-1,!3_1, _·1f!14; 1_994 and 2004 o_f · _ the Civif-'Code) (DE _/:.l=QN, supca..at 442): · '.• ..

Characteristics:·(RAUN-F,.GQ)

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Beal ..:_it is. perfected.by the deJiver-y of . . the thing 11)1eclged; · c: Absent. delivery, the ,c;;r~difo[Jcquire~ ~·~Hight to 2. Accefsocy confract '--; its· existence .is dependent . . t~e' pr_operty,_ b_~c~us~'/lfdg~ is. :!ier~lt ~ lien '·.._ .. : ~~oth~r co_~tr_act (CIVIL Art: 20?5)i · : . . ari_p possess10~ 1s 1~d1_spensebl~-t? ttje ngh.t_ 0f a·: - - 3~ ~laterral c0ntract'":"~ obligatio_n· is solely ·on tlie. _ ,· · llen __ (DE LC.o_N. : , supr"B· Bl·4··4.t>J:·.. _· . •·•.. ,_:-: ~-·_) . -.. pqrt~ofij]j~epitor to return· th_e.. thing. Sl;JbJect thereof upori··-tne fulfillment 'of···the. prineipal .• l\ipe o.f Delivery D~pehds l!po.nthe 8eculiar obligat\on; · . ·· Nature ·of tlie Thing·Pl~dged: . • . . . ·, · Actual delivery. - ~ctuaL_possession_ of~~ei....,,........--Nofe: I . f~tomes 'b_il~t,eral 'if c9m"t:>~nsa·tron. i~ ·. ~-. :-· . ·, prnperty pl~dg~d.- A mer~ symbt;lic d~i~ery paid . to a third~pa'rty. pledger Jt)e creditor . - . . is . nbt.~S!j_fficien( e.g. 'animal. Wetita· v. . .. , because, it gives _rise- to· obligatlqns·:ao the p.art of · · "" . Ganion;- "G:R. No:- 24137,,March 29792f>)J: · . both ."tfie· depositary ahd depositor'" (D_E LEON,· b·.. C_onstructi~e.'.delivew.-.-§ymbolical .transfer ;,_ ·'. · supra at.4_42)~ · . . · . :. . - ·· .. -. :"' . -ot:the-goods .(e".g. .keys "to a house, a·car, or. warehouse). It is·.in.disp·ensable· that the 4. MorhiDate - it has b~~i, given $pecific na'n;ie bY:. · thi1i"g. pledged ._musl.-be. pl~ced under the the Civ11~Code·· ··. · . . · · . ·. ·· -- · effective confrol,-_ a_nd'. possession' of ·the. . 5 .. .E_9rm~a(- A p;rticular. form .. js reqll\r~d. fo·r the ' . ·: pl_e:c:ig·e~·or- a third .per~on · (DE !-EON/supra . . .. ~on.tract; · . . . .- .. . ,: . . .-. . , .. :· .._. .· - · .-. at-447).' - ·6. Qratuitou~ ·7 -tt'le bailee ·dqeS: hot pay the ,bailer . for the' use of t)le thir1g; : . .. . • 7-: .Qnercius ...:. the ·.d_ebtor -gra.ht~·d, the :pledge_· in. . Whether .or . not a symbolic- qr 'coristructi.~~ .... consideration . of ·the principal, OQliga.tion being delivefY' is. sufficient _to ·validate a 'p_ledg·e would . secured (ld:.at 442-443)'. · · ·, •· · ·· . · · depe_nd:- on th'e--'peculia( n~ture of·-the·.''thing -. . ·, ...... : . pledged (Id.). ' : · . . _.., . .. r .·. ·.· .. Ext~nt . of pledg~: Unles~ ,stipulated'.: otherwise, . . 2.: Subject Matter .. ; . . ·. . pledge exten9_s to ttw .fruits;' ir:iterests or earnings 6(" the thing (CIVIL ~O_D.E,-Art;2102J.. . . All movables:which are within the commerce of men, .-·prbvided-. they . a.re ··_susceptible: Pledge v. Dacion en p~go .· -· .. . . . . possession. (C/Vft. 90DE1 Art. 2094)" ~rid · In case ciFdt>Ubt as to- whett:1ei- a· transaction is a incorporeal'"rights ·evidenced by" dcicu.rrients of · pi~dge_ or a·dation 'in payment, .ihe presumption (sin title, in·which ca~e; the instruments "proving the . favor of a pledge, the· latter bei~~ the · lesser : _r(ght "pledge9·:sha,II be delive.red. tcfthe creditor,

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do· so. -the pledqor may be held. liable darnaqes (CIVi(CODE, Art. 1951). .

transrnission of rights and interests (Union Bank of the Philippines v. Juniat, G.R. No. "1"11569, August

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' Rights of. the-Pledqor: (D-BAA) 1·: Tei Demand return in case· of reasonable grounds to fear destruction 'or impairment- of the thing without the pledgee's fault, subject to the of replacement (Cllj/L CODE, Art. 2107); . ~u_ty . . . ' ·J.

Two,(2):Remedies Granted to the Pledgor: a .. To-demand the .return of the thing' pledged ·. ·: -upon ·ottering another thinqin pledge; or ·· ti. · Cause the same to be sold at a public sale.

2.

Not to demand the return.ofthe tning untilafter full payment _of.the:debt, .incltidirig interest due thereon 'and -expenses -. incurred its preserva~ion·(~/ViL:· _CODE, A~. _21.05); ·

for

· Exception: Pledgor is allowed to substitute the thing pledged which is, in danger .of destruction -.or impairment wlthanotber thing of the same kind: and . quality (C.JVJL_·CO!)E, Art .. 21'07). ·. . ~--,

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Obligations of the Pledgee: (CUDA3R) .: · .. 1. Take Care of the thing. with the· diligence of·_ a good father of a family and. be- liable for the loss or deterioration of such (CIVIL . CODE, -Art. 2099)•' .

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Neither is· the acceptance by · the pledgor or' owner nor the return of. the .thing pled,ged. is necessary: ·

Not t~ Use. the thing .unless 'authorized by the owner its preservation requires its use· (<;IXIL ... CODE, Art. _2104);

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· >CB 321 7!11.t~

Note: The principal debt however is not affected by the waiver of the pl~dge. However, the.vtaiver of the principal obligati9n ca~ries with it that of tfie· pl~~ge· (CIVIL ·CODE, Art._' 1273) ..

· 13. To Sell'at public auction in case ofnon-payment of debt at maturity (CIVIL CODE, Ait. 2112).

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SAN·BEDA LAW CENTRALIZED !JAR OPERATIONS - MEMOR.Y AID 2019

4. .E_ayment of _the ·debt; .1 . , ·_. , · · , 5. Sale of' thing pledged al' public auction (CIVIL

.

. . Note; The deposit referred to here is·ari instance . of necessary deposlt (5 PARAS, supra ·at-1-104( ' - \' ~ . .

. .. CODE, Ari. 2115);.and. . . .• , 6. ~ppropriation uiYderArt.. 2112 of the Civil Code.

Requirements for' ,Sctle •of T~ing Pledged . at Public Auction (CJ.VIL C.OQE, Art.-:2112) . . . 1. The debt is due an.d unpaid; . 2: Sale musfbe at a.public auctiol'); · ·· . . 3. There musrbe n'6tiqe to the pledgor and owner, · stating the amount due; an9 · · · . -4. SaJe must .be .with the interventipn o~ a notary . public .. ·

3, · Not to Qep'o?it the· thing 'with a. thirdsperson unless so stipulated '(C.JYIL COQE, Art. 4100),:. 4. Responsibility.for ~els of-agents and employees as regards the thfng (CIVIL CODE,_Art. ?,1__00); 5. To ·~dvise pledqor of any.danqer to _fhe_thingi.: 6 .. To ~dvjse pled'gor of .the result of the public auction (CIVIL CQDE, Arl.,'2116); and . /. 7. To .!3eturn. the .thing upon payment of debt.:

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. ~·~te: ,·f ,:in. c.o~tr~ct. 'or" pledge,. th~ pl~d~ee .is aulhorizedJo sell· up-9n default: the:requirements. of . . Article 2112-'of the Cfvil Cod~ must be com.plied with; ·· if the· conditions ·of the sale. are set forth already in .the . con'tra_s: .,l,ixrtic!'e,. 2112 does not have to be' obser:ved (E supra at 1110).· · . ·:· ~-

P.ARAS,

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1~~t· re~u-;re post.ing. o;tbc . notice ofsale a,na pubiication,. .. Notification .. to the ; pledgor·:aoU~ ·_owner of·. the. thing pledge is . suffi~i~nt. ·]'he s~le i~. exl'rajudicial in· cliaracter, (DE · LEON; sypra ·at 4_65). .~;

· .. · ~ ·

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Note: The pl~dgee may·i1ppr~p,iate th.e thin·g··if after the-first and second auctions, the thing is not sold. · Hershall ·b~ 'obliged to give an ·acquittance ·for his entir~ claim: (CIVIL C.OEJE, Art. 2f12);. -.. ·

Extin~uj~hm~nt-qf .Ple.dge:· (C~AP.:-~A . '. · 1. · The same _g_auses. as all other obllqations: ... - 2. .!3eturn.of the lhing pledged by J~e p]edgee to .the pled:g.or (CIVIL CODEtArt1211'0); . . -r: .

. Bidders

at' the-Public Aucti~n

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Note: It . is pfesurfied . that th~· ac~e.ssbry .. 1: - P.ledgor; .. : : -. ·.··_. .. :_ .. :· -. ''\ < .. 'oblig'ation.of pledge has.been remitted v41en,.th'e -~ - :_ . : . .: .. ' .. thing pledqed.iafter its delivery to thecreditor, is : . · . . Note: Hei shall have .a· bet!~~ right rf,.he-should . found i'r:i possession 'o~ the debtor, orof a third, . -, offer .the same terms as the hrghes~. b1dde( . . person who owns ·1h,e -thing: (.CIVICCOOE, Art, . 1274). ·.. . .. ., :2 .. · Pl~dgee, provided is· not th~ on.ly b{dder; . . . '·, . .. 3. ·Third.persons (DE LEON, supra at.466): -' .. The possessionbyIhe debtor or owner of i~e . . . thing pledg~d subsequent to': th'e periection''of · Nature of th'e.Bids at the· Public Auction .· :. . . the. pledge, gives . rise to .. a·, 'prfma fac[e .. The bids.must be'fcir CASH.:.... for s·aid bids "sh'alrci.ffe'r presumption that the thing ·has been retun:ied Jo ~he ,Pq~hase P!i~e AT_ ON~E" Hciwe'y,er;,i(\ti~ ' and, ··therefore;'. itiat. ·the pfedge has:· 6een ·plec;lgee accept~d any other bids, ft is deemed ttfat extingui~hed but not the· principal obligation itself he already' recejve'd the purchase p'ric~,"as'far as the (CIVIi;.. " .. CODE, Art. . 2110): .. . ~· .. ~ pie.cigar 'is concerned· (CIVIL CODE, Art. 2114.;' 9

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3:· Stateme'nt in· ~~iting by ·the pledgee that ·he renounces · or ~bandons · the pledge .(CIVIL CODE, /J.rt: 2111 ); .

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Effect ~fSale of the Thing ·Pledged . Extinguishment of princip~I _obligation;. ·whether or · nol'the proceeds of the sale are equal to· the ·amount o'f .the prin'cipal ·obligation, interest and ex.penses in a proper.case (CIVIL CODE, Art. 2115). . .

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REAL MORTGAGE ..

Contrc!~t of-Reai:fvlo~gage . , .. A· contract whereby the .. debtor. secures· to. the, creditor . the .'fu1u11n:ient. -c:if a principal . obligation·, . .. specia.py subjecting to. such security immov_able · property or· real rights over immovaf?le, proP..erty in case .th13 principal ooligation is not·ccimplied with at the tim~ stip.l!lated (DE LEON," sup~a at.473). .

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1. · If. the price of the sale is ·more than the amountdue the creditor, the de.btor is' riot entitled to the excess unless the contrary is provided. . _2. ·. If the prite·of the sale Js l(;lss; the creditor is.not entitled to· recover.- th·e. defidency· i~ all- cases· . even ifthere is a ·stipulation to, that effect ( CIVIL . GODE, Art_. 2,115). '.· ..

Characteristic's of Real Mortgage: (NASUl2). 1. Nominate~.· · , . -· - · · · Reason: By -electinq -to sell the thing plec;lged -.2. ~ccessory - a _mortgage contract's validity instead.otsulnq on.the principalobliqation.vthe . de.pends on the· loan contract'svalidity (Limteo creditor · waives· ·.any other. remedy and ·-. must · v. BAP c;;re·dit-Gua'rantY Corti; G,R.. No. 204412; ablde by the results ofthe sale (DE LEON, supra September,20,_ 20_}7). . .. --· , . at 467). . .· · 3: ~\Jbsidiary;. . . . ·. .: .· . , · ·. ·· · ~!:!nilateral - ·it creates. only an ·obligation on the· __ L;egal. P_iedge . . 'tp~f~ creditor mu}t ·free the property Note: Article.?:21, th_e· provi$io_n op l~gal\P~5!,g§, r 1. V~omjl~ ~nq.1mbtanc~. once the.-o_bliQatio~ is c':nnot.be considered iepeslec: byj~A.11,9.J!!.since. ful~ll~~ (13,E'bEON, sup~a at.4~3r . - . . . the PPSA .deal$ specifically witJlas~/1_!i.tylntetestr: ,~ -§-.!~1v1s1~€?}(5 P.~R.f\S, supra a_t 111.6); an_d '. _

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Not~: 'T"S'~dfllla9e adtieres to the property; The p~ov1s1ons on ~he_pos~ess1qr?,jare, c\~ _sale of. ~1 regardl~~=~,~~1t~ subsequent owner may be. the thin~. pledqed goverri1i;i~1"'(cr,i_veritio~al\ plet1gm-,~.11·1iL1 ~--'~' _are <jl~J?~1ca?le to pledqes ~r.eat~·d~1;>y ~eiationlq(-:-tJL~~A m1~tgage ~ste_si~t!nvolv~ a fransfer, ~~ss,1qn. law. Unll~e. in ~onvent1_0~~): P.1~~9<.,Jhe1rerfia· der of~..;-.._~-:.: ~r e of p.)operty~u.t·?nly £Onst1~u(es.~ price. ?f'th'e. s~IE=n~~P,~ -~f! . Fin iHi 1,_'}/f!01'eo rq~~l:i:ON, SUP(E:·af'~97): . ·.. ·. ; . ~xpenses. shq_ll be dehvereCit' tJ tn\.eot~\~/V/[a : //d-'1:.~ ~{ -~: • . · _ , · · .:

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Re~son: Th.ere is n·o definit.e period-for.me payment of. ·the: princi_pal obligation· in legal -.·ple.dgi;i. }fl)~ p)e?g-:ee ._m~st,'.)h~frefor~;. mak~_ a dema·nd(without V'v'.h1ch, he cannot exercise the· right of sale at' public puc_ti6n (DE.LE.ON,"s4pra.at 412):: .. ·. :.- .·, .,· .

.R.1ght to Po~se~~1on ._. - .·, ··: . _ -:-. , ... .G_~ne~al Ru.l_e: The hiottg~gor, as·_a· f_l!le/ retain~ ·. · · · _P?f~t3ssi9n of_the Pf.Op,erty :n:,ort!;]a~~9.- · (~~}:f~ON_;.: -supra at_ 1?,9). · . ·,· · · . . ~ · . , ~.-. - .. :·· . . . . :. · . . Reason~ By the r:nortgage, . the::deotor · merely N.cite: :~ There is . orily ·one_ P.t,Jblic auction her~ (5 · . ,. subjeqts'..th:e·propertito._a lien btif d\i/n~rstiijfth~rebf - · . PA[?AS, supra _at 1-1-14) . .'... · . . . ·.. ··:.: ... : . · . . ·. is not·p_a·rt.f~with (Id.}.~ · . . •

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Re'r;nedy of Cre<;litpr in· Legal P.l,edg'e - .· . The- thing_ plel::lge_d may b¢ sold.- only after d~mand; . . ..... . , . ' . .. ) .. . !he_ P!Jbl_ii;· ?4Cyon :,~haH _tqK~. p.l~c_e-.:v.1trin· ocie m.orjt.h: . after demand and 1f-.the creditor does not·cause the sc1ie-_to be~ ~e1_d· ·within su_c·h Pirio.d,_: th~ .deb_tor.i:n:ay require th-~.retuin of thing (CIVIL G._ODE, Art. 2122). ... . ...;. . .

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It. must reco.rd_ed in the'. Registry of Prop~rty(C/VIL CODE,:,Ait. l125). Reg.istration in the registry .of. property is- .. necessary to bind third .. persons, but not.for the vqlid(ty of the ~oritract as ..· . between 'pa_('ties~to cl mortgage. . .. . .. . . . . '. ~

Opject of Contra~t of ~ortgage ~ 2. Alienable Real Rights _(CIVIL CODE, Art. 2124).

· f. : Immovables;

. Cause·or Consi~era.hon i_ri Mortgage" Its' conside'ration is the same.· as of the -'princip'al · contract from w..hich it receives· its life, and without which it cannot. exfst as ari ·independent ·c~ntra·ct (China Banking Corp. v. Lich'auco, G.R.· No. 22001, Nov.ember 4,-1-924): ·. · ·· ' ·

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Regis.tra~i6i:i of a kEM deeq is not essential to its. . validity ·as the law is clear on the requisites for the validity of'a mortg.age in.Art. 2085 in.relation to Art.: 2.125. of the New_:Civii cci·de (Coca-Cola, - . Bottiers Phils., Inc: Sps. Spriano, G.R. No. ·· 211232, . April 11, 2018): .. .

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· -·· A m~rtgage · fs a niere· accessory cont.ra.cf a~d its . './ · · .· validity would d.epend on the vali.d[ty the 'loan . 1 . ~ight. jn:Cas·e·ofL~iJ~I .r.i!'cirtgages . . :.. . secured ':by ~Tt. .. Hence; tne'. co,risideratio.n . ot the ' · The P._eri,l'ori's· in· whose favor 'the law establishes a · mbrtgage·con°\ract. is the same· as thaf of.the principal m9rtg13ge ha~ th'e right 'de,marid the ex~cution an'd .. · . coritract which· it receives life,: and witho.ut . ~which it' cannot existas an 'independe'rit contract. ,-,·. : I the recording of th~ qo~ument-in .which the mortga.ge. is formalize,d {Cl~/':- _coqf=, 1;1rt. 2_125, par. _2) The·debfor cannot esc_ap.e the cqnsequences o'f tbe mortgage.contrad ·or,ce the;.validity of .the loan is Order .of for~clo'sure cannot be ·refused on the upheld (Dev.elopmentBank.of.the phi/s:.v.·Co(Jrl of. . . ground. that the ·: m,ortgage was not registered . Appeals, G.R No. qS703,· June 39, 2006): ··: • r' ' . ' ' provided no lnnocenf'third' parties are involved (DE .Lf=:ON, .. sepra :at. 485).;·~ . .. Special "equisit_es: · · _. . . _ , . 1. It can·,·cover ·O,nly. 'immovable property: .and. ·--' .. . °":' K.indl~~Mo- gage: . _ alienable rec:11 rights, im.posed upon _immo\latfies ·J:: Vofanta,JY1,·:.... aqreed to by · the · pa rties or (CIVIL; (;ODE, Art: 21-24);. . ·• ' - .: coristitul~~·· by' the . wi11 ·· of the{. owner of . the' :·. Note: .. While a rnortqaqe ~f ·land ne1;e~sariJY ·. _ prop~1f _:whlctl) !~ cr.e.at~~ (DELEON: supre 7j,ncludes, : .. .i~ the .. a.·~s.en~e :ot i;J!pi;iatioh~ fne, .. . ,, ' at-'474); . . . . . ' " . · ·improvements. thereon.ia buileing_.its~lf'may b~ 2 .. ··.-Leg~?- re·q~irid by. law to be execute·d_ i11 favor . rnortqaqedapart from the 11n'd,onwhicti it is"~uilt of certainrpe,rson~ ((9/Vl,CCODE, Art. 21~5, par. tial .Bank_ v. Pani~,; GR~~~-~o.o e8 2Jt1111cf;ij . '.: aJready m.ortgaged which the· mortgagor-· may · subsequently ~cguir~. ins tan; or use.. in· . conri'ectfon with'·re·~(propertya'fr~ady/mortga'ged· · - '· geJon'ging tot.he mortgagor.is vc1!i.d (Preside·ntial · . , ·commissiorron Good Govemment;v, Office ofo, ·, . ·. :'mc:)VablEis. '-the. Ombudsmari; : G.R.: -,l}iJ __ 19p96i, Apr;i ·18, .: - 2'018). ·. . . ,

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· Effe.ct when ·mortgage · is· 'iri · a_ . priva.te. ·-. documEi°~t . , · ·.· _ . . No. \/cilia· mortgage is constituted· (Hechanova v'.. ",;. · .Adil, .G.R. No-: L-.49940, ,septernber :25,-:. 1986F · - . ·· The ~r'editor may _red;)Ver th~(loan and has ihe ·· · right to cor;npel the debtor. to execute a coritract 'of. ··mortga-ge Jn p'ubtic i.nstrument· ·(CIVIL_ CODf,."Arts. 135iand 1358).

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. thir'd· N~t \/~lid,· ~gai~st. 'tkii-d persons· . . witl1o'ut p·ersQ"ns ~ . without · .knowledge, .. unless· _-\1 ·knowledge, · uhle_ss descrip~ion of' the thing: regist~red. · pledgep and the. date- of. pledge.:'appear in a p0blic;: in~trument. ·'

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owner (i.e. his right to.oispose) {McCullough v. Veloso & Serna, G.R. No. 21455,,April 5, 1924) .:

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;Mortgagor:can. sell )lie pro:perty . mcirtgaged everr ~iiho.ut · : the · consent . of " . the, . rnortqaqee .

. (DE Lf{ON,· supra}t _415~416r Real .Mortgage

v .. Pecto :de retro sale·

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. .. ' . . /' . . .. · . . ..· ·, .... jtcreates.rnerely an ·~hcG/ribra,:,ce~ .A·nro·rt~ag:~ : is. r'Jierely. a ),ec;urity'·_ f9.:i-' a debt .a'~cl:' _a,n " . ·encurj,brante upon- the· p'roperty: ·-:1t:.1ci'es . hot extinquishthe title of the debtor who remains the •

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The doctrine does not apply to a situation where the titleisstill ·ir:i .. the name of.the rightful owner and the. mortqaqor is different frorn the person· pretending to be · .. the ~.owr:ier." . The mortgagee shall . not be consideredan innocent inortqaqeefor value-and the . reqistered. o'«nei will -not lose his ·title·. (Ere(la v. "Qiletie,r-KauffrrJan, . G.R. No. , 165853: June 22,

2006J: ·

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Diliqence R.~.quired of a 1Vl~frtga·g~e~1?ank , .' . . .. lf,the rnortqaqee-is.a.bank er.a.financinq lnstitution, the qeneral rulethatra.purchaser orrnortqaqee of · 1and is not required to look further than what appears -co. the· face of the Torrens Certificate, of Title-does not:.ap:ply."°(Premier Development Benk V; CA; -G.R. Nos.i: ?8122;:128184_.'&·,·1·2.8229; March' 1.8,.2005) .. .

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be considered a mortqaqee in good foith, a bank . .: should d,ilig~ntly con~uct,an.ii)V.esti~ratioA:oJ.:tl:illarid · offered· as.collateratJnls is especially.applicaqle inl . ( cases. where the subject land:was·riot-m(2r;tgaged by . th_e ;~w~~r;: t~il~_re(fo'.,:exer'?iSe.. ,s_uc~ITg'inoef~h~JI. .not entitle. the .bank-to. p_rote0t1on under~Jrre·.1a1· (Argu_e/les Y: .Malarayat>Rur_al..rBank~.lnci;, GR. No .. .-.. 200468,. tv1aich 19;· ~q14).

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M.~~g~.g~;:G;~·dit~~v(·J~}~ment C~JHto ;· is ; ,n_Qtc !'>Yn~n}'f:}'.lOUS -to . a j(!dgrilenL creditor. : ~_:"-.While law expects · a rnorfgagee-credjtor:._ to'-· inquire: .as . · a re;:isonaoly , ·Pr'l!dEfri_~.mari __"':'?U:ld. ~eg.~rdi°!:19 :th'.Er_e.ncJ1q{brann~sfon .. the -prop·erty,cm such kno~leage 1s. .. . ··ques.t1on,· noi. . . '/ . . imput\:?9. to _ajl.Jdgm~nt creditq:r.yvho merely·se~ks·\he . sa\isfactio"n .th~. judg111ent aw.arded'-in his ·favor· (DSM :"9ons{ryctiqn- -8, ·. Dev.~lopme!J(. Corp. v:·· CA, G.R.-No.· 166993,' liJeeembet 19;- 2005).··. - ,: .':.

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Rea·san:· The ownership of · sti.ch accessions; acce.ssories; and improvements· subseql!ently introduced·.also belongs:to·the-mortgagor.wtib·is the owner of · the principal , (Midway 'Maritime and Technological Founda'tion v. Castro, ·G.R. No.. 189061;° Augu${ 6, 2014).· Exceptions: .· , , 1. An express stipu.latiol') excluding them;~and·· .:- . ·. 2. There, is evidence suff\ciently. ·ov~rth·rowirrg Ufo presumption that the mortgagor .._owns ·:the mortgaged. pro.perty. .

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-.. Note: Article-2127 of the Ci~il Cod~·is irrelevan:t .. ~- . arfcl. inapplicable 'to mortgage)~ anq ' thei~ foreclosures if .the mortgagor is later .fo(.Jnd or . declared tobe npt-the·'trueownerorthe·propefly .(Philippine Nc!ti6rial Bank'v. Sps--:·Maranon,·B.R. _No. 1°89316, July 1, 2Qp).. · · · ·~' .-,·: , .• ; . .

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~egistratiori of M.ortgage . - . . .·,, ·-, ,·. Once a mortgage has been signe'd,inJ:lue·.fortn, the mortgagee is entitled- tq.its /egistratiqfi.'as,a matter of . · rightJqE LEON, ..supr?I at 49_1). ·.: .. ': ··.·.·.' . . ·, .

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Note: R~gistr~tib~ is; n6t' a '"c;;claf~ti;·~ .state that su-ch anl\_nstrument -is. valid ai:id· sub'Msting. · · interest in th~e aig. llis o;igre_ly.~0decla.f?ti?r :~b~t the r~~-orc;IJi!Jhe ~ti:t~~\\c!PP,~~t$ '.·t9, b_e. ;~~rd..e9~~;w!t~ the .. mor.tgage'descnb:ed ·(Id. supra atA92). ,1 , ·

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--~~e; .gt. Third F.'af.ti.es ·· · . .;, . ·.. .:. . ·· ,} · A regist~red m6tfg9ge .. righ{9ve(: p_r9perty' pfevi~.tisly ~-old /s. I~.te.rio_(t.o:the .qyy~r'~ W1r~~!?.tere9 rjgh,~. (Id.}.

Repson: If. .the_.Qrigina·l ,own!:r ·hacl s~~(tii.e t~ing,: · then . h_e'. ()0 rori~J°e"r h.as tti'e ·.9.~riership ahf Jr~e . dispE?S~I of it ·~o.):is ,to b1(a~l~~t9 mpft~-~g~ .iJ _(9tate Investment House,"-Jnc: v... CA; G:R: ,N6 .. 115548, March 5, 1996).. · - · · · · · ,- · - ' . ..-,· ,, · ·- · ..

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Subse·quen.tBe~istr:~~ion. of .an,A,dvet~¢ _c;11ai.rry . A prior registrl:ltion cif 'a'..lie·n · Greates a prefern·ncf Hence, the subse.quent· ·annotation of· ·an adverse claim ·cannot" defeat th.e rights of the· mortg.agee ·the pi.irch~~er,at .t)'1e\u¢tio~ sa.i~ .whos{rjght§ are ·c:l~rive'd frorn.,a· prior f!)Ortg'age validly register~ci· (DE LEON, supra at 4,93-4fl4{ ~:. · · · · . ·

·. 2019 SAN BEDA-LAW CENTRALIZED.BAR

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681

CREDIT TRANSACT·IQNS SAN BEDA LAW CENTRALIZE£?BAR OPERATIONS- MEMORYAID -2019

Alienation or _Assignment.of Mortgage Gredit The mortgaga credit may .be· alienated or·,assigned to a \hird. per.s·on, in whole or in part, with the formalities required by law (CIVIL CODE, Art. 2128).

the document evidencing . the subsequent advance -refers to the mortg~ge · as providing security therefor, In thi,s .case,. the · security · . specifically exec.uted for subsequent loans must . first be exhausJed before - the mortgaged property can be· ~esorted to (Prudentfal Bank. v. · ·Alviar, G.R:·No. J50197, July 2005).

Th~ mortgage credit is a real.right and directly and immediately subjects th·e mortgaged property to thefulfillrhent of the principal obligation. The assignee· may fore_close._the .mortgage in case of non-pa~ment of the mortgage- indebtedness (DE LEON,' supra at · 506).. . .

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· Note·: The Supr.t;!_me Court clarified ·that if .there is :no reference in th~'·security ag~een:,enl for'the :new Joan- or· obligation, then do· not .extend the application oftne ·dragnet clause. .

Note: Even if the alienation is not registered, it would . sffW··be valid 'as ·between the parties (Lopez v. -subsequent . loans, need .not be separately . Alva(ez,. G.R. No. L-3438, October 12, _1,907). annotated on the mortgagor's title in.' order to · . , · · . bind third· parties (Mojica· v. Court of Appeals, Stipulations on.Mqrtgage Contracts · G.R. No.· 94247,· Sept. 11, 1991). · 1 .. ·1n.cl.t..i.ding After-Acquired Properties· . ' .,,.·: -· . . . .".·- · · .. · ··· · · ·. Status:. Valid . ~urpose:' It' operates: as .a- convenlenceand .an Purp~?e: To maintain, to t~~ exten~ ,~Efrl b~ -}(-'ta.e.;..c?mmodati~~ to the, bprro~ers, as it .nia~es . the.' c1rcun:,stances, the oriqinal values ~he . 1. ~i~le ?dd\!1.~nal · f~~~s. w1th~~t the partles ~rop.erty·g1ve_n as a security:·. · ~~-!.·. . .~"""'l'.l{1y1~g '.~-e~cute.a~:d1t!.on~I s:~c~nty documents iti · ti '. · , h . . (Moj,161 v~~ourt of App_eals, .G.R._.Np. 94247, S UC h S 1p_U 1 a _IOn '; IS . Cor1}.f!l0£(. )':.ye\e _e " --..S·e"'i 1·~·991j . '' ·. . · .

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?~i~:-lien·~·~aches ~ind ~ests n~t.~t the~rfl~s.~icfi:]j ~~ ~~~rtg,ge .· _given.: . ·se~~re:· f_utl:!re . .- imprbvehients are constru°'cited bU~on tt,e91°:,..;..Q~ge! u~ ! · . ~ u 11 . amoun .. Quiambao, ~G.R. N<_J. L-5638,' March 30 ~ 1g5~~ ;,g,dvan~~e_I).ts ~re. ~ad~ !~u/Ja!T·~·- Lu_tero,-~.R. ~ol~~285f,Dec.9!._.19?6,.:frader~ Royal B~nk ·8·1.c}n ke t o_r., ·· 0.ragne .. t erause · . . ·· · · ~SP.oJfef 2. · . .[jJ.. ·· ~ ..,.. .. Castanares;: .· .. · . r.!.R. Y ,. ·No.· 172020, · · SJ~tus: ValJd. · .· ... Qe<;!;,f!1b,er. 6,:_2010). ,·. ·: ·

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--~~~e:. In- cas~ :of.,aii~nafio/ tra~~fe;e~ 'is oound to ·-r~?pe.ct th; encumbr,mce · (CIVI_L · COVE, Art. 212g) 'bec~Lise being a (eal.riglit., the p'rpp~rtyremains subject to·the·fulfillment ot the . obligatiorifor'whqse guaranty i_twas c'q~stituted (DEI-EQN, sop'ra at 50~). · : . . .' , ..

e~c;;h ~ewJra.nsaction (DE [f=ON, supra ~t_5Q:)q04).· . . . ·.· ·_ .A mo_rtgage with a dragnet clc')u~e is an "off~r"_~y . the mort\;j'ag,or to the _bank to.pr<;>v'ide f~·fsecurity, _.:1~~~e~i:~~~-~ge;for_ ~dvances of ah~ wtien.the,:' . .

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R~·a~·c;ni Si.Jc;!:J··~· p~~hibition ~oul'd b~··c~-~\r_ary lei th~. pue11c._good).~a~_r:nu9 a~1~·e -i~r:isrij.l~~io_ri of property; should. not be ,o.n.duly. 1mp_eded (OF . LEON, supra at·507) · . ·. . . . .. .

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. Ex¢~ption: ltc:an b.e said.that the "offer' was not a~cepted·_.by_. the b~nk' when: a ... sub·seq~en't · ·a_dvance was made becau·se: ot:a new security. : A m'ortgage· c·ontaining a "dragrjet claus·e· will . nol b_e ~xt(;lnd(;ld'Jo. cover (1,1ture advances unless

F6 . ~bjdaing Ai:ie~~ti~-~: of,Mb.n~~g~·d.Prop_ei:ty (Pgctum:De Nqn-Alierjand.o}"'' ... :. . i:· ... '·

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Stipuiatiqn Requiring Mo'rtgagee's.'..Consent · Before Alienation. • . · . Status: Void for violating Article 21.30. of the . 'Civil Code. While ~uc~ provision '·poes not ..

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CREDIT· TRANSACT.10.N S. . . . . S(IN BEDA LAW CENTRALIZEDBAR OP_ER~-TJONS- MEMORYAlf) 2019

absolutely prohibit the' mortqaqorfrornsellinq his mortgaged. property, what it does not outrightly prohibit, . it · · nevertheless achieves. . The . rnortqaqee can simply. withhold its consent and. thereby. prevent the rnortqaqor from sellinq the · · . property (DE LEON, 'supre at 50?r .

. Spe·cia·I Rights Right of a Mortgagor: . To alienate the mortgaged property, . but · the rnortqaqe .shalltrernain ·attached 'to the. property . (.CIVI~ CODE, Art. 2130). · ·, .. ·. . Note: · ln a sale with assumption of mortgage, a 'stipulation providinq'forthe need of the consent of the rnortqaqeebefore alienationis void (DE LEON,

···The sale of the property does not affect the right of the registered mortgagee to foreclose thesame even. if_ the . ownership _. has . been transferred to another (Id). : . . ·. · . · .

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Reason: y\lhil_e it does not. out~ightly ·pro)libit the . mortgagor from sel_ling hisrnortqaqedproperty, what it does ' not o~trightly . prohibit, it · nevertheless achieves. . . ·.

-G~ant of-First Refusal _Status·: Valid.

. :, The conslderation for the Ican-mortqaqe Tl)~Y be' ... saidto include the 'consideratioriIor th·e rfght _qf · R.igh_ts c;,_f _a _M~rtgagee: . . . · ;, · · first refusal. The mortga.gor has t_he .obliqation · T.o claim from/a third, person i'n possession ·of the undera riqht of firstrefusal Provision to n<;:>tify tbe. -·· mortgaQe~ property the payment _of the. part q~_the mortgagee of hislntention to. sell the property ·, . credit- secured: by the property which- said third and qive.hirn

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Note: ·. A ". sale __ made ·in violation, :of'\lh:f .·· . r.nort_ga~ee?s contractual ~igh~ of first r,e.tus<;} i1s .. resc1ss1ble .. Th~. quyer. 1s presumed t0-..tia~e be~n _r1otified_ tf:)erec:if,. ~Y th,e i-egist~auir?o"f the, . mortgcige de.e_~ ~ C(?ntainjng_ such· stipulatlQri, w~ic~ .. equat,es· to .nojice_ to_· -the ~ale•- ~orl,d. _

To.exercise' this_right, a demand to paymust have b_een ,,from . t~e. -d~btor .. _and · the _latter suQ_sequenu~'trefus.ed; or 1n- some ,cases when de·mand i~. ahne~essiry to put · the mo_rtgagor in de_fault, thal)fie·mortgagew obtains the right to file an : action to c011f ct the_ 9:bt "'or,fo_r_eclos_e !he. mo_~gage

__ ·(l.,toniua v. L&R Corporahon, G:R NP. 1_30722, Decefr1b.er 9, 1_~99).

(Mey ,Gov~mmentSer,,_celn.sura.~c~-,S~s_tem, GR No. _1_92r1t_ua~ _10: 20?(·> .. · . _ ..

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l_n·surance_of, fn:,~·~~pe~y ,:· · '.. ·. . .. ~ · T:he inortga§AA---and J~e~ mortgagor. · both h9ve . insurable interest in the property .. They mc;1y in.sure "th·e same· (5 PARAS; supra a~·1134r ·.. A stipulation stating ttiat·.on t~e occa~iq·n ·.ot'-'the -.. . '" · -·~o~~agor!s de!a,ult·; the _whole·. sum ·rell)ail)\119 . ~ffect of ~n_-lnvalid MQrtg·age· · .. , . : . . unpaid au~Omi;ltlcally beC:on:i:es ?ue a~~ple .. _· princip_~! 'obligat!pn1 which .i~ g~ara_nfee$,. is not . ,· · · · · ,, ,_.., ·rendered n.u.11 .and· void .. The p·rincipat··obliga_tion 7,-·. :~tipuiatfo_n o/0pset Pri~~ or _,;:i-,_PO';· '· . . .. . mature"s ·anci" becomes. demanda,ble ,in accordance . Status: Void·. ·. . · . _.: : .. ~ith stipulqtion 'i:i~r(aini1_1.g·to .it. What}s-lost is the . :, . . . · right.to fo(eclose the mortgage (PE;-U~ON,.$Upra a·t :·:·An Upset Price orTIPO·is th~ minimum price.at. : · . 49'4). . . - · .. ,_· . .- ·. . : :! . which the property st)all be_ sold ell a pJ.iblig_ : . . - . - .auction. . . . -Aliens·as. CrEidifor. Morigagee . . .. . . .. .A -mo,rtgage may be c0nstiluted in,.favor alle'ns as · .. . ·A.stipulation -in .c! m_ortgage .of .re~I .p_foperty .er.editor m_0rfga'gee. beca.use ·,t.does no( i~_~olve . pro~_iding for an 'up;,;"et p'rLc~ or Tip_o; to-~ecom~· . trc!,n.sfer, ofprop,e~y bi.!f. mer~ly·a lie_i'l the woperty ... __ operative. in .the eve,nt qf a fo(edqsyre ·sc1I~ at ·: · The p_ertirient,:.l~w whi9h·g9verns aliens -b~co(ning · public a·uction,:.1s-nuii.'and Void-for ·prop'.ertymust mort'gqge~s. is R.A .. N_o. 48~2.Jld._ ~t 509). · be sold: the highest bidder (DE LEON; supra . , · · · · · .• · at·537): · · · · · · The aiien ·'.'mortgagee:. may also Jorecldse_ the'. mortgam{and·bid in the.auction sale. Howeve.r;if he is adjudged'.the bwer,.he.-is mandated to dispose the · · Parties cannot-;·. by agreement,· contr_avene the property : within_· ·fiye (5) y~_ars pursl!ant to law·a.nd interftfre with the. lawful'pr,ocedui-'e.6f .the . R.A. N-6. 488:;( cour:ts (BPI v.. Yulo_, .No.· 9358, ~epttimber

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Foreclosure. , It is the remedy available to the mortgagee by .which he 'subjects : the, .,IT)0rtgaged , property .. to the satisfaction-of .the obligation to secure that for which the mortgage was . given (Id at 509).. . .· . It· is ~ proceedlnq to terminate , the righ!s of, the rnortqaqor o,:i t~e pr<:_perty. (Id et 5,10). . .. .

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. . interVen_ir::ig period (DBP v. Guarin.a Agricuitural · · ' and Really Development Corp, · G.R. No. 160758, ·January 15, 201-4).' .

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2. 2W:-Who may Exercise -: :· . The right of foreclosure cannot be exercised. by any person other than· the creditor-mortqaqee or his· assigns (Borromeo V: CA, G..R,. No. 169846, fv!.arch.}B, 20Q8). · ·

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Extrajudicial i- when mortgagee is ·given' a · 'special power of attorney to 'sell the .rnortqaqed prbperty by publicauctiori in the deed itself or in a document annexed thereto, under Act' No. 3135.· · ·

Note: A foreclosure-sale: retroacts to the date of registration .ot.the mortgage. A person who takes a ·_mprtga·ge in , gop'd faith +and for . valuable consideration, the-record showing clear title-to the -rnortqaqor, will be protected aqalnst equltable claims .on the title ln favor of third persons, of which he had no actua!': or : constructive -notice (St.·. Dominic · Corporation v. /AC,' G.R.'/'._Jo,. 70623, June 30, 1987) . ·.) . . " ', ' . . Judicial· Foreclosure- under-the Rules of Court (Riife's··"of Court, R'u!e 68):.(JQSCE~S) · .: ' · Step 1: Jµdfc,al Actlon brought to the proper court. having jurisdiction 'over the· mortgaged property (DE LEON, at'512J: .._.) . . · ' · . r: .

.Note: This kind of. foreclosure. is conferred for .· th.E:l'.morig,age·e;s pr~teption ((DE LEJJNisupra at . · ,. 532Jc.:lt.-is not a necessaryconsequence ofnon- . payment o.f,.mortgage indebtedness. T~e,power) to foreclose or· not is the preroqative of the, , m9r:tgpge_~· ,(ifsiatrust -Qeyelopm_(lf!( Ban!< · v. 1 , Tuble, G.R. !"o. '18397; July 25, 2012). .

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·,·::Ju.~icja_l ~?ref!~!'l_uie:v.,E~t~k)udi~ia_l ·· · Foreclosure· .. ·

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Ste ~:, . .§ale.to .the bighest _b).cfqer at-public auction if the .m'ortgag9rJails .. to pay. at 'the time. directed in the co,urt or~ef: There -~E). publication and posting of r:fo,Hces.' before ·the 'auction proper; any . . person ,~a/~d,in~Jud_ingJ~e·deb~or, m9rtg~gqr/1an,d

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Note: -l]ie· off.er ,!~id rriustbe the total debt -of the. mortgagor or tlie market·. value. of the mortgaged . property .'fhicbev.e0 lowe'r.Jt th:e 'mortgagee is.the . highest bidder, he need .notpay the purchase price·as~t~e. arr:o~nt?f'his c~edit ~?Llld·,be G._Of)Si_d:e.red as the l:)cor:is1dera.t1on ··which ,, will -:·be. stated .. in :,the

~[Jj~l~l~i~li~[~~~~~~. · The.re,.~ is.:_ eq:uity· -• ~f ;There ·. is '. ..a-. rigbtr; of .. ., -'rede'mption, ;:exceipt· on' redemption:':··-,· :: :., r· · · : b'(:i'nks which' pr.oviaes fc:>r ' ... ·. :··,,. '.. . . \ . a ·right, of redemp_tion-. . . ,.... ·r' ,, " ·< · .within. cine Yec!r cl'fter the s.al}i'of.t~~- property)t :.- ·

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(QE{Lff!"f!:,supra at·5~8) ... ·

: ·'st~p· 4:· _g_offi~rtl-atiori.,q<sa)'e, ·wbic~ :ope·rates tq· divesf.the rights of a11 ·part1esJp'.th:e-c;3ct10n ·gnd:yest ~- 1i_tieir fights ·to- the. putc_hqse'r' st..ibject-19 ·sych right of rede.r.nptiorr:as·.may· be··allovled' by._ law (RULES OF · COUR.T, Rule 68'. · ·, · · · · · _., · · • · ,. -Requ.iremertts:' · .·. · ·., · ·, -: ·.. • · . 1-. · Motiori' for confirmation is;filed;. and · ... · 2. ·. Notice ·and Hearing of motion· · ..I

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· ,. ·"Note: Effect, o{ c.onlirmation. pf sale .retro·atts·-tb the .... dc)te · of _the-;reg isfration of-t):i°e mortQag~ :(DE:u~9N, , . · S!,lf)raattf42): ·_: ·. ·. : : _._. ... ", : · - ~-·. ·. : j;.

. . ·. ..

(DE LEON, supra a_t 512-527).

Note:· . · Be.foJe · ~he . confirmation- of- a judlcial ..·fored0sure-: sale, the court ·retains GOntrol of the procee.dings· by -~e,<..erciSiQg. a s_oun•cJ _diSCJetio'n . in .. regard . to it,.: either' . grantin'g .. or . wit):lholding . · coi:ifirmation_ (Sa/az~r v. · De· Torres, GR.· No. L1371.1;- May 25,_ 19(30).· ·. .

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· ·Step's: gxecution of .Iudqrnent iri .the manner . prescribed by the law on mortgages, ,the parties not being · authorized to chanqe · _ the. procedure . prescribed (Piano v. Ceyenonq, G.R. No. L-1.86Q3, February28, 19$3). . .

Notices 9re · given to secure bidders and to · prevent a. sacrifice of the. property (Sps. ·suico v. Ptiilippine National· Bank, G.R. 1702-15, August 28, 2007). · Contents of notice: · To be valid, the notice. of a sheriffs sale, must contain the correct-number of the certificate of . . 'tit_ie and th~ correct technical description of the · real property sold (DE LEON, supra at 517). ·.

Note, · The. proper remedy to ,seek· reversal of a judgment in an action for foreclosure is an appeal fromthe judgment itself'or from the prefer confirming the.s_ale of foreclosed "real esta.~e_.(Sps. AgbacJJ1 -.v..

lnier-Urben Developers, . lnc., ~.G.R.;~_No. September .1.9, 2002). · · 'Step

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· ·p4oo} -. . Once a week for at least 3 consecutive weeks in .·a newspaper of qeneralcirculation in th·e city or . municipality. · · · . .. .. . · · The=-':notfce of. sale shall be ··pubiished_ in a . ~· f, · t. · · ..' h' ·t _ newspaper .o. genera 1. circu 1 a jon m t e c1 y or x?oyince_ . where the. rnortqaqed property . is.

of the Proceeds of.th_·e. Sale

. · _. ·3 .. Claims __ of· junior ..encurnbrancers ... or.' persons tipl?i.ng_ s~.b~equent rr:iortg~Qes-.fri the .ci~cler of their priority; and . . .. 4 Th . b I 'f · h b id . . th 1.· II · -. ·. -~. · a ance •. a~y •. S a_.·· -~ , pal_-_;?!' e

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absence ~.fa Certifi~ate of Sal,ejrib tit1~1~ssecl~~-?le !1l[~~-.efaJud1.c1al.fore~losure 1~ co~phed · the foreclosure proceedings toillie"vendee (Id. '}ib r.., "¥i witl'r•~-ve!i_1.f.t~~-~wspaper "".'as ~ot printed ~n the 5i4). ·. · , . · · · ~- .. l.l ~ l1Y:,.. locat19f') wtte.r~ . the property · 1~ _ locateg. T~e : . -.. .. · . · · ..... : . · . cruc1~1.facto(}~n~t· ,,wh_ere the newspaper_, 1.s 1\/\ Ex,trajui:!icia!. For:~_<:!~~ure . -~· . · ·' .. ' · . · ........,· [jl · . t e:1r:i_ed }ut_ y.,h~th1~ -the newspaper· 1~ bem_g . Power t_o sell is .$.i"Pn.ted to t~m ·11gag f '~~~ ~z.~irc~ated !n ~e) Cl!Y w_~ern the prop~rty· IS The· . f!10rlg9gee . must ·tiavl~. the ,··A9ll'!e! lto !jj • r~~<}W,! ·(Gotesco:1Prorert1es, In~. v. S~,!1c!b~nk . ext'raj~dicially ·foreclose· ttie~ortg·_ageK~~&ssly· ,::J-c., · C::om!f:--~_R_. t:,Jo.: 209)1-52:. July 26, _2017). - · .. -' _ gra_?t.e!d in t~e 'mo~g.age i~~x_.·0!he~~ Hi\._ ~. ·do_qum~nt,orm-a speCl{ll pf>Y,.,er of a,tlorn·Jft.~R;4;) or~ .:c"G
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·N~t~)! {h;r~··:i~.· n~,:~:~tl1~ri_t~: gi~_;~· ort · ~gJ~_,1~\~J0 the proper reme.dy 1s.Jud1c1~I fof!=!~os.ure:·7-' .~c:qrf,p.~~~upubhc. pJflces ·-~ot ,qnly: in· t_h~ · . · . . · . · ,' . -19.{).. l'\1.UneFJ~Y but·als.Q 1n t~e barrio wti~.r~J.h.~ lar:id . P~oce~u~_e Jor; E~traj_µ~icial. Fpr.e~lo~ '_re of:..:if{>!!t i\_1,n;1!rtga:ge·djs si}uate?· during. the ~Q7daY,·p.eri~d Re~l.0Est.~t.e Mor:tgage Und_~r .ActiNo·._,.3:3s~ri'fed1.a~ely _precechng, the pubhp: au_ct10[11 .. _1~ · Chattel .. Mortgage,. Under Act -N,o. -1~08·, (AM.· No. . .. ··-MANDATORY (Gufinco v. Antolo; _GR,· No.· 9~;1 o::05!-Q!· January 15, ·2000, 'fufther:·amen,d,ed _on . . {5085_2, July _31, 2006) .. ' ' August7,·.2001): .' .: ·.. · i. :-.. ·. . ·· '_ _ . . . . Step , 1: '. Fili.rig. of_'an appljcafion · befdre·. the , Step_ 3: ',The appli¢ation _shall be r~ffled· airiotig - Executive'·~udge th.r:otJgh. the C!er~.ofCourt'.'{AM _di!f~r~n\}r~riffsc Tl:lE::Jo~-~~l~s.ure.· may·-~!~?' b,e No:; 99-10-~5~'{); P.ar: ·2).' ·. · .. ·;~· · .·: :.- - . :.. .'·' , ~ ·· . _.. ~O._Q_dy~t~~f:.!>.Y· a. Nota:ry Pµ~}1c ._(~_.M. No::~[)-1 o-p5.~"::. · . . .o, No .. 4).. · ·. ·. . · · Note: In ·extrc;1jcidicial· foniclosure,of real. llio.rtgages . - '·- ,,- ·. · , .'. · · · · in.'.dlHei-ent-loc9_tions coyer,ing· single·in.debtednEiss,:. · __ §,t~P- .4:· An .au~ti~-~,-~c:ile n;iay ·.be.: hii'd ~.even. w_i't~· .only ·one-filjn·g J~e,corresp'on"ding - tc:f-s(,lcti-det;>ts)1all,· just 6ne.:{'1} .. pafiicipating bidder: The.: name/s ·of, be collected (A.M. Nq. 99-1.0-0.5-0; Par:A)." ,;_, the bid~er/s· shall.he reported 'by .the Sherif(orthe · '· _ _ , · ·.- · · · . ·. ., .-. No"ta'.ty-Pufilic: wtic/condu.cted,-the.,s'.c\le ..to tBe·~61e·rk St~p ,2, Glerk CQUrt '«ill ~~ami_ne;wtie_ther t_he.:. of-Co(.irfbefcire the issuance bf the certificate 6(sale: fol!e>wiiig,:req\J_irerpenfs·.of 'the ·law': have- . been · (As.'ainended qy the January 30, 2001 Res9Jution,.. · ·..- t'ompi,ie,d y:iith:. (AM No. 99~10~05°0,.No .. 2, f:ar. c).. pata~rf1ph~9 bfA· M: No: .99-.10-'05-0;·Sp\ Ce,rfe?,a 1: ,: Postjhg;~f notice · · · v. Phil. S~vihgs,Bank, G. R. No.- 190078, 'fv1arch·5, Not less than 20· days fn at least three (3}:public · . 2010). · places ..~ of ·ti,e · municipcility . or·. city . w.h.ere the ·· · · . prop~rty is 'situated.

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Note: The recko·ning d?fe_in .cas'es of rEi°gistered lan·d is from the registration.of the certificate of saie since . it is ·only from the date that the sale takes effect.as ;3 . conveyance ( Gorospe. v. Santos, G:R. L:~30079, .

. The· two-bidder rule is not applicable 'durinq - the public .. auction of the· mortgaged assets· foreclosed _. pursuant.to Act No. 3135 (Bo~fo(I Equity Resources, .

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, Reason.-The two-bidder rule is provided under P.D. · ·_No. 1594 tocontracts'for government infrastructures . J?r6je~ts ·: becauseiof public. interesf .· involved. . · Alth-oUgh,ther,Ei; is-a public interest in the regularity of .extrejudiclal.foreclosure of. mortgages, the . private interest is ·pr,edor!rinant, (Bos_to_n Equity Resources inc: v:,' Def· Rbs~rio,· G.R. 193228, Nov.' 27,

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.The s·ale- should ·be. hild in the·.municip~l- or city hall of.'.t.he . muructpallty: or- city where the. land lies. · between 9:0Qin therrrorriinq to 4,00 in the-afternooh.: . ·. No-sale-can.beleqallyrnade outside the province in . which .the .. property jold .ls situated. (Act- No. 3135, ·. Sec, 2) .. · . .

T~e · commencement of .th.e one~ye_ar recleinption .... : . peridd is. of critical .importance, not O"rily to, the . jwdgment debtor or a-redern_ptiorier,- buLev~ri"_in.ore so· tci·the successful -pi.irchaserin 'the "execution sale. This)s because·, -under th~rules;-itls:ot1ly a·ffer-th~ . la_pSE? of S.L!Ch . one~year · period- :with, ·ho . valid.. · . redemption_havihg bet4h effectecl;.that'c:3 Sllc<::essft.W purchaser ~cquires, abs.olute ownerstirp.qver, the real. property hei"p(J~chase,d_,in..the ~xecution;. sale an_d . becomes e·ntitled to. ·final· ·deed oF sale. The commenc~merit the 6rie~year \eden1ption· period is rec.koned from '"the date. of..r.e·gistFatibn .of tfie cefiit'icate of · sale:" The .. phrase . "regisfra.tion : of . certificate of sale"· 'hiean's:- registration ··of ··such ~certificate.with th~ RP-.($.o,ryeco Met~l:Corp... v: Court".

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: Any .. person. may subrnit-hls-bi . .:li;i a p:ObJic,bidclin~ . . . - .. , -~ - ;ri ". "' ·· thatls exposed to__ general or,~ulSHc;i:vie ' )~y~ne~t of the purchase pnc~ must b.~ 1~s!Ji:ieeft 1htli~. .. purcha~e_r Js- the m~_rtgagee (DEvf;l.N, SUf!r~· pt

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~u.i~ on Defi_~i~ncy , _-:·. -, ~ , .Theplafn r.esu'lt of adopting extrajudieia.foreclos.ure UIJ_der·A~t N9. 3135:is that the 9ceditor,~js his·· , ·. ..: ··.· right ·'.1.~.: re,coven ;,my ·deficiency· (Heirs pf Sps, · ·.. . : -FJaviano ·v. McmilaBanking:·corpo~atibn;. G.R .. N_o.

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.. ·. .; ., . . . . Step. 5:·.The of'._Cot.irf or N.6ta;.f Pµplic·· Sl'\ail . a .certificate s~le indfr!atfng·,the .amount ·· indebtedness, the:. filihg-· fees collected, ,he 'mortgages . sought'-: t<:> . be:' }9.rectos·e,cf,'- . the description -~ of .. the:' ··real .. estatel;i .. and . their

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St~p~Ji: The_certifi_cate of:sale must be approved.i ·. · by-tt)e'·Execu_tive Judge· (A.M;'Nd: 99.:10-0,5~0,.No ..

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·. Step 7: _Red~mption.of ·property sold. -The.::debto'r has ·th~. right to red.eern· th.e property so_ld within the term·9f one year fro·m and after the date o(sale".(Act

No. 3135, Sec. 6). · .

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of Appeals, G.R. No.- ~O?p31; August 17, 20_16): ·.' . .· . ; _'.' . - .. . . ~ ·.~~ .. _;,--· I. case th
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·i~·di~~~;oility. of.~ . ·;·~~I . e.st~-;e_. Jl~ortg.Age '--isf ,. . violated by. conducting; -two separate .. foreclosur?.. .. ' ;).t proceedtnqsiori ·rn9rtgaged properties lpc~d (h , . provinces ~E; long asc each 'parcel -ef~lc:!n_d_ -rs , . · answetable.forthe 'entire debt (Sps. Y,tfy!Ffi,tiilippine~'. ·

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-"a§e~~s i·a-nk orfinaiicialinstitutior,, the right_ to redeein t~~roperty A Uf\til.: but nof after,. the registrc3ti?n t,\ertifi~.ate~_of s.~le-whicli iri ~no: qase sh_al) betmori. t~a!1· three:. months. aJter foreclp~yre,_-: · whichever. is.ear!i~r:(R.A. .8791;- Sec:-47); '.. · ... · . · · . ; . ' ' .:. . . .·. ' ..

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·· Note:''The ll:lw, c6v~rs·bnly-teal"esta~e mdrtgages ... It.· ·· ·. ·- tended· merel.Y ta·:r~gulate)he: exti:ajudidai sale ~!'lbRro.pe_rty:· . rnoJtga~~d., if: ,·.:and.~ wher.i~ th~ _gage'e°"?i_s· given q. special ·power or:,.express. _ a·u'thority to do so _in.the ·deed itself or in)i.doi::ufnerit.. · -. anhe~ed th.~r~to-(Lun.a v:· Ef?c~rna~ion., GR NQ. L.-

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_46:3_7, .· June· 130,. :{~52; ,ponce· .-,de._.·'Leon .v;· :.. • Rehabilitation. Finance Corp., G.R.·•)'/o.-·L~24571, ·. . De_cembe._r:18; 1970);_ >: :·,. · , ·~. ·. . ·,

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v. PNB,. GR No. 'L-2181"3; Jµiy 3p; 1966): .... ·· ' .. . . . . . . : . . . . . . ~ ... · . ·., . ~.: :-,

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Cohslructi~n .rif-Ac_t °N,o:·3135 '. . . : ·. . . . . The, constrl.ic;;tiori of.this Jaw must be. ·equ;:illy · and ·mutui3lly . beneficial_. ·to"' .. both · pai:ti~s. (Philippine

Natioria_l Biink vF$ps,:cabatingan; B: R.. No:, 16.70§.B, _. JiJly:9, 2008):, - . .. .

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Re;;,edy <;>f D,ebto? Aggri~~e,{ F~~eclo~ure, . under Act. No,-3135: ". :. . . . . . . . .. . ·. 1. .File a. peti!ior, ·thc!Ul:le sale_ be -~et asfd.e. ~nd th_at the wri"tof poss:ession··b~ cancelled, specifyihg. · the damage to ·.him .. ' . .

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.C.REDIT TRAN·SA.CTION'S SAN BEDA lAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

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Republication Another p1,1blication is required in case ihe auction sale is reschedulecl, and' the ab~ence of . .such republjcation in.validates the foreclosure . sale. t~-e parties have no right" to waive the · publication requirement. (DE Ll;ON, supra .. at 527). .

.

2.

Ask annuJrnent of. foreclosure on the following .·grounds:. · -a: Fraud; collusion, accident, mutual mistake; . breach of -trust or · misconduct by the ·purehaser; . -b. -The· sale: has not been fairly and regularly .. conducted; or. ·. . ·-... c. The .Rrice · was inadequate and the . -iriadeq.uacy was so great as -to _shock the . . conscience .of the court (United "Coconut' · -Pranter's. Beak: v. - Sps. Beluso, G:R 'No. · 159912,: August 1_ 7; 2007). . ... . . . ' Notes ..'on Posting .andPubllcatlon Un~ct~o. u· · _31.35: · ~ · . · .. · - · · • . · ;";........_

2. - No Requirement of P~ersonal Notice . . Sec:. 3 of Act.f'!.o. ,3135 flO~·require_pers011ai .. or .. any pa·rticuJar rioticE; on the. mortgagor mµch . less cin his successors-in,:interest where there is . no .contractual $tipl!lation ·theref~r (id. ?t 518). · ·

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Unless the parties stipulate, personal nciti~e to -the. ~:mor..tgago'r -in. extrajudicial .foreclosure · proceedinqs is 'nof nec·ess-ily'be·cahse Sectloh . '3·ofAc}..Nc(3135 __only'r.eql:ifres tti·~ posting ·ciihe '. .notice 'of- .. sale. in. three ·public. places, and the.~~pCJbli.cati.o~ .of -t~at notice')~ ne.:Vspap.er.:.·.of '.J. g~'her;.1.. c::.irculat~o.r:i (Remirez . v. The: Manila 1: Nature, . · · . · · " · .:~· _ J.. ~ e._an/vng.. rJerp, No. 198800, _l?ec;ember 1-1; They we ~ 1mbueq with ~i,>j:1blif~PO,.l1cy · .. 2C:11'3r .2\, .,.... ·. -, :.' · · · · \ · -: r . '. · -~·, consideratlons ·. Notices are. giv~gJ)o. ·secure~'x,'"'C.,_., . : . , . .! ·. .. . ·,' ,•.• v .:.. bidders. and prevent a ·sac(~e".o~tne '"r.bpe.~ '1(. '\'f' .Hmj,ever, '(t~ere the f·cwreem~nt.. required · (Caub,anrr v, ·-Crisolog~·,, 17458tt, : ~- .!.&..: p,er.~pgaNqt1c~ t0 th~ m?rtga'gor i;.md .: nosuch F~~rua.ry·,;; 2015). . . ', · : .,/'}~ .. notice·yvafg~1iJ,t~e failureof t_he rilortga~ee·to J . cornP.IY w1th)~e~.otractual.aqreernent-with the .Failure .to. ·comp_ly 1witl'l1 ·the .staiutoJ~,? : .,.....,,r: mo"rt~agq_r, i. ., to\se.nd n·ouc;e, js a . brep.ch · req~ir:e~er:,!s_ 31s to.-~pl!lblicalipn 6( Jotice £.o~.n;~ !?.L,JJfi~ii:li:it to ~r'.\y;:iJi~c:lte ",(oreclosu.re~sc;1le. (Lim _v... _· .. ' a~~_tio~· 's33l_~-·~pASt!tut~( aJu~i~dic~~l\9!_!?ct·;~..::_··::, ..... Oe!r-"rtif. Ba1k1·.G:R.''No. '1770_50, ;Jul>: ..\.' : · -.w~1ch: mvahc:J~tes _t1;1e,salfyLa6l<~of,rep~'?,!1cat10!'1;m (' ·: 2J)}13J:i - · i"".: · ..,,,. • , -· _,of notice of foreclosure-~a1efn:lae sub~.J1,~e~t1s,~ .; ~ .··_··"\ii · ~ - . · . - . "· . : . '. .. -~, . after .th~, Qciginal ·date re~d~rs. such .s~~~~~ _I . ~~iJtiei'~fd~s-,en( ·9e·c,.:-3 ·r~9uire the J?OStinR ofi;cJ . ·:~(se·carity,?a'!~ eojp. \i. _Sps. Rodrigo; Gdf.~~oGc_e'Q . S!3l_e 'the mortgag~d ._proper:ty JO.E ... · .

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notjce:i_s bot·per/~~d,,,_. ri<3. · N<>"'~~~c(.;·o~P.qstii'l!;J.i;S Re'q';J,ired: . · : . . ~dr _jnval(~"c3Ung: a .fore~l0sure ·sale~_0\/id~~:Jhrf. Al~~e~rr~, . ·r:~le: ·. A :ce~if)ca!e '?f. Pfis~ing·_ is ·~_or .tl:ie notice ·there.of· 1s··.'.duly· pubhshep~eqtl-lred,·0m.uch-'less cons1qered-md1spens9qJe· . '6~wsp<:1p.~r"6Vgen·er91- drcLilation (Dev'elpph:,e,:,t. · · for .tlieyalidity. of a. f9reclosure·:sale under· Ac~ · Bank· of the. Philippines ·v.: .A'g'uiife, GJ?:. No~. No. 3135: (Id. ,supra a( 520). ·. ::· .. ,., •. . · '·:. · ,121.4877,·S,eptember.7, 2001). _· · ·· ·· . · ·· ·,'..-. · ., . ·· . ,.: , ,,. . :E~c~ptibn: ,Such~ i::e_rtific~te is .."signffiear'lt orily' . : ... · Reas~~:-:By such-pµblicatiotl,.a reasonably:wlde .. ·· ,....;~. when :''t·it .. : b.ec·omes: I. necessary.' ,.to ,.-;-:· pro~e ... · ... . - J>·pub'l(cify · ha,q,. beef:i':.~ffeded: such Jhai'_1,fhos.~ . . · .,·. ·c"i:,mp!iance witti.,th_e. require'd. ciot,ce~_of ··r0sting·_ . . · intei-e's'fed 'might ptlendit~e .. publjc. sale, and ,ttie -: · · (Ibid.).· . ·. . • ·· - .., ··. -, . · parpo~e 'of the i"aw had b~en thereby :;;u~served. : . . . . .. . -· . - . . . .. . . . . .. ' : . ; - (Devf]lopmerit Ba.nk pi the_.:Philippines·v.:Aguirre, '1 ri Bohanan' v. (G. R. }J;·.- 1 j }..p;ii. '1 s, .. C}R7No. :{4.487-7; September 2001) :· :. , _' . 1'996),. the ·absenc~. of-tt.,e 'affidavit ·of publlcatiqn was. considered fatal .because 'no ·equaHy c.or1yincing .and GOmj:Yeterit: prbo"f-:of."eomj)liaht!:? .· .. . ; '-./S,s ·l~n{J'.as· ttje·:qbje~ts,9f'.the:11oti~~·a.~e,attaii:i·ed, ' '·was·. :.offer~d t'q compensate '-.(or.:. ifs· ·nq_l)~ .- the sufficiency ·or yalidlty_of,a r)Otice of sale is. n9t . · presei:,tation. . · ,- · .. affected im.material·err9rs br simple mistakes cir cimi~siohs not-calcul.a'ted' to~deter>pr".mislead 4. Bu~den o.f. Pr6ving ... r,Jqn~.¢0.mpliarice with bjdd'ers, ·to .. depreciate the v~l.ue:~f-th~:-prop.eCTY,. . Publi~;ition·an~·Postin_g R,e.quir.e~~nfs·. . or·'to·i'prev.e(it :from. bringing· 'a· fair. price \Sps. . Forecl9s~re 'procee'aings ·haye in ttietrfavor·the Certez~ . v.. P._hilippjne Savirigs·•ffank; G:R., No. presumption ,of. regu_lari_ty (Union· Bank··or the· J9007i;J, Marc~. s;.20.10):· · ·: ·.·

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deficiency . clalm. is allowed (Pnilippln« Netionel-Ben« v. CA, G.R. No. 121597, June 29, _ 20Q1). .: . .

·, In . the, apsence : of · contri:fry evi_dence, - the presainpt1on· prev_ails that th~ sheriff· perform~d · . :·. ?.:J-iis offici?kd~ty of posting. th~. no.tic.es of,sale in . ·,. :. thl;l r.eglementary pElriod ·(DE LEON, ,supra .. at · ·. 520): . . . · .·.: Pretermission.of M(jliday . . .. ·_ . _ ···~·- . · · , . '- ·; . Whe're the· ·qay,i.or _the( last' day,. for. doirrq-any, act · required or permitted by law: falls 'on ·holida'y; the . ad may be done. 011 the next succeeding business' -. day. Preterrnission applies-only when thEf last day'of ·. . · a'.giv.~n p_erio:d;Jor-d9ii:Jg:' an- act falls•;()~ a holiday .' '(R_EV .. AQM:·COD~,.Se'c._31). -·~· ·· · · ·.,· The-:pretermission : .holiday _is. n·~t applicable-to ··· auction sales.It ooes.notappty to a '9ai,fixe·9 byan . . office.or officer of the government 'foran -actto.be, . done (Vatrn.o_n~~ v, CA,-G.R: No.,L-4'1621, Fe'bruaf;Y. 1_8, 1999), .':' , . · ... ,: ,.'·> -, ·· · • . . .. · · · , ,., "' Effect'.of 1riideqLiaoy :of- P.rice _..in."~ Fore~losure Sale'.. .· .': · ·.·.,.· . - ,; .-., .. _•.. ,... i . ~en~ral,Rui~::-:Wheri ther~~,is.·a rigpt,'to_ii~deerii; .-. · · · inadequacy df price is' ·immateriai .. 15ecal,ise ... theL · ju~r;:lgmen_t debtor max re.acquire the.'proP.,ef.ty eas~['° at ·a'low.price or·sell;his~righrto red"eem"t(Metrobarik . '·-V. _ch_··_v~.'::u_-Ta_.n,_~. G.iR_·:·'.NP__ ; ·.2_0_·__2.1,z~.)-, -~-· g (!st: __ 1_·_1, 6)~

. , Note: . In both · judicial and extrajudicial . ·_.foreclosure,:- . when. a- third· persorr, is the · mortgagor, he itnot liable for any deficiency in the absence of a contrary stipulation (DE LEON,· ··supraat-530). ';.': ··· , · -, · .-. ... ~\, Actio n for Recoy'.ery:of•Deficiency- ·. A. mortqaqee may recover- any 'deflciency in the. m6rtgi:ige . account, which is. not realtzed- in ·a foreclosure 'sate. An independent civil action for the . recovery of,defi~iencyjna'y·be filed .even.durinq the .. period; of: redemption (!Ta.mate· v. CA, GR. No .. · 190635,. Febrtiar.r_,13, 1~95). · · · · 0

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. Once the auction -,$·a1,e i§- ~ffecteci"°~nd ... the ·r~~ulling' · . deficiency is .ascertalhed,' the' rnortqaqee-creditor ls en\ftled.to'.secure·a?defiGie'ncyjudgn:ierit which rnay' immediately" be. executed; whether- -or .not the ' moctgagor- is ~!Hiientitler;:l:ta redeem th·e property: sold .. (Dev_el~p~eif3ant.of{h~ Philipp~nes_· v. .-,Vda. De·_·· , oil, G,R. No. ~-25802! January.31, 197-2). . . .; .. - .. _ ... :, · · ,· .. ; ·· .. : · . . .. · . · ·; Deficien'cy !Judgment - If the deficiericy' is· ·: '· enibodie9.in ~ jtdgment _([)E LEr buys bacls -the prope_rty.'w~ic_h· mi3y·

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: . ·Not~: ,f~e:· va1Ge(¢t.Jhe,mortgamid·· :p;opi~rt)a ....... ::lilol~""'----.-. . ~ii:.~~?;t,tt(i~~~~~~h~~=~~~~ci~~/~t~~h~~: . . · bearing· on_. the. bid __ price _at_· the pu1:>1i_~ auctio~. . · . c~~atedJDELEON, si.Jpr.r!I' a/'542). , .. . .provided that the::public·,aµction"was, (egl:llarly and , ·· "'; .. _ . . .· ' . -·"\'.• :, :( · ,· · ' ~- ,:, '. ·· :.. . .ho_nestly' co:r.i~ucte_cf(D.E:iEON;'"sµpra·~t:5~9):· ·. . . :· .Note: Asale:by',the.mcirtgagorfo,a-third party of'the ;_{,·.>· .; . ,;, ,'· . <" .,. (_..- .;J.. • .. '.inor:tg9ged]~roperty;durlrig:th~ period f9r:rec,le_rrip'tion .' Re~overy· of.:C?'efici~ncy a· ·· : .. =-:. , , , ~ trari_sf_ers ·only. 'to'..said·trJra pe°fson_ the right'to:r~deeni ·. Note:.that' the:. mortgage, is,-but,a: security.-and not a· th'e ·prop'erty, and (he. (ight to' posse3s,: use, ·and· ·. satis_faGtion_orth.e indeptedne~.s (M~tr9bank v>.C.hug·:. enjoy the ?i:ir:rie during said ._perl_o.d_. · ·, - · . Lt:.!,Tan;' G:if No. ,20217-6; A_ugust t-, ,20ii3X' i·.; . . . .;. '.<\' J ··:.:-,· ·. ,·:•". .. ' . .. -.. ~. - . ·.-: • . . ',, . ,. · · .; -. · . .'. · ·.. ,, ·.' .... .;_. _:. . ,. - . ·. _'. , · Where the-~a:1/with assilmptjoh· of mor:tgage was. 1. ·'.Judici~I· F6'recl,o~L.i're. under the Rp_les ot' . no.t_refgis)er~9·.~np{made,~ithout the con~~!l~ pf-the Cc>Ur( : . : . . . . , ,mortgagee.-:: the,· buy~r :.:there6f. w~s .· not-. :yalidly · .··-,the ·mortgagee, iS':SpecifiCally 'given the :right to · · . substituted ·as cfeb'toi/and herice, ·.had· no~ right, to .. cl~im_ fo.r;deficiency·(RULES OF C.QUf?'T;.Ru_te· . redeeiri'(Bonnev(e v. CA; G.R, No. L_-49101; October _ 6). . ~':\' · .. '··. :,.· ·,·.. . ~4; .J9_83)./ ·_ _.

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l(lteinatibnal Services, Inc. v. /AC, .G.R. No. L-· '67496,:July 7, 1986). · ·

Note: Notwithstanding Act 3135, juridical persons whose • prop~rty is being sold. pursuant to an extrajudicial foreclosure. shall have the right to redeem· .ttie . p'roperty ·until,·. but n9t after, the registration of the certificate _of foreclosure sale with the applicable .Register of Deegs which in-no case shall be more than three (3) · months ·after _foreclo.sure, whichever is earlier. Owners of property that ha~ been sold in a foreclosur~ sale· prior to the effectivity of this .Gen!,!ral. Banking. Act shall retain their redemption rights until their expiration (General Ba'?_king-Law of 2000, .R:A: 8791; Sec: 47). ·.

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. The mortgagor's equity of redemption can b!,!\ · lev_ied. upon ·.by me.ans of ·a writ of execution (Looyuko-,.v. _-CA, G.R. :No. 102696, July '12, · 2001).:

'Period to Exercise: Within. the period of 90-<120 . days from the date ot.lhe servlceot the order. of foreclosure., or-even 'thereafter but.before tne order .ot ·confirmation. of the .sale (RULES OF COURT,:Rule 68, Secs. 2 and ,3). · '·-. · .Effect ofFailure to Redeem · : . This. appliess~1q~oJ:_th0e)ropert~.The:mo:-tQag~r. byfa1hng . (Govern0.53n( Service 1.nsupcj.JJ,9~S,>}ste.p.-v. Tf/fl, rede~m . )p~ all . mter~st. m t_he proper:ty. . CFl.of/101/o;·_G.R:_No. L-4,§322~JU/y5,~989):Jf' .('6;ahay_a\i v. _Cprhmerc1gl C,red,t Corp., GR. No.·_.· ·. · · i.:..- / • Fif~. 168078, ltanua~3,)2018J.. . . . If the mortgage_e is a banyhe/m.ortg QOr may· . · . . . .. · ~ . "": . · . ·· · . exer~1se a· rig_~t of reaemp~on ~·nd_tth_is~9 l~tu~e ~{ the R~~~t of ed~mp~io~: - . .· . _ ''.. apphe_s_ .-~~e~ .. 1f. the · ~oi:e~9sf e. · 1s· JJ~_1c1~I £i.~ ~pn~1~eg~ f th~· exer~1se. o(. '::'·h_1ch_ 1s . _accorda11~e with R_u)e. 68 of"~e0R~~of.Cm1rt. ·· entirffYJ~~Pf??e~}POQ th.~.w1ll·and d1~~~et~on . _ (G_overnment Serv1pe lnso/.n ,....., right.of a-QJ._brt~g~~~er?;~atu_tOl],P~iv!!ege_...:...(rn:iust b~ ex~rc,-:ised : redee·m ·, t~e .. mortgagecf . pcorerty· 1r(__~~n-,J]t:n}e,..JQ ~~_side a~tw1thm the ~er!oc:l pres~nbed _by . ·. extr.ajudfcicil: fo,reclosure· of r~al. mort~age.;JEE~_tbes!.~t~ (ji- at 552); __ . · . . . . : ... · ·, :_.

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. P~nod tQ Exercise~ Within one year fr'o~ovol_ves:. title .to· the· for~clqsed . property - If : _.., . 'date of-r_~gistratiol') of.the ,c·ertific,ate_.of sale· witli . . · .. sei:rsona_bly· m~de, it seeks.to·eras~ from.the titl~ , . , . ·.·_.the,Reg(~fe(ofJ:)e·~9.~ .(Ad. No. -.31;35, .. Sec. 6;· . of ,ttje_,iu,dgm.:nt-o_r mprtg_age. d~~tor· th~ Ii.~~ · - · : · • ·i · Rl)_Ef;S_:'OF-CQURT, Rule 3Q;· Sec.·,28):.,..·· .. :· . · · .: .. . . ·· c(e·at.ed by reg1str<;.t1on of the moJtgage ~n.d sale:. ,- ·... -· -.;:::_. .. _'.,:,~:.> ·.'::.: .,... .... _; ·,.· .. ·, . · ... · .. .- _'lfn.ot._s~~son~bl_y.mad~;-jt·rri~x.see~.fo(ecover . · !=xception: In the ,sase _qf lb?Jar,:Rural B~nk v. _,_. · o~n.ership tQ the prop_erty since)he purchaser'~· · ' : CA, the ··Sheriff placed two .. ye;,irs, redemp"tion · · · iri_ch0ate :. title< . to·: the:··. pi'(?pe:rty· : qee::oines · ·· . perio\:l'in the Certificate of Sa)e. The-bank dicl no.t. . ·... . .c~nsolidated a_fter ·expiratio~ bf the .period-.(/d. at. · q'uesticm•.tl:le· 1:irovJslon. in tfre. certifi.eate ,qf sal~ •. ·. - 553).• · . . '" · ·. · \' . ' · . -:-Tl:le ·s~·prerrie· .Cojj°rt · held. that ·.Silence by ~the ... , Requisites qf a ·valid .. Exetclse, ~f· th~ Right of · p~r,k consent to:tli_e .two'-year. peri!)'c:J, arid · ··Redernptio.h:· :· . : . . . ' · . . redemption is lib·erall~1._interpretetj_ (n .favor of the -: . Must: be,made. wit~Jn tw.elve·(12),..monttisJrofi1 ·. '' awrier'· (ib,aari Rura/ Bank ··CA, G.R. No .. . · . the .. date ·of -the-:,regisirati9J1 t>Utie s.ale :in· the '·. 123817; Qee. _17,,1999}:",. ··· . . · · . .. · .. ,.-offi.c:e:of the-Registry,of:Propeify'(ldi- _. .,i··: · · ·... . . -: ·. . .. . ... · - ·. . · .. ' ·2. _ Payment c>f the ·purcha~e priGe ..of t~e. p~operty· .. ,Jhe /igh°t:of'~eder:ri"ption; as· long as with(n th~.' invplved; plus. 1 % inter!:)st per month the·teiin, _ · perioc;l_-P,ryscribed, mpy·be·e~ern~sed regardle~s . together with the am.punts '.of ·assessments of. of, wheth.er· or. not the· ·mortgag(;le i _has . . taxes·thereon; if any1' paid by the purchaser a,nd ?Ubsequently -.C_Q~!J-Veyedthe ···property. fa ~some · ·. the amount of hls prior lie,n; if any, .with th_e sa,ne other party·(Sta. Ignacia, Rural Bank, Inc. v.. CA, rate .of interes\ computed. fro'm: the date of G.R.·No: 97872,March 1, 1994).

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confirmation of the auction sale which· is· the date . when the:¢ertificate of tftle is issued (BIR RMC .Nb:· 15~2008;· ~ugust -15, 2008). " . · . . · . :~. .. 2. ··Judieial'~ within the period of ninety (90) to one hundred !wenty (120) days from the date of the... service ·of · the order of- foreclo'sure or . even · . thereafte(, but before. the ,order of confirm~tion of thi/sale (RU{ES OF COURT; Rufe 68, .. Secs. 2 and 3). ' · · ..

registration of th~. sale, up to . the tim·e . of re_demp.tio_n(Id. 'c!t,554); .. . .: · ·• ' · 3. Written notjce _of the redemption must be served 'on the officer who . made the . sale, . and a duplicate filed with the Registry of Deeds oMhe . . ·. province (.~ps. ,Yap v. Sps. Dy, G.R. Nd. "171868, . Jpne-27. 2611); and · 4 ... Tender of,pay_ment within the prescribed period to make: the· redemption for future enforcern~nt mal<~ the:·redemption valjd. or preserve the--right of. re_demption· for· -futur_e enfq_rcement (RULES . · OF COURT, Rule 39; SecB; A°cU\Jo .. 3135; Sec . . 26), . . .

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Note: ·Allowing redemptio'n after the:laps.e of the statutory perlod; v,vhen . the\ buyer. at the foreclosure sale .. · does·. not object ·but even co11serits .to' the redemption,· will uphold the pqlicy ci{-the · law 'whi6h~.is'.,to aid .rather than defeat the ' ri.glir of . r~d.emption- .(Republic y. · Marawi-Mara_'ntao ·General Hospital, ·inc., G.R. · No. 15~9?0,-'iiJov. 2?,./01-2).

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Note: The:-fili~g of~ 'court action· to enforce redemption, being~equivalent to):i'formal offer' to redeern.iwouldhavethe effect of "freezing'? the · expiration of the one-year period (Heirs ·of NJ. Quisumbing v. · Philippin_e Natio'nal Bank, G.R. · , .No .. 178242;·Ja_n·uary 20, 2009r . . . . . ·.· .. ·. ,, . ·-~··· 'Itis a seriouserror-to.make the final redemption. Summary of P.eriods of Redemption: of the foreclosed-property dependent on. the . 1-.' Extrajudicial(Act No. 3135) . ..- .. financial condition of the redemptioner. Financial ' a. Natural ; Person _.:.... one · (1). .year . fr0m - hardshipqs'not a ·gro6nd to extend the· period of registration of the cettiiicgte 'o( salf!ptit!J ~dempUSP,jl.';_.(HfYield.'.Rial(l! Inc. ·v .. CA; -G.R. • · _Reg_istr:y of Deeds·(~ct No. 313~Sec. . · No_: 1'3 89,'1.8/'SeP_.terr;ib.er12; 20.0~);'·. · RULE$ OF COI.JRT, Rule_ 39;~Se~.28). · ~- · · · . , \ - · · · .. . . · __ . . . · ... : . . ~ · . ~ · 'Persons . Entitled to Exercise Right . of ~ote:-.°.~he_ statutory perJo.d of ~&°demp~i()n is . R~demptj: only .dlr~ct?ry·- ;,md ~a~qe '_ext~naed b,~ 1. tv1ort,9agoro_n 9ne, 1,n. ,pnv1ty._ .of .title with th_e agreement of the part1es,grovi!!l~.d:. · . ..,. . ·_: · · ._.·,. rn?1!9aggc _LEON_; s_upra·at 56?); and. · _ f.- The .aqreernent to e~ten·d~volunta[Y; . 2.- · Sl!lc::cessorst11Fmte)-esl. · '(ACT · No. 31'35, as ari<;l· · . ', amendes!Jj_y."RtA. 41'18; 'Sec, 6) which includes: ii. T~~ · debtor · ~ommits . to. r2ay. · .t~e . . ··'.a. ,Asslqneeor transferee Q~ right-to redeem; . , r-. -redemptlon price . on. _af't fixed date· .. ·: b .. · one :_..y:~o. succeeds to.· right of debtor by· _(Gajudq, ti.. Treders Royal B~nl(, GF . ~ OR,_!;ratior:i of Ja0;. · · - r• • . '.' .... _-·:.. · ~o.-1.51.0~_8, ~a.r:ch 21, c .. · Jeiri_t deotors or join_t ?Wn~rs. . .

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b .. : Juridir:~I ·~erson - same. rul}\,as . .. person; . ' :.- ·.. . C: .Juridica,1.--Pe'rson"· '(mortgagorf.).No._· Bank ' _(ri19ftgagee). - · th_ree· (3) _.months· after toreclosure -or. - .before· re·gi~tration . of __ce:rtificat_e-9f fo~eclosyre whichever Js·giarlier ~--- .. (R.A. 8791,·.se~. '47) .. · · ·:~.- ·. ··· .·.

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N9te: By an amend~ent of t~e General Ban~ing . ,· ~ J.aW·. :. of . 2000, jl,lridical. · mortgagors · Jike partnerships and c9rp6r~tions·_are .barred' from , .. ·. 'the ·rigfif..ofrec:)em.p,tiori ·Of mortgs;1ged. property' . .· . ·sold. pursaant . to '.."an':· extraju~licia!· foreclosure,· ... . . . after:-. the':-·r\3gistratfon of.: fhe_ ''certifica~e:,. of · · foreclosare with the applicable Register 'of .. · · Deeds'(OE LEON, supra,af547).":. .

· ·eayment.of R,!:!deniptii;m .• ro·whom:'.:Ttiei':pwct:iaser' or-.redemptioner. 'or. for hirri'tq the offi~~_r:whb' made'·the sate'''(R_ULES Qi= COURT,:Ru/e 3.9,· Sec. 29)._·.' · · ·· · . . . Mediqm ot'payment:. It' may·be maae -in·cash or in · 'ch'eck (CcJ-'v:·phi!ippfne .Nationa/-.Bank; GJ?. No. [- . ·91j67, Jufle'·29, 1982).-·~~ ... ··· Article 124~( ot' the 'Givil Gode--" .yh_icli expressly 'proviqes for the mepiufn' iri the' "paynient'qf debts" is nofapplicable-'(0.E LEON; supra at-·556).- . . . : . . ..... . .. . ··. "\.

~~Bemptibn by 'check 'is. ~i;E?ad~ ~~-[l~ti~~e_ci· (Co.v, . · Philippine Nationa(B.ank, ·,G.R. Nd. L.,,51767, Jl.!ne·,· ·, 29, 1982). . .

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l~tention to Rede~m is:~oT Suffiti~~t_ lri~ not sufficient- ttiat a person offering-to redeem manifests_ his ·d~sire '.to ·.do: ··~o .. :,\n. · actu?I and· simultaneous tender bf payment must ·accompany the statement of . . . intention.·. . ..

. For : purposes · df ·, reckoning . the one-year .. redemption . period .. 'in . 'case' of .'individual mortgagors,. or. th_E;l three-month reckoning period ·for juridical :pe'rsons/mbrtg~gors, ··the . same· . shall~ . be reckoned from: the . .date ·of .

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Bona fide. redemption ·necessarily'. implies a· . reasonable and valid tende"r.of the!entire repurchase . price, otherwi_se -th·e 'rule on the r~aemptibn period fixed by Jaw can easily _be circymv.ented (Sps. Hojas Philippine Amanah Bank,:G.R .. No.--_ 193453; June 5;2013)-. . ' I • •

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B,ights-of"Persons with Subordin~f~ Interest. 1. . Mortgagor's. equity .of. redemption., before. foreclqsure :.....a s·econd r:nortgci'gee'acquires-.only . ·. the equity of, redemption vested 'in;the·mortg'agor and his. rights are s_trictly· swbord_inate· to the ·superior· lien· of ,the first mortg9gee (Sun' Life · Assurance Co. of Canada: v. Diez, G.F?:. No. . 29027, Ociober 25, 19~8). ·

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. . . possession . of'"the ti;m-ant. 'it !,\hal_J belong to the judgment obligor until t_he··expiration'ofthe period of · · · redemption (DE /:.EON, supra at.568).

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Amount, of the Redemption Price: · 1. When- mortqaqee is· riot a :ba'nK·(PINT} . ,. · ·a. .Eurchase priceof the property> ' b. 1 °Ii, Interest per month on the· purchase price from the.date ofreqistratlonof the certificate up to, the" time of redernptioru ~ . . .c. ·. Neees_s?ry· expenses ,'--inm..irred:·. by- · the . -purchaser for; the irnprovernentsimade by -him .to preserve the pro_pE:rtY d.!,!rin£fthe: -period-ofredernptioncand. t : -:-,---:, - ....d'. --Taxes paid and amouht.of purchaser's-prior. . ilen,. if any.. with. the same rate. of interest. . _computed the. date of reg~atibn"'cl .sale- up .!O the time 0(-re9_eruwo~-(A~o. 3.1 ~~;- ~n-re!a(ipn to .Se.(!~~ W,1i?ule~9.p.fff?u!es.

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Mortqaqor's riqht of redemption after foreclosure- . \::-.hiifretnedy islimited fr~ the ri_ghft0 redeem by -payinq off the debt secured by thefirsf rnortqaqe -· '(Tizbfi-v: Valdez;,G-:R No. '24_-797;~}Jfarcfi 16, ·._·-,·1926}. .. i ." -. . . ' ·, .·. ~ -, . . ' : . . . .. . . . ~3"':'"'"':Jhes_e'cori,d':mortgagee is .entitled.. under' the JVm9rtgage constituted in his favor, _to the . ...........:._pJ;yr:n~t,ot,his _crec;litthe excess of the· proceeds of tHe i1uctior)° .. sale;· afterr-covertnq ' the .:........mo_(tgag0i'f/ obfigc)tion·s to-the first-rrrortqaqee if ie-et 56.1):, .' · -~ ·--~· . .

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2."- .When rnortqaqee.is a·ban.,, t~.M.IJqE) ; ~ - . j~·'. t f'' d b th C ~~ I/". • ' . t d. :,U /~ . a. A woun 1~e · .Y ~,t1~01:J7r;:amoun e 11"' , -.,, • .., , I· '· .·. ~.\ ~- . .'. '<- ! ·.' ..•• . . _ under_th:e Mortgage deed;· . . 4. To · e ma~ef).(!lfendant m. ·an \_9ct1on for b.· . !nteresti,an9· • l'i, _,; for.~~losure o~~ri\ort~age (Id.). .. _ · _ . c. .Q.ost· an? .!;_xpe~~es _ ( G~neral' Ban['ng~(a/r°?>,10 ~~ _: _. . . . :· : . . . ._ 1. . _ ·, 9f-20QOi R!A.£87.91.) . · _;;,J. -:-t::(:~\ ~ ·N,ote:; 'f:h1s· 1sl:"noJ 1J1andatory 1n_~cbaracter_ bu.t · A . i:n.ortga~ee~cre_9it~ in1ti~tlo~\ c;loi~ "f. ·have ~: __ me(~dir~ltor;y;·:- fa.ill!re ': tq c<;>rnPV'will ._ noL d!SCretj9n·. tQ_. S~t··.a diffil'f~tr~pur¢~~{\_Prf~jffi.; · J'~)'.';·)l}V~d,ate, tg~e.,. _jl;J.C:ii_~al forecJQSL!re. proceedings .. ·from the. am_O':Jf)t me~t.ioie:d.'in ·-JREr m~r:tg~{Je. i~ .,~(0? ~lfiy effect pr/1e failure qf th~·mortgagee to . ·.:view ot,th_e settled role ,that-an. acUon,to·f61§c%_f9 ~~19.rrad ·{subordir,iat~ Ji·eh-h~lder ~i- subse_que~t .··., must.be li~it~dJo,the:amounLmentiohed";·_1,:~·~1:1~ch~er·or __bo~'is 10_,ren9E:r th~ __ foreclqs1:1re ;___ _mort~age _(Sps. ·Guevaita -Jt.-::1h~ Go~., o,fJl~~~ifle~c.ti~e·:.as. /g_a.l~?t· them: T~efre JelT!ains_ l~. . Lending. Corp.;· G.· B: ~_o, ·-·20.4.t,~tt~:-X"'f·~~!=!f/~~oithe{)nforeclo_se.d equity of:recfet:J_Pl!on ··· . .. . . 2015).-__ : _ _

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·::,: --~edemption:.p~i~e i.i/th.i.s.·6·;~:~:i;~;du~e-~t~i~e ---~~ue~ti~~-- th·~ Je~~;it~-: o(~t1~~\0rnd~sur·e·~ . : :_: ini::_0rner. r:e.c.eiv.ed ··fr9·m Jhf pr_bpe(ty, .(ACT .o. . . · i:~:: pr9cee~ings· or°'the ef!e~t. 6f •alfe;iged.)ack 'C!f - . . ·3135; as am.ended by 8:'A..4).1"8;,_Sec. 9):, ., . hotite: to·'.th~in of. su~h _foreclo";:;tire··(G. Puyat & · · . ·. . . ·.: -, : .Sgris·v.-'Philjppine Na(ional Bant<;:'GiR. No. L. -·, Not~.:- The _,reden:,p,tion ·.1iice-,-foc.pr.ope£1ies . · ._: f6843;,Apri/ 30,"·{962).'~-. · · ...~. __ :: :;: , · ·, ,mo~gaged:-·-,:·Jo· .. i·Jiild:·(,fo·t~i::10~,e~.·;:~f~--t~~--l :..-· . ;1 · • ••• ;,'. • • ·•::'"'. • -··;',J ·. ·.; ·.. · De\.'.elopment :;. B{;mk . .-ot_.:_,the· ,:P.h1hpp.1_n·es·J1s ... "· . Ri'ghf to Poss·essiqn .9f Third _P~r:~orts· as equivalent·to. tJ:ie remaining_ b.alance pf the loan·: . Purchaser ·· .. · · . :· : · · ··--· · .:·· ., .;,,,' with. int~rE;)st. at,the·· agr~ed i'Pte; ·Thet.chart!;!r;iof··. . Th~ p"urcl)as~r.in.an. ~~tr~-Judic·i~IJo'r~~lo~_ure.saie is· · . . Q.13.f? '(E.Q.: a\ (1_9.,t36),, as~:air)eh_d~c:l:.~Y R:-!\ . ·en.titled·to",th~ po:Ssessio.n:·of ihe-·.property .and can,.-·. :· - -, _-: . No. 8523:); pemg.;,~\~P.~~ia!'-art:d:.sub·seqo~nJ;la.~,. . . dfuniand ihafhe'be:;p!~ce_p. in .pos~·essi0h;9f th_e s.ame-,-: . _ ·amended Act Nq: .3135 _ir:,sofar_ ~s:. redemption ' ". eitber··du.rtn-g,,'(w,tp. bondf or' af.tet · the:- .e~pir._ation .· . . - pric~. -i~ :COJilC~~Qed j(!),eve/op,:n~[lfB?ri.~ of.~th~ . ·, '(witho.4t/bond.) :of;. thi r~_d_e_mpti9r:r"-p/rbO·. th~r~fo~ - :. · -- _. p~ftippines y/E~,;;_jr~nm.eo·(~l.'Aqµ_ati?, !n_c.-;·G.iR. . · (Sps.{Marq'cH§z··v,: $ps~· Alindog; ·G.R.
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-cR:EDl:i-: . TRAN·SA.CTl'CfN:S:

. . '. ' . . . : SAN BEDA LAW CENTRAL/ZED.BAR .OfERAJ/ONS::·"!fEMOf1Y AID '2019 . . . hff2!& f!iW?iSS¥i!&-:"4ts;r~n,~;5!*' ?4E14, J#5E! :--041 :a 7!2: #:tM$i.$:t&% t4:y&ittn'1:tf4#t:M:t iPWR¥tH@i·» DNS!ffel:tc, et1fl'.ll'Z r

.7 of ·Act.No .. 3135. is posted (Philippine. Bank of Cqmmuflications v. Yeung, G.R .. No. 179691, 'December4, 2013) ..

Rea~_i:>n: Until'th-e for~closure. sale of the prc;perty_in questio~- is . annulle_d . by _a court competent . jurisdictio[l, -the m,brtgagor- is ·bereft. of vcilid title and .. ' right to· .prevent the. issi.Jani::e · of -the· writ· ·of . After lapse of ~edernpt_i_c;m peri~ci ( possessiciri ,n favour o.f the buyer (Yulienco Court' . Purcl:laser is not obliged to bring a :separate ~uit for of Appeals, G.R. No._ 131692, June ·10.- '1999). , . ~. ."·. ·.· . . possessio_n.' He must in_yoke the aid of the-courts and When Writ of Possession is NOT.Available,:.· .. · ask eiiher _ for a writ of posse.ssiori or bring an 1. :_ Where .mortgage~ : property. uride,r:_·· .lease : apprqpriate indepen9ent action; such as a suit for .• .. previouslyreqistered in Ihe.Reqjstry of eroperty · ejectmenf (Javeiosa v. CA, G.R:.' No. 124292, .-_or despite .. non-reqistration, the-rnortqaqee has Deceinber.10, 1996). . . : .. :, .. ---~:- . .' .. .prior ki:iowle_dge. of.the existence.and duration of Once title.to.the property. hasbeen consolidated in . ·.Jhe·lease (tbescov, Caguioa,: G.R. No. L-132619, ·. the.buyer's !lame upon failure 'of the mortgagor to . . ·.A.ugi..rst 1ff, 19,86);. . - .: , ,:. -~, : ... :... · feq'eem:the·ptop'ertY within the 6'ne~year'redemption . 2., Where rnortqaqorrefuses' -.to ·$.ummcJ,erproperty period, tt;iei writ-·hf possession becomes a matter of· · sold;. the .remedy [s to fil~. an ordlnaryactlor, for, ,, .riqht. beldngin"g -to" t~e :b'1:1yer. Consequently, the I. •. : -tha.recovery _'l)f.-: poSSElS~iop,:ir,i',or~_er: ,t.b~t. t~e:'··. · , boyer_ can "demand possession ofthe property at , ··· _ ; mor:tga9ot rn~_y.be given,oppo~un.i!y.tq.p·e,h~ard · anytime, Its right to possession has then ripenedinto' , .JDE-~EO['/,:sµp,:a. at 580); or · -., . ': . .:-.· . · ··.the ·right of. a· confirmed. absolute· owner and tfi~·, 3. When,thir9 party is lo actual possession adverse · issuance of'the writ ·becomes a mlnisteria: functierf . to the: judgment .. debtor. (RULES .. OF CQIJRT;· · that does'-no] admit of ·tHe- exercise .of the. courf _· .. Buie 3~, _Se,c.-·35;Ac(.N9.:3135.S~c ... 6). . . discretion (Naf]lalon_ v.' UCP~, G,R N_o: 112504,·Uu/x _ · ~ 4; -W,her,e :purc,l;lase 'price, is. _gross!~ inadeql!ate._. 31, 2013). -, ; ·.· : · · .. '. ,· (DE L~ON, sup,:a.,at.581}.;, , .<· , . . . , . :.- '. . ·. ' . . . . _ . ·.. _ _.. . , · _ . . ... : , ~_. 5. Whe[.e 11}0.rtgag~e . fails. t~ . ·,pay.-; sffrp_l!,JS to No bond 1s requ1(ed ·of th~ p1,1rchi?ser. "af!er the · mort~agorc.(l_d.):, · · ,.·, . redemption period if th~ pfqperty is· not rede_emedr . \JVaiv~r of Sec_ur.ity.- by ~ortgag~e ·· . , .. · . .:-;:"" '· .(Sps: Espiridion :"v. ·CA,, .G:R. No. ·146933, June .. The mortg'.#gEt \ay i~stltute ,~~\per;~. P,e~son.~1. action . 2,006).-~·t·, ·:_: . · .... , · . :-'~ ·: .· : ,.,"' · for, de.bl a e~~f ct1c;m to foreclose. the ·mortgage. · . Rea~on:
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·:. prop·erty_has ·b~cor:ne.' ~bsolute. so. that ne li.as4be·--~-.Options in Case .of. peath o(Debtor. .,- , . right to b'e_ p9qn pos~ession thereof which. th,e,co'urt GerieraF"rU'le:. A, secured· ,creditqr holding·'.·a·· real !TIUS\~id _in'~~.<;:tin~· (Sps. E_~pirldfO(l ':··'G:~\ No: ... estaJe morfga'ge -has• three :·dts°tin¢(.: independent,.: N69?3;--Jun'e S; .2006).:-._· . · ·•. ·-·: ·· · .. ·""!11"7 .. · . arid.-: 'niutuaJ!y . ex.clusiv~ . re'n)edie.$-· _that· .can·· be -

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. . -Ttie is.:ii'uahc¢; of a-writof j).0$5-!cl_ssion. in f avor:cif _the. . , .pu·rch!,!S8f.Qf ~(1 ex.tra\ju,diciall/fo,r"~clefSed pr9perty • con'stitl.ltes·only·a:n:iinist~ria\ ·q_uty_.ori the· ·plrMf the · _ co'tfrf (Sp$,' .:Ma'r'qai}z:.-}L_-Sps.: /l,fihdog; 'G:_R: No. .C1B~045, Jiint/aryf22!'2014}'.- · .. :·•. -· ·-. .. ·Exh~ption: _l)nl~ss a.·tJiirtj·party·is.a_ct~ally. holing . the prbperty'·b_y'apverse title:or right (RULE~:OF · · . CO/jRT, Rule' 3§}/ $ec. 33t · .. · .. , :·.: '··: ·

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... · .. .lnjunctiori·N<;n Allowed. . ' . . .. ' . · Injunction ·,to )rohibit ·the, [ssuance of -the W~it of. Posses.sior\ is .no.t allowed· (Ma·nalo v. CA, GB No: · . 141,297, October. 8; _2601); just·as.·a. pending. adio'ri · . for. annufrrient· of. mortgage or for~closure does. not - stay :the .{ssLi°ance. of. writ.-of possession (Baring ~-. · Elena ·Loan and Credit Corhpc!,ny, Inc.,· ~.R. No. _?24225, August 14, 2017). · ·....

..a1lterTn_ati.Ye_lY.J~tuhrsuedtiri,~~~· 1~~-lrri_~rtgtha~or·t?iesd:,.'b't ·,.' ~ " 0 'A(~11ve ~ ga9.~.an,,·/ 91,1;1 .- e en,ire_ .• e .. : . . · . , from the ~state :of. the· mortgagor; as an· 9r9inary; . - f. : 'C!a.in:;·, •. , \ \ . <· '· · ... · I .• ·· 2 .. ff.O for.eclosejhe: IT)Orlg~g~
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· Petiti'oii .. · fo:r Annulment of Foreclosure ·. P~oc.eedirigs · · · .. . . · : ~ ~-' . · 'This petition. conte.sts ·. the ))r1:sum~a . riglit of . - ·ownership of the buyer in a foreclos,ure· sal~ and:puts in ISSU~ suc;:h ·presur:n_ec! right, bf ownership while an. ex parte petition for.:is·suance· of a ·writ· of posse·s·sion . is. a 'non-iitigious proceeding (DE LEQN, supra· at· 582). . . . ..

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CR·EDIT.TRANS·ACTI.ON·S .

SAN BEDA LAW CENTRALIZED.BAR OPERA!IONS - MEMORY-AID 2019 .,»

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. , Filing of a -petition for nullification of- foreclosure . proceedings with, motion for. consolidation 'Is not allowed.as it.will render nuqatorythepresurned ~ight of ownership, aswell as the right of possession, of a buyer· in a- foreclosure sale (Id} · ·

Reason: To forestall the use-of antichresis for · purposes of usury · (DE__ LE9N,, · suore at 598599). . · . · ., ·

3. Nominate - it has beer) given a specific name by

the Ci.vii Code; and· ·. . -. . . ·4 .. .Qbnsensuai -'-·the Civib Code .does. not require , Remedies of Mortgagor after Foreclosure s~ie delivery _of the immovable to the creditor (Id. at. 1. Tt,'e 'preliminary step ts _to ·file a terceria '.(third 598~599). . . party claim) or an affidavit of. claim with the . Sheriff. implem·enting the -writ. By .(e'.ceria, the. sheriff. would ri6t be bound to keep· the property . ., ·special Requisites: .. · . and rnay.be-held liable. for darriagesJfower· . 1. It cari.cover only the fruits of_ an immovable Sector . Asse"ts & Liabili(tes - Management ' · .property but notthe immovable-itself (Id. at 600);· Corporetion v. fi:1aunlad Hornes, lq_c.; G.R. No .. : . · · ·· · . , . · . 2 f5933;'February a; 2017). • . " _ .. . t•fot~:"Artj!;le ~ 30_6· of the. Civil' Code gives parties 2.: File ari independent civil _actio"n · to nullify the tbe freedorn: to . stipulate. otherwise. . Th~ fcjfeclbsure 'sale on: the grollna·' of failure to , reduction of th~·amo.unt of fruits available to t~e- . . corn ply with -the requlrernents- of 'auction sale, . creditor does R~(vary the nature of·the contract (ACT N<;>. 313.5, as arrie_nded by R.A. ~ · : . · .. ·. · . · ·..

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~etiti~n- t.inde/s~c:: a··af. A;t. ~_' o. 3j§§ i~ IDJlivi~~f}beimmovable is necessary only .fp( the co~rt whi?.~, Issued. the writ o_Ppq,_~sffe:>~ !Qe cp:i.5.!J:t.0~9.r~c~1ye1ttie. fruits and_ not_ for the set' aside: the sale __ and can:'.2el fhl'e/ wnt of· · cq~9_5:t~o ~,b_1n.a_mg (Id.), . · , .' .: · .. -P~.s~essi_on,· 1t _r:nust· be·'f~~~dr.n_ot~1er11J.g°"'.30-i~ .. 3-~·m·o~nt ...~f- ~J!{'c1p_a1_ and. interest must be Qa_ys a'.ter the p~rchaieJO"."r,s· given . th~I ~~ W -~~1fTh! . ~)1.t~, Oth~rw[Se, _'the contract Of poss-ess1on of the property (la?)¥ , ~ 1& anti~hres1s'fl}al\ be v91d. (c;;IVIL C_GD,E, Ar/ . /. . .· . . t..~'A-' · .. 2134j; ana, ( {} . : . .. · · .. . N~.t~: ~egardless_._of ,~fie~t ·ere)S pen 1119 4-.-J:~PTfS.S'. 9gree~nt that the debtor ":'ill _give _suit f9r _-ai:imilm.~_r.,t off-tn_~~~nlortgager .or '1:I t.2~P~~~~~s1_on fr"t~e yop~rty t~.. the ~red!tor: ~rid .;, ·: f~_~e9[b~\Uf~}~H~l.f:: the· Py.~Jl~}tI~ -~~titl~{(Jq_::'Jl;·; !ha,~the !at~er»1Jl1)1i~r;1y_ ~~-e-_fru1\s. t9 the,_1ot.~_r.est; . ~~It of pqss~ss1on, ._.y1.t~_ou~ greii:ia'i~~f.(~he~~~ : 1f,. a11.VEr};9.e.n.Jot~~ gnnc1pal of his cred1~ (CIV.Is eventl)al .9utcome of \~~::£}~_id_ ~~s_e_ ~~-hi rj~ C©~7:rt.- 211.32¥1:f. , ~·· · . . :-_.. ~--- · _Constr.uctron Corp .. V. BPt, ·CSR .. No(!; 76871~ .• Juf)e 8,.20.Ql).. . . ."{f.>., ~till . '~ ..L~~8~--~~1.en.ce·_o.f tris 41~ r.~qµisi~~· .. th~ ~~ntrac.t_ '· · ~- - . · · .· . )' _ · ~cf11 b-~~e~me_d JQ be or;ie of, m'ortgageJOiegp · R~tf~hale: allow ··the. urcli~s·e*.' . _f_%na~ndo/ G.(3,; ,N_o. -L}5128, ,4,ugus{_ 2~, . po:5ses;sion of the--.fo~~-clo_;,e~operj:y "'.'j!C_?~f~ ~60).~ •.:~··_. ._.~: . , ' · ~· .. . delay.fo_r suehJ>os.se;,s10.n 1s founde~i~ist{gh~- ""\\. ·J, . .:;,. . .. ·· : -·· .' : . . . . ,,, . . . ·, -_-· . of 9~!')ership·(DE.LEON, supra al~a~UJ. .. oi~ne .. obhga_t10n to .Pf!Y·.m\e_r!:Jst J~.'IJO.t)~e · . '.• . • . . ·• 1 . · ,. -"-...~ : · IVl ("\.l.e!i~E:J~ce .. 9f-.-th~ .. contracJ ·.of, ant1chr~s1_s,. _ttiece .. : -: .. · .. · ·. ·. . •. -. ,.. , ~lng nothing · 1n· the· .Code · to show . that ,. . . · .. · . \: ,:. · .. ,· .... , C: > :.· . · antif\1fesi;,_. i~/onl_y ·applic_abl~ · tq .!S~G_u-ri.nfi:th.~:, . A,~TICH_RES~S. - · .1·, pay_ment of.-:inlerest-~e<J~ing· lo.in~. Or:i t.he· · '· :. · ... (AR-J'S. 21,32-:)?139).. coritr~ry.\ a~tic~r:~sis_·'._ is . su~c;;e~tibJ_e- . qf . · · , .. .: .· ,. · : ... ,·· --. . . ,· . . gµ~r_ar.i!~!:lll)g al! ·kmds _9f. .obhgat1on~; .vyhe.th.~,r . . ., . .~ . . . .. .. . _. . .purn :or, concJJtional. i{l · natur.e (QE- L.EON;"slipra · . · .Soritract _qf Antichresis_ . . . . . . at 600). . '· - . . : . ' . A co~trp~t- whe~eby th~ creditor .acqL,J!r~s. thf:: _rjg~t to . .,... . cec,e1ve. the fruit~ of. an 11:nmovable-·property-._of the. · · Mortg?g~~Jn. Poss~ssion : .· . . . . ... - · de°l:!.tor,. wjth,: ihe. <:ibligation · to, apply. them·. to the . Orie.w~_g li~s layVfully a_cquired.J!Ctllal"o~-constr0ctive· . P<:1Ym~nt 9f tbe. interest; i_f owing; ancl th.~~eafter to . _po~session .·of. !he premises under. an.· _inyalid .. ,the principal of his cre_dit-(9IVIL CQ.DE, ArL2132):, fofecl9sure proceedings; .standing.up0n :hi~ rjghts a_s ·m.ortgagee· ~nd riot claiming -unqer.:anotne( titli,dor '_-:char~c,teri~tics: (AF-NC),-.: . · ·:·. . .. · . · . · . the purpp~e·; of,;enfotci,:ig)1ii·-.s~curity_0\ip6ri· ;s.i,f¢h 1. . ~ceesso·ry - :it..secur'es ·tre performance of. a· · pr.opertYo~ m_aking its incifme. to pay his .debt (D~ego princip~I obligation;· · v. _Feinanqo, G.R._No.· L-;1_5128, Augusf;25, ff/6()). ~ 2.: .Eorinal:.... it-must be: in a sp~cified.form to bevali1:f r. i.e. in·writirig (CIVIL CODE; ~rt: 2~4). · His. respe~ti~e rights. krid :obligations.·are. s.irriilar .to, .. . ,_ ...i . the 'partie~· ih ·a co'n.tract o{antrchresfs,.such·:lhafif - the" n:io~gagee acqlikes 'POSS,~ssioh-: in .any. 1a-.qu1. 3:

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manner he is 'entltled to.retain such possession until : . the indebtedness is . satisfied and the property · redeemed; that thenon-payment of the debt within the-term aqreed does not vest.tneownershtp of the property in the' creditor; that the· general duty.of the mortgagee. in possession .towards the premises is . that of the. ordinary prudent qwnef; that .the .-·mortgagee must account for the rents artdprofltsof . . the land,: any amount thus realized going towards the discharge .'of the mortgage':'g_ebt; ' that .2if the' mortgagee .. remains in .. the possession . after .. the ' mortgage- debthas ·beein satisfied, hebecomes a tr.ustee for the mortqaqor _as to the excess ofthe rents a)'ld profits over ~uch debt'(Dia? v, Merideiona: . · · .· 'eta/.,· 'G.Ft No. L:,2~82,4, Ja_(l~ary 1~?6).:. ·. ·, .

The . creditor., . .'' unle~s- The c~editor ha~'no s\Jch· \here is.stipulatibn to the· obligation·. . c;ontr9ry, . is. oblig~d to pay the ·. taxes . · and . charges upon'the estate. ~. . . :.' . . . .... .. . ( . ..;.

is' no such It is expressly $t1p.ulated There that° the creditor given obligation on part . of . p 0S~ession · .... the m~rtg~_gee . . property : ..$hall apply _all th§. fruits· tli.er¢of to th~ .paymeht' i~terest; if 9""'.ing, a_nd thereafter to 'the principal,.

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inclebtednes\ must .be returned to the lenders .. b~fojt thfborro_..y'ers c~u_ld·demaQq the returnoft~.P.!:,9.1?$!!-~...~Qicr.-~s contraryto an antichretic . . . conta_c~_wh~~fi~J~.e products ofthe. Ian? s~ould · · . · ·. : be apphed,to·tfie interest and then to pnns!pal; . 2:- . The. use ofthe term "mortgage" in various-parts . . . of the. contract; .and . . : : . -. . . . 3. The_agjeem~nt that· the· lenders are not t.9. pay. ~1-----~·renfals on _Jhe property in .conslderation of, the factthat the borrowers do-not payintereston 'the. \um wh_i.ch they obtained.as ,3° loan '(Id: a(603): · '

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The· actual. market value· of. the fruits. at the .tirne of . . application th~_reof to the.interest.and principalshall be the measure o( S!JCh application. (CIVIL. COf?E, . ffrt. ?1.33). . ·. . . . .. - .. :·· . Rights ~nti~hretif ·credjtor: . . . . . .1 ~ T!le rig!lt to. the. f~uits and income ·9f the ihing (CIVIL GO£?E, 2~ 3~),:. · .. . .

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dedito( a~qui"r"e'i. c·~editor .. doei/ n.ot ti~~e· . th~ .r.ight:'fo rece\ve.. _the :aiiy.(igt)t to '-,reciive .·the . 'fruit~ of the R[6per(y;. fruits; but. th'e mortgage fie nee, it ·. :does not 'C(~ates· a. real' right"'over produce real .rig tit' ,· •the- p~op~rty .. _-;. . .

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_The_ .. pr_operty ·. d~)iv;~red· ·;ta~d~ .as ·a s·eqirity for the. payment of the. obligatipri. of the · : debto.r in .antichresis .. (M9.capinlac v." ··'Repide, . GR. No:-1.857,4, -s"eptember_20, ·1922j. ·, · - . . .. : · ·

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.. The antichretic debtor's complaint for recovery . of possession .·of .the jeal 'property gi,vert ~s · security must be dismissed if. debt has not been- · _totatty" paid' (Sos. R·e.yes 'v, Heirs o( Melence, -. · (3_.R.' Nd. 2.19071, Augu§t 24; 2016}.' . ' .· . '·: ·' ...... ··. '· ... : ...

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MEMORY AID 2019

Remedies. of Creditor in Case of Default· . If the debt is not paid, the, creditor does not.acquire ownership of the ·real· 'estate, since what .was - transferred is not the. ownershlp.but merely theriqht to receive fruits (Civ1(::_cODE, Art. 2137; DE LEON, ·supra at 605-606). -:

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t...Jote:· A.It. provision~'.' on: ~fiqtte1,·_A.1qrtgage =!_a7.e · · · repealed: by, RA.'. 1.1 (}§7. o! .o,tf]er0its·e. (IJPWQ·as~.tti~-:' ,, Pe.(~.qoal · P(9perty . {iecµrity A~t (f?.P.SA) ·effecJ~'(~' ·

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. 4. To ~eri'c!ef :an 'acEdu~t--of :th~';fruits to· the debtor (Nedet v. CA, G.R. No. L-46623, March 4, 1994).·


_act, hq~e/~(,_:)c.~JJ b.8: ~cinrf (tion!? · ·u;:/)/}.. t~/l . R_eg1s.try_ be1ng'·estab/J_she9._ ?,nfi .9p~tcJti.on,~I· .un_d~r. · S~c, i _of th_e ;P.f S/J. (f;.A: ·.. 1.1 Cl§!, -?,fC.. 68r. T_fie1 . lmplemen~in_g ·Hul~s J!nd Re·gulatf.~_ns ;.Of .Pf.$.f\.,.-. . likewise, has. nqt b:een,)ssue.i;f of the' date or- .. prfn(~fJ9 of th~s Me'rii?jry°'Aief. . .

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Properties Held· to Be Mortgageable Under. · the Chattel'Mortqaqe Law: . . a.· Share's .ot stock in a corporation (Ferro . . Ch'emicais, Inc. v. ·Garcia, (3.R. No.' 168134, 6ct9ber 5, 2016); ~ · · , .

.Contract of Chattel Mortgage·

. A. contract by- virtue of which personal property is recorded . in - the Chattel Mortgag'e Register a? ·a security for-the performance of an obligation. (CIVIL_ G;ODE, Art. 2-f40)-. . .

..

. Note:.df. the· owner· of the shares is not ' domiciled in the. same province where the . : corporation is domiciled, the reqistration -. must be made in both provinces (DE LEON,_ '\. - "suprci 61~}.: ..' . .. . .

The definition provided, by, Sec.: 3, Ad No. ·1508· i~ considered inaccurate because a chattel mortgagee, . i's. not entitled to- the. rnortqaqe of the personal property as the chattel mortgage is merely a 'security . for the-loan'(Serra i/Rodriguez, .GR. No. L-25549,. · Apr/(22, 1974/ , : :' · .. . , · . · ·

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( Note: If the' movable; instead· of .being recorded, is delivered "the· :creditor 61" -a' ;ihird person, the ccintract· is'·a ·p1e~~e· aA'ci ·not -a chai:tel;mp'rtgage (CiVIL CO_DE, Art.721_~Q).. ''· :· .. , '; ·

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. Fieason:.1lis:a-person~1·prope-rty capable. ot appropriation (Laure{' v, Abrogar, . GR. No. 155076, -F~bruary ?7, ?006);. :· · · ..

Characterfstlcs: '(Af..UN) ''. . . ·: , .; 1 ~:· ~ci::essory -·it is for the purpose-of securinq .the . , ·. 'performance of-a prlncipal'obliqation:' 2. .Forrnal -··registration in- the- ChatterMortqaqe ;: ··-Register is lndispensablefor its vatidity; · · · 3:: - Unilatera' -': it· produces only-obliqations -on '\lie -. : pa_rt-of .the creditor to free '.tnE(thin·g.:from _the . encumbrance upon fulfillm~nt of the obligatic;>n; '? 4 .. -~Qminate - it. is _given_ a specific n~e bY, the.\_ 'Civil"Code (DE-LEON, supra-at _609). ' .: ' · ..

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. · • c:.- .- Machinery tniated ~y tbe parties as person?I · . ·p~bperty. ·sub~e~ueritly installed on leas_ed ' . land (Davao :-Sawmill· Co., Inc,· v. Castilj9, .. ·G ..R No .. 40411, August 7, .n35, see also ·. Provincial- Assess·or of."Agusan' ae/·'Sur v. . Filipinas • Palm' Oil Plan.ration, GR_ {Vo. 183416, :O
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\/~Sfe11 but '.it_ is es?_en°i_i~ that' the m~·~tg~ge is· reJorded · 1h the office of· the Philippine ·· ccfas $~ard of'the port of_docu111en\ation of 'i.5~ch 'tes$els (P.b;:'15?1); .1-· · .··_, · . , . 0

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2. ·-' Civif.Code· · · . __ ... 3.' ·Revise"d Adtn'inistraii've .Code· '<. N_o.fe: The)ilortgage must also be re~istered -l~evised Penal C.ode·; and. . .· : . ,' .. ·.. , · . in the LTO· and .wi.th~ respect to vehides for . s·.. Ship- Mortg.age. i:Secree'of'1~t8, p'o. '1521, in . QUbii~ se.rvic\:)S, the mortgage. must be - case of mortgage: of vessel~· of aomest:.;;ic_.._ __ ..,..,._ ..... ar:ip~ove,d by·ttie nFR_B.:to _make it effective . . ow_n~r~jl'lp, (Jg. :at.-6_1',?f' ,. ' . .. . .· . ··.' againsf •-the public. ,arid' the 'Con'Jn:ii,ssion , ', . .. . . ' (Montoya · ,,/:: Ignacio, . G.R:. Nd; L~5.868," . ;· · Sjl'~cia_l R_equisites: .. ·. . . . December·29; .19'53). ,.. ' · .- · .. ·: -. · 1 .. It can cqver .only per.s~nal ·or:.rj19vable, property. · · · ' · · ... , . , . _ · , , . , ·. . . .. , _. . . ir,;geri~i:~i- ... H~wev_er..-)h~ parJies:.ma(tr~-?1t- 8?.. .-.- .f. ·. House .:o( 'mixe·d. matefrials .· (Luna· v.' . ·. ·p'Efrs_on'af·prppe_i;ly i~a.t whic;h _by its natyr~ .W.ou"ld . Encarnaaiori/ G.R. No_.. ··.L-46:)7, June .. 30, tj:e :re'aJ · _1Jrop~rt'y _ (QiVIL. CODE,. ~rt;· ..2140;, ·Apt,-1952}. _, ,filo . ..1508,.S'ec.,°2); · :· · · - · · · ·· · :" · ..... ,_;-, " ·, ... •·'. · · ,, . .' ; ·' r-. ' .· • I . ·' . . "·. .... 1, • .>:-.,.·. ·. · · ,. _.. · . .· .. :- ·:····Hbuse.:,ih!ended···,to· ··be :.dems>lished (OE Note: A real ·prqperty may ..be· -~ons_idered_.as c( · LEON, sµpra at-615);. . . \. ·p,er.s.onal ·prop\:lrtY, putpo"se~ ,of. exec~ting a ... ~ ·.. . . .. ct)~ttel rii_o'rtgage thereon. asJ9ng_·as :!He pa"i:ti!=)S_ Reas·on: Whi:!t~are .re9lly "rri"ortgage'tj are. the •.: . to the. con.tract so. agree anaJio-. inbbcent -third 'materials thereo.f _a.nd they a"ie.· ft)erefore;· · · .. ··. ·p13rt( wi)I . be jreju~.i~~d. the~~bi ·9pc( ~he ·person?l ·property° (Id. ~iB15). . . . . , ··_ partie.s .. $0: agre~p,' they are ·al(eady. est9pp~d. __ ~ .. ·;J: . - , : ,. · · · , ·. · ··from: clairri"fng- otherwise.· (Mak~i( Leasing, and . ..' ·h .. -House puilt on. rented .l~nd"(id:· at 615); Financial' Corporation. i( Wea(evei,.r~~((le Mi/It;;. . . ', . . .. • . '.' . . . ~- " . ... . . . " . Inc. G.R. Na.·{-58.469; May-·16, 19"li3, see'also ·. ,·· 'R.~a'~~n: .It ·does n~t fo·r~· part of .the l~rn-9. · · Serg.'s., Products, · Irie. v. PC/ Leasing~- and . An"cibje<;:t. placed on· lq~d by ·one ·v'{h~ h~d Fi:1_a,nce; G;_R, N_g. 13_7_705, "Jwgust ~2 •. ?O.OO). . only a. temporary right to th'e:'sa'll)e do.es-not·· · becbri1e 'immobilized b.y attachment (Id):' , · ~·=- •..

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Machinery which is movable in . its natureand · becomes imm:obiliz~d .. ·only· by . d$stination or purpose~(Makati Leasing and Finance Corp, v. W~arever· Te.)(tile_s Mills, and . Inc., . . G.R. No. .. . L-58469, . . May 16, 1.983); . .

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· H:Ouse of stro'nQ materials (DE.LEON, supra at 616);.

Note: Although the parties to a contract may treat certain improvements and crops as chattels, insofar as they are concerned, it Is now settled. in . our jurisdiction that, in generai. and so far: as the public is concerned; such. improvements, iUc1lling under the provisions of Article 415 of the Civi_l : Code, are · immovable property (Id.). -, , As· a consequence, a mortg~ge constituted in the improvements must be susceptible of: . _ 1. R·egistration as c1· real estate rnortqaqe; and ... 2 · Annotation on the certificate of title. to the I.and of . which they form part, although the Jarid 'itself . r11aYi not . q!?_. subject ,,t~ said. e,r;ic.L!rnberance (I[!lent[r10.y. -Beltszer, ·G.R, ~0 .. L-14597., ,fi(far.c~ · 1961, ·see afso Mentepe: v. CA, G.R.'._No, 1255.85, June 8; ?005). · · -· . ·

Note·: It may be' _considered as. personal property;for purposes of executing a chattel · mortgage a_s long as: · . i. The pa·rties·ta the coi:itrc!Ct agree; and: · ii. No innqcent . third · person will · be. . preju~_iced thereby .(I.cl.): . , .. 2.

Reqistratlon

of .the m9ctgage_·with '.the_.Chattel

tr,-,

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.. Mo~gage· · R~gister ""'.here ·the_ mo~tgaQbr . . Extent of Chattel Mortgage~· , .· ·· re~1~es .. If- the~prop_~rty ,.s-; located ma. diff~~ ch~. mortqaqe: shal(be deemed to coy_er: only prov~nce, reg1_st~at1on m bo~tprov,-. ,ces is prol:lerty describ~d therein ara not like ·qr substituted _:eqwre~ (Act No. 1~08, __ Sec. 4), . ·. · ~n{perty_Jhereafter ac~~i.red ·_by_ the rr_,o~g~g9_c a~d platifd 1rt.he~· same depositary as ., the property .3. Des__~~1pti_0n: of. th~ property as~~~~·E;f.!Jblejhe _ " ..:...originally mortgageq, anythjng tnthemcrtqaqe tothe .... parties or..ott)~r,.pe~sons ._t1.1.~:·~¥,tti~af:1e 9~ cbntra"rY, no&ii'~hst' r:iding (Aci No: 1508;'-Sec. :7, Par. after reasona?le · 1nve.~~g~JJ~ni ,arid I 11:51u1&1 }. "'aT. ~ · (Saldana v. Phil. Guaran~ (Z,i!nc., No. If'. · ~ '"' · . "\ · . .. 13t°94, Ja.nuary.29, -19.6_0 r)""'-' ~Qt~::... e provi!i0Pci0es not.re~er ..to.those.alr~?d'y . '. . . · · _.· ~; · · ··. , . 1f:E;l'J,isting ~nd origipallt ~n~luded at ·the date· of t~e- . 4. Accompanied_ QY ~.n,affl~F1v1t-0J good.fa1~h s_tat~~JL~rfstitution of jrtgage ·(PE. !...EON, .suprf! at th~t thy ·parties · swear .tha«:j~e -~~age!i-.:1~'@.filf~q}9J,. . . . .' m~de for the pu,rpose ofl5~qmg-th~~~1 a ti.ans···, ,- · . __specifi~~ in the .G
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.. :Note.: · A · m6rtga.ge ~ont.aining a stipulation in: . regar.d t.o:f~ture··adva'nc.es ir:i tne ·.er.edit .yvilJ take .. effe~t only fro"m .the dat~··the.sarneare'.mad~·anq :not from :the. dafe of the· mortgage "(Jaca· ·Davao L.umb'er.·C.o,, G.R .. No. ·L',,2577.-1, :Maret,' .29, J 9{32j. . . , .'. : . •,

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1. · Both are executed Io secure perfqrmaoce of a ... · priridp'a[dblig~fioh; .... : .. ' ';, '.: ,· / . · ..

· Mortgage· of Irnpro.vements on Land . . . . · For. ~lJ!po?e,s, ;of/_tliei- :Chattel· rvtorti;iage . law,, bo°ih·. growing.crops and. large cattl~ are-personal property ~!though they are· c.on?ider.et.1 · as immovabl~ .under. Artipf~· 4·15i N(?s.·· (~). ar,d (6). of the.' Civil Cpde (DE LEON, $Upra at.617):-· . . :· • · . . .

698

-: ,,

~019 SAN.SEDA LAW. CENTRAL.IZEDBAR OPERATIONS

.2.. soih 'are constituted only on personal ·property;. 3. s6th are indivisible; ~ · ·.. !_ · _: : -': ._.. ·· . · 0f"'

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4>.Bcifti_con_stit_utfa ljen Ofl the P!~perty; ·· ·•· ·.. ·:. · · · 5. 1o·b-oth cases, thefcre'ditor. cannot ·appropriate · .th~. prefperty ia·ljimse"ti irr P..ayni_er:it of th~ debt;. ·s'.. lriboth 'cas·es;when' tti'e d'~b.ior.~efaults,\t-ie . p~operty.rnust h~ ·s~ld}o(the ·paymenl-of)he ·1·.· cr~9ito.r; .a~p .... _. .· ·. ·. .,· . : :. '. .. ;- · B9tl) 'a'n/ex.tingl,iisheq by !he ·f~!filJm_'?~t.of}t\e:. principal obligation or by' the destruction of the : propeity· pledg·ed or.rriortg
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-CREDIT; TRANSACTIONS .

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SA~ BfDA LAW C'E!'JTRAL,IZED BAR OPE~TIONS

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- MEMO[IY At0.io19

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in.nocent' third persons ·.is prejudiced

supra, at ~22).

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e1ces~ · . pf -. the amount doe· goe~ to the . ·~

LEON,

,

Venue .of Regi~tration:· . . 1. · If he.resides.in the Philippines - In the.offi'ce of · · the register 9f deeds of. the' province in' whkh fhe ··mortgagor -re.sides at the(tiri,e o(the .making ·or the ch~tt~I. mortgage. . ·· · . . . 2. If he doe~-not reside.in'the:Phiiippines - In.the province iri which the property is located ... 3. If the pr.operty'is situated in .the province different from-that in'wtiich the mortgagor resides - The mortgage shall be recotd~d in bqtli" provinces · . (double· re.gi$tr~tion)°(Act.15b8, Se_c, 4):. · .. . :, Effects of-Registration:, .. ,. · . · ·.·. . ·' ' . · ~· 1.- Creates -a real ri'ght'-'-. The.reqistration of the. ' chattelrnortqaqe . is, an. ~ffectlye .. and binding .notice -to other creditors of its- .exlstence and creates a rear .riqht .or a ·lie~ .which, -, b.eing recorded; follows the chattel wherever it goes. The registration gives· the mortgagee symbolical possession _.-(Northern.· Motors, 'inc: v. .Coquia, . G :R. No.,L'-49018, December. 15,.. 197 5): . . '. _ Adds;...nothir,g· to the. mortgage --~Registration· 'a dds; notpi1ng to· the. lnstrurnent, considered asa _, . source of title and affects nobody's· rig tits except . . as -a spe.cJ~of _notic~· (St~[ldard -Oi( of. fl{_ey;._

Tl)e ·registration·. ·af the Th~ ·registration in the· . mortgage ·in .the Chattel Registry of Property i~ . · ·Mort·g~ge · . Regi_ste~ · is· ·not necessary. required. by law.

Se_c...)4). .....

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.York. v. Jararrullo, :G:R. No: 20329; March-.1.6 · 'i923f . . \ . . . . . ".· > · r, . . . '

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.Wit~f>~~~~~t inh~.c~n~ ~hird ~er~·on ~.Th~~· ·.-registration aoeSjlOf bind innocent purchaser for vcilue:"d~_9.li.Dg,.with the .mortgage'd. property. As . far' 'as·,they. .are ·cbnc!:lrned, ··thefe ·. is ho 'fien. l:he ·cr~eiitor \~: e~titl~d· to' . . .. recover-'.. :-- the deflciency :. fr.om· . ttie' debtor except if ·the. C_?att~I · .rnprt.ga~~ is. a s~_cL,1~1ty _.: . , (or , . , th:e . rui:2hcise -of pe_r~o~.al . property in installments

(CIVIL 1·484).

CODE, . , ·

The : creait6r .· . . · covering such- property. . :· ~ ·.. . .. . . entit1Jd . to . . . : . · .. : .. ·. . . . .· . . . ... -: . .. .d~ficiency . ---Eff~~t~of~Faifunf to-:Re'gister·Ch~ttel-Mcirt:ga'ge 'ln . nbtwlt~stc3:ncfo;1g.· any .-the:Cha~el.Mortgage-Regjsfry . . '-~ . .sttpulation -~d th_e con rary .· .. the. mstrument is· not :recor.91:l.d; the 'mortgage' is , (CIVIL (!ODE,,Art ... 5); ~ev~rtn~l~s·s abindih~ · _between· the-' p~rtie·s (BE · . · · . LEQN, supra at o.22}.,However, the perscin.irr'whose .... favor the Jaw· establll:,hes a rhortgage'has· no';other: Art. right thah:'to:dem:c1nq the e){~cution arid the·re,cora)n·g. o.f.Jh.~ document · · · · ,_ · ·

't·

21'1

D_uty of Re~i~t~~;~f,,Dee~d~; Minister;~,:. . 'i ,, · .. ~ , .' ·• .. · .., · . :· The·dutfesic:i{a:register._of cJe·eds lrrriisped to t11i. .. . .~r.ealion of A.;Chatte.l'Mortgage regisJration of _-cl:fa_ttei. mort~·ages of ·a purely: , ·. T,~e;law 'provi_des:only for one way: ttie registration · mihis_terial _c::haraCtE:_r·_(ld:·' al.'625)': ·• . -of J~7. personal pr?pertx ,ii:i lhe c6attel Morigc1ge . . , .·, .. - ·· · ·· . · · -· Reg1s!er as security· for the periorman,fe of· the D_ebt Must be Current · · .· ·. · · · · -· · :· . , obligafioh (CIVIL COD_~,:A_rl.. 2140) .. · · _ · . . . - · ,. The-debt r~fer~ed to .in· the\:iv/is· c~rrent an·d n.6t an. . .... . .. . · . _. · obligation_ th.at is m~re1y.contempJafod: mortgage · - _'p,eriod .. Withln, whiGh'..- Regi~tration ·-Should ··b·e . . _th~t:. ~ontains a _'stipulation._ in r.egarq ·• to future . Made · · · ..·.. . ·.· . adyances·in-the-credit'wilH~ke effe~t only'from the: l}e~~: is' ~~ spec.i~~ tirn.e. The .law ·fs .sub~tantialiy . . date.the sam~rnr~ made·and ncitf(OITI the,date of the ~~d suffi_c1ently com_plied with .wher~ the registration., ._. ·m_ortgage_ (Jaca· ba~ao Lumber Co;,' G)~. No: L~ .1s ma~e _bY.}he r:nor:tg~ge~ ~efci,re the m<;>rtg,iigor ha.s · 257.71, March· 29; '1-982; Marquez v. Elisan Credit comphed'w1th his principal obligation and right of. Corp .• G.R. No. 194642,_April 6,-?015): -, · .

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(R:EDIT TRAN'~ ·SACTI.O· N. S

, . . SAN B_EDA LAW CENTRAUZED 8ARqPERAT_IONS -·MEM_OkY AID 2019 0

. . . the proceeds ·.of the sale of the 'property 'at a· public auction .. throuqh a public. officer in Jhe rnanner prescrlbed in- Sec, 1'4 of Act' rsos . :(fv1filj9t1ey v: T~ason, _GR. No. :14129; Juli3D,

Registration of As.signm·ent of Mortgage There is no law expressly requiring the .recording of the as~fgnm~nt of a mortgage (D~ iEON, supra at

624).

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2. · Private Sale There '.is nothi_ng illegal,. irnrnoral.. or aqainst : public order . i.11 arnaqreernent for.the priva.\g sale of the personal properties covered bythe chattel e· :_"rn9:[tg~g¢ · (CIVIL ·.cGDE;. ·:flrt.' 1:3DpJ.'· T~e 1991)-.'. , . ·rrrortgagi:fr °is::1.n estoppel IQ question itexcepton Financiai LeasinqUnder the Flnanclnq.Gompany the ·ground of fraud .. or duress (Philippine· Act of 1998 r ••• -· Netionel: Ba_nk · v. : Manila tnvestment & A finance' company purchases on behalf of.a cashconsuuction- lnc., · G.R .. No. -.L-27.132, ·f\pri/. 29, strapped lessee the equipment ·the latter wants 'to . ·1971): • · · · · ·· · · buy .and then leases the equip_rri~nt1!g the,,less(,'le. ih. . .. ·. · ·\: ..::. · ", :- z • z," . . • ..•. '. ·, • ·• • . · exchanqefor tb_~ latter's,, p'eri_o~ic··pa~~-i':l°nrofa'fix ed . ; · :-"~ff?!~~-·for~clqsu\1? -~?i~s)1'.a.Y, ·b~ .. i_nitiat~·a :· e~en amount of rental (PC/ Lea_s_mg ·and 'F1na'(Jce.-Jnc. v. . dunn,g my~lµntary proc~.edings as.lonq as_ leave .Trojan tytetal,- G_.R. Nb.. 116381, 1 December 1f&... · ·: ......Js ~r~t.9\:?t~i~·ed,frpJ:1 \h~Jtis91v~_ncy court (Roye! ?0·10). : . , ·, . ·. _ _ _·/~_ . , • '.A.'1_ Go~-.efCl· ··:.; ·• •. ·,_-:-·'_,.::·. buyer·. i~ :a~quir.ing, m9v_a_ble,~prqpei'ty· .(P~J.LeasllJ[! · · -~a~er:s· ~--b_Jf~ste~bl1.s.h~_<:f .to ~t!~~tF~m;·c.1?~--~re . and. F1ranc~ Inc. v: Tm1an Metat(G~~- ·Nof.J76381";"""'~,f.'.a ·1~~~~e,x1W:~~~~f t_he c~at1:eJ mqrj~clg_e_; ~-nd. _ · : Decern_~~r.-15, 201Q).. · .· -~ .lQ) _)._;:,·· --Zr. _T,h~i·':1_ '_9_ri~.f.~.~-~d-efa_~lt·pn tne,_?bl!gat.1onJQE 1l . ~ ~EON!,SUP.re a_t 6:37). . . . . . : . · Exception_:: .If ... the~,--movable"-prop~rty -aJr.eady·

Note: The assignee is· bound the, terms and .,. conditions of :the·, chatter mortgage. ·executed ·between the· .mortgagor_ ari_d :th~· mortgagee (BA F,naf)ce. Corp v'.' CA, G.R: 'No. 82040, Augus(27,

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hP.lc;mg-~d ·t.o ·t~e. bo'~ro'«er~i~~-e·;jtt:ie.-fa. lease (PC/- L.e~slrJg apd_{cman~f-_ ln~~W.~SJF]WlJ.".~~: .. ~ortg~~-~. ~}s. .P?,t; · ob.ligated .: to. q~- .. ·."[rOJf]h ·Metal, G.f<... N_o., .. !t61a.-i,~,Defte11:Jer 15, ;z,...:.:..c::':inuepe ~~lfl clPlI n;f?zl e-.e_nfor.ce_ment of h1~ -~red1t.

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his ow~ P~.9·perty as se~u~1ty t~ a_no~h.er·~ ~~ig~~-o/t~trrI~y.-_1~.'~nght_ ~11(:>rc;:~,t~_e to mort~-~~~-?acUn_n~.1.1 not),9!!d_anlJ ..'b9.un~'. w1tt:i,_ the:p(ll)Glalr·.o~l~~l~~({q1; ~- · . ' . only-!JPf!l !h·e_defaulU>f:tpE}.the:l~t!er,tba~.J~~r1~!or. . ... ,_ .. m~y , ~aye b_een recoun~e on 'the: .m?~g~ort. by .L!i~?J!'i~~t~ql_of~ ~:?~~F!Q.e ·,, . ·. . · : .: ·. '.. ·. ~ foreclo~ing . th_e.-.m~.rtgaged J?.roperties;~ '?nd~~p~g.ag~ecr)1a51; a~~_(th_irty" (30)_. days frqnt,ttie· · li$qility-of -thei l/'li!p::pap}y mortg~go,ri :e~tei1.d~ 9nlydo · _\1me/tne.'.conoition 'is· bto~e-~i-~c!~_~e '.lb.e rri?rJg~g;ed, .. ·the,;pn;>P.erty mortgaged, (<.;;erna·,.v: CA,,_.G,R:; Np. [;~ . prop_erty to. b~ .sold· .. atpµplic · !=l°ti¢tio_n QY ·a -pqpljc' . -·· 4835$; March ·3q," 1993). , · · '.' · ::: , ,,.-·_ · . . : ; ·: · officer-(Act Net ·15QB,~'Sec:'.'1'4j: ·'3 ·. ': _:·\ · . ' ;.: .. - . . . --· ~ . . . : ' ·; . \ '· .. · ,_ ..... ~:.

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. , .·If.the rnortgagor. a~faults:.in. the ·payment qfthe . .se~_ured ·deb.t or ottwry.,is.e fails to. com'ply With ' ; the:conditipns,of. tbe:niortg~ge, .the··.c.re.i:li.tor has . : : .-6_0. right to apprQl>r.iale- :10; l;lim.s·_elf, .th'eipersoncJI·' . '·· . _pr~perty (.
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-Th_e 30-day peri6d-to-fo"reglose th.e chattel'(l1\:>r.tgage. · i~· the~inin,il'.n_um p~riod:~~~fvio_l.ation pf._th~fllo.dti~~~ ·. cond_itioh (or the mo'rtgage crecjifor to cause tne·s.a[e at public ..a.uctio~ · of.th~ ;f11.o'~g~gi.c.l.:.~hifte!.?~it.l};~t .. ., j~a~t q~qfly~.,.90.tiGfto .t~.e:IT.1Q,rtg~g9r p~d .~9~\f~g ,qf : . P,Ublic [J,6tice' 9.Hif0e; pJ,ace,_. ."a!l.9. 1?,U'rJ,?_qs~. of. s_uch . .s)1!e .. Atter U)°e.~a.l~ of-the:i··~~c1,tf~t~al:p_u_o1i¢.auctioD, tti\.-rigt,i(qf (ecl~rflP.llOfl .iS~/lO·:IQn!':j'et.ayajl.aqle:'tO:;ttij :.·,. ·.,'·

.

2019 SAN BEDA t,AyV_ffNTRAl!.l;ZEDBAR'OPERATIQNS

.•

.

.

· CREDIT TR.AN·SAC~I.ONS SAN BEDA_LAW C~NTRALIZED BAR OPE::F~ATl?NS·-

IW!&t£§¥'it! S,Srihi:9W!'M!%¢i ii :fS>5aj:

·= 3 S.i:'#4-\.~ rn;;a:"f!':JiMt ::cw•1m

inGurred by sue:h breach of condition before the·sale thereof (Act No. {508, Sec. 13). .

3.

Claims" of persons . holdJng' subsequent · mortgages in their or.der; arid ·. ·· · . 4, T~e-_bala.nce,_ iC/mY,,. shall., b~ .P.aid to th({ mortgage~ or person tfolding under him (Act No.

f568,· Sec. 14).

· ··

· ·.

'· .. :·_ ·

·.'

· Ttan~porta}ior:i .. po. ·}nc., .. v .. · -1,.C(?._ ~ttas{ng -.a_nd · Financing·c__orp:;.G:R: No._ 15067:J, Fe~fuary 28? 2003). ·. .

t;if

. : ,-~-~ a.ctJgn for ;deficMr:icy -~ay b~q~gh,t,.~itbirJ t_en.(10)ye?rs.from.t,he;tiri'")e the cause of.}c~9r . accrues (CIV/L-COD.E,.:-Art. 1144,. par . ._1.-and 2). I..·

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. · Right Ac,q uired by th~ Se6on.d- Mortg.agee and. the Subse.qt.ierit·Purchaser· . {. Before payment of debt . ··. ·Afle( a c~att~I mortgage_ is exe~ut_ep, 1 there. ·. · . ·Jemains in. the mortgag0r: a ·_mere-· right of . . redemption "and. only ttiis right .passes_ ·to the /· . secqnd.; mortgagee. in case. of .. a. ·seconamortgage (lcj.): . · ....... 0

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As· between the first and· second mortgagees, - ' .. · it{e;latter can .only r.ec.ov.erthe; property from the . .: , ' .. forrii-~r oy p~ying him \ne· rnortqaqe debt. · Even ....-~ ....when the second mqrtgagee goes through the --·-.:..form;iify:\ cif.:. extraludlcial · foreclosure, t: the R,Urc~asei acquires. 110 more. than· the 'right of the first -~ortgagee ""

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· 2.. After .pa~merit of; debt=:-. · , · :. · · · _ · ·. ~ .·· ·, .. If th?o~1i1iviibl13 i,nte_res"i,o_fa·ch_aitel-nfortgage: · . .i~ a.....:n:'.~9~~~- property. is .. ~js r:(_gt,t of 1 · recfemptr9n-,_ 1t J0flows; that .. the:Judgment .or · attathiAg~edifor. who purchased the property at the '.e~ecutiqn··:s~le: could not acquireanythinq · _ _.,._exceP,.~ .such .' right ,of. redemption.. He :,is-~ not et"!litled_to" t1:i,r-actual'posses.siori· anddelivery of .............,......._.......,_ tt-le' pr0pe~ty without first .'paying the .ni·or:tgage · :~-, . -~~bt1.(Jd.).: _: .: :.. ... :. ·.. ~-,~. - ~--. ~ ,, .. ,

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·. · Nate: execution sa1e: ln ·Iuch ~-ase 'is n6_i. ;=_. ·.·. : .: '. foreclosure ?ale (tnaustrie! Finence, __ Corp -. v.' .: ·. .'. ;, k:amfrfjZ, (3.R: No._:L:.43.8.iJ,. fvfay-26;) 97-7):"_ · .· · ·. . : . .. . :, / .' : . . . '. . \ . Right.of Rede!11p_don_ \.md~r Ac_t 1 _50( / :_ ~ ·. ., V\lh_q:JV1.~y.E~1:rcise_tpe_.~ightof Reder11ptii;>n·~. ,, : · · · .W~~n th¢_e:;on9.i.tion of a 9hatt!:l}_'mortgag,$ is.!J~qken;: . . ·. .- . : tne:fb)lowing_may redeer:n:. . .,' . ,: ·. . · 1. rVfrirt98gor;: · · · .\ . ... · ~~- · ·. .' 2. · Pe"rsqn holding a subsequ.er:it mortgage; or_ ·; · 3. Sub$$quent c!tta.c~ir1g _c;:re.~ito"r ([j)E. LEQN,:sJJpra 1

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When Redemption-is Made It, must be -rnade.'atte.r his· default but before. the ... foreclb"sure sale. After the-forecio;iure sale, 'the right of. redemption no. ionger exists (/ij.). . . :· . . .. :

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·,t:,lote:· This redemption partakes of an·.equity redemption (DE LEON, supra at 628). -I • , ..

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Right of Mortgpgee to .Recover Deficien~y 1.. , wtiere mof1gage;is toreclos~d .'- If.;. in.· .an ex~ra JudLcia'i. foreclosur~ . of · a chattel mortgage a defidenqy,exist?, . .ari inde.perident civ'il.actiq_n-:ma'y oe ir:istituted for the rec0very . of · said deficiency. : To :~eny U:ie n:,ortga"gE:/e., the right° to maintain 'an action·. to. · re.Gove'r . the_ defici§Hicy. afte~ .. , foreclosJ,ire , of . the_ chattel mo~.age .WQt,Jld be. to .ov,erlook Iii~ fact' ·that· the-chattel m6r:tggge is · ·only given · · ·.. a$ _s,ectir-itY..and n9£.:as·p~yment.' or· th~ ·.debUr:i: · · case· :of . failure .. of · payment .. (S_iJpe1:fine_s."

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.the', P.os·sessid~; -of thf ·. Foi.,e~J~s·ec:(prope_rty.in Ghattet:Mortgage ·· . 1-. ·,., After" default · -·. :<... 1 . . ~. ·, :1:J:ie: figt.it of tt,le c;:re,qitor'.·t.o. take;the··mq"rtg~ged· ·. .' pr()p~rty. is· ·j.rnplied, ··from the~ prpvisjo.fr .(Ci.VIL .. / . .COi;)E, Art .. 2087) which gives· him -·the right to" .· .

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.· !~·- '.; ..• :·_. .. ~ .· .\ ... ; . --·~·:-. . 2:. ~Before default · · . · ·. : ,H.e·1s;n-9t·er:1tit[ed p0$Sess'io.n,.; Qtherwl~·e: the . ·. :·. coritrac\· b<=:_comes a pl~pge- (C:;IVIL GODE;· Art;, N

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-Ar:i attaching m:edito/whci so. -red~ems, shall 'be . sub_rog_~ted .lo).h~· _rJ"gr,ts Of tl;ie· . mo.rtgage~ ~n.d i_S·. ~en,tlt\ed .to _foreclose_ the :rrio'1gage (Act. No.· 1508, ~c. 13'.~ · ·. . ' .. : · .... J·.i ·:· .· How Redemption ·i~ l',~1ad~ · By paying or. delivering to the mortgagee the ~mount . due on such ?1
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_ Rem~dy · M~rtg~g~r- ._-~ef~~es. -~() . "vi~1~P.rop·erty;:'. · · · · . o:: · ,, -.. . .. . Where_ the·<:lebtor re.fuses to yiel_d t,t1_e.p_(9perty, the : cr~ditor!s_rernedy, is to. ins_titute. a"n:·a9tiofl eilh.er._to . . _eftect: judicial· for:_eclosure -pirectly. or to .·secure · .posse~sion (repl~vi(l) as ,a preliminary-to the sare _eontemplated ·_in s·edion 14 of [\ct !'Jo. 15Q8. (DE. ·

LEON; supra at (329).

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The necessary expenses incurred inthe prosecution · by the rnortqaqee of the- action for replevin should be borne by the rnortqaqor · (Agustin v. CA, G.R. No. 1Q784q, Apri~ 18, 1997}:

CONCURRENCE AND PREF_ERENCE OF CREPIT Note: The provisions on special preferred credits on movable· property, specifically Articles 2241, ,2243, 2246 and 2247; are ·repefllea. by· R.A 11057 or otherwise known as the· Personal Property Security . Ac!, effective SeptemberZ, 2Q18_ . .

. Not~: In case .of default and the mortgagor r~fu~es to. surrender . the chattel, replevin judicial . foreclosure does' riot require the mortgagee to first ask the sheriff to foreclose the· rnortqaqe qr: take possession ofthe prop~rti(DE LEON, -supre at 629!.-

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Reason;- "The· slieriff' has no authority to seize the · mortgaged· property. Wheneve·r the sheriff proceeds · under· Section 14. of the Chattel Mortqaqe-Law, he . becomes .pro ht:Jc vice.·the jnere ag~_ht of the: creditor (Nortnem 'Motors, .Inc. v. Herrera, G.R. 'No. L-32674, Feb(Uar;-22:--1973, · see_ elso' Fllinves: Credit· Coro.v. CA, GR.' No: 1'15902;° Septembef27; 1995).. . . . . Remedy .. 'When the . R\ght _of M,ortgagee is

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PPSA was ·pa$sec;J on · Augii$t 1-7, : 2d1 B and 'took ettect on September 7, · 2018. N9twithstc1ndir(g · ot entry into-force of R.A. 11057, the1mp~em,entation of . this act shall-be' conditioned upon -the-Registry.being esrab/i$hed _ant/: operetione! 'under Sec. ;_26 of the PPSA .~ (RA 11.05-7; 'Sec.: 6Bt 'The- rmplemeu_ting_. . Rules 1!ind -Regulations·. of PPSA,. ror the effecti_ve -im12lement?Jtio·ri oftbe statue has not ~ifon issued as ~of the date of print!ng· ot this Mem_oryAif}.

~~~ief~~: m?.rt~?ge· aut~~rizes_ tn~ag~6 {"/n?r~oJ.,~re~it~~ .. __ . __ . . .. · .. . ta~~ p°.ss_ess1on _of the_ property: pn,e~-~up~e~-- ·-- . . _Th1r)mp.h~ Jh~po~~~s~1on- b_y two o_r mer~· creditors rnalntaln .an action· t?. reeov~~r~os_s~~~:m t;..tb~- ~~ _'""o~·~q!-la~,g~o~nv1leges_~lVer the same-property rnortqaqed _c~attel frorn.the m_oJ~~.OfJ_11;any-pers~12, -oj-all of'the wqpe[ty of the·debtor (ld._-at 642). in· whose hands he may _finf'th~ro~!n e~ect,'. tt:i_e . ~ :~~_. \-- · (. . _ . '. ·.. r:)10rtgagee, upqn the.- mortgago~)jS deElt· IS .t~·/'t Pref~rere of C ea1 ., . . . :. , constituted ·. an attorney-inja~0f the Jnoi'tgaQOf r,~ _i-ffisis t e .right1,h~~Ya-creditor to_ b~· p_refe~_red in. ena~ling s~ch _mort~a9ee act-f~ll.and in ~eh:a,l~f~ ·m·srh~_"''pay _ent of Hi:s· cla1~· above oth~~s. ~tit ·a~ t~~. the·owner (DE LEON, supr,,~30). , · ·~Lln;ya~.to·r·s assets.· tf1s·:t~e~ng~Uo be paid_ firsf (Id.).·

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. o~~~~e·s_l~~ol_vi~g:~-~~tt~liMort1ige~ :_ _. \m,-·-:z~~.a~ur:~;,e~·E:ffed~:o~~r~f~·~e~c_e. '. .:~- ·.. · ·. ,_· ·.. 1. ·• l:(nowmgly re.mbv1ng any:} p~r\Of!a~iw@ertXA c-l?~'s"n?rc~-,ul~/A.de~Jc 1s haple"w1th i:311 hJS property, ·rn~rtgagJd .Linde-~. the Ch\tt~I M°.'.figag~{!fa~o;l'.Tu . 'Wf<e~y-a_ncy-.tuture/ fqr .;~e-."'fulTll!ri_ien~ ·.. of. -his· : ~ny provmce:o~-.e1ty-,o_ther tmai:i. !.he~n~,:~n :f.n~1igat_1?n}(CIV/L C©DE, ~,t:'2236):, .; ··: , _: · · ·1J'was:locate1·a~ the·.t1m~ ~f~h~ exe~_~o~-~-!..~~'lENI\1"..,.)·L.,., · · . . mo~ga_g.e -""'.1th_o!J.l _the wntte~0~s,~oL]he~~er~1tor.~.p~e._!he'ngh~t~ p~rsu_e_l~E: pr~perty m · -~o~gage_e; and. . .. .· :._~ ..<_9f.1~£~sess1oo~tne·.~ebtor_Jo satisfy-their _claims (DE_ . 2._ $_e(hng pl d~m~. _persona_l · ~~OP.~r;t+...alr~~y MtE.Qf?J,_"'sf/pra at_.~42): · · ; , . . · ·. _ . · . · mo_rtgage.d, or ~ny p;3rt,_th~~eo'., unde: t~~"'t~ '. · · . '. · : · ._· · , -. :.·._:· . 9fth·~,6hatte[ ty1ortgage-l.::aw-~1~hout the c~n?ent _Except.ion: ·Tfle-~e st"j9u]d · be n~ rules ··a~ to who of the· mor.tgag~e· written on: .th~ back ,Of th.e sliould be- paid -fir$t:· Preference ·applies ONI;.y when . . m~·rtgc_1g_e anf _duly,jecor~e.d,_in·' m:e .Gfia_tt~I _there. are. (2). 9r _more~ creditors .with s¢paratet ·-. . · _ .-: Mortgage··· Register .".(REVISED.' PENA/: COD~; claims against a deb.tor who nas·jnsuffjcient'pro·pEfrty. . - Arl. 319),_ ';\ · ' · '·:· .. ·.· . --~ · . ·. . __/·\· ·. to . ansy;,'er(_f9r ~ill his·, o~jl'gatiohs'. S1f1c.i( i( :is:;a_h·. ~.. ,. exc~'p'tion_~ ·to - the( "g·erieral ;rule;· ttie'.·· l_aw ,·:a~. ·fo ... Effect ·of_ Full Payinent..on. Crimi_nal-1..Jability ·. : preferenc~s is strictly ._..const'ri.Jea '._ (Ro/rian :v.· ·Th~Jno.rtgagor is ·riot re!ieyed,c:if trimitti:11.'·ltabilityHerri9ge,,G.R. No. 225.11, Oe¢~f!lber 22;. 1924):, ~~e.n Jf-th·e._m·6~gaQe .. i_nd~~t~,~ne·~s:'ls)her~;3ft_~r P?id ·_.'· · · ·, · · · · · · -, · ' ·: · ~· 1ntfull,ort_he mortgagor-selleunformed th~. purchaser '. _ 1 .. boel; ~ot. --~r~~~- ~n · :~~te~e-~t prb}~~rty. thaJ the thing ·sold had-been mortgaged. (People v. , Pr.eference simp)y create? a right_ tp_be pald.firs.f Alvarez, G:R. Nq. -19914, Nqv~m~'er 27, :1923). ..from' tne pr9ceeds of. the ..'§_ale "of prqperty_ias·· . ' . . - '· ·' ·--.· ·. . ·. ·· . ' against ai1ofher· creditor; It do'es not create·a lieri vaiidi_ty· of flie Sale Made ·without.the co:iisent of -~-·on the:j:ifqperty its~lt;°but m·erely,a ·preference· in ,. the Mortg_agee : : . . , .· · · " . . . ~the applicati6n · of the. p~oceeds_" of'th~ _-pr6pe'rty The sale is valid although·no written d:msent:·wa"s after it is.sold. '~btained·from the'mb.rtgag.e(t but the niortg'agpr !ays -:.liirnself _open· ·to· cr·imihal. prosecutio11 (OE LEON, s_upra at 613).· - ·. · .. · : · · · _ . ,. ..... __ .

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The creditor does not have the right to take the property or sell it as against· another creditor. Preference applies after a sale, and it is a question of application of.the proceeds after the sale. · . 3. It must be asserted ... lf the right claimed is not asserted and. maintained, it is lost. if property. . has not been seized, it is open lb seizure by. another. ·. 14. It must be· maintained. . Where - a creditor . released his levy, leavin'g .the . property". in possession of the debtor, thereby indicating that he did not intend to press his claim further as to · that specitic property, he is deemed to· have .. abandoned his claim of preference (Molina · v. . S(?mes, G.R. No. 10.105,.fv!arch 31, 1915).

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Preference of cre.dh Lien: on the other hand, · applies._ o.nly . to ~I.aims. creates charge on a which do not attach to particular prope_rty. specific properti~~· ·. · · ·

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Lien shall refer lb. a statutory or coniract~al claim or judicial ·cha.rge on r.eal pr persgnal . property that : legally entitles a. credfior resort to said pro'perty for payment of: the cla.im c;ir debt secured by such lien ·(FR/A, Sec.4) . ' · ...

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: Not~:· Lien does 110t, .in its ·general sens~· import a right of r~tehtipn-, . though'. t.his right' usually · acc;ompanie·s the li~ri when the subject is persona/ p~opef\y in po.ssession of' thJJ lien-hold~r (Grano v.. Par~des, _G:R. No. 27019, March 4, 1927).

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. Rules on'Preference Applicable When: 1 .. Thereare two (2) or rnorecreditors: · ·2. · With separate and distinct .claims: 3.· Against the same debtor; and · .\ 4. ·. Who has insufficient 'property (Pacific Farms, inc:v. Esguerra, G.R, No. L-21783, .November 29, 1~69). There\1usl be aproceedinq such ~s ~n i~s61ve~cy proceedinq wherein the creditors can file their claims, The right becomes significant·on yfafter the . properties 5>(the debtor have been ~en'torL_ed~an'~ liquidated, and· the claims of ·the various creditors ' have been established ··(Development Bapk of th;f\ Philippines v. NLRC, . G.R. No .. 86982; June ·2:Z. · 1990;-Ass.ociated Labor Unions. v. Court of App~a,y, G.R. No. ·1.56882,. October 31, 2008). . . · . 0

l,.aw oh l,:isolvency . . · lnsolyency shall be goverr:ied by speci;:il law~ insofar · as they are. not inconsistent- with this code (.CIVIL CODE;, 1;1.rt:-22:{"1). . . . · . . · . . ~! . . . ~. . That sp_e~i~ law is R.A. No. 10142, otherwise known ,: a.s the. Fin?ric ra1 Rehabilita_tion and ln.$.ol\/ency Act of · 20.10 (FRIA). Insolvency· is thus. governed by the · :civil Cod'e; a'nd suBsidiarily, by the FRIA (DE LEON, .· supra-at 686). · · ·, ·

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The Fjnaricial Rehabilitation and Insolvency Act (FRIA). of 2010.(R.A 10142) · ·· . · Reason: P.rior to the proceedings·, thedebtor...has no· . The FRJA, .an 'act providing for" the rehabilitation or . way. of ascertaininq who the creditors are; and lias-·- .......liquidation of. flnaficially distressed ..enterprises and no liquldated .propertyout of which he cah pay the~:. . ·_ indlviduals, which lapsed into law_ on July 18, 2_010, ... superseded.the former lnsolvency.Law or Act No. A pr~ferred ;, creditor's 'third· .party ·:claim :to;· the · 1956/as, .iim'endec:L·· · · · · . ·. · · · · .. ,: · .· :' proceedsof a foreclosure sale by the mc;:,rtgagee is ' E,x'Cll!_Qed· d·~btq:rs·'from the op~ratioir of FRIA riot the proceedinq · contemplated by law for . the . f. ·Banks;·· . · .: . . .. · i· enforcement of preferences-underArtlclezza t and 2. : Pre-need companies; · 2244 of the Civil "Code - unless the· claimant- is enforcinq a credit . for .taxes -that . enjoy, .. absolute · .3. Insurance compa·nies; and '··: .. ·- ,., priority (Development Bank.of the Philippines. v. CA, . 4. Nati_onal. a,nd l~cal government agencies or uriits . · ·· (R.A. . No.. 1014~:·sec:· 5). .... ··· G.R. No. 12_620~, August 16, i001) .. · .... , •, ' ·~ ' ~ I . · .... "

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_A final [udqmentobtained by a .bank depositor for the. · yaymer:it of his timedeposit if) a _saving~·bank prior ·, to. the.institutton of l(qufdalion proceedjngs but after the 'bank was declared insolvent-would not' make-the claim a preferred. c;laim against:'.the bank Filip{nef..Sa_vingsand Mortgag(l Bank v. NL.RC, G.B.'.No. 8213.5, 'August' 20, 1990). · .. . . . Fixed, savings, an~ cu·r~ent deposits- !)f money in. · bank!,. and similar institutions are considerec;f -simple. loan~· (<:;(VfL CODE, 'Art.: 1980). As such, they we not preferred credits.

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lnsolve-nt · It refers to the ·iinan'cial condition of a debtor that is ., . g~[l~r~lly unable to p~y'its _or ~is li'abilities. as they fall due in·· the -ordinary_ cours~ of· ..bu$iness;·or has . liapilities th·at'are greater than its or tiis assets (RA ._. No_."10142, Sec. 4,.Par. p). .. Clai~s Covered by FRIA Definitiol'"l of Claim ,. . , Refer to all claims Cir demands of whatever nature o.r t~a~a.~ter against the 'debtor or it~ properly; 'whether for money_9r otherwise, liquidat~d or_uvliqi.Jidated,

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or local, including taxes, . tariffs and customs. duties; and . ,. . . . .. 2. Claims against. directors and office:irs of· the. . debtor.arising from acts don'e in t~:e discharge cit their .functions falling within the -scope 'of their· authority: (R.A. 1'0142,. ·sec:4, Par. c).

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Orders the sheriff. to take possession and control .. of all the property of the debtor. except. those· that may be exempt from execution:" . . . .

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Orders .the publicatlon: of the petition motion in a newspaper. of general circulation once a week-for two· (2) consecutive weeks; - . 5. Directs payments ·of anyclaims and conveyance of any propertydue the debtor to the liquidator; 6. Prohibits paymen_ts by the. debtor and ·. the 'transfer of-any property by the debtor; 1 · Noter lnclusion of ·pac2 does. not prohibit.the 7. Directs· all.creditors to file their claims withthe creditors orthlro pa~jes from filing cases aqainsf liquidator within ·the period'setby the rules of the. di redo rs or officers acting in their personal procedure; . :. . . . . ; . capacities (R.A. 10·142, Sec .. 4/Par. c) ~ 8 .. Authorizes the . payment. of· administrative expenses·.as. theybecome ,dtJ'e; .: Claim must be Aqainst the Debtor . · . 9 .. States that the debtor and creditors who are not -rhe rehabili_tatiori:.cci"urt has-jurisdiction. over.claims . petifloner/s may submit· th~ nam·es··'of~ other against-the debtor-that is-under rehabilitatiortbut not:.' nomineestothe-positlon ( , . . . . .. 'of liqi:Jjdator~ and: . . ·. · ove~ ¢1air:i:s by th_e:_~ebto·r.?gainst~~s own debto~ets·_the'cas_e for_,h~aJi~g· for the_·e1ec~ion and ag?lmst..th1rd_ parties (DE_·LEG_N;,sup~a·.at 693)~·' :1' aap_po1ntment.of the_ hqu1dator1 _which date shall.· nt b~ les~. than th/rt.Y (~O)::days 'nor more· than Mpnetary a~_d;Non-Monetary Claims~ . .r~~Qi:1>"-Jive.(45). days f_rom- the date- of the last _The. f.RIA covers cl?irris of.·w~~-ve1'r_.$.1:ire .or . ·_. . public1rtibn'\~-~-- '.0142, 'Sec; 112):· ·_ . J.

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ch_ar9~ter. _ ·1~·: c~vers:. b0\h ·. monet~) ·.a-~"d :'n_.on~~. .. ~ ·rr:ionet_ary claims·. Examples;- . .' ·,_D .. Tb) -~ -~1q_u1d<;1t1~n,P..~a.9.,) \· . · .· . , . . . 1;· A claim by an employee· fOJVjllle'getl 'illegal ~- ,l~is an enl,lmerationcof'all the assets,oJ. the ·qel;)tor · di_~missal __ . _(f~ic~/do .. ·_fastill?l v. ·r.Ui'l~'i!.!de__ r ):~ a,nd a {cned.JJilS!)i~l'.Ji_da_liob< of ·t~·e.· ass~ts and.: .

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cc;impany_ und~~ rehat;uh ~Jioh.py.v1rt~~u,·ripard~;:;...:- . S~l!..9.~f·e·t_he -_~orcu,rrenc_e a_nd Prefore.11.c~ · .se~i_ces ..9f th~ lie_rihold\r (~e~r..os tif·.'439. ··-Banks;:.;-:.'. .. · .: ·.-·~ ·~ : .. · · .. ::~· ;'_.· . [hereina_fferAQUJNO).°'· . '.-.. '. ,. ·. ·' · -._ • • • '. _· - Sectj.9n; 30 of. th~- J,Jew. ee_ntral ·-J3~nk· Act pro_vjd~s . :·: :-: --/· · '{· .... ·. ,·._.-.·: .'.:, .... · . . :· ·: ' ·, .,·.· .·,: tn_at debts·and:liabiliti~s 0lthe' ba'n~ und~r li_qu[~atioh". Ljquida,tor. · ·. ', : · , .· ' · · · · ... ', ·. are'·t6_. be· paid 'in· accordar.ioo 'with -'.the1 rules. ·an A.1,iaturq_l_ pers9ri or jur.idi~_at~ntity deemed IQ be ;m.. . coricu_rr~_nce. and:pre_..f.-~_.rerici°e·oi~redit)u_~d.ed_h_e_ C_ivil · office_r of t~~ ·-c:'6urf·_-A.,vit~ th_e prif!cipak ,dulf of ,. · P".9~erving·a~q~ma~irri1zirig !h""e ~~lye a,nq r-ec,s>:_ve!i_n~f' Bode .. · .· .. -~. '. .·. · ... ,· .:_.·-.:::· --~:.'. _ · · .. S; ••• '.'· • --.::;...-:;~

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th~ a?S.et:~ _of,Jh.e d~_b_t0r,-.witt'f tt.h.e' enq of'liqyi_daJing. th~rn :and_ d!i5,Ch~_rging_to tbt.ext~Q.tp,q~?i.Qle, allJh.E( .t_he__ 9ebJor_'(8,'A.· 101~?; S~c. ,( Pa_(._.. ,• .

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De~l~r~s t~e- d~~te>~ in,sol_yefrit; -. .': · .-_ , ;, ·: :. ~ ;_: . Orcfe_r~ th~,.hqu1dat1on. of the deb.tor: ahd ·in the.· .Ci?Se'of la~-. diskoived' ~ . . ·. .fjurrdicai'debfor;.cJe·clar~. . ._ . ~ ; .. : . . .. . ' : ..

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·: ln·ord~·r 'to s~c~r~· a tax' clear,a"nc~ as ·;r~o/;~-~t-'t~e : taxp·ay~f, ha~ cornpfetely paitl;'off hit.tBx-:l(a1Jilit1~s; .. ·. .,.- . · • petitic:ine1-.;PD.iC will,be)compelledi·td;~ettle· and 'pay- ... :,, ·. -:. fir-st..aff .. tax' liabilities ·and.,:deficiencies. oL!he-~bank ~' : •" . . r_egard,less .9f the 0rd.er/'ot- pre.f~ren~e- Qiid~r:-tti'~- . . . pertinept provi~icinsthe Civil C_ode (PD1C ii. B./R, G_.R. No. 1_72p92, ·Jun.e. -13;-2pf3)._- · · ~ ·. ··_ ·. ,_ · . .. ~:· : .. · _.. 'f . .:.. : .. ' .

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Rights of ·S..ecured -Credltors A secured creditor shall refer to a creditor with se.?ured·claim (R.A.. 10142, Sea. 4, Par. kk). A secured claim shall refer to a claim that is secured b'y a lien (R.A. '10142, Sec. 4, Par. jj)._ .

a

The Liquidation Order shall riot affect the right of. secy red. creditor· to . enforce his· lien in· accordance with the applicable contract or law. A secured creditor may: ·· ·1. .Waive his, right'under the security or lien, -prove his .claim' ln the liquidation proceedings and share in the distnbution of the assets··of the· debtor; or .': '. 2. Maintain his rights under the security or lien. In which case:" . . .. . : . '. . a. : .The·'. value. of- the property may aqreed · · · upon by the creditor and the liquidator: ,•. · j:· .. J{ value of thepropertyls less than theclaim it secures liquidator.may convey . .-. theproperty to the secured creditor and the latter. will be .radrnitted in. the liquidation proceed in.gs ·as creditor· f~r the balance; . . . ·' . . .~ ii. If, value of the: property exceeds the claim secured =- liquidator may convey the property to creditor .and ·waive t'Jp . debtor's ·.. right · ot redemption . u'pon · ·-· .c • re~:eiying.e~c;;ess- from_ttie c~~1)tJr:,- ., :. b: · The · liquidator may Sell the .property _and . satisfy' the secured creditor-s gntire claim . : .. .: .frorn.the proceeds·of the·sall:l; or . c ... The secured creditor may enforc~ the'.lier:) er \ • . . · foreclose' on the· · property pursuant • fo

The··. d-ebtor;. is. -~~ot absent as .he files· ·the Petition. .. · . . . ', ,• .. : .

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_Applies. ·in.· t~e·· case of absent debtor (Debtor resides ....oufside or :·ha~ departed •' frOfl! · the Philippines,' cannot be found or conceals himself) under Sec. 108 o( the

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. . . . biquiaation Qrd,er.. is .L)guidatipQ . ' -- is~u'ed Wjtfiout' .'."trial issued, a_fter trial(R.A. 101'42' Sec;. 10142, -Sec. 107) ..

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.Vol~ntary l::jquidation v, Involuntary tfj~uidation · · .' ·of Individual, Debtor; .... · .. . . .

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. ·Acts - of .. lrjsbl"'.en~y_ .Creditors must pr.o've,a,c;:,ts tm.~er. _s~cJion J0.5 .o.f of if!solvency._ ., .:._· .. the FRIA need not. be · · . : •, . ' . .J . ' ~ .. allE3g!3d .. ; . -: ., _._ · . •

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Jhe ·debts must be at The debts must be at least ·. least: Five hundred Five-· ;hundred thousand: t~ousand pesos (Psoo;· pesos (PS00,000.0Q)·. .000.00).

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·

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d$bts . n:iust',be_. ~t. Tti~ d~~'i-.otaggregate of. · least: fiv.e·- ,.hundred debts must be at·least one thousand- .. p~s.qs: .· )P. m.illk>a:·: . ... . .. pesoi soo,bpo) - · ·, .. ·. : ·.. (Pfoocr.ooo) · . .- . ·. 'or . ., . ,· ·. ~q'uivaJerit to 25o/o of the - '• .- . _subs'cribeg ca pit.al . or . · · ....· pa~n~rs' · · . c:o.r;it~i~\.lti¢ri,· , . ·w~ichever is higher.

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The· · ·in~ividual ·. ~an The .. continue the busij,e~s. · organization di~solved. ·

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There must be. an act Act of. insolvency 9f insolvency. - - required, . .. . . . . ~

Exernption.of Conjugal Partnership or Absolute Community . If one of the spouses is insolvent, the· assets of the ~o.~jugal partnership · ot _gains (CPG) or absolute community (AC) do not pass to ·the assignee in insolvency elected by the creditors or appointed ~y -the court (CIVIL CODE, ,Art. -2238). . .

'is: -~·ot

(Id. at 4;38-439).

Noter- . During . the pendency. . . _qf .. rehabilitatlon: proceedings: 'the court order !he d{n~~si_o_ri -~

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Rehabilitation · . _ It refers 'td the restoration ,of .the debtor to a _condition of. successful operation and. solvency, if it isshown that its continuance Of operation - is eeonornically fea'sible and its- creditors can recover byway of the present value. of payments projected ii) the plan, more if the debtor continues as a going concern than if it is immediately llquidated (R,.A. .10142,. Sec. 4, Par. gg). ·· · ·

.

'

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_. Reason;: The conjugal partnership · of gains or .... absolute community· is distinct .from-the individual · spouses (DE LEON, supra at 649). ·The. exemption applies provided that:

' 1. · The Cl?G or AC subsists; and · 2.

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Upon a finjing that the debtor .1sjl!J..Solve~a_r~.d,_ . there is~_no :5ub~tantl?_l_~i~-~lif1ood~r.ttid~or f
Tlie obligations of the insolvent spouse have not · . redounded to. the benefit . ofthe farri'ily..(/d.). - . .. .' . . ; .

Not;: The··i nsolvericy of 'the: husband does not have the effect .of dissolving the conjugal partnership or 0

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,Rule,k 'Co~ow .ership .. . ·. · . . 11'iJte·re-·i~~W.fl~ship and of th~:co-o"':'ner's is ~l'(:' •";3n .. iosolve~' deblOfi\ his undivided share. or m~erest 25, Par:cJ/ · ... ~ . '/ ~~ I·.'·:··~ .. -~Q'."th;)r.oper:tyfs~lftl??·poss'essed·~y !he ass1gne_e 2~ No Rehabilltatiorr \l:a~ ."':,8,~, c~nWl1~d,i1th!~ O'}f . , ~ ,1n\[nso1J~ncy pr.o_c~ed1ngs because Jt rs part of. h1~ (1) y~~_r.fr_om the filing of1a pet1t~on to E~~firm:a ·asset5.1(§E·LE,u o set apart·~~ ~pt..propert1es under the_. ~he r_e~ab1\1tat1_9~ _rece1ye~ tryat Hie reh\Q1l11~ori~ ,_. ~F.~11(~ · or.the-debtor _1~ ~o.t· f~a~1Ble (RA~: 1~7~i~~~~l~~e)Re'd,uty:of the_:co'>urt,, up_o11:,pe11t1on ?,~d 92J.- · · '.. • ·,"'. ·-.. ·. SczE:;:_:.,.-rat.te..Yhear-m9·,.-to ~;!empt_acid s~t.ap_art. tor the u?e •. ·: _ . . · ·. . .. - · .• · ... ·7.""'- •·. ' l"" -1~e~~f~ s~id ins·olvent, sue~ !~al. and. · Lial;>iljty,of ~e.bt~_r's P_r?-~e-~~t',:f~r,. 1s·Q-6~;~l~n:5.., · rrper-so~t ·, ·prgpertyi ~s .. is ·.~Y),8-,YV exemp~ from . G~~_eral :Rule_:.,.D~bto(1s: hc!bl_e. w1tJ,:al)~~-IS-Pie.Pj~tr, i· :,( r~~e~~~~~dals.o :a -horr:iestead-,(RA 10.142, Sec. p.r~sen_t.. and-·_:fu~~re,. .f9r ·:· _t~x ·f9!~11~~-n~~ IJi.~ . 1Vl.lra~~-~- .·_. . , · -.\ . . .. ; · - ·. .· · ·. ·_. · . - . . . . . obligations (CIV(t· CODE, Art. 2236). . . -~-~. : -::::.. ·...-, · _..::_ · - ·.. ,·· ·.··-:-. .. . Ru!~.lnvqlv.i-r,g·P.roperty}f~lg.:i~;Tf~st. . .. .. . E'xempted p_roperties:. ·. .. ,. ·. . · ·. · . Property. Jiild }druJ;t by)he: 1r:isoli;,ent_.q,ebtor shpulp · 1. Pr~sent _p'r'op'e~y,:.:.. '·thc5se~provided under Art_§._ excluped~~fro.ni insolvenqy, '·Pt.oceedihg_s.: (CfV_IL;- . . 1~p· ~pg'}05. o~ Jhe. Fa.m.i[y:1Cod~;, SE?c. 1/3,._R.u(~ cotJi;,:Arl.:'2-i40J.'.·'· · ,: ., ; ·.: . , . . . · 39· ·or the Rules of Court.-·an'd. Sec. 118 of the_ .· · .• .. · ,. . .· ':'. , . . ,· · : P~b~ic Larid Act.. _.·'. . . ::_ :· . · '.'·? · · . .:_ ·;. .. ·. . ReasJn:~The~trust~i. is·'n'ot the'._o.w11er'~f. the.·trust 2. . Fut_ur.e~ prope.rty ~ a -~ebt?r, y,rh?: obl.§1_.'.n~. _a . · piop_erty .(DE LEON; supra'._at _696).: ·., · '. . ..., . .. discharg~ ·from:~1~'. debts. 00 account .of h1;, .. · · · · .1 ... ··., • : • • :. (risolve ..ncy, is· not liable for the unsati~~e~. ~lairti's' Three (3J'Ge·neral ¢ategori_~s-ci! Cr.edit - .:.. . .. of- his creditcirs. wi_{li" -said- prcipe.rty subjifct ·fo . .1. Spedal prefei-{ed credits_ lis~ed 'in Articles ~-~41 · - certain. exceptions .expressly provided l;>y J~w ·. · '• ahd.2242• ·. . ..... _: · · : (Ac't'-No. 1956, Seci.1'6B=an_p 69). . . · ·.. · .. _· .. ·. · 2. ·or~ina·iy. ~r.ef~rred credits ii_steid in Article• 2244;· . 3. Prop·e·rty under. custody -(DE LEqN, SUJ?(a . ·. a'rid, .:. -,. · .... · .• ·. . ·. ...· . · . . .;. at 64Bf and·· those ·_owned · 'by · nilln[c.!paJ 3·: ,co~~b~_lr~ciit.:((non-pr~te~~eci) u.nder .Articie . . ·corporatfons_ ··· neces_s.~ry_ fbr _ gove_ rn.m,e_nta_l· 2·2"4·5 (R..... · b1· · · p "It G. R · N. · L 5656·8· epf.!. . ,c y, . era _a,, . , .. o: ~ . . , .. ·purpqses · (V,iucfa. de. Tari Toco Y, .MiirJ/qipql May 20,' 1987).'.: · . · · ' ·. · .

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Note: . Workers preference' as regards monetary claims must prevailin view of the provisions of. Article 110 -of the Labor Gode despite the· order set forth in Articles ~241 to ·2245 of theCivil Code (PNB'v.· Crui,~·G.R. No. 80593, December 18,--1·989).

First Category: Special-Preferred, Credits 1. · With Reference-to Specific _Moyable Property . Under-Art. 2241.of the Civil Code: ·. Note; This-,.1_as be.e_n emended by_RA 11057:. . See .discussion·on.page: 554.. ·. ·a. · Duti~s. ~xes_ governme_nt; ·.

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Note: Thetax rnustbe dLie on the movable : ·' (5 PARAS, supra at{380):. ": . b. ·Claims . frotn misappropriation, breach of trust." malfeasance of public officer; : - .: Noter Th~ acquisition-rnust' have .been irr. . · performance of official functions and · the . property must . st)lf be in the hands of the ..: public ofticlal. If. it· is soldto a "purchaserfor · value and in ~·good faith, there can be. "more claim on thesaid movable: '

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Article 110 bf the 'Labor Code does not purport to create 'a lien in favor of workers.or" · employeesfor .unpaid wages. eitherupon all or. any particular property owner by. their employer. Claims for unpaid wages _do not. '. therefore fall within the cateqory ofspeclally _ · preferred· claims established 'under Articles . · 2241 'and -224Z ot.the Civil Code, except to . . the extent thatsuch claims for unpaid wages · 'are.already covered by' Article :224 f, No -, .6, . and Ar:iiclEi 2242,- No. 3: Tei the extent that claims for unpaid. wages fall outside the , · · , · sc9pe ot°Aii. 2241, number 6 and Art 224.2, . -number 3, they would come within the ambit ot the cateqory of ordinary preferred credlts .. . _ ·. - 'under Article 2244 (DBP v. NLRC,. G.R: No . ..........-..· ~86932; June -27, 1990),. . · · - '.,

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l~~~re; ",:must · h~ve. · been ·.' emgf~ed by the ownerof the goods, not-by ~ thefc&>~fracfor (Bc!utista v'.· 1,1_di(o,: _Ge1eral,_ · · G!k.:_ L-~799; June 2$, 1955!: . . .. .·

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. between· the lindlord''and tenant . . .from their co~tract on· the share 6.f each· 'in" :. th-e fruits or.h·ary.est;~ .- -. . ··. · ,

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Credits f~_r-'the rtjaking, ~epairs, safekeeping. or preservation cif the ·pr,ope'rty; ·. . ''' .'

f._ ·. Claim;, _f9f laborer's -~ages · . · on the property.;.

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·Thfa applies 9nly tci .pe(son-~I. not to real: property (5:PAf~AS, supra at·1380) ...

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Pnce of the contract of·transportation and inddental expenses on'• the goods_ carrie.d, ' until . their deli11ery arid' thirty .(30) . days ·-. thereaft~r; ··· · . · · -, ·' ·· . : · .- · · Credit$ for lqdgi['lg ~. __tr~velers·by hci\el belonging to. th.e m;oll,qbl.es; ·-:. '. ··:

and supplies fur'n1shed t6keepers on ;t_tie movables ·guest_ as long as ·such· '. : ' .-.· '. . . -: '•

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Np(e: This ap'piies so lohg. 'as- mo~ables are , in. th_e 'h'ofel:·This'does not:apply' to·money _ loahed_ to: g_yests. . ·:.

: ~ote:·lf.ttie c~ntr~ct is a pledge, ifn:ni"st_be' embo_died, i_n a·p0blic'iosti:.l,Jment;:if a.cliaftel '· · mortgage/h rrll:J$t be.- regis~ere_d with the- · .-. C_hatte.1 fl.llo"ctgage'.Registry. · , . ·. '.

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Expenses fqr· cultivation and· harvest upon ' the fruits harvested;. . .. . . Rent for on~ (1) yea~ up.bi:)· the pr_ope.rty of the.lessee_existing on the immovaQle·l~ased and on th~ fruits ;of the· sam'e, but not on money qr instrume·nts .of ·c_re_dlt; and

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(~EDIT TRAN·SACT_l(lN~S. ·

SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMOR'( AID 2019

Note: The preference is according to the order of time they were levied upon'. the property (Q.E LEON, supra- a! 658). ·

_m. Claims of ·th~ depositor if depositary has . · .. wrongfully sold .. the .. thing deposit.ed,. upon ;, t .t?e price of sale, . · .. -, . .

h. · Clai~s of co-heirs .. for warranty partition of the property;

.: Wio·n~fu.l ,:akii'lg .of Mqyables Under Article 2241 of.the Civ_i_l Qc>:de ' . . Th.e preferred creditor may demand i.t within· ·. thirty (30.). days throuqhan accion ·suqrogaforia, c , exercisiriq the right of the debtor 'granted him under Art. 559 .. of. the· Civil · Code .to recover· · pr~.e_~~y w.ro·ri~f~lly taken.trom.him -,

in the

i. : · Claims .0f°donors- for pecuniary charges or . other conditions. imposed, by him upon the -~one~;an~· · ., Claims ofrlnsurers for i~sur.ance premium for 2 years. · · · . , _ . Note: -Article 2242 does. not give -the .otder of "preference or priority of payment They merely enumerate the credits .y;;bich·:enjoy,-pre(erence with respect to specific rnovables-ortirnrriovable . With theexceptionof the State .(NQ: 1 ),. there is Xfo · grefere_nce·. arnonq. th~ .creditcrs, only .L e::onc1p~nce (D~ LEON;, supra a_t 653). ·' . j.

· . .tJ,9,t'~:-Jt applies orly ~hen the right of ownership . , )r1 .such prop,E31JY.:9.9ntil}~,ei1i_n the debtor, and, · therefore.it-is DO.fapplic.aqle to cases where the· d~l;>!qr ~§S Pc!ft~c_j withhis ownershlptherein, a!?.. -where i}_e,h?~-s9lq_'.hjs prnperw. (Pena V: Mitchell, . .. "G.R. No .. l:.-;3.764;<J,anuaiY,.{5;.:1.9q8)·. . .: . . . , .. , ..' · '· ... ·;,: · .: ·. ·. · ~-· Wit'1.-: .R,efer;ence;,- to •.. Speqifi,c;.-·11JlJPO!-a6l';u rrop~r.ty-.!-Jnder_A.ft. ~~12,_.of t~e_<;J_vil-(;o'de: . . .. a. · Taxes.due.upon larid or, qu,lldmgQ

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: :. N~\~:: Th-;s i~~~~:!~. -~i-~. i\h;~i~:~~r:· -~~ .. Thus, capital_· $a ins yi~Si\-~qT c9ver~fi,. -:f: . 'Y,( reco{l~ rJqi~o\ som_ething __ prev1o~~ly mad_e, _pec·ause if.:i.s a-t_a15,on_JnG9m!:l',.,..a.n.c:j;f.1ot on tHe _-1/J.y. sucl\ ~eP,a~r .o~,·~on~tr.~~t1on .b!311}g ~ade, . . . property it:;:;elt(Qq L&ON_, $·upr.a-at 659):· . /\ r-~ .. , A~ce1ssa_ry bf ~~·c;JetE!nqrat,~:m or·destructron of ilj' --" t~ffii~_g, a~~q[~ei:lyexj~ted (Q(=L_EON, supra ·b.

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· ·. ~9.~e: T~.E} "ra_w:.~_a.ls~s~l\tino~i~tsetween~~Sec_crn!~t}::.90~ .~,~i_n.ary 1: ~referr.~-~ ~r~dits . . . . _re~1ste~ed· c!nd unreg~~t~re~. v~~~z!.slien:~; ·~0rd_1~a.~,~E)ferr~·~~e01ts ,:und ..er ·Art·... ,-2:24:4 of the 1 .. . · Hence, ·any · Hen· oithisJ ~\{'~ .!3ri0X . th_~. ~~Qjvil?f_~ .... a.sf~rr:re0_'d!d .bJ'. ·':,.r1: ~:1_~· ,of.:the .Labor · .·, . ,pr~f~rense,GrE),di\ s,t$tµ~ .(/~ .. c1t-6q9)~S>'. ~.:1• 'Qcc(~'y~ey._sji_allb~.!/efe~r,eq'. :·: ,_ . , ·... , -,-·. _:,., ~ ·._/ ·.- ,· .. _-·. . . _ . 1. ·.Cr~d1!¢r S.$~1~~STe~de~es;j_ ~Y:Jc\_bpr~u,; , .. c. "Clqims ·of labo_r~rs and _ptber:. _wor rien~h-.) /~ . enga~ed in.th~ con'str1,1ct~. r'e-c<J]struclib1:l~~-te;_~q, .;m/,,of thl:l --.b_aqor':.Cpd_e.-._diq ·.not . ; .· .~.rj~.P~ir-· ?_f. ~~i!gi_r:,g~.- ~anals,(~_1e~Lip~~-~t!.:i.e )·Yqr!<~r.~· .. c,(~i~:--.,~? .:_a_b~olut_~.IY . ,:- 'N.or_ks; .. , . . ._.·. <·, ~-- .. A.'"t~p1J-~~fW:.~~ cr_e~_1t; __ ~~~,d_1to'.s ".4"1th:l!~P~--~~.9.erA~1clp ·,, :.,,·, r···· '--'·, ... ·.·- ·. ,_. ;-~-~i~;'-~Z2:12 _-are. ·still·. gryen preferences -over .the d. ·' Clai~.s. of _furnisher~ of: rn?t~rials.. used m . -~ _ proce~ds.-.of:_that,1:frop{:)r(y (lc:f.~!:(>6~), ·: ·: . w.ork$ m¢ntioned ih_.~_0;_ 3; . . . ·.. ,, , .. ,.· - ,; · : '. . · · .. ·. ·: .·: :: ·-::- .·;_a:_.,·\;'-<: · .I_ .. • - .. . .. . . . ,· .. -; : The_ u~e'..o"f_Jti~ phras!3 ,Jicg·pre'fE!ref)~-~·1·inArtic/e. ; :M,djigag~ crediisF 1.10 of, the Labor Code "indicates tnat what it • · · 'i . irJtrn.d~~"to_.mo.aify i~~'._tl;l:e.);r,d,e.r..of.fp~~f~rence.. · ·.,, N~,tE!: .,; Mortga·ge , · MU;,J_.-:,.hav·~ ·. b.een. . fou"rid fn Art-2244 oftne"Civii.Cocle,iwhich relate·s, . . I -r~gist_e_red \ iri. -~he Regi __stry of, _Property. A to prope~y of-thfi~s~lvenfthat'-is ~ot~b-urdened . .. . ::_. re.cordfct-:m:qrtgag_~, G~~di.t,_is,:·s!_Jp_$,rior to an ·. with·.,. liens . or-.· .. encumbrances·-· -.ere.ated or · , .... , -. unrE!l??.rd.ed ·. -~tipaj_p;. v,el).9., .;f:E. . . . ,-~\, ._: .. · : .. · . ~a1_1u~ry 28, 19:61). . Artie/~ _110 oft t_t~,.. L~P?¥:,so.1,$, ,~oqif\~.d. Article . . , ·, .... , ,. ·, ·· · . , , . · . . . - · , . v .. 2,?44 of the_.G1v1I CCDde. rn twq respects~· , , ... f. and .. a. Art.o:110 of the Labor,Code:;rem.6ved·"theimprove,:rier.1t-!)f _real property when.the law . , =·'. . :one~y~:a.r.: li;..,lt~tio~. {o·~-~d. ip)>Jp; ·2. of -Art. qUfliori~E:S,fe_i,:nb.y~s~m.~,rit; : \. ·,.. ~ .. .. . ,_. :~ 2244 {(d. at 6_67)-. . . . . . ... . : . · '.'·.· ... · :'- ;"·•-.·.;·.. -•: · _ -. ,. b.,.A~, U~:of;tt,;e.Jefif?~(fqd~ . ~l~Q.fD.OV~d:·LJp: · .. g_. ··~r~di,ts.aqnot~t~d l.').l~.e ~egistry__pWrope,:ty the claims. for. uhpc!i.d .. \;'J~-g~s. ·(ancJ ottier by_yirt,ye:-pf. j1,J_9ic;)a! · 9rder, attachment or . monetary· claims)·of laoore"rs or workers Of." .. execution; · · · if)sol_v,ent to first priorijy:(/dJ .- _. . ; · ·. . . ; - .. ~ '· ' .~ ' . , . .·.. .·.I ...

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Note:. These (No ... 14) credits shall ·have·. preferel")ce'amo,:ig them i~ the order-9f p'riority of the dates ·of the 'ii1strun1en'ts- · and of · the judgments ~ (DE LEON, supra. at 671).' · . . -~ . .

· .· A declar~tion of bankruptcy or a· jud.icial liquidation-' ~mu~t be, present befcxe ,.workers' prefere·nce .. may· be enforced (Development Bank v. Santos, G.R>No. 78261~621 March·.8,. 1989). . ' . . .

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. The order,of preference is first, in·tavor.9f credits· evidenced by 9.fjnal judgrrrent (shquld.ttiey hav~ been th·e .sub}ed of litigation), and secondly, in favor of 'credits' - evidenced by a' public. ..,..instrument, the preference among·. the two kinds -.--· o(credits being determined by priority o_f dates , ·''(Rizal Surety ·and lnsuran<;:e Go: v:De/a Pa.z,

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Rea.j;on: Without.judici~I proceedings·, it. would~ . ; t;>e· pu~ting. workers in a· better: positio.n that the State could only. asser:.t it;, prior preference.in a .. judic:Lal proceedings .. (Development-Bank of the Philippines ·v . :NLRC, G:R. .· Nos., 82763-64, March 1'9, 1990). . ,·· · 2.

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G.R. Nb.---L;6463,- McJ}'·26,_.1Q54);~.

Funeral.expenses for .the._debtp.r, or his children ur:ider paren_tal authority· wh9 have--i10 'owh property, upon. court approv9l; · . · . .. . ,· :

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·Statut.piy. PreferE!nce NOT' "Applicable' to ,the Gove'rnmenf. · · · · . · "'· · ,.. · 2244, particularly Pa~ .. ~14)(a) t~-;:;reof, is 'not . · applicable·:to obligatfons of· the· St_ate·:·as 'if i~,a . ·:,recognized doctrine that. the St~te is alWc:!YS solve,:it (Araneta v: Hori. Gatmai(an; :G:R.· Nos, L-8895 and L-9191-; April 30, 1957).' .. . '1

.. Art.

E?(pemses quring the last ilines~ oJ d~btor·or of his/her spou~e .c;ind children un.de.r parental . authority',.if tliey.·hav_~ no own property;:·· · ·· . - . . . .. . -.~ . . . '. .

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4. · Compensation . due ·the. laborers or · their · .' dep.e,nde.nts.uhder·laws proviqing for' indemnitYr;

N,ote';. Tn~·6'rder 'of preference 'in Article ;244 of tnd .. -Civ] Code is )Jery.importarit.. The order_ofpreference ese. howevsr, -does _not -reter to specific 'real or 'persohal _prcwerty: -'. It .refers ·to other property (5 ·

7:PA:RA~'.sirf

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·T~'ird C~~e_g~~\Gom~ci,:i·~r~edits: ·. :· ''. . · Ar:,y: :other. clarms. ·or., credits' other- -than those · : rtrnntio}l~ct in(Arti~ es ?f 41, 2242' and ?244: o~- 'the 7. Fines and civil ·. indemrilf~~ti~,n~ ca1isi~g from : · · . Civil ·~ae. i::~er.e is;io order of-preference 'amonq . criminal offense; . · :i- , •• • • common. cr.filillors. They share what.evec-,is·;,left in ' : · . · . ·· · . ~ .proportien to "tfieir_'.G(edit, 'reqardless ·o.f date. (CIVIL 8. l:.eg~l-~x~~ri'ses and 'ex~e~~es incurreti:h·t~e ·CODE,:_A~ .. 2j. . . .

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.. ·ya· l-~d_a__ drninist~aticin·. of the. i~~-ol~~nft:./. ·e_s,.:tate; · . _., _ . , . ~ . -~-......,No~e: Ordihary Preferred arid· Common ·Credits . ~:. _taxes 'ari,<:l., )ssessmen_ts/ -due tli(. natiqn'al ' 'cover ci,nly'"free property" of' the debtor, or, those riof ' . goverijmenr· other- them those menti0ned in ·. . subjectedto Special Preferred Credit.." ", · · . . . : ', ·.A~icl~s22411(1)_anq_2242(1)of·the-<;;~f.Gode; .. ·.·,':,:, r: ·'".. .• . .. ·, . .' i .•. • ·.r, , : Natureof.Claims-or C.red_its .in, Ar:ticl,e~.~241 -and" · ·· · 10, .Taxes and assessments _due,anyprovit:ice(o°iher . _ .. }242 of. the Clvll Code (Spf?cfal.P/e.~e'rre~- Credits), .. . . . 'than .jhose- referred'. to in Arts .. 224·1 (1) a Ad ,J • !1' ... .Articles 2241 and 2242' of the Civil.Code shall be · . , . 2242(1) of the Civil Code, , -, · -r ,--,' . . ·.·.. . . . .· 'consid~red ·mortgages1or pledg·~~--ef(-P.er'son_ai .'

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· . · .. 11. Tax·es.'· and ·.__ assess·ments · due any ; city or.'-, . . . municipality' 9th-~r · thah·_·; those.· indicaJed -·in. . Articles. 4-241 (1) and 2242(1) of the <:;ivfl Code;· . · ·. ,:·· . . . ,· • , :·" . ·.· ·· · . . 12: Damages f9r, tjeath pr physi<;:ai. injuries caused . , .b(q.u:asi-delict;.-· .· .· . · ... · .,,

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13:•Gifts due. ·fo .'charitable public,· and. private·· · · in~titutloni.; and . ,.•,. . _14, Credits· which, .wi;hout·.special ·p~ivil~~e-. a:ppear · .: ~n. (a) a P.~blic ·iristr~rrient; · or (b) in · a ,final Judgment, 1f they have been the subject of litigation.·

·

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and real_ prope'rty... :~. ·: ·

Not~:·.1n ·case of insolvency of ttie. debtor, such .·claims. or credits: shall. be, cbrisider~d · as-liens. ·, f-i~·n_ce,. they -·i:!re '.r:1ot inciwd.ed in· th~- ·in:s~lvent .• .. ,e:l~btor's_ assets'(Pli: l,.EQN, suj:ira fl( 659).' . ' . .,, . ., . ., . . . ,. .. .- :· .. . . , 'f\i;;: lien·s,' they are ·consi<;iered'. Gharges., l)nless '·otherwise:.st~ted;·they are not po~se~sory liens with ·the· right of ret~ntion ·.(5 .PJ?,RAS,'-~upra· at . .·· 1~80) . ·., ·

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A~ides .. 2241 and 2242 · .only find ··application wheri ther,e is concurrence of credits (DE LEON; · · supra at 659). · ' ' .. :· '-,' · · '

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2019 SAN BEDA LAW CENTRAIJZED BAR OPERATIONS

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·credits to the ·extent·of the value ofthe movable With the e:><;ception of the. taxes due to the State _lo which preference refers. . ' . (No·._ .1 ),.Articles 2241 · and 2242· of the Civil Code merely el')umerate .the · pr!:)ferred: claims on Pay No. 1 credit in ·Art. 224 :r of -the Civil Code, specific properties. They do not.give the order of. ·preference or priority o.f p9ym~rit (Id. a_t 659)". ·. · and. if two or more credits· in Art . .224-1 conc.ur; apply proceeds bf.sale pfo-rata, (pari passu) to . .. . the cre_dits applying Arts. 2246 and 2_247 ·of the· Nature of Claims or Credits InArticle 2244 of the Civil Gode. · Civil Code (Ordinary Preferred Credits) In contrast with Articles-2-241. and ·2242 of the "Civil 2. For'" immovables and · real: righ.ts - Sell . Cod~. Article 2244- creates. no liens on -determinate . immovable . an.d real right and determine_ · if property. which follow such -property, What Artlcle proceeds of sale are sufficient to cover. the. 2244-creates 'are simply· rights 'ln favor of certain special preferred credits in. Art. 2242 of _the Civil creditors· to have. the cash and- other assets of the Code. ; · · < insolvent applied. in a certain .sequence. or 'order of priority (Republic-v. Peta/ta, G:R,-No, L-5.6568, May 20, 1987): · · Exclude ail · other, credits: to the. extent of the ._ _ vafue • 6f immovables" arid real dgtits which · Two-Tier Order of Breference , ' .. preference refers: · '·. 1., _First tier - includes.only taxes, duties and_~· . · ·· · .. · . . -. . . ·:- · ._. _due on a specific .. ,mov9bl_e or- ~ova9le P~y: No. 1 !n Art. 2~4~ of_the C1v1I Code.ff two_~.r property; and .··. _ /~ I\,. . mpr8,:cred1ts mentioned: m Art. 22~2 pf the C1v1I · 2. Second ~ier·- All oth::r specia,I pre~r~1d..t:""~..Cod jP.n?,ur.; _apply pro?~ed~ o_f:sa~e pro ra.ta,. tax) credits. Th_ese credits _o~;..atisf1ed · · 1pan,passu). to-·th~ _cre~1ts_ applying /\rt~. ·2248 pari pessu ;:md.pro rata, out ofa~s1i:1.1:1~v.alue~ .::l:. . ""_-.and 224~°iPf t e C1v1I Code. _ . of-.the specific _pr9perty t~,e_hic.11f{u~h· oth~~ ·-;; ~r- \," . : , · · · . : .. · .. · _ : credits relate,(Republic-vf Pera/lit,. G.f R:No. ·Ii- ~ .Step 5: \" · . .: · _· . · 56568, May 20, 1987) .. ,· ·. iV\ 1 .. If proceedsA·~1e~frQm specific· movable.and immovable are insufficient, the balance-of said Note: Pro_ reie rul~ :dots ~Qt ~·pply. ~o. ".c~~.ditS'/~ f!'.I C"'.,,4~P~<jial p~e$~-- ·cr~dits become . ordin~ry . : a~n9_t~ted m t~e Reg_1stry~~op_erty m~,rt~eeterm,ne . first. 1f . 1t.al;J11it1es.: ex_cee,d the .. s~s- · .. · f1.. ,...;.9red1ts under, A~-.22:4? of-t_h_e·_C1v1I ~ode . . Categorize,oth.e, -credit~. _-:into the fQllowing( three-. · : ·, · · categories:· · , ··· ·... . . .. ,. . ..: · ;: . · . · Step _6: · . :·· . _;_ · -.. L SpecialPreferr~d 6re.dris in 'Art. ,2241 and.2242;° With the eicess· ca·sh _s_ale of- ~ssefa: COVE;i°re.d irr Art: 2: . Ordin·ary P.refe/red Credits: uncler.Art.-·2244; 2~41 and 2242 .of tlie_.Civil Code(,if:any; sell .otber 3: Common c(edits t,mder_Art, '224~. -.. assets of debtor an~ si3tj~fy th!:). ·o.rdi~ary pJeferred,·· _ · ' . credjts · by -applyin·g_ proce-!;lds. of s~,le' in acc_orda~~·e. ·step-2:· ·· _ .. · ... , · -. ·. with ·the'_or9er· of prefereri'ce of c·redits-·es_tablishe·d in · Determfrie 'or niake an ··inventory" of'the assets or Art. 2244 9f the C)vil Code_ (Cl.VIL, CODE, ~rt_: 225-1, properties~ofihe-in~olve_n~.deb_tor:. ' . ~- :._ ... Par.. 1). Rule on.preference appli~s ... · . ·. ·.. · .... , : . . . . . .... '. Step 3;. -. Step 7: . : · · . Seg'regate spedfic : im.mo~abies·. -a'nd/or: niovables- ·. . After applying the _pr_oceeds ofci°al_e ,of all p.roperties: mentibried: under Arts":":224 f -and. 224Q or the ·civil under Step 6.- i,ipply any balance' ofth·e proce~ds of Code, r:espectively .. ·· · · · . . . , · .the··sale. to common credits· ir{ ,'i"ccordahce with the .~ . . . . . rule pr9~ided iri Art 22q1 .c:if .the ·civil Cod·e. ·R'ufe on Ste·p.4: . . .. concurren~.e ~ppfr~s:; thcey: ':~re· . 'paid" :-.pro- . rata 1.. ·s_eil ·m~"'.ables and_deterrni.ne i'f.-th~,proceeds a"re· r~g~rdless ofdates (CIVIL: OODE;;Art. 2251; _Par. 2). .~ sufficient to·.cover tne: sp~ial pref~rrea credjt •in . Art. 2241 of the-.Civil -Cside; exclude· all :9ther .. 3.

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2,ooq,000 2,000,000·-

Receivables· Immovable Property .

:Rou.se'.and Lot I.

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1,00:0.000·

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Movable Properties Mercedes-Benz

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Fr~e froperties

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Cash

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Unpaid wages

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Unpaid purchase price on theMercedez-Benz ·..

Pd:, Bal. of

4,000.000 ·'

Fjmeral.

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Unpaid duties on car- ·· · Funeral: expenses deceased. child Unpaid income.tax

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Unsecured credits of X and Y. (~1,000,000 each) Total valueof liabilities '. .:

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Exception: 1,\-private ..sale .rnay be allowed with·· . approval of court. if:_ . · · .. . · -1. The goods'to be.sold areofa perishable nature; ·or . quickly deteriorate . in ' .. value, or disproportionately expensive !o · keep or ·r:naintain; or · · · ·. ·. · _.. · · · · ·· · · . 2. · The private sale is for the best interest of the . · 'debtor' and -the creditors · (R.A. 19142), Sec.

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P.roc~e.ds . . . ., . , Any property- ·received upon s~le, lease _or .. other. disposition-of collateral,. pr whatever is collected-on or distrit:)uted 'Nith respect-Jo .the cb!lateral, cl§lims ;:irising out of the loss or damage tci the coll.~teral, as weir .as·· right ~a· . insurance paymen.t or- . other compensation_ for.loss or qamag~ of'the_collateral -(R:A. 11057, Sec. 3, Par. f}, .. ..

'Perfedicin- in Pra"c·eeds· . . . . Scope of the PPS~ . . . · 1 . Proceeds" in th&-fbrm·' of money,·· accounts , This. act' s,hall appl~. to }ii tr~nsa~tions o'f any form · . rec;:~,iv~IEl: ._peQO!!?~li~ _ln?!';:~.rn~_nt~. o~· ~~-posit .. that secure an obliqation with movable C
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oth_~! pei:formanc~ of- a_ri ot_»Q~or_; re~J.~f~l~~L::., 'j'.!: -~ '14): /.. . \ . , . . . • ,. . . w~et~_ef. t~e parties bay~ aepO_ijP._ma~~~_,\i! ·.~s&,a/ > · · _ . .· se:curi~finte're.:3t,_an~. ~.eg;,i_rd es~the_t~yi~1~f qSS~t~~lf0:o,bj~ctsf[r;;,t)le.i1:'.SA .· •,. · £ ... .'' · .• ·, (R.A. 110.q7, ~e~: 3 U)). :·' ff;F. t·ff:1-- _ ~6ci}Y.1:~ter-~s.t (1!;.~.---_.110:57, 'Sec.. 3 (b)(1})' -, . ·.. . '. .. · , . ,, .. '\' ~ ~··. ~ ~{&f'.~~-qd1~~C9n!FcftS (~.~.9~.·~.(~},(~l},. . . . · , ~- s~Gurity _mteres.t: -1s er l!ed e~/,a .C!l.~{g)~-. \1{,<~a~e ot;.o.od~_(Jec. 3 (.C)'(~)) .. ;. agreement,-under wh1c~ the.d~~t.?r. gr~u,ts .~sec11~. , :~~~lJl)Js R~c~i~~~.1.~. (?~'?-},Ci)}.;_ :"'- ~ :.:· ..• , :- . . intere:>t· in Jhe _a_ebt?rs·:·p~?P~rty-.;asf.G.cilta~~ra¥o8 . ?-~1t:eiguiprr.J~.~t .. (~f~--!J_;:·. · .:· : ·. ·. :_/' ·;.,_:, ·,., .1o-.-.·· ··.· ... .' '. .' .. . ,. ·· -·. · - _· . -~-~ ./·f}(.{)~7~epo~it.Ae9ount (s'~c. B (b)),: . ' · ·.• · _ . Characteri_?tiss of Se~urit~ ln~~-r~~t. ~GAF~ M. p~o:p~(tf(~~
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A description of the collateral shall be considered sufficient, whether it 'is specific or general. if it reasonably identifies. the collateral. (RA .. 110.57, ·_

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Perfection of Security [nterest . A 'security interest .shatl be: perfected when it has· been created and the secured creditor has taken-one of thefollowinqactions (R.A. 11'057, Sec . .-'11): · . -1, -, Registration. of a notice with the Registry (Sec. . 12;-Par'. a); - · . · . 2. Possession of the- collateral· by the, secured creditor (Sec. 12, Par. b); · · ·· -3. ,Cor-i'troi'· of investment- property anc deposit -.', account [Sec: 12;· Par. c). '/ ."" . . . . ... . . . . ,\ On perfection, a security· interest becomes effective • aqainstthird parties (9ec. 11 ). . . .

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security i~terest in any ta~gible asset mJy be . perfected by- regi_stration or-possession .. A security interest in investment- property anddeposlt account may be perfected by registration or. control (R.f.\. 11057.,. S$CS. H _& 1-~)- .. · ·.. ~ .: , ; .. ·.

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Perfection by Control Control of the security interest.- is . perfected · automatically if 'the depo_sit taking· Institution or the intermediar:y ·. fs '. the secured · creditor . . Otherwise, a control agreeme'nt or'.notation· of the. security interest is necessary (R.A. 11057, Sec.-13). ·

Assignment of Security Interest If a secured creditor assigns a perfected security. if']tere$t, an amencfmeht notice.may be registere'd_to renect the assignment (R.A. 11057, Sec.' 16). The Regi_stry . . . . The Registry shall: pmvide electronic .means for r'egistiation an.d searching of notices (R.A. 11057, Sec. 26, Par: 8). · -lnf~rmation .· contained in the.: registry shall be . considered as' a. public ;re{cord .. The: electrO:nic. . rec9rds of the -Registry· shall be the· official records ·, "(R.A. 11057, Sec. 27). ... ; .. ·: :_Regi_~lration · contributes to the effici_ent· ... estal:llishment of. a sy?tem of priority ·security interests, by' aJ?plying priority rules.based 00,:the tirne of registr<;1tibn. · · · · .&

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_' Notice~,. , . The. . dutie:{ of. the' -Registry -shall' 1be-- .- fT1erely . administrative in -nature. ·s'y; 're-gistei'ing, a ·notice or refusing o reg1s er a.notice, th.er Registry,:does not determine the sufficiency., correctne.s~;-.authenticity, or validity of any fnformatiqrkontained'in'.the.notice - (R.A:.11057, Sec. ~5, Par.~- . · . . ·.. .. .. ·,. ·~ , . . ~. .. . . ~-:-,

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. -~:A ~ecwity.Lnterest.i_n_ 1.) atanqlblernovable asset.· 'such .c!s··m:otpf VE;,fi'ic!e, i_r:ivest.m,enfpt~pe~fy;- .. · .s.~c~ as ~e.~Uifite~. ~) a_ deposit a'G.C:_R~~rit such as . ~<:IV}ngt_ .~c.cq~n! .. m~y ~e_·· .. P~rf'.ecte.P,_ qy reg1~J~t1_o~_Q(the se?urity lnt~re'st in !fig re~i.stry. ·

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Priority ..Rules . . , .. , . · The' priority .. of security··interests· and . liens ih · the safT)e collateral ·shall ·.Qe determined acc:;prding'·to · ' time 'of_~egistratiori of n9tic_e cir.. per:fe~_tion· by other. means, without regard lo·the ·order of creation ·ot the ·:. security ir.iter.ests_~nd,lieos (R.A:::1-1057, Sec. ~7) '.

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.:.· P'riorits, for Perfection _by·Control-· '·· ,., ·1. A security iriterest .in a.-·deposit account with · · ·. resp$c:'t· tti which · the -s.ecure c~editor · is the .. depos\t~taking instiiu_tio'n or . 'th~:, intermediary )-'~OQ:registrati~Jn :dbes' ·.IJO.t aff~c( il'rimediate :: . ·_. . • ·-shall' h'ave priority ayer·' a competing- secu'rity 'parties (Filipir,a~.Marbie·:corp. v, /AC, G.R. No. · · . · int~rest perfecte_d by-pny method., . _ . . . · ~ [;6801Q:_Maf_ 30, t'986J., _· -·. ._ :·:\ _: •.. 0A '2. security·interest in ··a deposit ·account .or· . ""'\ . . ·. . . .1. i_n\estment _property 'that' is .:per:fectecj a ·. 2 . . -p~_rfection:by· Pdsse·s~i-on . ·. control_.'.~greell')en.f shall have a· priority oyer a . A • s,e§urity inter.est ni'ay ·:~~ perfected. by com·peting. ·security. interest of' dep6sit-takfng . . 'possession.whfcft Is ho1c:1lng o't=t_he._instrument: ., · ir:istitution· or the jntermediary. · .·· · .. . . .. :_ . .·_ .. . . ....... . 3. · The orqer of pri~rity among competing security Under the.Civi] Code, po?s,es·sion .was essential interests in a:· d.eposit a<;:counl':-or investment .. for~ I_h~ cr'e'$,t1pr, · )e:.cu_rity . in· P,er~onal .. property'.that were perf~d.ed:by th_e:cciriclusion . : ;Pf~per'1y: Und_er tQe ·_ppsA, posses~ion is.• only . of control .agreements shall '·be determined on . . · . · requir~d for third party effecuvene·ss. · . the basis of the tin,e of conclusion or'the control ·agreements. · · ·

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2019 SAN SEDA LAW CENTRALIZED BAR OPERATIONS-, 713

CREDIT: TRAN.SACTIONS SAN'BEOA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID ·2019

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Any r:ights to set-off that. the deposit-taking 2. · ~lth judicial.process . . institution may have against a qrantor'sriqhtto . If u'pon default, the,secur_ed creditor.cannot take payment of funds credited to a deposit account .. pb$Session ·.of the. collateral without br~·ach of shall have a priority over a security interest-in the p~ac~. !_he secured creditor: . · ... deposit account.. . . . '. 5. A security interest ln a security certificate a. Snail .be entitled to an. 'expedited hearing .perfected 'by the secured creditor's possession upon application for the· possession of. the ot. the certificate shall have ·priority· over a· - . · .collateral; .: : competing - security interest perfected by . b. Provided the debtor; grantor,· and if the reqistration ofa notice in the-Registry. · , collateral· is a fixture,· any, real.. estate . 6. A 'security interest ·ir:i. electronic .securities not rnortqaqee, .. a · copy of the· 'application, held .yhh an intermediary perfected by a notation . including all' .supportinq evidence and of the security interests in 'ftie books maintained documents; . . . . for that purpose by or on behalf of'.the issuer c. _ Is entitle,d to an orae(gra.nting possession of shall have priority 'over security interestin the - the collateral upon the court' finding that a same securities perfected by any other method: default has .occurred under the security 7 .. A security inter~st _ in· .electroriic securities not aqreernent. .helo .with -an Intermediary perfected by the. . . . conclusion of a. control' agreement· shall have .. . . . ~es'sor of the collateral refuses to yield priority_ over a security _interest in the~sa'ii;'"e go.~.session:. -. _ '. . .. .. · secudti~~ perfected by registratio.},_oftt'noti~i~ njo~gee has th: riqht to m_~intain: · · 1 the R_\:ltJ1stry. . · ~ , /'-. ~ (_~ £in_act10..n. 0 recover possession: or . . . - 8. The order of priority-among co~ple®,9ie~urity.. : , . 2: RecJ/er )>~~~pleviri the -collateral from-the ~n~erests· i~ e'lectro.nic-sJ~cu~iti~s n~jlclJ.{J.l~·an:" ,.s'=, ~~gag'@,,f-bbrr' ro.m ,Y. ·the ~ecur~d · cred1to( ,1.: · Witl:foutJ!Jdicjc)I pr~ce~s · ... . with~.ut~j!:Jdiqial pro_cess '-'.- ~ _-:-·: _.. · · · '. .·. .·- ·,.. - . . a.. lf,.ttie • _sec.wily a~r~e.rn~nt. ·~o· _ stipulates, ·. .1.: . lnsfruct}Q-~ -~c~pu.rt-de,qt~rJo. rri~k_e payment to , ... prc)Vid,ed that· 'PQ.~~eS$iOh .. -can _be taken, ... ' th'e s,e~ut¢~ cre,e:!.itc>.r>~~d.~f-PIY:SUCn~~ayni,E:ritt~ without breach,of. i;ieace; . · ,~ _. the ·satisfactiorf of ~he. obligati<,'}[1 :secwed l;>y' the .. : . :a) -_ • . ,. ' . . . se:Curily inter.~st after dedli.cting ,,the,:Securec;_j t,,iot~·:: The' - breach: peac·e sb.a11.. , (r\c;:lude ·creditor'i rea{o.na.f>(e''collE?cti~ri'-.expe.ns·es; .... '. _ ent!3riii'g_:thE:iPrivate re~i~erc.e;ofJh~ granter 2 .. In i)egoti9ple ·ddcu,rnent tM13t Js p~rfected by''· without p.ermissicih,'· resorting. to physical ·. JjOS?essi.on",' ·p(oceed :as }o. the . ri~gp~rable.,., -~iolence · , Of . it:i~imidation, .•. or.. ,IJeing do'cufoent br gobds'.·covered' by-,the negotiable· §IC,t:Ompar:iietj by"a ic:jw· .enf,or.cement ofDcer. document; . '.· • ' • . I . ·'.· wher:i taRing poss·ession or cor:if~onting the 3.' - In a depcisi! acc9ueft :nJ~,i(ltcJtn~tj by fh,e se~.ure~·.· gr_?r.itbr. _- .·.', .. : - .. >~ ":' . ~- : : - . ·-.. cred,i.tm .... ·~pp'ly ·.tn~···bal~r19.e_'~of. \1)'.~:· de,_p'q$it 0is _ a9ci?.ur:it:to the, o.~lig_i;i_tjon ~ect.ireq ·py t,t:ie c;_jepo$it b .. · If - the· ~:ollateral. -a fixture:_ .the. ·_s·ecured accciun_t; and . . :.. . . . . . ' . creditoi;';if it nas,-p'riority,ov~r.all .. aw·n'ers and .. 4. In othe.r cases of s~curity interes,t- in .a. d.eposit_ rn'ortgages·, m.ay re'mpve the·fixture_from tti~ a<;:courit p,erfe¢ied ·. "by'_' c;cinfr.ol, . instruct the . . re~1· property to whiGh it is a.ffixed, pmv.ided ' d_ep9sit-ta~ir1g iiis.titytion. to -p-~y,.the halar')ce bf . he.~).<ercises. dU\'l :care 47f: . 'the dep9sh acCOUQt. tc{ the. s"e'c1,i'red creditor's account (S.ec: -48) .. · ·

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CREDl·T-TRANSACTIO-NS SAN BEDA LAW ffNTRALIZED BAR OPERAT(ONS - MEf>:,ORY AID 2019

Disposition of the Collateral . After· default, · a .. secured creditor . may sell or otherwise, dispose · of the -, collateral,. publicly or.privately, -in its present condition .or following any commercially reasonable preparation or processing. .

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. The. secured· creditor may buy collateral at: any publicdisposition, or at a private disposition, but only if thecollateral is ofa.kind that is costornarnysotd on recognized market · or ,the . subject' of widely . distributed standard price quotation (Sec ... 49). .,

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. Note: Although- the PPSA grants the higher-rc;Jnked se.cu'r.ed .cr~ditor the rig~t fo.~~k.E:3-0Ver 'enforCef\)eht, . if,th~ higher"ranked cred\to(fails _tp take over)t'does. · not share tn the .Proc.~~_ds of_ the gisposition effec_ted by a lower ranked se'cured creditor: . . . .

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. c. · The 'satisfaction. of obllqations secured by. any subordinate security interestor .lien •in .. the collateral if·a written demand and proof of the interest' " are · received · before· . . distribution of the proceeds is completed. 2. The s.eclJred creditor shall account to·t11e grantor· for' any surplus, an.d,' unless .otherwise. agreed·, the debto_r is liabl~ for any. d~_fiqiency (Sec_. 52).' . . . . . "'· •,

Note: Disposition after default is similar to extrajudicial . foreclosure, under · the laws· "arr Real Estate Mortgc1ge. · ·· · · · ·

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. .The innocent buyer at the dispositjon of t~e collatE)ral c:!cqJire~ · the granto.r's. righl.in the a~set free -~f the . _ ·rights c:if any secured creditor or l[en holder ·(R.A. 11057, Sec:.53). · ·., · ·. . . · ·

, Commercial Reasonableness .A . disposltion · i~'·.cornmercially reasonableiif the secured .creditor . disposes of- the collateral 'ln . conformity with corrimercjal practices .among dealers in that typeof property. ·. . . · · . . , .

. Retention.of Collateral . R,ele.ntiqn of collateral is the .i::esult of. itn_ offef_on. the,. :part of the se<;:ured· cre9itoJ (\h'e proR9sal) ~n.d the: ·. acc~ptan~e th~ proposal ~Y the. p~rtje$ entitled to rece1~he..,1~1J>posal: . . . -: , . . • .: · _ . 1. - 1.n ·_'case;Jh~ proposal rs for full. ~at,_~factron,

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acceptree i.s. deem~d ~iv_en· .uh_le.ss the parties deliv~;a~,ol::}j~ction in writing.. _ ·~· .If-. th~ Rrop~$i:!I is ·· fo.r ., pa~ial satisfaction, "·' .~ b1;;_estc) bl'h'db · · ,,, _acceptance· ·must 1$ e . y·a· m1rmat1ve 65'~~1it iff YJriting,of all the parties .(.Sec. -.~·

. The right;of redemption under the.pPS~ pa"rtak~s of.· an equity of· redernptlon as -ltmay- be e?(ercised·· .... unless: . . . . ·. . .. - . .

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The person entitled, Jo. redeem . h.9J not, after default-waived in writing the right ot redeem; · ~- The collateral i$: sold or disposed, acquired "oi collected. by the secured 'creditor or-until :,th~, conclusion of an .aqreernent · by the secured ·c,reditor for tha·t purpose;.- .: ., · ·· · 3. The · secured· creditor retained the .:qollate'ral · · -:(R.A. J?t.057, ·s~c . .45). _·. .r-

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:· · Note: Ttiis is similar to.dacion' ei:i ·pago, 'not pactum commisoriurn b:ecause there is'an· offer or.'approval, . . and irocGttr$ only after default ·. .'.- .. · .. ~ · - · ·. . . ' . $t~ps_ -in_ Applying·. the Rule~ fo: Preferen.ce :and -· . . co·nc::1:1rr~.rfce .'of ·cre.difs:. as ·c11riehded:·bf R.A .. ·. .~.:. · .. _ .· · · : . . . 11057: .. ,· ·. · ' . · · . ·

Application ~f thJ P~o~e~d~'- . . . ·."· ·1. - The proceeds of disposition shall be. applied in '. t_he' followfng order: . .· . · · · ·. ' · · · . : a: The reasonable expenses of takinq.holdinq, .. : preparing· for.dlspositicn, and disposing of. . . the · . collateral, · · including reasonable . 'attornev's feesand legai .expenses fnc'=!_rred :· bythe secured creditor; . . . . ' . '. ·. · 'b. The satisfaction of the obligation secured by the securltytnterest of the enforclnq secured . creditor, and · · ,.

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Note:. The. following is nof y~t effectiJe as no: I.R.'F?:. . . yet hf!S· bee']_·issued as of the date-·of printl{Jg, and ., PPSA 's. implementation is conditioned · vpon the . · . restablishment . anfl. operation of.. the R~gistr/ .in . . . af;cordarice with' Sec . .' 68 df1he PPSA. . . · .. St~p 1:. ···~ ,-·. ~:..· Determine, if · the . liabilities exceed the· assets .. Categ:orize the· cr~di~s in_to· the· toi19wing:·thr~e ¢ategories: "'· . ·-· · . .. ·.· . ._ . . :1.. .Special_ Pref~rred Creg_its inArt.'·2242 ·and· RA - · No. 11057; · . v . • ' • · 2. .'Ordinary Preferred .Credits under Art. 2244; 3. Cpmm9n er.edits under·Art.'2245. . : .. : .. -

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D~terrilihe or make an -inventory of the assets or, prope'rtie:s t~e insolven~ debt0r.. . •.

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C-REDI.T TRANSACTl·Q:N~S SAN BE_fJJ!, LAW CENTRALIZED BAR OPEl}ATION!> ~ MEMORY AID 2019

-Step.Sr. . Seg,r.egate specific immovables under Art. 2242 of . the .Civit, Code. Only credits in numbers (.1)' of Art. . 2242:enjoy preference, allother credits enumerated therein'; have no· preference and · the · rule · on concurrence. applies to these .credits, ,

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5. .Th e · officious. manager (gestqr) · must have : voluntarily taken. charqe (that is, there must be . no vitiation of consent, such aserror in thinking . that he owned the property or the business) (5 PARAS, supra 1..15~) .. . . .

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If- he- undertakes risk1 operations which the. to embark.upon; · b. .lf ~e- has preferred his:owh interest to that of · the owner; .. · .. :· · -.: . - ,.:·-.· :· .. ·.....• · · c. . · 1f he fails· to return the property' or business t •

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·(§:!:.~RAS, ~.up!'a .a(1159). ' ... · . . ~/ , · ·.:- -· :· · . , . ,:.. . Note: .. So. l_ong as the owner does ·not know !~at · , .. ano!her: is. a~!in~ on ._his behalf witnout futh~r(~ ·. nf!gotiorum gest,o exists;- ·but orice~e 5~prne~ _ aware of such,fact and s.ti!l::.he d~~ npt re.P,}ld1.9t~ lhe . · • ?._Cts).9ftt")e 9:geilt, the. quas1°coritractic~_ases. !9 ex1sff, . It has .become-an implied.agency (5 f!ARA·S, supra :.· -at 11.5~) .. ~: . . .

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s·e personally liable for contractswhich he has enteredinto with third ·persons, even thouqh he acted, in the- name of the owner, and there shall . ·be no right of action between the owner and third· persons except: .. · · . .- · · . a. Wh.en the .owner has. expressly or 'tacitly' ratified -the' rnanaqernent, or · I b. When'the contractrefers lb things pertaining to the owner of the business (CIVIL c;oDE, Att. 2152). ,F- ·: .: , ,:' : -Not;· The res~~nsi.b.il;ty·ot two o.r more officiou~ marfagers'. shau: be . solidary, : ·unless: .the: management was-assumed to save the.thinqs or .. · · d · -(CIVIL CODE business from imminent anger. . . .\ .. •,' 2 Art. 214 and: ..: .. , - '

Gestor . should .: 'never The·. agent 'is. actu,aliy- I have 'been authorized in authorized. to . assume -.· any mariner. the agency by virtue of . ,., the acts> df. the owner or . .by virtue ofhis sile6ce, .

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·gft~r ~em.and byJhe.~w~_e_rr·· ... :~· :. · :· .... IH'le-as,.sumed ttie·ma~agement batj faith (CIVl/l CODE, Art. 2147}> · .:·.. "· · . .Exo1mt whe.n. the management ·, was · a?su'fed~fo save .. the property or t,_usiness-, _ fron'h rnment da.nger:7". · ;(. ,If. h'e manifestly ·unfit)o carry·. the. managepient; · ·. . ... -·.- , . : -''.. ·ii',~.y~his interveot\on he ,pre.','.e/1fed ·.·a ·:competent per~qn· from. ta~ing up .. Re~pb~-~i.b.ilitiEfs .of the OfficiC>US. "4anager: ' ' ' ' -~ the rrianageme'nt . (Cf.Y/1".r. CODE,· 'Art.\ · 1 .. Continue· ·laking. 'charge of .the ag_woy.. or.' · - 214Bi,: .··. ;····· ": : .. -., :.- i. .·,· · __ , man~g~-m~r]l"unJ!I the.- terrnin.ati~n_· 9;"t~f affa~.- · . ;.· \ _ .- ..:·: .... :. ; . .- } - . : . ;' .- . . _. '- · _ ' ~-n~ its 1n?~~~ts,, bqt_ ~~- may requ,'.~ -.the.?~-O~r•. ·Respons1b1J1t1e~ ?f,the}1~ne~~. -. .; .. ·,_. . : · , .. :1 . ,. _ .· _if:the latter.1s·11:i-a ~0~1ll9n fo._:do so,.!o su1?5.t1tute , The. oymer: of .I.lie. prdpe_rty shall b_e: haple f?r · the officious mal}ager. (CIVIL CODE, {'\rt, ~141): . · .. · obligations::.incurred~ ,in .his·. interest; - and.: ·shall ·• ·. •• :',·. _.:. .. ·• - ~ .· • . • . - :, ..• • .• _ · v-· refmburs'~ ~he qfficious ·m·anag~r for~th~ n~9.~ssaty .. 2 . ., .P.ertorni" hjs d_utl~§ with all th~ dilig.enc~ ot_a. ·g~o_d - · · .· and. tiseful: expense·s an·a·, for .dafnages;- which the . f~!~E=lJ of;_a-faryiily, arid P.ay .the dama~e·? yvhii;;h . ·Jatt~r may-have suff~re~ in the peftorm5'ince _o(his . . throygh his. fa!_Jll or. riegligen<;:e . .may·b~_suff.ered-.) . duties iri the·follc:iwing instances~ - . . .re· - . ·by .the owner-of Iha property Or b!]si~~ss ~nd.er · .· 1 ... When the:~-owne·r,; of, .the:.: pr.operty ·,o'r bci.siness: .. ·- . m·anagenient •. b.ur: t~e courts . m~y . ho'."'ever;. . . ' :, e'njo.yed·, .':ttie': . .'ad~arita:g~·s . ·bf ·.!_he,, .offidous, in~reas,·~ or,mode_r~te th~ indemnity ~gcor9il)g to : - management ,although·· i_t ·rnay. nqf have· be.en ,ltie ~ir.c;:.umstan.ce~ of ea~ti- case .(C/VfL". <:;ODE;· · _ , :expressly ratified by) him·: (CIVI~. CODE;·. Art. "·.:2150, Par::1J; ·'.'.···. ;- · ;··,· · ·· . · ... · - · \ }L\rt. 21_15); ,.

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Be liable· for· the acts· of his delegate if he -delegated to ai:io!Jw~- person."c:!11,oc s.om~ - of :hi$. · d.Uties·, with9ut p_rej_udjc~ tcfttie direct oqliga~iO!'}. : . ·: . of the d.~legate to\Nafd.t_he qwner.o.fthe bu$i11ess·· : · . · ·- ·(CIVl[JJODE, Art. 2146, par. 1); ..

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Liability for Contracts . The owner shall be liable for contracts which· the officious. manager· has entered into with. third . persons when: .. , 1 .. Such owner has-expressly or tacitly ratified the management; or . . .. : I 2. The contract refers to. things pertaininq to the . owner of the business _(C!VIL CODE;Art. 2152). . .

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No.te: Payment by ajoint co-debtor for thebenefit of another co-debtor or co-surety is not solutio indebiti but a payment by a person interested Jin the fulfillment of.the obligation under Artide-1236 of the" Civil.,,,..,..-..._ Code (5 PARAS, 'supre et 1165) . . .

Note: Even if the owner is a minor; he- is still liable under Article-2150. of the Civil Code for he-should riot be unjustly enriched at .anether's -expense '(5 ·· PARAS, s·upra at 1'1.62).

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Liability. a Payee. in BadFaith: 1. · pay. legal.· interest if the sum of money is - involved; or ·_ _ · , 2 ... Uabie for-fruitsreceived orwhich should.have · beep received if the.thlnqproduces fruits ·(CIVIL_ CODE,.Ad:-2159, par, 1) ..

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When is Manageme_ni'Extinguished: r . . . • Reason: Tne:P?yee assumes all-risks having .1 .: Wh·en the· owner repudiates It.or p~a~u· ac::ted ·Jr,ai.i~l).ler:itly_.· tho.µgh darnaqes may be' thereto; · · : . . ·· · . ..,-..,;.;.~ ~ · ·· mJ.ticilte,d ,urid~r _A_rJ:. ,22J5 of the Civil_ C(!d~ (? 2. When the officious manager-w1thdr9~frqrn~f,Rf§, uera af.-1168).. · · · · management, subject- to the pr~i~o.n~~~Af11cle ~- .. ~ · 2·144. of the C_i~jl C?~e!;and£ -Si-,..H~shal~~rt~erm6re be:ari_swerable for.any.l~~s:_ 3. By the, death;. CIVIi .. mtercl1ct1or'./msan1ty .OJ) '")f._C, "¥!' or 11rpa1\rll-~tof. the lhmg from any CaLJSe :and

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f1i7JC 0USf. anag~r . ~. .·•. ·."' . /&. ·fo~· -~~ma~~f . ·to th~ pers9n _y;,ho deliVefe.d the . :. . . ~··. · t~m~ unM\1 ~· 1()-~co~ere.1. (CIVIL CODE, Art. • · • : ,·~ • 111 ... · 21'59: par. So_l~tio_Jnaebiti . _ _ ~, · . · _ · This takes place whe.n sometl]og ~s re~~ived.wh~r(f.,1\1, .;i}1a_p1ht¥ of.Payee rn~Good Fa1tli:. · -'· · the:e is·. no· righ~. to. dema~~"'fi.,t.:~rid'. i~~\ ujlduly -~~E1:_- 1. in ·c~ffeii3pnrn,1tpair~1nt .or" loss, li~bility is oniy fo ae~1vered thru m1s~ake (CIVll Q~E ~(t~fe.:._ . ffij· i"' . t~e -~~ent '), ~b~~~f~; a.n? : .: · . . . ·, · It_ 1s _,pre~urned. th_at the~e ial \ii1staf~ ,tH pfih~na!_1gn_, ·pnc:.e is_ to be re1mb.~rs.e:cj, pf!yment_ 1f:someth!~g·wh1ch nad never· bee~ 1·e\'?r· ~'1 1~ff°as.~of .~red1t(the sam.e s~ould be assigned had. a_lr~a~y b~en .. ~a_id "'."as:9efive,red; b!J.l ::::~~--£:(,~{VIL Q;0E?f=,·.Aft~?f60):. · .' 1 ·. wh?m ·the_return 1s cl~1m~q rt'l_ay ·prOV(!l th_e_t ~[:b"'-l.'1"'\ ,>...:-'.)-\ / . · ·./..;: .:··. · .· .. __ · . . . ?e.hvery was made out o!:~1beraJ1 y,~fo_i;an~~·e,:..:::~"U: ~;Jh~S.P.0~~.1.b!_~1ty. o_t two or P~Y.ee~, JU~t c~u$e (CIVIL CODE; :A,rl. 2163):.. .~.Qf[l.'tfier~\~lti>e~n. pay_n:en_t CODE, Art .. 215_6J~ . . : . . . .. . ..· ·:. ·.. ·Note: He. w.ho P_c~id ltrftluly may pr.o,ceE:idonly ·agc1!i,nst R.eq·ui~it"es ''ot s·01utio}~del;,"iti:'· .·. . . . ·~.'.\ :. -, thEt!rl.le 'debfo(or 'thegua-_fa'ritq6witl:i Whbrri the·'action . ·. 1: Re9eipt (not- .mete iacknowledgment) . of j.s stiU e.ff'.ective (CiVIL-CODE, ~d 2162).' . · · ·. ins.olve~cy of''the ownerf (CIVIL _CODE, Art. ?_1531

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CRE.DIT TRANS·ACTl"ONS SAN BEDA I.AW CENTRALIZED BAR OPERATIONS - MEMORY A/0 2019

Other-Quasi-Contracts 1. When, without the knowledge· of the person obliged to give support, the support was given · ' · by a stranger, unless it -appears that 'he gave it . - out of piety and without intention-of being repaid (CIVIL CODE, Art_. 2164); . . . . ' Requisites; . a.. Support has .. been furnished in favor .. of a: · dependent of- one bound to give support but · wh_o fails to do so: _ b. The -support was supplied by a stranqer; c. The same was given without the -knowl~~ge of the person-charged with the duty; and d. It must not have. been given. without. the expectation. of recovering it (Ramirez v. Redfern, G.R. 26062, December 3°1, . I ' 1926):

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When a. person. has found a lost' personal property .(CIVIL CODE, Arts. 719, 720, end 2171); . ' .

9.

Wh~n a possessor .in good fa_i\h has: incurred necessary ana useful expenses (CIVIL CODE; · Arts. 546 and 2172); . -

10. When:c! third person.: without the krjowl~dg~ of ·· - the debtor, pays ·the debt (CIV/L-- CODE,. Arts: 1236, 1237 and 2173); ·· .;

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wnen funeral expenses are borne b/ a .t~ird . person, without t9e knowledge of the relatj~e? /, obliged to-qive support· to the' deceased (CIVJ'-l CODE, Art. i165); . . · . -

3.

When the person .obllqed to supportan orQlian, or. an insane. or an indigent person. tfuduly . A. refuses to. give support to the latter, a-third . person furnishes the s4ppo_rt (CIV!l!::'CG>QE, A~, .2166): .

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inhabltants of age ..decide upon- a· measurefor protection against lawlessness, fire, flood, storm, or other calamity, 'anyone who objects te the.plan and refuses to contribute to theexpenses but is benefited; by the. project as -executed 'shall be --~liable to Ji>?Y his share of said expenses (C!VIL CODE, 11rt. 2174); and · ·. · · · . ~

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.__L_A_N_. T_i_T_L p .....E_s_A_. o_D_E_E_: N_. o_s _

Land T_itle . . . Is the evidence of tlie right of ttie owner or the extent of his interest and by which means he can maintain control and as -a rule, J assert. right to . exclusive possession and enjoyment of.the. property (PENA, Registration of Land Titles & Deeds Revised Edition .(2008) [hereinafter· and Deedsl). . . PENA, Land: .Titles . . . Deed . A deed refers to a written document executed· in accordance . with law; wherein :a person grants or conveys to 'another a certain land, tenements, or· .hereditaments (PENA, supra at 4). ' .

. provides a' public record of the title itself upon which a prospective purchaser ·or someone else interested may rely

LAND REGISTRATION Land, reqistratlon -· -, . . A judicial or administrative proceeding, whereby a · person's claim of ownership over a particular land is determined and confirmed .or -recoqnized, so that· such land and the ownership thereof may. be recorded in a public registry. . - . ·: In strict acceptation, it pertains to the.entry made in the . registry · which records, solemnly and_ permanently the _right of ownership and other- f~al . .rights. Simply staied, registration . Js made for .the .. 'purpose. of notification (Cabiling v'. Fernendez, GR · 183133, July 26, 2010): · The act of registration shall be the operative act to 'convey and affect' the-land, and in all cases under this Ac_t the· registration shall be made in the office of". register of deeds for theprovince or orovinces or city where the land li~s (~ct No. 496, Sec. 50):· · .

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System of Registration'.ir:i.the Philipplnes (STU) 1. System under the §panish Mortgage t.aw; ·' 2 .. Iorrens System; ·and.· 3. System of Recprdirig: for !J.nregistered Land (PENA, s.upra at 4). · · .· . ,, .. , Note: Lands-gfinted unde:r Spanish Mortqaqe l.aw, which.are not yelc~vered by certificate of title" under Torrens System~~ considered as. unregist~red lands (P.O. 1529, Sec.3)~· . : .. · . . •. . .

.·,' (RE(SIA, supra at 7)..

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Registration under·the Spanish' Mo~gage Law Discoritin ed -P-,D: '.892 was 'issued. decreeing the discontinuance of -t~i system of. registration under the Spanish Mbrtgage LaW and the, use of -Spanis.h' Tille as evidence · in · land reglsti;atlon . · proceed_ings .. ', ..

EXECUTIVE COMMITIEE SUBJECT COMJ\'.l,!ITEE MEMBERS . .Al)VJSERS MARY CYRIELL C. SUMANQUI MA. .CRISTINA D. ARROYO... ELLAIN · G .. PEPffO, MERRYL De\l,11.. ED . :'_!NCENT S. 9ver-all Cliairperso.n, ERICA. Subject Chair, .M:ARY CHERWYN !GUSTIE .. M. ·· FRANCIA: · ALBANO, Dean -UJ..PIANO P. 'NiAE·c. VISTA Chairpersonfor L.' CASTRO" Assistant Subject CHARMIE RQSE -DYNI; R. · SARMIENTO. _'in;- . Atty: . Academics, BEN -REI , :E. ' Chair, ·-JAYSON P."' lllQUIANA ROMANO, JANJNE CAMELLE MANUEL P .. CASINO, Atty. BARBERO ChalrpersonforHotel . : Subject Electronii: D~ta, Processing, ·r:.. GASCON, ,\IIA. ·. G:HERJE DAtfl."E. 0. DEµ CRUZ, Alty. Op~rations;]]-!ELSEA LOUISE B.- . M.ARlj\ ANGELICA 'n. LOVERIA JANE ... · G. · LABANGCO, . ROWELL" 0. ILAGAN, Atty. DIMAANO _Vice Chairperson for ·. Conflict of . Laws, SOPHIA .MARIELA MAE B. MAMAIUL, JOSEPH FERDINAND· M. · Secretariat," :EARL JUSTIN · M, VICTORIA _E,. MINA Persons and ]EMMA z: OY A.tES, BENISE D. · DECHAVEZ, Atty. 11-IERESA· YAly!BAO Vice Chairperson for "Pamily : Relations, ·JOANNA MAD~A. DONNA.I<Jl.lS. B. · GENEVIEVE NUEVE-CO, Operations, MA.' ANGELICA :I). . ELlZA.IlETii . · .. ·KAMI.A:' C. GOM$Z. JASON JERF;MIA.H' G. ,, .;_, . :··. I DE· LEQN \{ice Chairperson for MALCONTENTO Property . and · RUNES,_.'GERARD CEASAR S. Finance, ARRA OLMAYA ]. Land Titles ·and .Deeds, KEVIN- BAGUIO, CAMILLE c·. CELZO, BADANGAN Vice Chairperson CHRISTIAN A. - PASION . MORRIS MEDEL F. SOLANO, for Aud_it, JORDAlfN. CHAVEZ , Succession, ]AMII. P. DALIDIG JOSE MAURICE. ROMEQ .Y. Vice ChairpersonforEDP,HANZ· . Ob!iga/ions- ... and Contracts, ·SALVACION; LOIS RENEE R. DARRYL . D. · TIU Wee. KEIRVIN ANlllONY B. VIADO. TUBON, .Ci;EsKA JOHANN G. ChairpersonforLogistics,an.d Sales ancl L(ase, KORINA ~ M.. CO, :JEANNE PAULINE .. ·F. J;)OHN Al.FR.EDE. AQUil.IZA:N .C~VA Partnership an1 Agency, RESURRECCION, . MARIA·· Vice ChairpersonJar . MARJA ANA · ANGELA T.- EMILIA. A. SIBAL, ]ERRIC B. Membership SIMPAO Cr~dit Transactions, CRISTOBAL -GIZELLE KARINA · ' D.C. "M01'1TERO Torts and Damages

LANDTIT.L·E.AN·o·DEEDSSAN °8E()A LAW CENTRALIZED BAR OPERATIONS~ MEMORY AID 2019

(AGCAOILI,· Property Registration Decree (Land Titles and. Deeds) Rf:)vised Edition (2015) .P· 27 [hereinafter AGCft.OILI, Land Jitles .and D13eds}i.

o"':'nershfp is established· . and reco·gnized. ( Traders Royal Bank CA. G.R. Nos.' 114299 and 11"8862. September 24, 1999)._-.

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Laws Implementing L~nd Registration . 1. Property\Reg,stration Deere(:) (P.O. 1529, as . . amended); .. . • ' · 2 .. Cadastral.Aot (Ac't 2259,. as a.mended); 3. Public Land Act (C.A. 141, as-amended); 4. Emandpation Pa,tE:nt. or. CARP of. 1972 (P.O. 27); · '5, Comprehen.sive,'f\grarfan Reform Law· of 1988 (R.A.6657, as am~hded}; and· 6: Indigenous P'eople!LRights Act or IPRA of 1997 (R.A:83-71). .

Note: · Registration does. not vest. tit/~ .. It i? . not -a · ·mode of a_cquiring O'f'nership bui_is merely evidence . of such titie ove.r 13 particular property: It does .riot givs the hold'er any b!:)tter right thari what he_actually has, especially if the registration was ·don~- in bad faith. The-effect is that it is·a~..jf .no registration was made' at a·II (,4.vila-·v. · Tapucar, G.R._ No. ,L-45947, August 27, 1991). \ .-· · ·- · \..

It is emphasized that the . registraJion of a 'patent under the. Torrens: System merely ..confirms · the registrant's title. It does not· vest title- where (here is Note: P. .D. · 152°9 amended· arid codified the laws-on ·. none because ·regfsfrati·on.und.er thls system·is not a registration of property, · in .order to· facilitate the mode of acq.uiring ownership· (Heirs of Spouse's De- . . effective )m.plementation -·of 'said laws - (AQUINO, 'Guzmeti », Heirs or B.andong, -G:R. No; ?15454, Lena R~g'.~trat~on. andRelate_d Proce~dingJ.,.,f2007),' :A~fP-1~1~ 2017);.,.~~gi~t.r~.ti.on c!g~s not _giv.~ the . . p. 3) fheremafter·'AQUINO, Land ~eg1strat1on]~-. _ . - feg;.stran~a bette_r ngJ-)!)flan-.what ~-~ :h:ad. prior :.to-. "7 . ': ~: regi~J{atio~ (~'t1qU(!-.[?osaii'o · v. B~ri_co _ F.il~pirfo _It superfed~s all other: law,§ relat~f.:.regw~tion. of Savmgs..lamt,'"!J.\er1n_g~ftll~g , Q~\HI , --, .(- . . · . _ - , · . 'ehteririg.o_f'~ver-y conve}anc~~~~g1~~ase~ ...!F_,;1. ·.": ; • .. • · !' .. · , - :·, • . li~_h, atta.c~_'!)ent; o~der,_·jucl.9!:)l~·nt~nstro~n,t or=~.si . "..,; · . •., ' · · ' :. ·/' •- • . , · . en.tfY ,a_ff~c.t1ri~ r.e.~1sJ~r~9_.Janp-:(P10~.5;?_90~· . .. :ffit ·x.. .. . .. ·.. ~.- ·'ft-,·· , _.0:. . :. '. ... , , ~ · / - · 52);. .· -. - . - . .'· ... ·.'\ . . . \ln..,v1g~~f~v.inef§_ l~:OI._ ~r~q-~edmg: .. · 'w~er~ . 3. i;o _.~ot!f.Y 13n_d_ .prote~t th·e in.t~.ests ·o[is!ranger~ -l~~o:'.1an~}l-~/?¥.f!:ie fir~! m~!~ental '!1,at_~~: -~ft~r .· ·. to.? g~v,e11 .. t_rans?~t1on, .Y~flS? .maY. _b.~A~rant:> · - time(\i\~,E;.,j:~f. public ,oqg1ri~J.regJstr'?_t10.r;i may · . · · .ther_e0f: (C?Jsi.ca it:. Vf!!a_socEJ,·. Gf!·. No1 ,i=-fJJ9o; 1 ~,o~\u]l.oer. any of .t~e be: ,bro~g~_t _before the .. ·. Apr,l_30i:., 1 Q5!); .... -.-. _ ._ ,.- .. ,.: : ~ sys_tem~ .- ·- of land ~eg1st_rat1on co4rt by . , _ 4.·.. To en~bje .. every .. regjste'red.: owner and .every. registration (PEN)\,. ,Way.of'motion or petrrion · · ·.. . ""· '·subse~t;ie'Ht'"12i1tch}1kfr of tegist¢'f.etl)~'r]d taking . - 'supr~'~r.·11). . .'!. • .. ·- .~·:~' fiiet1: •'by.: th~'·_·rigi_st~tEid -. ' .... a c::ert1ficat~ Dtle" valui:H3(1d in .go_od faith· to: .. .'.. :.· ,.·,: O:~ner br. a' p_arty'" in:. , .· ,. "' ):ii:>1~. :the ·~a~!:No. volu'nJ.ar.y, .- .,. ,. - :· ::· ·. / ·: . . ;:::· · · .. ,·instr~m~nt_shaJLberegistere:d by the Register'oJ.; . . . , .. , . '. . :'· . ,- . i · · ;· · . , ·Deed,s,:cun)ess th_e·_owri~(~:·d_yplic.at.e :certificate :. - E{f~cts of;R~gi~tration: . : · . · - · is presented »1ith. s·t.ich:,fristrulJlent._(P.b. 1529, · - ... t .. Registrat_ion in_t_h.e public registry is notice to:the ·sec. wt,ql~ ..:yYprld; ...... 6. 'to enabie:the Register. of D~ed·~·to·M~intain a 2. The act of regjstration- is -the operative c;1ct to·· repository . · '.(Primary, Entry·. :raook). ". of · ali ·. · '.Cony.E:i9~ atfe!:fth<{lar,id:ihS:~far a~Jb ii-f~i§.'rsoii,:' : . :,. : .. i'nstr.uments affect'ing r~gist~red ia'no\F(DA 52[J; . ...' ,, a~e;.GOrtce~ilect.and·· . '. •. : ·_ .: · '·.: ·~, .. _Sec ... :56)i, . . , -·: .· 3. \IJl{hiLe regi_str.ation:.operate~ ·as a···n9tice· of. the · · .· 7: To issu·e a certificate or.title to' the o~ner, which.. °qeed,:'t:i:mtr;,id,:qf'instruri1er\t to._oth'eb,;~it~does ... • . sha!I. be. the best _svidence. cl,his own·ership 6f ·· · rl(?t, ..?S·, t9 it~· v_a·li,dity 'r:i.or c9n~e.ds :an )n_v13_J1d th~: land des·cribed··therein (Lee··Tek Sheng v. in.&triim.erit inJ~ · .a--valid one; ·.neitt1er .. does- ··it •.. :CA,"GR:· No. ·115402;:July:.1{5, fgg8);· ~rid . ·l€CO.gniie a· .vali,d ·and·stJbsisting'interest'ln 'the 8. - To .Guafantee the,'iniegrity .ot-'land 'titles ·~ncl to .. iand(A_GCAf?IU, supra ai 4(3)., . · · · · . ::·': •,; · . · . protect their iri'clefeas4bility onc£'lh~ claim of '-

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LAN.D T-ltLE. AND DEEDS Alf) SAN.BEDA LAW CEt:JTRALIZEDBAR OPERATIONS-- MEMORY

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Constituti9nal Basis All· lands bf ·the ,public· dom_ain, waters, minerals, coal, petroleum. and· other mineral oils, all forces of . pote.ntial energy, fisheries; for~sts.-or ti.mber, wildlife. _fl9.ra and fauna, and -other: natural resources are ' owned by the State .. With· the exception. ·of agri9uJtural la'nds, all other n.itural resources shalf ~ not.be aHenated :The· e_xploratiori;develo"pn:ient, and utilization of natural resources shall be under the full con\rol and· supervision of the SJate (C.ONST, Art. Xll,_~ec. 2,_.Pa:,,,_1).,.. ·. : ·· ·

Advantages of R_e'gistration: 1. . Secures title; -. · 2. Protects against frc1ud;. _ 3.. Simplifies dealings; 4. Restores .the· _estates to its just value, whpse .depreciation is caused by some blur, tech'nical c;!efect; and . 5. _Bar's _the recurrence of faults in the· titl.e (Legarda v. Saleeby/G.R. ·No.· 8936; October 2, 1915).

· -Nafure of:Lana Registration 1proce'.ec;lirig_s. '! ~..: . ....: '= , Juc;lidal for .'1he · registration of la~ds~·Both.the 1935 and the ·1973 Constitutions prohibited throughbut the Philippines shall be in· r~m and: shall · Jhe ali~nation of all_· natur_ql _ resou~ces,, excep,t . be b1;3sed on the· generally accepted.' principle~ . agricultural lards:·~f. t~e ·public· d·o'main. The:.1987 . underlying·. the T'_orrens system ·(P.O.· 1529, _Sec.· 2, · -~ons.titution readopted·this-.p~li_cy: l.1Jdeed .. all lands·. Par. 1). · ·,. · · · .. -~· . . ·, · · · of th_e -pub.lie domain a~ ,well as air n_atu.ral. re~o.urces -enum·eration· in the Philippine Constitution belong·to ~µri~di,di~n in.'re.m c~~not' be a·~~uireJ-· unless th~~~ .. the.State.(Co//ado v. CA, G:R: No .. 107764, ·october be· a constructive· s·eiz.ure of the · 1and- ...-through , ·4, 2002). . ::: .•f . _,,_. .. publication an~d:service bf notic~. (Republic v. Co.urt < of.Appeals: and Ribaya,· G.RA-;Jo.. 113549, .JulyA:9, Effc::!tts . . '· 1996). ·. . . ;. · . ·.;,. . ,: All lands·of wba.t~ver das.~ifica.tion and otl:ier natural , resources· ,not otherwise ,appearing· J0 be clearly witl:fin.private owrier~hip·are.presumed to' belong.to. --th""e-S1ate, whrch is thE:!-source.of any ·ass'erted right. ·. · .Lo oyvnershiP. -~;/8nd (Republic v.' -Sin, _G.R. No.__· · 15748~,.Ma~r \6,.2014). : ., . ~ · , . · .Acc~r~i~g1y: rub1ii 1a~ds ncit.show~ t~ ~av~ -b~~~· r~-~lass~ed·.: ~~~~s.ed. a~' -alie\n~b(e . fand. :?r.ali~nated to~a-.pnvat~i·per?
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----- . . . . . -------------~~. .:. . . . . ;.,. :; :; ; .i- ......-.A..:, 12P.!.Y1!2g.J.b.e reg a lian doGtrin~ •. the . :state owns all· ,, . · watersvand lands of the Pllblic dornain.. i'ncluding -, ·

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· · · ,Cqn~e-pf\ · · ;·· . :. . . . Under tpe concept of jura reqeli«, private title to land . ·. _must·be·_tra,ced -,tosome grcjnl,. ~x·pr.ess -or.·i~Jiied, from ·t~e. _Spanish· Crown or· its· ··succ;es.sors, the: American Colonial Government, arid 'thereafter; the -p~i!ippin"e_ Republic. Jhe· belief that' the· Sp9n'isp . C~9_wn !ft_h.e: o~igin of alt 1.~f)d titles inthe f?-hilippi~es. ·.·. bas persisted. because - title to land must emanate · from some ~oure::e for. it·c:a~bbt issue fo~th.Jroni. nowhere (AGCAOILI;supra at 2.). · . . · . . . . . .

. .- · : those physically re.claim'7d.: As. a ·,general, ruler _:' . therefore, only" the -Nallonal- Government 'can .'. ' r.eclaim;fo_te$hQr~ landsand other SL!_bniecged areas· ... · (Rep_11blic v.. Court· of ,P.ppe.qls; G'.Ft1 No. 103.882, ·- . November 25, 19~8): .: . . ·. · · · .· . . ·'. . . . .. · Property ·of· .the 'public domain. is·,:·be¥ond ·., the . ..~omln_erce_ :_qf ~.;in: · and. not susceptible -of-.prlvate . · .. . approp_riation:·a·cquisitive-pr~sciiption.· Occupation .. ._. thereof andin ttie· concept ofowner.jromatte . r.how . long_~-cannot ripen into-ownership and 'be repistered

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In -its '.broad. sense. the-terrn ;'j~ra ·;eg~lia'.' reters ·io1• . -roy_al ·rights,,qr those rights~ whi.ch· the t
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as a JitlE;l (Re'publ!(;,11_;' (J.~ndy M~'k,er,:.-inc'., _G'.R. Nb_. .. ':· , .. ~~376~,. ~U(lf}_,22,:?_?0q(. · .. . .,. _. ,, · . .. ·., .'' . .. a. · ._. \ -~ -:rnat_land ·ha? qeen re.moved frorr\ the.·scope of the · .. · ~egalia·r\ Doctrine .and· redas-~ified ·~art ci the public dofllain'~. alfenable arJd .. disposabie __ por.tlon can·not_ be assu~e.d or.im_plietj._ T.h'?; preyaji"ing.r!Jle. is. that: 'the. applicant- mt.:Jsf dearlf e'stablish the · . ,e~istence of . 9·· positi_ye act o·f ·the' government . (Repuplic .of the Phil(ppines v: .Jabsori, G.R. No. . 200223, · Jurie· 6, ·2018). · The burdefi. of -proot'.° in. overcoming the presumption of State. ownership of ·

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· .2019 SAN BEDA LAW CENTRALIZED.BAR OPE~r10.Ns'.1 729

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LA·N D ·TIT LE AND DEEDS a

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SAN £3EDA LAW CENTRALIZED BAR OPERATIONS.- MEMORY AID 2019

Private Corpo(ations or As~ociations General Rule:· Private corporations or associations may not.Jiold such alienable lands of the pu-blic · ·· clomair, (CONST., Art"->X/1, Sec. 3). .

the lands of the public domain is on the person applying for registrat)on (or claiming ownership'). who .must prove .that the land subject of . tbe application is·alienable or d_isposable. To overcome this presumption, incontrovertible evidence mustbe established· that the land subjecl of the. application (or claim) is alienable or.,disposable (Diaz-Enriquez v. Director of Lr;mds, G.R. Nos. 168065, September

Exception: ~y lease, for -a period riot exceeding . twenty-five years.- rer'i'ewable for not . more than twenly~five year~, and nof to exceed one thousand (1,000) hectares in area (CONST., Art. )Sf/, Sec. 3):

.6, 2,017).

Exception to-the Reqalian Doctrine It was ruled that.any land under native title, cir. those · that should have been in· the possession of an 'occupant and 'ot his predecessors-in-interest since time -Immemorial is an· .exception to· the Regalian. Doctrine .. Such> possession. would justify the presumption thaf tfie land had never been pa.rt of the " public domain· or that it had· been private property'. eve·n 'before'lhe Spanish conquest (Cerino v, Insular Government, G.R. No. 72; February 23, 1~)~

Exception to the exception: Possessory claims to the property acquired before the 1935 Constitution prohibited the alienation of all.lands of th·e ·public · domain: except agricultural lands, subject-to vested . rights existing at the time of its adoption (Atol<0Big Wedge Mining Co. v, CA and Consi, G.R No. 88883, January ·1 ?, ,1991). -. . . . . . . . Modes of Acquiring Title: (.PRADA-VINE) . 'l"."°"'!:ublic Gra.nt· "" by .adrninistratiye process, the . .. ·.. · ·. · .: . · . · - ·. 'Z_;.;'. _ . . · .N.g'ov~T.~nt transfers la~d to a priv~te i.i:idividual ~-e~allan Doctrine Does·· N~oN gaJe°"\~" .,....at1ve. . ~ bJ tli~ ~suance of sales patent spec1a! pate.nt T.1t1le" · .' . · ·. . · · . (~~No.~4i; .elso known as T~e Pub/Jc Land . When., as far back as testimony o. memdrY, o.es,.ti,e-.2t, _..._ Act, as-amended). · · .. , .· land· has'been held· by individ~~U(:\Ohl° a oJ . _ priva~e own_ership, it will be presum~¥.o h ve be~~. L& c~mmonw~,a(th~Ac.t' No. 141 (CA. '.41), al~.o held m the same-way. b·etore/-~. SP.anish conqu_e?t. /\A. . · knoV,n as Ihe fyJJl1c Land Act'. remains. to this (Carino v. Insular-· Governm_2PP,(.G.R. f~2, ' ! . anp . ''\1ested.:. (.Tiro · v.> f:hil ·. Es{ai~s . · reclaiming title ·thereto ··(NOBLE/AS, ·supra at. ~ Corpdfation'. GRNo_:_ 1-7052.8, August26; ?008). · 42). . . . '·

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: }itle ~·- ~e~_i!i~~t! ~f__!:i;1-I.e: :.: constitutes·~ i~sfta~se . Mer~ . , evlcl~-nce, ..... cif of 'exclLI$ive· possession· ow1iership; not ihe 'title :to' ,which ':. 'is . '. "th'e the land' itself. . . . .

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fo~~cia.t!o.11~of:o~.ne.r?hi(l o.f ·prqperty. · · ·. · (Cas(i/lc{ v. Es'cutin',' G.R' · -·?009}°: ·.

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U~der:. R.A.',; 1899, :.also·':·kn.own" .. ~$: An . Act . Auth.orizin'g .The Reclamation ·of'Foresti6re Lar:ids ·. By :.. ~Ch'aitefed ·._ -cities And· rv'lu'nicfpalitie:5 (June. 22, · 1 Qfrl),. 'lhe · National· ·· Gov~rninent · granted ·to= .911 · municipalities·. and··~ . cli'~rtereiJ. ciIMs · t.he. au.tiiotity. 'io undertake: carry out at their·,own exp,ense. the recramation .by ,dredging, ..filling;·. or ·other· inear:is. of- aoy. · foresho.re· lands bord~dhg 'them: Any ··and .all · such land reclair'n~d will become property of th~ ··respective municipalitie? or chartered·.cities;, but

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LAN-D TITLE.AND ·o.EE.DS SAN OEDA LAW CENTRALIZEDIJAR OPERATIONS- MEMORYAID 2019

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the new foreshore along· the reclaimed areas shall continue to become property of the National Government. --

other 'real rights but .the gran"tor was no] the owner or could nottransmit any right" (lmuan v, Gerena; GR 167995, S~pt_ember, 11,.2099).

Note: Under R.A. 1889, Fore-shore 1a·n__gs should not.be.construed to include submerqedareas. (Republic · v. CA eno Republic Real °Eistate· Corporation, G.R. No. ·103882, November 25 1988}. r • •

The rule is well-settled·that prescriptlon does not run aqainst registered land. Thus. under Sec. 47 of. P.O. 1529, otherwise .known as. the Property. Registration Decree, it is specitlcally "provided · that "no title to registered land in deroqation of that of the registered owner shall be acquired by prescription or adverse possession." A title, once registered, cannot be defeated even by adverse, open: and· notorious. possession. The certificate - 'of ii tie. issued is ' an absolute and indefeasible evidence of _ownership of -the property in favor, of the person _whose name appears. therein. It is binding and conclusive upon the whole world. All persons· musttake · notice and.no one can pleaa ignor~r'lce 6f the registration (Dr.Reuin v. Belarmino, GR-153691, July 19, 2006). -

Acquisitive Prescription --~ust be in the 'concept -of. an owner- (CIVICCQDE, Ar(526). :A person acquires land· title by acquisitive prescription if he has been in open, continuous, exclusive, and . notorious possession for-a_ pe'riod prescribed by .. ·law. 1 .. Ordinary . Prescription - · possession in good· faith and with.jusftitle for-ten (-10) years (CIVIL CODE, Art. 1134) . 2. Extraordinary Prescription - . adverse possession without need of title or good faith for thirty (~O) years (CIVIL GODE,_ Art. 1137),

_Qescent or-Devise · a. . By Descent ..:. acquired , by . virtue of · hereditary succession· tci the estate _of a deceased owner; or . 6~ _ By pevis_e - su_ccession need not be in favor

No. title to registered land in deroqation of the ----mJE;i-of-thITTegistered-ownershall-be·acquired-by · .. prescription or. adverse possession (f?,D. 1529, Sec. 42). J

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- · · · -· ( · ', Open, continuous andexcluslve ppssessio~ -,of .. land classified as alienable and d1spo\able"for at· - . -teaet .!hirty 'years segreg?tes .the land from the . ·. public domain and ipso jure cqnver.g; the same . into ptivate'property (Bue·nJventu1-a v: Reput5/ic, · G.R. No; 1~?8.65; March 2, 2~1>~_' ·

_ o __ /f a r_ei_,_t1i_1ve (·N.OB.L__E__ JA_s_,_~up_~~-~-t 42).

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P!ccre\iC?J- T~ t~~ owners oflands adjoining the ban~s of rive~~long the accretion which 'they graaua'lly receiv~fror.n the effects of the currents of the.waters, (CIVIL CODE,_Art. 457).

....__..,.The-alluvial prop~rty·obJaine·d due to accretionPrescription Is concerned with lapse'>-of~time _i_ii is not automatically covered.by a Torrens Title .: the manner and under conditions l~d. down by·----Qwnership of piece of land is - one thing!_ and law, namely, that· the possession should be i_n . reqistration under the Torrens .system is: quite .. the concept" of an- o_wner,. public, peaceful, another. To. be covered bythe.Torrens title. the· .. _. unfnterrupted anti ~dver$¢. Possessior:,_is open. allt:ivial, prope·rty must be- placed unde'r _ tlie . .- when it is P.atent, 'visible, apparent,"" f']Otorious oper;::ition·of tlie' registration la_W"S (Grctnde Ii. C~, · arid not · clandestine. · It is continuous· when G.R.. No . .L-1-7652; june 30, 1962). · ·unigterrupteci, un}:,roken_ and not intermittent or" .. . '· :. i . . . ·- .' _-: .·. . . . . . ·_ occa.sional; -~xclusive · when the. adverse A.fcretion forrrie~ a$ _a 'resu_lt of duijipfrig of possessor" can show exclusiv.e dominion 'over' sawcll.ist i~ - pa.rt 9.f public 'domain. !he word the land and an appropriation of it.to hf.sown use"current" i!1dicates tli~ participation of the· body and oenefit; and notorious when 'h is so of water.in the"ebb and flow of.waters: du~ to high . c;:onspicu-ous. thai- it is.: :gen'er?lly.-known and and low'tide''('(da. De _Nazareno v. CA, G.R. No. · talked° --Of by- the- public ·or the. people_, in ttie 98405; Ju'!e 26, 1996): · · · neighborhoC?d (Rep_ublic · of--'the Philippines v. . . _ ·- :· · ·' _ ·' Northern _ ·cement Corporation, G:R. No. 6. yoluntary T-ransfer- The-trar:isfer is given l?y_th_e · 200?5_6,: April 11, 2018). volu_Dtary e,secution 'of a deed:of conveya~ce in certain. pre?cri.bed ror:m; completed by · the Note: Just title· means ''.with· color· of ti.tie and · recording or :i-egistration · th~reof- becaus~ · good_faithn cir cphjuslo titulo bue(JaffJ /Aiba v. registr~tion is the_ ·operative act that binds afid · Gour! of Appeals, G.R. No. 12.0066,- September affects thirg per~ons. Non~theless, the contract is binding .belween · parties, their heirs, · 9, 1999). For p1Jrposes o(prescription,_ there is_ just. title when the adverse claimant came into assignees and successors in interest (CIVIL p9ssession of 'the property· through orie of the CODE, Art.' 1311). ' recogr:iized mcides· of acquisition of owne.rship or ~. . . ~

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Persons Bound Notwlthstandinq Lack of Registration: a. The grantor; I:>. The grantor's heirs and deviseesrand - c. Third - persons. tiaving actual. notice pr knowledqethereof (PENA; supra at 48). ' .. \,

· Note: Although the cause is not stated in the contract; it' is presumed 'lha't it exists arid is lawful,' unlessjhe debtor proves the contrary (C/VtL:COf?.£=,·Art. 1354).. . .

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transacuon with interest in·land whose declarec object is, under government authority, tc.establish and certifyto the ownership of an absolute and indefeasible title to realty,· and to _ .. simplify its transfer (~GCAOILi; suore at p, 9-·10). .

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registered u_nder Acr N'o. 3344 ar:i'd not under· the·. Land. Registration Act, the sale ls not considered' 'registered and ihe registration -of the deed does ncit · operate as constructive· notice to the whole world .

Purposes of th~ Tdrre~s .S)/s.tem: (QUIPPERS) f, To _Quief title to land: to put a stop-forever to any question of the legality of the title, except claims which·were n_oteq at thetime ot.reqistration.un the certificate/ or which. may arise subsequent thereto (Legarda v. Saleeby, -~.R. · No: 89~6,

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Tb relieve-the landof Unknown-liens or claims, just or unjust, a'g-ainst_it except Statutory Liens. under Section 44 of.P:D. °f529;· ·· ·. · .. · . To create .Jndefeasiole-antj 'imprescriptible title bili'ding the whore _world (N.O[?l:EJAS;'supre at 3). ·. · · ': . To Prevent fraudulent.claims; ·'. To ;provic;le means ._o( f u):)iic"ation or notice to· . third persons; .. :. . . . . . To gstablish priority in right. - "First in Time, Stronqer in. Rfght" . (Primus ·jempore,. 'Potior

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Registration under -the 'Torrens> Systen:i a Proceedinq in Rem . . A'proceedinq in rem ls.when the objecfof the actioo is Jo bar in_gifferenlly all who- might be minded to make .an objection of any sort against' .the ;ight .. · sought to be estabflshed.rand if anyone in the worldhas ~ right·to be (ie~rd on Ihe ~trength ofc1ll~g[ng .. facts' which if true, - "shows . an 'lriconsistent interest ·

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f~cilitate . transactions . r·~1a'tive·. thereio · by . givin~ the publ_i~:t~e 'right to _8ely\igo'n the-face ' of the· Torrenscertificate ·cif -ti"tle and· to dispense : with' the need ¢f 1nq_~irrr:i'g fu0rtlier, except ~tien the party concerned has actual kliowledgEJ of. - I facts and circumstances that'. should" imtiy a ' reasonably cautious man. to ··make sucli. further .inqtJiry;.anp · -· ·: : - . · · · v · · · 8 .. To; pro~id~- -~!a_l)ili!y tq lan1:titles~fAG~~!'=C .. . Land T1tl~'s:and De~qs, sup_r9;<J,f1"12)·) ~~ . . · ,·.· · · , · · .. ~ · ,· · N_ote:· Registr~tibri i~-~ot equ~al~~; .legai ti.tie. .

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. , 'A land registration "is. a -proceedinq. in rem, and _~ jurisdiction in,_rem-'cannot be.acquired. Lml~~s.,ipere , be . constructive. seizure of the land th'rqugh · . publication and service of .notice (Repuqlic v. CA

~-F No. 11354Q, July 5, 1996).· ·

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'Registratior:i~tmder .. the -To~ren§ System conslitutes, . atihe. y_eri]ga~_t, 'cofistructive notice to any boundary ~wne.r of whHois his n"eighqor (Francisco 'y. -~
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No__..: 20~-~-:-;l· ...'_1TJ.une~.' · ,:·,·2.a:··'ii7tl)· .· .· govern~t. thro~h the,:Registe_( of q"ee~s.pamirig . _ ,\ -and declarin~pne :own·er.in fee_._.simpfej:;if.the -realynde~ : th_e. ·Torre.ns .. sxsten,,?; re~!s~rat1op _ o_n y prc;iperty_ .described· th.ere_in; fre(;) 'irom~~U: lie'l}s ;·arid . gives ".'al1d.1ty. to _the ~~~msf~r pr. creatiw ~-'_hen ..._._e_n-cumb·rances ~xcept cjs, 'rpay _be exp~~~!?IY 12oted· . · _t,.1po_n.!he land. It r:nerel~ c_;qnf~ri'ns, but,'tjoes ... not- .............;lhereon_QJ)otherwi.se re~·erved by_'!a~: (ALBANO,. . confer,_ owne:ship_:. (Lu v. Ma(lip~~-... No. ·· C~.V,il ~a_w. R._eview_e_r_ Re~(~~,cJ_Edition. (20)}) p. )98 .R·

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Effects of_l.ssyarice ofTitle: (,:.RHC) · · . ~. ._Th~ _lanp '. is· · Rfaced. tinder -,the :opera1ioi1 . of . Iorrens:·.syste_m:-.(P.D. 152~," Sec .. 3);: . . . ·, f· : Land_ is _8eliev,ed. from" all. i::l_i:1ims _exc~p(thos~ . · n"oted. thereon· arid providJd by law;- (P; 1529, 46); · . . . . . . 3_. · Title to ·the lanp becom~s lmprescrjptible; (P.O.

152"§); ,Sec. .47);,

Legally. defined,· _a· <:~rtiffc:ate~oJ"title is t.h~--trari.~crip_t . . of decre~:- of registration:_..m'c1de! by·.the Register of Deeds (ivtanofok IV-v .. Hejr.s·ofHonie/Baique, GR-:

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The , ·land _-.·_becomes · Incontrovertible :· and : iride(easiqle (P.D..-15~9, S?G.'.32);.an~ . . . 5 .. Th.e'certificate of·title is nol .?u5iec_t"to ~oilateral· attc;ick. (P.O. 152ff $.ec. 48).

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Pr~baJi~e .V~l.ue: ·,Torrens ~1iil~ may'.be. recii,ved if)· e?iqence _i!)__ all Cbl.frts _of.th~ P~ilippjnes!'ari_tf s~all be condusive · as. to:' all matters ·contained therein;--.. - . P.~incipa!ly t_he _ide_~ity of.t~e own~r-~of the;coverid_ . ·1a~d \here9y· and )dentify Qf. thfl~trd:_(A;GC~O/L/, .· .

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· Registration· under · Act· No.· .3344·· l!ieffective ,a-gainst Third'.P.ersoris . :. · : ~.· · · S~ctibn _194· o_f- the Ravised Administrative Code~ 'as amended qy Act. 3344, provides fo'r-°the registra.ti~n · of deeds . or instruments .. relating to lands not registered under the Torrens system. ·If a· parcel'of land· coit_ere'd by Torrens title_js sold, but the saie is ,_ .

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Two.Types _of 'r~ri-;n~ "ce~ific~te. ~f·Title: . ,. 1- ... '.- o_rigina1 ~c;;ertifi~~te),t fi.ti~· (QCT) --~· the fir~t, · title issued in' th·e name "of th~ "registered· owner .. · . · by ~hi' Register of Deed!? .coverJhg parc·e1 ·p( -~ . la_nd;- ~hich·' had .. bee11 '.register.ed .. uAder 'the· .• 'Torren~--:Systei'n. ,by-•.-vii:(ue_ o( a· _judicial or· ·. adn:iinistr.ative proceeding.

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LAN·D TITLE AND 'DEEDS SAN_BEDA'LAWCENTRALIZEDBAR OPERATIONS- M~MORY AID

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Implement all orders, decisions, and decrees 'promulqated relative · -to the registration of lands and issue, subject to the approval of the Secretary of Justice, all needful -, and. requlations... · · . ~ ~ules . e. Act as· ~lerk of court in land registration proceedings; . ·· · · f. Exercise gxeclJtive ·supervision . over. all clerks of. court and personnel of the courts with respect to.the discharqe of their.duties and functions in relation to the 'registration of . Jands;and . · · g. Exercise -~upervjsion and control over all Registers 'of' Deeds and other personnel of.: 'the Cornmisslon (P.[r1529, Sec. 6'(1)).

It consists of one original copy filed in the Register of. Deeds, and th'e _owner!s duplicate .certificate delivered to the· owner- (P.O.' 1529, Sec. 39) .. Transfer Certificate of Title (JCT) - the title issued by :the Reqister of Deeds in favor of a transferee .to whom the ownershlp of· a registered land has been transferred by any. 'legal mode of conveyance (e.g. sale,' donatfqn). It also 'consists of an. original and an owner's .' duplicate certificate. (P,P -, 1529, Sec. 43).

Agencies. · Implementing Land Registration_ Proceedings under the Torrens System: . · . 1: Courts (RT·c acting asLand Registration Court): 2. Department of Environment and Natural Resources (DENR); . . Note: The dut/of the LR1\to·iss_ue a· decree of· 3. Department of Justice '(OOJ). throuqh fh'e Land . registration 'is .. ministerial .orily in the sense that Registration' Authority (LRA) and its Register of...:• they. act under .the 'orders of the court, and the . o_~eds (RQ); _ . . , __ ~. .N:,~G[e\:J mu~t be,..i~ conformi_ty·with:'the decision· 4. Department of Agrarian Reform (E>AR); o~th8.-ceurt andwiththe date found 111.t~e record. 5. D~partment of Agri(?U\t_~re i~hey are'i~ :~oµb_t_u~on: ~nyp9iD.t in - - --. '/ .... \;--:. · · ·. · ~elat19n ~~\pr.eparat1on and issuance of the_ _ .: . .· . . . · . . ~) ~~e~ -~~ t~eir d~_ty refer the matter lo "the . ·, · - .· .. _. · . · .· '.. 1t 1 c_ouf (~f,j91)t, supre ?( 3~).: . ·. .·. ,

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':R~ste'rof~~s(ROD) . . . . · ._" :· · ·. f ' · 1·ji . .. lie puplic· r; pbsitof: of rec.ords of ii:istruments 4t;ta.tte'cting i~ i-/~gJs~d C?'i:.. un!~~i~t~red ;1a_n?s_ a~d 1 .. :Land R~gistrati?n ~utl\eeds ·with reference of Deeds;· · . ·. · ' ... : . . :: .. .. . . .. . . ···, .: to-: the'. registration . . of · deeds, ·· enc_umorances, c. ·Yerify'. and:· _approve-. , subdivision, . instruinenis. ands· the. like is ministerial· lri nature consoliqation: arid consolidation.'.subdivisfon (Baranda. v. Gustilo, G.R. 'No. 81163, ·september 26, ·- · si.frvey plans. of ptqperti.es ·titled unde~- Act 198.~). .' ~- .. · . · 1. ' .. 4f)6 arid p..o. 1,529 ·except-ttic:ise. covete·d:by. : ·P.O. 957;· . . . ....

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The Register of Deeds is entirely precluded from exercising his personal judgment ah.d di!icretion when confronted with the problem of whether· lo ·register a deed or instrument on lhe ground that it is invalid. The determination of whether a c;lo"c1..1ment is valid or not is· a function that belongs··p.foperly to a court of competent jurisdiction (AQUINO, supra..at · 11). . .

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concerned has authority to ackno_wl~dge the document executed within' his territorral jurisdiction. Notarial acknowledgment attaches .full faith and credit to the document· and a"lso vests upon il the · pre_sumP.lion _of re~ularity (Sales· v. CA, G.R. No. L"40145, July 29, 1992). · Modes of Regi~tering Land-Titles: 1. · Judicial Legalizatiqn . · a. · Judicial 'Conflrrnation .of Imperfect- or incomplete 'Title- (C.A. 141 amended, Sec. 48·.(b)); . b .. Voluntary or Ordinary Land. Registration . (P.O. 1529); and .. -c. Cadastral PrQ~eeqings·(P:O. 15_29). ·

The law on· registration does not· require that only validinstruments shall be registered. If the purpose of _ registration is merely to give . notice, . then questions regarding the·. effect or invalldity 'of · instruments are expected to 'be ·deciqed after, not . before reqistration. lrmust-follow as a necessary consequence that registration must first be allowed, and · its validity, or effect is litiqated afterwards' - (Almira/ v. Ttie Register of Deeds of Agusan;· G.R.. No. L-22486, "1_arch 20, 19q8). · . . . .

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.Administr~tive Legalization · . ·a. Filing of.application at CEN80/ PEN RO; . b. · Forwarded . to the Reqistration · Director'. · and/or-DENR for-the issuanceof patent and - Reqister of Deeds for issuance-of OCT~ and c. Through the .NCIP ~ for native..title over both ancestral lands and domains, (AGCAO/tl, SUP.Ta.at 124). ·

Instances when ROD May Deny .. Registration: (No3-Mor.e-CIV)· ·· ., 1: . When . the · document is Not .verifled · 911d acknowledqed before -a notary public or olr'er public officer authorized by. law to· take acknowledgment (Gallardo v, /AC, G.R. No. L-:. -·-Classification. ~f Lands: _67742, October 29,.19$7); _.. . 1. Private O!j:l?ublic; · · 2. Wh'cn the: land involved is Non-riAoii:;trnh\jil . 2. · Aliena~ieJo\}na.l)enable; . -·land·'. . . - ·. ·!fj":~ . -: - • · 3. Registered or Unregi~tered; and 3: \JYh~re re~uired certifi~at~ pr"clQturrienls are.· 4. Regi~trao}e 9r" :Non·-registrable (AGCAOILI, _ Notsubm1tte~; . . .:·~:~ ~- · ... ·-~02-206). . · 4. ·. Where 'there rs More thaQ one.-(-1').,.ceRY oh.lb§. · · .~/;,_:;=·ff":' . . owner's duplicate' certificate of tUle:ana· not~;m Po~e"r t~ ·:.· cilssify:· .. Lanq~ is an Executive · - such- copies 'are presented in the Register of Prerogative . · .· -, -Deeds: · i.e. when there ace co-ownef·s Ih "classification of ·puolJc.. lands is an· exclusive duplicates of the same Title; · · · prerogative of the executive department and not of 5., ·wh.ere. the property is ..'presumed to~e £onjd'g~l- ..--tn~eourt~ '. (AGCAOILI; . supra at 202). The - but the instrument . of cohveyar:ice bears the classification and reclassiflcation' of public landsirito · signature of only one spouse; alienable .or disposable.imineral Of forestland is the .._/ 6. -~here the voluntary instrument bears on its face exclusive prerogative of the Executive Department, an !fifirmity; and -· . · and ls.exercised by the latter through.the President, 7 .. Where lhe Yalidilfof lhe"inslrume_nrsought, to~¢ · or S!JCh · other· :pe(so.ns· vest~d with_ authority to registered. is in issue in a- Pending court ·suit I exer~ise ·ihe sa·me on hi~- benalf (Republic oNhe.· (AGCA,OILI, supra at 48-49): Philippines v.. · Heirs of Cabrera, G.R. No. 2.18418, November 08(2017). . ·. ·.· . · .. · . " Er,. c.o~sultcj: when "the .R~gister. of. Deed~ is. in WilJ:) The government, as .:the agent q_f lhe state, is doubt ~eg"ard to the proper step to be taken or memorandum·to be made in;pursuanc'e-of any deed, _possessed witti the plenary power as the persona.in mor:tgage. 9r .. other insirument presented lo him for law to determ_ine whp shall be lhe favo"red recipients registration, 9r where any party in interest does not · of public lands·, as weil as under what ierrris ihey agr~e with the-':action taken by°the:Register:.of Deeds may- be granted s·uch ·privilege, 'not· excludin~f-the .. with reference-to any such insfrument; the question placing oLobstacles·in:the way of their·exercise of shall -be si.Jbfnitted to the Commissioner of Land what otherwise would be
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JlJ/y.1, 2015;· Republic of-the Phifippines· v. Spouses Go,- G:"f?. No; 1972.97, Augusi 2, 2017). .Certifications issued by the CENRO, or .specialists.of the DENR,. as_ well as. Survey .f?lans -prepared "by .the D,E;;NR . containing. annotations that the subject lots. are . alienable, do not-constituteincontrovertible evidence lo _overcome "the presumption that the p.rbperty· sought to be registered belongs -to the inalienable public domain (Republic· of the Philippines: '( . . - Mendiola, G.R. No. 21.1144, December 13; 201.7). ·

Note: A arid D lands held _by governmen.t entities under Sec. 681 C.A. 141 cannot-be alienated without approval by Congress_{AGCAO/L/, supra at.220J: Non-Reqistrable ·Lands:; , Those found in Civi] Code provisions: 'dealinq wlth · non-reqistrable · properties: ( e:g. · property of public • dominion) (CIVIL COQE, Art. 420). ,, Specific Kinds· of Non-Registr:able Properties or Lands: (F2LAWN-M3P2.G) . . . 1.· 'f oresr qr timberland, public forest, . ·& 'forest reserve. (AGCAOILI, supra at 222);

Neittier does a survey plarr. Tht? fact.that the. lane has been privatelysurveyed is flQt sufficient to prove ;·its.- classiflcation or~alienable character . .While. the conduct· of a survey and the submission of the Forest lands are inalienable ·and possession original tracing .cloth' plan _are mandatory thereof, no matter h().W long, cannot convert the . requirements for appllcatlons-fororlqirial (egi.stration .same-into private property, Courts· are without of landunder P·.-0. :1529;-they cnlyserye to.establish jurisdiction to.adjudicate ·_lands· within the.forest the -true ideritity.. the land and to .e:nsure that the · • >zone (Collado -V. Cdutt -o! Appeals,· G:R No .. property.does no~ ov_e~l.ap.-V'(.itll anpther on_;,;:over~,d 1.~~· October 4, 2902) ·· . · a previous reg1strat1~n. Th~:se. dOC_!J!_1~nts ~ot, . . . by themselv~s, ~rove:8l1en.ab1hty·_a_nj:C:l1s~~~LI~~~....._; fa,. fo~psted_ a.rea cla~s1fled ?s forest lan~ .. of ~he . the property (Repu_b/1c_o(:thePh1!1p~mes''f,"N1cofa~.. p~bh_e"d~am does n_ot.lose such.classification , · G.R: No .. 18143~, october 2, 20jr7)~~---~~~~P!Y~~c;1tseJogge~so(settJer~ have.stripped· mi.\'),( .. ·')'-:{ u o\1ts~for$lsC:~er (Am!,l(lategip v. Director- of · "J:he- trial ~o~rt must be giv~n: a certi(i~ )~ui ·copy. of_ Forertr/'~'G:f... No. L-2-78_73, Nbv_. 23, 198~)·.• the:·cJas~ification mad_e_ ~y·_tQ~e DENR-Se.~le!~_:_~:.,,. · ·. J · ( ".);\··· · . . the President pecause-1t 1s -f~l~acGeptal5Je .ancl ·. W1tli_0t:Jt,the offlc1al\declarat1on that }he :subJeCt s~ffici_ent ,Pr?~f of the al!ena~J~.' an~. di\pos'a6J? ·t-.:-.":$Jand/i.{.~!(~nfl5,i~ ~n.tf_aisJ?OSa~Je ~r_proof.of (ts. · d'jar,act~r ~,f.t~e la~c;l1.(Du':7f ~epu~/1c, · ~-f~., d~~lass1f1catk~:~sintb ~IS~OSa~Je agncultu~a.J la_nd, 21.~2.69, .June·{!, 2q_1~J.: Fc11,l~re:t~pre~e,~<>ert1f1ed~....: ,· ·· th1/~o;l~~j1f1edJ riubl!G ~orest lal)d's" ·J~gaJ . . tru': __copy ·qf th~ o~'.9.\nal cla~s;fi,caJ1b·~- af.A\~~15Yim.. i,0· cl,as~i.[0~!1on_J ;subJect , la~d'- r~_mains.. , tM·[?E;t;JR- secretary 1sJatal w\se.cur.i.ng.'r\~-!(~O~~ ~ ~T._prna11_ey1~'}(:e on the phys1cc:1l layout or .. ,. . . of title· (!B_epubfic bf the Phi{iPP.!'l~s v. RoveneyJ?'e~c·· 1· .. '"7/l!c1~·1ti9n '9f-:"t~e 1-subject_ :Jand - thc:1t it wa.~ ·.. and .D/w.~lopmer.t.: Corporatiai'ti :G.R .. 'N.o .. f9 8~~ ~~te~~i{r.r ·cojon·utJrees and· beach· h9use~· · . Janµary 10; 2018). · .. \.. · <. ~~e~··,.c~srr.uctect,.;th~reoii ·.-'- are no.t .. , · ' · .. · -. .:, ... · <- ·. . ; ·Z' · ; conch..i~e ~'.: l1he .. dassification of tbe, subje:rct Regi$trable.:L.:.ar:ids;~. :· · . i .. ·. .· . -{ I V). . . .. · lan,,cl'frf~!:lrlc3ble _agri9ult.ural 'Janel. Rathe~, "it is1. Alj~nable pt1_blit a_grtcultural lan~s·· CGf $_I/}'rt:.M.',\""t{e\.-_,.,9fn~_al' ·prqcl~rriat_ibn. releasing \~e: .. Jand _ · · XlltSfJq:-2)'; and • -~·· ' · · ·: .· .. '. · ·. , · -, · . . as~_ified. as.,)?u_bJic forest land _to.- fo~m .pa'rl !?f ii-'. 'priv.ate igndif:(C/V/f.-. C()DE; Arts,. 421; 425)!. :,· :. . . .-.-di~po~abie.· agric1JltLJraf lands : gf _. th~ ·-Public . . _: .. · . ~--- . · :, . ·. . . ."< . i . . ·. . . . . . . .. ' . . ; ·-' · qor1}.ain ': th.at"'. is.·. definitive' (R,fpublii>bf lhE! · 0n1Y--Ali'enable and· ~isposable (A 'and·D)' Lands · · ··: . · Philippine.s .v.. Saromo, .G_.R._ No:. 18~803;. Maret] . · mayJ>e-su6j~ct:to dispos~ibn ... _ )·.. : .. - ·,. · ·. 14, 201'{3). ·. - · · .,_ -~ · -' , · .A and··o ·lands a_re 'limited only_.to thqse·lands·.whieil . . . , . .. . . · · l)ave: · oe~ri: QffiCi~lly ... -'.delirri)ted . :an_d ·. •'classified 2. ·. E<;ires:hore' l_ahd '~L se'a.shore (AGCAOJid;: supra· ($ecre'ta.'ry_·'of._.DENR __ ·Yap,· G.fi?;•.)VE>_.,1·167-761; ·':_·,a~·2:?4);"· ... :. ··: ,· ···.: : ... : ·, .\ __ :··.··;:-··· Octo':Jer,,B,. 2qo8).-- , · · · · .3 .. 1:.akes (ld.at:23.4); .- ·, · _.. · . .. . · ... ·,. . . :·. ' - . . ' . :, . . .. · -: 4: .-\~llu11ial deposit· along: .r[vi=ir. when,•:man:-r:na.de They ')nail-~· be: _ _. ~la_s.sified, ·· for:... p·urPQs'E~s .. of. . . ((cr.ai 8-2); · . ., . . .. . . . .. . . adminlstratior\ and_disp.Gsitic:iri;1.ac,c0rding !
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to be naviqable to be. of public -ownership. Streams and creeks, whether navigable or· not, are of public dominion. (161 ROQRIGUEZ, . PROPERTIES OF_ PUBLIC DOMINION (Under fl.rt. 420.of the New_ Civil Code (1988), p.480). 7. Mangrove_ swamps·(AGCAQIL/, supra at 229); · 8. Mineral lands (Atok-Big _Wedge''Mfning Co. vs Qunyf)ng, G.R. No. 88883; Jan. 18,.-1991); 9. Military Reservations (ld:at 233); ·1 O. freyiously titled land; ·, 11: . .Erotected ·Areas· (R.A 7586, also known as NIPAS-Acfof 1992); and ~ 2. Qrazing land : . Govern~ent.

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They are nor synonymous terms; ·the first includes not onfy, the second, but also other lands of':ihe qoyernrnent already reserved or devoted to public use or: subject to private rig_hU/vfoiltc!no. v. -lnsulet: Government, G.R. N~. ·}_7,14/January '26, 1 ~6,9).J.

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Note: Foreshore and submerqed areas "sh:all not be alienated," unless they are classified as "agricultural lands" of the.public domain: The mere.reclarriationi of foreshore . areas- does not' convert these . in~li~nable n~~µral . resources · .of ... the State in~ T · alienable or disposable lands of the -public domain . - (Chavez v, :· Public. Esteies; Au(hpr=ity, G.R,f' 'No. I '133250, Ju.[y·9;_·.2Q02). ~ . • ' . :,, rhe~~-mu·st a 1aw or presid~ntia·1.proc1amation . o~ifially_ clas~ifyJng . t~~~.e reclaim~ lands ' as ,. al!en9bl~ or. disposable .an~ open to. disposition ~r concessron.. Moreover; these reclaimed lands .;can.ript be ~l~ss.ified-.a~·.c!llenable or disp§sab,le if law has· r_eserved them for some p!Jblic or quasi- · . · pub_lic use·(Chavez v. Public Estates Ay!horifr,' G.R. ··- · N0. 1.33250; July 9,. 2002). ·. . . · ' . ..; • ·· • . .. ) .. ~ • .. ::: .. . • , ,.r \ ... , .' ..... ·.

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In the case of rnarried·couple's, one' of tliem may avail of the privilege granted .. But if both shall avail of the same, the· total .area · acquired shall not exceed the maximum fix;id (HA. No. 7042; Sec. 10, -esemended by R.A. °t'Jo.8179); and · , ·g. In case the tran'sfe·ree already owns urban or. rural-land, he shallstill be entitled to be a . . transferee of additional urban or rural land, which when added to those already owned by him, .sh~)I not exceed the maximum areas . authorized (R.A No. 1042, Sec. 10, as· amended.by R.A. N9.81~9)_.

· necessary for the mission by a sending state, or assist the later in obtaining accommodations in the country (Vienha Convention on Diplomatic Relations, Art. 21).

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The.State shall also, when necessary, assist missions in obtaining accommodations. for its members "?Vienna Convention on Diplomatic . Relations, Art. Z1). ·

Foreigners. · are Allowed ,. to Purchase -Condorni_nium .Uni1$~ · . . Aliens may acquire condominium units and shares in- condominium corporations up to no more __ than 40% of- °the_,tot_al and outslandinq capita! stock of a Filipino-owned or controlled . corporation (R.A·--f726, The.C6"rid(Jminiurrj-AcC ·· Sec0-5}._ . . . . -

Note: A natural-born Fillpino citizen whohas lost. h,s- citizenship' but. who has. "re-acquired". the sameunder the terjns of-R.A 922~ is not subject td area lirnitation provided .iheJejh (AGCAOILI; · 1~89)supra et . ·. : . .

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Whil~. aliens are disqualified fr~q9i~g N'.e;~all¥ se~ar~te_ct· fr?·m th~ ~nit -itself, th~re_fore lands of publicdomain, ,they-m_~;tioQ d1~e~e J~~~tut1onal proscription against aliens private lands. · ~ lease lo/~ aliFl~~or .a . . . . ow~hg>r~lfroperty does n~t apply- (HI.fist v. PR reasonable.period is valid (Id. at '19_t)r.- ~ -·--::!:. . ,. Bwlff'ersftnc.,1i.R. No. 156364, Sept. 25, 2008) . ~c. ~

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Land~-a~quirec:J by ~itiz~nlo~o:.atio ~oft! Cor_~?rafiolJ~\:~.: -'_. · · _. . .·· ·. lJn~ted States prior to _t~{.~~ithdra~~-1 o~ the .f~/'"'. Gene_ral .R~l:{:P~_vate corporation~ . are .n?t_ . United States soyere1gnt}:;pve'ef the P~1hp~;~,~? 1::;ji. ~;· 1, l_;ga!JY qua!1fe~~-.~vtn lands _of public domain may . _b~.. reqistered ~~cl~r-1-(thr ·. OI_dina_Fl9~ t:..., ']l~exct t througl\ ea~e (~ONST., ArJ.. X/1, Sec: appended . to . the: _ 1r9~r rror:ist1tw1on. · t1n~.ill]J121,:1~ . -,1 • - •• Nov.~mb~r 10, 1~39 (MJs~;.p.rrec@. ands , : Not3'~~~e~foh1bi~1,on 9oes not·cipply·.t~ land·n? · G.R. No._L~~71.7p._Nov~mty;e, __ 19'J.7'~ . ~. -t)i":s 1q,,»i9.pu?M~la~a ~rn~. are thus private land . . . \ · \. ~A": ~ • c<,~ (l).11<.,e.ctbr- <;' Lancfs- v. !AC, G.R. No. -73002, Effect. of Sub"s~querit _Natu_ralizatio~~l'i""t-_t e- ;<. ... -:. tz··oe ,29; ··19.,S(;), / · : · ··. ' . Trati"sfere·e . . ·, -~-· . · . . .: ·' /· -. .. . · .

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:~ !f land_ is fr1ya_licil/ t~~r1sferred ~o_._§ln, t~e ·. su_bseq~e_ntly be~?'.r:ie~- a F11ip~o J:jJif~n-: ]J~or.1tor?)_io,r J_av.e: b·~en· 1n .posq(;)_ss1011 C>f :the land tran~fer:~ 1t ~o a ~1!1p1no1 t~-~ f!_~w. 1~f~~1~T.<;1_f~ .. · !3':~LI{?~~s.mc_eJu11e 12,- 194~ _or ea~her; then tran.~pct1on .1s co.ns1der.ed ·c.ur~~ anc:M1t1J..1{lthe. MA11.t rn~nglitfully·"!pply_ co_nfirm_i;ltiorLof title to the· transf~ree i5: rendered . :valid '(Boiromeo~c!ncf..Tha,t, veste,~ - right"J1_as_--to · be· respe·cted . . Descallar, G.R:· .. No, · 1,sg3_1 O, _. Ee_bruary. 24,:(Republic. v. fntermediate ·Appellate Court"' and-_ · · '2009) .. · , .. · · '. · . , . . . . . .Acm~,-!£-~3002, oe·cember 29, 19£36); . .. _.:.' ·- •. . .- '• .. . . :. . ··~ . .' - ' . \

. Rati_onale:. The ban on --alien"s "is . intende.d io - ·. . ·.. . pres~rve the.hati~n·s lai:id for f1,.1t0re gener.atiori_s. ':: of Filipinos :.(Muller v. Muller, GR·· No. 14961 $; - . '.Aagust-29,:2006) .. · ' · . -· ·· .:.

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Ali.~nation in Favpr of Fq.r_eign. Government. to.:_ If~ _Used. as Chahce.ry-·'or R~sideoce of . Qipl~rriatic R~pres_entatiy:e.s . . '.Th·e,:., prohibition "in·:_ the::, Gonstitutiqn · aga.inst :. alienation 9f lc!n,ds in. fa,/or. of aliens, do not apply •
·.738

-As part of its treaty obligation_ under.lnt;rnational · Law, ,the, State -sh~II either.··. facilitate . the· · ac"cjuisitJon- on its territory, ·t_h~ premises

2019 SAN BED~

LAW oiNTRAUZED BAR. OPERATIONS

t:"imitati~rns:. · · . ·. · · ·. .. . · · · - · : · . a, ·Private Lands.··.·.. . . L· :.At l~~"St"60oio of whose capital"is owned·. ":.:. b{ Fliipinq ci~iz"ens .. io_ acquire private . ··1an'd·· ·· ii. · Re~tricted ;as· to; t~e extent r~asonablY. .· necessary "to en;:ible ·it" 1
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land (De.los Angeles v. Santos, .. G.R. No .. L-19615; Dec. 24, 1964). . . . . . . Land. Registration ·courts Gan -Now, Hear .and Decide Controveraial and 'Contentious Cases ·-such as Validity of a Tax·s~fe .. ,i ,. · . . the Supreme Court has .decl;:irJid that Presidential Decree· (P.O.} No. 152~. w)th the intention to avoid_. mt,Jltiplicity of suits c;1nd to prqmote expe_ditious ·.. ferm\nation of cases, had eliminated the 'distir:iction. between. the g~ner~I· Ju~isdiction vested .:in'· the· · . re@ional trial couri and the latter's _limiteq j\,ltisdi~tion wh~.n acting·mer~ly as a lei.rid.registration court. Land r~gislratio'n ·_courts, ')s s.u.ch,. caB _now· hear _a_nd decide ev.en· controversial and. contentious cases, as · . w_ell as those·.i.~olvihg -su9..starit!ai iisu.es. ·certa01y;. . thus, the,'.dourts a' quo h~d jurisdiction:_to rule on air . matters necessary for the determ'in'ation ofthe issue . ~f o,;_;riership, includfng·_the ·Validity 'of the 'ta,~ sa(e · (Solc_o y. Meg~worJd Corporation,· G,R ·No. 21366_9; . Marc~ 5, 201.B). · · · · · · ·

Rellqious Ass oclatlon Controlled by .NonFilipinos: The constitution makes. no· exception in favor of , religious associations. To 'permit reliqious associations controlled by ncn-Fllipinos to acquire ,agricultural lands would be to drive the ope_ning wedqe revive aljeri'rellqious landholdings in the country (A.GCAOILI, supra et, 193). ..

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Corporation Sole:" It may acquire, and register private agricuHural land. It has "no nationality".' thus the' constitutional proscriptioh · against private corporations acquiring· agric_ultural lands will not. apply (Romen . Catholic .Apostolic Administration.· . of . · Davao, Inc. v. . Lend Reqisiretior: Qommissio°r]; G.R. ·Na. L:8451, December ?O, ·19_5_7). . .

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OR-IGINAL REGISTRATION: -· . . . . . .

Ju,risdiction .in Civil . Cases. Jnvolvi~g .. Title .tc:i .. e.roperty_' · · ·, _1 • • : • ,· • RTCsshal(e}ercise exclusive _original jurisdic~ion in . all civil · involve. the title. .., to, .-Qf . .-a.ctibns. - which . . . . possessio~lf, real _propertJi_or any in\er~. st there.in: _ _. _ 1. W~er
. P-.D. l'I9.·i529.. s· . (PROPERTY REGI.STRATION .

. Jurisdiction . ·. . ~ .. • · . _.,, .. Gene~al Rule:' Regional Tria(Cc;it,frtof tl:ie province, 'city or munlclpalitywheretheproperty ls sitftaled. ' . .

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Not~:" The decis'io~. first~ley_el- 'co1:1rts~:-sh~11 be appealable to .ihe "cbart "at Appeals (P.O.: 1.529,.Sec. .

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, Exc~pti~~-=- "Deleqated" jurisdiction. .to . the MTC, · 'MeTC arid MCTC bythe·Supreni~ Court in. cadastral .. and land.regT~trat_ion cases if ·. ·., .. .. . . ·_·. . t. 'Tnere ·is noconjroversy or 'opposltion over the , land· Of' : . '. ··:·. . . . -:'. 2. The. lot is -~onte-;ted but· its: value is less than ~100·.oa·o (B.P .. 129, set. 34).·

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Registration.' Court' Not Diveste"d'' of' Jurisdiction b·y Adminfstrative.~ct for the Issuance ·of Patent. A 'ipnd reqlstraflon court-which has ~aficlly acquired ·_.juris'dictioh o.ver a parcelof lcJnd for reqistratlon of title cannot be divested of said jurisdiction by subsequent. a_dminisfrative act' consistinq in: the. .· . issuance of- homestead patent covering the same .

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Overview· of the . Req1,1isites (1~ .. Stepsj m ,·.. -Ordinary·: Land . RegistraU.on ~Proceedihgs ·._ (P.D.1 ~29): (SAD:TP~SAl;i\PIEST)· · . · . . - .. · : ·-1, ~urvey:.of ihe,_lan.d'by ·the Land :Mr iriitl?C-hearin~ :·by' thf'c_qurt which shaJI not be earli~r- than 45 days noi"'later .... than ~O ~ay~ frofn· the date. of t_he order-;·: · , · .. _ . · · · 4. Jransrnittal .cif ap'plic~tion. arid. date- ·of · initial-., . hearing "together with 'documents _or othe"r . evidence. attaclie;,d thereto ·by. th:e Ci erk· of Cciurt : to the Land. Reg[strati_on.AtJthorHy; · · 5.- _Eublic'atiori of the -n9tice of filin~rof applicatiob . and the date:.and·place ofheJ1ring· once in. the Off\cial Ga.zette' an·a onc_e in· 'a . ne~spaper of . general circulatiorl.il') the Philippi_nes; · ··~..

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SA~J RFrlA.I AW C:FNTRALIZED BAR OPERATIONS I

739

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LAND TITLE AND DEED.S SAN BEDA IAW CENTRALIZED BAR OPERATIONS - ME!!10RY Alb·2oi9,

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6 .. §ervice tiy niai.ling of notice upon contiguous

Form of Application: (WS2) · a. :in-Writing;. b. · §igned by· the· applicant or person duly a4thorized; and . . . c. Sv.,iorn -to before-.-·au'thorized officer:in. the pro_vin~e or ~ity where _the. application 'i'(aS ac_tually signed

owners, occupants and· those known to . have interest in the property and posting by the sheriff : of 'such notice in a. conspicuous place on the ·1an9 and in the-bulletin board of the· rnuniclpal bulldinq.wbere the_ land is 'situated; - - -, 7. Filing 'of Answer or Opposition. to the application b_Y any p~rsor;i. whether named in the notice or . not; . · , . . . . . . 8·. Hearing ofthe case by'the court; 9.· p:rorhulgation of ju.dgment by" ttrei court;" 10. [ssuance of decree "or 'order by the court . . . declarinq the decision final and instruc(ing the . · Cand Registration [\uthqrfty_to issue. a Decree of -, - . Confirmation and Registration; · ·, Entry decree in the,' Lai-id Reg!stra~ion, . . "Aut~~qrity_;\_·. .; '·. . .· -: .,. ·. : . . ' . · 12. ·§eoclin"g, of. copy of the Decree .to .the

Note., If there Is. more thah ... one (1) applicant, 'they shall be signed .and' swern,.to·, by'and on behalfof each (P.D. 152f); 15). . -, , ,, . C~nter1ts: (oc:.r-.j),M2 · __ a. ·'.FjffQe~crjptionbfth~,lan·d ~.s evidenced by · ddly approved .survey plan:' . · · b .. Citizenship'·and civil status.of the applicant; . c. - Euli'"N~iyies. P,r:i;1 ·a:ddres~ses-'o(all ~~CY?.c!~t~ , of the land· and those of. the adJO_\ntng

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;3~~pne~~~J~o'.J~xclus1~~, pro_p~~X:- 9f. t~e ?J?~1cant1 · . ·. ,su"'rvE{y Of the' land· by· th·e -land -Jlv1anc1gemef.it:~ · ·. H.· -~jn:\es all,dccu~ants.of the lar'lci;· · ... ·. · · · -· t I'< ·s., ··~-<~ H"" ~,,....,.,.r: ·-ti ··y ·J. ·· . BlJreau O( a d'uly _lice'nselil Ri:ivate· surv.e_y,or· . .,· .. · ~~ '. &f-igi"n_arm~ni~~nl(of titlei a~d .. >~\:.' . · . ·,: ... ·: _' _ ·_ ._ '.· ._ ·. · .. \ :. . · _ --~. _ · _rr~_ , · ~ .(~9J.f:t~e':l~nd·if~o-~ride·9_qy.a ruoli~'·o(_pr!~at~. ·. _ ·.lt,rnus!_~e d:r~f~ '..n ~ t~~cmg_cl(?th plan'. · . ·:~_ , · .··. roa/d 15?9,}fe~-:·1·5)._- :--: -·. ;-.

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by.'the·: ~ir_e~\9-': o~ci~~ !CG?riwan~_·n_g- -· Doc.urii.e.nts.:·.· . (IJ.GC~-0/L/, . ,·, Manageme~.t (aut~9r,1Jy of L~ 1h·ap~e~fych~~~,~!J4~~f1~). . : .- ·, 1 :. :--.•. • • .• .-:- • . _pla0_-was.-w1thdrawn 'by'~-f!.- 2_39 dat~.~J¥ 9,. MJ\._1;~~~~-,n~.I plan in ·jr9~1n9 · cl~th_ ._or. d1azo 19!33) .. : ,,_ · · :< · :- : . ·. . .': . ·. :~.:,~ ... ;,,~--g~lyeste~,._ ~l_m_,; 9uly, _-~J:)prpv,ep.'_. by. ,th-~ . . • ·-:. ....... · "·, • ._...· ... ....·. :)~..• _ -., ~ ._f .. , ·•: : .. r . · ' :-- ·• .·... - .. · · · · .· , . . ' . 1.· ;R'egi01:ic1I ·,-:;Jecn.nical -· :-:, Direct~r;-'- t~i'Jd . . .-. . •• ·--·,~ ~·. .,. .-._·· :, -:·r . ,·. . ·, 2: . Fi.lirig(ofApplica,tion· : \ . ·!_, . , - • . ... . · ·•. ·. •. · • •. -··. · ·'Maf.'ia~Jemer'll' $ervice .: o.f'. the' -'DENR;, 'fl .' ~!liri~'),f _aj,i°plfoati~'.~1• )Zi(-_fp~i~tra~jo~~-; -c~r~i(it=:.1}opy _whi~)1}h~l~J>'e· ~.tt~fi:ie~- to . ,.?PPll.cant at" the. RTC 0f. the. pro_v!nce,._.city .Qr . ,· · .1b_e· duphcate_record.s_antj. f9_rwa_rd_ed!o·the. ro6_,jjc;;ip:ality where ttii;l_pr<;iperty. i? s. i tuat~cL(f.D. . . ,L~ (LR_A Cir&_u!ar Q5r.~QQ9)_; -. '···.: .._'\ ~ · .- :'·""·.· .. · •. •-· • ,.· , . ,. · . , .-. , . .,..· • 1 ...._ • •,, ·/" ·•• ·, .. - • ., • • ·; I ' '\· ~ •· ·•.,--. 1/i2~; S~c:::17'(· ~: ; . . . c. • ;'. i.. : . . . . b .. · ?/.1?-'U.t~r(n~ P.la~n_; _;_,.; ·... . . ... . • ·· ... :i. · · .. , . . •. . •· · -, .. · · · · , .- . c. T.h~'ong1nal ·cirid'.twq cop.1es of the tectirncc\l . . Th.~ application o.e)c6ompanied by;'all the . · ··.-· ·.<de~c'rjptit:>n~ .. .certifi~d · ::o.y - the •'-. :.Region~I N. .. . . . • '· ~ . .. ..: • .·-; .. . •• . ,. - r:n~!)im,ents. ·q_r titles_. arid·. c9pt~·s t~ereof -with. ,,_, _. ~ T('.lC_hri_icaJ Pire~tpr.._or ~my auth'o.riz_~d. .officta!; ,· . :: :i Si.H;ye,ipla1;1.·ap.pt-qved -~y lpl(re~O· 0f .~and((p.p. ' . ':: . . d: · 1~tf origJn_al ·ah.d Jwo··G_O~}eto(tti,!3 Ge'ocle.iic .1.52~, ,Sec;,_. 17f 1/Q/'!.e(fity_ .9.Ltf:J~:.Philipp/Of!.S 0. . . Eog.il".l.ee(s c~~i~c:3t_~. or.;' i~:JJ~.u;_th,~re_qf,_·a :. ,.. ·,· , Rosario; <3.f.J. ·No>1.3,6965,::March2B;:200'1{ ·.'rt~rtification~Jrqm. ~he ·.,Reg.ior:i,al :T!:!.cbni¢al .' · ;, ' . :--; . . ·, . . , .. ·- . '?.}(est
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2019 SAN.SEDA LAW CENJRA_LIZED BAR"OPE~TIONS

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-LAND TITLE AND -b-EE·DS.• SAN BWA LAW CENTRALIZED BAR OPERATIONS -·MEMORY AID 2019 I ;

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... Fees P_aya9ie Upon Filing of. Applicatiqn .. · Fees· are .payable to the clerk cif court· or his deputies 'upo[i . filihg \ an application ' for registration of land, qn· the· basis.of its assessed valu~ for the .cu~renf of.year (P:D. 152~, Sec. _111).

· filgJJ,~ · app!i£:ation. for' ,1and · iieg_i~tration- joir:itly

If the_ property has-'·.nat . b~en '.asses~ed. _fcir · taxation, the fee? payable .shall be based.on the current market value. ln.-this -~-?se: the applicc:int · sha.11 file a swotn d,eclaration" 'of three · disinterested pe_rs9.ris fix_in·g such market value (P.O. 1529, Sec~-1-11)'.

where·the'land is qymed in common (P:o.- 1529, $ec. 1A,.par. 3). . La,nd, Sol_d under.-fcu;to de retro .. , .. G~nE!ri:11.rRule: Vendor a· -retro. may file. th~. applicatiofl' for land_registration,,provided ttiat he : secure? ·lhe written consent ·of the'-purchaser. If the latter refuses to 'giv,e 'ii, ne·must set forth irf ·.thE':!-'application the sale with right to rep_urchase, -~ in ·order th·a't the same m13y .likewise be recor-ded. .. in th,e decree ofregistratiOI) (PEJ\JA,. supra at59) .. . ' . .-··. :· . ··-~· . ...... . . . . . ... . . . . ;.. ' ...• . . ' ... ~·- ~· Exc·eptjon: ~When ·the ·peri6d · for redemption ' expires· during 'the pendency 'of the.:registrc;ltion· '• pfocee9.ings a~d. ow_ner~bip tb' tbe pr9perty. is .. consolidated.· jri the- vendee a. retro: the latter' ' shall . b_e' .substituted. for ,the' applicant·· ·_and;. ·. .··.:·continue-ttie:proC!:eeding,,s (P.O. ·J52'9;_ Sec. 14, · .. · -Par. 3). · · .. '.- · .: . .,.;Where· the land has been sold·un_der pacto de rel(o~ ·th_e )endo,r ·a· retrci A,ay .fiie an application .___..._. fot,the: odginal-'registrafion of the lancl, provided, ---:.: oweve'r, •ttic;lt" ..~hould the pe(ioq ior- red~rnptiqn : expire during ~ht:, pe'n~·er)cy 9f·the registration . ·. proceedings ·and . ownership· _to~ ~h~ property_ . . conso'lidatel:i 'in: the vendee a . retro, the. latter

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Nc,ie: Application·. is eriaqrs_gd: th~· MTC. if ' there i~:no_controversy over the:li,ind;or it_s \/alue . is.less t_h?n P100,000. (B:P. Blg.:-,7._29,' $ec. 34)'.'.: Burea_Li of ·.Lands. [now Land_ Management. . Bure.aµ] must.always be.furnished '!Vi.th a copy°of the·· petition · and :--·all pertinent :documents1 (University of·the. Pbilippines ·-v. Rosario, - GR · No: 1-36965,' Maret, 2_8, · 2001). · ·

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_s~a)(. t5~--ip~i!~t~d:,t~r:fh~ a~plic~~i?~ ?.nd -may .·· ~e ~h~·~oc~~~)ngs (D_(chard fReally apd . : •. \Oe~~lop_menl_ (;orp. v. Rep_ubltc; G:R. · No,. 136ZBO,_ 'Augus 3V, 2001) .. .....,. : . ~: . ·. . ·

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. ., . . -· ~ ' ·:· . ; :. ~ · l,.and-,Subjecf 9f a Trust Ag_reement:-Trustee ·. ·. ·.ori· beha'lf_· ·of ·the- oenefi_dary . may .appiy for ' - . .. ·{ .... ' ' " ·.regJl:>tra\ion, !-)nle~fpr.o_h_i~it~.tj by. ttie i!iistrument . . sr~a~inef th~ t(~_st W-P: ·1529, Sec: 14, -par. 4): · . . . - :· ' . '· . . . . . .. ..... ' ~. . . .. ... .. ·-·

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· Th,e. ·follo,..;ing rriay .file -. an ··application· for registration land: (OP:C.:O)·. . ' . . . . . . . of-!!tle . . . ;:i. :
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Note; If .the agE;1.nt. or- ~epres·entative dies; or ·leaves toe . Philfppir'ies,., the( · applicani shall forth.W.ith make .. aiiotnec _a:pppirJtment for· the substitute, and, if he-.f~ils. to do so th_e.cciurt may ·d. ismiss the-.· applicatbn (P.D: 1529, Sec. 16). . ~. .

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Amendments . ·. _ Refersto the changes made in the allegations or · contents in the application (P.O. 152_9;,sec. 19).

Lands _Applied for by' Minors or Persons. Under Disability: Application should be- done through their judicial guardian (NOBLf=JAS, supra at 89).

Kinds of Amendments in the application Formal Amendments. Refers to · chances in the allegations concerning the applicants or the parties-ininterest.' ·

.a.

. Lands, Applied . ·f6.r ·_ ·by- . ~arried': We.man Withouflncluding the Name of Husband: It is allowed only when, the property relationship - between -husband and - wife is complete separation of .property or .when the property is a paraphernal ~property (Id. at 92/ CIVIL CQOE, Arj. 214). . , . . . . .

Kinds: _i., .. Joinder inclusion of· ··additidnal "applicants; amended by adding names Land Regi~t~ation" AppltcatlonCoverinq __ Two otnewappllcants; (2) or Mor~ Parcels: An c;ipplicc;itr~n-rnay°inc;:lwde ii. Substitution - replacement ·of the two .or .rnore -parcels of ,land 'belonging to the origin?I party by another; and. . ,-appii~anUs. provided they ar.e_ situated witlji_h_-the . · iii. Discontinua·rice.--removal·of names of ... same provinceorcity, The -~O.U~ may at ariy time · . one 'or more applicants, . . · order an· application to be .amended by. ~triking -· . 1• . out one Of ~-()~e of the parce_l~ or,Qy a severance u·~Amendmeots· to the -application; including ofthe .apphcal1on·(P.D. 1529,_ Se~B)r-,~ · · ·/iCJr:i~er, substjtution.or discon_tinuance as to ~a,')i~s~aybe allowed by the court atany __ Who are·~1squalif1~.d_to ap~~~tage.)~l\!_he. proceedings upon just and a .. A ful:!l1c land sal.E:~ ~PP}eai<~n;9Jar~,-.~equ_iffiqle terms. In.such.cases, public::~!i~n la_Qd covered QY his sal~·ap,phcjlli.On is "'"Jf'· is n~fefessary (P.O. 1529,- Sec'. 19, par. cqn~emed (Pa{awflrl A.A91!fultu'j1/ ., ~nJf '. tft~ ~ . 7). Industrial Co., ft]c. v,..JD_irectowof L~nds, (3.f?. . No. l-2?914, March 2~_.,...1. -1,i--··-. -.0:-SubsJan ,i~I.-A . enpments: (SIA) . ., . _ . • : -""'-......,.. l;1H -r-4"'J~~ · ·I : " #.:"\ " · · d · : . · R·· . H k I ti· th t fli ·. "ril, tF 1.11 )Ji.Y· ii §u~st~n.t1 1 c~ange in the boun _anes, . O · ~a!'i9n. ~ _ay no»w·e .. ._a _. is_ E1J _ ,, , , ·, ·! . ii. !i:icr~ase;,irn the ;:irea of t_he .land; anrl .· ~he ~»'.r:ier_ of the la~~ th~_trth1i_~ame 18~ · ~ffi:;:;lnc1Jsion ~flAdditional. land (P.O. 1529; -· · pubh9;~_ land (Palar_~'}AAgncy){tJh.~-and.. . · ,. ,:~-..;'seof ,1,9-11 ··J-:-2). '., .. ,. . . ·tndu~tna}-C9., /fJ~- v.l),!,:JC,,l~·o!li~-,G.R:)~

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~~r~~?1,:: __1,~_72{ :~~~ . ~J\1ca,lion - : - . ~Y prescriplion·- tlie land· _surren~el'e:{t~~~nd_;~t1c~-Uf!der--Se~t1on~3 qf P.O. ~-52? are: -·

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by the debtor. (Ramirez -ltl~··CA/f'R~~q'.\ref..;, ( ·. - .. 1~'. ·. '.~7-24?~-~ril 9'?)_. · · ·. ~hid~ s~a11_-~on~is.!·i~.-S~P$_t_a.r)tial

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R~as_o~:, _Hi~. pos.se.ssio~'.: is ~ t 1_ ' tbe M~,ang~m t~E: _bou~d_8.r[e~ .. or ~n 1~cr~a~~ !!'!_th~. c_oncept of. ~n:_o.yne~ (R.f!.mJ(ez _y. CA., G.R. .. . . ~re.a ~f t~e. land app_hed ~qr, or ~h1c,: h 1_nvo(~e the_ No. 11724T Aprif·.1"2' 1"996): · -' .; .· . - . 1~~-lus1on of a11 _add1t!onal1and_-shalJ be sot:iJect to ··,. · ' . ·· · ' · · .-,· · · · the sarn.e··requirements of publication··and notice · A Mqrtg·agee·--ar bis '.Su¢ce~isor~in-in'te~est to in aiforiginal applic'ati~ri (P.l:J. · 1529; Sec. 19, ·. -the mortga~i~'l = iiotwith~tEintjirig the· lapse o( . · P,ar.- 2) .. · - ·· ·. ··_ . ':.'. :· '· . · · · _·: · · ' _ . 'the p'eiio9 for .th.~_-inortgagb'r tci_-pay:.t~e loan· ; Nofe: "fhe purpose bf the new publJcaUqri is•to ·se_cured·to redeem i.t·(Reyes-v. Sierra, G.R.- · . . give· n9{ice · to afl .persons con·ce'fned re'gar_ding ·. · No. 'L~2865§3, pcto/Jer:1"f3, '{979)_. . · . ·· ' ... ,·.,.. . ... ... _·_ .. t~e,. am~ode.tl ·applic9tion,. -Withc;nit," a n'ew · :publication; .-._the registr~tibn court cann.ot _. R(:lason: $uch· act·. wotild -'amount to .._ a. acq-uire ju'risdiction· over the ..area .cov.ern.d by pat~urr, _tomrr;issoriurn,, which is agai_nst the original appli~atici"n;:·and. tlie deci~iqn:·of the· good· mOrals ;:ind. public-' poi icy (Reyes v. registration cou'rtwollld be a nullity ir'isofar as the . Sierra, G.R.'. No,-- L-28658-: bct_ober 18, . .-decision 2onterhs .the newiy·indu.ded'larid: But . . . . 1.979).. : ,- . . . if·th~ ~ni-endinenfcorisfsts :in the excfusion of· a portio"ii-.e>f the _area ·covered by the original ·a .. A:· p¢r?o'n_ or entity whose claim' of ap·pli~_ atibn · ~nd .. the· original ··plan.· as ownership. to·· lqii_d . had: beeri. frevi_ou~ly, · previ,ously established, ·a .riew p1,1bli_cation is . denied· in a· re.invindicptofy -action· (Kidpalos · ,.. not. n'eces.$ary· (Berii(I ·v. Tuason: -G.R. N9. L-·: , . ·v. Baguio"Mining -Co.; G.R. No. L.: 19!_140, 26127; June ?B, .1974) .. ·. .. August 14, 1~65). ·

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_742· 1

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2019 SAN BEDA lAW.CENTRAL IZED BAR OPE:RATION$ 0

LAND TITLE AND-·DEEDS . ~N

An amendment due to applicant does ,not (Director of Lands v. Court, G.R: No. 73246,

BEDA LAW CENTRALIZED BAR OPERATIONS - MEMOR: AiD 2019

setting the time for initial hearing IQ be published once in the Official Gazette and' once in a newspaper · of g.eneral circulation 'io the Philippines (Director of Lands v. CA, G.R. No. 102858,.July 28, 1997).' . , · · .. . . . . '

change of 'name of the 'require republicalion intermediate Appellate March 2, 1993).

In case . of .. an amendment of· application involving.2 or more parcels of land: the court may at any lime. order·, a11 application to be amended . by striking out one· or· more of· the parcels· or b.y a severance of the· application (P.O. No.' .1529, Sec. 18). ·. . : .

Note: If the publication is rnade after the date of the initial hearing, the entire proceeding will be null· and .vold because publication must precede the hearing. This is because the court was not able to acquije-jurisdiction over ·the. property · ·(Republic v... CA, ·~.R. No. 100995, September 14, 1994) . ..

. Note: In case 'of reduction of the original area, .no new . publication is· required (AGCAOILI, .supre ettst). · · .

. Purpose and Effects: · ·a. To confer. Jurisdiction av.er. the land 'applied r for theupon the.court: and · b. To, charge the whole world of. knowledge of the. application · of the land involved, and ,. . invite them· to. take. part - in r the case and assent and P,rove their righ.ts · over .. !tie . property. subject· thereof (AGCAOILI, supra at 159}. · ·

.

3: -. ·Issuance by- the. Court of Order-Settinq the. Date of lnltlal-Hearinq . Setting of date for· initial hearing by the court, publication, etc. -4,

-.

The court shall, within. five (5) days from filihg_of · the application, issue an order setting the date and hour of the.Initial hearing which shall not be earlier _·than' forty-(i~e (45) -. days nor later than ninety (90) days from the date of the order (P.O. 1529, Sec. 23).

6.

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Service Notice : Service - of notice· .upon contiguous owners, occupants and those known to have interest in th~ pro~ti ~y.the· she.riff (ld._at 182); . .

Note.:. lfthejdate .~i· initial h~ing was' set Modes· of Givin,g the Public Notice of Initial .beyond. the 90-day period, the Cpurt- will still acquire jurlsdiction.,' No fault, is ~:ttri6utable to · Heafing:~andato_ryj.. · . . .~PUl51icati~. . ·· · such party.if the triafco'.urt. 'e~rs.ori ~tte1s with_iQ. .b. -Rosting;~or'.. ·· -.its sole power. lt~is.i.Jnfair t9,_12uni~h:in applicanJ · c. Ma.iling (P.fJ_. 1529, Sec.: 2"3): for an act or omission over which- he applicant has 'neither responsibnity nor cor;itrb( esAe.ciafiy. 7 · ... if ..the applicant has complied ith all· the W o. are notified in the notice of initial · requirements of the. law· (Republie 'v. ~an----hec1ring:. · . . Lorenzo Dey'l, G.R. No. 110,724, 'tlanuary 29, a .. 'owr:i~rs of acljoining land; ·. · 2007). .: . · · . . b. Occupants 'of the ,lan_d. souqht to be .regjst~red; and . c. To all whom. it may concerti or those who 4. Transmittal . . . _ have interest in the property. . · . Transmittal .of application and date of initial ... ·. ·. . . . . . . ·. ·... ~ : - hearing. together with ~·a!I documents cir other. · evidence attached· thereto .by the.Clerk of Court Mailing . . Within- 7 days after the publica\ion · of the said , If the lana· borders on a·· river, .. navigable stream or shore, cir 'an arm bf·the sea where The requirement of publication once -in the .. Official Gazette and once in anewspaper of a river or harbor lies: Secretary of Agrarian general · circulation · in the Philippines · is. : .·. Reforfl'.1, Solicitor General, Directors of L.:a~d . [11ow Director. _of· Land · Management], mandatory and ·concurrent; otherwise, :.the court ,y.,ill not acquire jurisdiction over the case. Director of Public Works, Director of Forest . Development, 'Director 'o( Mines, · and The law used the term "shall" in prescribinq the work to be done by the Commissioner of Land in

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2019.SAN SEDA LAW CENTRAL:IZED BAR OPERATIONS·

I

743

LAND T_ITLE AND-·DEE·D-S SAN·BEDA I.AW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

Director of Fisheries and Aquatic Resources (P.O. No. 1529, Sgc. 23, par. ·2).

Kinds.of D~fault a. ·.. Order of General Default - covers the whole world and coverspersons whodid not appearrand. fj!e an answer. (AGCAOILI,

'supre at 180). b.

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Order of .$pecial Default - covers persons· /. who .appeared and asked for an extension of ·time to file ..answer Qr opposition yet they were not able lo· file opposition -withiri the giyen. extensionof time Od. at 180.) .

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... Order of D.efa_1,1lt . . . ,:. ' - ·,: , _. If-no." person -appears ~'19, answers ·within t~e · time.allowed, the courtshall, upon motion.of.the applicant; rio.. reason to. the' contjary.appearinq.; order ·~ genera1:,cletaG11 to. be~ recorded and ·.- ··requirethe·~·pplitantt.dpreserit-_evicje,n_ce~ By1]1e. :· ·_· · ... · q~scfiP'.tion in .. tha notice "J,Q. all Wh9m ti: May. .· · . Concern" .. a'il' >the I world is made . parties ' ,. ·cfefend_ant and shall be concluded by.the 'default, . order-YPd!>: ·1.9.29; ::;;e9tion 26; par. ·1)- · . . . . . .

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·. Musf be· filed· within fifteen,,(15) days· afterorder of default-is received · · \

. : · ii: Appeal .t9:fh~ CcurtofAppeals; ifcliiotioo~ _ . . .. f6:r)new trial. is· denied.' ltrnust, be filed · \ within-fifteen (15) days afterthe receipt . · : · 6f:the judiimenl of denial-for themotion for newtrial. '. . .

.

Where.-an ~-pp~ar~rice '.has been entered .and an answer -filed, special. default. order shalt be : . .enteredaqainstpersons who" did not-appear and. · answer:'(P:D: 1529, Section 26, par. 2).' ,. .... ~ . . ,

i

744

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2019.SAN-SEDA

~W

. .

CENTRALIZEG. BAR"
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.. i=~i;~~~ -~: a motion. nev,;. trial ·or appea! within 'th~-. regle~nen.ta~ period .. Will· .render the- judqrnent /final· and . ~X.e~~tbry. ' · .; · ., <,

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LAND _TITL.E ·AN·D o·EEDS c ..

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SAN BEDA. LAW CENTRALIZED BAR OPERATIONS..

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birii;!Alt#Wtt*ib#fA§nt_AA4i&t¥¥9tf2$

Ground: FAME and mE;!ritorjous defense .

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Reference to·a Referee The trial court'sh13ll s~e to it ·t~at .c!_IF registration pro_ceedings are dispos.ed within ninety (90).· days. 'from "the is "".submitted 'ror . . date the. ·case . '. ,, . ·- , dec1~1on. · . . . ·•. - . . . . ~ The· Court may refer.the ca~e or any_pc;1rt thereof . to a referee (cler.k"of. coud) wtio shafl hear th'e parties an,d thei(e:vide_n,ce. . ·. ' .. . , ' . •. . ' . The referee shall subrnit hi~ report thereon to the .;Court within fifteen . (1.5) ' days:. afte_r ·the .. :, . termination of su'ch hearing.· . .· . . ,. . ·--~. '. . .' . ·~ .. Hearinq before referee may be. held at ar:iy: . convenient pjace.within the province or 'city as. inay be fixed(b.y him and'after-reasonable-notlce · thereof .shall have· been 'served the parties concerned (P,D: 1529, Sec.,27). . .. ·: ·:, .

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· M'ust be filed within sixty· (pO)· days from . · · knowfedge ·of j_udgment. bl.it not beyond six · (6) months frcim entry of)u·d~rhenh · ·

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If t.he · 6.~mon'th period :.lapsed and th~ adm.inisfrator alr"eady. issued de.cree of. : ·. registratipn pursuant. to t~e order of thi: · 'co"urf ~: P~titic:il'l -fa reopen and review the decree of registration (P.O.: 1529; Sec. 32).

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Must .be. filed within one.(~) year frOJrl the -entry of ·-the decre!:J . of registrat,ion, . .. . .. \

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and c_adastral_.: case_? by · analogy or in . a suppletory character and whenever "practicable" ·and convenient (P. o.. 1529, Sec: 34). ·' ·

If j4dgme.nt becomes tfnal and executory .: Petition for relief from ,judgment .under.-Rule 38 of t.h,~ Rules of Court. · /

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MEMORY AID 2019

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If _o~~e· (1) ye·ar· pe.rfoi_already e~pired . Action for reconveyal)ce.·. ·.. · · . _ . - .

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The· Court's possible ·a~tions ·as-. regards' the refer~e·s report'. (MARS) · .: a ... Mo~if:~ithe report; · · .. · .. . . . .. . b. · Ado.pt ·'the same and use it as basis for -,1 . ' . · ju'tlgment; · ;':·· ··.· · . . C,. :. gefe~ b aik o.f_ recomtn_it ·_ihe _'<::tjce ofinitial, ~ . .: .. public domaintand. . . . . ·. _ ' · .. ·. ·. ! htar[f)_g\ _is . publ_i?h~g: in : t~e, 9rnciaf .,. . . e.:-·---~pplic9nt has acq.LU_red'the !and throt,Jg_h··any· .. . Gaz?"Ue. but n9~.: in , a-. new~paper. of . qttie.r. mq.c;les· of. accj~fring ow11ership ·. ·. . . .: ·. ., ..... : ·.,general_ ~ir~·ula\ion),. · . . .. (Heirii Mario Malab.anan v. Repyblic, G.R. . · .. · ·, · .. '.: · No .. 17998~)Jvov. _1P, ,· ·. · -A pc1rty deciagid in ~efaCJH re.ti)ins tbe._right · . ."c;ipp~ai ,~n t~e.''"groun·d·: that th~· 'plainiiff ·;_ · . Note:~ ·.. Judgrp~nt_· .. refers i· ·adjudi~·ation: .. . . --fa[led to prove the material allegations 0tthe .\ determination 'aijd·resolution of the questlon of · pomplaint, o~ th~Uh_e decision)$ ·contrary:to · · ownership. .· · . · ;,._ · · · . ·law) .evet, with.0ut the need of prior fillng of a · motion, to·_ set· aside· the. 'order of. default _. .:_ · Partial Judgment: . ... . . . ... . (Martih~z.. v.... Republic;._ G.R. J;v~. 1q0895: •. ln-:a- lahd "registr,ati.on' proc:'eeding where:only a . Q_cl[!IJ_er 30, ,2006): ; .... · ·. · · · . portion. o( the" .iand. ,subject of' re·gfstratioi,'.js ·, co"i;itest~d.-~he cour:t may render parti~I judgment . 8. · ·H~ari~g .- :_; .· .. provid~d, th~t sub"division"-plc;in showing· "the·" . . ; He~ri~g .of the case by". tne eoJrt; : ; contested" and uhco·ntested portions approved .. ' . ' . by the Director of Lands· is previously ·subn:iitted · . . .. Reception of"ev1d~nce. is governectby provisions ... tq._said court (P.D .. 1529,: Sec. 2$). . .. . . :of P.O. 152\3""aiid _the.Rules'ofCour(insofar'as.it- is not i_nconsistent 0ith. the prov.isions of P.O. _; 1529. It shall. be applicable. tci.Aahd_ r!=)gistration 0

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LAND TITLE-AND D'EEDS SAN BEDA U.W CENTRALIZE_Q BAR OPERAT/ONS ~ MEM_ORYAID. 2019

Kinds of Dismissal of the Proceedings a. With pr.ejudice (provided that judgment is -: · already final .arid executory) · . . i. Principle otres judicata applies. The partycan no longer re-file the case. b .. Without prejudice. · · . · i. The party, may' re-file the case,

I. m. . n.

Liens; . Other encumbrances; and Rights of the tenant-farmer (P.O. 1529, Sec .

3~

.

Note: The decree of. reqistration shall bind the land and quiet title thereto, subjecj.orily to such exceptions or ffens as may be provided by law. It shall be conclusive upon · and: against all persons, including the National Government and . all- branches 'th·e~~of,. whether rnentioned by name in the application or notice, the same being included in Iheqeneral.description "To All ·whom It May Concern" (P:0. 1529, Sec. 31). .«

'Illustration: When dismissal is. due to lack of evidence 'presented by.the applicant (NOBL°EJAS, supra at 78). Remedies: · a. When order of dismissal is not yet final and executory-- Motion _for reconsideration to be filed fifteen (.15)- days_ from· · receipt of judqrnent (RULES OF-COURT; Ru/e-37). · -6 .. When.- order of dismissat is · final '. and . executory - File~ a new application for . . . · , . reg. istration._(RUL_ES OF COURT; 5.Y_/e<-~7).

Gene!ral Rufe: Regi~tered owner receivinq. a · · .certiflcate of ·'tiUe in pursuance of -a decree of · ~ registration, and .every subsequent purchaser of· _· registered land takihg a· certificate title for ~ ' . . . . la~ue. and in 900_9 f~it~,-_sh_all hold-t~e same f~:e · .· . · . -- · · . . -/_ · I\.. · .f\lfrom-all encumbrances·{P.D. 1529, Sec .. 44). · 9. Decree of. Confirmation and Regis ratio!o'>- - . ·.._ · ·f. (/., .: - : - · . - -, · Issuance: of decree or. orde1.l'bY· th.b,-ccfu'rt" · · · · --!:imitation's: Statutory Liens , . ·. ·. · declarinq ~he. d:ecision fin~lf{ncl,ifi~~c~g-the-~~r . ·,..__,;( Bi~~ql~s rights a·risi~g _o~ .:ex_istin_g Land Re~)strat1?n --~uthor~ty~~)'t_o ;issue _-f: '~.m,?.~r 'tt~· ca~s . and ·const1t~t10~·- ~f · the Decxee of Co~firmat1on·an_a R_eg1strat1on;. . 1fV ,/&. -1~11J~1-~es.wr11ch.are not b_y_law·requ1re9 to rl\rr~\ ppea~t:,"'ao~din the Registry of-Dee~$ _iff _ · It is not the co·u~ b~t tie)-~li":'ho:i~•sue~ t~e {der_· .te~~ ?gainst su_bsequent ·. · decree· ?f.. confirmation _"!.nd·..teg_istra,ti.qn. !li!li ~-~~. QL)r_c.h_a:5e ~ orf~C~IT)qr_al)c_e!s_of r~cord; . duty_ t9 1s~~e the ~ecr ~ ot-rdg_1strati'bn doe. ~t~1W)'o. b. · l!Jnpa1d ·J~e~I]. es_tate ta~es ·. !e~ied __and . rJOt. pr~scnbe ·-(Repub/J~ .• No. ~~s~~ w1_tH1JJw~ years 1m~_~d~afely_ . ..1_5Q595,. Jan. 23, 2007).\tf)\· \~ \"" · _· ~pr~ ee_d1_L1~t(~g.Cq~~~1.t1on ~f any -~1ght,ov.er · . _ . -: . . . . · _· · . . ·-~~ . I~ .::'.,;.@?: Ian~ by ar,i;nnoc.ent purchas~r for vaJue, · · One (1 ), year after t~e issuance-of the ae.g-re.e, ·µ'.ill_ $.)~~ithout prejua1~e · to the·. rTgh_t ·· 6f.- the !;>'.~cqm·es.- incontrov~rtible \n<:1 amend,m1rp~~. ··. 90).efnmen~t? colle~t,ta~e~ p_aya~le ;before 'th.e satrie will not-'be_.alloweavexce~ ~.erel'5~lEN1'\h . -th'.3~ ~edodffr?m "t_he ._d_~l\fiqu_enna,spayer . case _of cle(ical.errors W:D. 15~,Se9-32).~A°lo}e+ /.. .·. · · · . _··. ·. . . . . ,·. . .: . -·· · ·. ·· · . .f91'.1~i.~f.i;~,;~[DU~!.1~_- h1gh,;va~ o_r· pnvat.~ w~y·. 10. ;Entry of.D~cree . · 7 .LX:_~-~al51Jshe~-~r rec~.9111zed by· I~~. or any . _ . E.r:itry __ ot. d~cree. in- the Land -~e§1st~~~~~r-ri~ejt-irri_gati?n _or later~-~ ~h_ere6f; ifJhe _ ... ·.-. . A9thonty; :Tb1s- ~ei:_yes as Jhe reckornng date to .. .· ··. e:_ert1ficat~. of. btle do~~ ~ot st-ate thaHre · · -det~rniine the )_~year. period· fr9_m yvhich 6ne: can · bo'ondarjes of· sWcn< highway or irrigation .i.mpi.ign .. the -vaifdity of the registration (P:D. · canal .or 'lateral" thereof - have 'been ' . . . . . .. I . .. ,. , , _15.29, Sec: 32): ..· · det~rmined; and · , . · · d. · Any ·.disposition. the prcjperty or- lirnita~ion. ·· · Gohtents ·o.f H1~:Decre.e .pf-Registration·":·- · · . .: · _ ori the. ·us·e· thereof by virtue 6'('o"r pu'rsuarir .a., .D9Je, :tiour ;ahd ·tnin_utes· :of. the. entry of the . . lo,'· :.p:o.-:· Nd: 2--;,-.'.a,'br any 'otMer law : or decre~; · . . _; , . .. : _i-Ei'gulations' b°n.-~-gfaric1n reform (P.O. 1529, ,· b. Signature of administiator; · 41):· ...... ·:-- .- ;,., ., . C:ivil sta.tus ·.. ttie · ovyrier; -if:· conju.ga1 ··· . property. [l~:l°me o.f. both _spouses; Remedies of Parties Aclve~sely Affected ·by ·d:, 'If ttie:o0n-~r~is:.under _di_sability, his:r.iature- of:· · Judgrnenfin the Regis:tratib:n Proceedings:.· dis~_billty; :, · · ' · _a.·. Molfo·n.for n·e0'·tri~I (RULES10F COURT, e. If the o_wr)er' is a minor, his age; . . Rule 3.7) 9.fl..!he grounds.of FAME;: , f.· . Des'cription of' the ·1c1rid; . b. Appeal fiiep · within . thirty. (30). days frqm ,.g. Estat~· of; the ·owner-; -receipt of.notice· of judgment; ·. . . · · · h. Re[atjve priorities;· . c_. Petition for reiief front judg~ent (RULES OF ·_ .· i.· · !?articular estates;. CO()RT, RuJe·3aY:on the grounqs· of FAME, j. Mbrtgagees_; . ril~d· siic°ty (60) days frbhi '.receipt of noticEl of k'. Easeme_nts; , r" ·judQ'nient, but_rio~ more:than six,(6)'mo11thsi

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Action for reconveyance, filed with_in ten (10) . years but not available against innocent. · - purchaser for value;· .. · · ··-e, . Action_ for damages againsLper.sons who ,_ 'perpetrated fraud;.· - . :· . ·. _ · .... -·. f., Claim agai'nst the Assu"rance. Fund, g. Cancel or. nullify title· fo. the la11d-(e.g' .. foreshore-land,_ published onlyJri the OffiJ;ial · Gazette); ·_ ·. . _ · · . · h. Petition to r·eaper.i ci'r · review t_he - Decree of Registration (P.O.·· {529;._ Sec. ::}2)., _file_d . within- a· year· from' entry Decree of- · · - Regi~tratiori' on- the. ground bf actual fra~ai· _ . - and - . _· _ · · ·· ·

of the pub.lie domain, under a bona fide daim of acquisition of 0wnership, for ·at least thirty. (30) years, or"-at least since January 24, 1947 (R.A-. . 1942, Sec. 1;· See People· v. CA, G.R. No .. 116372, January 1~, 2001f 3..

N~tural-born 'citizens of the Philippine,s ;,..,bo haye -lost their citizenship_-.;1nd ·who has thelegal capacity to . enter. intQ a .. contract "under . F.'hilippine laws. may· be aJransferee' of private . , land up to a maximum area of.5,000m2, in case. . of urban land_ or. th"ree (3) hectares in case-_of rural land to be used by him.for- bu°&iliess or other purposes (R.A 817.9, Sec. '5); -

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Criminal A<;:tion f?r Perjury ag_ainst·_the(party :: . who obtains · registration . throt,Jgh. ·fraud (PeopJe .v.JCainglet, ~.R. Nos,' t-21493-94, April 29, 196(3). . - - . .) . .. . . . , -: , · (S<;1e s~parate discussion 'on Rein~dies).

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Sending· and Transcription of the Decree: a, . Sending of .copy. of the . Decree. to the . correspondinq Reg.ister of Deedsrand _---, b. Transcription of - the Decree - .in -the reqlstratlon . book and --.issuanc~~f th~ ,o"."'fl.e_r's. d~plicat~ _;Qrig[DaF <;ert)!i~ate oft Title of ·the applicant.by ·ttie_..Fe:g1st~r Jf.

Natural-born citizensof the Philippines who · ·have lost their Philippfne citizenship, who - · have acquired disposable andalienable lands of __ the-public domain from Filipino citizens who had . possessed .the same in the same manner and . for the lenqth of lime indicated in paragraphs 1 and 2 (CONST., ART XII, Sec. 8).

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~-~_When thi conditions set:' by' law a"re -complied _,...__witb,~tl'ie possessor of the· land, by operation of aw, acqutes a right_ to 'qrant, .a g·over~rhent grant. ,lhout the necessity of a certificateof title beinq: ·s-~ued (Repuplic v. Doteol, G._R. No;

Deeds-. uporu payment _: of the _p~e~i::rib~d · · · fee~.'(P.'D 1529, Sec. _JJ)'. . . . .-.,...~ . · · . . . ~ . " . ' . Note_:. In -J~di~i~I. ati_on:~f lnc_omplete -t1Ue.- th~. ab_o~e..ot~?ned _.step,l .. ·-must_· a1s.0 be comp\1ed witb~(§.._A~1.41'-'§

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. Who May Applyf- .,. : . , _ 1. · Filipino citizens'_who by tnemselves_or throLJgn ' . their · .predecessors-in-ir)terest - haye been'.- in open,--· coriti11uous;- ex9iu~ive: and :notoriousposses?ion. arid· oq:upation: of · alie:nabl~., a·nd disposabl~ lands of pUbl"ic do"i-riain unaer_.a _bona fide claim.of a'cquisitlon since June~ 12,-1945 cir . · prior th~reto or'since time immem.orial (C.A.14.1, s'ec: 48, as amended-by P.D.-1073,-Sec:-4); .

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2.--: Filipino citizens ""'.ho by th~mselves
possession ·of lands··bf tb~- public. dom~in_-miist "be from Jl.ine'· 12; 1945 or earlier, fqr'-the 'same. to ·b.e ac,quired through,"judiciai' confirmation "of imperfect title' (Republic Dofd6!, ''G.R." -No. 132993, Septe'f!lber:-10,_1998).' .. · . · · · · ·

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Applicant Must P.tove That:· _ . -- ,:_ ·1. - The· lane! ii:i° alfenabfe ·and,- dispos'ab,le land_ qf - public domain; a_rid · · · 2. .They have been_jn·opeh, co:ntinuous; ~xclusive, and· notori9us posse~ssi<;m·aod"occup)1tion of the - \and for_the length of time·and in ih(;l m;:inner arid , ·. concept provid_ed by law (Director'ofLarids v: - Buyco, .G.R. N9. 91°189, Novemq_er 27,.1992) . . : . .. . . I ' . . Ex.tended Period for Application- _R.A. '9176, Section 1 provides· ih part that"The_time lo 'be fixed iri the entire archipelago for the- filing of . applications :·under: this chapter shall not e_xtend beyond December 31,,-2020, 'pr~vided-th'at-the area _ · applied for does not exceed, twelve (12) hect~ires." . l

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2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS 1 ·747

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LAND TITLE AN-D·DE.E-DS SAN BEOA LAW CENTRALIZED BAR OPERATiONS ~ MEMORY AID 2019 ·.

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FILING OF APPLICATION Extent of,Jurisdiction· . General "Rule: Application -shall be filed with the RTC of the province. or city where the land is situated {P.O. ,15~~.~Sec. 17). ·· .· . ·: .. · · ·

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Certificate regarding the last assessment for taxation of the property. 6. Amendments to -the application including joinder, substitution, ordiscontinuance of parties may be allowed by the court-at any. stage of the proceedinqs upon ·just and· reasonable terms (P.O. 1529, ·Sec. 19); . '- . 7. Additional requirements· the court demands and not inconsistent with law '(P.O. 1529; Sec. 21); and · · · 8." Occupants· and; adjoining ·owners (P.O. 1529, I . . Sec. 15): · .

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· Exception.- Qelegated jurisdiction -of ' the MT~ to hear and determine cadastrat 'or' ·land: reqlstration · cas~s covering lotswhere there. is nocontroversy or opposition, or C:of)tested-16ts, -th$ value .of which does not- exceed (B.P. · 129, Sec. 34, as : ,am~ndec(bJIR_.A.. 7691). · ..

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'Note: Ttie Reqional _Tri1:1I Courts have the authority Note: Application ·shall. state. the full names and toactnot-only on o_riginal applications but also those addresses of all occupantsot the land and those of. ·· filed after original registration, witn· power' to. hear the a_djoining owners if known and if not known, _it -~_np ~que.siions -~uponshall state theextent ef the 'search. made to find them . ..., .,. d_et!:)rm_ib.e,:~all.. . . . .~ . .. arising . . : ·- (such ...... appl1c_at1ons_or,petijion_s·(Avemw. Caguioa,.G.R. No. {P:O. 1[529, Sec. 15). · · 'l=--6.512, Oer;ember29; 198.6; lqnecio v~CA~ G.R: No; . . -. . . · . 98920, ./l:lly.·14, 1995). ·.- . ·. ·. ·., · - . . :Se'c _ion ~ 5 o_f P.O. 1529 _is.explicit in-r.equiri~g that in · .:·. · ·. · . . · -,~ . . I\.: . :J:.n.d, a9pllfat1on. for reqistration , of. land. lilies,· the When the i~_?uesJaised before the ~rG'(s'ltt~n@'a'~~gpli.Q_atiov.sriall .also ,sta~e the, ~full .. names. and land· ... registratioi:1· ... or cad.a.,str.;l~cou~in~olv~ .•. : addres~s·o~\ ..occupants.o,f_t~e landandrthose of substantial q~controversial_mc~ilte~:'1~aid4'ssue·is-cl~ -the.ajjjom~g owners if known, and_ if .n . · -,. ,. ·,·. · . . or911}ary.cc:ise .or_ 11:f f~-~•. cas~ wheri,t.e ,n~d-~~~~u.r\.~~_11. w,ithjl f1v~--{5):c:1_ays:frc;im·.ftl1pg eft~~ ... prop·erl(belongs. '(Tagaftay~-TEJ?I v. · CA: G.R,(§f,:J£RK~~n~fi>Jic~~~! is~ufjn or.~er~~etting :the .date a~d-hou~ , ,1068;14; June ·10;.1,.997):: ~· ·_ .. ,~:1:_)': ...._;~o.f:'~m!t1~~anng wh,eh,_~hall no_t'be .~ar~e.r: t~~~' ·fortyJi\1\(i-f:S~cfaY.s·.noi)ater t~a·n ·ninety.c(90):days. f\.per~on' ,V{h_o.·s~,e._~?tl;le)~~ist_t~ti90"- 0f !itle foia;pJe~e . k5T·,ltie-cfate·of. t_h_e,?_rder (P.o:·;1529:· Sec. '23); ·. ·'"'ofl~_nd.0n,!he...!~~s1s:QfRQSs_es_s19~bY,h[~.self!~_~s ·I"'.11~. ,: ... _, ....: . : . .--.. ,· ,. ·:. ·.: .: ... · pre~ec~s~ors-in-ti:iteresh :mu.st- ,prove,-=ih1~-'. ,cl_a1ni.'-::b~eason:·To. corfer J~~1:;,d1ct1~m up~>n . ~~~ cou~rt,~nd to clear: a,n_d_·.. coriv.j_ndng~-·~_vic;leJJc~.:t~~qs,. he ,rnl!~t . invite_'a(l. :..Pa~rties ~ conce_~n7d· to -~ppea~. i_h _court to . prc;,.'(e,his titl~;.and.-sh_Q~Jcj.,oo.t rely:_bncthe c!9!:>en9e pr ·--ish_ow cause why (he pr~y~r ~f,sa_1c!_ appligat1c;in.,shall, ·, wea_knes.s o($yi_d_e~_ceofth~'bpppsit6rs·(0'ep_u~!icv. · .n9,t,be._gr_a·n,te~ (;'-~ 1529,.S7p. 23).:. . _:.;. ~- :-: ,.. : ... • Rayps,J;JR 21169,8,,MEJY.30,. 2916) .....r_ .. · , · -:- . . ,1· . • •. • · . : "' · ·. · · · • · · · -· · · · · ,. · Th'e · public··,shall be-'given notic.e;: o(t~e .initial 'conJerit~}o°i;th'~hea.r)o'~{of _the.~_ap'pJic'atip_n for lanf registr'ation ~. Naine.Qf ~pplica[lt!:c)tizetj§hip, civil'sta~us,_nar:0~ · by:_.(RM.P)_ .··. ·,.. · · ·. . : '. · · . · · · .. · · .· ~f. se(iuse.,~ an_q jf r:n!'l'r[iage. has, ·q~_e_n :,_Je·galJy \ ·., 1._ . R,ublication o_f.,notice of_ initia_l h.ear[ng. ,' : ... . 'dissolvei:t;-ttiefmanner6fits·terrninaticin; .:. · '.. ..-. ··~: ... , ..,.... · ..•. :', ;· _;.,- .. . 2 .... De.$Criptipn''ci(t11e-l~rh{. ::·: .. ;· - Frequency of Publi'oation. '· .':: . 3. .:.'V~rifjt~t-ior:i;.,. i ~ . -~:- :. , :_.. . ._. ... · · ;· ' : lt-~hall b"e published:once ir:i ~he;Qfficial Gazetfe ·: · ... ~ 4: . :p,igplic.ati_qri C.Q':J~ringiw9 Qr·rriqre"j:)_c;!fC~)S 9f land,.·. ..;., and once· in the newspaper Of gen_efai circuJatio'n' · belohging tcx ·the .8ppli.¢ants· pr'qvided they are· . ({?.b. ~1·52~, Sec.,-23):.· ·· ·situ9!8:d-:in th~. ~a.ij)e: RJ:.O.Y..~-~~q~,.'eit~;_' ·• :· ·_·· • . · - Publication on-lssus' of .Jurisdlctlon ., ... :·5. ···Annexes· . ' · .. · .· · . . :. (;·6.n:ipli~nce i~.- .mindatory . and -:jurisdictio.~~I a.. Su,rv~y p\an of the ,lanp:(P.P, :1529, Sec .. _ 1 !); . ((~~public. Ii. 'fvtarasigan;·_G.R. N,o. 855.15; June ,. b. · T-echoiGal d_(i)sc;:rip_tioris. (P.D. ,152_9; ·Se_c .. 15);. .·: : ·.. 6~1$.9.91).. . . c. ·.·Certificate o'f:the· Ge.o·detic-Engineer;iJlRP· ·. ,'':"'· :· ·., ...... .-•

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SEC: 9. x x x Thereupon, the court shall cause a notice of the petition· to be published, a·t the expense -ottiie 'petitioner, twice in successive 'i~sues. of the Official Gazette, and to be posted . on-tn« main entrerice .ot the .provincis; building . and of the 'municipet building of the· municipality o~ city ii}_ whic/1.thf:),la~d.fies, at least thirty days· .: prior to, the dete of 'hearing, and after hearing, shall . determine the. petition and render such judgment es.justice and equity:rnay_ require. The foreqoinq provlslons., -therefore, clearly'. require that (a) notice of the petitionshould be published in two ·.(2) successive issues of . the Ottici,a(. · Gazette; and (.b)/publication.should be made at. ... leastthirty (-30}days prior to. the date of-hearing'. . -~ub'staritial compliance- with this jurisdictional . .. ... requirement is not.enouqh: 'it bears sfressihg ,. : that \h~ : -~cqu.isitif?n . of- jurisdiction" over a , reconstitution __ Cp~e' ,',is ... hinged . on a . strict · ·-compliance with the re_quirements of the. law .r(Bepublic v. de·Asis, G.R. No. 19.3874, July 2{ . . 2013).: : · , .. ·,.

· Repubiication ' .·. If th~ afaendment consists in the incl~sion. in the application for registration of an area or parcel of land . not . previously . included in .-ttie original appli<:ation, as· publ_ished, new· publication of the amehd~.d application must be made.' If the amendment · of .. · the survey· 'plan_··. duri.ng the ·registration proceedings qoes not involve an. addition, but' cin· the contrary, a r.~dwction of the ., original . area that was ·published, . no new ' · pi.JblicatioJi is required (Republic v.-·.CA, G.R. · . ' Nos. L-43105; . August 31: 1984{ · . · ..

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Technlcai corrections which do not appear to be substantial' do not neeqrepublication (Francisco . v._ C0,urt o( Aooeets, (]R.-No.· 1'3Q768, :Mard.h 21, 200?J:' : / . ,... '; .. ·.\ 2. . Mailing of the notice 'of hearing. . .AdmiHi_str9tbr of· Land· Registr,atiori · Authority _sf.tc;ill cause a_copy of the notice of initial hearing . of tt:i•e a_pplic:::aticin to be mailed to. the followinq: • • • . • .,_ cL Every. person named ln jhe notice whose · · 1• ·. ln 'case there is a discrepancy between the . address is known - 'within sE)v.en (7)' days . , publlcatlonin the 9fficial Gazette and t!;ie no~iC?~ aft~r the publication ofnotice, ih 'the Official . 'of initial hearing, it affects-the jurisdictfoif'of the Gazette; '· .. · <. ". ·,, · • · -~ · . " c'ow~o~er- land~registraHon' (He}rs.off~alado V. b. . $ecjetary of DPWI{ Pfovincial. Governor', ;: R_epub/Jc, G.R.: No.: 1(}~1.55, Feqruaf:¥ 1'5, 200.°V· , . ·ari_p l'illl!}yor of th. ~ municipflli.ty'.ar· city: as the · ,· · ·· · 2.J.· case may be;· in-:which 'the· land .'l_ies, if' . P~bli~atio,:i sh~f i-·p~ec~·de· the,cfute. cirt-i~arin~. · -. - ·_'}ppfii~r:it reqdests: to .na~e :me . line· of a -'·.. · Late . puolication of th~ notic~~defeats the ,·· publ!c w~y or ~oad ·deterrn_ined; . . , . · . purp.o·s~ for its:e'xis.te-~ce th~rtbrreg_ueijig'ilto a : c. secfetary of. DAR,' ·~o)idtor. General, p~o-form·a ._n_ottce (RepUb/Jc v.. ~A, @.R. ,No. . Directo.r.,.of".'Larid tylanagement, Director of , 100~9~; Sept~mber 14, · ffJ.9~~~ · · / Mines . a1Jdlor Qirectcfr · of Fi'sheries and ··i:).quatic Resciurc~s,as.the ·case ..~ay-'be,l if :· A'i°and.regi;tr13ti~~- pr~c'e~d·i~~ is f!1 and . . the· land·· borders·,.on· -~ river, navigable . . 119-tjce {herE;)of by. public.?tiori. b!nds the~ wh"'qle._ ,, stream .or snore,. or on an of the .. sea .. · .v/9rr9,_ i11i1usive o(.tho~e. Who rriaY tfe ,ad_vh/e1y ., .... · .. whEilre ri.v~r · o·r- hf1r~6r ·_·lir:fe' .has· ·b~en affected .t~~re~y •. inno~en_t ·faclUc!iir"c?sC they . . ·,-estaqlished, ~ir- 011"cf.1a~e.· or if..ir btherwiSEl . . mighthav~ be~h ofs.u.ch publication: S~a rul~ ·. appears fr9m _th~··applicati·ori thaf'a tenant-·, could be-,the'. only wa'y to ,give ·rr.i"ec!ninI:i ·to' the ·--farrrie·r cir. the national go.vernment may have . fin;;flity_ ancl ir;-i'disputability ."bf the Torrens· ti_tle to .. ·.-a· ci'airr, adverse lo .the.applicant;' a·nd , be i's$ueq.(.Fran_i;isc;o CA, ~,R. No. L-3578-7,.' ·. d .. Other persons .the-court ma}/dE)em proper , ApriJ..1t,·f980): · ,.,., · ., __ ,. _(P}p. ,1529, Sec.-23) ... · ,·:. ·. · · . .. . . ' . ~. '.: .. ,.. .. .. 3. ·:fasting· ~ . ·- . , . · ., · ~ ~ . P.ar!iaJ Nul_lity · .: , :- ·, ... ; · ,· Postin~rof .the .copy- of the ·rfotice;_of hearing'·is a . · _; It it is-Aater·sfiown that.the decr.ee of registration. ·.. d'uty of. the sheriff whicti.' must be made .at feast . had included ,~·nc:1· or'· 1ar-ids··. nofincluded in the 'fourteen (14). days, or 2:Vv'.ee.ks before the. date \>i{ginaL.,appii~a(iqri. p't.iblished, ·"ther:i . the .. , · of initial hearing, iri. ·.·conspicuous .. places \egisfration pr1>c~~ding~ 'anc! '•the d_ecree. of r , .°(,t1G9AOI/...I; supra ·atf6_2f:.... _. · . :: ,_ ). ·. re·gistrc(lti_on_ iii0st't,e deciared· null·ancrvoid - bul· .. ' ~ . . . . . :; . : :. . . . . ·., _only· inso_f9r:a$ ·the. l_?nd, _nof'inclua~d _iri' the. Certification of the -Administrator of lRA and· of . pul:llicatioo. is coni:::er'ne'd.,. This is bec_ause t~e 'the .sheriff concerned to' the effect-that the notice . court did. not' 'ac·qt,Jire jurisdiction over th~- la~d o(initii:il hearing, as ·required _by law:'. has been ··not inc.lud~d in _the puqlicatioli- ,the publJcation . compli~d wit~ sha!I. be f~ed· in_ the_ cas_e before : being_ the .b.asi,S of:the jLgisdiction of th.e COUrt -the . date ·or initial hearing,_ and. $hall be . (Ben_in 1( Tuason, G.R ... No. L~.26.127, June 2.ey, conclusive proof of .such. fact. (P.b. {529, . Sec. _:19-74). · .. :,.· . . . 24). ·, ,,··

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LA.ND TITLE AND DEEDS SAN BEOA LAW CENTRALIZED.BAR OPERATlpNS - MEMORYAID 20°19"

Service of notice upon contiguous owners is indispensable aQd lack of service thereof constitutes "extrinsic fraud.'; (Adviento v. Heirs of ,·· _ Miguel Alvarez,. G.R. No. 150844,· Aug.. 20, 2008). .

3.

Answer or Oppos1tion Oppositor to an application noticeof initial hearing._

4 .. need not be'named in the ··

The §overnm'erit relative to the right of foreshore lessees of public land as the latter's rights are not based on dominion or real right independent of the nght of the government (De Cesiro I(. Mercos; G.R. No. L-26093, Jan. ·21, 1969);~and . -A Homesteader who has not-yet been issued his-:-title but who" had _lu_lfilled all the conditions required by law to entitlehim to a patent (Leyra v, Jendoc, · GR. No.· L-f696[?,. February" 28, 1962).-

, Requirements of the answer or opposition: . 1. It · must be in. writing· an.d .sworn to by the applicant or a representative in his behalf; . The opposition must state all" the objections :to 2. It must set forth the objection; . . · theapplicatioh and set forth theinterest cl~imed 3. It niust state the .interest of _the opposinq · party; bythe opposltor.and duly sworn to by· him Qr his and ' .· ' . duly _ai.J_tljorized representative. . ; '. 4.- It must state the remedy desired. (ALBANO, c.. The· Rules of. Court coulo 'be applied _in land ··civil Law Reviewer supra a(815). registration ptoceedinqs in •. a .' suppletory . ' .. . . . ' . . . . --~haracter or whenever practicable convenient·

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Adv~r~e cl~!m~~ts rr:,u.st set fa°~h i~ ~i!'fnswer 1( N" 1P~GJ. 1529, Sec. ~4). . . . ' _.:· -v • all their objections to-the appl1catJ~"'andt,mJ,,!.St · f. . . · . · . · ·. . clairrt an· interest· to the property applied for, . . . t14ot10!1 to 1~terve~e-1n a land reqistration case rs _ based
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. . : · . · · :-, . ·. \ · : \ ~~ ~ ~t ~"?~ernm.en~·-. tan.n?~ be estopped fr6h') . ,;~e. ~!-!rden_ of .~rov1i:i~. lhat __ th~. P:~fe Y"~'- 1./aG;sti<::>~i~he·-va)clity of _the ·certifica.tes.·o'.f, tit[e

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alle~abl.e an~ disposable_ ag\cult~ral -~d were" gr~ntsitf. .~ithout· oppositio.n' from- the . P,Ub_hc ~omain falls. on .t~e-:. .agf 1.i~a_n}· r;iof'~H.dEN.Jgover~er\,-~he" principle .of ·estoppel. does· not · ~ta_t~. -~owe,ver, when l_he State haS{lO~~et~ve~ . appearance · h_as . b~en · · · · entered and an ansvyer.flled,'a .default order sb~IJ be The . Following may:. be Proper·· Opposito"rs: · . :enter.~d-, ag~iri$~ p·ersqqs _who :did -~_tit ·a£pe,ar::_and · (FrAGH) .- · . ' ··. · · , .. ;._ · · · .~ · ·. an'sw~r. (fl.'0: 1529, S~c: 25): . ' · · · · '· · · · 1,' A pufcha:~er of Fric!r l~nd before !he is~uan'ce of_ Rem~dy: A' defaultec;l interested·pers.cin· may ffie:.as the patent:to him;· · . a ·remedy·rn_otion to .s~t asfcle th~ oraer of default in 2. · Per.sons who claim to be in possession_'Of a -tract . accordance with Section 3~b) ofRule 9:of the Rules· .at p·ubiic,11,i'ncr.and ha_ve Apr:ili~d with ttie _su·reau: o"f Court, (Cerezo v. Tuazon, G.R No. 14.J 538, March of Lands for its purchase; . . y · . • · · . 23, -~004):

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· Additional · Reliet:' ·Th~ applic;tion of. the Lina · Doctrine as. applied in the case of Martinez v, Repubtic (G.R. 16089~. October 30;· 2006) states as- follows: .. · 1. The defendant in default may, at any time after . discovery thereof. and before judqinent, file a rnotion.. under oath. to set aside the order of d~fault on.the ground. that hfo _failure t9 answer was due. to {FAME) .Eraud, ~ecident, Mista.ke or · .gxcusable.·neglect, ·and that he has meritorious. defenses (RULES OF COURT.Rule 18, Sec. 3); 2 ... lfthe judqment has already been rendered when the defendant discovered the default, but before : . . the- same .has become final and executcry, ,'he .. ·may fil~ a motion. for .new trial' (Rt,JLES OF · · COURT; Rule-37, Sec.. per. 1 (a)); : . · 3. :.If-the defendant discovered thedefault after the · [udqrnenf has become final andexecutory,' he· may fite a .petition for 'reiief. .. from judgment '(RULE$ 'or COURT,: Rule 38, se;c. 2); and 4.· He may alsoappeal from the judgment rendered' .. _agai~st·him ascontraryto the evidence or to \h1 · law, even.if no_ ?etiti_s,n ~o set aside the, ord~r,9f · default has been presented by him (RULES OF. .· COURT, Rule 1_1, Sec. 2). · : ~-- ·

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The Court has pointed out that although the best means .to identify_ a 'piece of land for · · registration pu~poses is the original traclng . cloth plan approv~d by the· Bureau ciflands {now· the Lands Mc)nageriierit. Services of the. Departm·ent of .Environment and Naturai Resourc.es): ottier. evidence cou1d:··provide suffi°ci.ent ·identification (Republic v. · Alba, G.R: tyo. 169710, August 19, _?-015)_. -

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d .. Tax declarations ·(AGCAOILI, supra at 267}'; and' .· · · e. · ~oun_d.aries anci area: (Id. at.266)... · ,. . . 3.· .e_ossession. c1ncl occupation:-cif the ..l9nd __ for lh'El length· of time arid in· the manner r"i_quired by law (Ong v. Republic, .G.~, No. 175746, .March 12,. :.

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-Effect of Po~~ession ·. : General Rule: Open, exclusive and undisputed, .. -, possession of alienable public· land for .the ,--~·p~riod prescribed byl§w.creates the leqal fiction . y.,hereby the iand, upon -cornpletion of the .· ·

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1 .. That-the land .applied for has been Qecl9ss1fied. . .LancliJv. JA_anila Electric Compeny, G.R .. No. L~ .: - .."and is 'a . public agricultural lw.oris"alienc!ble anq 574.~1,, Sf P__ t:: 1t1, 1 $87)... · . . . ;: '.. ., . · . · disposable., .or ·atherwi~e/ElP,~ble ,of,:igistrati_o'i;\ · .u .: (~GCAOILI; ~uf)ra at 241~'£! ·~ _, r : . \ lWf&':l"Jr'ersefil"po\Jessor may complete the period .' . . '- . . . ... neces$ac.Y.i:.,Jor prescription. by tacking . his; . .Note: -Specific eviden.ce: posse~sior,, to that his.granter OLpredec~_ssor- . . a; Rresidential pro_clarilation; . ...__....,in-interest (CIVIL CODE; Art. 1138, pa(.1):' b.' Executive Ordeh ·. · . ,----;f.ai;;king .9( PQ§Sessiqn is allo~ed only· when · t. . Admin_i~tra.tiy·~ ·prder · issued . PY there. is.,. privily of. contract l or· ~elationship ,: .. Secretary of:DEN~_; , . · ~ . . . · b¢tweer,, tt:ie previous ·ana pres·ent ·possess·ors . ·c:j: . Bure_c:i_u of .. Forest'· De_velop .ent Land (South. City Homes, R(Jpubl(c, :(;.'R. No. _ Classificc)tiori·Map;. .· ·: · . : --~ : 76564. May-25, 1990). · ·. .: ; · . . e ... 'c:ertification by the Dire~tor of Forestry;_ ;.: . f. · lnvestig~tio:n reports of the BurE?ai.J of !:.ands ·. Proof ~f
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SAN BEDA LAW Cl:NTRAL/4ED BAR OPERATIONS- :t.1EMORY AI0·2019

·. Reason: Poss~ss.ion qf .applicant . is ~not. completely adverse or open, nor is it truly in the concept of an owner (Sunga v. De G1,1:zman, . G:R, No.. L-25847, . . . Junf:J 19, ·19-79)..

It-is merely an indieia of a claim of ownership· (Camara. v. Meiebeo, G,.R. 'Np. 154_650, July 31, · 2003) or that the holder has a.claim 9f.title .9.ver ., the property (Mun. of Antipoto v. Zapanta, G.R. ·. No. 65334; 'December 26, 19.84). .

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2. -Iax declarations and tax payments ... While tax declarations and real estate tax. receipts • 'are not . 'conclusive evidence of Reason: The.holder is not.in the concept ot.an . . ownership, if 'presented .;as «iocumentary owner, and- doe's not .perforrn possessory acts, evidence. coupledwith ·proo( · of . actual notwithstandinq ihe length cit the start cif ·the · possession [orthe period required by. law of the ru6hing, of .the: 'period of· prescription: ,\fl/here. land.. they· are good evidence of · ownership applicants tack their possession · to that· of their (Heirs of Mtming,;Jing v. CA, G.R. ·No. ··12'1157, predecessor-in-Interest. but they did.not present . · July 31, 199( Repu,blic ot the .Phitippines: \(. · him aswitness .orwhen 'rib proofs of what acts . ·. Metro Cebu · Pacific Savings Bank, G.R.. 'No. of owners_hip arid cultivation· were performed by . 205665,. .Octobet: 4,- ·2017):. Moreover, even ·if· ., the predecessor, the-holder-likewtse.cannot bebel:3tedl~ 9edar~d:.f~r taxa.tionytJr~~~-es, it ?oes . . an.o_woer (Dire~toroh1:nds.~. f)at~;-'G!FtNo.· L . . ... not. negate possession especially if there .~5731 'July 5; ·1982). - ,. · .:. · · other claimant of the land '(Republic v. CA and· 1 · f!ivinaf/or, .G:R'. No. 11637-2,-,Janua,y?/ 8, 2001 ). Mece~~~~ai-.-.c~liiv~ti6n of port!~ns.·of, th~ la~g, 1 • ~~bfcl~1man (Rep1,1bl1c_.of.t[le.Rh1/ipp,nes.v. vere, · W_here t~e. taxe_s f6r.,31 y~ai;.s:/IJ~6:i!"to :~976, ... ·. · G_.EJr Sciettce c~nst1tut~ sufficient prqorft~~!Qpl1cart -has la_ J~ ].( ParR•of fh1!pr2mes, Inc., G:J:?. No. 237714, 'bone fide claim of ownership during those years Novembefx_ 2,_ 2Q.18). ·· · :· · prior to t~e.Jiling of.the, apel!:cation:(RJpi]JJl!c v. 'tt; . . . . _· . .'. .\~ \-·-: . · . .. . : .CA, G:R. [Vo. L-61462;·July..:3,1119,84).·\ -~-~ 11:! r~"~Rejl?_~n:~· Po~sesj1~-~. 1~ _._not. _exclu~.1ve . a_nd· _A"', · . _·,1:\1 .··, ._ ,no.tcfr1ous s-~·~s to. g1"'.e:;r1s~ to-a p.res~.rn~t1ye . t0ere fa1!ure -of the _owner~o~t~e la~~ pay the-t... gran,~t~e:,S,t~f~ (Rep_ub/1c of-the f?.lnflpp,nes · re9lty_ t~~ thereon d0e.s n0('')?1~a.n~ ~~~~~~s10~1£1· l.l9"i~.Yl .G RdN@'!"L -l~5!z8,. JaJuary .?7; ..1983.). :· .. that -t~ere yvas abandonment:-6 . _1s n~l\tNtiliuJ · ~~ . ~r.operJ.y~·(Rey~s .v_.. Sierra. Q~R,_ No.', 8_658'.r • . ~ .J:1,.sJess~n- of ~th~r:.P~[}:o~s in _the l~nd_9pplied-. . ·, .· Octope,r 18,.1.979f. . :, ·-~· . ~ .1 . · · . .· ~r.:?:1.m;tJ~~s..:.. ElXfh:1~iv.e '~~ua,lity,_ ; ?.f; ..th~· -.,/ ·. . . . .· . . . . . . . . . . SclEN{\~ ~PP!,a.~t's-1:>'Q~ses~10n. (01rector of.l:ianq's:v, GA, 3. ·Oth_er k1ods·.0f proof-_ . ·. .· .:j·) ·' · · , . ··G.!J. Nf;J,,~0),40, Decen:bw 26,..1[)84).. .: . . ,1)i§>t(monia1 evid.ence (i.e. accre i9.f!.:iI!j)"I' ijn.&~1"'\. :\:. ../. . · ... _" : · .,-,_. ,- .. ---~. . . . · a.djaq.en(ito a riv.~r)./:--n') evidence- tn'a~cc.r1i.°'n·, M. ~,~~~ttf.ie··p,E)tition~ts ..·ca_n::t.l:a,c·~ ·their·deed of . .. <.J w,,a~ f5x.ined.throug~ h.urr:ian·i0tervention neg~sL ~aJe"back~to'Adarn ap.q;_Eye,,fiU.irfeye.ry:square · ·. . .the. claim· (8inalay v .. M.afialo, G.R. No·. 92,f~ .. 1 . in.ch·, of the· !ahd .. with',-agric:;ultur.aJ te.nant$, l:,~ave.·· , .· March.·18)}981f . ·"'· .:· '-~ .· · .. :-' :·., ,·., . ~e.s(dentis:11·.ho:~s.e.s: pwilt·eveJ,ifew· meters tiere ·._ ·a~dJhere;·payihe·.reaityda~~s-r~ligjouslY:ev!:)ry~-· 4. ,Eresideniiar .issuaf1ces. a,nd - legislative· :.acts • ye~r---·9nd haye- ~n:: ~pprov~ct- Bureau ·of Lar,ds· co~st,ifutive of a_ 'Jee simple" title:,or abs.91µ\e title. .$1.!rvey .ye~rly, · ~hey ?i.ill not_ beqo.me the own.ers .· .· , in· ::favor... of· ,.the \gr'an·tee.·. {Republic. '.o[. the ff they. ·wi'II not.'follbw,-the :f-irocedt..i"re, tp·. 0tit~in v· . ffJllippfnes:v: 'CA·, GJ?}Nb. L-409..12, S~ptenibei public agricultU[al lar:iq,manda.ted by ttie'-Pub'lic ' ... '_ · 30/19!.6}..v ·. ·.: ', --:· b.an_d·A.c_t (C.A .. °No:~4·1:)-(Manal~s_tas v. q_A, GJ~> ... , .· ·. . . iNo:}}7493,-F.ebrua/Y,.8;:1993)'. \, ./' .. · · ·1nsuJficient Proo.f 'of._Qwner~hip_: (F;-il/-CO.R)· . · . .· .:.:/ ,:: ... _,: .. _. ! · . .. · :: ,._ · ~. Mere' f?ilure-,of F°iscal re'presentirig. the· State. to f>,roof lnsµfficienf to· Es.tablisn-· Private. Rig.ht or· . . GrO$S.-e)59.mine. lBe· applicilnt::on ;:the·; 'claimed . Ownership:: . .. ·.. ' . .. . .' : . : . . . . '. possessior:i (RepUblic"i.1. L°e~) G.R .. No. '64818, 1. P(cphlpmniis(:l'.'agce~ment-·~·ni.Qhgi parlies to'a . . . . May-13;_,.19.91;.. ~- _:. . .. · . . .. .• : . , '. . . . . . . . . lcJnd ..-r.eglstration ;. cas.e j,vhere;0the.y .. ,have r)ghis: · · · .,,and:interest:over-Jhe. ·1and 'and.ailbcated'·portibns, 2. ·. Iax .declaration. ofia'iid sought to b~ fegis_te.red;. / . : ·th·~~eoh& e~ch'.of ttien:i; .. , , .-··: · ... .- . · . which is: 'not in the na·me t>f..the apf).lfea·nl but i_n .... . ·.: · . ,=-·· · t •.· •. , _ _ ~: . the . name ... of th(;) oe'ceasec;l· parents. of.' Note:: Asseh_t. of th'e .Okec,;tor bf L~Hids an.d the ..oppo~itor (Sunga v. De' Guzman; G.R. -No: L.Director.of Forest Manag·ement to.a-compr91l'}i$.~f25847, Ji/ne 19, 1979); •, · ·····. · : : "ag_(eem~nt did- n?f and could not s1,11:>pfy ·the

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absence' of evJdenc~.- of' title required 'of 'the. applicant (Republic v.' Sayo, G.R. No. 61_565, . August 20, 1990). . · _ . · .. · . .

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. · · Limitation" to Area Applied For •.. · . M_aximum of twelve!·(12) hectares: as provided in · -, R:A. 694.0, Sec. 3 (1990). · ·

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A decision in 'an estate proce~'ding predecessor-in-interest of ari · applicant. which. · . involves aproperty.over whichthe d~cedeni has no transmissible right, and in other case's where issue· of-ownership was not definitely passed -- . 'upon (Dire'ctbr of Lands v. /AC; :G.RY'NO. "!QB25, . · ' . :March 1'1,-1991);_ · ., . · .. · · , · :;· -. ... . . . ' .. 3. A survey plan of aninalienable land.. . . . ' 2:

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Note: Such plan does not corivert such land into . an alienable land, much less a, private.property · ' .. ,: (R~i!u6tfc :v.' CA. G.R.'No. _.l-56948: sJpt~mber ': 30,''1987)._ ,, - .

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Procedure: (PreNo,2S-P2AHDI) . 1: Determination . by the President · that public interest requires title-to unregistered lands be settled and 'adiudicated: (P.O. 1529, Sec. 35 (a));. . 2. Notice=of cadastral survey by the Director' of Lands'publishedonce in-the o'fficial Gazette aridposted 'in a"<'con;picuou's. place;' with 'copies I furnished to the mayor and baranqay.captain (P.O. 15?9, Sec.'35 (b)):.. . . . 3. Notice -of:date. ofsurvey "by Bureau of Land ·Management and posting iri bulletin board.of the, ·. · ,.. municipal building· of the municipality or barrio! and· shall mark the. boundaries of l the lands by · . . . monuments set up. iri. proper· places thereon ,.. (P.o'.·1529; Sec. _35..(c)); · : ... 4·. .Cadastral Surve:y · ( Ab. 1529, Sec: 35);' . . - ·, . ',. . · Note: Only unregistered -Iands may· be -the · . s~Qj~tif a cadastral survey (AGCAOIL/i supre: . . at 395). . ·· : ·. .' . · · . · ·. ,: . : . . . ... ' .~ -. . . .. . . . '

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Filirig of 1529,:_ Sec, 37); : ., t!earin.g,_of the case (P.D. ·1529, Sec: 38);,,v..1.o.....-.-. 9,_ .Qe~' (P.Oi 1;52~, Sec, 38); and··_·~ . -- • 1 O. Issuance of Decree .and Certificate of Title (P. o. . . I . ' • . .. . . . , . ·, 152-9._; Sec. 38). · . . · . . · . . . Involuntary P.fpceiding :: . ';_ . . . '· " :~ .. ; . . .~ ·, . . .... . .. . . •. . 'cacia's'ira( pr'Q_cee'ding 'is ... fomf_iuls.ofy regist~?tion .. N.ot'e: A de¢ision in:~cadastral proceeding declaring ir1itiaie'd l:>y~t~_if.goyernn,ent-;'lo:adJt:idicat~ o'wn,erthip' . . : Ian cf as· .puolfc. 1.a.n:d n'ot. preclu'oe( the .clafmant . · of lanf I ny.q.luntary on the. p,art- of the:d_aim,ants ,but .. '· ·. from··~ubs'equently .seeking a.Judicial confirmation ·Qf' .. tney are ·compelled -to· s,ubst~nHate their claim .. or · h'fs title to the·same·land t:inder se·c. 48, (;.A. -141 . ·'_interest throµgh an ·ans.wer (AGCAOILI; supra at . (Oirecto; of· Lands v. C.qurt df Appectl( arid· Pastor, --~90):···_. ..... \ .',: · :··. -,.: .. '".· ,. G:R. N,o:'L-47847, July3_1';·19B-1):' ·. · · ·. · .-·, ,.,. . ... . . .

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To serve __ t)le public interest by regu1rir:ig th.at the . titles to')ny· unregiste_red lands -be: settl~d. ancl . . , , :" .adjudicated (P.0.' 1529, Sec: ..35(a)); '·. · .... --: . ·: 2: · ·Ta settle ·a11 dis'putes over. the. land;· and ... · · .. · 3. 'To'·famove all cl9t,ids over larid titl.es.:,as far as . practicable, in'·a··com111unity- (AGCAOILI, suprii . · ·'·, at 390). -. . . •. . .. . ·- ·• P.eriod·of ·Exten'ded up fo -Oecerriber·31, '2020. as 1:frovided in-. . ·R.A. . 9176,,__ 2 (2902). . . . . ,"··

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inemc·ac1ous a dec1s1on in ·a land .reg1strat1on. case . (Republic ir. Nil/as,. ~'.it No: 1 ~9595: Janoary: 23, 209n- ·.. ·' . ·.. · ' ·: .. · ·. ' · · . ·A Cada'stral ..C;3S~- is. a-judicial proce~ding in 'rerh .· which b.inds the whole .·.world. A fin:at· judg.ment .. · rendered. therein 'will c'onstitute 'res judicata (R,opriguez v:' To,renoi .· ~.R.· No.: L-2959'13; O~tob~r . 14,_19.77): . . . . , · · ·. · · . /_: · · · ' ·• · ·

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LAW n:NTRAUZEDBAR.. oPdRATIONS 1. 753

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'In voluntary regis_tration proceedlnqs, there is no res . judicata· when the applicant f9 to- prove his title · (Vda .. De Villanueva . v. CA, ·G.R> No. 117971, February 1, 2001). In cadastral registration, if the applicant cannot. prove that he is entitled to the land, . · . the land becomes public.land.iThere is resjudica,ta. (Neverro v. Director ot Lends, G.R No. L-'18814, July 3.1, 1962). . . . .

_Ordinary Registration Proceeding·~. _ ·c9ciastral Proceeding

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When the lands have been surveyed or plotted, the Director ·of Lands, represented by the Solicifor · ,General, shall . institute oriqlna!' ·registration . proceedings 'before. the Regional Trial Court (P.D,

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-,~. · Docttlne:': The .Cadastral-court :is riot limited to . merely adjudication of ownership-in favor' of one: or· .: . : more c]°atni.?nts:. Jf:lh'ere~ar'~nO:.sucC!:)SSful claimants., . · ·. the. property · is declared pubfic land, .Addiiior:ialJy, - while, the co01,ha~ no jurisdiction toadjlidicate lands · already covered · by, a Certiflcate · of, Title, 'it . is . ·:· .noretbele,SS truJi tliat tgis rule- only. applies where ·. there exists "no! serious .controyersy . as .to'- the certificate's authenticity vis-a-vis the land covered therein" (Repubiic :V-, Vera, . G:f?~. No . .f_::.3577f· . , January 2z, 1983; Wii:Jo.J.,s .and,OrphansA.ss'n., tnc: · v. cA;~G.~: August.,?.8,"'1991)."_· .. -: : ·

S-u~ey\1ppliedj6(:is· · It isthe Gov~rilment-;: done. cat "the . instance: that undertakes the . ·.. a'nd·\fc;:>r the account .Qf· survey and advances. . . .
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:applicant-Jails -fo:prove·· .: appli~~rnts,-ca_h· prove ·. his ,title,. his application . :th1~t· be is. entitled; to, may .be dismis_sed ·· the land.. the · same with_ouL. prejutjice , (no shall be 'd!:)'clared · res ju.di<;ata).· :· ·· public (resJudic;f!fa). . (f\JOBLEJAS, supra at"7.7) .. -·

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·_RfGHTS . AC.T OF 1997) lndige-;,dus Peoples· Rights Act -(IPRA) of 1997_ (R.A. 8731). ·. · Allows indigenous pe_gple t_o r.egisrer their arcestral iands under Judicial Confirmation of Imperfect Title or uhder Volu~tary Proceedings. . .. . . Land Registration ~ . .

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The IPRA cateqorically declares ancestral lands and domains held by native title as never to. have been · public land. (AGG_AOIL/, supre at -116)_·. constltutional Basis. o't th'e IPRA : . . Th~>-state·. · subjett. to .. the provisions of ·the - Constitution.:ahd national development policies and programs. shall . protect. the _rights of in~i~enou ..s" cultural communities to their · ancestral. landsi'-to -erisure their economic, SO.Gia! and· cultural wellb_.eing. . . . . . . · The Conqress may provide for the ,applicc:Pil.ity of · customary laws _goyerni)l~· property -: rights · ot . _ relations.In determining the ownership and(extent..,.. ··.:. an~estr~I domain C9pNSTI.; Ar!_ XII, Sec: 5).~, . ·. · · - .. .'-- The S~pre~e, Court' uph~ld.''the co'ri~titut1onality of . ·. the I_PRA, as '.it.grants 1$Cs/l~; ~a~di~cr ~iri.~of. · ownership over __ ancestral '.doniains· ffe!d an.s;e?tra1 ,. lands., lt .. was to address the centu_ries-clld.:~eglec~ ff the Philippine iQ_di_g_~~o~s P-~.op.~es t.hlt: ttie_ Tenth ·congrys,s -of tt,~ PhJhpp1ries_ passed alil~~pmved : R.Ad3371 (Cruz v.. Secretary of DENFi?; G.R. No.-.--. ·.135385, 'December·6, 2000). . . . . . ,. . . . . . .· Indigenous •. Culturpl - Com~~nities/l_naigen_ous · .Peoples (ICCs/lPs). · · . . . . · ·1.r Group· .of :people :or. homogenous .. soc\eties. i_dentified-_by self-asc[ipti9n and ascription~··py. 'another, who- - :· · . . -:-·· · · · ·· · · · . a .. ·Have ··.continuously lived as-· organiz.ed . . .:-- community. on. communally bound_ed. and .. defined territory;: and . . . . . ~ . b .. Have, und_er·clairns of ownership.since time ' . immemo~ial, o~cupied, poss~_ss~d cu·stoms; ._ .. · trc;idition and other. distinctive _cultural tra_its; or· ·. ·· ·-. · · , Have;- through· resistance to politi~al, !>OCial . ·. .arid cuitural inro.ads of. colonizatior:i; non-·: - . indigenous· religions and c.uJture,. became, · · · historically_differentiated from the majority of . . Filipinos (IPRA, S.ec, p?f. h).' . . . . .. ··., . ·.

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People -c\Nho. are . r~garded as i~digenous ·ori · accouot. of their descent. from. the-populations which . inhabited the country,. at the tin:ie ·of . ·c.onque~J_ 'or. colon_ization:· or: .~t ·toe .tirTJe of inroads · · of non-indigenous · religions and cultures or the establishment of present state bounda;i~s; who retain.some or all of their own .-social, . economic,·. C_Ultural ·. and . pol)tiGal institutions·. but- who may' ha~e be_en displace?. from their.traditional ·domain·s or.whq may·have · resettl~d·outside their ancestral domains (IPRA, _Sec. 3, par
Ancestral Domain's . It refers to allareas.qenerally b~_longmg to ICC:3/IPs . .cornprislnq 'lands, lnland waters; coastal are~s and natural resources therein which are: . . . 1: ·, Held under: a claim dt-o~riership, 'occupied. or. . . -po~sessed. by ICCs/lPs, by . themselves- or thro!:Jgh their ancestors, · communally or individually: ' ' . ·since time. immemorial, continuously to the . present except ~hen interrupted by war, f?rc~ majeure or.· displacement· by. fb~~e; deceit _or. _,stealth, o · as.:,.a consequence of government . . .proj!=)C~or. any othervoluntary dealings erit_ered .into . bf_. . the. _ qovernrnent _ and · private . individt1§1s/_corpoi:_ations, and; . · · ·_ . 3 .. -Whi<;:p"°c3re'r:i\Cess'.ary to_.e~~ure their ecoriom1c,_ .. :: · social ·a~d ·ct!Jltural'welfare (IPRA, Sec: _3; per: ) ' · . :. . . · · 0

a. · 11. also in~lud~'~""lan.ds wh,i~h may. no longer.~~e · exclusivelyoccupied _by t~f IC,Cs_l!P.? but frorn whi9~ they. tradition a fly ,ti.ag' access. to for their Sl!bsist~nc~ .ancllradilioji?I activities.(/PRA, ~e-c_: 3, .P?!· a).· . ~~t:: A~cestrai d~~in-is owned in .common by.the· ICCs/lPs. and . not · by . ~ne par:ticul~r. perso_n ... C6mmunar fi~hrs a_re hf:ld /11 trust fo~ ~(g~nerati_ons of the·· ICGS/IPs, past, .pre~ent -and future, The . .dom.cJin ca_D!)o.t· f>e ·tr_anif~rre~, sold·,. co.riveyed'-to other per9011s ,by ooe·per_spn a_nd b~longs)o the ·1c¢s/1Ps.as,.a comr;nunit'((A_GC~~/Ll,supra·at 121). ·

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. Ancestral- Lands '· .· . -.: .·· , :,.. . . ... ~ . , . Refers to la~d occupied, ·p_oise·s~~d and ·ufri°ize~ fiy .. individuals families and clanswtio are members of' . 'the ICC~/1 P.s s1nce:time. imm(;lmorial,· by thern?elves . . or through_-~ their . predec~ss9rs-in~1ntere_st! .under · claims of -individual-.or tr.a-ditional· gr.qup own~rs_hip, coriilnuo~s-ly; to the· present e~c~pt wh~·n)r:it~yrupt~.d by 'war.· for~e majeure· or dispJacenient 'by f9rce, deceit siealth or~as· a cons·equence of government . projects a.nd.oth~r vcjiuntary.d~alfn'gs entered in~o by government, ·and . private ; 1ndividqal~/corp9r9tipns, ·including, but. nqt- limited · to, r.esident~al. lots;· rLce. terraces ·9( pc;iddies, privat_e foi'ests, ~swfdden f~rms · · and )ree lot (IPRA, Sec .. -3, par:·b).:._ · ·. ·

c;Ql9 SAN SEDA L,AWCENTRAJJZED BAR'OPERATIONS

I 755

LA-t\JD. TiTLE AND .DEEDS •• . SAN BEDA LAW CENTRALIZEDBiR OPE;_RATIONS- MEMORYAID 2019 . ~\\Yt::ttti·titi NS ;;;?Nt::@Af.' {PM #¢::a@' i ;;;,; 24'#3% ., !Atv ' it;• Ni' t R51i?i&f4it5$#! JXAiff·:·#¢'ri#r-ibrt··it:. Md ¥14 &i&l&i§i,Q

Ancestral Domain v. Ancestral Land · '

Includes' all areas generally belonging to ·1cCs/lPs · .comprising lands,- inland waters, coastal areas "and. natural.' resources therein. ·

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that a formal and written aqreernent is entered · into yVith the ICCs/lP"s concerned (IPRA, Sec. 57).

-'oniy · includes lands w~ich .: · are _oc.cupi_ed, possessed and utilized by individuals, families and clans who are members of the lCCs/lPs since-tir1:e· immemorial.·

Two Mode~ of. Acquiring Ancestral Domains and Ancest~al Lands: . . '.1. ·by Native Title, over both ancestral ran~~ arid domains; and · . ::. 2. by Torrens 'title under the Public Land Act and Property Registra_tion Decree,. with respect to . ancestral lands only (IPRA, _Sec:·12). '

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Subsequent Registration. . . Refers· to any transaction affecting an originally . i'(,:lgistere_d la rid aod 'which, if in order, is re..9istered in the Office · of the Register" of Deeds concerned, {f'ENA, supra at.12). ·. · ~ · ·. ,,· . .

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Act~al .notice ··howev~r is equivalent to-~egistration. :Thus; whe.re' the party ha~ -.kno.wledge of.' a ·p.~ior' . existing interesrwhich is unregister~q at-th·e. !ime he . · c;1cqufr.ed :a right .to the sa!Ji:e !an_q, hi_s·_~l)owle_qge_ of · that ·prior unr_egister~q .interest, has. thE:., .e'ffecr·of · registra"ticiri as to su·c_h party (AGCflOILI, supra at · . : ~·: ·. ' '· . :, '· ' ; .. .;..- . ~ . . 4.79)- . ~ i . . . .. . . . . . . . .. ·' . '

W~ere :iricident~J matters' after. orig'inal reqistration m~y be "brought before the land registration court by . way· of a. motion or. peti!iofi fi\ecJ by the ~egister~downer or 9 party in interest. (Id ~t.:12). · _ . , . .. ·"':~. . .. ... ~. . . '. . . . All. fransactlons affecting an ortqinatly registered . . land whether voluntary . or' involuntary, . shall be · r~gi~ien~·ci· with' the; properReqister of Deeds. (P.D . 1529, S7r;: 1,0). . . . .~ .

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. The non~regi.stratio11 of th/ Deed ~f }-6~,qi~te .·Sal~ with the Registiy of-~oes no( affe_c}ttils·ale's y.alidily and effectivity:. As· .ruled __ · in, Sapia . v.. fabianc;, · between the parties to- a, sale, 'regi$tration js not necessary· to· make [t valia an.cl effee:_tivE:, for· Actual notice is equiyal_ent to ·registration {Miran_da _v: .Sps: Errie·sto, G.R.. No.' .218343, :Nove_mbe_r. ·-2?;·. 201 ~):· ·.

.Rules .as to the Necessity and-. Effec_ts of Reg'istration, in General: .· '. ·... · : I · 1. Except. a will -that purports: to convey, or affect1a : _ reqisteredland, tge r:ner~ exe,cu\ion of~eds. of . "_ sale, mortqaqes.. _ leases . or ·othe~ · vo_luntary_A .. documents servesonly two (2) purposes: (1) as.: a ·~ol)tract between the-pa_!'.ti~s:_ thereto; ancj f2)· · ·· as ·:evidenc·e · ~f puth.9rity.. 'to_ thJ RD. to regi~ter · 'such ·doct1ment~_.(P_.9.: :J.52?[~eq:l.-1 ~p_ar.~.1).2.. It ls onty the· act of reg1s.te.nng ~instrument in ___ tlie(Registef_·ci·~~~9s2of ~~ pro,;,inee,;qr'~( ,, . . where _th.e'-_larid. hes WOfC~ .IS· the~~er~1ve arfct · that _conveys_ o.wner_ship or afe:ts;_ me_: la a . .insofar as th1.rd·.pers9ns are con'z'.'.Y (P.D. . -.: 1529, S~c.· 51,.par. 2) ... -_ _.. . ·; . 3., T~e "act of" r?gisirati9n_ creates ~ fon~tr,~cv,1,e._ .: notice' to· the' whole world of· such voluntary· or involuntary instrument o_r' court writ 9r_ process

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R-~fer to' sud1;writ·,·or?er .. .or process :issaea 'by-.,a cmi"rt record· affectih"~ . ·registere:d: land w.hi<;:h,by :_ jaw sho\Jld be registered :tb' be" effec,tivei:-~~92~l.s9 to - such· '. 'instruments . whiot'i",iire- not tt,e :willful · . a¢ts of-_:the · regi$.tere~ ··

Refer to · . :q~:eds, inJti-umentso:. · : . .' ·: ·· ;or· . doc.ume(1ts·· . ,,.;hich -are results ·of th.e .free :and volu·n·tar'y ·acts ... oL.the parties . ~- !". •, .•. th~.r~t9 (AQUINO, ... -supra · · at - .184). · -· ._ .. ,...

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R~g_i~tratiori\>f 9:-~~ixfrp~,:it-is< m.ipisterial."o·n the pa,rt'. of-the Regis,tE1r :·or Deed~, .TJ:i.e R~!Jister qf Deeds 1s ··preGlud'ed from -~exercising his.·per~olial judgf!!ent -and •discretion when co11front~d with )he p(oole,:n_pf whe"ther. 'tp' ·register·'.a: .-d~!:)d Q~ jn~!rument: on' the gr~un'cf-fh.at. i(is. inVali.~.::Thi~·fµ11c_tio~ -~~Ion.gs. to, a -~ court,of competent jurisdiction. (Almira'/v:·.~~giste_r bf ·oeeds of Agusan,. G.R. ·:No·: _L~?-248.~- 'March 20, , · 1968). ·: \ \ ··_·_, '~--- ' . . 1(·d_e~ci ··or .'.~fber: vo1u_ t~'i-y 'in~trum'e~i i_nvolving · r.egistered.land shali'not take effect"a·s a conveya~ce. or. bind the ;land. b·ut. shall" _opera(e a~ a. c;oot(act between the parties)iinc!.'as evide.nc~·o(the ~uthority of the Regist~r'. of'D_eeds to _make· registr~_tion. The ·act o( registration ··shall- ...be_· ttie operati_ve act tq convey o~r affect the land insofar as thira persons are, concerned (Marasigan v. lntetmediate Appellate Court, G.R Nq.L-69303, J_uly 231 1987J:

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l;(inds 'ofTra n~; cti0.ns Affe~tin~·Lands Originally· . Re'gistered-: '. · · ·.. · · '· 1.> Vol\.mta~YJ-@ealings '.' , . 2. Involuntary De91ings . . .. - . · ~ . : .

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The act·of rE!gistration creates consti-~ctive notice t~ the whoi"e world and bincls third p_ersQ_ns. By_ · constructive notice, iis presumed that.the.purchaser . has examined every instrument ~f- record. affecting the·· title.-·such.presumption is ir(efl:!table a_nd .cannot be_· overcome , by proof of innoc~nce · or;.good-- faith · (AGCAOILI, ·supra at 936). ·. ., ·\ · ···. ·. . ~ . . : . •. .

.P .D.· 1529

.

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SAN BEDA LAW CENTRALIZED BAR OPERATION_S L MEMORY AID 2019

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·- '1-'··sale· . , .',. · .. . ' .. · ,,.· .. . · 1. :Attachment"-: . .. . ·. ·~ ....,. . : . : . . ·. · 2, Real property 2. MaFld~mu~,; . . .. · . . ;mortgage;· 3.,Sale .on execut,bri of ,3. Lea'SE:l; , . _. ' ·• . . ·_ . judgn:ierit_ 2~ sale.?)or 4- Pactci. de retro sale; taxeis;_ ·. . .. . . 5·.' Extra-judiciai . , . '4. Adverse C!9ims;-: ·. . settlement; -5. Notice'of Ifs pend?ns; 6.- Exp.topriatiori; ·

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::>nm SAN·Ri=nA I A\11/ ,J=NTRtd 17Fn·RAR OPFRATl()NS

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LAN-D TITLE- ANO. DEEDS~AN BEDA LAW'CENTRALIZED BAR OPERATIONS - MEMORY AID 2019"

7. Forfeiture; and 8. Auction . .. sale . foreclosure · mortgage.

. homestead; 7. · Powers of attorney; ·'- and · .?· Jrusts-.

An innocent purchaser for· value of registered lan_d · becomes·. the regist~red owne·r· _the moment . he presents and file s a . duly .notarized and valid deed ·of _sale and the ·same is · entered in the·day book al the s·a'me tlme he . surrend(:lrs' or presents the 'owner's duplicate · certificate of litle covering th_e land sold. 0

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voluntary instruments. Shi:!11 be in a public . . instrument executed in accordance with law, viz: (SANS} a. :§igned by the parties in the presence of at • · least. 2· witnesses who shall .likewise sign thereon; -, . -z • '· • b. ~cknowledged to be the free act and deed 'of the parties before a notarypublic or other Entry ,thereof in the day .' officer authorized _by 'law to take book of the Register of ' 'acknowledgment; .. Deeds is · sufficient c. ·where.the· instrument has for its object 2.or notice·. to . ci'll persdns · more parcels· of land, the Number thereof even if the · owner's 'shallalso be stated in the acknowledqrnent. duplicate c;ertificate Qf d. · Each page of the copy of th.¢, instrument, title .. is not presented to except · the page ... where the __ ~ig~ahm~s. "the Register of Deeds.' already appear ;::it the fqot _of_ the instrument, ... shallbe (1) siqned on the:(eff_m~rgin_m_ereof . by ih'e· parties and their witrie$SeS, and. (2) · · · . · · . ~sealed. with the notarial seal. This fact· as ::well' as the number or" t~e ~ages·.-sJ;iaH be • _. ~ . / stated in th_e_ ~ckno~_ledg~ent; and · . · _·

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e,r,esenl~JJ.~'Nf owner's _duplicate certificate 15~;_.Se.c. 53); .. . . . ·, .

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Ne$d-to"pr~s_e·nt title to r~C?fd the deed in req,u_1reaV~n.nqta,!~on rrt ~ ./&.. Thetpro9..uf\!o~ \of the o~n~r ~ gughca_te registry .and to_ make e lf;Y booi/i§ .. ~u~crent. ·· f','·, ·f•"'i~at~ •I(•'~'1/ves.as co~cl~s,ve authority .. memorandum on title. ·. ,i ~om the r~g~qpwner, t9· lli~, Register ._of 1 . · . · ·. .. · . . . . . · .:';" ~ 1;1 r~~!)ee ~ to EinJer- a.,.p~w _c~fl.1fi:ate or-to m~~e. a .. (AGCAOILI, supra at 481-482)~ [ ; ;' &i~;-x-~:U ~ m~ip.or~ndull'!J0f~re.~;:;lrallo_n ~n ac?9_rda_~e:e with .... .: ... : .'. ... _. .. · .. ~~4 - .. :~4t1in~9 . t~e/:{QliE5tr1_r.~;!ns!r~.peh.~ w~~e.nted. -~.-~- . : .. yoluntaiy Deah,nr;J~, . . .. ... foll{l~j~ .. l'.)Slr~ment __ c~rno~ be · An .. qw~~r · of -~-· rl:!glsrere (J~ n:,ay~~RFl~!'!Yil, (~~r~.cf Jy. re.a"s m.ot th~ rnlu§_al.?r;.f~1.lu~e-of n:,ortg~ge;' Jease; char~e· or·:other.,vis ·-~dj°:l~n~l:\e~!u . ~VJ ~;.':iZqfdy to_ s_u'jf¢n9_e~ ;th'~ fWn_er's d~J_Plieate_ same 1~_aee:ordanqrw1th_ eXJ.Stfn~:~aw~j~,e ~~i!-ic~~ of._t1t.lV1be PArty !~·'.nter~~t may file ·a such fo_rms .of deeds, mortgage,t>, I.eases' or-. o\h;y ~J>,..B,~t1t1oliin cot.irMo compel surrendernf the:s·ame v0luntary instru.ments_ as a·~~- suffici~ht_ in~ P.:'.0-~o _tfe ~st{of 9e~.?,s-~f':~- _-1529/$_ec .. 107). _, 1_5?9,...Sec. 51). . . :. . . '1' l ·l\1~12.o~fil!r\g' '~f. 1,11·~ pet1t1~n; the ~o~rt; . aflr.r ·.·The~ act. of. registration shall- oe the _operative alt to · lVU~aftng,-.may either: .._ . . . . :.. , · c<;mvey. or affect the. land insofar as third .pers.ons ar,<:l.,.. ~a ... ·order the registered owoer or any j5er~on . · con_9~rn~d (P.:D. -1.52f), Se~. 5J). · · . · · wittihoiding ·. the ·du'pijcate ··certifi~~t~ to . ' . . .. . .. (. . . ... . . . ~. · · · surrender the same· a.nEI·, direct the entry" of Physical. Delivery. Not a .Requisit~ for a. Valid ... a 'new :C~rtificate' or· ·'memorahd°um _'upon Corivey~nce,. . ... . . . :·. . . ..: . ·: such surr~ ..nder;" or··. ·: . '.: '' _·: .:: ·' : :i: Deli~~ry. as a_. mode :9f · transmission_ of q_~_nership b: · ~If -:" tti.e registerJd-,. owi:i~r .f/r . ari/ ·'pers.on · rr:iay- be _actual or.constructive. Whe_n the saie of reaJ ,: .-: ·witnholi:ling ·the duplicate, ~e.rtifkate. r~fose~ property, .is :made. in .. ; public ihstrument,. the· . 'to'surren'd_erJb.e sail:le"'cir_if for ~riy 'reasorf .execution thereof is·equivalent.to the- delivery of the . : .. ihe ( :o~tstar.idirig .-·. ovir:ier.'s .. · &1pllcate. thi.ng Qbject..of- the_.con'iract,. absent any: showing ·in '-~ certificate cannot be delivered, on:l~r)he. :-. th·e· de~d· fo the., contra&'. In .this ·case>the(e is . annulment .·of the same· as ·well· as the.· c.o.riit~4dive ·. _.\lel_i~~rx ':: _'(Pt!ilipp1b~ '.· :fosua'r:ice .o{a riew. c~~ifi-~i,Jte· of.:title. in'_'lie_u .. DE!veiopm_ent: Corp_·.· v; 'Auditor General, G.R. flJo. L-. therebf (AGCAOILI, slipra at:486). ' - .. ·. ·_1.9545,. Apri({~, 19!5). .. . .· .. . . · .. . . .... · 3 .. _.f~II; pay~·e~t of ·req~ir~d j€_gi;tfati9ri fees and· R_eqµiremeiits i'n 'the Process of Registrat.i.on in . the~req.uisite doc::umJintary sta.n:ips;. . '·. . . . Yoturitary O~ali.ngs:. (SPF3), · . .. .

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· · Deeds,. : , cor:iveyances, e_ncumbraoces, . discharge~. powers · of . attorn~y· . and other /

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758 _2019 SAN"E3EDA LAW CE~TRAIJZEDHAR

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OPERATl@NS_

·ivid~_nc~ of. f uil p~yment of reai'e'stat~ ta;as ·. may be due; a._ng .. '· . : .

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LA.ND TITLE AN·D DEED·S ..

5.

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SAN BEDA LAW CENTRALIZED BAR OPERAT/ONS:

Mirror Doctrine . All persons dealing _ -wilh property covered· by a · Torrens· certificate of title are not required ~ro gci beyond what appears on the face of the title. When .there is nothing on the Certificate 'of Title indicatTng any cloud or vice in the ownership of the property, or encumbrance. thereon, the purchaser ·fs not required to: explore further 'than what· the Torrens ... · Title upon its faceindicates in quest for ..any hidden . defect -or inchoate· right that .may subsequently . defeat.his-right thereto (Centeno v. CA, ·G.R_. N~. L- . 40105, November .1.1, 19[!5;· Sigaya v.,Mayµga., .G.R. No .. 143254, August 18,'. 2005; Ca/ma v. Lechice, G.f?'.No'.2°22031, Nove·m-be! 22, 201.7}:, · · · ·, · · · · · Note: !h'e. sanctity of theTorrens System. must be--.n_. preserved; otherwise, everyone 'deallnq .. with· th~ .property reqisteredunder _th.e sys~·rn-·ll(ill hav~ to . lnquire iri every instance s to wh~lher the tit~e had been" regularh'., .'issued,· . contrary the e~Jent purpose of the· law "(Heirs ofG'arvino-v. C/J.:;,,c#.R. Nb. . · 0154,.J,une 29, 1998). · . . . . , . . . . . .. . Exception~· t,6 · the, ·Applicabjlity",9f1>. t~~~irrpr Doctrine: (.sF:s-~LI~) · - ~ ~ . : .. "", 1. Purchaser acted in Bad 'fa1tfl (Egao v.. CA; G.R. No.".'79737,·Ju~c/~o-:108h)i('. ~- Y,.,hen .. the purc;:haser' pr. - n)oOgogec · jg~; . ·. ·, f.inan¢ing in·sututlo~ e.g:. GSIS:-(9&fa M1:1.1,;~'r:l/ · · , .Gsts; G.R. No. 149398; Septe,Wer 11, ·2001);. · 3. .§.anRs', a~.. their ~usiness .is·· ,Qne eaffect~d. with · . 'public interest (Omengan ~: G}~. No. · ·161319,;.Janua:,y-23;'2907); . ' . ' 4. Whe're · a person - . buys land· rio from. the ;"';,,_ regis_t¢red own~·,: buff~prn;one whose r~tto the:..:' _. . lan.d'· lias· ,. been. _merely.· ~nn9tated on . the-· Certificate_ of.Title (QufrJi?ncf. v. C,A,. G.'R. No. L! .23024,.May3_1, 1971); _ · · , ·: · 5::.- Pu'r:~_haser··of l.and_",w~e~e the· certifi~at_~ o{ till~_ _ -· cb'r'Jtains.a notice of Lis pendens; . · · 6.: .sutticient1y·.strong -'!°ndications·la impel· closer. · · . ., .. inquiry --into'. the 'l_o<;_ation; boundaries, -. and . · , condition:of\he lot·(Ffan.cisco'.v. CA, G.R: No. L~ . . 301.62, Ai.Jgl.f_st-:n, 1987); and' -. :. :·. · · T P'urchas_er-,.with' full Knowledge 'of ..flaws and . - def~cts 'in the -title (Berna/es /AO,. G.R: Nos:: .. ... , 71490-91,:'Juife 28, :.1988; Lµ v.._'fvfanipon, ·G.R.. . No·. 1A707'2, }Aay 7; 2002). · . ._ . -: ·..

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.Douole Sale . Where· the _same registered owner sells-the same land to two different persons who are unaware of-the flaw that lies in· its ti_tle, the owners~ip_ of th!:! land passes to the vendee who' first' recorded it' in 'the Register of Deeds '(CJ_vtL CODE,. Art. 1544; par. 2) .. should there be ne inscription, the ownerst)_ip shall · pertain'to·tt:ie first possessor in good faith and in the absence thereof, to . the orie who, in ·goad· faith, . presents the:o_ldest't\tle (CIVIL CC>DE, Art.· 1544, par. ';J).' .· Time ·of Effectivity of Registration . The -Register of Deeds, as ~ prelimii,ary_process in. · reqistration.rnote ·ir1· such book the date.' hour-and · minute of reception.of all instruments, in the' order in' -which they were received. They shall be regarded as . @gi~tered. from . the time so noted, . and· the . memorandum of each instrument, when rnade on the certificate,of title to.whi~h it r.efers, shall bear the . s~date""~Rfo .. 1529, Sec. 56): ·: . · · · ' · '. - · · · · · The rule. i~ tj al where two cerlifica~es 6·f·. title. are .- . .. i~_sued"to.:.cliffe~e~t persons coveril).g the-same p~rc~l otlan?. 'in par~. _t11e earl!er in· dat_~ must.>. prevail as between the original parties and; in case. ·af'. s~~i;g n,itihn.· whim~· f11ore .than. on.e . '·. certificatedS'~ssue .0ve·r.the landi: the per!,on holrlin_o. ·tit)e: .under_· the prior :·certificat~ is co titled ·to "th~. pt?Re.i:..ty· as agciinst tbe .P.erson who. relies ~~-the. secbnd cer:t_if_icate· . (Nalionc;1/ Ho4sing ·Ai.Jl~ority v. · E:aurlto, .G.R . .fyo_. 191657, July_31, 2017):

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Th~. j:>resenGe. of .anything th~t excites or ·a'rouses s_uspicior:r should tl)~n prompt ther yeni:::lee to. look . beyond the vendor's i;;ertifk;ate and' inves"tigate the tiJle appe.a·ririg.· ori · the face of th13t ·certificate .. -A .vendee- Who does .not do so cannot be denominated eittier an in_n·ocEint purctias~_r :for v·a1ue or ~s a · .

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purchaser in good fciith and hence: does hot merit the pro'tettio~ of the· law (Sp~. Domingo."'.· Reed, G,Ri'No.: 157701 . .Dec. 9, 2005).

·Inclusion of Cine extra copy_of any document of transfer ·or alien_ation of real· prop~rty; to be furnished the city'or provincial assessor (PENA, supra at 247);. · ·-

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MEMORY AID 2019

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The. ru)e : that. wbere two ce.rtif.iccitj:!S : purport·: to i_riclude'the' sam~ laiid;'the e_arlier in date prevails, is . valid.'only,absent any anomaly or irregularity_ tainting--· ·. the_t\'lgistrati.on.:($~afingo C3asis, G.B Na:.179641, Feb: 9, 2011;;Bangfs v. Heirs of-Adolfo, G:R .. .No. · {908Z5, June 13; -20,12):. · .. :, · · ' ·.

v.

F~rged or F~c;iud'uleiit Deed may b~ the Rb'qt:"of a .. : Val!d Title ' · · .. · . . . · '. ·· · ·· · · Requisites: (DTi) ·. . . -· 1 .. The ·registered ·owner Deliv.erecl .odmtrusted. the.:· • < • o'wne_r's duplicate certificate of 'ti'tle to·th'e forger.; 2. · The certificate .. has already. be.en };ran~ferred . from the ·name ,of th~ true owne'r :to Jhe forger; ' . · · and ,. ---..· ·· · ~: · 3_. . T_h~ -~~Ad~y or mortgagee .is· ·;,in·.· !nnCi~~nl, : pyrchaser for value (AG<:;AOILJ;:supra ~t 45_0) .. · ·The· :established_ rule is that_·a. l~rged deed is generally null and.cannot convey title, the. exception the~efo, pursuant fo · .Section .55 .. of the- La'nd · Regjstration Acf, .-denotes ·the registraiic'in of titles

2019 SAN BEDA LA'0iCENTRALIZED

BAR OPERATIONS

I: 759

LAN:D TITLE AND DEEDS . . . . SAN BEDA LJ,\W CENTRALIZEDBAR OPERATIONS - MEMORYAID 2019

from the forger to the innocent-purchaser for value. · Thus, the qualifying pointhere is that" there-must be a complete.chain of registered titles. This-mearisthat all/ the transfers starting. from the original rightful_ owner to the .innocent holder for value _:and that . \ . . ' includes the transfer Jo the forger - must be duly' reqlstered, 'anp the ~itle mustbe w9perly issuedto the transferee (Sps. Peralta v. 'Heirs ot A baton, G.R. No. 183448, June 30, 2014): The above rulecannot be applied.where the owner still. holds · a · valid and existinq. certificate- of title covering·. the·. ·same 'property because 'the law protects the [awful holder.of a.reqistered titleovet lhe transfer of a vendor, bereft.of any-fransmissibie-right (Tomas· v. Tomas, G.R. No: L-36897, June 26, 19$0). '. . ·.-_ -·r· · ,. ·., ...... .. :... , . ..

1.

Enter .in the registration book the fact of -~onveyance; _ 2. Prepare. a -new certificate of title in the name of the grantee; and . 3. Cancel the original and' owner's . duplicate certificate of theqrantor (P.O. 1529, Sec. 57). · oi.

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If· the owner conveys only a portion: of the land covered _by the certificate of title, the 'Register of Deeds shall, -upon approval of the plan bf subdivision and technical description of the land: . - 1. Cancel the certificate oftitle of the .g.rantor as to the portion conveyed, or cancel the. same totally and have a. new· one issued to him asto the . remaininq'portion; at the gr~-nto.r's option: and 2 .. ·issue a· new certiflcate of title· to the grantee of /. : the. portion conveyed to hi.rn . (p_.Q~ · f5?.9, .:Se_c..

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InnocentPurchaser for Value . :1 . ~ • . • • · · Where registration is procured by fraud; the owner Ca!;,.ry1 9 Over o~ Encu~br:ances · . .. . may. .pursue al~ his legal ahc ;equita~etferrf~ies : . J\:ronver~es of reg1~te~~~··lan.d, all_ subsistinq ag_c;iin~t,t1:1tpartie~ to -sui:;h fraud withouf"ptpJ,Y°dic~.~ e.n~1Jrrfb~an~~- or. ~11no!at10~~ _31ppean~g m _th.~ however •. to· the rights of any irinfctnt 01de?'ror . ~~9!st1-at1_~n'6~Nha\l be ~arned.?v~r_a~_d stated,~n valueof a certificate of..title ~529, S:ed.'53,.par~ th-~~!:::' c{rlJf!~.ate o~. t,!re, except where said 3). ·. . . . · . .. ·. '.-'_ir . .~<;:u,m~r.anG~~r)~~n9tat1o_ns are s1mu_lfan~ously. i;E;leased or-'tl1sc;:~arged (P.O. 1.529,.SeCi,,·59),. : : . ,

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An irinocenfpl)rchase~ fqr ~aiue·is on_e who b'uys the 1 property of ·another v,,1thbut n5Ti'c"e:lhc!t' so~t er f~Mortga~f5 ar:,d h.easJ). · , . . . ._ person . has- ·a - right-· to or;I in~rsef in -1h~at same~ 1r :-~qrtg_ages. and 1~.ases s~all ·_.be. reg,~t.ered_ by ,.filing p·r_operty, ~nd ..~h·o pays a. f~II· fc!ir-. pri~e_ at .t~e{.c .the /Reg~ter:p~,td~'ttie in~tq..1rne~t·:~r~_atin~ ;1 tim.~ of the purchclse and· befo~~.ceivi~\·notice:-""mTI~tie ~o9.gagt ~'} · bY.-~ pnef memq~af"!d!Jfll ._there.of .

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0f another_p~rson'.s cl~im ·(SP,f fjami~~:;..~~·~aro~~ .' 1: : ~~de-J~~R-e9.1r~fkD.eed_s:~:-°·.~·~~9·.. ~e~. _60). G.R. No. 177tf37, Apnl 7, [email protected]) .. , \ ~9 t . th · · R' ht f ". ·• ·. ·•. .• . ·:) ·.:c · . . · t.1.:§; ~P-'V.~o~,"),·oc_.Jne · 1e,s .. o_ ._e.. !9 o a,·, 0 Not~:.. Thi:> piotectioh giveo to·a .innocen.t.purnba'ser. -:. -~G. ~91-eRe f....1. A... rt-·.,· ... -·1->. i." . -;:h-tt. -· eneri] u e: ·10 gage.e 11as a ng Q. re 1 y In fo~ yal.ue exten,ds _to,~n'.mnocen isseei ~~g ~f~I:EN-I~o~d1i,it1fontlii certificate title Ifie fn"o"ftgag9r .· ?r ot~l?r eni:;UF!')b~a~cer for_vall1e· (P:0 . .,ff~Jtie ...,pr~rty/offere-d.a~ . security',° ;a0c(·if")_· t_he

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. . ·. · . · ... ·. . .· :_.. -: . ·M· . · . si~!1_ !h'af~l~~~ arol!~e ·~u$pici9~.-t_he,-,_ ·. Me ·oran~iurri'..of Ent-umbr. nces ·: .. .·, . -~~tJ)~)1~~~·~;,:.has ,.no . ,ynder:tak~.,fl,l~her .. ··;..-'~, . , ' · , '·. ·.. ·: · ,- . ~ . · · , · - :-. : · . ·. : · · oveslf9at1on. (Argue/jes :V: .f:,ifa/arayat"'R_uraf-· Bank; It ,~_not ne_c8:s~ary.-~9 1ssue'.a:i:1~'A'.~cert1f1.c,a\~-.oo Uie: G.'R No. ,ioo468 Marcfi:·19 ·2014; · ·· .. bas!s of ~n inst_rum~_nt which. q~es _not 91ve~t th.E:, . ·. . . (,---,: ~ · ~, , _, .. : .- < _.-. .. · · o,wnership ·.Qr --title ,·from, the owner o_r: fr'om _th'e · ,Ex·c~p-tions: . . _ , ,.. . . ·, .·' . . ·: ·. tran$fere~ . of lhe0. r~·gistered . . , siwner. • ..A . 'brjeL. · · 1 .. ·s.ariking .. in~tilutioni{ ·, · · · .. -, : . · _ . memor~ridum. of 'the nature'.:of the instrument . . . . .. . . . . - ·. ., .. · en.ter-ea, ititcr:th.e. Gertiff~a"te .'of ·ti.tie..: sig~~-d -by B~nks are e15pect:e~ to e~~h:i.s.~,greater"carefai:id . . .. . . . . ··"prud'ence ·.in.' th.ejr.,'dec;31irr~J°?, iQciif,dfi:i~( tJ:iose .· . .· ,R~gis'ter 9.f 6'eeds; sh.ail ·serve(\as notice., t0 ·.thir.d . iiw61ving·registere'.d lands:A banking:_institu~ii::ln 'patties .. of th"e instn.irnen.ts. affec:"tfng. the.:·.property. • is expecte'd . to. -.exercis~ ·-dQ~ diligej,d{..beFore- . (AG~A?.Jti; .:Supra.at 50?). . . . .. entering. into '.a,'· mortgag_e~ co_ntract: -(PNB . \!'.. ·-·· !._:. =:"··· .. · .... ·. . :.. :: . ·.-. ·(,. ~ . > . . ·· ; . Ju,aJTJarfoy,.. G.R No,'1699Q1,Aug:: :3;'·20'11-). . . AU· ·intere.sts. in. Iegister.ed land. !ess th.afl o'wnership· · · · - · · · · shc;3ll.; .. be·-- ehtered ·: -~·lri. 'the- ... ri,emor~·ndum· . ot.. .Whe're '·the·- ~orl~-a'~ie!'i' is~-a-.b~nk.' it rely·,; encumbr~nce:S (P.O. 1529, Sec,· ~1). -1 · . . '.:. · .. _;, . merely" on the certifica.te .of tjfle offer.ed by the.. · · ' ··· r '·· · •. · . · . · , .:·· · : \ ·· · · ..' m9rtgaf)or .1n.. :a.sc·enainj~g · th,!3_ · ?tatu_s·, .. Qf ·; Coriyey.ances: and:Tran·sfer.s . . . .. . · mo·rtgag·~·d pro'perti~s. 'Since.: its ,6\i~iriess.···.is, . Upqn ·pr.~sefltc!tion by ihe ·owner wlio . de.sire_s fq . imp~e~sea·wjth·pi:ij:l_li~ [nterest,.the r.iiortgag~~~. · convey. the. lefnd covered· by ~is, titl_e. o(th;e pro·pE!r · · bank is- datfboun·d to b·e.-mote-cautions ev,en in . d~e.dr:of .. conv.ey~_nce' and' .,,the-. owner!s· dl,lplicate ·. dealing v,,lth registere~ iands . .Jlnde~d •. the rule .. · cettificateto'th~RegJ~ter.of Deeds_;Jh.e.lc;1tter.sli~I1! . . . ·that a person deai\ng with registered·'1ar:ids!can·. . . . rely solely 'oil the;, certificate of"title ao~.s .·not

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equitable interest in 2. to the' . volume" and page in · the such . land without 'transfer: ·reg1straiion b6_ok where it is registered ."\ . (P.O. 1529, Sec.- q5).

The ascertainment of the status or condition of a property o&ered \o "it as security for a loan must be .a standard and 'indispensable part· of ·its operations (Duque Rosario v. Banco Filipino, Savings"ancl Mortgage Bank, G.R No. :140528, December 7; 2011). -c, 2.

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Mortgagee does. not directly deal _with tlie · unregistered owner of real property (l)rguel(es v: Malaray~t Rural Bank, G:R No. 2004q_B; March ··_19,-2,01_4f. . . -": · ·

Discharqe or Cancellation .. A~\nortg_ag~. or l~ase -on registered Ian? may be discharqed. or-cancelled' by means of an 1~sirument . 'executed by the mor_tgagee or, lessee m a-,tqrm : sufficient in law.which shall be filedwith the Register · • of. ·oeeds who . shali make the appropriate memorandum upon the certificate of Iitle (P._D.~ 1529 'Sec: 62i,' · ( ·

in _any way deals with · · .registered. l~nd in · tr~st be registered 1 - shall. unless the . enabliog P ower ...... is:"·- .. 1. .f;xpres~ly conferred ·:. in ' . tbe, . trust . instrument; or ,,. 2. A final · judgment order ·of a court of . . competent · jurisdiction '· has· construed . the· · instrument in favor of · the · power:_ (P.O.: . (

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Trust ··-··.. .· _ . , . . . . . Fldueiary-relaticnshlp with re~p,ect to pro_pertx_whi~h ~' lnvolvesthe .existence of equitable duties imposed. upon the h9ldEii'r of thetitle tothe property to deal Vf,ith · · lt-for- the' benefltof 'another ·(AGCAOILI,, siipr« at

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instrument·_ which transfers, mortgages. or .in ·:any ..way_-_de~ls with . 'register13d' la"nd · in t_ru'st .shall . be· registerf:ld . .~nless .the., enabhng . powerk .. · . . 1. Express!y cor:iferred in · .· · ._,the tru~t ·. ir:is\ru_m!:)nt; or-~. . . 2. A fina_l-· judgment. o.r. _ ,order "of,,..a- court. of c;cimpet_ent . . . ]u_ri~-dict_i,6n . . , h~s ·:. -~- .. construed- .. the . . instrument in favor ~f the . . p~wer, . (P.O. ·.1529,.$ec: 66r:·.· .. :. ¥

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·.-INVOLUt·ff ARY o·{AUNGS "'· . , . ln\,oluntary De'alings 'Aff~cting Regis_tered .L_and .. ·, · wh ich. M usrbetR~gi$tere·a :' (ASAN): . .. · . ·.: . 1. Attachments·(P,D. 1:szf]. Sec:·:69),' . ·.. .:··· . . . . 2. ~919 :·on. execution_:· Or 18Vy .· fo_r::·t~lXeS..
When;ver: a deed - or· otherInstrument .is rn'ed for .. fhe .. -'purpose' '"of ~ra_nsf~rring : reqistered larrd in trust or upon any equitable ~onditi~m. . limitation · expressed . therein." or for the putpose of. creating or declaring--~ trust or "other

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note shall·. be.- made· . . the .· .'"original instrument. creatinq "or declarinq' the . tr:~st or other equitable interesta ~.eteience "by number to the: 1., certificate of title to · .. '-i,:'.ihich it relates; and ' . .

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Su~render of certific~te 'in involu~tary dealings · 1( ~ttachment or other ,lien in. the nature of an . involu'ntarY: dealing. in _registered ~and. Js registered;_ and· tfie duplicate· certificate is not presented ·at. the · time of registration, the. Hegister of beeds · sh·a1_1/ wi_thin th1rty~six' hours, send notice by mail to the

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2019 SAN BEDA LAW CENTRALIZED BAR OPERAilONS I 761.

LA:ND TI.TLE AND DEEDS SAN 8€DA LA.WCENTRALIZED.BAR,OPERflT_IONS - MEMORY AID 2019 ,,& • , t:!Ai ,§ts®* t·t¥2ii t&&t&«::

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registered owner requesting him tosend or produce his duplicate certificate so that a memorandum of the 'attachment or Other lien inay be made thereon.

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. Formal Requisites of an Adverse Claim for· Purposesof Registration: (WNR) . .. 1. Adverse claimant must ·state the following in Wri!ing: .. · · 5. · His alleged right or interest; 6. How and under whom such alleqed right or interest is acquired; .. 7. :rhe description of the land in '?,'hich·th~- right or interest is claimed; and · 8·. The certificate of title.number. 2. Such. statement must 'be signed and sworn to before·a Notary public; and ~- Claimant shall state hi? Residence or place to which all notices may b~ served upon him,i(P.D .. 1529, Sec. 70) : ·

Ir the owner neglects or refuses to comply, within a reasonable tirne, the Reqister of Deeds shall report . the matterto the court, and .it shall, after notice, enter an order to the ownerto produce his· certificate at a time and place named therein.jmo may.enforce the order by suitable process (P.D 1529; ·se_c. 7-1) ..

Attachment . Attachment 'i's the legal process'of seizing another's property in accordance with a writ or judicial order. for the purpose of "securinq -satisfactlon 'of a judpmentyet to ·be renderec (AGCAOILI,- supre at 571). ·. · · Non-compliance· wfth tht;i: formal requisites . . . renders 'suchadverseclaim ·nari~registrable 'and 'fJh_en an at~ac::hr:nent has been levied upon-pr?Rerly,... . .. ••JQ.~ffes;tive _(~ozanO' v. Bal/est.eras; GR. NO. a -purchaser thereqf s~bsequ_ent. to th~ attac~~t >.._--.., 49"i17.~~n 8,_ ~99-1):: ·. .: · .. .. . · takes the property subject to the.:atta~~nt. in .. · · .!,._ determining priorlty. between: two;attachm~~n--"""'Re~iistra ion' of Notice of· Adverse 'Claim . ' execution affeetinq, the same prOJ1l!9,W, i~not the An. ~eFs'e cl~i~s .a type of involuntary d~a·ling priority of 11:,-e execl.ltion sales h~i~ti-y.tJ.iaeterrfi'ine .,it_ designed .t~pfoted the interest of a P~:son over a· the preference,. but t~e priorit1~ee~.{t~e _t~ol Jece of Qro~~y·by_ apprisinq thirdpersons that .attachments, .. that is, the a1tachmlnt previously .t~- tliere is a e_al_ conJrote~sy over the ownership ofthe land. reqistered is superior arrd pnffFl~ to a s~pse.quent t lt-seekslto · pres"er:vJ ctnd protect fhe right of !lie one (Cruz v. Sandoval,_ G.RI No~L(-'a6701,Vune 17,~ i".. adver~e clairn_an,t d~r~g. the pendenty __ of 'the 1r;4oJ. · · . ~oversy whlre ·re1Jirtration of such._ intere.st or . · · . _. ·. · ·.: . : · ·: . ...._,~ · ~~- · -~IDT@rjght_ is}jpb,olhe~';jpjovided for b_y the. Property : Adverse Gla_1m_ . .- .. . . ·. •. , /I .. · . t,!~ 'Re~1;>tral1oroecr~~ adverse q!ai~ SE?:Y,~S a;,a An adv~rse claim IS a ~ot1cet.ftm11t,d pe~~~(ithat~ t,.'fjqt1c/t6~rd p/rson~ ~at any tr'?~nsactl,0n,r.egarq1ng: sdm~on~ __is ~_l!=)iniing_.an_i,nt~~st ?,n ¢_'.,1,j~11lte~-j,9~~-d ): )~b)~ct 1o·_.th~. ~~tcome ?f ~th_e. · has-a better r!ght thcin th_e reg1st!;lred o~er d~tife;i:· Bfili)r_e ~ a lloli~~ .~L ~averse .. ~la1m._· 1s ~nd th_at any!tr.an~action·regardiQ~ !~e'd1sP.ut_e"(i~njj_~e~~~_red.At.must..,o_~ sho.'-:"n th_at the_re is ~,~ .(?~h.e.r 1s su_bJect-t~ the_ outc_ome ~f -~~e. d1sp·ute (-SaJ~s..~dr.e~orfi~,la.w for the r~J!1strat1on ~f- .t~e .clr'fi1t~_re~t is ad~ers~-w~en: ·. .. .. . . . 1. ·. Claimant's right or interest in regis_t~r.ed land is the(lapse of thirty days from. i\s regisfr'atio.'n. .The~e . adv_erse to the registered awrier;- . . . must. be- a. :petition for . the pufppse to·:-af_ford. Jhe adverse. claimant 'a·n" ppportyriify. ·10. b_e h·eard 2. 'Such right arqse 's0,bsequent. to the . date. of ·I (Sajbnas :Court of Appeals; GR.No:. 1023_7.1,' /illy . 6rigii:1al registration; and.. . .. . .. . . . . . . . . 5; 1996).. . :L No at.her provh,ipn :is made in .the Deere!¥· f~r.the ' :registratic:m. of such righ_t pr claim .(P.O. 1529, Sec.. 7, par:. 1). ·-.

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Notice of Lis Pendens The notice of lis 'pendens is ordinarily recorded without the intervention of the court where theaction is pending. The notice is but an incident in an action, . an extrajudicial one, to be sure. It .does not affect the merits thereof. It- is intended merely to constructively advise;- or warn, all' people · who deal with . the property that they .so deal 'with it 'at their own risk, and whatever riqhtsthey may acquire in the property in any voluntary transaction are subject to the results of the .action."· arid may well be i_nferior and· · subordinate . fa· those which . may . be finally · determined and· laid down .therein (J .Cesiin Construction Suppl~es v.-Registrar of Deeds of Las rPines, G.R. No. 168655, J(!fy-02, 2010). -

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Where· the continuances of the trial are ur:mecessarily Qelayirig the det~rmination of the · · · · case tb the prejudi~e of the defendant;-· 5. . Upon ·verified _Eetitio_n of the party who caused. . the· registratio"n thereof; or . 6. Ir is deemed ~ancelled -after" final jud.gment in .. favor of the peferidant; or other dispositiQff of the aetion such.:'as to" terminate all rights .of the plaintiff t6 propertyj[ivolved (NOBi:.EJAS, supra: at 438-43_9). ' · .· · · Requisites: _ · .1. Must.be before finaljudqrnent; . , 2. Upon order'of·the court; . · :. . ._ . . 3. Upon action· bythe Register of .Deeds .at the> instance otthe party caused the-reqistration OR. : .. Lipan verified petition of the latter; and· . ' .- .4. · Must be due to· the g·raunds mentioned (PENA," supra at 485). .

· · The title obtained by the transferee pendente lite (pending: suitj-affords him no special protection; he . c;:an_rjof'invoke the: rights of a purchaser in good faith and cannot acquire better rights than those pf his predecessor-in-interesf (Yu v. Court of Appeals, GiR No: } 0907S, December 26, 199°5}._ .. . .. . . .

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Notice ~aver~e- -vClaim and Notice· of Lis . . Pendens : . .. . . . . . Both .are different remedies which maybe .avallec .of at· the. same.time. The arinotation ofa 'notice of_lis P.f!.[!cl~ns at th[·b.ack." of a ~~r:t(ficat~ of title does not -- preclude-the subsequent reqistraton on the same _ certificate ojtit!f_o~ ~n adverse claim. In-Paz TySin . · Tel v. Jose ~.Y Pieo, _the·~ourt· ruled that it wo!-lld notonly unreasonable_ but also.oppressive to hold : that the subf equent_ institution. 'of an- ordinary civil action ~~lc:JJt".br~o divesf'fhe adv,er~·e clai_,:n of its vali~ity, for a notice Sf~lisp_~ncJ..e,:,s may be_ S?ncelled . even Befotst.Jb_e.#act1on- -1s finally. terminated - for. _ .causes which-may ii"ot be-attributable to.theclaimant (Yalderama v. Argu~/les;· G.R. No.' 223660, .J:.pril 2,

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Lis Pendens ·:·· . Notice 'of Lis Pendens cannot be the action ·i_s· pending (AGCAOILJ, ·· · · ·

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. .. Ex~eptions:'.(ME_NB-PG) . -· · 1. When. it . i s shown that' the notice _is for the . . . . I·· . . ·. ,_ · ·,. · p!J.fpose of Molesting·ihe adverse party; · · · ' 2." Whenidhe Eviden~e so . far presefited by Jhe · · .. plaintiff does-:-not bear. out Jhe main-allegations_ o_f ·. the-complaint;:: .' ·. .. 3. When it .is· shown that' it" is Not necessary to protect' the' right .gf the part)7w.ho'caus·e~ the registratfoii· thereof; . . . . . . . ..

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Hear"i~g .. . .. ~· . . .. , . . Applications .for-' registration ~hair be_ heard qlJ. the regio·~al. frial cour:t ·:or,-_,in. prope"r cases; [n: .first level · co"urts, in the·.same:m_ahner and sl)all b~: si.Jbjecrto. . the saff}e procedur~ a;; e5.tablished_ in the ~rope.rty .· -R_egistr9tior,°Decr~e.(,1GCAOIU; sup:a 182). :·:_ · .

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Note: While a referee can', 'reGeiv_e evide_nce and: ·. ~_bjections;, it.has no. p9w_¢r_ to r_ule(on-the c~se ..: _Its . main duty is . to. receive--- ~vicie"rtce . and sµbmit . its . finding~, and ·recqmmendatiqns to the _cot'Jrt_JP.!) ... · . 1529; Sec.· 27). , : · ·. · ·

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2019 SAN BEDA·LAW

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BAR OPERATIONS

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LANClTIT·LE A.N:D DEED·s SAN BWA

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Judgment . . All conflicting claims of ownership and interesl in the larid subject ·of the application shall be determined by,the·court (P.O. 1529, Sec, 29). ·. /. ·

When the law confers jurisdictio'n upon· a court, ttie . ·. latter is deemed -to have a·II necessary powecs to · · exercise ·~uch jurisdiction t~ ·make· it effecti'Je (SM Prime Holdings;-Inc. v. Madayag, G.R, No. 164687,. 'Feb1uaiy 1.2, 2009). · · ' : ·

rhe··Jaurt is now.authorized .to 11e~r an.d·de~·ide ·not only non-coniroversial cases but even contentious is.sues whi_ch used to ·be beyond: its compete~C8' (Ligon·v. 'CA, No: 107751, June_ 1; 1995).

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INCIDENTS~•.

· Writ of~Possessio·n . . .G~'neral R,u_le:. The judgment . adjudicating ownership .to ~he successful cipplicant impliedly ~arries with' it the delivery of possession. if he· is; dep,rived, since the.-right-of pos~ession is inherent in . th.at of ewnership (Vencilao: v. :V,ano,'. G.R; No. L- · ·.25660,.Feb.·4~/1990): / · : .. · · · ..

P.O.' 1529 eliminated the distinction betwe.en the general jurisdiction vestedIn the regional trial court · and the limited jurisdiction formerly_ conterredupon it when acting merely as cadastral court. Thus, the court may resolve issues ·othei · than· those strictly pertaining fo· land reqistration: in· case's (ALBANO,· supreet Bt-Z) .. ,:. •·a.". , .. ,·-.. . •' .!;:X!=~P.Uqn~;. · .. ·- ~,. .·-. ., .. , . ·.· .. . ·. ,. :: .1.. ~ · wr.it of possession, does riot lie in a. land Duties of the court: . · registrfltion .case agaii:isf ,.a person who. entered · t. Render judqrnent, declare the same final'~'"a/id N.·"'""-:(he .property aft~.r. the jssua_nc~ ·of th~ final . · . cause thedecision's entry (P.D .. 1529~e~2~); . r tl!;!f-J:e~od y,.,_ho, had ~ot .b~~n ~· p~rty in the and. . . · . /~I I , ~rse~ancJ~ . -·· , .. , . , ·2,. ·o~der the LRA toissue a .decr.e~·>f)eg!straiion · ·· 2~~':"{yof;;~~ssess!?~ .~a~.n?t-be issued· in a: ., .' '(P.D.:.1529,-·Sea:30). ~e:t1t1on.,t:f0J. ~%,onst1tut1on of a!le_gedly1 lost or. 1r)) ':"W. ~~srqyed-c,ectifica~epf titl_e'(AGCAO.Itl, supra· at Only cl~im~d property ora P.Ortion'ffhereof can 27p {.8~. ~ _ . · . . .. . . . . · - . adjudicated. If the applicant, assert! owntrship ·10 .7 °};,, . . l .,. r). · - . ·. · ~· · ·. 1 ·f" ~ . l!t. • f~~,~!-t"' · · he~~~nce of1._c\.,y}rit of_poss~ss1on rs only a.matter and Su b rm·1 s . ev1id ence Ofl,Y or ~pori ion p a o ,. ne ·'l f · · · • if tA· irt Ihe: · h b .. · inclusion of th ~po rt·1onno·ca1me t. Ill .,,,- dl!'b"·y th eapptcam·-·i I 1·· ..-·~ i ,~:t;Sg.ur.sp.eI 110 m.· •· e past as een issued in i1~~f;f'f,..,. f · ··c·· (s 'void .an·d .of, no effect for a· l.fill.d · egistrat10.n c.001:£~.i~:'t-t,iC>~ -~· ~ ·. e regi~ de~e,q-,~ .n~rL;t~etreG!~R, n·9N_pr~Lsc1.r6ip9t9io5n_ has·no_j\,.Jrisdicti~m to·de~reea ..Jo~ to·a(Pe?.son WhQ~~Os.[.Q.bl S~lp~.,~n9,c UC_zero 6.eJ8V.~,f,· O
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. l:-49250, Dec.e'°!1be'.' ~-1, 198:>\._ ·_ ·~ \ ..:.~1~~~e-rri~fti6n··!11~st,_,_1.i~e.wis~,.i~sue~~spe·~ially . · : .. : · .· · _ ., . · "\.: ~,: .· c ~~de.nr,~that.t.h~;.{a1~ .. wnt 1s but_con:ipler1J_e[lt9f·a T~~ court may re~er~e its dec1s1or:i fV,efl after.~e;[E>-:rf.W~f-~ss(;!ssio.~Without sucl'l th'e latter shall be LRA )las al~eady-1ss.~~d the decree ef ,91st~~n~ineif~et~·e."r».QC.fi.O/L/,'s.upra at'-28.8).· · .. : · ... · (:Go_l1}ez ~- CA, G_.R. No .. !'1_779, Qee.e~e'j 15~"\~' :\: ·. . ,, , . ·. . . .· .: 1988) · · · · · ' ~ · Th~ :j~d~~~nt·' be~6mes' 'fi~al- up9n: thii, .. iapse of '<': ~ :· ,•, . . ...

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. fifl~~~;:(1~}.dayls~~OUflt~d trefl) re.~~jpt,9f,.nptice,~.. ju?Qmep_t ·(B.P.. 1}!1~ §~i\_:39;: f;l?:ir~{~of.. Cornelio., i~prada v.=MoQsaotb,. G:R.'No: L!..66242;·:~.ugust 31.~ . ··1gs4) .. How~ver,-notwith§t~nding.tl)e·1_a!T,)se c:iftne 15~ . t .• dc;l'y,p~r,iod from r.E:,)ce,'pt_of ju_dg_m~nfbj tb_e 1:far\i~s. the court continues fr> reiain ·control over. the case · ' untiLthe' eXP.iration 'ofone (1) year !after::thientry of . .· the· decree i:if '_r:egist~ation ..by the ·LR~· (R,ep'i:Jb/ic:; /.· .. , . ·'A~sbciacion Berrevofa:i de · Cebu;.: G~R/No .. 7.7243, . : .. . . O·.r;•'to'b er 26 ;•'.1.9,89;,-p....D . 1529 , S.ee... ·3'2''1.. ;_ ..... .··: ,',.. .... . ·. , , . ·. · ' · • · .; · · · · _Parti~~~~_dg'!ler.it. ·:;_ ( ; . ~ · ·.. . . .·. ·.. ' . · In a. !arid registratrbn proceeding .wher.e .onl.Y a ·, ·'. '

>. ,. ·' · .

portion : 0( tt,e land. s_uojecL .of i:egistr~tion .-is · .. (, contested: ·.the court may r(;!nder partial; jl)dgment : · prov.itjed , . that a' .. sybdivi~ion · pian .·show.ing . ···the . · .. · · ·· · ·. · c,ontested an,cfun'coo.tes\~d portjon~ appfoyed ~y t~e .. · Director or.Lands is·'p(eviouslY, .submitted: to said . court (P.O. 1529, Sec. 28).

,· 20i9 SAN·. BEDA LAv(cENTRALIZ~D BA~ :oPERATIO~S

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Remedi~s of Aggrieved Party ·in.-··Registrati.on .·. · P.roceeding'§: . · ~ . - .; ·:' · 1 ... Before·.,Ji,Jdgn:ieri'f E!eco~.~s,'F.i~a1:., :. · · · .. · . ~a. Motiordor,Re'consider-ation.· . . .: .. :. . . . Gro.undsi (D.EQ). .: ·. ~ . . · ·. i. · Damages a\:Varded a're excessive;· :-. ~ .·. ii. ' . Evid ..enc.e_··is ... in~w'ffi ..ci~nt to •.··J·'us.'t.i_f.y .tb.e. : . ._ dedsion or-final order; . · · iii, 'Decisionfilial;brd~·r:is.c;ontrar)Ao law ... ,. / :·(R.ULES CO_UR.T;'.Rule·37,:Sec. 1)-_ :·

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m. ~xcusable · ne'gligen_ce \vh_ich_ . )5rdin_,;:iry_· .··nrLlper,ce r. r:. · could not. have guarded ag_a,inst and by · reascin cif which _suc.h agg_riev~d ·p·a.rty:

'· ,•

~AND Tl°TLE AND [).EE:DS -

· SAN BEOA ~W CENTRALIZED BAR OPERATIONS·~

has probably been -irnpaired in his rights; ·. . . . _ 1. · ii. ~w9rd of · excess1\le damages, or, insufficiency of the evidence to justify . . the de_cision; and -. ·· . ·, : 111. Newiy discovered evidence which with · · - reasonable diligence could have ·not · ' .· been ..discovered- "and. produced at the' trial . and . which -if presented would probably alter · the result (RULES. OF · CQURT'. Rule-37, $ec._,.1), .

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}ntentional cor;icealmenf .and represen.tation as · pdssess<;i_r, _ C?C~_l:!P911t' ·anq claimant constitutes .aq,tual · . fraµd_ justifying - the reopening, and review of the decree of . registration (Heirs of Man,ue(Roxas · v. G.R: No. 118436; M_~rch 21,'1·997). ·. · · '

•

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~rou~ds for Revi~w of the D1;c~ee: (FIJ) · 1. , Actuqr or extrinsic fraud - an 'intentional · . omissi_on· of fact required by law io be ·. stpted ·ii:i .the application :a willful· . . state.men! a claim ag~inst the truth. It ·. · · rriust show soni_e ~pecific acts i~tend~d . . _!O dec~ive ar:id deprive .another of his right. (Lib.Ud?r/ v .. Palma Gil, G:R L- ·. ?1163, May 17, ,1972). . ..

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·After', J,udg~ent 'Be'coril~s .iin~I but. s·efore -. l~s·uanc,e. of De~ree. Registratio.n: ct: Annu.iment 'of. Judgment · . . · . · . It may only be a~a-iled of when''the ordinary · re.~edies_ of niw ~tria'i,.appeal,', ·pethtonp&. relief or ·other appropriate remedies are no ·1onger ;-- availaole Withc:iut _· the· · fault ·of p.etitiof')e·rs. °(J..iozag CA, G.R>No. 122181, ·,.Jime._?~_.-1.9-~8)°. ..... I

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Review of. Judgme·nt v. Review of the Decree 'It is ~ petition for revi~w ~f judgment;:,h~n it . is file9 aft~r reh.dition the decision but . l;>efore the ·~ntry ofthe decre(;l of registration.· And it is a petiti9n for review of the 'd\~cre~ when it·is fil.ed within_ t~e on'if (1) year perioci' after such entry, '· .. · ' .-

· P~~i~{'bf .filJng: .W_ithf0 f)fteeri .'(15)-day. _ per\oa for ~erfec;;tirig a~}!PJJ~_a.l. (B._P .. 129;_ Sec, .. 39;- Heirs,?( fc!_brada v, _A:Jous.anto, G.R. Nd. L66242, Aµgust.. 31, 1_~84). :-. _. .. . . .

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· _L-', ._" l!]_~ta~c-~s of ~ctual '9r'extdn.sic ·fraud 1ctual fraud proceeds from . -.an · . iote1itional- decepllori, · p~actlced by . mea_ns of . th~ ·.misrepresentation . or . >conce]!_rnent -- .. of ' .. a material :1. fac ·. _ExJJ:ihsic _ frau.d is employe9 'to degr.1,ye. partie~. ot t_heir da,Y in court and· . •,, \ . , q,µs_ prev~nt th~m
b. Pefitfo~-fa"r-Revie~ o.f a·' Decree . , This_ - _rern~c!_y: ,- i.~ - available •. en_!y. - o _.·an· . qg_griey~d ·pa~y whohasbeen deprived of land or ,_-any .. estate or interest therein _by_ decree -of reqistration, and the only .ground that 'may "b(;i, invoked for .-this purpose- is. actual fraud (PENA; ·supra'.at 164).·. · . .· . .; .. ~ .. . .

. · · . , '. .· .. ,-Extr.ir;isic· fraud is, aiscf act~ai fra~ct< ·t I • .', •··. • ..• '1\"·· . ' .•. , ·' . '. ,· .but. collateral to .the'• transaction sued . ,upor:i (Si?s..:.· ;v.·-.Zp_sa,'.· G:R. No. ~. :_,152q18, . July.3_1, 2ao6J. · · ... . .. . . ,

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. -P~dceeds_ ·:-from : ai:l Act i~·- ·ri·ov-·,do'ne. or ·intenlilJnal · · 'cie'ce'ption commi_tted·with actu~L . practiced- QY· means .of 'desig'f') to commit-positive rpisr~presentatiq.i:1 · .. o~ f~?.u.d ·or i'n]u~y tipon other · · ·concealment o[ . ·a· persons but is' cori.strue'd material fact.- :' as fraud because 'of its .. cfet~irT)ent~I-- effect. upon . pi..Jblic intere'st. and 'public or. priv~te·_co'n.fidEince._...,' ... , ··

an

th§f ;~:e .peti~io~

may bk filed at. af'1i tlme atter therendition -, of .. ·1Ke court's- decision and before .the . explratlonof one (1) yearfrom the of . the final decreeof registration,' for there ·tan -~-E\-:no. posstble ·, reason . _for . req'i.i°iri_f,lg . the ~ornplarfi'i_rig party to wait' until · the final decree fi enteredbetore urgfng 'iiis claim" of .. fraud.}R,vera \1. - Moi_an, .G.R: No. 24568, · March---2,' 1.926). · :· ·

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·_ .Wh~n to file: Not-iat~r;~;han one yeqr from . -and after the.date of enfry.'-of'sudi decree of .. regi~tralio_n .(P.~P fs29;:.$_ec,-:32J. _ ,-.... ·. ·

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(f\JOBLEJ"f\S, supra at 221).

. \ . . . . . 2019 SAN BED.-1;>; L.AW.CENTRAUZED_BAR OPERATIONS I _765

LA.N·D TITLE AND DEEDS ._ SAN BEOA ~WCENTRALIZEO BAR OPERATIONS - MEMORY AID 2019

Extrinsic Fraud v .. lntrinslc Fraud

party

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.Prevents. a. from Where . 'the f~aiidulent ha~ing:a jrial or. from. pertain to.an issue presentinq his entire involved .. in ·the original case-to the court: . action, · or · where the acts constituting the fraud were or could have .been . litigated therein ..

act~

This relief is .applicable to land registration cases if the petition is filed within- the time therein provided and the decree of . registration is not yet. issued. (PENA,' supra

at 171). .

·

·

··

Suhsidlary Nature: Relief . may not be .availed of except when . the decision .becomes final and executbry, and.onlywhen · -a ·new trial i~ not" available · (-AGCAOILI,

supra at 302), '

....

(~d. at 223). Patai fnfirrl}"ily_ir.i the decision for want of . due process, provided _th.at-'"no innocent purchaser ·:·for· value will· be injured .. · thereby (Vda. Oe Cueycoriq . v, · Vda. . _S.engbencgco,. G.R No. L-162~,',...

Period of filing: Wilhiri sixty'(60).·days after -the petitioner-learns-of the judgment, order, or proceeding· a!id not rry-ore :than- ~!>'. ·. (6) months after such Judgment or order- was entered or such proceedinq wa_s taken· (td;

ii.

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N~'S~t:'on

·,Novem~er 29, .1960). _ .. ·

-~ for R~c?r:ive~rice . · .. . ..: . . -~. ~ /)- ~~gal._an·d equltable !emedy granted to the . Exceptlon.. E~~o: 1f twgr~~ rkg~rpl Oy-'.~er ,of land whic·h·. has .be~n upon ~Y·. th~. c~a1manttJ.fjQ~.effeetthat .. · , wrori_gfu!ly\.o_r E)rrone9usly. registered in the the ?~1g1n~I title lc1~tee1~}(e;'~sential~,~ ?f~~~othE)~ ·for. ·:t.h~ ~tirpo~e of . req.w.r_emer.its pre_tri~d) by. la'{! for: itID ,[ "\o/.. . fO_mpeillj t~. latter· to' transfer _o'r recor:i~ey _va~1d1!Y,,.~here sa;acl~1ma'fit~ ~Jlowe~la ~ :at. he l~qrto~ h1~ _(Narvasa v. lmbornel, G.R. . . con.s1de_~ab_l~ nt11J1ber ears before ((~, :.,,. . No. 1 BQ.9[2J~ugust.6; 2014). tlTe_y~oke u~ togJJv~,the·_alleged ~rror __ !L . n" -. -. \ ~ { .· · . · .. of __th~_.. court. w~ Ot· decreed,~ _ R.equ1s1 es: \ .· .,· . .. . registra_tion !a11..~in ~ci-~~~,· it_ efa~\\\IT~ , ;~ -~ c1~_'¥·:an_al_ on,vinci~g . ~viden_ce pf m1e _to . -h~ld th~t: noth_1~g'fu0re done '-;:;;...•..., ~_. · . ~t~e ,J;Jroper ~; . ·· . < · · . , .·. ,~~~ut if!o.s,_Li~f&r(iti' law-~ecre~- of~ i ef>} . Facj commi.~ed._by _the _P~_rty. . · .reg1.:3trat10~·-.9.~l'J on!foe· set as'<(~~1!hiQ~ ~~ ·~ · whp reQ1~iered t~e_~p~op~rty. 1i:, his/her _one, y_ear · aftei\' the. \ntry_~l;ie'r o ~ ~ . name (Heirs of B,rus,a~ v_. CA,, G.R. No.

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111 · L~nd J_flould i:,_ot have. passed to ~he \'t}lgn~S; Of .af1. mr.iocent- purchaser fo,r .

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-~_equ1~1Jes Re~1_e.w of·t~e:Decr~e~~~~conve_ya_nce _is ~.av~1la~le· ·n,ot only. Jo. th_e . 1. · . Th_e pet1t1oner must have an estate or: l~gal ow11E)r of . proP.erty-, · bu.I· also to the inter~st.ifr ,the ,19oct: · · . . . . . p~rs·on with, ·a, better: right than ;ttie perspn • ii: He: musf shdw ·actual·' fraud in tlie . · ~ \.lnd¢r-· whqse .name .said 'property., ·was procur"ement. nf the decree of · . ~rr9neously r~gistere.8 (Paqe't~ v. -~·so.tigue, • , - -0 ~e§isfration; · · . . . . .. G.R. fl!o:·18§3575,.D.ecemb_er 10,:'201_2).• ·. . · .: .. · . · .. Jii. · Pefitiofi is filed ..'wi.thin. ohe (1) ·ye_ar-'-from· ·.. · . .. ... · · . ·' ,-· 'issuanc.Efof th'e'detree by the. l8A; 'and · May bi.filed.'ev.eh .after the l~pse 6f9ne'year · . 'iv: The property has - l')~t- yet passed_ t§"an · from en.~r'y of the d~cr.ee '.egistra.tion as i_nnocent .purchaser. for .. valu!9,, (Eland · long .. as· ·the property· has~-- ·not . been. Philippih.e$,.,Jnc.· V,·i·.G$i'Gia; GR, Wo. . trc!IJS·f~rr~ct or. cqnvey~d .. to"__ a_n· · in,nocent-

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Peti,tion·for;: ReUef frory1· judgm~nt : '. Grounds-:'When. a,judgment 'or.final· order is rend~red· by a'ny co in a and· a. pa'rty th~relo, · by fr~:u·d.- accident; mistake eiccusable .. neglig~nce. )le may"file a petition: .. in such' c_oLirt _praying. that the judgment, 0rder-:or, proceeding be set- aside. (RULES OF COURT, _Rulp_ 38, Sec. 1)._ .

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•

766

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2019 SAN SEDA

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LAW CENTRALIZED BAR OPERATIO~s·

An ~ctioi:i tor'-re.co.riv~yan,c~ does not- aim ·or purport .. to reopen t.h.e' .. registratio"n · proceedir.igs anci. .set asid~ the de,9ree of . :r~gistra"tiori. but only tp th;!it'the person . who'· secureq, t~e.: rE)gis~~a~ion _o_f the . cjL,Jestiqh_eq prciper:fy',is riot '.the real owner · thereof.' . The·. actiorr: while respecting 'the

_show

LA.ND.TITLE

AND DEEDS·

SAN BEDA LAW CENTRALIZED BAR OPERATl9NS - MEMORY_)IID 2019

decree as incontrovertible, seeks to transfe( . or reconvey the land 'from the registered owner to the rightful owner. Reconveyance -ls always available as long as the properly has .. not passed lo an innocent third person . for value (Hortizuela v. Tagu(a, G.R. No. · 205867, February 23, 2015).

Implied/constructive trusts are· created in equity in order to prevent unjust enrichment. They _arise contrary to intention against one who, by fraud, · duress · or abuse· of . confidence, obtains or holds the le~al right to property which he ought not, in equity and ' qood ·conscience,. hold (Marquez -v, ·cA, .· G.R·No. _1~5715, December 29, 1998) ..

. When Reconveyance . Does Not Prescribe: i. · If-brought by ·~egistered 'owners or their. · children; r • • _.,,

'·

e._ Action for Qamages May· be resorted to when a -petition for . . review and an. action for reconveyance is no .."' ·. longer 'posslble because the property has passed to an innocent purchaser fo'r' v~l~e and -in .qood faith (NOBLEJAS, supra at · 3,42). _ . .

ii,

A co-heir.who, through fraud.aucceeds in. obtaining a certificate of title in his name to' the 'prejudice of his co-heirs.ris deemed to hold the land in trust fo~ the . tatter. The excluded Heir's action· is .· ·imprescriptible· (AGCAOILI, iupra at 341);.or ·.- ·· iii. Where the plaintiff in an action for· . reconveyance, which is in effect an _action lo quiet' tit!e, is in possession of the _land in· question (Id. at 341)·.; or iv. Right· of reversion or reconveyance lo the state . of public properties . .., fraudulently registered _and ~ich are .. not capable of private appropriatioo or pri~ale acquisition (Martinez v.f CA, G.B No. L-3-1271, April 2J,: 1974).· . ' ~

j

· .An ordinary· action for damages prescribes in ten (,1 Q) years after the. issuance, of the Torrens title .over- the property (Id. at 343) . f:

.Q_ancellation Suits ' : lnitiated by a private party usually in acase . . . .'-' where two certificates are issued to different persons coverinq the same land, When·one , · . _. oHhe{two titles is held _to ·b'e superior over the· otne(, one should be declared null -and ··. · voitl and. ordered cancelled (AGCAOILI, · supra a 353). · · .

_.

;q~e ijudg~nl: would .clirect the qefeated party to vaca:te 'the,Jand-in que~tion, and deliver- possession thereof to the lawful , .. ow_nE;)r_ of thE! land (Id. at 353).

•

g. ----_,....

··.

Ten (10)-Y.eafs from the dateof the registration of the deed or.the date· · of issuance of the OCT or TCT. .. No·t;: The ~bove rule 'does 1-iot ·,n,~n,..;rtwjf" . apply where -th~ person' enforcing -S~~~~~l lhe trust is in actual possession of . . "" the property because he is.,n effect ·", · - , ~~·ek111g to· quiet title to the same ·q.,-.,.ra.· ,.. .., which· is .lrnprescnptible (D.B: T. . M~r-Bay. Construction, Inc.: v. ~ · Panes; G.R. Nq.~167232, July 31,:

,,,,,_..,,..,J>\,., ......_; 20091• I

4

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lrnprescriptibte (Casip(t v. CA, G:R No. 1-4.0457, Jan: {9, 2005)

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.Q_rinii.nal A~fion . The>·State m~y-- criminally 'pr9secute f.or · p~rjt,Jry the· party wh? ·6btains ·registrati_on through ·fraud,· such-as. by stating fals(;) assertions -in the swor.n ·answer ·required of applicants in c·adastral prbceedings-(People .. v. Cainglet, .G.R .. Nos. '=.-21493-94; April--2f!, . '1966).1. . . . ' ..

h. Action.. for· Comp~nsation. . from · . · . 'Assurance Fund·. . . orie who mes arL ac!ion_ .ror damages from . - . the _party . wlio.. all_ege~ly . regi_~terea th~ .. proper:ty through fraud,. and ;the latter, · ·: · .. becomes insolvent or . is barred. by prescriptior:(may file an 'action for.rntovery_ ·. under the-Assurance Fund within a period (?f . six (6) years from the time ~he right to· bring: . - the action ·accrues (P.O.' 1529, Sec. 9[?).. ·. .·· .... ·, •

. . ~ lmprescriptible (Caezo vs Rojas, ·G.R No. 11~788,. Nov. 2-3; 200,7) •

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Such loss, damage or deprivation: 1.) Was occasioned by the bri!')ging of .the land 'under the operationof the 'Torrens system: or - · · 2.) .Arose after oriqinal- reqistration of land; · · The loss, damaqa or deprivation was. . due to: 1.) Fraud; or· . '2.) Any_. error, omission: .rnistake or misdescription in any certificate of · .. title cir in ·ariy, entry or memorandum in the registration book; . There was no n_egligeoce ori __his. part; He i~· barred or precluded under the provisions bf P.O. 1529 -or under the · provision ot.any lawfrom bringing .an . 'action fpr\th_Epecoyery._of ~UCh .land or the.estate or interest therein: a·n.ct .·: ~ The .action-: has : not greserio~d (AGGAOIL'I, supnYat-35_6)~

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Actions for cornpensatlon against the . . Assurance Fund.' grounded on fraud.. ..Registration of the innocent purchaser Ior-. value's title .should qnly be considered as a ... condition sine qua non to file 'such.anaction arid not as 8 form Of constructiye notice for the. purpose of reckon°ing prescription. This -: iv. is because the concept of reqistration as· a . v. form , of constructive notice is- essentially premised on the policy of protectinq the .. .: --inl]og~n.t-.PUCQ.has·er for 'valu_e\: tltre::wriich. 1· . ,., , , .. cohsideratlortdoes.not, .. however, obtain in . · Assurance. Fynd. cas~s_. The coristructive . · · vi: no\i~e 'rule ·o_n re_gistration1.-sh9ulc;!_ not be ' 't , · /ma~ to apply to tit!e ~qlcters·_whq_have beeh -, · · 1 : : u~us,tl':,! deprived of their. land-without their) - • · _N()te:. lt·is c.orJditiqn:sin_P.il!a n~tha· t~~ -~~E;l~ge-Q_ce·.J_I'\~ ~9~uql !ill~ ho!~er'c;a~npt ti~. -p_er~o_n who brings the act,on~r d~ __ages~..........:: ae~n~ed ~f hr~ or ~er ng_ht~ ~Ys'.'~-e -; fr_r~t. by 5~ aqainst the 'As$.uran~,_.[funq . f_e. t~e '-£ l -'1[ra'bc;lo$~e~1~tra_t1ori _of,the trJle_ rn the ~a.me ·~egrstere·d ~"."'ner an_d(a"sfhi,~l_qers of tHJ 0f t_he Yrur~~r, and__ s~cond, by ope~a.t,~n_ of . TCT, that _they be rnngcef)purc~ers in 1 , .t}e cpnstructrve not1G~J_ule up~n re91stratron good faith and. tog-,tj:lo~e .(Eagle. Realty . 'l . , ~~ the ,t~le·...,lQ the 'n~me~:of. \he inno~e_nt .Corporation v. Repubfi~ .R. No.t5}'42~4~ ~ <"1)( P,U~c~as1r.'for value (Spol!ses Stjlian(!pqulos ·. July 4, 2008). · _ 6. The-1t1fliS~lii o(Def;ds- f~r·t,..ega~pi City, .. 7':-~

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rnno.~ent purc?aser·~~J-"~a_1y~~ ~,OEf:(1:Y~~o .:: 'L4.1K.;... ] . -~- · ,. ·. -: _:, . ~: '_; . _. _ ' · ·the usurner,'s ll!le wh_1ch.,q::inst1tu_te.s'r.greaGti ~ 1:~~~··qf_ TJ._1~., ·. , _ '.' -·..... ·.- .... _. _; -~ ·_ <;>f tr~st) '_ca~ it' be _sa~·,.t~at,b.~. cta~f : · _ ·An aet_,o_n ~rat _,s b_r~L!-~~t ._f~nJ-?Y.~:~cl~u~_s. _.. effectively '.'su·stains· l_~ss·.or._c;!a~ge,~1~ 0J):'~_e _ti(l_e_lo.real pr,ope_r:tt ~~- ~ny. rnt~r~st. deRriy.ed of land .o~· any.~~~ate. o_~nterE;)~r._:l~~t_t\~~·-bylreason of_ any 1nst~W~~,P.!· _re_~?r?·,. - -_therein in ·conse~qu~nc(;) ,?f·thetbri(~Q-:<jfffi~-~--~-"''7\~l?)C\Jncumb_r~n_ce-~.r pr~ce;e1,~~- ~h.,c-~ '-5_. .• ,, _ land und.er, the _operatrbn -.of- the· lorr.ens '\. ·,f :i\ ........__.\\.?.pga_renUy ~al,~. 9r _e~ect!'~~ buL!.t in. !n-1~b .. , .- . -system;" :(Spouses ~iilja(}__op_O(;J~~v.·9he -1yip..~?nf.,n _f~ct invalid, ,,n~ffe~t1v~:;~~1~~b~~·-·.9-r< - ' . - , Register. of-Deeds· for-Le'ga~pi-City :End t'fj'f Y~-~~.!~r~~able, an~_ rnay .. ~-E;! .'.p~eJ_w;lr_c~_~I~--~~-.. , National -_Treasµ,:~r,. G:R.. lV.0.- 2_2'46!_.8, July ,.. -~~'~}~!le;an:; 3, 2018). · ' ·( · · .. , . . _ .or~m.ary .C!VII: rem~:d_y (SYt.~\ Yi . . r··. · .. · ·:.- .. N(?; .._L-_66741.;_.J,u._ne.1.6,·1.98~);_ \~.:.-~; . . -·:.: . . -: . . · ....• .. ;" ' : . ~irnitaf\9J}:Of.-Action;'i-'_ - . :': :· ;:, . .- . - '.. ..., · . ·'.· . 1 . -_::.: .. ,. ·,,,. ,., ,-:": · .. .Gen·e·ral . ~-ule: ·Must~:t:ie-:-instituted- .within ·-: - , -pe·;f~d"ofsix_.(6.) ye'ars Jr6~- th~ 'ti~e -the right .1 .... -': - .; · 'to· b'ring· SlJCh:adio_n 'first',QC_c-~i'rep·wnich is •. v ' . 'from the'mom_erit ·thefplaintift $iffer.ed los? or. damage O~ -v'{aS ae·p.rivec:J.°o(;h_is _prqpef:ty', or ihteresdhereir( · · ·· · · . : R~~6~~ing-. of._:: J~s-t-:u~e_n_t~_ _. .. , .. ".' !)_nreg)_1.t~reqll.;a,n_(!s_'. ·. - ·. · -~· :E~c~~t;~-~: T~-~-acti~n-ma~:-~~--i~~tit~-~;d at No· deed, con',!eyance,mortgage, 1le~s~;-.-or ,oth¢r . • \ . • . . . ·_tt, .: ·-· ~ ... ~ - aiiy · time -within) two, (2r years after s_uch voluntary. iristruriie.nt, ~ffecting 0·:1and· .hbf regist~(ec;!· ··. ' disability ·.- . has:-'. .· been' .... remqved, ·. und.er.th~ tor.rens. system sh·a11 v~ltd,:(~xd!lpf as· . ..nc5twithst;,mding the E;!Xpiration~of.the origir;ial . between:the p~rties theret,o;.unless1sue::Jl:i~sH.unient: .. - pe.rjcid _o_f six_ (6) .years. lf.:(he'pers6!]· El11title~ ... shalf· have .. be·e'ii~,:r~·corded in. the :r:rfan,il~ir::h~r'ei'o·: ' .. to)rin·g ~uch _right.cif;act_ipn was a inin'br br. . . prescribe_d. i-n · the·. office or-°th·~ R~~istir-::ot)~>°e·i:l~~-'.tor. . . insane :Of impriso~ed _of·-Otherwfse under th~ province ·9r city where' the )ai,-d -liei-s (P_.D'. 1 §29; le~al disability (P.D.~-152:fl; Sec. 102)." · Seq.-113). .· . , . . . . - , · · ..

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The provision cannot be interpreted to include c::cinveyances made. by_ ministerial officers, su6h as sheriff's deeds. . It ·conte·mplates . o.nly such instr.uments as may be created' by a·gre.~ment of the parties. The provisions of'Act No. 33fl4 do not apply ·_to j~dicial-sales.(AGCAO/L/, ~upra at 819). · ... ' · Registrati_on. u.nder Sec. 113 .cannot defeat a persori ,whh ·a better right . ·.-· · . · · ·· 'Re_a'son: Registration under Sec. 113 olAct 3.344 is n9t precec;Jed by ariy ·inves_tigation, whether judicial:; . or ac;J_ministrative,: as' to the validity·or- the .efficacy of .. ·the title sought to be rec.orded. ''Better right" .. ' . , · ·Refers to a right-which must nave·been acq!Jired py :a third pa~y·independently of the unregistered deed, · ·su_ch, for"lrls\anc.e, a~ ti_tle by prescription, arici'that it . 'has. no referei'nce. fo rights· acquited un~er. 'that . : . unregistered. dee~ itself (PENA, . supra at :7{ and. '-..:,, 600). . . ·. _... · · · · . · ,: .

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\JYhere regisiered la~d has been the subject of a . transaction·and this·.was .recorded underAct no.. ' 334'4, ~-u~h-,r.~co'rdirjg. does· not "bind third"'~s6ns . . ·. t; . · . since 'reqistration [hereunderrefers to properties no' :.re·gi~tered under lne Land Heglst,ration Act; ci!J,d ,. · ·' · :_;. · hence; riot effective-for, purposes of Ar~ 154i4-:of the. · · · : Civil · Cocie'·' on double sales· (A.GeAoiu. at . ·:-.

· Registration creates constructive notice only to future dealers in unregistered land . -. R~gistration ··und~r ·).ct 3·344 "do.es nor' ;ff~rd fui'I protection, and the· tit).e. reqlstered .. .. ... . .~ . in accordance . , therewith must yield to aprior.and 'valid title, though · unreqistered, for registration under· said Act' can only · affect ·right~ or interests .subsequent to the registration. It is a notice only. to future dealers of the land (PEN/\, at 602). X · . . ,. _ .-

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As .a matter .of. precaution, a. would-be. purchaser' of . an' urireqlstered , land. should. ascertain for' 'himself .. whether- the seller is, at the time of the .transaction, still the owner of.the.property, -andthejnosr practical wa·y::of -ascertainlnq such 'fact. is: to proceed to the land. to find 'out tne persons in actua]. possession thereof and to inquire from them in. what" capacity th-ey possess and 'occupy the 'land. The rule that the· p"urcha.se'r 'is'. not required-to: explore further, than what the record in the.Reqistry indicates upon its face in quest of any" hidden defectorinchoate right . . which may ·sub;equently' defeat his right thereto •,, refers.on,_ly. to property reqistered under the. Torrens ~Y.stem (Id. at6Q3). .: · ·

·, Ti1e' ~nregister~c! donatlon.oronrer nu pties .do.~s · n5>t bind tliir~ 12~.rs,0[1:> ·: · _ ·. ·, · {' · · ·. - .. · Prior · un(egrst~d . q~m·a!ibQ ·:_ does ··not . bind re~po11d/nt.s;l\vho ~re in'no·cen,t purchasers-for-value." Registration i\ nof -necessar/for it t~. be. .. 9.9·nsid,ered _ valid and ~ffectiy7.:~owe~~r .. in 9rder to'_bind- third· · · A . regi~tr~tion a deed · _of mortgage ici, the persons, the d0na_tion must be· registe_red )fl. the , .. unregistered· land' register is withou prej dice .to ... Registry'of Prorerty'(oow Registry of Larid Tlll~!? and ihird, par.t_ies,0i.th a bette.r ~ight (Ri~era wMor:ah; CJ.R: Geeds): Although .tl:)_e--n.on~regisfrqtiori ·of .a·:deed "of No.. L-21:_568,· March .2,· .1926t · . donatio"r1-·siicjll no.f affect'it~· validity, t~e ne'cfussily'of ~.----r-eg'""'1'!"':s':'"tr-:ation. donation -~b.?11' not aff~ct .its yaliQ.iJy;. the. Effects'.'of.;;-T~an~i:1cd9ns· ·covering Unr~gi~ter_ed necessity ·o{ rEigistratio'n tomes fnt9· play_'wh~n- the . ·: Land· .. •·.. -·... . · ·: .. . righis. of third· persorfa '9re affect~d (Spous·e's-Cano1 ,<s~·t~een the parties·- eve~.ifJh'e:trans~ction is v. 'spouses-·Cand, ·_G:·k:_No>1?B666. and .19Q75o; , -. noi-.i·e·giste~ed; the: co"ntract is v.alfd_ and ·binding Decembef'14, 2017). ; : .· · .. (Dadizpn '{(.Court ofAppeafs, G:R. 'N9; .1~91 {6,. -~- /. : : .: . . . ·, -._,', :-- . . . :. . ; : . . . . :. . Septe17Jber: 30, 2009); and , Pr.irna_ry !=ntry ~00'5 ·an9 Registration_ Book. .' · · · - . · · 2. As among third ·persons - the law· requires._ that The Regisfe"r 6f-Deeq? for e·~ctJ. province or city shall . : .' in' oi-Mr for· thEf transac~ion to)e binding .fo' third . '1<eep a Primary.Entry:Bosik ·pnd El Regis"t~atioi\~C>Ok .. . . '.persons, the same-must. be re9.istered (oa/lizon · Jtie: F'rirriary ·Entry B.9ok :sha'il .cor,itafn;_.arilong ·other ... .... . ·- . · Court o(-.Appeals, · -G.R.: .No .. 159116,.· p~i'rti~ulars,_.· _the .:~rftry · nun:ib~r. th_e. ~·a.m~s. :of (he , : Septembe'r-30;. 2009)...... . partJes,: the nature;ofthe doc_uN1ent.; th~ date) .. tio~r. . . ' .. . . . . - arid'. ~im:i'.te'it wa$ pre$e11te9 ·and· received:, The recording· of the.d~ed __and;other-in,l:,trurn'ents i'el~ting. Procec!.ure tor ~egistration: - ·_ . ,.tc:i"urir!!igrsterecf .l~nds.:§hall )e.effect~1. by ariy .of.. ,.. -. 1-.- · Presentrnenf. of, Jristrument : · dealing in .- . ann.otation .on the space·. prbvidecl :therefor.. iil. t.he unr'egistered.Jand;-·and . · Registration Book, ·aft,Efr ..\He.sarne shaJI hc;ive.beeh' . -. ·.2·_. l(fo:und: · .. · ente'red in: the Primary Entry_ Boo~· (p.,o: 15~9. ~ec: · a. in bi-der: register. . . . . . {13; par.:ar. . . \ .. . . . ... . 'b: . defecti.ve,. re'gistratlbi, ii,; refu_sed;' writing his r.eason for refusal '(See,tion 194 of the· Revi:fed,Adminis:traUve Code,_ as ainehded by Aat·N9:33.44) .. · . : ..

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Primary Entry Book (Day Book) Provides ·spaces whereon to er.iter. .the r:iames of \he parties, ·the .nature ·of the instrument or deed for whi~h registration is req~ested, the h0ur arid m.inute, . da.te and month of the year wh~n the. instrument is r~c.eived fA.~CAQ/_LJ, supra at 497).

. preparaiiori and issuance. of the decree, they are duty-bound to refer the matter to the court. They act in this respect, as officials· of the court. . The administrator is thus bot legally obligated to issue the · decree where,. uporr his verification, he ·finds that subject lancf has already been decreed and titled in another's name (Ramos· v. Rodrigoez, G:R. ·Na . .94033; .May 1995).: . --..

29:

Effect of Sufficiency otthe Instrument If, on the face of the instrument, it appears that it is· A decree of registration i$SUed pu.rsuant to the .. Land . . sufficient in law, the Register of Deeds shall forthwith Registration- Act on_ly confirms qwnership of th.e record the instrumentin the manner provided herein. -In case : the -Regis.ter of Deeds refuse; · its applic~nt over the land subJ~ct of the- application · (Tore/a Tore/a, G.R. No. L-27843). . adrninistration to record, said officiai shall advi?e.the party. in. interest in writing of the ground or grounds for his refusal, ahd the latter may appeal the.matter By whom · issued: Administrator of Land to the · _Commi~sion.er· -of Land Reqistration in ~egistration who siqnsthe decree.of registration and accordance with the provisions - of Section 117- of ,..a~tests t~er date and hour fi. R~g1strat1on <::.an not Be · · (P:D. 1529, Sec. 113, par:JJ).~ \ Issued ~~1171ngfAppe11 : . . . %~ :~ JJ(,ln.. a9y/i'~·v 'nt, 'iif.o:,~~eld that .execution PE:_nding , . · :· ·. · · : . . J ... ~ .r,,~~pealj.f", notl applicable·· to , a land registration . . • • '.;.;.W· ,/:<."I' /~"', , lT . I' . J ' · '"'·. .-- _- , ·.· · ·.' . ·,._ ~ " .. ~toaet~1!)g,J?orre~s~·titl_e i~_sue~ on_\~_e-_ba~is.o.f·a· . . · DE.CRE.E .OE ~E.G·IS.TR,ATIO ~Jtf~~enl_]3~!-IS ~~jfinal '.? a-n~l11ty, a.s 1_t_1s_ v~o)at1ve. ·. ·... _: .. , ... -· · . '- ·· . . . ~he e~pl~Apr.o~s1_0~.of.the L~nd.Re~1strat.1on.A.ct < .' . -- , .. · • ·. . ., _1~~~qu}'res:.!t1~t a dec;:ree be issued onl_x af~er·the A~ pr?v1ded· law. 1! .t_~e court f!11,~s _aff~~~aing__ · detJs~o'~adjydic~tjng ·::the- title becqmes.'-final and . th9t th~ c1_~phc_a~t o~ a?ve~_se::cla1m.~rt has .tit(~- as lv11~~~cujgf~~i:idit is pn -~he ·qa~is ~t.-said ?ecreE:_that - s.t§lted_ 1~ His app[1cat1on e>!._ atjyer-s,~- cl~1rn .a,~ope[ ·. tt:ie~eg1stE;!r .of. .EleE)ds coljcerned, ·issue$· the for registra)ion,:.,_ a:: _.decree· .of confinnap9n_ -~~d . .. corresponaing·· certificc!te -of ti.He. (Top M~rlageinent · .. , : _registration ·sha!I be.. · eriter~d: (ACT:· N(? .. : 3261, Pro~ra11;,. CofpdraNori ( Fajarqo_, ·.G}~.- Nd:· --r5;0462, .. Sei;:.3).- - . June 15;. 20_1!):· .. .-·;-:_ . .· . ,.. . -· . --. Purpose:~The.'de:Cree. of:'teg{stration bind~ lhe land,. .- C.o!1te.nts:j[)~QM) .. __ -·.·... ·._. .. ,. ·. ,.: .. :- . . · . quiets title· the·r~to, subj~ct on)y to:.such e~~eptiqns.·. ,· · 1: Date, hour. arjd··minLJte of i.fs entry;..:..: . . or 'f1ens''as may be proy19ed by law. ··It. is QOnciQSiVe 2." owner is under Qi~·abjl[ty, the nati:i~e of upoq all pefSOn.s. in:cluding the. Q_ationa[ g9yernment such·. disability; andjf a mirier, ·his age; . : . . a·rid all. braDche;s · the/eo( wheth~( l]l'entioi:ied by .. , _ 3. Q_escriptiowof the.land, e~tafe·of the own.er, and, . nam'e .in. t,he~applicatlon or 'notice; the. same geing .. in such manner. as . to. show their ·relative indude'd·.fn:the mineral d~scriptic:in "J.o AJl,Y{hom If p·~,;r.ities; ·all ·P.ar.tJc\:i1ar:<~i,tate~i<mort.g~ges, _· · May' Conce~·o·:· -(PENA, .at.13.1). · · ·· .: , easem·efl~s •. lie·ris,. attachments, and:·· oth_e'r. 1 encumbrances; ·, . . Th~·duty of the.land registration official~ to is.Sl)e th_e 4. It s~all. ;iate wheth~r the owner is. M·arrie.d or d~cre·e··of. registratfo.ri'is mihisreriaUn th~ ·?ense that ' u~marri'ed; ·an:d-if mc!rried,.-.th~ name pf spous~ .. - they act under the orders.of the·court·and.th.e decree· i(thE3 land·;is.:c6nj~gar p·r.op·e·rty; the·cJecre~-shall . must be- in. c6n.form1.ty wfth. the 'court judgmeht and ·.. be issued in the .. riam~ of both spouses; arid" ... with thef data found in ·the record.. HQWElVer, if they ' 5. . Other matter-s to -be determined .in pursuance .of are· in doubt upon any point in. relation to Jhe. )a\N (P-.D. 1529, Sec.·31).

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'. Distinctlons betweena ·Decision in Land · R~gistration' Case. and ~ Decree of Registration . , .

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registered a'np an E;)arlier certificate for the 'same land is in .existence· (Caragay-Layno. v.· CA, G.R. No. L- . 5W64,.December 261· 198.4). ·

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In _determining whether a property· belong·s. to the. · conjugal partnership or 'pa·raphernal pro'perty of on·e Of the. spouses, it is imporJaAl.tO note in whose name -or n~·m.es tne title is'.registered, This is lz>ecause .the_ c~rtificate of title' does not establish the time of .tlie: acquisition of the· property.· It only confirms a preexisting title (Ponce- de· Leon · v. ·. Rehabilitation F.inance Corp., G.R. No. L-24571, Decembe.r ·18 · '19!0). . . · . . ' . ' . . Splitting or Consolidation of'Titles The former practice of securinq the approval 9rihe ..court .before a registered . ow~er may': split or consolidate· his. title has been done away with RA 440, amending·Sec. 44 of T)ie Land Reqistration Act and Sec. 4!;! of Property Registra(ion ..Decree (PENA, . supre ,at 206). , .. · · ··· · · ·

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Rendered ·by .th.e -court ·issu.edc by .: the·. Land and signed by the judge. Reg(stration ... Authority .. · .find signed by the .Lar:id Registration . · ·· ,, :· . Commi~sion~..r. h---..;>--

Fqund in· Rules 37. .and·· Fral:ld ·and :mu~t b~ ·filed. .38 ·~f the Rufos of_:<;~ourt. withfr1 one·. 'yea'( fro·m .. . .. '• . . issuanc·e.-· . . . ·:

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(ALBANO>?l!Pra at 816_-817) ..

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Spl!tt.ing· of: Titles .- =upon petition- by a registered.~'NnE:r of two or-more parcels of land . .. ,_.aescri5ed,iq a. certificateof title, the RJJgister of·.· · · .: . Deeds may cancer the certificate and issue in . .li~u.. '.h/r~f .· sei'veral new . certificates. 'ea~h . -covenr.ig one or.such number of-parcels as the ·_owner, ·f!lay desire, without . (~e necessity. of . . obtain_ing a prior authorityof the-court. (R.A. 440,

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·· 2: ·. ~onsolli!!)o.n of Titles.-·a r~gis.tere·~'o0r.ier . of. : .. several' distinct >parcel' 'of land -described in ....___ separate certificates ·of. title may, 'ii. 'he .desires, .eause all hiscertificates be cancelled ahd i.n lieu :....,,...-~---:::.-·tf.lereoVi ·sii:igle ..certlficate be· issued' for· the . . "different portions thereof'.by djrect-applicatlorr to . : . _th~)~e~i~te'r ofDeeds (R.A,,'440/Sec.' ·1t ·:

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Attributes and Limit~tions on C;rtificates°of Titie. and .Reqistered Lands; . . 1. · Fr~e from Liens' and Encumbrances (P.O .. ·. · ·· 1529, Sec. 44F · · . ·

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... l_t tQkes effect-upon the,da.te qfentry_ there9f, and the· · · lar)d: c9vered th~reby- becomes· a· registered la.nd on' · .... ···.·.that· date· (P.O.. J 529, Sec. 40).. . .... · .. . ' . . ~egis_tr~tion,does: not vest titie.:lt is merely e'vi~ence ··of.such t_itl.e ·qver a, particu,lar :property, ATorr~ns'· :.· certifiGat!=) i$ _the be'st. evioence· of ·pwhership ov~r· ·. registered li?nd (.V(llanuliva v.' CA G.R: No. 8446'4 · . J~n_e _19~1; Ct;,a'veZ:-v'.·. P~A ·&'._Af?1Wi Coast.Bay Dev't. (;orp:, G:R. Nb. 13~250, July 9, 2002}.'

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H6W~~~r.· si~P,le pos~essicin a certincate. of titie does nofnecessarjly make the holder iheceof q true owner of c1IUhe· property de$Cribed therein such ·as: -wher) till~ in_clu.des by mistake or oversight, !and. · whicli can no longer- be registered under the Torrens system, as when the· same land has already be_en

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General ~Ruie: Clairnsrand ··fiens of: whatever : _ch~racter existinq against the iand prior to 'the . . - _issuance of the 'certificate of title are cutoff by . such certificate and the certificate so' issued ·· binds . the .. whole . world,' including .; the . . , qovemment. · · · .. · E~ceptions: {CeNTPD) . . Those :n·oted on the Certificate; h.. L!~ns. clairr:,s. or righ~s- l:i'rlsing- .. or. existing under the laws and the Constitution/which . .. · are Not by law, required,to· appear. of r~cord . in· the Regis_ter of Deeds in order to be valid; . c. Unpaid. real estate. Taxes . levied·· ahd . asses.sed within. two· (2).years immediatefy c;1.

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. · pre.ceding 1 the acquipition of the right over . the lan,d by an innocent purchaser.for value; · d. Any _Eublic highway, or private ·way established or recognized by la_w, or any gb_vernment irrigation canal or lateral ' thereof,. if .the . certificate title. does 'not .. , s.t!:3te the.,.: boundaries. of such. highway or irrigation-cana!, or la.teral thereof have been determined; and · ~' Any . .Qisposition of the property or .limitaticin orr the· use ther:eof pursuant to P.O. 27 or any _other law regula.tions on agrarian reform (P.D. 1529, 'Sectio·n 4_4). · .

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·certificate of Title. Not Subject to Coliateral . Attack A certific9te .. of title sh·a11 · not be :· su.bject · to·· ~ollateral attack .. It cannot be qltered,:modif1ed, or. car,celled except in'" a direct proceeding in accordance.with law {P.D. 1529, Sec:· 48).

· Time · and- again, · it has'. been held that a certifieate of.-title shall riot be 'subject to a collateral atiack and tha't the. issue of .the validity of-title:~ can" onl_y be.. als9iled. _'iri". action 2. ln_~ontr~verti~le and i_gg_efeasi~le; expressly instituted for such purpose. · Herice, any .declaratien that may have been made in an . G~r~r~LR.lll~:. 'Upon tbe,:_~:l(pir<;1t_ion; of, one. (1) ... · ac<;iQnJ}UPlfciaoa. cannet affect. ownership over ye_ar from.and afterIheentry qf. the,decree ot.: · .. · '. t1:1e. property 'nor _riu!J.ify.~a-Torrens tft1t:-.as:·u1~ reqistration in- the. LRA, ~ the decree , and the __• -~, . :a~j\Jdicatlon · wa·~ :. only .fo.r . th~. purpose, of_ ~orre?pondi~g CE]r:lifi_~~~e' ·of_ title bee~ TJ. 'N~~9lving issue. of 'p9s~ession- (Heirs ofm~on;r~v.~rt1ble and· md~feas1_ble (P:O.. f'f:R-29, Am1sr$0 v.. Vc:Jllecer, G.R. · No.· 22_7124,

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.E)(ce_ptfqr_s., (.PN~)-._:: -.. .: .· ,;le considered as . . c9lla,teral !f.Er~v1ousyal1d ti~(~ o!) e:~~rne,,·a~~~i), a~ck:_~-~\ .· ., . · .. , : , ·.. , . ,. · (H_odges v. Dy Bunt10,- ·G.~R:,UNo.:-l-1.6096,{£.~~. -~ a. Qefen~tfs ftled a11 answerto the.complalnt . October 30, _1·962);·.- . · ·· .. -> ~raying· t3f:lcancellation of the TCT of· b .. W..he_n.. the l~np cover'ea;,i~ ~ot ca~le~o! Iii;!. ·. . · ~laintiff a0sJo .· the ~ward·. of dama~es by · registration (Palomf At.~~ol!r_f ot\_AppegJs-;, ci:ounte'rcla.[m: -,TQe prayer· for ~anc~llati~n is · . G:R.. {Yo. ,9f?608'., Jan.1:§r.yf 2,1, 1997)_;- .a.~d~\S.'1;~Ejzy l:!li · . coll a_tf~91~,tt~~k an? _,.ca~not. 9_e. d9n~ · · . . an9 . · <;:.t"'t· \ .. c:: · '~afr8J2 Appeals,. G:R. Ncy82??Q, .j.~fy~,_'11.~5):. tl ~~-. n_s~r of _deiendc!hl: (R~p1?bl[c v. S,am~on- ·

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: ~~ t1tl5\~0 re~1st~r~d. l~~d .. m ae19g_~_t,,t o_Qh_(f \1lle,pf/i'!~te.91.~tyred0.9~ner.shall,~e-~~;req,bY, pres~~1pt10.n· pr_ ·adv. er_se: P.O?sess1ory · SfJC. 47).· · . . ·. . . · · · ·' · . ; ~

. ·,.,col~~~;a.pattac,k_ o~ ·Tpfr-.e~;' T~tle _w~~.~ ·th~ . ~:-\__la~{J~m: co_ntro.v_er_sy Jles ·· ""'!t~m .,:1he. IVI. ~/\.")}.. ~~ )9oun~a_r_1es .. :9e_~~~rn.t~.e,~· .. b_y -..?~ch title·. ~YO.~q : fv!_o_tqrs: Pt:,1/ippmes 9_prp,_ v. _.CA_, · : . .,,.·: •: .. -: :. , : .,.-. '-',/ ·. > . ·.:· .. ···-'.: . t_ :: . :·..;-·,. ·. , -:,· · · G:R,:· N_o.;,1Q288/,:7'.P~ci{i.rJb'df.,19~2J;. . .. Thu·s·, even advers·e,-notorious·and continuous , ':·~··.' ·· · . " . ·: .· ·.··.· ..... -·~- ·., · . ·.·, ·posse.ssio.n.uociePa. cl~i~:.cif .own~;shipfbr th~.Includes Jmpr.overnenfs -o·n li:._and; . . . . •,' , · ... · a~ .... t: . . . . . .. • . •., •. ,. ... , "• .· . • , • . . • -., • •. ., . period . fixed by la\!\'. iS . irie!f.ective.::..~gcjiOSt .a . . . Ge_neral _Rult_ Torren_$ c~rti_fica_t~ .C?f _title coiJEjrs Torrens .. title .. (J,M. Tua~p[I. and. Co., Inc. -v.. CA, · ·,··the_ land~ de~cribed)IJerein, togl:lth~r ""'.ith ·al! the· ,,, G.R, .. :N_c/.ii,,/~-4~0.;_ SeP,t~q{ber '1.~i 1-~7~). -~· . .· , . . build)i:igs ·and'i_mpr6y~~-~:~t\~xi_stingj,li$rron~,.-· ...

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,. :l~~-dc _befprei';~the 'r.~co~~titu_ti:o_n· ·of .its)iUe,; . It ·cannot--pei:force t5e acq!,Jirec;l by. prescription (R~vem V . .CA, G. R.- Ne,. _107:903, N[ay 22, -1995). · · ·.• . . :·-·i· · ., · · · .: ··· · , ' . · The- defense. of .is'~;;_ ·e~'uitable. ·q·~;)od · · cfoes'ncl conce~rn. itself with the thcfracter·of the· defendant's· titi'e, ·b~r'q.nfy· with -whetti~r not by. · . r~a§9n ·of. th~ pl~i_r-i(iff.s ... lpr;ii;( ·. i[la~tiori _or; ~Jn~x.c1.,1sab1e: nElglecl sho'uld' b~ iSarr.~d)rom .'· ,• asserting .hiS"~clai.rn atall:be<;:?USe to,allo'w him. to: do .-so: , wouldqe· ineqtJitable :and. :un]ust . to I . . ,.. . ; · .. •

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. Gener~! Incident~ of Register;ed Land . Regi_stered land shall be subject ·to such burdens . ·and incicjents as m9y arise b'y operation of lay,., (P.O .. 1529, Sec.· 46). · Regi~t~red. land_· or ·trie owners ·t.tiereot' are riot relieved from the following: . · 1, . f:.riy rights incident to th_e relation . of husband· and wife or landlord and tenant; ·... .. ' 2. Liability to attach.mentor.levy ori executio.n; 3. Li.~i'bility to .. any , iien of ·any description . established by law on ·the_ land and. buildi'ngs thereon, or in the in!erest of the owner in su'ch · 1arid or building; .. · · 4. · Any right or. liab.flity th at may arise due·-to 'change, of .the law o( descent;· .. · · "Fhe rights bf partition betw.een co0owners;:, . 6:_ -The right bf .government to take· the. fand by . ·... eminent domain; .. '-: ' ) . . .. : . . :.. 7. Liability· to ·be· recovered:· t>y 9n. assignee'· in . . irisolvericy or trustee 'or bankruptcy ·under th~· . laws relative to pref@rences; :and1.. · ,. 8.· . Any· other rigbts or liabilities created by' lay,., aQ · applicable tq unregistered land·(P.D. 1529, 46). ·: . . -· . - . . 0

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. When a free pa_tent title is, iS?(..i'ed to c1n appli~~nt and_. the ·seawater, moves . toward the. estate of . the . ·titlehol~er, the invaded property. beconies part or°the . foreshore land .. The land under the-Torrens.system reverts.to.the'public d'or:nain and the. title is a~nulled (Repub'tfc v. · CA, G.R. No. 100709, · November 14, .. {997).c. . ' . .

·, Any f11ipino .citizen' _;ver ~he a'ge of eighteen ·(18) · year,s. ·or li~ad of a tarrii1y:~

Do~s not own ~ore to~h twenty-four . (24) hec\ares ,o(larid in :th~ Philippines-. 9r · has not had. the henefjt of. any · · gratuitous allo,tment · of · more than '24 hectares · ··

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Must -, · have ... r~sided contin·uously. for at, least one (1) year 111 ihe -municipality. ,wh.ere '.th.e · lan.d is ·situat~d ·· ·

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Must have .. cultivate·d at le'ast; cine-,ti'fth .( 1'15,j of'the land_ applied: for: - .. ·. '."

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Public lands suitable for agricyltural· pUrP.o1es----,.....,-are. disposed as-follows: , -.· ·. .. . 1 .. Homestead settlement: -~- Sale: '- · .. 3.: Lease; · · -. ·., ' . 4 .. 'Confirmation\ of · imperfect . title incomplete· ·

'. titles· . .. . .. . ~. ?"' . ~,· . . . · · a, By.judlcial-leqalizatiori:

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Has . '· . ccinJ.inuously ·. OGCUpjed1 _and. c\1ltivi;Ji~d; . 'e!ther.- by- hims_E!lf or his . predecessors-.in7. • · Jriieresi. :. · tr~·cus of. ag~iculturar publi~ land . ,,. s·u~ject of 9ispbsi_tion,-

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b. .BY administrative legalization (free· patent); .. : · ·.·and . .: . ' : · ·· .. · · · · .. . . . . -, Citii~ris.. . ·. 'the T.~ b~ve a't·lea:5\}neHHth 5 .. Free.title (R.A. 63). .... . . -, ·.. ·· - ( ) f th d b k · ·· . / .- , Philippines o["la~fuJ.age 1/5 o · e I a,!'). ·. ro. en Title lndefeaslble: . . -;· .; . . _.·: .. , . or .~uch· citizens .. not.;of ?11?. · C\Jltiva.tep- yvithin. 5 · :'A,oertificate ·6.f. title issuedpursuant to a public larid / · .> lawful ·.a.~~ »'.~?.:·1s -~ea(;J .years trer:n __!Pe date of . patent-partakes. the 'nature ·of. a certificate. of title ;, . , . of -- a . , f~_mily . '!l~Y the award · · · . .· issu~d ·.thrpllgh a. judlcial proceeding.:_ u . becorries . . .'. pur?h.~;e -~· ptbli~ Sh~II have · established 1.:-('' . . inconvertible upon . the. expiration . Of one year from .: . .agrtQU .tUh .. ra ·· twan · O (.1n2~)actual . . occupancy · -:· · · ·.. . . ' · ·. more arr eve · · · .. , 1 the. date of-the order·for the issuance of the patent, · . -, · , · · ·· . cultivation, and' .h · .. · ti · t · t' , · t th hectare.s. . ._ . , . e~c~, .: prescnp ion. :·c.ann_o ~per~~ .ag~11~~ .. e · · improvement ofat least registered· ()Wner. (Heirs .-'of .S1mpl1c10 Santiago v. -1/5 of ·the land until the . Heir~ -of. ¥ariano Santiago, G:R No> 151440, June .,.,___ . date .of' ~akf( .. final 17, 2003):' · · payment. . ...

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2019 SAN BEDA LAW CENTRALIZED BAR OPERATIONS·

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Jurisprudence 'supports- the return of lands· sold pursuant to. the declaration otavoic sale forbeinqin violation of Sec .: 1·18.of the Public Land Act. Because>. · the subject the transaction is a piece ot.pubflc · land;pu,blic·policy requires that-an heir should not be Sre!ented·from. re-=acquiring it.becauseit was given -- by'/laj,. his f.amily for their home and: cultivation.· -. T-h(~ ·i.~t' P,k)_li~~ ·on. ~hiGh .the ho~estead law is prei:li~te~ ··(Bin.ayvg ·\I. Ugaddan, G.R. No. '18-1:623,

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Have . established c, in . ·. ·good faith -his- residence 'on a.parcel of public lano which is NOT needed for public servic~: --~ : ,;(:..,., .~ Have ~strG:ofed[ Ri? house /~nd\Je,tuaily · :(esidetl t~efeih/ ·.. ,.,,,-

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Land·s G_ranted U_nder Homestead Pa(ent· Are Exempt from-The c:ovEfrage of The CARL · Lands·granted un·der homestead.patent are exempt fro_m the coverage of the·· CARL. In order 'for. the homestead grantees 'or their direct compulsory heirs to retain or keep- their homestead, the following conditions mu$t first be satisfied:. . (a) they ·rnusi still ,be. the ciwners: o'f- the original-· homestead at.the tim.e of the CARL's effectivity, and (b) tbey must coriif nue to cultivate the· h6mest~ad land ((\lmero, · et. .'Al v: Heirs or Pacqi.Jing, ·GR. ·No:

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. . ., . .. Non-Christian Filipinos Secre_tary of the DILG under · Sec, 84 · of the _shall certify that the Publjc Land. Act. • :m~jori~y ··_of the non- . . Christian inhabitants of any. given rese.rvation h·ave . .· advanced stJffici~ntly in civilization.

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of 1.;;..A. Actions ~gain.st ,R_esfrictjori on Alie.natioh/EnEut;nb~ance oft~n~~.s ; Pat'e~ts: 1 (RpR,). ~..""4 \ · · . · .·· 1 titled Pu~_su~nt ,~JJJecttv~ rs thl sancellation of the certificate . .. encu~bran~:· of ·larids 1'tq~~e_d~~r. f(e~'~·:jj! . of tit~Jl.~ the .c_~l}\~qt.ient(al reversion.of the ; · pat~nt or.. homestead-·p~ep\fe?'~~ep~~l~or ·qf!ffi : •f\ ap~o'verfd.. t.t;ereby to. the State . (V,~ente . the. Goverr:iment "fhe Rep.ublic·of the Philippines-'{Pub/ic 2 .. Alienation, . tran~Jer- .?f ·co~~ey~nce ·.of~;n3f.c(Sec·_101i:_ ·.- - .•... -. .·: . .. homestead after: ,f!ve (5) years and · b'e.fore · . : · ·· . · ' . twe'nty~fiv~. (2i) · y,ears., ·afte~· is.sµan-ce. of ·titre . A private : party i;n~y:. nqt_ ·. bring a·r/actio.i:/ foi · -' :..without the approval ·qf .th~ 'secretary of .[)EN 13 .. < -rever-si9n· -o'r any action"which ~OU.Id: ha.Ve 'the (ljtA.-10023, s·ec. 9)... .' , . . effect of'cancelling-a pubfic lan.d.patent·and the· .corre.sporidin'g certif(ca.te.· ofiitle1 ·witli· the resl!lt · . Re.~s9n: To.presei'rve:·aficf ke_~p ·in-the'·family of. that the lai:,s{covere.d thereby will a§ain form part. ihe, p(1blic iand grantee tha!· porti9_n ohhe: public. of the pubHc domain (Sum?li.v. Ju4ge bf th.e.- CF!· domain whichJhe State has-gratuitously given to ofCotobato, G.R ,No. L~$278, April-3·9; · 1'955;· · him . : (Fonta~i11a: Sr ... v. · . F~n.tan[.lla; . G.R. :~No'. ' Narcise_v; Va!bueico_f.nc.! }i.R. No.: {9B8_B,8; July

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. Prohibition· is, m·an'd~tory;i' violation· ·of·. wli,ich· ,re·nc:iers 'the conveya_nce' nuil and'vo'id ·ab initio;·. thus, it ca·nn0t •acquire validity, through th~ l?as~age of

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Grounds for:.Reversi~n:,

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Land covered.by .Free Patent - may 11ot be-sold .:.:.,,jthin five.(~} .years' from .. the. issuance of th~. patent. ··

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of-Secs. ,·fi8, 120-122 the:Pubiic. · 't.:Emd . Act · (e.'.g. · Ji.'tiena/ioi1. , ..or ·safe . · bf ·._,... · homestead. e~c;"cuted. within the' 5-year : . . proh)bitory 'period); - . . . . .. . '

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SAN BEDA LAW CENT.RALIZED BAR OPER,'ITIOt::JS~ MEMORY AID 2019 · :r3JC:F.Pt:,&Akf f .,, .. geA:»t , os+::r?X.f iStZ:t·v&:<•@@41& Rf,b¥52'f

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Failure_· of the grantee to comply with the: conditions imposed by law to entitle him to a· patent' or grant; . d. When a_rea is an e,xpanded area (Rf!pubijc. v. Heir of Villa Abrille, G:R. No. L-39248, · . May ?, 1976); or _ e. When the land is acquired in .violation of the Constitution (e.g. Lend-ecquired by an alien . riiay be·reverted to the State); · .f., Grant of patent was made through mistake or oversight (Republic of. the· Philippfnes v. Amor Hachero, G.R. No. 200973, May 30, .· 2_01,6). Note: lndefeasibillty of title, prescription, laches and estoppel do : not bar 'reversion suits. . Declaration. of Nullity· of Free Patents/ ' . Certlficates of Title v. Action for Reversion, The difference between. the_m lies ·in. -the -alleqations as to the character of ownership of · .. :- tt,e realty whose title -i~ .souqht to b·e· nullified. . an action for- reversion, the pertinent alleqations ·in the complaint . . would admit ownership of~the 1 Stat~ of the disputed land. On the other h~a. a cause of action for declaration of nullity of free patent and certificate- 'of title wou.ld require · . alleqatlons of 'the· plai_ntiff's ownership. of t]l..e contested. lot prior to the..issuance!of such.,free patent - and: certificate. of· title as· well
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-Cancellation . , of Certificate of Title~

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It is.proper for a private to [lie c;1n a9Jipl) for -cancellaticn of .certttlcate: of 'title· is.su~_by,·a virtue of a.public.landpatent as when fie claims ownership of . the · land as. private' property by. virtue of. lorig period. of possesslori .(PENA, Supra at 678). · · • · ·· · · ·

. . . · · , If the land covered by a free patent was a private. ~ ·. · · land, the Director ·of l.ands-has nojurisdiction · · . . over· it. such tre·e patent and the subsequent .. , . . certiflcate ·o( t_itle issued pursuant. theret'g is- a riuliity. Tne·. agg'rieve'd party may initiate ~n action for.cancellation of such tftle (Pabau~ v, · · · · - Yutiemco, G.R No, 166.4356, July 27., 2011 ). ~ . ·-. :. . . ::-, 3. · 'Actlon for .Bec~_nveyance· · · _ -. General Rule: Reconveyance is -not a proper . remedy in case, the subject property is· public · land. It is. .because a private person would ·have no right to recover the property.' It would simply revert to.the public domain. · . :-,

Exception: Wlier:i a free patent.was issued over private lands ,tt:iat are beyond 'the jurisdiction. of. the Director of Lands/DENR to .dispose of (De Leon v. De Leon-Reyes, 'G.R. No. 205711, May/ . , -30, 2016). Residential Free Patents _ R.A. 10023.ent(tled '.'An Act Authqrizing .the Issuance of Free Patents to Residential Lands"· was approved on March 9, 201'0 and became effective o'n · April 3: 2010 .. DENR Administrative Order. (DAO) No. 2010·2?, · appr9ved on Qctober 4, 2010, ~owev~r- amended Section 3 of DAO 2010-1-2 otherwise known as "Rules an·cj Regulations for_ the lssu.ance of 'Free Pate'nts to Residehtial -Lanqs under R._A. 10023." . It especially prQ'vides ·that: . ., .. '!3.2 Actual :occupation; actual residence . and . • continuous p'ossession ~md occupation ~f tl)e" parcel . sLJbjE:]ct of tl:'1e application.either b'y her~elf or himself . or through ·her or his predecessor-in-interest,' under a bona fide claim of acquisition o( ownership, for at lea's! ten· (1Q)', years prior. to the filing of the application.." · · ·

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Tti.is · ·subs(ap:ti~!fy· recjuc.ed the preyious requirement of thicty (30) years of open and c·ontinudus pqss~ssion. of land _'under C.A. .....__ ......_.__-141;)as· amen-aed, or the Public La.rid "Act and tht.JS exp~dited:the titlfn'g process. . . ,. ··. ···, ....... ~ . . . . b. ,bahd applied-"for is not needed for 'public . I , s·ervice or t. rel="nofollow">u.bli~' l,fse.' , ' . .. . .. c .. ' The"land should Not exceed: . i. ·,l_ri hi~hly urbanize~_citiis·.- 20.0sq.'m. '..ii. - lri other cities - 500sq'.r:n · · : · . ' iii. . 1 si _.and · 2nd ·class · municipalities ·.;_ · · ·750s·q.m·. · '. · .. -· ._ ·• .. iv. In a.II ott,er municipalities - 1_,'000sq.m·~, 1R~A. 10023, Sec. 1) : · . . ··. ''. ... . . . 2. ~ Coverage· _ . Lands th~t h9ve been. zoned: as. ·residential ... areas, including town sites, those located. inside delisted military· reservat[on~ . or ·abandoned military camps, and those of iocal government units.or _LGUs 9r town· sites whic~ preceded R.A. 7586 or the-National Integrated· Protected Areas Sy~t.em Law ( R.A. 10023, Sec. '2).

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2019 SAN BEDA LAW CENTRALIZEo' BAR OPERATIONS

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LAN D-·TIT·LE A.ND b·EED-S SAN8£DA_ U)W CENTRALIZED BAR OPERATIONS·~

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Special Patents. . Asidefrom private residential lands, public lands ··· actually.occupied and used for public schools; rnunicipa' halls ... public plazas or parks and other government institutions for public 'use or. purpose may also be issued special patents under. this law in the name of the national aqency or LGU concerned, and all such public la~ds ·so . . titled shall notbe disposed of unless sanctioned by· Congress;·· if-own·ed by 'an ageocy · of .. the . national qovernment, . or sanctioned by' the sanggunian- concerned through an . approved ordinance, if owned by the LGU (R.A. 10023,

MEM9RY AiO 2019 '.

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RECONSTITUTION O.F CERTIFICA.TE .OF TiTLE Reconstitution of Certificate of Title . . ' . . . -..... The reconstitution of--a certificate of title denotes . r.estoration of the instrument .. whicK; is ;u'pposed to have been: lost o'.r dest"royed in its original Torm and condition ·(Heir:/otPedro Pinote v. Dulay, GR. No.

L-5-9694, ~illy2, 1990). ··

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Purpose: To· have -the same reproduced, after .. proper p~oc"f;)~~ihgs, in the same form they ,were.... · when: the · 10s~_- or 'dE)structi9'ri occurred (Heir~· of

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' -4. Application ·, . , . ···: . , . · _: ' . : . . Pedro Pinote.-.\1. Dulay, G.R, .No. L-566Q.4, Juiy ?r a~. F:ifeo wi.th the{ c'ofor:i,unity En'{iron·1~ei:it and·. , 1@0;,~~#.a.~f(~I) v -. Sp[!uses.:.Cruz, G.·R:··No. 220_940,< Natural Resources. Office (CENR,O) cif" the - 'March20, _?0.1'7). . . DE~R.ir'nm~-<;liately.after the eff¢~!~of;t~ -;.~ . . · .. , ·. · .·· . ... :· . · · · Act .. . • . ·- · ReconsITtbtion denotes the restoration of. the b .. Supported ~y.,a map_b_~sed ~;~C,wart!f~~(ut~iet~.tjtle~l\~9~_d!y. jost or. destroyed _in. !ts' conducted by .a qeodetic engmee~~groved . · qr19_1na_l to,rm~ qon~1t10.~.r 11 do.~s nQt ~9ss upon by the DENR. :~~~he gue~_ti.o~J-QvV~[Ship :(Repµpfic,v. $ahtua'..G.R. c. .s:u~p?rted .• bt th_e. jf~v(J,-Of·· two !(~, T :--M'5!,Q3,. §.eeft~i. ?9.0~). It. partakes of a land d1smte~~st~d persd!J.S att,es~1~g to t~e ~ .r.e_g1~trat'f~ ~{J-~9!(1~_. Thu~!;,_1t ·.~Ost granted · occupation _of_ . the pp11c'l2t _ (or /'Vv. onfy~o/1: c)~~f:fo~\tha_t. the htle ~?ught ·tq b_~ predecessors-1n-mtefe~IF'on the· ·saicl· Ian 'l' restorecrr,vas· in1c!eed 1ssue1d to the ·petlt19ner or his , . (R.A."10023,_Sec. 3)..~( · .. ' . -~~ \i~P~~ce'ssor-)n-i_nre'rest-, al)d S1:JCh title."was·in·f9_rce W.~:izy··t~t~~:\i,T,e it ~~s l0sr:o}-aest~oyeo·(~urfz .v. Re,o.ubl[c 5 .. Action on·:t~e)\p'pllcatl~ ..... (]( · · ~j-'_.'.;_ ., ot'the:P il!p Lrtes, ·No .. 298948:-Febru?ry_ 24; The CEN~9 .. is· man~ated')to _;~~s~ therifif. 1J12016, .f:;;}. · .~i"ppliqatio~ wiJ~in.o~e.o~iaitcfc!~d:~w(q_~~:20)~. ·J¥,~' ~-· · .. ' .. · ... ·- .... ·.; · : . . , .: . ... . _ ~a~-~- _to· l~~l.u_d~ · comp)ja"(ice'·wi!~0fi~}e~ir~ ~7_ ~-. or,a~. rdei:;o.f rEi°cb'}st)t!Jtion· to· iss.u~; tt'le. _foll~_win·g . , n~~l~~S '.. a.~cr ._:.O!~er_. ':(¢.g~l\eq.~ir.t~·IJ!~,Q~~~e~_t~ -~~~!"be: ~e.~~nt: :. -. .. ' ~-- , . ,· . . .',·, . ·fo~ar~ .. ~h1~ r~co~m~n-?~tia.n t? )Q8." ~~1f}'~}EJ::'!'11~'F'7>c~~1~1~c!tjt,?;t_1tle._ha~. ~~:enlo~t.?~ de~.t_rqyed;__ En_v1~o_nment .-.~r1.?_ N.~tyra! ·..-~e~\ur9~~)~ff1.(£, . . ~~~~t1t1~~:1~:th~ ~e-~1~tet:o 9_w~ef 9.r_ has an_ . (PE_~~O), · ~t:,o · _shall tiaye,. five't 5)~d~q' to · .· · ~l~?:~~~r~.11:(a~1. ,: .'. _ ·. : · '.... ·. · ... ·. apw~v.e ~r _d~~aeprove_ t_he;p_a_t~_n!_. _: , -.-/. ~~e.eq1f1:ca~e;.?f,t1tl,~:~~-1~;.!0,ec~ a~ th· tlP,1~ 1! 1,,Va_s .· ·. . . •. ·· · . , . . · . · · ,;: _ · .. , · . : , . l9s~ -?T d~~Jr~~d (t:?YO~ vi- Fil~f ~lat~ _G9lf. a.rid · lri ccise·of. a,ppr_oval; 1ic1ten(snc;1II. be ,issued; in· .... ·,:·. ' -o:~veldpm_e(iL'C(Sipor.ation,:-G,R.· Nit·, °f5b.470, ~a~.e. oi" ·:: -?·iff~(E),rii° . - . ·. . '· 6,' 2'008: ., . : ... ·, \ · :... : .. :. :. _ :_, · · .' . ··_: . ·C_ ?la!m_arits,;()~~- p~·rt1.~.s ,lilJclY ,s}~~k, \h.e .. prnp~r · · ·. . Jµdi~Jal rerp/~die~ ..(R.k).Op23,.:_Sec}..6).'" · . '-'.'f6er:i. ibf:_be_ei,(~i9st;: J)Wf!.er.':$ ::dµplic~t~:- c;ert,.tibate - otjitle •• • ·I ;s .. has, .. 'nqf. ,:b.~t ·.is~.·. -in,• "tac(" :-the 6.· .. R~r;io\,~t R~_~tri~tL~~s · ... :·.. . . . ·:-_: posi~~s_i9n:· .:ot.\~hb.thei:'···pers6'r1, .: th¥n .:_:.the. . The -:-.f.estrif.!iori? ; reg~r~H°Qg ··enc\.)rnbranc.es, . <e~bri~t_it~ted C~f'!ific~t_e· ify6Jd. \' _,...: .. ·: ~. co_nveyances, transfers or.djspositio.ns imp_osed · ·1ht:fo}!bwf6g·/~q~isH1::~ :rri"y?t :.b~:,·co,mpiied :v,.,_ittl: fo-r·., . \. _iri .s.ecs/1-18, '1.19i1Zl, 12~~ar'ld a_n ~0!9.ef:for.recqnstit_utLon: to, be,_i_sS.LJed::.(~)·.nf~:it. the,. , 'XII·;° Title VI of C.A. · 14 r a.s, ·a.mended, shail not , cert!f!c.ate -~f-_title ha:d'bi\en)osfor t:lestro:Yest; (b))h.af ·· .::-apply:to·patents issu'ed_:(R.A.)G023, '.Sec.:5). · ·_- .. c. thei£lf5curr.ients pr.ese_nt~d by_petition~r are ~uffi~ienL. '·· .:·. ·_ : · · .. : ,: : . ·:;>· ,- : . . . ·ahd r5ropir tci·~a'rrant·reconstituticih-ofthe·.10·st o"r .

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'_d~it~0yed:,c.e(!!fic·atei6f-:Jitl~;~(e), th?i-° the··p,etitior1~r. is· . ~ . . '. tt,e· · r'~gist~re:.d · ·ow.ner..,·o_f· the p·~a·p·erty ..or· had · an· . interest thereinj'(d) ihat· th·e-certificiate.of title was ih . force·_,a(-the'"tirry~ it ..v..ias·.1ost a0_d'd~sfroye'd;:·~·ifd·(e1' . ·that. the descriptio_h, area: ,and . boundar.ies · 6f .the .. prop~rty. are ···SUbS!phti_ally· ·the same. ·as th~se . cont~ined··in the' lost'or destroyed c$'rtifi~'ate of title.·"

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I . _201~ SAN BEDA. LAW:CENTRALIZED OPERATIONS ..., . . . . - . (·· BAR . . . . . ' .

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.. LAN·O-llT·LE AND DEEDS· · ' . _SAN BEDA LAW CEN.TRAUZEDB"AR OPERATIONS- MEMORY'AID 2019

·-.The Court has held thatwhen.the _owner's duplicate certificate of title has not been lost, but is; in fact, in · the· ~~sse·sslori ·. ·?f a~othe~ per'son1_ then, the reconstituted certificate rs void, because the court that rendered the..decision hadno jurisdiction' (Dy. v. . ·GR ·N· 219.500 · t 9, 2017) . , A. ugus . .' .· · ·. Aid ~a. . . · o. .

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In. ·redonsiitci.ti~n ~-proceedings~.: the · court .has repeatedly ruie~ that before jurlsdiction .over the case 'can be validly acquired; .it is ·,{condition sine cua non. that the certificate of· title. has· not· been' issued ·anottlir. person· (Sebastian v. Spouses . · Cruz, GiR .' No. 220940, Mar¢b 20,, 201'7): · ·

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Kinds of Reconstitutlori': ( . 1. '.'Judicial_·_.· partakes "ot· the nature- ~fa land . ··.. . .·· re.gi~tration_ proceed_ing./n rem. :"··· : . ' -

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· . Th~·judiciahiiode is the qeneral mode which i~ -applicable Jo all cases' of. reconstitution.. It . re.quires, fifing· a: petition (n. t_l)e. proper Reqiqnal · Trial Court which shallstate tltat the owner's or co-owner's- duplicate certificate .gf till~ had been . ~ost or dest"rby,ed·,~if sycb,be the fact, th_e Jocaj.on, . :..we~ and:_bo~p~aries. of th_e pr.9_~erty, .t~,Ua':1E:?· and addresses of all per-sons--who' have a ·c1aim . ~-:_!x encu~brnnce-:6ht~e.. p_reperty toge!~~;· with~a ·. statement of their cla1ms/"and a statement {hat _~: r:i9)cleii:Js or. oth~r .-~iristruriients;.affectiii'! the prbpe.rty have b.· een .r,e~j(fste'ed~'(R.AJJ,,2 . Bt_Sec. · '12).' ; . . .. :" ,.. •

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. . ·' . ~ ~When the dl,lplicate title of the landowner is lost, ihe · proper petition Js ncit reconstitutiori··or title, but one filed with the. courrfor issuance. of new title in lieu of ttie lost copy. · · · · .. ~-

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Reconstituted ·certificate is void.if the oriqinal.is not re a Hy lost but .only in . the possession. of another . person (Strait Times, Inc. represented by Rafael M. lrierie v.··9A, G.R .. No. 126673, August 2fJ,)~98).

for

· Sources Judicial Reconstltutiorr ofTitle . The petition for, judicial reconstitution 'must also be supported by.any of.the followin_g: -, 1. For OCT (in the following _order): ·(OCCADA) .·· . a .. Owner's duplicate certificate' of title; · .' ,- ~ .. . _ b.-··.- f.o~ov.mer·.~.. . mortqaqee's . or. "lessee's . . duplicateof said certificate; ._ . . . c' . _g:ertified"'copy of such certificate, previously issued by the Reqislerof Deeds: -~ ~uthe'nticated copy of _.,the -decree of . · ·regi:?\ratioh .or- patent.vas the. case may be, whichwas'trie basis of-the certificate of title; e. _Qeed ·or· mortgage, leas"e or encurr:ib~arice containing. desi::rip_tion of. property covered b~ t~~ _certificate d._t!!le" a_n_d-on. file wi~h· th.e . Re_g1stiyof.Deeds, or.an auth:entjcated·copy thereoi arid · ·. . . . . · :_ .. · · f;. ~n~ ~tfier docum"ent, which, .in_:the" judgment , _of _he coUi:f·, is sufficien.t ar:,d·prqper.bas\s'for. '. recorastih:iti?n (R.A. 26;· Sec. 2); __ ··· · ·. .. · d.

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··Th~~n-_otic.e tl:i~\>eUt.ion mu_st'.ai~;· e publi~~d ( a. · S~riie' as sources .. ,-1,: 2, .···and · 3 ,.- for, twice·· 'io ;~s,uccessive iisues ~n the Officitl · rs26nstitution of OCT:.· · :: , . Ga~ette, posted on_.-th~ ·.main entrance the . . .Deed:· .. of: lr~·nsfer . .'-or . bthe;:. documen.t· .· . provi~cii:!I· a"rid munici_p!;II° buitdi.lig)!}f.....,.h!Ch' the.containing: ?esc.riptfon . ()f· the p·~op~'rty ·.: . · l~:fr:,d __ 1s si.tu.9t13d, and_ s_en_t· by. (egiste"red. rnail or""·_,_-..- ............. covere:cJ..by the tra·nsfer certificate of title and ·' •. ot~e:rwis~ to all per~?rn, n;:ime:d. tn~fi ib_~ .on.-file :with-·th;e._Regi;;;try ·of Deeds,· 6r an (R.A. 26, $ep. 13). ,; . .· · _ ...,.. • au_!h"~nticated·copy· th'erJof;- -'. · .· '- , .. ·, . . . · ·.. , - . . c<_: Safr{e. as:s?ur'ces 5la~q 6 "fb(_red::institutjqn. · .. · . 2.· _-,A~r;{,)_~i-strat1v,e. ~ bE\~Vaii;d ~io.n·l;iin ~-a$e. · . of OCT (~.ft -26, Sec .. 3). : · · ' . , ·.-·· ·. : . ' .. of· ~· · ·· · ·· : · ,:.:~~ · .·-. ·. __ );{ ·. ~.·· ;, . ·.: ... • -' . . : ' . .:· . .. .. / ·· 13 ... /,ubsta.ntial los-s or d!:)s(n,iction ofthe original · · -'The· requirements under R.A .. ·No: :.26 for. · · . : . ··, · ·' J9i:,d titles- due· to fire', f109c:J., or other 'torce . . rec
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. -LAN·D .TITLE AND DEEDS · SAN. BEDA LAW CENTRALIZE~ BAR OPERATIONS - MEMORY AID-2019

Philippines, 2017). 3.

Note: The above requirements are mandatory and jurisdictional · (Aif~tropblitan Wc;1te,works af.1d Sewerage System Ii. $ison, -G.R. No. L-40309, August 31, 1983). ., ., . . ,•\_ . . . Non-compliance With the prescribed procedure and' requirements "deprives the trial court 'o.t jurtsdiction over the subjectmatter pr. natureof the case· and, consequently, all .its proceedinqs. are rendered nµII and void. The rationale.underlyinq this rule concerns thenature of the conferment lnthe-trial court of \. . . ' . . -the authority. to undertake. reconstitution prcceedlnqs- In all 'cases where the authority to proceed is· conferred by a statute arid the manner of obtaining jurisdiction. · is. mandatory, · the· sarne.rnust- be ·strictly complied with, orlhe proceedinqs .will-be utterly vojd (R~public ottne Philippines II. Su$i,. G.R. NQ.· 2~ 3109,. January · 16,· 2017). · · ·

GR. No. 195726, Nove_mber 20,

For Liens· and Encumbrances: . a. Annotations .or rnemoranda appearing oh. - the. ow'ner's; co-owner's, mortga'gee's or · 1e_ssee!s duplicate; . b. Registered documents on file in the regrstry · ·of. deeds;- or authenticated· copies th·ereof showing t_hat the .originals thereof had beeri :- registered;-and · c. . Same as source .6 for reconstitution of OCT (R.A 26, S~9. 4)

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"ANY bTHER 'DOCUMENT" _: refers to docuril~nts similar to those previously" enumerated thereln. that . is; those mentioned in .Sectionsta) to (e )· of RA'No.. 26. (Repµblic ~- Intermediate Appellate Court and . Kiram, G.R No: 68303/Ja.nuary 15,. 1998).

. !~-ese_•· are r~li•_bl" dricument~. of the ~d~ed

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lfl _the _pr~ced1~g. _e~Uf!l(?r_9t1~i1s. mustcor::,iefron:_offic1~I sources ~t11<>h r~c9~ze~e ·, . P-ETl'Il 0, -s/TRANSACTJONS , . · ownership of the owner and -, h1". tre~e~essors-in=-" X~ ~ , . : . ·-. .. \ . . . . interest. Only i~ the p~ti~ioner il(fpcoistituJi~_fail.~ W _. ,E9ISTR,AT!9N , . to show t~at_ h_~ hadi_ 1~ fact, soughty~q·secure sudli --~~. ......... . documents 13:nd f_a1led · to /find: them, ,Gan the _..{/,~ (.: (:). : .. ··. · · . . . . presentation ·of "other docum~nt-l' las 'eviteiicein . ·:. Am~nd~~n(~n~~lte_r,rt•?n of Certificateof Title substitution be 'allowed (Regufjll(;;vf_Cata,loja, ...@~'R? ,,--~J~nd~ 0r ~et1i10n~. No. 171774., Februa(Y.12, 2'b1~l . · -[__:~·, .... ::''·~ W~~n- reg1~~~rfilWnJ~:~sts _of ~~y--~e~cnpt1on, -, . . · . . . .~ · .. ~~ _. - whil~".) ~-e~e~7dortingent, · or· inc~_oate_ have Sources" for' Adritinistrati e ~constit · ion 0t, ..: -;:--teV').!!!~Jed .'i~ased;_ · : _ · · ,. · · .. · ·. · Title:. . _ · '· · .. _ .\ .J \. "Q. _ jt{t,}:'.~e,9-l~w!l1-fete~tf~av~ ~nsen or_~~en-cr,~clt~_d_ ·1. · Owner·~ · duplicate · ce'rti~cate. o\·title~n ··~ .. '-':~;l~.sr.·.do.Jot a1w_ u~_on·th~ ~ert1f1cate;. · ·· · 1 .absent · , . \: . , . . · 3 /; ..W.. en !=In¥ er~~r:.i_ 0!111ss1.on·, or._1')11st€_1ke was-made , · ~ 2. "co-.~~~er's,_.mortgag~e·s.: ~ lessee's dup~§te-: . ..- . hi .e_~_nn~ a. j~~ifi'cate -~r .ant ri1_1:i"ri1ora~~u·rn ·- . · · · of. said certificate - (NOBLEJA'S · supr~t ·3'3'7~1nJJ,eQ_U..or _ol}any ~u~lieat~ certificate; . .' . - 33[Jr . :. . r.' .. ·,: . ()~~{\n_f~J:a~~--6.f"any person on th_~· certificate . ~~."}..D,\3/iDt~h;mg~d;· ·. -· .· .,.. . · PuQl_icati9n,:~aifing.and·P.osti~g._in; Petitf:on~r M~~n;'[ffe regist_er~~ ~Wner:h,as-been m_arrled or Reconstitution· ofTitle. . • . ,. .. -. - 1s._reg1i,tered .as. married, anq the marriage has . p\i.rpos_~ . ot pub1icati6n: _ app~aise the w~o,~ · .. · · terr.ntn~~ed'. and- no.-·riti°ht .C?r jnierest· oftfoirs- 9r . . world ::that_.sui;:ri . p~titiqrf has. ~~e_n,Jiled _ and \h.?t · credit?.~~ w1ll_.there_RX b~ -~~ec_te~: ,, . . . whnever-is mi~ded ~o c;:ippose it fbr 9·ood reasons· or 6. W~.!::.n ~ G~rporat1on_. _wli1eh o~ne~- reg!ste_~ed . CaUS\,~.ma¥ do ?O y.,itnin:thirty {30) _days befor.e)he _.. la_nc:J and _ha_s ~~~-~·-d1ssply,ed, hp~ no\sonvey!d, · d~te ..s~t for h_earing. _ Since )he .-_requir~ni_e:nt of .J (~e · ~~!Jle, ·. ~1_th1n· . t_hree . (3) years afte.r. ,its · ''publication.was· not compiled-With, the order is not OIS?Ol~tlO!l; or. : ";. · _- , . ,·. · ·. . . . ·, .. ,.,....~. ~ · ·' yal[d f_or la¢k of·jLJris.dictio(1·(AL~ANO, supra at°7$}~). 7. · yY_~~~~·_t_here. i~. a.·~~-asona?.le.jiround .for. ·the·· :.:, , ,. _ , , ·· ... . arn~0ament or alter~t1_011-of title. 1P.p. 1529', -Sec. . ., Rules: : . · · · · 108) · · -' · · : · ·. · ' .· · · ·· , 1.· Notice .. th~re9f · shall ·_be. pu,blished twice in .,. . . ,, . . . . ... , --:r '."· :·· , . . . -· . /

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.\ su~c'essive-issues of the Official' Gazette- : Must ·b~· po~ted on. _n1e. maih. e6trance'· ~f. the provinci_a!.,buildiog a~d of t_he mw[ijc;ipal building · of::the- municipality·, b[ city where the land is . situated; · .- . _ . .. . 3:· }9 .be~seJ?t by. registere·ci· mai-1.to.,ever:y p~rson . _· ·na_med in s~id--notice. (R.A.. 26,. Sec. -9), . . 2-.

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13~~ OPERATIONS

_N."a1r the title·.· or oth~_r interest-·of:a ·Ruf.chjs~r hqld.ing,.,/i'.:ertific~te . for value ·a:l)d_in ·goo.d faith, or· his neJrs ·and assigns, without his cir ·tneir· written consent: After due hearing, the c9urt ri,iay only: · · · · · · · 1 .. - Order' the': ~ntry or__ c~ncelfatioii. 'a ~ew 'certificate;· ·

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Order . the entry or cancellation of. memorandum upon· a certificate; or _ Grant any other relief. upon such terms and conditions as it may consider proper (P.O. 1529, Secs. 10_7 and· 108): .

Notice to the Solicitor General by petitioner' is not irnposeo by.law but it is the Register of Deeds who should request for representation by the Solicitor General (Republic v. CA,:G.R: No. 128531, October 26, 1999). . ./ . A .proceeding where the certificate' of title was not in fact lost or destroyed. is null antj void for lack of jurisdiction. and the newly issued duplicate is "also null' and void (New Durewood Co., Inc. CA, G.R. No.'.-1117~2, Februety 2Q, 1996). ·

Grounds for .Surrender of Withheld° Dupljcate Certificate of Title: 1: Whel) it lsnecessary to issue a·new certificate of- title .pursuant to any, involuntary' instrument which. divests the title of the reqistered owner against his consent: . 2. Where a voluntary instrument cannot be reqistered by· reason of the refusal or· failure of ··. .. -the holder to surrender the owner's ·duplicate certifieate of title; and 3.. ~here the owner's duplicate certj_fic~te is not presented for amendment or alteration pursuant to a court order (P.O. 1529, Sec. 107).

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Grounds for·Amendment or Correction of Title: . 1. : That ari error or omission was--m~de therein; 2. That a registered interest is terminated; 3:. .That new 'rights have arisen which do not appear on the certificate (P.O. No .. 1529, Sec. 1 ~8).

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Note: A petition to surrender title may be filed as an jncident in an action affectinq-said title. (Ligon ~- CA, G.R. No. 107751, June 1,.1995) · --. ·.. ,

Proceedings under.. Section .-108. of P.D. 1529 Pertalnlnq to Am~ndment and. _Alteration . ;f Certificates is. Not. Applicable- i · Partition Proceedings · ,. · · . .( , · Section 108:..9f-P.D_ 1529 is lim'ite·d;o ly f'o~s-even instances or' situations. -As h.eld · in· tf_nilfppine ·· ·-Veterans Bank v. Valenzuela, tht: prevailing rule- is that proceedings underSection 108~of· P .o. 1-529;are ~um~ary 'in n~ture, c~nt:!11Plalir:ig: ·,.co7recJ.io~s OQ · insertions of mistakes which. ar_e ~,!!!Y. clerical but certainly not-controversial . issues.· Relief unJer sald I .. legal provision can only be gr.anted ~!fiere is · .. · .. ~nanimi~ :amor:ig the parties, or'., tha there is ;i:io adverse claim qr serious objection on _t e part· of any · party _in interest. .Hi;!'re, petitioner cannot avail of the __ sl!mmary -prcceedjnqs under Section'. 108 of__ P·.D: 1"529 because the .present controversy involves riot , the amendment of ihe certificates of -title issued 'In favor of Roqelloand Orlando but ihe partition of the estate of Maximin6 · · and Elig\a vyh9 . are both deceased (Bagayas v. B_agayas, G.R. No. 187308, · September 18, 2013). · "-. Repiacement Cost Du'plicate Certificate of Title . D_ue.~otic~ u_nder oath shall be'~ent by the owner or by someon.e in his behalf to tne Regis fer .of Deeqs of. - the province_ of the city where the larid lies as soon as. the loss _qr theft is discovered (P.'D. _1529, Sec: 109). . ,

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Petition for replacement should be fr.led V:,ith th~ RTC · '·of the prpvinc:;_e or city-wher.e the lan·d·lies. This is.true even if the title was issued pursuant to a public land palent registered in·ae:~ordan9e.with the law. (Office . . of the Court Administrator v. Matas, A.M. ··No.. RTJ-' 92-836, August 2, 1995) · .

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Persons Who Can Sue and be Sued for Tort: 1. Plaintiff .:...natural orartificial persons injured by a. torlio'us act; can sue 'the tortteasor arid are· entitled to damages (AQUINO, Tor(~ and· Damages, supra at 23).

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To'rts i(\n unlawful ~iolation. o.f-a private right, not create9 qy contract, and which gives dse to - ah ~ctioi:i f_or damages (A.OU/NO, To,ts anrJ'Damages (2016), p.1 [herfJinafter AQUINO, Torts andE>a,mag,es])._

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It is a "tortious liability" which arises fromthebreach · of a duty primarily fl.xed bylaws; such duty is toward persons, generally, and its breach is redressible ~.Y an.action.Ior.imlfquidated damages (At;.BANQ, Torts and Damages (2.016), p..1 .·'[hereinattw AL/3ANO, Torts a_nd D~magf!.s])."·. · ' · .· . · . . -. · .. :, .. · ·.- - --· · ,-.. . ~ Note: Tort. law is nol.concerned with ·the separat:: issue of criminal responsibility (DE LEON, Comments . & Case~ on 'rorts;·,and_ Damages ...Jj012}f;y.12 [nereinettet [!E LEON, Tojts.etui Damages]). ~)..._ ·

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Tortious Act i- A wrongful, act. Jr· is 'the commission/omission of an act by one, without right;- · whereby . another ·receives· .sorne direct/indirect ·injurY., in persqr:,,. oroperty, or -. reputation (Id. eit). · · • ·. · · Except in .. cases. where 'an injury to one person operates· as.an injury to 'another, e.q., darnaqes · sustained by a parent arising from· tJ1,e. injury _ suffered by his/her child; an action for.damages can only be maintained -by- the "person directly ·injured, 'and-notbv'one alleging a·cbllat~rali·inju.ry ·(Id. at'16).· · · . .. . · . . · .' -. . ·~-ls ..e,vejal~~rsons are.wronqed by the sa,:ne-a_c_t, -f"Vea..ch·~erson irijl,!red may-sue (ldt_ · · ..

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law into their ,own han~s;{. 2. To deter wron~ff:JI pondu.ft,--:,._ . . . ]:.:! Tprtfeasqr . ,~ . :. ~- . To encour_aoe socially. re~fl~~I~ le Qeh y1or1,i!J'.lck~. !'.,I'. ~j::vgr.y'_p~r:son. !E!._allr·r,s;ponsirle. .. condition. inscifa( a:> Jre:. la\W·:ra~[R.O .. ~Dl~!$f ··an : (ALBANO( Tprt~·an.d Df1~f!.9f , sup~~t'·t:>1-1).~ ·

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. E'xEcuTIVE col\o1M.1rnE ·. ·_ ·sUB)E_cT coMM.ITIEE MARY c:YRIELL,c: suMANQUI MA.'-- crusTINA · o.. ARROYO Over-ail. ·Cbairpers~fl,. 'Ji.RICA ·Subject Chai;, 'MARY CHER.WYN MAE c. VJSTA Chairper~on for . L.i . CASTRO· /\ssista111 . S11~ject 1E. Apadeiiiics;' BEN·. .~I , 'Chair, . JAYSON P. HI QUIANA BARBERO Chairperson for Hote(' St(ojei:'t Elec'iro11i~ Data Prate.sing, 'Operatioi1s; JHELSEA LOUISE ii: . MA1ill\ ANGELICA R. · LOVERIA DIM~NQ Vice Chairperso,; Jcir ; C~nfti.ct ... of.\.Laws, · ·. SOPH~ Sec~etariat, E~ .)USTIN"M .. YJCTO_RIA,E. MlNA_-Person~;and YAMBAO. Vice-Chairperson for Fa11!ily..: Relations, . JOANNA Oper:aiions; MA .. AN'GELii:::A:~, .... ELlZABEjH .. · KAMLA _. c. DE LEQI:-1. Vice Chairperso(I for. . MAI-CONTENTO Pr:dperty' and ,Finan.cc, ARRA. IJLMAYA·'.iJ. - . Land Titles· and Dee'ds, KEVIN BADANGAN .Vice ·Chairpf!rson CHRISTIAN A. P.AS'roN for AudiJ, JORDAN N. CHAVEZ· .. Succession,- JAMIL. P .. DALID1G . · Vice{:h~irp'ersonjorEDP,Hf\NZ · Ob~i;gali~ns . and· .Contracts, · DARRYL 'B. . TIU ·. :Vic~ KEffiVIN ANTIIONY 13., VIAf)O . ' ChairpersonforLogistics, and : Sale~ an'd Lease, KOIUNA.CES M. . DOHN ALFRED E. AQUILI,ZAN CUE\(f\ .Partnersfiip and Agency, , V(ce ChdirpersoriforMembe~hip MARIA ·. ANA . ANGELA . T.. . ' ' SIMPAO .credit Tra,isai:tions, . GiZELLE , KARINA D.C. MQNTERO Torts and Daniages ; . .

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• RO/vlANO, . · . . JANINE: ·CAMELLE T .. GASCON, MA, ' CHERIE ·. JANE. . ~·. G. . Li,\BANGC();:~l,;AM4 13., · ~- )'£~ .z .. .QYALE,S, · "BENISE . . D.

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13 . ., ' . , GS)MEZ, : JA.SON , JEREMIAI;I . RUNES, . GERJ\RD. CE/\SAf,t . . BAGUIO; CAMILLE .. C . CE~zo;·M!)R.RJS $.D~L_·r;.:···. , ·. · SOLANO, 'JOSE. M;A.JJRICE . ·. ,·, · · ROMEO v.: SAL\fACION, LOIS. ip3NEE_. R.."'TUBON, C~KA. JOHANN G. 'c;:p,_ . ,, . . JEANNE. PAULINE · ·F. ... :

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SAN BWA LAW CENTRALIZED BAR OPERATIONS - M~ORY AID 2019

Joint Tortfeasors Two (2) ror more person.s . acting · together in com miffing a wrtjng, or contri~ut_ing t.o its commissiof"),· or assisting· or pa_rticipating· therein actively and yvith _q_om-mon intent, so·that injury results.to a third person ther(:lfrom. (DE LEON, Torts .and Damages, supra at· ·18): . Jest:_ . . ' a . 1. . Whether plaintiff has a ?inglef cause _.of ac_tion , agains.t 'such tortfeasor's; 0( , · 2. -Whether plairiliff has .several causes- of action _ ~gai~st each of tortfe~s·ors (Id.' ~/ {BJ: . .

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A'paym~~l. iri'-full.for the da.mage &ine,; by 9ne o(ihe joi_nUortf(;)asors; ·of'c9urse sati~fie~ any.claim wni.ch · might exist agaihst the ·others .. There· c~n· "oe but . . satisfacfi0n. The release of.onifof the joint 'tortfeasors · '· . b9 agreement. generally. operates: ,lo· discharge_: c:ill (tafaige · Ce.ment Philippli)"es, Inc. -v. · Cp_ntineh(al. Cerrienr Corporatia·n, .G.R ..· No. 155173, November 23, 2004). . ,

·sin.gle injury to a third pers9n, it "is impossi.ble to determine in what proportion"each"contributed to the, injury a·nd either of them·is. responsible for tfie whole injury (People V. Velasco, G.R ...-No. "195668;-June 25, 201,4). . . Join.t tortteasors are j~ln.tly and severally liable for. the v- . ' . . . ..,: . • . ,- fortwbich they commit- The persons injured may sue . all-of them or· !3[1/ number le·s·s ttJan ail._.~~Ch is _llable for. the whole damages caused by all.ano all tggether . are jointly liable for.". the :whole damage: it. is no ··· defense- for· one· sued ·alone, that "the - others who · . participated Tn· the wr9ngful actarenot jqih~p ;,;,;ith fiirn _ as. oefendants; nor is. it any' excuse .for ~irT),_th'al:his . p~r.tJcip.atibn;irfthe·tort was ifl?!gnificarit a? compared. to· that. of the others' (Sing v, Li Seng. Giap &. $qns tnc.. G.R. iva:·}70596; November 28; 2008).· ·. ' . .. . . .. ·; .. . .,, ·' .. 1

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-~.oncurrenf N-egligence . . .. , . If refers to negligence of two or more persons acting independently (AQUINO, Torts and·bamages, supra at116). .' · ,. · ·· ....... · '

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actor's neglig.ence ceases to be . a . pr6~i-rvate WqJ~r~. the. ~1nc\1rr~nt or-successive n_eglig~ni cicis or .. cause · merely because 1t does not exceecJ..- the omissions of ~b 'or more persons, although aetinq ; neglige~ce of . other _·Each; "."/0~dqer-· .. is, .: ind~~e_n9_ently\are; comb!h~tion,. th~-r?ir~d an_d . . . responsible tor. the entire result and ts liaole · a~ · ·proximate.cause -of .asinqle in11,1ry_ to. a third ·person . !hO~Qh._hi.s ~Ct~ V{ere the. spl~}clt1~e Of'\!J.e1(nju/Y, (~pr. _: ~: and i_t is in:ilo}'siqfe !O' _d~term_i~e ln wha(, p"ro.~·o.~tiOh . Eastern. Sh1ppmg .v. (/,I. G. f?. . No.: .t·7.94jrJ,,t_·J,:m!~Ary· '" . ~;:ir.h·,r.ontq.~u_te..d)o the .1n1urv,..~1(hef is responsible for ., -. t:o; 201)): ·,. ._ _ :.- '~- :· ~ ·. · :_···:::_the wh-¢11in1uf'. e\e~ th?~gh.hjs ac~.cllone.iJ)igbt n_ot , .· ·· ·· ·. .... . -- • ·. · h~ve.cau?ed·th~. e tire inJuryr or th~ same;darnc1g~ · · ' ·· Alth~ugh the e'.'1ployer is ~ot.the(9b'fual t.9Jl.f~~s~r·, _might~sCiltea7frprn the acts o( th.e: q_the_r '. la~ makes him1 vicario1,1~ly liabl~~". tpe:11?asis- of.-the ·tc;,rtf.easor: (fl.NCG).1.1:"CA,G.R. No. .1'5.fJ270, August 22; . c,;ivil _l_aw. prinfiP.l_e-_._of -~~/er. far,:11/ja; faih.lr~ Jl_o. 2005). ~: .. · _:, .. exerc1se:due care and v1g1lance.over. the. acts of one's . · . ·_ · .. ~ubpr~jnate.s lo 1/e.ve~t,"damag~. tp :anoi,ti~r: \~).~.e : . In .. _10:20.11)". ··.:- .·.·,--:: .. • .·· .. ,: \ . - ·· .. ,.. · -:.• · · _Solidary Liabi'lity;of Jbint Tortfeasor.s . _ . _ . ·,. · : · · ·. ·, ·.1.... The· r~s·parisibility' of two. o(-more perso"i1s. who ··are ·; - _· In~ ·.case .of .i~ju"ry t~ ·a .. passe~~ier d_u·e to- the .·-. "ljaJ:51eUor a:_quasi-delict is' s,61idary,(C/VIL,.: GODE, (lit. ·negligeF1Ce· of th_e.· driyer oJ tt(e(bus' on: wHicti he: vJas . , :· ~~94).' . "-rid!rig.~._an·d .th:i" drlver:of th~_other vehicle, .the °d_rivers ' ' . _ . , . ~ ' , . · '.' . anq . 6'!,'ners~ of ' the f~o vel)i,cles' ar_e. joi_ntly a·nd Und.e.r Article_ 219,4.of t~~- _c;:ivil Cc;,ae,.joint tortfeas,ors ·.: ·.. ~~verr,1Hy lipble· for·damages (Constr;ucfion-Dev.-·Corp. · ·. we solidarily l_iable'fo"r th~ resuJtilig ·.damage. In other . ·. of .the. Phils:·.iv. 'Estr.e~la;- et .. · al.,_ G.:R. No, ;147791; W.Qfds·! joint ttirtfeas9.rs: are _ea:ch.liable-as principals,· ··i ·$eptember·B, 2006). · · ··· _. '-..: . · ' to tre .same ·extent and_ ih the" sarn!';) ma oner .as, if th.ey .. · '' . . h_ad'.p.er:formed" the;-wrongful ad. them'selves (Pe<;J°j:Jle · · 0here. tne "o.bl_igatiol) .of p~tti"~~·i~ $Olid°ary, ei~he·~ · Velasco, GR No. 19566.8, June "2.5; 20.14). · . · . . of the .parties is indispe.nsaq!e\. anq tlie o_t~er is_ nor • ·. · '· · :< ·_ .'"° · • ·· ·• . . . ·everi:.~·. necessary part/because, compl~te_..relief is .T_here ·is._. .. no-_con~ributio11. between.-joint tprtfeason:? . ayaila~le from _either .(Cer~io \/.".Tuazon, .G.R/ Na:· \:".'.hose li~biljty is solidary sin.ce· ,both Of tliem-:afe Ii.able·. · ·141538, M?_rc~. 43, 2004).. . '._. . •. . . · r. · 'fo(-.tl:ie,_ t~:tal· d~_mage: Wh~.re. <_!~~--- cor,ic~·r.i:.e.?t o\ . succ~ss1v~. negligent acts or. om1ss1ons of .two or · ..-:·. ·more persons, ~aHho~gh_attin!;J independ_ently; iire in. '·'· ·, .. 1• . · '". combination the direct and proximate cciu_se of. a ..

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Materiality of Motive Where motive is material under the circumstances of the particular case, a.bad motive, in connection with conduct which violates plaintiff's rights, has beerrheld to' render the' conduct tortuous (D_E LEON, Torts an.cf Damages, supra-at 39).' ,

Remedies for Torts: 1. Compensatory - actions for sum· of- money for damaqes suffered (AQUiNO, · Torts and Damages, supra at 26). 2. Preventive - prayer for injunction, and awrit of preliminary .· injunction· 'and a . temporary . restraining order,' to enjoin the -defendant from . continuing. the doing of the tortious conduct (Id.).--: 3. · Rastitutlon - · to ~ disgorge gairis that 'the defendant wrongfuily obfained_by't'art (DE LEON, Torts· and Damages, supra at 14). ·

. A bad motive is occasionally important in cases .lnvolvinq certa in. economic torts, e.g., interf~rence·. with business opportunity without physical threat cir' harm and claims for punitive damages °(Id: at 39). ·

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Cause of Action in Tort -. Materiality of Intent . Test: Wbeiher the ·deferidant'ow~d plafntiff. any legal Liability in tort for an injury is determined by conduct, duty to do sornethinq which detendant' wro'ngfuily did· and.can 'ari~e}egardless of the mental stateor intent . not do, or-not to do something· which.·h~ wronqfully tocornrnit an unlawful act (Id. at 41), . . did; in violation of plaintiff's legal· right or rights _(o'E · . . . . . LEON; Toris and Damages, supra .c!t 28-29). . . . Proscription ·on Double Recovery . . . . · . ., · · . · :·~4ftno'ugh single act .°: omission !11ay give rise to two Elernents ; (ROW) · · · ... '. . .trfefe~t-c~uses·_ofactibn,-the- plaintiff caqnot recover 1, A legal .!3.ig_ht in favor of~ pe~son,(p~fntfJ;~ages.,tw]..G.~for the same ~ct oromission of the 2. A, correlative legal. Qt;>l1Qalton~i:i . t_µ.~par_t . of . . deferidant-(C~\ Q;OOE, ~_rt. 21.77t . : . . . . . defer:,dant,to.respect ornot ilv-iot~te srch-_.ght~~--.............~'\.; ~. .. . . . . · and. · :. ' ~~~~.. . · ID) \Rv9s_mu~~ · !3S, fi~ hapility co-exists with_ crimi~al · · . ·. '.'""'I . · Jr ~ ·~e~ponsi5llity'i'r:i.~egligt.i,ce·cases, the offended party

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Note: .Moral rights and du tie~ - ~ lh9~se dµties ~\ has:the -~~-ti_~inB~t::;,~n\an. ·ac.ti~n for enforce~~nt of which. are dic~ated _m_er_ ~g0~d. m9ral_s ~~ f:~-' --·~v1l l_ili51li~- ~a-~eo ~lf?a ·cnm!nal under Arli~le 1 ~O hum?rie'coris1~erat1o~s·ra~e~n0tw1thin t~,_dn: .. . . . 1.' 'Nigli_gent. : T9rt : (NeiJligence) .. --~- ·.l_nvolve·s ... . 1.·_' A:singl~ act 'or 9mis:s!011.~ay give_ risf3·. t9 two __ or. ·v619:Qt_~_ry_ ~~;ts ~£ orni~?&ns tha\{e_S\JI{ in J~jury \o. _·· more ·_causE;Js of. actJCin,: ,.e., bas.ed · on, dehct, ..... Qthers·-,. W1thqut._int~n~ing .t~ caus~ the sam~:T_h~ ., .. ··quasi0d~lictal'}d cqnfr?c~;. -- .... : :· : ·.-' _a-ct.or faiJs.· to: ~.xerd~e. du_e .,care: ir.i pefforin_in~f .. 2, ·. T'#_o persons· µ,ay·~be liable for· ori·e act c:i.r: : .. sucti, c!Gts ~-or·,,otnissions '(AQUINO;· Toits and ·. omis_sio~;thal caus-es the in}ury; ·. . · Damages: ·sup.ra..at-2).-:; ~- . . ' . : .. 3. There may" be._a·c'o.ncurrer.ice ot-cfdiqns ·even\.if . . . . . . . . .. · · .. · . only Ofle_ per~on _is sougbt·to,oe held li~ble:·(id. qt. 2: lnJe-~t_ional· tort -:Tort. is intentjdna(if' ~Hi actor ·. · 42-43). · · · · · ·' · · . · d,esires to·'bause,the·consequences0of.liis ·act or . he believes .that the conseql!erices of his.acts ·are ce-rtaiii'.to .'cause ·-d~ri'lage tb~ari'oih~r (ALBANO'. Cht>lce of'rei:nedy io coritl!rrernce.of-ca°uses·ofatti~n . :1orfs. an~ Damages 2): . . . .. pertain's ·to p/o"cedLrar'~nd ··jurisdicti~ria'I rs~u~s o'i .. . . . ·,.... •.. ... action. T[ie rem~dy_ .may' be based _on a delict: or,. ... It_ i'ncludes assa·uh, battery:- faise irnprisonrhent, qt,iasi~delict._ A quasi~delict :.action· niay-_ 1:>roceed :C:fefamcition,'in~·asi'on·ofpriv.acy, and ir.iterff3rehce in!'.feP,.ender:itty from th_e criminal a~tion (Bciir(!do_.·v. ·of property (AQU7NO,.'Tofts ·iftJrJ.bamages supra Garcia, GR. No: L~48.0Qf5,, July B; 19.42); bu_t- it. ls.· at 2)_. · _· __ • · · .... _ : · '.' · · .· ·. . . · • · subject to th~ pros.cdption ag.a1nsf double recovery (CIVIL COD!j=; Art. 2177). ., . . .

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N.egl_igence_ · ~ . . . '·The faultor negligence of the obiigor consists.in the . omission 'o.f· that" diligence whicb is" r~,qu\red by.thenature. of- the'. obligation. and. corresponds with . the . . circumstances "of. pe_rsons, place arid time (CIVIL . CODE, Aft. 1173) -. ltis the failure to observe for- the · c- · · · protection ·of the . interests of another 'person the i:l~g~e 'of care,_pre~autio_o. __ and vigilance, 'whic~, flie _circurnstarie~s Justly demand,. whereby such .. other," person 'suffers injury ·(fNR v:-cA,: G.R -. No.15w_5p, , October 15; 2007, No~ 129792,- b~cemb~r 21, 1999) ..

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Guipa criminal v. Culpa aq'ujliaria · ... ,.;_ ci:i_lpa--c~n'tra~'t°u_a! · ·. _ ..

~-· Strict Uability in-Tort·.:.. Th~-person is. made . _ liable ~indepenaent :O( fault or negligence upon submission :of proof of certain facts: The co_i:1cluct ... is generally nol wrongful jn _itself but \he wrong . consists in causing harm: by engaging in certain 'types "of risky activitie's' (la.). .

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Negligence i's · rnerelyincident to·tlie' ·: . pefformari'ce of an obligation already exisJjng . b:ecau·se of. 'contra¢t .(Huang.· v. -Philippine Hoteliers, Inc., G.R.No: .. 1.so,ijo; · Detembef."5 . . . 2012). :· .. ! .

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.· ~~-~re .i~ ~~- ~'ard ·:a0d--f~st: r~le. wh.~rJ~y ·S\J<>h -d~~fetr~ ?,_f·care vigi!an"c.~. is: c~l.ibr_at_<=:d;: it is' dew~-~nt upon=the .circumstances :111 i wh1c~a. p_erson finds . ~irn~elC. All. itu~t.. the _lpw. {~res.4 _.that. i~_ , is,.·.. perpetually compellinq upon a pws_o.n..fo~e t~~t ct~ and ?iligence expected of _.s~n,sible'_men u~~r , _cq_mparable .: circumstances, (~NR~-C , _Gf.: No. 157658, Octoper _15, 2007). . . .

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. ~he. ~~;:ste~~~ of; ~_eglig·en~e i.~ ·a_.ciiv,e,.-~as~ ,i~t~ot,;..·.,.;.._....,_..;....-..::~ :det~rmined by reference to-the persona judgfo.~nt of · the actor in · the situation before hiQl. rffe · law · considers· what would be reckless, blameworthy, ·'or - ~egi'igent jn the_. man of ordinary intelliqence -and .pn.id.ence-_and determines· liab[lity. by that "(Picart v.. -S.mith, ·J_r-:; G.R. No. L-,12219) March 15; .1918/ · · -· :: . ' } . . ·: . ' . ·. - " . ..···· ,• . _.· Pi-qof. bey~~d reasonable · .. ·· M'otive NOT'tnaterial· . · .. . · _doubt_· · : .. ': · : tiAoiiver ·is nrit material· in;._.iiegil"g~nce cas· ~ ~;:-° The . • • , • I. . (Barredo v."· . : d_ef~ndant m~y still be held li?bLe even if the act.was Gar,<;:ia, · G.R. meant" to be .a pr:a,ctical j9~e (AQUINO, To,ts and No. F48006; .· . Damages; ~upra .at 53): ;~ .. ~:. .· . . .. . July 8, 1942). . , . · · ;. .;.:i<:ihds:. · . · -'..

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Civil liability arising from. a quasi-delict.v.' ,Civil liability·arising from delict· ' . . . . . .· .Articles._ 1172~ 117 4 are applici:Jb_le: to 1~~"~1 quasi-delict. · · · ·

Head of the. family's._ liability 9bjects. .. .

Solidary __ liqbility, when there are two or more persons who are joint tortfeas9rs antj they are guilty of only one 'qua?id~lict.. ·

Effect of plaintiff's own negligence as the· and proximate cause of tlje inj!.Jry. · ·

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·Defines, 'the re.sponsibility .of !:_alher . or' mother; Guardians; Owr:iers/Managers ·of ·· establishments; ·. gmployer; · '. · ~late; Teachers/Heads. of Establishments· of. 'Arts ·and _Trades (FGO~EST).·.

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States iii_e re~uirements< in order that minor or insane ,person's 'pr_op~rties m1iy ' be held.an'swerable. , :, , . ·.· ,

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The possessor. user _of animal is li°a.9le for the damages it.may c;rnse. · · /

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T:he c·oncept of quasi~delict Art.· 21'16 is) broad; it includes n_Qt only injuries to persons butalso damage to pro'periy (Cinco ·v. ·.can,
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Culpa Aqui/iana or Quasi-Delict lt,is _an act or omission· which ·causes damage to anothe'r, th_ere, 'being fat,1lt or negligence ~nd there being .. no · pre-~xisting · contractual.· _relationship between the p,arties'(CJV/1::-CODE, Art._.2176).

1~~:i:.~.,,.1· FGO-EST's· reimbursement. for wha{ "tttey paid ,' for damages cause'd ', _tiy their dependents'or em'ployee~·. . ' . .

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· · · · Two.Views:· ~. _ ~jority view :_ Article 2176 '_inclu_des intentional Imposes. Jiability to tnanufactu(ets ·and .. · ·· • · . · · possessors offoodstuffs.dri ifs:'etc;:.~iftne : 2 .. ~:s~rity. view ~ Article 2176 is -1imit~a'. to dealb bi: injury. is' caused. by th~ noxi<5us . ·. negli~enc_e: "1ntenti1:mal and nialici~us acts are substances \lsea by them. ., , ·- ·;,:governed. qy. ·u;e . ._l~evised· Penal -Code, while , Primp fade pre·surripticin. of;defen·dan't's .. · .·: .. - :,n·egligerit +acts ··a·r ornisslons are" covered -, · by .j · _neg)ig~n~e if.~e~tti· inju'ry···resuits' from. · . Article 2176. of. the~Ciyil Code: (AQ'UINO, Toits', 'his. possession of dangerous· weapons or . •' . a_nd parn'a_<jes,-_'supr~ a/8~1.0). ; ·.. ··; . . . siibstarices.. except when possession or . . ' . , '; -; use of the .sarne LS intfispensab]e in: his · ··: . Note: Even.prior-to "the .enaclment of-the New Civil oce:upat)on or' bus)n~s·s. . ~--- , ' . -·. . .. , Code.j the Supreme Court _had already ~~opted,, in Provinces, .cities, and ··rri'unicipalities ·are '. _so~e of itsdecisions, a: ~road con~ept·_of'torts using . liable for· damages .for. deathor injuries _A_rticJe:1902 of the ?)d C1v!I C?de. It 1~ no1~w<:?.~hy that .. caused .: to .: .. any . person .: because . _of , . .: . tti~ 's,ar:ne. broad · .1nterpr_etat1on of q?~s1~~ehct ba? defective public works, under their controt . be~n g1ve_n to Art1_c~e th~ prov1s1?n 9.R quasj-and supervision." . · .. · deh9,l· uod~r the_ Nevy C1v1I- C.ode. The Swpre,n:ie Court .· . · _ · .· · _ ,. . --· · . observed 1n .a numb~r. of cases· that .Article 2176 · . ~·ue.-. to.' lack,' of .'nec;:tss_ary' rep_ai~s •.. th_e iriell.lqes ihtenticfrial, acis-(ld: at'B~!)j'. : , ·. ·_. ' ·•,; , owner of_ th~ · building/structure .. 1s . · · · ... , · · 1 - : resp,onsible _for t_he ··damages~ caU$e.d -by· ··. · · An, action for qua"si-delicr can be~ ma1ntained even if 'c!I,,: its collapse.' , , ·. , . , , , .r:- , . , there 'is' an e~isting contractual relatio"n bei0eeri :th~

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P.r6prietbr's . other . re$p'onsibilities Ori 'explosion ' 'of- m~chinery; , . excessive . 'smoke, "f~lling trees,-and emanation from tubes', etc. .

.parties, pr_o:yidecl thafffl _all s-0ch ca.ses)h~ elements .:, of quasi-dE!lict are present and, the-, existence-'of , . ·.C<;i°~tracl is· merely in_cideiltal (Id. 31). .

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-Cases'where Article 2176 is NOT applicable: a. Wher.e ~here was a pre-exisflnqcontractual relationship of employer .and employee Includes negligent and· It ·is whhin the concept between the parties . and there . is: merely intentional . . criminal breach. of contract, except when the 'act -ot" ·· of Art 217.6 of'thercfvil. acts . ancf assault and Code arid is· limited ·to breaching the contract-is also tortio_us; . . battery,· . false negiigent acts b. When the 'fault or· neqliqence is punished by fmprisonment or deceit (ALBANO; Torts ·and law as a crime where Art. 100 'of the Revised ·(ALBANO, "Torts:- and Damages, .:supra- at . Penal Code will be applicable; . · • . c. · When · the action . is .. already. )>arred< by Damages, :supra · ai 13). 1~. . prescription i.e. the action for quasl-delict is instituted after four (4) years.fromthe accrual Burden ofProof . . . of the cause· of action; · General RuletNeqtiqence is defined as the failure to . d. .The injury suffered by a person. is the .result observe for the protection· of the· f~terests .of another of -a · fortuitous. event··. without human peFs~i:1,Jtiat degree of care, precaution and vigilance / intervention; . . . . - ·~ · which t_h_e circumstances ·justly demand, whereby e. If there is-no darnaqe or ·i_njury, caused .fo 'such .. other: person· suffers injury. The negljgence or . anotherparty; and · fault should be clearly established as it is the basis-of.... . f. Where there is .. no breach of contract; nor t_~~ action· .. J.he burden ot proof is upo11JJae~\ntiffT T :+."-P.roof that · a.n airline acted in wa~t?n, (St. Martin Polyclinic, ·Inc. v, -LWJ15.ConsfrucJJ.on ..._) J.·V/fr'}l;l_~ulent or malevolent m,anner,-t~er.e·1s no Corporation, G.R. No. 217 426, Decemb~r 04)-2017-):_....,..~ ~~s):S'fe~h_e a'.:"a~ of any form of d_a.1:1_a~es. --····lPlt_VED1,'{o.rtsa{ld Damages (200~);~P,-. -16~ Ex~eptions: When th_e rules .. ~ thE) 19-$Jjpr9_vide"1~~f~"1_heref:after . PINEDA,. Torts· and cases-when.neqliqenceis presu~AQU/NO,. D\a ~fs)L:~ .· ._ ,.. · and Damages, supra at 135~/36) ... ~/ · }~ : ~ ( ·."!"'. .. . . . / ~ /. . · f'r~ 2. Lp~ttJr . ..,. , ... .: · 1. ·Qi:5put~bl_e_-Px~sumpti~~! t)Jegligetice,.'r)·:/U · ,,......-r.;:, ~lie lthmg o'\t~s~c,t1or:1speaks for itself. ~ a. -.Mot~r.yeh!.cle.Mishaps-.a driver is P.r.~sum~t::' JV . :· 1 . :.. . . . : . . . . ~~ghgent _If ~e~: ... \.'§:ill7.Jg' ~ The i hm~ ~11.ch•~_f.lJ~ed ,the mJ_~IJ, :v:'1t_ho~.t :t!'le . !· _ ~as ,found. gU1~y·,of'."'t\ckl~d'r,(_v.ing-'?fr : fa_0!~~ tnJ~red'.:i1j uncjer:._t~~ ex_clus!~E: contr~I ·. ·.. v1?l~t1ng traff~c ·re9-t(a!!ons atr_J.~t twic~ · oy91;Jefetlan:t.a~d ·the l~Jury 1s_ su_~h ·th~_t .1~_ : .. · w1th1n the pre9;mg two (2)~~nth~ c~wgQ,1#7n<;:>t_;.:ave iscurred if.· he,· hav_mg .such . · (CIVJ.L COQE; A . 2184;.Flar. fJ;(fir _ ~ 7~tfol,.us~d- P~.ojer.care (ALBANO;. Giv_il Law_:· · ii, "!'as vi9la'ti_hg ~r)Y·. a.ffiq r~g!:latfp~ e~f;!fiewy.(2pf8)_[p._._934) [her~inafter ALBANQ, . time of the m1.~~.aP. .l<:;IVIL t§)~~1..;,fif.flEt:kNTT...,.-\\rf>-.~C/Vtl Law Rey1':f.'er]. , .. , . ·. ·.:~·· · 2185)' · --· ~·'1· ~~" ~/·: · · · ·: -.. T.hl.~~~e .o(ref -ipsa., l;quitur is· ,.sirf!ply_- a . . Note:· =R:~. 4136. ~~~~d Tran~6tion MA)e\o~t1on.of the pos~l!late.,t,h?t: ~s a matter- of _ · ~ ai:,d .Tr.a.ff1c_ Code) ,provides_ for ms.t~nGes,. ,,...£9f!lm,~:in ~r:io"'.'le~g~·- _and· e_xP.ene~ce, . .th~ v.ery . : 9f_ !raffic r~les·· ~ommo~ly vioJated. by: .. ryaw~e of c.e_r:ta1n.;typ~~ o.Jo.,cc,urr~.nces ~a~.il!?.ttf.Y. . . · dnyers,. such · ~-s e)!:ceeding r:.egisterea an ·_mfer~nce . ot Qegl.19ence· on. th~ part 9f .the · .. . ~capaci(y,' arid obstn..iction of traffic ... ·-person: i,yho conrrols' the 'instrtl'm~ntal,ijy' c_ausfr:i:g ' .. · b, . Po:ss_e~~ic;m · of..... daogerous .. ·_w_eappns-·,Q·r· _the i~jury i~ the absenc~ of ~omee><"pl~n~tioh:by · · . su_bstanc~s. su.cti as fkearms aijd poiso'n that · ·~he_· ~ccu?ed-appellant · :Who ·is·· charged:· with . · : ses41ts.-·i~ de~t.h·:or)njury, except' .whe~ the' .. ne~l.igen~e·. It i~ grou'ri.de.d:in-the'SUReri"O('.log,ic{of ·: .. P?sse~sion or use there.of. is. indispen.sft~Je in. · . ·. -ordinary. hu.m_an ~x~erierice ·and, on _the .b·as'i's ..of ·. ·: his __ oce:u.pation or business (CIVI~ CODE; . · · su:c~ .. e~~en~r:ice ·_ or : ·c~mmoq · knbw!e9ge, . ·. Art. 2188):'.. . · , ·. . . . , . .neghgenc·e. may b,e, deduced from 'the' me·re c .. . Comm'on ~arriers are ·. preiu~ed 'to have . . . . occufr~n-ce of ttie. acci.d~nt.if~elf. Heri't~; . I: . been ..at faul\ or acted .negligently in.case of . Joquituci,s appli,ed in. conjtinctibn' with:the dbctritie . ;death 'or 'inJur.i~s t? 'pa$sergers, ~nless 'th~y . ?.f Kriowfed.ge,. . .·. - _.:_ ' . .·· · . ·' ·., :_:· ' .. : ~-'. P~9ve that · they obs~Ned extraordinary . · ··.. · ·· ·· · >· dtllgence ... prescribed in. .Ai:ticles -1733 ..ar:id The do.ctrine .. is no.t. meant. to .·~nd doi~;-~ot 1,75q. (Cl'(IL . (;_ODE=, . Art. 1756 SANG CO · d_ispense with. tKe ·.,requirement .of. prqbf bf_ To~s. and .· Dam~ges (1984); p.· 10.?j. culpqble negligenc~ ·~gainst-th~ P?r.ty cfi9'rge:d°, [heretnaft.er SANGCO, Torts.and Damages]. '" . rattier, it mere_ly determir)es a_ntj_.regi.Jla'tes. what · · To~

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. . Tests of Foreseeability: ·1. Unre_asonaole or.Undue Risks , .. This risk is. dariqer which is apparent; or. should be apparent, to.one in theposltion of the actor. It 'is a risk that is reasonably toreseeebte (AQUINO, {.arts.and Damages, supra at 50) -,

(Solidum v. People, G.R. No. 192123, March 10, 2014).'

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Th~ .doctrine is an exception to the 'rule that in quasi-delict cases, the burden.of proof lies in the plaintiff to show neqliqence of the defendant. It has been resorted towhere no.direct evidence " can be presented .as to prove Ihe. liability person (ALBANO, Torts and Damages, supre at . 57).·

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Probability ...., " There is neqliqence if a prudent· man in the positlon of the tortfeasor would :have foreseen . th!;tl the harmful effect was .sufficiently probable' to warrant his conduct- or. guarding against its consequence ·(Picart v. Smith; Jr., G.R. f;lp. L. 12219;· Man;h · 15,:··_1918).__ If there. is a great : · 'pr,ob~l?,ility and risk that - damaqe: will result, .a · · 'person is neglig'ent if he did not 'exercise due . diliqence in the face ·of such great probabillty .(AQUINO, Torts and'Da_mages, supra a/50).

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it a 1esser..i:leg~ee of.probability that darnaqe _'(Jill result, ttie darnaqe may still be .. · considered foreseeable (ld.-:?t 50).· .

'Calculation .of Risk: . · ·.,... Rlsk-Bendfit -Analysts - Balancing the risk, in . .-·_ .: l_ightof.th~s'oci~_I valueof the interest''t_hre_ate~ed. ·. · andthe P,r~ab1hty and extent of the harm ,:rgainst . · . · the va1ut8f.the interest which. theactor is seeking · 't
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TJollowifigcircum'?tances should therefore be · · .. considia~~ . -: - ·. : : ". . . . _ · : a. ··Gravity. of the. harm tobe.avcided; · . ·. . !:?,;" _.Util.ity·of_.cori;:h..1dorthe·=social' value it seeks 1, ' ~varice;' .~nd . ~ . : . · _, .........._ __&.--Alt~rnative· course of action, .danqers, and . advantages: to the person or propertyof .the actor-hi~elf alld· to ·ot_hers. (AQUINO;. To[fs · an_d Dainag~s,.supta at,57).· ._, ·

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.• .. Test of Negligence Foreseeability · .. . . . Tl1i.s. is. the. fundamental - -test or - neg.ligence. · 1n deteirn'.linirig whether the· a.clor was .n~gligent,· th·e · court Will place· itself in the aGtor.'s ·position to:se¢' if a prudent .m<:1n could Nive f0re$~en ·the.'resulting harm · .if-· the. conduct "is· pursued (AQl:J/NO, :Torts and -· -Damages, 'supra ·af48).. . ·: .. · . ·.: . . .. . _. .

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neglige·nce form\Jl~1: If the ·pro_b.abffity·be. call~d ..P? lhe injury· L;· and the b'urden. B~ 1.iabi,lity depends : upon whether B is less tha·ri l ·multiplied,.by. P · (AQUINO, 'forts· ahd Damage_s/.sUpia at. 59). · -

Risk· . .·:_ -.. Da,!1:ger-.whfch i$ ~pparent or sh~u-l_d be ·appafent .to· . ·. Even if injury- was not ·foreseeable,. risk is still . . the- actor;· it··· 'is ·. unreasonable risk :'(Phoenix fore~eeably if p()$'Sibility 9f1njury is .fore?~eable_.-(/d.:'Construction. V•. /AG, G.R. No .. L-652,99;' 'Marc/, 10, .. . at ~8). To:be_negligent;a:defenclant inust. have acted 'J.987). . .. _ ... : · · - . . · . · : . _: . or .failed · t9 ad in such .a.· vy_ay ·:that - an ordinary ·· · · reasonable .man·would.-have· -realized ·that certain _'. Circum~tances Tha_t · Affect the ·. interests: of . ·certain·:- person; :were . tH'lieasonabfy Determination of Negligence: (PEST-GAP) · sut;,jected to·a general but definite·c1ass of-risks.(R 1. · .Eerso.n exposed to'ifie:ri~~ · .. · .. · . ."F.ransport G_orp. v: Yu, G.R. No. 1.74161;,February 18, · Higher _degree of diligenc·e required if ·a cl')ild is ' 2015)., . . . ·.in_volved; even if a tre.s'passer, because entry of children_ in vacant lot may be foreseeable . . (AQUINO, .Torts and [?amages, supra at 68). .

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. Emergency -Rule or Sudden Peril Doctrine . General" Rule: An individual Who s·udden'1y" finds _himself in a.situationof danger andis required-to · _- act without much time to.consider Ihle-best means . that -f0ay be adopted to avoid' the impending - danqer is no.t,guilty 'of neqliqence if. tie· fails .to undertake what subsequently and uponreflectlon .rnay appear to be .a 'b·etter solution (Id. at 63, /' _ Maka ti Auto Line Transport· Corp_qration · v. . People; G.R: No. 152040, March 31, 2006). .

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It is he· who, in the performance ·of an act should· foresee.the ·consequences .of the same. if he does, he, is· not ne!:)ligent. (ALBANO, Torts an_d Damages, · supra at · 34). What should· be · determined in negligence .cases is what is foreseeable to a good fattier of a family- (AQUINO,. Torts and D$mages, suore at 70). · · ·

Reason: A person who is confronted- with a sudden emerqencymay be left with no tinie for · · A gooa father of,·a family_ is also referred to. as the · thought and mustmake a speedy declsionlarpely reasonable man, l man of ordinary intelligence- and upon impulse or instinct '(AQ.U!NO, · Torts and prudence; orordinaryreascnableprudent man (Id.). · Damages, supra at 6.3).·· .. /. ·. ·.. · · ... 1. '. . . . : • •• -: . · · . , · . . . . . . .. ·' ·. .: . .. . Th~ law requires a man to possess ordinary capacity · Exception: 'The ernerqertcy rule . cannot tie· · • ·10· avoid harminq his neiqhbors unless a clear· and . .. invoked if the person invokinq it _fo.und).itn_~lf mu· . ~fe~t inc~pacity is sliov:'n; bu_t it d0~~.-~o't generally danger whichhe.himself _creat~d thr0ugh_ ~qwn · .~1':1~ !table,< f~r u_ri1ntent1on_al .rnjury- unless, negligence,. (Dolsen. Tra(lspory(.,(c: 9n~__.....~e!st~g/s. uch eapacity.. _h~ might· and ou~ht to gg;;tuction,.

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Any act . s.ubje_c_ting ,. innocent m=irson to ,,.():-,',. by tne ria ure on !~ligation ano .corresponds with . unnec,es·sary risk is· a {iJ°gli~e/t :act 1r:ttfo .2.~~lli_~_-cir~tl~stanc1s~h\e., person~~ time,' ·and place outweighs t_t1e advanta9e~c~ruing· to~he~a%tor.:Jl.5(C~IC_ ,11_71'\ · . . _ . .. ·and even- to . the_ inr~n:tlp~rs0n ·. 'hims.eJtr1 (AQUlf1!0, '..orts -a_nd bam_a~.e~1 67). ~-:i~Uribute~!}a G}ood F_athe_~·c5f a Fam,il_y .. · , · · - · · . ,__ (T'i · . \~ ffi'i: MG0.~_~:Fa1tby. '. 4. The _Iime .. of t~e day m'ay?"affect.. tnej1~enct~~ ?t~~n;is: , i.nj.e.Qtio(iflr,. hone~t _. la~~,- infent. .It required·. ot · the ·.'?ct9.r (Cl\{/L'CC:;JQE,),.ttt5N{~:Jt}-~1. . ·co~o ~ .. _. ~eedom I _-from . .. knoy.ileqge al)d' niqre ~ruc,lence is _re~ired (w~en:-~i~~-'- · an~~.w~ic_h ~u~ht_'to·pu_t a pe~s_o_n:.i~ _i~qu,iry. · night _(AQU/NO:>Torts and, Dama[!e.E})~su12.r~TEN,\t§,0q_d',fa1t~. ttle~e~'e_x1s!s:·_an -hone~t. mt~nt1on· to .. 61) .. '. · .... · .. · .... ' ~'.,.··-'J .·-~ao~efr9_rr..s-a~gyri~~ris~ie~tio~s. adv~~tag~·-of . '.,;mE_th~i:'~~AJ.'i\R,; ·rorts_and.O.f!mages s1mpl1fie.d. .· 5. Qravity q.f the ~~~m to,b(;l_a~oide~.. . ~'.{_0) \pJ37 (hereinafter_ ARALAR, Torts· . and · . f=_ver .If the odds t~at an-.tnJ~ry Wiii r.e?ult a.r~.t..::.!:!?t!A?.ge's]).. . :_ ·.. _:, ·, ' ' . . .. . , high·, h§lrm·may still be considered foreseeable 1f. . . ··... ~- . - _ · · · ·, · ·,_ .. :~ · ·. . . · .·· ,!be. grayity" Q/; o.arm::J6-. bei _9vciided-- is great... . Te?_ts tq D,Eltermi°j,e.tn.e ~xis:tence qf Negligeri._ce:~. (fi.!QUINO/Tort~ and Banfages,·.supr9: at-64). '\ ·. · ~. ·· Did -tl:,Er defeqda(lt-in 9oin'g · the· all_eged-r1egligent-' ':--'.· .... ,· . . . . ' . :. ~. . . ,.,._~. . .. ·act._._y_s~·/easbna_b_l~ ·c.~i:e a·nd ·cci~ti_o?-~til~h :an . . . 6. Alternatl'.ie'·coLifS~S of. action:.· · ·... _ · .. ·,-- · . ~. · ordinarily, p·rudent persoo. WOUld·have.used•tn ·the . ·:···. ·"jf'tfi'e" ·ait~rr.iJ1tive:, pr~s-~rile'd · to_...tn!3 ·'.actor is .same sit'uatiori? 'if-oot, -there is neglige·nce- (Picart ·. -~. · co.stli .the·. har.in,1tl:,.a(malresult may"·s.tiii. b~.. . . x.'SmJth;.~G'.R: No:t:_1g219,,March.1~._.·1978f •· .. · c_6nsi?ered (mfor~_seeable to.a re·~~on~~le· nian. 2. Could a p·ruderit ·.man,·· il'l . the case under · .. ·More .s.o-,if:there-is ,no. a1ter11~tive ther~to. f/,q;· at ·co'nsiqeratiorj; foresee haon·\is. a result'.o(the . .· · 6q-6_6Y: .. : , ·- ·. '. ·. ·: .•. ··.:,. ·. · ·:. · . · -_. · .·. ··~· ~oufse pursue9?tlf-~o:it\Nas)he duty of the pC!or · -'- .-. :. .. · to tak~ ptec~~uc:in.s to guard·against harm (Picart 7. Place· ' -.,. . . . . -,._· "v,,Smith; ·G.R.No.,l.:.t22:19;Ma,:eh:1 ..5/t918).: · The. place. wnere. the actcir is located 111ay ittect .. · ·'. · ::.. , .. ·... · ·· · the d_ilig~nce.reqµ_ired from:.hfi:n. _e.g· .. ordin'aripr. . . co:;,d~~t is -.neg_l1g.ent whefl a prud~nt-.man .in the '· reci'sofiaple :,ca·r~ ·)n,.,:Qi,e; .op~~atiqn · ·of,,~ .. r,rj6t9r . . . · P,OSi(fbn. of t_l:ie ~ortfe<;IS
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TORTS: AND. DAMAG·ES.· SAN BEDA LAW CENTRALIZED OAR OPERATIONS - MEMORY AID 2019.

s·ome. activities by nature . impose d uties to exercise higher degree of dilige.nce; e.g. banks are r_equiretl. to exercise. the •highest degree of . diligence in the. conduct bf its ·affairs ('Rr(Jdf?nlual Bank v. Rapanot, .G:R. No. 191636, January 16, 2017) and common carrier:s. from_ the na)tu_re _of· their ·busines·s .a.nd f_or .r,easool? of public policy, are bound· to observe extraordinary diliger:ice· in the yigilan~e oyer'·ttie·gciods.antf_ fof the safety of the passengers _transported ·by the_m, according to: all the. <;irclimstances of each ·.c;:ise ·{CIVILCOOE,i•,rt. 1733). . . ' . : .

"Diligence before the fact". The conduct that should be examined in-negligence. cases is conduct prior to the injury or the aggravation .. thereof (AQUiNO, Torts and Damages; supra at 53, St. Francis: High .:School ·V ... CA, G.R. · No. 82495, February._25, J9'9}). . · .. · · · . ", ·.

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Note: The stateof mi~d.of the actor is not irnportant.: .Good-faith or useof sound judqment is im.m.atehaJ (Pica.ifv•$mith; GR. _No:L~12219, Merch 15, 1.91B\ Only-juridical-fault is subject to liability arid not moral fault /AQUINO, 'Tons and:· Demeqes, supra at 53). : . . .• ·· Note: ThePhilippine- concept of.reasonable man is . consistent with; t_he above-quoted: 'description. . . . .. ~. . . ·, . ~ .The law considers what would be reckless, blameworthy qr negiigeqt · in the· man·,; of ordinary intelligence and . prudence (Id.- at 71): '· ,.. in. Ci_rcumstances:-; .: ··Ma!erial Neqliqence: {WINE-PICK) .' 1._W
· Note: . Distrib.ution utilities are, pupJic uljliti~s vest~ci VyitA pu_blic;interest, and t~_usi are held to ·a_.higher-degree .of :di_l_igen.ce· (Manila·°f~lectric C_o. v. Norder:;_ Pnilippines: G.R. No:··1.96020, Apr.ii 18, · 2018).. .

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. . ·.. . .. . .' . 4 .. _!;xperts and Professionals · ··, · .. _.A.n,e.xpect should exhibit the.d1re1and _skill of.one . ordinarily skillea in the pa'rticular fi!:)lq that he is in (AQUINO, Torts andpamages;_ supra: a.t·91): ·

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fh;ysical .IDjs'ability .·. . ·. . . . . . . ) General Rule: A weak or accident-prone person . must. _the'- standard of ~ reasonable man, _ othervvisel!:ie will.b~ consideredasneqliqent (Ld.

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I~ V;l~~z~ela v.. CA,(G.R.-N~-""11502i, [2ebruai,·_:_ . _ .·at 7, 1996), the.Court held. that a womap driving~ ., Exceptio ·: If the defect amounts to a .. real '. : .. · . · vehicle suddenlycrippled by1a·tlaJ· Jr~·on a'trainy · · ·disaBiiity, ·file stantl~rd of conduct -isl that of a·~ · riig_hf "':'i'll_~~ot be fq_uJt~~ fqr~togpi~g a~ ·p?.int reasoncl.Q.lg_pe,rson under. like-diiiability, e,g. the · which. is beth convenient for-~h'"er. to dS. so apd · · standardof-conductfora blind persor: becbrries .. i which . : is ·. not a_ h,azard to otg,e~{ m~tori~ts., · _that of' a rea_soriql;>le persb_r:i. :,whp is:. blind However; 1t can also be reasonaoly.,argued that · '(Franciscq· · 11.- . (f:hemica_l ~; · $.ulk ..· Carriers 1 .,, .• t~e sar:rw· COr)clusion ,-can be 'r-~aGt,i,ecl.if. it.,was._a----ln6orporated,
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Intoxication·. ·. . a I Gener.al . . Rule: . Mere ._. ;intoxication is not riegligen9~:r:ior e.s\ablishes warit of ordinary'ca_re. But i_t n;iay _be one-.of. the cifcumstanG.e~ to. be . ·c9nsid.ered:to prove');1egligence_ud/aU;16;, Wright _ · v~·Man/fa El_ectric,Railroad ·& _Light Co:',_ G.R: .No. . ·, 7760, ·actober (.1914). . . . '

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. ._·. ·regulati9n _qt th.e: :time · of. -thE;. mishap ; (CIVIL· .' · COpE, A,rt.· 2·185). · · · · · .. · · · ,· ~ , ' · · .. · · · ' ~- Natu-;e·oi Activity·· · When pe_hi."ons impose ypon themselves -'certain ,. ,. .. · -.. · · ,obHgatipns; · n9n-com·p1iance. .111.erewith .wi11 ;. be. .. considered. negligence; ·e.'g. railroad company .6n _. .having a g9te. at a railroad· cross.ing.~(AQUINb, . . Toijs ana Damages, sup.ra ad)5). _ • ··

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Ucid'er·~the 'Revised·· ·Penc!,I · Code,. ·an -io"i3ane . .: person is exemp~ -criminaJ- liabiiity. bu.t rnay : not be··exer:nr:fted dvll 'liaQi)ity· (AQUINO; .. ·Torts a'?d D.am'ages,,st.J.gra at 99),) ·. · ,_ '. · · · :'_- Uhder·· the :C::i,;il Cci·~~~ the0'i~~anit;:: ·of~ persondoes not excuse him o'r his. guardian fra°m liability .. ba.sed <;>n.'{JU asi-delicdbv1t CODE, Arfs .. 21.80 . . an.d 21,°82). · · --~ .

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Base.s·for H9lding an lnsan·e P~r~~m Liable ... · ·for His_ .T c;>rt: . ' · · · . · . · ... . . · . . . a. Between t_wo,· j;,r10cent persobs, the loss. should be _borne _by th:e-·qne_ who. occc3.sionea.· it···· ·· · -· __ ;_ ·· · b.: To induce those interested i.n the- estate o"f ·· ·. ' the:,insane p!:!rson:to re~tr.ain and co}1trol him; and . . . . . . ·. . .. · c. The' .fear .that .. insanity wouid. l~ad. to.:false claims of. : insanity and . avoid liability

. TORTS-AND DAMAGES SAN BEDA LAW,~EN1?1i\LIZED BAR OPERATIONS - MEMORY AID 2019

(AQUINO, Torts and Damages, supra at JOO).

limit) (AQUINO; Torts and Damages, supra at 1:13-114). -··

~hildren The- care .and, caution required ·. of a child is according· to his maturity _and capacity only and this is to be·" determined in each case by- the · .circurnstances bf. the' case (Taylor v. Mera/co, G-.R No. ·4977, March 22, 1910). , .- .,I . ' ,• . . . . Art. 12(2] of the Revised Penal- Code had been - impliedly repealed by the "Juvenile Justice and Welfare Act of 2006" (R.A. 9344), wllich raised . · · the age of absolute irresponsibility from nine (9) to fifteen '(15) years of age. R.A. 934~. Sec. 6 provides tor child fifteen (15) years of age or· . under exemption from criminal liability ..

Exceptions: (US) · When !,!nuswal· conditicns occur and . strict observance may defeat the , purpose of the rulethat may even lead to adverse results: or _ ~ ii. When the ~tatute . provides that the violation merely establishes a presumption of n·eglig~nce (AQUINO, Torts and Damages, supra at 115-116, Ted/a v.. Ellman, 280 N, Y.. 124; 19 N.E. •. 20 987 (1939).' . .. ·.

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Administrative Rules -Violat'on- . of . i . r.ule . .. promulgated' by . admlnistrative agencies is riot negligence per Liability Without Fault .·. · . . _ : se, ·.but may be evidence of neqliqence · , A c~il? ~nd~r fifte~n '(1.5) years .. ca~still~u T (M~.r(ndu_q,uetron Mines ~gents, lnp. ·~· :he subsidiarity liable with his pr9p~y:lt'(REf!~EO , .J.. Wfirk£!:f?ns Compensetion Commission, . P~NAL CODE, Art. ·100),. AbsenM.of7iegBgence ~ ~ G/?_,;Nb.c:8110, June 30, 1956). -- · .., d6es'not necessarily mean,abs{nce·oj,~bili1°y.' · · ·. ~ . ". . . . /~/.~c.,Private:.r'~lesofConduct. .. ·. If. the child is legally·i_ncapaole"of,diseern~nt, tt,l,~ 0 "¥i '. · :(iolatiofl'!.9f._ . rules: · .lmposec by· -private .parents of. any persor/- ~er~~ihg paren'tal ~ I&: . indivitlu<\ls ~-9-, employers) is merely a authority over him may/~ill be/liable if proper/(}:,,., · · ~pssiblf(j.JV{dence : of' · neqliqence diligence 'in superyif;i~Qe/ child wa_s:not I',! (1QUIN©,~s and Damages; supra at . observed. The actor ~ir.s.elf-ti~_liable up.'~Ci>,'.~e~ t;:"'~! 1: . :ex~ent ·of his propep.ies~(QU/('JO, Torts an6,. .c : • . · .. -, ·. _ .:·, - · •. ·. · Demeqes, supra at-80).\ ~ \ d. · P~Jma e ca se. · · ·. · . · . .: · •. -r-: , · ( .() • ~ ·. ·ffff · l') · · - eljrs t~)lhat'lct!Jse; which,. in natural and -' 8. )Snowle~ge anc:! Exper!~l-G~:o th~_Y\c -~ ~· ~Jit!~u~u.s -~e.~u.enc.e:, . l,l_nbr~ken .. hy.. any There are matters wli1c~ a pr~dentf@a~~_,,J '"" ~ fffc1_eD -· mt_el)'.ernng .·.c~rnse, ··.pro.duce;:;. th_e . Concll)Si:"~ly · presum_ed· to ·..~no~ -~-sec;;!~ n . · · · .· inj~y(~_rrd yV~DOUt.-which ,t~~ result WOUl~_nof · .. knowledge and expec1ence, e:g. farn1hantJoclJ,elEN1;\h· .. ha:ve occurr~d (People v VIiiacorta, G.R. No .. .. place· .mE!afls_. kn·owl~dge of lhe · ma~eyj~_r;-~ .Aa6;~. stpt~rhber 7; 2011 ;_· VQM. Trading; s;;u:n_e ~rea; or the b~sic laws of.:natu~.e~p~Y.srcss~~tf Cc!r:u_ngC:ong,_· ·G.-R.- ·No .. 206709,

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Other F?dq_rs Jo Consider-: 111 Determining tfie ·.. Pr~serice ofJ:Je·gJig¥!1ce,:, -· .. · 1. :·yi9lati9r\.of:Rules ancr~tatutes.· a.. $tatµtes a_nd Ordinances Gen.era.I .'Ruie: . ,Violation. of ? .statutory ·~uty: -~ is \1egligeh.ce pe}. .'!ie· (Gipr{aoo;v. c;A/ G..R. 'NQ. ·10°?968, :Qdotier _3Q/ 1996). Vyhen the.liw .. marid~tes. that 'ja' cert'airi dE3gree. of dilige~ce be'·.'obser:,;~d: the'}taridartj o( 'care.. · required ·is· .-no -longer. y.,haf.- a· .reasonably· _ · prudent ··mai:.- would_ 'd_o~ but:wJiat th·e law · requires. , ·· · •

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·· . ·.: Ncin-co~piiance with statutes is .not a sine . qua non. of ·ne.gligence. on'e ·cannot avo_id a · charge._of-negligeri.qe by showing tha.t the act . or omission was of.i.tself lawful or not violative '_ of ao'y ··statute· or ordina·n·ce .(e.g., liable -for. ne,gligence. ·e.v~n if driving· below .the speed

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Ger:i~r.al Ru.l_e: Plaintiff must present proof . t9at .... ·:: .. ·: -·· , .·._ ·,: :_,... : .- ·: , . · L: .. The·negligen~~·of the. defendant'is the , · ,p'r_ox[\'Dc!te ·'.ca.us~· of.injui.-y; anp · . ii. . ··Th~·re was, ·c::·ai:isal·:'co.rinecticif}. between ' : .... the r\eglige'nce _or-vjolati(?'1i'.of·the,statu:te .. . a·nd the injury (Anonuelio v:'cA G.R. No'.. · •-130003, Qc;_tpber 20,. 20Q4). ·. . . . ·. . ' - ... ·: ·.,. Exce·puo·11s: .-: ..,·· ·. · ,. _.'. · i. · .Proof ·of violcjtion of .a s.t.atute and . · d.alll.c!gE(· ~to· , · t~e: {>Jair:itiff maY:- · itse'lf . · establish· pro'ximate ·cause · whefre the da'mage'fo plaintiff: fs·the"aainage':sought . t0·b~~i:fre'vented by the sta.tute· (Teague ir: · Feinande_z, · G:R.-·Na.;· .L:29745,· June 4;. ·1Q7.J);~and- · · .. ii. there ·~xists an efficient · intervening cause. ·

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TORTS.AND D·A-MAGE·s SAN BEDA LAW C~NTRAiiZED BAR OPERATIONS - MEMORY AID 2019

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Practice and Custom_. Compliance/non~cQmpliance with the same does not neces$a'tily ·mean · that \he · actor wa·s negli'genUncit negligent_, resp~ciively (AQU/NO, Tor!s ?nd._Dam_E)ges, sup·ra at' 122). A practice· V\!hich is danger.oul, "to cann'ot' ripen ·into' a .custom w~ich anyone \.\(h_o · .follows ·· it (Yamada . Railroad, G.R. No. 1007~,--Deceniber

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human· life will protect . v. · Ma;nila 24, 1915). ·

Affirmative Duties anc,I Miscellaneot.is Activities: 1. · Duty to Rescu_e ·. Duty to the Rescu.~r . . · . . Gene~al ·Rule; A p'erson _who refl_!ses to render · 'assistance is'not jiabfe.. ·

A reasonable pr~dent ·person who .w~uld have Concluded such peril·or appearance peril e;istent; and . . The rescuer: Acted with reasonable care in effe.CILjalihg th,e ·re$CUe (Id. at ·156). .. .

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Duties qf Owners,· Proprietors · and Possessors of Property General Rule: _The· owner has n·o duty-_.tb,_take . .,. reasonable care iowards. a trespasser fo'r his protection or even to protect him from 'concealed da~ger (Jd._at· 160),. Exceptio.ns: (VATS) · ·· ·;.a. .'{isitor$;· _ . Owners of b"uildings_qr· pre.mises owe: c! duty of care, to 'visitors (Cabigao Universiti of the East; CA-G.R.. No. 3J5q4~R;.Aug.ust 2{: . 'J 973;'. · co·mmQ[l. c_a"rr.iers rpay be held ·liable .. for negligenc~ to ·-persons ·who- stay in:. their· premises even if tpey _are. nor passengers . (AQUINO" _Torts fJnd Daf)1ages,· supra at

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·. Exceptions:· .. Limited duty.to rescue a.: . .- In cases specified . in Article· 275· of. the 'Re~ised· Penal Code: · i. Tei render ··assistance to any· wsiunded 1~~' . . ·. person orin danger _of.dyjng,_found~n\.an uninhabited place, when assistance can . . ,/ · l5., · Doctrine of Attractive Nuisance; · · · be rendered, withou] .d?nger to h(ins~. · An owner. who maintains, on his.:premises · 'unless such· omission shall corislitute a .. dangerous .instrumenialities or.appliances bf . _more serious offense; .' · ·. .;'~ . a .cpa~acter likelx .to attract chil9ren _in pl_ay; ii. · To· .render assistance· Io prn~tner 'whom ...... ana fails. 0 exercise orqinary ca're to prel,'.~nt . . orie has accidentally WO~,dea·o inj'u~d; . ct(ildren from _playing therewith 'or 'resorting \. ·. . . . jji. '. deliver a~- . ab.?~don¢d'.. g,jla~under -~:J~eiret~. is~ iable to -a chiJd of'.tende(·years. ·. seven years of ag~to the authorities ~. ~~l'.io is:;injtlfed' ther~fiy; even·. if- (he- ..child_ is · ·.. ·. -~is family cWtaKe\hip\"te,a~fe plcjce.; -; · tecbnically/a trespasser· in· the· ·premises b. _ _. No ?river of-·~ motor _v~~~ .,co cerne?~if\,a . (Hidalgo Enterprises, ln_c. 'V. BalaHdan,~ G.R . ..., · vehicular accident ~h.all l~a~ hE\ scene;of · . No. t-1422,'June-·13, 1952) .. · · .. - .. :. the .accident without. aiding !lie victim unless he is excused· frorri dc:ing· s~ (R.,f:·413'6,· Land Tra_n_sportation-and-:-Traf[i<:lCode,(See·~. -----_.Note: This is: generally· no1 .applicable to. 51-n5d~.1;'!·.1,d:.ua: Is·.·.Lr·e· q:(J· _:_1.r.'e .._d· . b·y·.· l.a.w·.: t.orca<e·;·c·a·re·· f_. · bodies of artificial or' natural 'wafer ·in~ the· r. absence, of- some: :':un~su'al: ";co.ndition or. 0: C. ·· · · · .: another person.'e.q., parents to their ch:ildrerJ' artificial feature: other than the mere water· .. . or 'guardians to: their wards; and ·. . . . and its. location (Hidalgo Enterprises;' 'inc. V:. · .: d. · -The defendant fn special. refationships (e.q; Belenden, .G.R., No. C:..3422, June. -13,- 19.52j: . · . Common: Cemer-pessenqe«; innkeeper-· ·•. · ·' · ·. .. -. - . . . gµest) (AQUINO, Toits_and Darr.ages,-supra .· c. "_Ioler~ted.Possessi~n ..•.. ·: . 'at 158--159):· .. ' · ! . · · · . . . ·The.awrier i~ still liable if the plaintiff is inside his property by "tolerance or" by implied .. Nbte: One vyho·was hurt trying to·i-~$CUe-another. 'permission (AQUINO,. Torts· a_nd Damages,· . . who.was i.r'iiur.ed t~roug~·ne·gli_genc~{may'recover_._supra at 160). · · · ·. · · .. .... damages from the p'ersoh w~o··origim~lly_caused . d .. §.tate of Necessity .(CiVIL c6o_1;;,Art. 432) _: • th~ injury (~ot. the re~cued:·pefson) (Id.·_ at· {54): · : A situ·atib8: of- present ,__ danger · to legally . prptected.inte"rests,,wher"eJhe.only r.em'edy is' . ·:R~~'~rsi;es.·t~: M~k~- a T~rtf~asof-' LiaplE:i°t~ the ,injuring anothet's .. also. : legally ... proti/cted Rescuer: (NICA)- : · . , . . . . interest (ALBERT,'Justify.ing ai!d· Exempting a. The to'rtfeasqr was ·Negligent to -the person _. Circumstances -- under: our .. Penal Code, . rescued and ,such~ negligenc'e ·caused' the reprinted in:AQIJlNCJ;. .Torts: SLipfa at 167). peril 'or:the appearance of-peril to tne 'person . .. . : . . . ~ . · rescued· . . .... Fdr ·the defense··. o ( st~te necessity .tq be·.· ·. b: The pe;il ·or· the.· appearance· of pe~ii. was · availing, the greater injury_feared sh.ould not · !mminent;" h~ve been brought about by the nei'gligence ·

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LAW CENTRALIZED BAR OPERATION$ ·I 791

TORTS AND- DAMAGES· SAN BE_DA LAW CENTRALIZED BAR.OPERATIONS - MEMCJRY AID 2019 ·

or-impr_udence, more so, the willful inaction of · the actqr' (Ty v. People, G.R. No. 149275, September 27,. 2004)... ·.

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may be due to the negligence of the employer in the.maintenance of the wq_r.kpiace .. In sucti cases, the· employee will be saddled with the burden of proving .negligenee on -the part .of.the employer

Duties .of Proprietors of Buildings · The proprietor · of a building o·r structure is · re·sponsible - foe tr,e damages resulting from · its total.cc partial collapse; i{ it should bt:1 due to the ··1ack of nec~ssary repairs (CIVIi:: CODE, Art.

(AQUINO, forts and. Damages,_ supra at 27): Collateral Source Rule If an injured person ··receives compensation for his injuries frorn a source 'wholly independent of the . tortfeasor, · the · payment.' should _not· be deducted· from the darnaqes · which ·h~ would otherwise collect from the· tortteasor · (Mitsi.ibi~hi

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Proprietors . shall also be _ responsible for damages caused: '(EEFE) . . Mqtors ·Philippines Salaried Employees Union v. a. By.the·sxplosion of.machinery which hasnot Mitsubishi Motors Philippines Corporetion; G.R.. · been taken care of .\ivith-'.due diligence, and - No. .17577~1 june.-17, 2013):·~ · ' · the .jnflainnlation of ··expJOsi\l.e "substances .·· ·.". Which :haii.~· 'riot been ·kept. ·in a safe an:q · .. Employees . \ _ . . . ') .. adequate place; r . • : . . ~mploye~s are bound to exerclse.due.care.in the b. -By g!(c;;.~ssiye smoke.whlcri may be harmful performance of their functlons for the employers. _to p~rsons ~r property;_ ·.L:'.i~_b_i~-may.be ~a~ed·on:(iegli~ef1Ce ~ornmitted c. ·-sy. the falling· of. fr~es. s1tu~~t:J. at or near f\/'v'f11le~ the performance :of -~he ~ut1es _9f. the .hig~way's or lan~s, 1f not cau~\bY .fo~.£ ~rppl~y>-e ('AQ_UIN,01 T?rls and:Dama~es'. supra 0 rnareure: an?· '. h'\.'·~ .. · a 173) ..' ·., • . ·-d. _ By,-.!=m?o.atidns ffom.tubes,janals_tsewei:s·or~-..,'-·K_r.\~. · -_· -r : ;' · . _ ... · . · d_~posits- of inf~~ticiu~I ~att~/;;p~uct,ij An e'{nfjrGye~~li~ble f~r ?.. tort when he neg_lects without precautions $J1tab1ifro · he pla'cEl ~ ][_to perfo_rm 'Fiis-dutre~ properly.to the damage of (C!VfL CODE, A_~:-2!i191). .,r,-;'t\ ·. - the fir,m of. w~'Fi)ne··-~a. ~ .an officer. H is.. q~ _no r , i'--· moment.,that lie occup1,ea· a contractual posltion _ I~ dama_g~ refet're~ to._in t e tw9-jreced.i~g._~rti~J~~fil c.z:_~as thi1. ex(ste~~~ \ontra_ct bet"."een. the -~art~~ should ~e · tt:ie . r~~ultf ·~.1,.?l')Y d~f.ect m ·~-~:-', • 'jm1~is ~o · ~~r, _t~Hhe commiss(on ·of a tort anq· t~e . cons~rur:;t1on ·1:-1eq!10.necq ,n~'.~.,rt! :_ 1 \~·te,e 1 c£1ffei~~n~- ~rcoveH of qar:nc!g~s·.(Aran~ta-v.pe . per~o.n. s4!fenn_g . d~m.a21s1.~~y Pi:_w::~~a ! ff\ _JO)'j~GJR:.f'JO~~,n,_,M24,c1>:.197 4) .. ·. •\ · ;,against-the errg1peer or-arcl'l1tect or co11:~tqr 1n~ d:.~! '.(4-z' ~ /.' ··" ,., . · · · · . . :accordance .with. sai'd a·rticle, within t itl',5eridJ.:;; '...'5: . of#s·a_nks:. . .'. ·. . : .. ~ . : therein fi~t;d'(6:':VIL COD~\A~t:.:2192)... _ . 'i . . · ~i-~g1.1s -~~usin~~-s ·~hat is: i~pr.~~$ed wfth ; . ·; . . · .'. -;' : . , . ::,- . · . Se rt'\ t?:Pqb[ic/mteresVWh_,!1p~1ne. -Nat/Of'Jql . Ba(IIC v. ) - , l.:.iabilitle~ of th1-9.9.?) _as.weJ{a.s i.~. t~e ~on:d'ucfof · :· · : . , .. . .. ,.:· ·its affaifa.(Prudeptia/ 8ank:V: R'apariot,.',G.f?. No. :lf..-:the erig'in~er'l or", ar~hit~c/ supervises the . _{9·1?36: Ja'nuary.1:6, ..2017)/ ·, .· ,. ·. . ., · · .·, ·con'struction; ne'shall·be ~olidaril.y·liable.w(th the . . ':. !' .' . .. ... -. . . .-·' · , . ·.· : _., · co_nti-a~~91' (CI_VIL_ C.ODE,-Att.' ·1'1-23 1).: · · .A-bclflk's.gross-negl,igenc;e in'dishonoririg-a '.Nell~ ·. . ' · ·· . funded ·Check;-.~a'ggravated qy:its: unfeasorif:lble;; · ·. ·~: :~ote: :- A~·<;;'eptari~e .·of·: .. the _'. building .. aftw . d~1ay:in _repairiog :fne; error\:ca11s tor .a'r, award ot . ,·" . c·ompleti.on, ·does nofimply __waiver of any'of the .. moral .. ang .. e'xe~plary.:darrJ~'ge.~: .: Th~ ·r.esultihg .. ·. calise ;of', action': ·by. ·reason' of. any' defect injury (qJh~ c;fiesk:writ~r.;s repu,tatiori·~nd:p~as;e. rrieriUoniia ..· in.: th~-: ~ifeceding · paragra·ph. The· of . mind n·ee'ds to .. be recognJzed .. and· . actiin _mys~~ ,be- .. tfrciu~ht· \i-J.\lhin I t(:ln" {1'0)· years .. _. comp,enslifed{{$olidbank' <;;or.p.:: if..) SfJs. Ar.rieta~ following; the· collapse · bf :-~he. building . (CIVIL ' . G.R:·No::·1:52720,. 'Ff!br.uary.,{7;°'2Q05/ ... . ·c-· CQD_E,··-Art. 1723, __ par.,·2 &.-3).; ~ · CoJiim,oh\~~-iieri .. : ~:;. · ": · .. .... .. ·. . fl. 8qmrhqn· , _ carti(;lrS· ·are: ;.·r~q·uire{ to exe,rcise 4. o·uties-of Empfoye_rs··anp-Empfoyees_ . . . . I . '. .. . Em'ployers : : · · · ·· e,ct~aord_ina1Y. diligfa!ri.Ge:. in:_the: v!gilan.ce pyer . :their. '1 . passehg'ers ." and ·transpo'rted ,·. good"s, ·In .corr\"rnori · . law,· :~mii'l0yees· : . can. . clalm l .. . .compe.nsation from' thelr e_mplqyers:df the latter ·according to .all tbe circumstances of.each case (CIVIL ·cQDE, Art. ,173_3).' ." . ·cornrf1ifre'ci.tor:tio'us.a~ti6_ris:againsr:the'm: Liability-

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. A contract, to transport passengers is different in . kind . and "'deg"ree ·from< any othef. contractual relation because of the relation which· an airCl:lrrier" sustains· with. the - public.·- Its · business js · mainly with the'trav~ling p1,1blic.-·lt invites P,eople · · to avail bf the comforts and advantages i\ offers .. 1h~ contract o( air ca_rriage generates ...a relation .. attende~ . with- a public duty". · Negle_ct o,r,: · malfeasance qf the cl:lrrier's · employees ·is a ground f9r an action for' damages (Air France v, : . ;Carrascoso, G:R. No.· L~21.438.; .S~ptember 28,. -1966). . . .

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· or injury· ordinarily P.~s~ess, regard being in the st_ate of scientific knowledge at that time- (Id.).·: .

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Captain the Ship Doctrine h . The operaling surgeon· is the person in complete charge of. the- .. surgery ro.om and all personnel . . connectecl with _the .operation. T!)eir .duty is to · · obey hi.s, ord.ers. (Profess.iona,l Services, Inc. v. · Agana, G:R." No. 12629_7., Ja0uary 31; 2007) ..

· · rh'e head -~urgeon· is rilade li~'ble· for; everything: . that go·e~ wrong -within tl'ie:'four corners ot>the · 'roperating r'.opm·(AQUJNQ, Tons·-andDama·ges, . .-supra at 208) ... · ".' . .

Arj airline· passenger wa~ ill~gally ousted . ~ . .. .•. • . -. _, I . . from his· first-class 'accomrnodatioh ,"de'spite ". his- first-class. ticket. He was' compelled· to. - . · f~~t. that---there ·. is .a: trend· in.: American take aseat in .a tourist compartment. C~n the _. . ' jurisprudence to.do awaywith the Captain-of-the·airline be held liable for damaqes?: c1 :- , •• _.. ' ·. · Ship doctrine does rro"t mean.that this court 'will , -- Yes, '_the -wronqful expulsion· of. the passenger' . ~ ipso-facto follow· ~aid trend. The 'court must still . was a breach of a public du~y by the· ~ir'."carrie,r. . . give 'due .fega'rd forthe peculiar circumstances A_lthough the relation between a passenqer and· a , . ·. obtaininq iri° each. case to justif/the application of . canter is contractual both in oriqin.and hatur/;the - the'doctrine\(Rarho·s v. CA,·· G.R.'-1243!?4, April act thatbreaksa contract" may also ·be· tort (&,ir . . _11; 20.02). . .. · ·. . France ( v. Carrascoso, G.R.z N. L-21 38, -.. · ·: · · · · · - ' -Septembet ?8, :1966/. . · . · .· ..,,.....-... - -=Elem'~~t~~f Me~ic~I Ne~lig~nc~.: ic:;~_Br.lP) · •. ·· ·;,. . .. · . :. · : . a .. -Quty,,-l~f ~se at leastJ_he sa_me ,level ?f: care Lirnltatlonof Llability'r-> ,. ·· . · ._: ~ th/:_t_j8J1.Y--- r_ea·~onab_ly:pru.denl' doctor would Con.~ract,of'Carriage of Goods · { ·- ·· ·, usl' to treat=a condition. under the same

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. · -: ;t~~~~t~~no~~;~;; li~r~-~;r~~;a~i!i~~f-~~~-, . b:::·-~i~1;,,}ue~s~ ;rJfe:s1s1~~~,·~~t~·o·;. i~~ro~er. ; , :·for~_er-for. the·loss, destruction, 9r €leten_orat10Q- o}\ . '.Iferforman!e thereof; · · · ·. . · c: / ··.. -- .. •· the .goods to .a 'degreeL less ."than~xtraordinaiy . c. 'Mi~fr'is 'ca.~ed _to_ the P.~tient,: con~~ifl~tin~ , dilige,:ice . shall be .va[id, prov.i9ed...,lJ"be: · . . ' a~l1Qr.iable·malpracllqe; and . . -, a. In writing, $igr:ied. f?y the snip8.§_r..or. owner; . ·- .. d: The·· .~oc~or!s Jactlons ~wer(!l the{ f_ro~i~~te · b.,··· su·pported' by a valuable ·consteraron· other,: ............,_,··.· ca1,1~e of lh_e pc:1tient's 'irijl,Jfl{.'{Li -v: SAouses. ; . than 1the serxi"ice· rendered by the e~omn:ion··. · ·.,soJiman;.G.R:,'No. 165279, June:7~ 2011). · ·carrier;and·' ·.,. : .--~ : ·.' · · · .- .:.'· ·· .. \·. ~- .. · ·-·-,.·· :· .:"_C!. R.easo,nable, j~st'a~d- not cqntrary to PJ,li,c i\v'o•Pronged Evi.de.nce: .-: -:' ,· .. - .. · ' ... ,_ . \ .· ., ·, · policy (GIV/1.: COQE, A'rt. 1744): . ·:"EVidence :a~ to-·\ti~·recognized·standards of.::: (.·. ~ · . ,: ... •• · . . ·. . .. ., _ .. -· · .. ,. ...: :i-'' ·. :: . :: ::: · the me'dica.1,"comrt)uhity: [n·tlle:_particular kind · · , :7 . Dutiesof-0.oct!-'rs·, ., . __._,_. ,:. . .,:ofcase;'ancl" ·~::---~: :,-.·--··.·· .. , .:· .. ··. ,. · General Practitioner .:.. The standard· of .care I?", ... A -shqv,,,iri'g · th9t:. the_. "physidari- · n'egligel')\iy , '. demahdea. is b·rdinan/ care and diligerfr:e in' :the I. 'dep~_rtld from -~hls.,starida/d. in hi~. tr(!latment .. applic9tiqn· his·· khpwledge. and skill- in· hi.s. : . {Garcia-R(!eqa·/'_v .. Pascasio, .. , G_:R: N_o.. , ·.,·P.ra9.tice i)f the profession, ~e o_ught to apply to " .... 118141,,Septerriber 5, 1997 ciflng.Oavis V, .. ·,. ,._ his ·patient . .what othe.r gerier-al pra9titioners will ·: -- .. · Virginian R,ailway Company, 361 US 354). · · . apply \Nb.en· con.fronted. with· )imila·r·· situation · ·. -1 . : • . · ' ·. '. ·. · (AQUiN9, Torts and _bah?ages, -supra' at 183). \ Not~;· It is matter of expert opfnion. ·whether a . . . . . . ,-, ··:'.:.·· . . · ,;; -.·. physici9n·." or.-. a·,surgeon. has .'exer.otsed'_·the_· , .$peci~list ·-:.-The le-gal 'duty to . the patient is requi~ite aegree·:of tkill and:care.in -th_e trea\ment · · . ·. ,,generally ... ·cq]isi9Elred-.: tci._·.be . ·th9t '·of-;
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caused injury to the patient (Cruz v. Agas G.R. No. 204095, June 15, 2015) ... Res ipsa loquitur.·applied: . .. , a.·. In· medical · iieg!igence,. res .ipsa '/oquitur 'allows the mere existence of an injury 'to justify-a presumption.of negligence on the part of the person · who controls the. instrument' causing the injury (Cf'J,:ilre v, Sps. · Go, G.R. No. 160889; Apri(27, 2007). b. -Medical malpractice can be established · by res ipsa loquitur. It is limited to cases where. the court, ·from its common knowledge, tan determine the· standard .of care or.where an ordinary layman can conclude that there was . : neqliqence the part of the doctor (Solid · v. People, 'G.R,. No .. 192123,_ March 10; · 2014). , .. ·'. · , : . - , · , _. · :.. ; · ·_. . c: The doctrine is not available in a !Tialpractice .suit if the. only showing is that ~dc§sir°e'du result of an operation or trea.!,PJenl vtas· not · accornplished. (Solioum -~- ;,eo~pJR. No. . ·1921?3, Ma~ch 2014)1'.,( >-~ ·.. .· . .. .

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Liability of Hqspitals For . the purpose of' allocating . respimsib.ility in medical . negligencecases, ar.i er)lployerempJoyee. relationship in effect exists between hospitals ar.itj their . atten'ding . and visiting physi'cians (Professional ·services, Inc. v. CA: G.R..No. ·1262Q7, February 2, 2010). -- Where employm~nt relation~hip exists, ttie hospital may be ,held vicwipusly liable under Article 21-?6·in relation to Article 2180.of the Civil Code or the, · principfe of respondeat superior (Professional Services, Inc.·, v. CA, ·G.R. · ·_No.' 12_6297; Febru_ary·2, . .2010). · · . · Doctrineof Apparent Authority Wher:i no employment relationship exists but it is shown that the·hospital holds-out to the patient · : that the doctor isits aqentthe hospital may be . )t}ica~sly liable underArt, 2176 in relation to Art. . J. ..\J..143.1 {m,d: Art, 1869 of -the Civil Code . or. the ·. p.d_~t!f!;;> o~apparent · authority (Protessionei . . . . Ser:v1ee~.J/1C,;,.v. CA, G.FJ. No. 126297, F_ebruary ·

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Doctr.ine .of lnformed ·Conse-nt) · . Ur:!!ess excused- the· 'dc: ·-~\..-:,.( "~ 'a.: Tne ~hy~ician.' has,_ 'Qu.ty. to .disc[:g's t ..e., {·· . /('..;.__~ ~;; · ·. , · · .. . ' · ·. · : . ·- matenalns~~.; : ,."·:· .- .: '\.: _,-· .. . .... · _ ~.9~.rdlesp .of th .. osp)ta1;.s·re}ationshipw.ith_th.e b.- ~.he .:.. physJct?~ .Eatlea t?- )1tscl~ h'~1'i:-,..r1" \''\\.~.-.,do_c.t?ef:Jf~ay.t3;~h~ld dtree:tly ltab_l~ tp the pat,e~t _1nade~uat~!y·d.t~clO~~d tt)e~sks;z .t,,o~ry)1eg.hgence. \X_ . .fatlure to !?llo~. - c. As a .?1rect ~n_d proxtm~~e ·resulM-!1B'r~at ur~ta"hli~~standard-.'?f. co~~uc_t . to wht~h.':' t~. · to .·. d1sclps!3, th~· pat,ept· .. ¥onse.nJe_,.. Jo ,\~st19°blif9nform. ·as a ·cprporat1_on_ .(Professional. treatm~nt_ ..she; C>tli'ef"'.Vi~e ~.ould · qo~e - .. I'\:-~A(ice_s,Inc., ·v.'GA, G.R. No .. 1]6297, ·February c:;onsEEnted to; c=;m.d .· · · · . : ·. 2;. 2010). · · : JL Th~ .'plafntiff. was. !njured '.by 'th~ proposed. · · · ...,, tre,ai_ment (Li y,. BpOU$eS·Solirnan; G.'R.. No·; Nurses ·: · . · : 1'65279;.Jum(l'..· 201":1); : . .. . A'nurse who assumes· the care of-a,patie.nfmust ·; ·-.. ; -· exercise th~t degree of.s~m, care'and 1
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b. . Burns of 'Patients ., Burns by. hot-water bottles, sitz baths and, heatinq pads .as a result of negligence. · · . c. Assessment and Mo nitoring· Error~ d. l.eavinq ·F.oreign Objects - For nurses, . leaving a foreign object inside the body of the patient after the surgery is· a clear case of .. n~gligence. e .. Failure to Protect - The nurse may be held 1falls'from liable for quasi-delictif the patient · ·· · his. bed because the nurse· failed to make · sure thebed railsare up (Id. a(21B.:222):

human life may not constantly be exposed t.9 the dange~ flowirig. from the sub$titution of _deadly · · poisons for harmless medicines (Mercury.Drug Corporation . v:--De Leon, G.R.·. No. · 165622, October 17;· 2008). · · ·1 · · . . .

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. Note: In cases where the negligence of thenurse concurs with the negligence of the doctor, the .. two· of. them. are. jointly· and severally liable as tortfeasors {Id. at 208). . · ~.--. . . . · , .. , Owners .arid -Operators . of . 'clinical 'Laboratories . Test ofExlstence Neqliqence. Did.the.health' ewe provider: : a. ·Fail to do· somethinq which a· reasonably : .. :-prudent health care provider would . hla)le : -done. O! do sornethinq -~hich- a re-aso~Q!Y prud~nt.health care _;prqvid_e~.would:ncf ~ave · done· and· ~ . ~ . :I b .. )hft_f allure o'. action c_aus~~ in~dr~ i~ tpe :. . · patient (Gar~_,a, Jr. v: SafYfJ,~; G.R. No:, . 16~{) 12,. Mc!,rC~ 20;-200:,j,,r ·. II.. 1 .~ 8\ . . . ,' ... ··........ . D~ty of· Owners an:d~ 0Rerators..;..o ·. Clinical ·:

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l_n the pur9h;:ise and.sale of drugs, the buyer arid . seller do not starid at arrn'.s length.- There exists . an imperative duty on the seller or the· druggist to ·. take precautiorjs to p'reyent death or injury to any persc;m who -relies on one's absolute .~onesty and peculiar l~arning (Mercury Drug·,Corporation v. De Leon, G.R. No,-1-65624;· October 17, ."2008). •.. · I '. .' • . . . \ I

In Mercury Drug Corporation V. Baking, Baking was given a:. potent ·sleeping tablet,.: instead. of . medicines· to stabilize h_is- .. blood ·sugar: On the third day· of taking the .wrong medicine,'Ba.king · figured in a_ vehicular 'accident. · Htdell as'leep-. while driving.· . The' . proximate cause. of the acddent was the gross negligence· of the. ph'armacist·. Who ·.gave· the ,-_wrong-'.rriedicine. to · Baking.(M~rcwy prug Corp. y. Baking, G.R: No. :156037, Mf!Y 25, 2007).. . . Duties· of,Lawyers An . attoj':~·y is· · bound to exercise;. only a · -reasonable ,degree of'·care and ,skill,. having ·,eferej'I:~~ \he': business he_ undertaKes_ to do .

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. Note:,,, Tne.~lawy~-'s liabili_tx ri:a~ not· be base~_. solely~oJJ:!h.at,,faGt · that. his chenf lost the case . · (fi:OUiNO, Torts a'nd.£?f}mages, supra· at 2_31r .

~ab:oratori_es ·• .. 1 · :. · . , P5 _· : . . :: Th~y ha_v~ t~e_.d.!!_ly_to co~plyV:11th~~tatut,s, r_ul1s, . -arid· regulc1t1ons, promulgated . to p~otect. and~ . . ·. . pro]l1ote the health of. the people by·p.r-Jve·npng ·. '" .... 9, •.••. [2uti~.s of Experts. · . ·. . . : . · · · . Ari·expert should exhibit.the c~re and skill ·of one · . th~ ."Qperair6n . ·._ of substandar ·. · _impropeffy ' orqinarily skilled in tbe particul_ar field_:that he is in : managed: ·.· s'upported cli.r1iaar. . . and ..inadequately ... . ' . . . (Cu/ion· Ice, Fish .. & Electric., Co. v.. Philippine. ·· ... laboratories_' . by.. improvirig thf:!· ·~tra!Lty .. of.· Motors; G.R. No:326'11, Novemb. er . 3, 1930): : ·. perforrJiance · of clinical· 1aporatoiy exa(ninations. . . : l .. . . . . . . . . . ~ . ' . .(Garcia·;- Jr:y. Salvador,· G:R .. No. '.168512; Mar.ch 2007).. · ,,The rul~ ~ppijes· to profe;sionals, ·j"r~e "ci~,ct~rs, . . . :· ~pilots. and- others' who. have 'underqone formal . Standard' of D_uty · · . _ ·, . . education {Ff onli _for. 6rie!s owri acts or oniii;sions,. but, also' for··those: of . -Need for Licensed Physician ; . .person~ for whom on.eJs respons_ible fClVIL -CODE~,. . . ·· ., A .clinical laboratory must be .administered: Art. 2180).. · a .. •. . . . . · directed .. and supervised-by alicensed physician . ·-· authorlzed.by-the Secretary of Health'(Garcia, Jr. . T_he basis e>f liability is pater fa,nf/ias· Of th~. failure of. v, Sa/~a_dor, G;R. No:··168512, Mafch_,20, 2907). the personi mentioned ~herein to exercise.d_ue care and vigilanc·e ovJr. [he acts.of.subordinate? to prevent_ . D~u~gists/Drugst_ore Business: . . . the damags·_{Filcar Transport Services v.· Espinc1s, . "They must exercise the highest deqree of care, G.R. No. 1741.56;'June 2'0, 2012). ' . · • · dlliqence; prudence and vigilance; and .the most ._, · exact and reliable safequards consistent with.the reasonable conduct ·_of the. business, sci that

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Persons Vicariously Liable To sustain the-liability of the father or the mother One is not ofily liable for his own quesi-deliciuet acts in proper cases, it is ne_cessary that: (BTL) . butalso for those persons for whom he is responsible 1. The child is· ~elow twenty-one (21 ).years: under the law (CIVIL CODE, Art. 2180). · Except: Deep Pocket. Tbeory (see discussion ·. 1. · persons· liablefor acts .cornrnitted by minors: below) · .. , , . . . 2. Guardians; . · 2. The child committed a Iortious act to the darnaqe 3 .. owners and .rnanaqers .. of an establishment or and prejudice of another person; 'and ... · . · · entejprise; 3. The child :.!:,.ives: in. the comR_any of the parent 4. Employers; concerned whether sinqleor married (Libi v. /AC, 5. 'State;· · . . G:R. No:70890;,September 18,.1992). 6':· Schools.Jeachers and administrators; and · · ·· .., · '· 7. -Other personsvicariously iiable: Note: Th~ liability of both father and mother-is now -a. Innkeepers and-hotelkeepers: · primary (or solidary with the child) and not subsidiary b. Partnership; and (AQDINO, Totts-eiu: Qarr,agesL supra at. 616) . . · 'c. §po~ses. . . · . . . . ,. Under Article· 221 'ot the _Fi3rhily Code. parents are F>7rs..9~~· ii~b.le for Acts Committed by Mlnors: princi'pally-.and~prfrnarily.liable,for.ads or omissions bf . (ROS) . .,their·. rnin'or.ic~i)dre_n ·r-e_sulting in -iniuries to others . . 1. _earents.; (CIVIL cppt;, Art. 2180,_ Par. 2) · __:..,-~~\/,er, fo~ liab!li~y orfth~. p~~ o~ the parE;?nts to 2. Those exercising; parental ·authority. Qther tfian. -.~~c ~he mm?r child.must be li~mg. 1~.t~·e1r co~pany parents. .. . -: . • .., · ~ / ~ · · J.n. u~de~ tl;1e1r.. parental authority _(L1b1.. v. /AC, G.R. a..' Adoptersj.or · .· . r: No. 7.Q890,-.$'?ptember_ 1-~,. 1992). . . . · _ b. Court'-appointe.d.g_uardiansf_{<SLVJ.l.~,ePBl;';Arl. ' . >,. . : .. . . - .·: . ,?182). . . ·, . ,Lr"()7.'~'fbe~q1~1l·lit1l!ytt?.\e p~rim,~~:-for9nmes_comm.1t\_ed· 3. ..Those exercistnq §uq§t1tute ,~re,ntal authonty1tl). · - rT · qylthe!r\mmor.,..c~~en .1s·'d1r€lc~ a.nd pnm~ry,- .•a,nd a. Su[VJving:grandparenJs:(F{'·M/L'( CODE, Ifft. ~\ · stlbjec_n~ the-~~f,ense of. la~~.6.f_fa'ult __ or_.~egligei:,ce_ · 214);: ·"_·· f., / ·-~"'}\,opthe1rpart,0that~~eexer~1se.of.the·d1hgence __ ofa. b. Old~st, si~li_ng, over 21~a~s oJdjless ..~!fi~ j:11· .9~~cl~!atnpr p_f ~ Jc1mi~~·(t:ibi v.. IA~, GR. /Jo. 7089.0,_ 1 • _.or_d1s_qua~f1ed_·(FA1t~~.ODE, A~ .~Jq, ~ ~~..~f.tem~e'i 1_8; .19~2,Y

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Tho~.espe~i~I· .par~nta!··-autug!_ty: M~~~!.~b..1~;f?r:d_a-~a~~s.caus.~2··qy__~in~·rs.or_ (SAT.I) .. · .. , . . ·,in.capa~itgfed-P.ersci.n!:> (even iUhey.-c:1re already of _ ~- ·. · a1,:§Gh0ol;_ .· --:.· .. : :.·: r'\·.- ._: · ~ ·: a'ge)_under:..:th,~ir· c\U:thoritY~.and liv.ing in tbeir.·-· · ' · l;i'·-·-~dm.ihistrat,ar$; ;·.·.= ,:.· ·. : ... y=·· .·_·compa~y: ... · · · ·''·.· ·., '.. c;,., Te~',c}1e_rs;,or. _ . . -,,, . . . ·. - .. , -.· · . ,..,-. , . ... . .-:.'·- ·,, ., ·: . . _ · · · · · ' d::. !ndividual, en_tity or. ir.is.tituti9n ,eQgqged in · · · . ·-1:hE;? legal .a_u_thority t~ferred tg.~in ·Articl!:l. 2180 is · · '. \ ·~ ·'. .... ·· ch_ild ca~e "Ct'!'·MIL Y. ~OpE, Art)2f8). :·: · ~. , · :·· -·leg~l.~u\h.oFi.ty ?~f~t.~~ p.~:rs?n 'pf: the.' ":-'.ar:d· antl · 0 " • -- •• •• ,. ·:·-:-:. ~-, • -. .: _-. ~,.:':.-' ··= ·. ·. . •· ... ·· not ·legal ..,·autn-or1ty only with.: re$pect to. the· ,F~aren_t~- Th,e.,_ fath~.r. ,c;in,d. ·in·, C9S~ .of ~i,s_ death dr. . :..:; . R_!"Op'erty. ~fa :persor.i · d¢ciw~ci' a~,_1n2ornpetent_ - inf·ap.~~it_Y., .; U:i_.e :.rnotheft. af.e'. _ci~il.ly. _lia.p!~ fo~ any ..'- ~ · .although of'_.rJ:aj_orit( ag~. (AQµJNO; Torts ;;ind· .- Q9~~~.~~::_tpc\~/!l~Y¥~e._q~.u~.~Q by the. m1n~r..9h1l~Jr~n.· .. · ·· ~ .Dqm9fles; $.Ul}fc!:cf(-.6~9) . .:~ .~;. . .. ~ who live·in their·c;:on:tpany'(C/V/L,CBDE, Art. 2180).· · · · · · · :,·. ·. . . . . · · .. : · ... · · . . . ..., , ,.:,:.·.·: •... :· .-'· \ ·.:. .:· :,.,.:. ,;'_ ·..,''., ... _· ·-·.: Nqte:)Acorfipe,tepfifJ'clud_es·. pernons-·suffering· ·:. ·•·· ,Reas·qn_:-The:11~-b.il!ty_ is· a n~cessa.ry c·on~s.e.quence_of .· :· .. : . t!le.-: pe~~IJy . of .?iyil. - in.r~rdicti9..r ·.- or --W~Q.: are - : ~ th~:;parent~I. <3:~t1i~rity:,tl,'lfY··~x~_r9is~ ~VElE· th~m.:J.he, · ·- . . · hospitalized,. l~pe·r~. _prqdigal~.: de.af. ahd~· dump ·. · lia_~llitY..: UQdJ'?.r .thfs_'. artJ:91~.: 91.so'. e~tend? ,to ot~er · · ,· · .. - . \Vho ~r,~ unable. t9 r~ad ~nd yvrite_,. thos~ who are · p~r?ors exer_c=;_i~if.!\:f:°parentc!I: authority like -judici'ally.. of ·uns.ound mind,_ even. th'o'ugh they have, lucid' c!PpoJ9_ted ·guar9ja.n,s a,ng.::ciu;jopteri (AQylNG, .Torts. .:. -~ intE:Jrv,i:!I~. aij_d p0erson's: ~ot .being .of. -.~rl$0und :· : ·an_d0amages,:supra·a(614}: · ,, mip.d,-but ~y.r~a.s9r:,_of,·.a_g~. ~ise~~~· y.,e?k'mind, · _ and pth.er ~1rn1lar .cau$es; cannot,, w1thout·_o4tside ai_d, take care o(th'efm~elves ·and_n:ianage their =

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SAN BEOA I.AW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

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A child who is above twelve (12) years of age up to fifteen. (15) years of age and who· corrtrnits-parricide, murder, infanticide, kidnapping and serious illegal detention where the victim is killed. or raped, roobefy, with homicide or rape.. destructive arson.: rape, or ··Extent of Special Parental Authority1, .-. . carnappinq where the driver or occupant is killed or It can be e;xercised only over minors while· u'nder their ., raped or-otfenses under Republic Act. ,No:. 9165 supervision, ·instru_ction or custody,. including .while in (Comprehensive Danqerous Drugs .Act of 2002).' authorized activities-·whether inside or" outside. the punishable' by more than . -twelve (12) · years of .' , 'sch~ol,. entity,. or 'institution· ·(AQU!NO,-_f ort's imprisonment, .shall 'be dee'})e,d a· neqlected ' child Damages, supra clt 630). ·. . ·· under Presideritial.Qecree No .' 603,=as arnendeo: and<;;ustody _::.. tti~ protective arid:.}LJpervisory custody ' shall be rnandatorily placedin a special facility within that the _school and- its head-and teachers 'exercise . . ~h·e yol,lth care faculty .or 'Ba.hayPag-:as~· catled the over the pupils and students fo"r, as lonqas they are · Intenslve Juvenile Intervention and· Support Center ' in attendance "in the school; including- recess time. (IJISC) No .. 10639, Sec. 20:~). · · (Spouses Pelisoc v. Bril/anf_!}s/. GR.. N_o.. l:.~29025,. · · · ·,. · , · -r . · : · · Octobera, 1971-; Selvose v. lntetmediete Appellate , ·owners and Man.agers of-Establishments · . ' Court; G.R. No.70458; -October5, 1988): · Jhey are liable· fpr '
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·co.ntemplatio of''U~~~abor -Code-is· not a' ma.r:,age'r., · ·referred t0 ~- ~180 becaus·e he himself-may b_e.. r~gardel·.aS cJ.n ifmployee. cir: 'c;fependiente of- the employer ,(P/1i/1ppine Rabbit Bus Jin~s; Inc. v.. Phil. fl.merican Forwarder~; lnc.,-GR.No. L~25142,. Marc.h .

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-Deep Poc~et· Rule under: RA. 6809 in relation to Art 236, ot' ti-1e Family Cocfo. . -. :... : : ' · · :.· . : . J. . A. teacher in. charge ·i~·-~till}c!bi!:! :.fop..\he a·cts of .. ; iheir:stu.dents·even:if ine minor student reache"s .... the ag_e· -~. . · . · , . ' .. , , . . · .:--. , 2. T_h~ pa_r~nts. or g~~rdi~ns.,c~Fi still b_.e.. he.JdJ_iabie'. ., . even 1f :,the·. l}l!nor 1s . already .ernanci(lpted .· provi_d~c:l- ..th!3Mi°E~. ,i_s·_9_elow ty.ie~tiorie. (2-1 )_.ye9 ·ot ~-9~. (Id): .. =·'. · •. · ·

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Rule under~Art.. 101 of the Revised ·Penal Code. A c~ild fift~eri (15). y~a'rs o(age Linde~, at tt1e 'ti;;:,e ofthe C(?mmis~io~ of ·lne_'offense .shall ,.exempt from.. ·criniinal - liabi[ity. However, .the' child,· shali ·be · subjecfed. io an interve(l~ic;m ,J;Jr9gram:·.·pursua.nr to Secti_on 20 of this Act. .(R.A: No: 10630, Sec. 6f . .

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l..iability undei-' Arti~·le 21.80.(4) of the· ci~il .C'bd~ applie.s to· all,·_,those .. ;~ho,:_by; their~ ·indust_ry_ .. profession. or.:other enter'pris.e, have other persons in their· service or. under their'.~\Jpervisio~ (PINEDA, Torts.and barnages, .s.upra at.89)>, . .- · · · · ·. . . . ,· . .,:: .· ·:::-

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Employer? ._ . . · ·.··· - ,:··:.· · Li~6f'e .for. damc1gei ·c?.us~d; b/their•.emP.lciyee~ and·· household helpers :actil'.lg within th.e scOpe of .. the,ir assighe.d tasks· ev~m- though·· the \employer · [s not engag~d- in any;~l!Si~e.ss or.:industry-.(C/V)L. CODE, Article 21_80 Par:--._5}: .· ··· · .. ·; :·· · ·. · .. ··!

;Although the.E;)mployer is:"Dotth~. actual tortfe~~or.,.lhe· _ law rn~kes. hjm' .vicari6u?IY. liaqle on the· basis ofth'e civil Jaw· P,fi!lcip_le of. ,pater· (ami/ias ·.to( failljr.e . to exercise due care and ·vigilanceoyer the acts.bf one's·· .subor_dinates t? _wevenf.:dc1rnage. to. another (Fi/car

2019 SAN BEDA

LAW

CENTRALIZED BAR OPERATIONS

I

797

TORTS AND DAMAGES SAN BEDA LAW CENTRAllZEI) BAR OPERATIONS - MEM9RY ~ID 2019

Transport SF;rvices . v. Jose Espinas, 174156, June 20, 20"12). .

G.R.

Criminal Negligence Article .103 of. the Re.vised ·Penal Code .goyerns the vicarious liability of the employer for the crimina_l . negligence of his: employee (AQUINO, Tads and· Qamages, supra at 675). ·

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· Requiihes-ofEmployer's Uabilfty: (CSA) 1 .. rhe · employee was ~ho'sen by the employer __ ,· · . personallY:or thr.9ugh another; : 2. The Service is to be· rendered in accordance with orde'rs which the emplo_yer·has i~e _auth_6rity to giye at all times; ar,d- . . . 3. The illicjt -:Act of the employee was on the ocdsion or-by reason of the ·functions. enfrust'ed to him (Spouses Jayme v. Apostol; G:R. No. 1.63609, November 27, 200~). ·

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Employee's conviction of crirninat negligence proven . in a' criminal action is. sine "qua non for employer's subsidiary 'liability· to attach. -Emplqyee's criminal negligence conclusively binds the employer .to be . subsidiary liable fqr the damages awarded (Fernando -v. Frenco, G,R. No. L~27786, Jah_uary-30; 1971). The defense that the employer exercised due diliqerice in the selection. arid supervision-of the' employee is hot · Note: ft is' necessary to ~stablish: available herein. · · 'a. · The employer-employee relationship: and . b. That.Jhe 'employee was· acting ·within the Wh!;)r~. the security agency, ·as here, recruits, 'hires. · 'scope o{ his assigne.d task· when the tort and- asslqns.the. work: ot it~ watchmen or-security complained of ~as· co'.'1~itted (Car~. -Q~s. the a_genc_y_i~_.the e~pl~yer of SL!C~-?uards Trevel and Tours lr1tf!rnat,on_al, l.nC.)I, AbeJa!•lLJ andi"~at..chrnen.. L1ab1hty. for :il_legal~ or har~!ol acts G:R No. 179631, Febiuery 10, _2016)~.. c"om!!11tte~b'.J! th_e_ security _g~ard~ attaches to. the . . :· · · . ··· . ./~ -~~nJ.plof~r -ageney, and not to the clien ts or customers .. Defense of Empto~er, · ·_. of such 1afe~~YN~·_a'.:~ene_ral 'rule, a: client ~r- .. · Wh~n the -~inp~o.yee .caus.~s da1age$J.~t?.!Jis~own~c.ust~~ ~~~- s1cur1ty agencY._ has _no. hand· in . · .. . · n~g11gence;_ wh,1~. perforrninq. p~Q~_n.1dut_1ps. th%J \~)ecting~ a~~he poo1 ~~(~ecunty -:g~ar:ds·-. or anses ·the Juris -tentum presumpt1em that tfue ~ watchmen em1:ifoye_d·b1, the aqency shallbe as~1gne·d .. employer is negligent, r~butiable c!n1y b~ proof of ;,r{~ tp it; the J~ty to _o~.fr~e~he diliqence of a good father observance of · the diligenc4 ~ood f~tl'ieror !3 of-afafij'ily in the selection ofth~ quards .cannot, in _family. To · rebot . the presumpti~:)n of n~gligeodr;!\ -l'\ t~~r~imrry cm.irsfq"~vf~ts, be_ demanded from·the. e"ri1pJ~yer, must prov~. tv-.;o· thin~s:J first,. ttfat i_~ n'a_~t~?~sli~rif·V'!~~se :~re_~isesf or prope;rt~ a~e _pretected by .· E:!Xerc1sed · dµ:e· · - d1l1get1ce~1Q \· ttye?elecflon o :,.,..:_ -'th_e securlty;ouardf (Spo'-1ses Mamar(I. ys .. Boy Scout employee~;·a·1'1~.se_c'ond/th~t afte~l'liri~g'1:?)~~ . oyees~ i,;P0~ff/x'ttiJ···p~nls~G No .. )79382, :Bf ·J~nuary. ·14, ~-r.np_l?ye_r. .· h~d - ex~r.c1setiJ_ due 1J ~en_c~~! ,~~,9./3). {} ":'<· , · ·. . . · · · ·· : . :. ,n supeN,!s,~g,them. · . ·. \ iJ) ..

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1_n· . o:~-er" tha:. _:.~ti(_.ovy~~r~·- -?t·. ve~i_c_1e mct~JJeIE}f\~;:/~~tr: :~~~f~~/-~:ti~!/~e~:f -·cons,_d~re_d· c1s h~v1ng_. exerq?e_d_an._.d1l1g~ce o~-(IC.E)~---~ g_o?d fath~r. ?f a._fam1ly. he: stJ?~ld\not(5v~en-·~~E!f@~eyl!nsolvent; .·". ·• _··:. _ . sa~t1~fi.ed w1_th-_t~e. mere. posse~sl?.n ~f a ~~~onal .). ,{ 1'.)mploy~e .wa:>· fonvicted · · of . the offerise dn.Ver S ·. . hcense; .he ·. ·sho.uld'· , have. c·ar~Jully .1VJJ~~co~ittedin the discharge pf his'a_uties; and . · examin.~d.the·applic~nt for employm_ent as, to _his"~ • 3~Emp:ioyer 'is-.!;,ngaged, rn. any ,·l1:d · of , · (Philippine R~'tibit 'aJs Lif)e$: 'inc.'-.;:- Pi§ople; G.R. service. .. . .. '.· ---~.. No..147703,~Aprif11,

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. Due.diligence in .the s~p~rv_is.ion of.e_mploye~s. oh-the -other hand;· includes.'the'·for:n,ulation of suitable ruies. a_nd regulation_s the guidance, of. employees. and the iss~ance·or proper ·instructions- i_ntended for the prote9tioli the' public. ·and persqns wit_h 'whom the ejnployef. h~S '7elcition~ through-his it~.'e'mploye1qs · · a_nd. 'the impositfo'n of . ne_Cl?Ssary. dis1::iplinary mea~ure's up9n:·employees in case. of-breai::h''.or.•as . 'niay-be'warra1"1ted fo.'ensur.e the p~rformance·ofacts. indispensa'61e to the· b.usiness of. and beneficial to their .em·p1oy~r. 'ct~a1 . implementation·"· ~nd monitoring oJ consist'ent. corripliari.ee· with. said .rule's. should be. ttie'.· constant· ·concern . o'f the· enip)oyer, . acting through dependable~·supetvisors.· 'who' sho'u.Jd. regular'ly report on theh',supe_rvist>ry fun~tions. (Reyes v. D,9c~olei6;1 G:R. No; 1.85.597; ;.:ugust 2, 2p17).

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. Reason; It is basic constituiion;I rule .t.hat-tbe State: .. cann'oi be ·su:ed without its· consent. consen't=ot. the- . · _· ·st_ate ·b~ sued.·can .be.1:1anJf~steq throL:Jgh:a i;pe:~1a1.' law-: or. general Jaw allowing 'the St.ate to be sued (AQU_{iVO, _Torts. and qamages,· sup-ra_ at 68LJI,'

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Exc·epti·on.S: · ""' · .. 1.· Spec_ial Agent -:- .o.n.e-sp·e9ifically -~~mimisqioned .. tb ca.rry··o~t the .. ads complained of -outsidE:! ·of. $\J_Ch ·,a_gef')t's regular dutie_s (Rep't)blic· Hon. Palacio, G.R._ No: L-2~322; May.'29, 1968).

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. ' . . 798 I 2019_SAN-BEDALAW~ENTRALIZED BAR Oi?ERATIONS r

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·.. The mere fad- that a p·ublic officei isJhe head · Of an agerrcy.:doe's not-neclc!_Ssarjly mean tha~ he is the party ultimately' liable in case of 'disallowanc;:e of expenses _for questionable . transactiot1s of his ag~ncy (A/6ert v. Gangan, .G.R. No. . ....· 126557, Mar"c;h 6, 2001).

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Judg;s ·.:"".not for damag~s 'for. errors in_ . . .. '. deciding' case·s .(Barrosq f!.rche, AC. NQ. 216.. : . CF(September 30, '1975). ·

Governme.nt .. ovJned .. and Controlled · Corp.o'rations - ,Not all: goverpme'nf en.titi~s. whether corporate-or nqn~corporate, t:fre-immune· .··from · s·uits. Immunity. rs determined by.j}11e : . charac.ter of the objE:cts for which the entity, w~s organiz~d (Philippine National Railways v. IA~C, GR. No. 70547, January 22, 1993}-r:·

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·Sc_hools, Tea~hers and Administrators · • '{hey are. liable for damages caus'ed by the pupils and stude"nts Q( appr~ntites in.their custopy, instruction or sypervisiori, ~hether a_c::ademic.:. or nori~a~ade~ic (AC)UIM9, 'foits and Df!mages, supra at 630):_

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It : is not n~cessary' lhat the pefen~ant ·under.Article _32 should- have acted with malice or bad faith,· otherwise, it would defeat .-its main purpose, which i~ the effe.ctive protecti.on · of individual. rights. It suffices that" there. is '.a violation of the constiiu_tional 'rig.ht of the plaintiff (Silahis · · International Hole/, Inc. v. Soluta, G.R. No . . 163_08_7, Febru.ary ?O, 20_D6). . ..

The responsibility o(the ?late is limited by Article 1903 qf the Civil. Cqde 'to the case wher~in it acts .through a special agent (and a spec::ial agent is on·e who rnceives a definite and fixed order or C~mmission, foreign fo the-exercise.of the d~liE{S of his offi'ce if he ii a speclal official)"so that in_- . ." r.epresentation of the state ·ah.d being boun5fto . act as an agent thereof,_. he executes the tri.J_st co.nfided.-to hjm. This concept _does not apply. to any. executive .agent who is an employee of the actin'g · administration · arid who on· his· own J~Sponsfoflity performs \he fuoctions Which are inherent in and. natur;:illy pertain to his office and . which are regulate"d by law ancf the regulations . : . (Merrit{ v: · Government of'the Philippine_ Islands,_-_ · G.R. No. 1·1154, March 21, 1910). · · · 2.

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Note: Arti~e 2,18. f:amily' ·Code 'expressly provides tpat the responsibility-and authority of. the ',school ..c:il}:a otf.ier ·P,(r~o.r:i~..e~ercising special-parental .,. · authp~~~haTI _apRIY. !o,.al.L authorized ·.activities ··i..i~~flity of_ Other Public . .'e·6rp.g.rat!o~s ·. or wh~tlier insiae':oor,.0ill~ioe thepremises of the school: · Officers . . . ·. ., . . . . .. . : ~_ritity, _or ir.i~.ti1Y1io.n-(ld,:q,t 6"32). . · ·. ·'.. , ., .. · . . ·· a. Mlinlcipal_ Corporations • Prcivir;ices,cities ·. · . ·. , . , and municlpalities shall be lia.ole for tlie:de~ih · 'When·. an academic institution accepts students for -, ' of,' or· injuries suffered, l)y. ~IT/ pebm·. by .. enrollmli1J1 there is establ_ish_id a contract between . · reason of .the- defective cond1~n- of r~ds! Uiem'i"':"resulting: i~ bilateral obliqations' which.parties . streets, bridqes.. public buildiqg\ _and other are -bound to comply with. For its· part,' the school public .. work:s . under ··.. their ~1:>~I . ·o( : undertakes: \ci· provide the student with ar:i; education · ·- _ supervision·(C/VlL_ CODE,=Arf.' 2:189). . thatwould 'presumablysuffice- toequip him with the . - .. --· .. ', . . . '.' .. necessary toolsand skillsto pursue· high_er' education. b .. 'Public Officers s- A'public officer is by law. or a· .. profession.. On the·' otherjiand.: the. student . not immune from darnaqes ·_-in his/li~r'" . covenants .to'_ abid!:! ... by:.·_the-,_scho_ol's·· academic per~onal' capacity for acts done· in bad faith .. · re·quirerpents and· observe its· rules. and regulations· , ~hich,iibeing· outsiqe · the . ·s.co'pe,~.of. . his . , · · (Rhil/ppine Sqhool of-Business. Adm,nistfatiori v. CA,. aLitho(ity, ~te.'ria· longer _prot_!:?tt~d: by:. the . G:R. No. 84698,'•f=ebruar.y 4; 1992; St. Luk.e's Coll~ge· mantle . of immunity. for .. ·. official . actions· · ·· of Medicine-William· H.: Quashii Memorial Foundation (Vinzons: ,~ Chato· 'v. · FoJu-;;e Tobacco . \I. ·spouses Perez,. G:R, f:t.o.-2227 40,- September 28, . Corpor§Jtion;. GR. No, -14.1309,' June 19, · ·: 2016). ·. · . -2007J". . .. I..... . ,: :_:. . .. ' '" .. . -. - · . Article 32 of the-Civir Code spe~ifies iri clear ... · . an~hm,equivocal .terms particular spede of . an "act". that may give rise to· an action for . damages against a 'public officer, arid that·is, . . a tort for impairment .0f rights and liberties . (Vinzons . - .. Chalo. ,v.- Fortune Tobacco Corporation; G.R. No. 14i30.9, ·. June 19, 2007).' · ·

,.Statutory ·Basis· of Li~bJHty:··~ 1 .. · Article.,~19 ·of th_e Fa'tjlily Co.de-.- applies if the _ .. student fa cl mirier. . .. . .. ' . . .. - . . ' . r • P~rsohs Liabl~: . · . a. Schoo!; admini:;;trc1tors, te·a_chers or individual;. institution engag·~chn child care· -(e:g. Day.' care· center) -'. principally arid . · . solidarily Hable. ·

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student _privilege, the responsibility of the school authorities 'over the student 'coritinues. Indeed, even if the student should be doing nothing more ·than. relaxing in th'e . campus in the. company of his classmates and friends and enjoying the ambience and' atmosphere of the school, lie· is still within the custody- and subject to the discipline -of the school

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authorities under the provisions .·of Article 2180 (Amadora v. CA, G.R. No. L.~47745, April 15, 1988). . . · . ' · · Rule on Acts Committed Outside School.

Persons llable;" · ·" a. T~acher~ or ·heads ·0f eslabllshrnentsof .. arts ano trades -:- liable for· damages· caused by· their ~tud,ents Sb 'fong 'as tfrey re.rnain in their · custody. ·-- ·.. · · ·. · b: B y way · , o f-exc::ep · t·.1qn, -11 ·1s · on 1 y th e_ h ea d of th e·. ol ~wno· :is liable "where" th.e"· iniuf is · s9 o · ·d· . · : . . h. ·f : . · , dJ d 1 ra e. ·· cause . in a sc oo 1· o ar 1·s an (Ama.dorav. CA- ·G.R. 'No. D47745,Jtrij 15

There are instances where the school might be called upon. lo' exercise its power over its. student for· ads committed outside the school premises and beyond school hours in the followlnq: . ·1. In . cases · of violation or school policies or regulations· oc·curring in '. connection . . . . . .with. school . sponsored activtty off~c~~pus, or , · . ' :. , · 2. In cases where· the· misconduct of the ·student . . ·=: · . d . ff 'th +n.v0Jves his :~talus as. a- stu ent or a ects _ .e

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subsidiary liability' of the emplo~f: unckr- Article -A t Ti°rtf~ · NOT-E · t'f L' bTt .also -~pply. !6.: te1:(cher9)for f~I~ j~, c u~ I 0 t. ~0~\ . .. __ xemp . rom. la I I y . · ····tr d b fh · ·1 JW 'l!i.. Tb,e minor, ward, employee, special. 9gent,. pupil, · ~ommi e Y, ei: pupi _si L ·• -:#'~ s16derit· lnd a\~~tice who actually com.milted the The P.hrase !'~o Ion~· as. (tlie students) emain in delictual.-'a.cts anf fgt exempted by the law from th~ir ~ust~dy" ~e'ans the an ),~Pe.~s?,ry__ ,?e!s<;,.nar~es~on\ioili_ty, ~h_e_y ~ay be -~ued_ ancf ll)ade cust9dy that the s.chool _9n~ 1tfhe,,.ads and .t.~a~~~r9.'r-\ J! i.:.t~i_.~)e ~lo.~e as ~hf~ ICanO_L(S O~l1go.r.pro\.'.eS th.at e~er~ise _ov~_ r the ·p~pi!_~ · a (ltth_e ' s tude_nts ·as. l~ii~ll.W,7'f~~"exerc, 1 . s :d ' . t he· i 1l1ge~cr. of a g~od· fat_her,,of a ,farrnly ·., • ..' as tlie.y.:are· at .. a).!en?~~~-ei~the·~~cli~~cl1udin92.:-cJ~E LE©,8ifrso~s1af}~_E)amages.'.supr?J a_t re·cess llroe. Nothing.1_n1the 1avr-rt9i~es~J:\l0{.St,JCR11· .µ1,) : liabi_lit~ t~ altach, -t~e ·pupil~ro.itfeaso(m~~~l}.'.~antQ~ "t~~:~t~r,7.~.leSJ?.O~~l?I~~~ O~ V1~~-fl~~:· O~ll~or.: .. bo_ar~.'- i~ th_e schqol (SpousJs Palis~-c v.. Bri}l'ii'irices;···· . ;'ji! C!J1~l~J1ty .. ~I~~ _v1~fl! 1ou_~ ob~~~~1 1")~~1n1a.~y.. an.~I · ..... G:R.,Nq, _L~29025,· Gcto~(!r.4,' 197.1).· . \~"'-~ai~cr(-'~O-~_su~~1.d1WY:: !~IS' res_pons1~1hty. IS . not .. " ·· : .· '··. · :. :-··· .··. - '· . ·· : <....._~p~9Joned".'µpon·;re insolvency or pno_r. recourse . While_.-the: custbay r~qu_ire'meri~ 'do~s ..;no}}.mear.i ·th'~JE~-~~nsi,tfe~n~ljgenf -tqrtfeasor (De Leon' Br,9keiage the student_~ .rr:_iust· ·be . ~oardin~ 1.w1th~Q§)/~cfiool~€o~f\1'\9~,W"R .. No. L-~152~7~ February,_ 28, 1962). ~~tt:i_orili!:_~_; it doe!3 sigriify ._that the s~u'd'e_rl~I1_0.~li-1?e w1th1n _·th~ · -~?n\(ol ·and· un~E?r: _t~~" influe.~c.e~O~P-~rso_ns.Y•c.anou_sty lia,ble · · . ·. .· · ~c::h·ool authoripes:at. th.e,tim,e:of,the o~~~rre1:1ce.of Iii~· , 1. _ lnnkeejier.s ·ar,d 1:1<:>te_lkeepers· . ··- . · jnjlir'i/ T.his-- does·' not necessarily' mean that .$Lich, , Civil Liability ·...:: F:cit crimes· cciminitte_d in their :· . custody ,be·. ci.citerrr.iinou~.:'.. with':· the;, :sem.ester; ... ·, ·:; . esiablishm_iin'ts:in c~se_ota violation of m~nidpal . beginni,Qg wjth ttie sta.~t·o(claS$es and E:P.ding \ipon· . qrdir;i1:!nces' ·of sprrje _gener~ll° :91: :~pecial(p9lice ;_ the' dose :thEfo=iof,: and· exclodjng, the,·tin;ie 'before qr regulat_iori'c;orhmitted by them .or their. emplo,yee.s, · . after sucfr.oi;:>eriod;-such"cis' the ...pei:iod::bf.or:egistratiori/ ifi; default 'o(pers'ons crimina.lly~Jiable' (REVISED . and-:in'.· itie 'casetne 'per1od . . .. ;. PENAL: CODE, :1.62).°; ' befor~-·the· .cqmn:,~nt'ement 'exe.rcisef I~ the·yie""'._ ci'f( . . . , th·e C0urt, the stud~nt is in the .~ustody of the. school ·· . /. Su~sii;lit.fry° L.iabi(ity'- for t~e r.estitu!jon. of go~ds. authorities as long ·.as he is· .under- the· control arid ·.·-' · . tak~i, by ropbery .br th.eft within- their-:h6.uses from . . inJluence··a·f· the schhoL'~1rid wfthin .iti· premises, -~ QLi°ests 'lociging .therein,• or ·for p~ymenf Of the . wh'etlj~r· th~ - seme~t~r ::t1.a!5. [\Ot-Aye_t. t;>eg1.i'nJ:>r 'ha? . . .. value .ther~of,- ,provi9e''d .'that: . .. ~' · .. ~· ·. .: .( al~eady engE:.d (/Jm?Jdor.a,.-v. CA, ·G:R . .No: ,L,47>-7_45, .. a .. ·Ttie.-inn.keeP.er or !ti~ perscin·_;repr.esenting . -Apri{1.!j, 1988). . . .~im vyas"n·otifi~91i[1.pdyance of tne d!;lp_osit of. .. •. . '·' .. ' . . such goods,within !tie· inn{·ahd - . ' ... ·As long as it cari be sho.wfi .. lh.at.the ~!~P!3nl is ir:i the·' b. ·: The glle$t·has_toil_owed . the 91rectiorn~ which·· sct,ocii .pr~rj,ises i.n p)..frsµ~Jwe .of-.:a. legititnate :3tude~t .. : . such innkeej:>er or. his representative. may objec:Ov~.,.'in th~ exerc;;ise· of a· 1egitim9te.sti.Jdent-right, . . , . have '·given witti. respect-' to~.tb~· ·2are ,a.nd. and ·evert .. in· the enjoyn)!')nt· 9f:· a·~leg_itimat~. student vigilance over the,goods (fl,QUINO, Torts and·· right, :_,and· even iri the. enjoyrne;nt· ·of ·a · 1egitimate Damages,. supra_at 6.81), . .

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: . · . · Vicarious liability is similar to. the common law .: rule on _respondeat superior (Id.· at 6.82). . . . .

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·-rest of Li.ability··· . , . . . .. . Whether· the. wrong was. committed· in· behalf of . th,e paffrer?tiip and within "fhe reasonable scope of its business, and jf so, the partners are all liable·. as joih.t'tbrtfeasO!'_S (Id.) . . . .·

The owner. was not in the Article.2180 applies. motor vehicle at the time x, .. of the accident. .. . (CIVIL CODE, Art.' 2.184). ~ . . ·. . . .. ~ . . -Note: It refer.s 10· ownerS··Of/vehicles who··are not· ·includ~d in the terms of Artic1e21 sci as :·owners of an _establish'ni~nt or ehterpris~ .. " It is· inter.ided,. to cover owners'of vehicles for private use· (DELEON, Torts and Damages;-supra at 404X, · · · · · -·

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Spouses--:_ -~ ··a .. · Abscilute· comiylt:i°nity of property. · . · It is answerable· for liabilities incurred· b'y. -~ilhe"r" spouse- by r.easo.n· of 'crime:' or quasi" . dJlicl in: case of -~bsence: or. i~sufficier.icy· ,..,.the exdusive prope.rty of the debtor~spouse .. · 'Paymenls 'considl:ired ··as· ~dvanc~s · fo11'b~ deducted from t~~ share of. the. debtor- . . spouse upon liquidation: .of· the commoqily · ... · (Ff.:,MIL Y G_OOE, Art .. 94,par. 9). .

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_There is 9 rebt.ittable · presum.ption that a d"river of -a motor vehicl_e has )Jeeri'" negligent if at'the time of the( . mishap, he.was ·violating any fraffic··regulation (CIVIL .COPE, Art: 2185) .. ' · .. ·· , .. ·.. ·. . c•

· Sµqmissi0n"'.'."0f .. Compulsory !hird Party Liability.:., lns~rance I) i~. a prerequisite to registration of all. motor· vehicles. ·Apparently, -the-purpose of this requjreme,!]'t- it t9 : e.r.is.w~r, for, ,,damages to. third persons (y;lVli.C0DE, ArJ.. 2186}::· ·,.. : -; ·

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f{eg1stered~Q»'1.1arJ~ul~· .. 1. ·. Li~ility . , .. · ··-· · : . ' .... ·. The ·regisJer·e,cl . own.~F of a y~ehic,le is.· prlri)arily ____ ,..resp6nsibl.e. to.thepublic Ior whatever. damage or . inj1:1ry- the vehicle rnay. 'cause .' even 1(he' had ""'"_._.;...._alre..a.dy~61d. it to someone el~e (Erezo i(. jepte: . ,·· G.R, No: f-96Qfj, ,Septernb_er_:30; 1957). ·.. . . ·. ,. '. .!; · ... ,1· .·. -.. · , "~. ··. . : . . Wher.e the registered;owrier "is allowed .to 'evade . '} .- . . ni~pon$,i_bili_ty PY _p:r9\iing,. who. t_he. · ~;uppos~.9 , transferee o~· owner ·is, it wo_ul9 be. e;:isy_.fpr·him, ·"'"···. ~(co!lu~ioh With others or. ottierwise; to· esca_pe · c. Sepa_rau'on qf Property Re~i-me · :. . . said r~sponsibility~ ~y transJerjing th$ sarry~ to an· , _ . . Each ." s·pous~ '. is •. resp_p~sible-~ his/her' · · ' · ., indefinjte,p~r~on::.who posses~es no prqperty with . .. · - .. ·sepa.ra~e. obligation· (Id.). .. ·. · . . .· ·· . ·which· to r.e.sponcf f1n.~1Jciii1y far. tl1e: 'dairjage.·or · -, . . inju~y- c;lc>"ne. The· _'poli.cy b~b-ind ~ t~e: vehicle_· . regis,tration :1s the easy.identifkation of tne ciwner. ... who can .b.e 'held res.ponsi.ole.in case of accident, '·~·r··.t····_,,",, · .... ·.:.. ·. ·. ' damage ()~ injurY, caus.eq: oy .the vi_hicl~. so as n'ot The :-P~oer _:1~ (ns\de ~ the: The o~ner. ·fs ·soJid~dly . '- to i_nconve_ni~nce or pr_ejudjt~ a third. party injUfE;JP ·· .vel)ic;I~ .at the ti111e of-:the. liable with his driveri> ... by 9'ne whos_e .. id~ntity ccinnot · be, secur'ed . ·ac¢ident. He could have;- . . : ·. _. ~. . · (Ca_diente.v .. Mcjcas, G.R: No: 161946, November by" the .use of diligence, .Ratio:.The owner-'s' own · 14, 2008).. . . . ·':. : ., . pr~ve(i~_ed th~ misfqr1_un~_ omisi,ion js a.'cdricurrir:ig 'b.ut.. ,·did . not . do i,o pr_oxir.nate ·cause .of the Ndte.: It" is. irii.perative to. ap·p.ly ... the: regi~t~;el ·(flNEDA, .. T_6rts . . · and injury. ' · . owner rule·· .in' a ·manner.ln~t-- harmonizes it with . D.ainages, svpra:at 126). ' . Ar.tides i176 ,an.ct i188 of the ·Civii..Code. k~les ITJUSt be. construed·: in . a manher that ·will . . harmonize. them other rules' as to form a' . . . ·with . ' •'. . .

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uniform and. consistent system of jurisprudence. In lig~t ofthis,. the w9rds used in Del Carmen are ·particularly notable. Th.ere, this court stated that. Articl.e · 2180 "should def$r ~o" the registered. owner rule. It never stated that' Article 2·130 · should·be totally abandoned (Caravan Travel and Toujs lnterna'tional, -inc. V. Abejar,. G.R. - 'No. ·. 170631, February 10, 2016), .-· .

relatio_nship. between the driver .and· the present owner-buyer-l'essee (w_ho. is· deemed the registered owner) and'the"driv!:)r.must have caused the injury .in the performance of his functions (AQUJNO, Torts and Daf11ages, supra. at 67.1). .. " . Ciyil Liability of Registered Owner

Therefore, the appropriate approach is that in cases where both the registered-owner rule 'and' f\rticl(;),2180 apply, the plaintiff must first establish -. that.the employer is the registered owner of the . vehicle . jn · question: Once 'the 'plaintlff successfully proves -ownership, there arises a . disputable presumption 'that the requirements. of . Article · 21'80 · have been proven. ·As a ·.. _ ... consequence, ·:the· burden ·of proof· shifts to the -.. defendant to _show that no .. liability under A~,>a 2.180 . has arisen · (Caravan Travel ~d Tour~. tnterrietionet, Inc; v, A,bejar, ·G.R. No. 1fi)631·,

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· party seeks refief based on a delict or crime . under AJjicles 100.and--103-of the Revised Penal·Code:

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lfihe .cprriplainant see~s relief based on· a quasidelict under Articlt?s· 2176 and 2180 of Civil Cod(;). ·'·

Note; Even if a_ sale has been executed before a· .tor.:tu_ous incrde~t. the .. s·.a1e,; i(.:unregist~r~d. has n_o ef!:ct as to t.heng.ht ?f the public and third-per~ons_.~o r,~ct?:'.e~om the reg1s~ered own_~r .(PC/ Leesinq and 1j1.1ancf;, Tfc;,,:: UCPB Gen.era/ Insurance, Inc., (!.R ..

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2. Leased via,ic_les. /~~::;''."'CuJRa. ©rimiti,al· ·::C\I'· . Cri,minal. Negli?ence (see , · The regi~tered. ?wqe~ o[ aJry'3eh~.e-ven. if 11S3t lf' f?EVf.Sc_D P~NAl..ti€@0E, Art .. 365)_ . · .,, for · public .servrce, rs Pjlmanlyf'lial:>IJ to th1ra ff;;-l _ '.];[ . \. l . persons for deaths, injurts, and~ama~es that it;(}\_.,, Eleme_ntt (~-V~~f~ \ ,. .· .. · , ·. caused. The rule applies~enl\f the \venicleis""~1. 1-.-=r-t:ie-~f(ender ~oe§. ~r fails to do an act; leased to third persons 7fif;{:f;intinceC01pqra'l[b'n"A 1· 1 :.;2',1i.!:he ~bing or\t~~~s1:l~~re to _do !he ac~ is .Yol'u_ntary; · · v, 'CA; G.R.· No. 94566, ~ulx; 3,. 1992).. · ~,~:' ,...,~1JM.The or b~lf~ on e without __ mal!ce;_ · . .: . . . . - --\~ . ~ . ~&IJ~~-.··.-~a!f}Jf};)~~r;ra~e]/r:esul_ts .fron:i · the. re~kless 3. Stolen Veh_icles () · . .,:,,: -, · · " ·. . . 1mp~;J_~e;k911~ . . .· . ,. · _Howev_er,-th~·registere_a e'n~r is not l~~~w~eltTI J~11,.,9j,~,-JS,mix~usqbJe Tay~ of_ ,Ere~aut1on .on _the_ an aCCJd~nt wa·s cause_(:! By the person ~;ti"&i~~e], ~ . . a{\?f . th~l.'offen_d~l, cqns1denl")g .t:us ~rnployme_nt ' jt (buavit v. G_A,"G.R No. 8'2318, ''ltay 18,. t B ~- · . <'\'.i.,.9~~1:1j~tio~. _cf,.gree · ?f ifltellig~n.ce,. physi:cal . .. . · . ~-:' ., ·(Sic· . . . -fS§
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.- Recours·e ofthe-.Re~istered Owner · • · ·. ~ · .. . . l'he. liability if~u.bj~ct- to his righ(o.f recburse'·again.st the drat,sfere.e -'or:. b·uyer' .(AQUINO, . Torts.-. and Dariiages, -supr3: ai'6f35). .· ' . . · _ . . ,'

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· Not~:' Tbe ·policy ca~not ;pp lied -if.th.e pla.intiff .is . the person ~ho fa a·ll~geply invol\ied, in_ such ~ystem (Lim v. CA, (;A; G._R. Ni;J. 125817,·Jahuaiy.16, 2002): . . . . . _ . . .Empl9yer-.E.mpl~ye·e Relation.~hip: · ··· . , Th~ registered OWn!:?r .o.f the motor 'vehicle is ~OJ"!~i_d_ered:as:_the .. empfoyer of the tcirtfoasor..:dr[yer, arid .is_ made p'rir:na.rily liable for the' tort conin:iitted by ·1atte'r under Article 2176·, 'in relation-:with. Artlcle. 2180, of th!:) - Civil.· Code (Metro Manila.·: .Transit. Corpciration v.. Cu'evas;···G.R. N
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·.·:.those _w_h9', in peif~~~,;;~·c.e~~-f ~t,eir ;;,~Jigation·s · . are gu1[y of. fraud,. neg[1g~oce pr delay; 9nd those . who' in a.oY manner contravene the te'nor·thereof. are· . i'iabl~ for da_ni_age_s (~'tViL. COQE, Art/117'0}: · ·.- · .

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· ·N-~!~::jh~,. Qf:. flOh:·-~oo.tra'c:t~al. ob(i~{at'ion~ . i?_._ . br9ader ·,tlian that bf contractual. obligations·. it cornpriiei· the_ whole ext~nt ·af 'jurfdical hu~an . fE)latior1s (Cangco Manila Railroad Co:;- G.R:: - • 12'.91, O_ctober11, 19/8/_. :. : '. . - ·.•. . , .,.-It is: s~ttl~d that iri .CUip~ c~ntra~tu'_al, the m_~r~ 'pmof· ·of the existence of 1he co-ntract'.ind the failure of its· com_pjiance justify, 'prim.a'fafie, a corresponding. ri£jht' · pf relief (Saludaga v. Far Eastern Univer#iy; 'GR: No . '179337, Aprit:30, ·2008);' '

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BEDA'LAW CENTRALIZED BAR . 80~- I 2019 . SAN . . . O~PERATfONS ..

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. SAN BEDA LAW_ CENTRALIZED BAR OPE~ TIQNS - MEMORY AID 2019

Defenses i11 Negligence Cases: (FAV-P21C) 1. f.ortuitous event; · · ' 2: ~ssumption of risk; 3. - yiolati9n of statute by the victim; 4. -.Er~scription; 5. _Ela1ntiff's own neqliqence.: _. .6. - . Involuntariness; . ... , 7. _Q_ontribl!_tory negligence (AQ-UINO, Torts ettd Damages, supre §1(262-299). · _ Kinds· of Defenses: :'. . 1. Complete· . - completely. bars' recovery (i.e .. Plaintiff'.s own .neqliqence as· theimmediate and proximate cause he cannot recover damages) .. · 2. .Partial .:.._· mitigates 'liability. (i.e._ 'Contributory .. n·egligen~e)_·(/Q'~ at 262)_. ·.·. · . -~-. Principle of Demnum A~sque lijjuria · v, There can - be damage w(thout· injury in those instances irl"which·the. loss· or harm was· not the result of a violation of 'leqal duty. ( Sps; .. Custodio v. CA, _ ·G.-R. fio. 11_6.100; i=e~ru?ry 9, · 1996)~ .' ·

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In e~ery -situatlon . damnurri:.. absque . injwria, therefore., the injured person alone bears_ t!J_e consequences. because the .law. affords no,remedyfor.... .. ·" · damages resulting from an act that does not amount . 'to a legal injury. or wrong (Sppuses Ca1bone'11;v .Met:OP~_IJ!an _Barik- i:in·d Trust Cb;P-,f°N_o, 178467, Apnl 26,-_.20.17) .. _ .

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IQ Custodio v. Go~rt r,~ite@ted _the.-. mere fact that the plaintiff suffe ed losses does not. giv.e :ris~. toa right to recov~r:d~i_ml3'g~.f'~0\warri~t the. recovery' of damages; there. musJ be .~oth a ·right .. . .ofactionfor a legal wrong inf!icted by lne,..gefendant., and darnaqe resulting .. lo the . 'plaintitf.-therefrq'm. w.rong_ without. damaqe.ror d~m~g~- "':'ith'o_utfrr,on~, does.riot constitute a cause of !3Ct1on,··s1rc~- dalrrages , .. are merely 'part ofthe 'remedy a_llowed fo( the injury . -caused 'by.a breach 'or wrong ·(sps. Custodio. v. CA; G.R:'Nq. 116100,' February 9, '1996). · ·' .. , Injury . •"":·~·

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Th~:recompense or ; comp~__nsation awarded for the damage suffered :· , :(Custodio v. CA, G.R. Nb. 11.6100, February_:9; 1996; D'e.Peralta v. Philippine .. Commercial International Bank, G:l~-:No: 184440 (No(/ce/ July 3, 2017). _, ... .

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-DEFENSES Doctrine of Contribl;Jtory ~egligence If the negligence of the- plaintiff cooperated_ with the negligence of the' defen'darit in bringing about "the accident causing' the. injury cory,plained of, such negligenc~ of the plaintiff.would be an abs_olute bar to recovery.'lf the .neglige·nce of the plaintiff. was merely . contributory to his injury, .. the. immediate ~rid proxi.mate cause of the accident causing. the injury ·being the defendant'~ negligence, s_uch'. neglige:n·ce, would ·.not be. a bar to recovery, but· .the. amount . recoverable sh.alLbe mitigated by the. court.(Phoenix , · .Construction v. /AC, .G:F{ No. L-65295, March. 10, 1987); .. . ' · .· ·· .. ·. · :~' · Contributory N~glige_~ce. . _ ;• . ,, , ,_ Contributory negligence is conduct .on the part of the · injLJred. party;' contributing as_"a .·legal ~ause to .'the ha.rm.he has suffered, which'falls.below the.standard . to which·'he. is _:required to cohform for- _his own ·proteiction (SP.blises Vergara·· v: · Spouses· Sonkin, G.R. No_ 1ft.,,3,659;_.:June;.}5,-2(J15)..· . · ' Tt)er~ is contrib~ory n~-gligenc~ .wheh ~h.e pa.rty's·~ct_. show.ed lad of: 9 · diiiary care arid J9resight th~t su~h . a~t could .ca_u~e ~i:i:i- harm sir' ~ur-.his_ life_ in danger. .·; ·(Estacior/.v._ Bernardo; G.R No. '144723, Fepruary · -27 2006),: . . -.. .: . . . . . · ,.. .. ' - . - · . · .. . . · ·

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bank.-.is guilty ot contrib~tory ne.g1ig~11ce when it: a·cc~pte~ .'for :·d~posit ·:a 'post-dated ctieck: notwithstanding tnat- said.' check had been· cleared b,y t~_e· .ar.a~e:> ba'nk. wfiicli .fai)ed to-. returri.··u,~. ch~c;k : w1t~in the 24-hour_ .r~gle_m.entary peno~- (Allied . B_anking Corporation· · v. . ..B.ank: c}f.. ·t_he. Ph(!if1pine islands, G.r: February 27,.-2013). ·.. . :No. 188363, . .. . . . ·:

Th~· und~ri9.lng ·p;~·2epfori coiitr.ib~fo~ .. ~e~;i~ehce ·is that a pl~intiff who is Rartly° 'responsjble fo'r. his ovyn injury·shoLtld. not be enti\led to recover damag·es in . full but must bear. !_he con§equei:,ces. of his .. '.own negligence. Tlie defeii'dant ·riiust lhe'refore :'be h·eld 'licible _only.for !tf.e'damages'·ac_tually caused.·by his negligerice-.(Spouses Vergara v, Spouses: Sookin, G.R. No. 193659; June, 15,'2015). ':., · ·' . ::., '

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l_n ivta-ao Sug_af ce'ntra[ _Co., Inc:: 'CA, the Goui:t ruled th~( the:·pelltioner' coo,pany ¢an11of excuse i'tself from its failure. fo · .properly· maint~in - the= \A!ires ·by aUributing negligence.to the victfrr;'_ The re·~ponsi~ility. of maintaining the rails-for the purpose of -preventing. derail~entaccidents q_elonge.d. to:u,e c6mpc1ny: The company _should .. _not' have been neglige1;1t . in . ascertaining th~t ttie.·rails were fully -~ohne~ted tha·n· to wait until a ·life was lost due to an -accident (Ma-ao Sugar. Central .Co., Inc .. v. CA, · G.R. No. 83491, .. Augu_st 27,· 199_0).

;01!'.l S~N BEDA LAW CENTRALIZED

BAR OPERATIONS

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TORTS AND DAMAGES SAN BEOA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019 ' . ,' . . . ' . different rule. The effect would de8,elid on whether· the vici_latio"n is:· · · . · 1. Meirelicon"tributory negliger:ice -. partial def ens~; ·2 .. The proximate, cause. of-·. the . loss ·- complete · . • l . defense; or . . . _., 3. Neitheri c·ontributory nor the proximate. cause of th~ loss·- prnof of causation required (AGUINO, supra at 278-279). · ·

The defense of contrib1,1tory rie.gligence does ·n.ot apply. in criminal casEls committed through reckless il"l'.)pi'udence, since· one cannot allege the negligence of.an.other.to evade the effects of his own neglig!;lnce ·(Manzanares I(. _.Peop(e, GR·. Nos. 153Z60-61, October 12, 2006), · · •

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Th·e -fact that a ·"p.racticaf joke" is, the cause of an injurrdoes'not excuse the perpetrator frorh iiab1lity in damages for· injury sustained (52 A.M. .Jur., · Torts,. Sec. 9pJ; ·.. ·

Note: Contributory negligence Js conduct on the part of- the ihjurea party, contrlbutinq as a regal cause 'to . · the harm he has .suftered. which falls. b.elow the "Horseplay'". ·. _ standard· to which he- is required to conform for his· When one 'does an act which proves injurious to own .protection. To- ·.hold- a:-,person as-,·hayir:,g another, ~i'ri action in"·to~· arises for the injured person. . contributed to his injuries, it-must be· shown that ·he althouqh the· act was done without rrialide .and no performed an act ·that brought-about .his injuries -in · in1ury was interia$d (Makovicka Lukes, 153:N. W.2d disr~gai-d qf warn_iog "or.sim1i of an imp~["!ding:danger .. . · 733 (1967)). -. · ,, . . to healthand bodyr-To provecontributory negligence, . : . , ~I ne,c~_ssaryJo' establish a causal link, although . 0?~_1,r:}n~ _or_c9mp~rative N~glig_~_n.ce . n·~t gr~~imate_, bet~e~n. the .neqliqence ofthe: party Th:e :el?t1ve: deqree 0~ _ ~egl1gen~e, of ~he p_at!ltS IS i._nd( twe')~cceec;J1~g ·!nJWYi ln. a ~e~al ~ens.e~ . · cons1?ered m det~rn:1n_ing~ whether~ncl'\tg. _wha.t~negiig~nce rs, cijon~nbutixy only when 1~ .c~ntr!l:Jutes . dewee·,- .·. either. ;-s~ould be resjfur:1siblp,ijo~s : pro_x1,:n_ate1i1t,il\e injury, and not simply a· condition n_eg(ig~nc~ (apportionment :of ~{.m"'a~ps · (AQ_UIN_f!., - sl :for•it~~~_urr~~c·e !>i&e/a 'Cruz_ v. Octaviano, G.R. No. Torts a_nd-D~ma'ge~, supra.at_26,¥J;~ l( _ .·,D). · 2_4,~649,\Ju~-2~,r,17).__ : · .', . .. . , · · : _. 1f' I ~ \ . ,.., \ . . . •. • • The rules involve.apportionnjent of damages. Under/:';.~ Fortuitous Eve f(€1so FoHuito).. ., .. -tre "pure" l~P.!3 "q( c~_mplr~tive 'negli~In~ce';"7"tn~7\n . eventJ_v;;hicH ~uTd ~ii.qt. be foresee_n, or "which .p"laint_i_ff~ co~t_ributory ·~¢gl_ig~npe·d!e~··~6t W.P.e~t~}~'\ j;jj; t~tn'~·gh. f?rese~n-. ~~t·ne.vitable {CIVIL ,CQDE, Ar(. b~r _h_i.$ _cec~~ery-?lt?g~_ther ~-~t d.des serye ~Q r~d~c~~Sfu7JiJJ1·Z4). . :h1s·dam_.~ge 1n ~roport1on lofl~cf~ltJ!? ~' .. 6'.267)~';::)--c:'IJ . t._ . _: _ • ·.• · ... · ·. .- . . ·. \-.r ()\'- .. _\~ · ·)'ffi UGene2yffe.Je. ~ , . . . 0 . 1.0)P~!e~ C~n!(Jbut_~~}': N_eg!iJ!~n~e\ ~1t!ti~'.J,;0,plete aefen_~.;.-.a~d-a_.P~rson ·i~·_not-liable-i_f · ·-·. Ne_g!1ge!1ce_:1p_1~puted 1f _ttt~raGtor 1s:<;f.1fferen s:f5o . e • . "-~ /~~- of/1h_.e :d~!J"l.age was,,a. "_fortuitous. event . ·P,_e~pn,_w~o);i·.~~i~g m,~PE:,li?ble_(ldLa~?·7!L ·::- -;~V.tu1iUtY- 'eve iii, tt:u{p1af ntiff. was ·not hirnseff r5er.sonqlly . :·._s ,., "octui-reWce, of::th'e. failt.ir~:".6f.- XRe ·d~bfoi-:·fo · r:ieg[jgent .. b.ee~use, the,/neglig.enc.e·· of anot_t:ie_r. _is. . ·;_ ~0Klp1y ·vXith· tiis:'obii at(o_n/in[i·~1 be· in.dep;n'aEi~t.-· _..: ·i~PW!efto th~_plaintiff:(RE.YE,S0['!.0P"i.JNO, 0utline . of._t~~-hu,man\i.ifll;: :':':··. . , ·- .... ·._ , _oUHe Ph_il. pvH·Law;- Vol.. ff P- . ."169). [her_f]inaft~r, 6· 2.·, .The, occ,u.rrei'ft~ -must- b~,.~uch to rE3nd~r-. it · REYES AND PUNOJ _·, .' · '; . · - · · , .:: impo~_sibl~ fbr tl'li,rdebtoi- to fu)fill his· Qblig:a"fion· in ' . i7 _.., . · . .. '. . . . a n0rmar·fnanne"r'' :.""·. ·: . ..' . ·· . partitipatj6n Appl!c~bility: If ttie: neglig'en_ce_ wa_s on th~ p~r.rof tli.e · · 3:'. The. ,oJ::iiigo/mu$t\i°e(Eri~ fro.m any ·," . pe"r-sori ··.for, whom 1h~. plaintiff is·: respohsibfe, :~tid · · : . ·· ,n .t~e .aggravat_bn ·of the inj~jy \e~lting to. th·e . ~.espeoia[ly;· !?Y. neglig~_nce __ bf~-·~r\ .associate·· in' ttie' .. . . credltoF i,ind . : .... · · .. :. ·. .. . .. • .· -- : . t~~bsac\ion wh~re-he_ was_ injure~!: (fd.): . · ·... ,. · ';__ -~. . 4 ... It rt1:u~!"~e··!inpo$~i.t5je to:.fo_resee the eve·nt which : . .. / . . ·. . constitutes "ifie . fortuito . or "if h. ca·n be. Vio"latiin of -Statut~ the.Victim . . . ..-- .. fore~~en, .. it · must . be.. frrip.o'stil)le, to avoid Ii is •tr:e.!fted ·gen.eran1 ·as~Qegligehce.per· E?Xcept "(Sp9tises.-Cr~z v:· ·sµn-Holidays, - Int., G:R. l\/6. when the-. law; ·or rules specifically pr.ovide- for, a 18_{?312,. ~une 29, 2010):

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.TC)RTS AN·O DAM·A.G·E·s ,

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SAN BEpA LAW CENTRAL/ZtD BAR O_PERATIONS - MEMORY A/0-2019.

Acts ?f. God - Events which are totally .indepen9ent of the will of every human qeing (e.g. earthquake, lightning," eruption of volcan.o) (DELEON, Obligations c!/ld Conlrcicls, supra at 77). · ..... . .

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Acts of Man _;·Events which are independent of the· will of the obligor but-no~ of othE;lr human wills e.g .. w;:ir, fire, robbery, in~urr_e_ction (id.). Foi-·a· person ·to be. exempted from liability due to fortuitous eveht,,the latter- must be the~p"roxim.ate .. ancf -only. cause· of the loss or dal)lage. -The 'act' must be ohe· occasioned exclusively by·the violence of nature . and hl)rnan . agencies are , to · be excluded . from' creating or entering' into:. the: -cause of the· mischief . · (At._BA,NO, T.orts andDa(!lf)ge:s suprfl _at 52). -: .. · · Nbte: A_ fortuitous event may·e.ith.eJ,Qe-an actof God,· or natural occurrences such as floods or typhoons; or. an.act of man such as.rlots.rstrikes or wars. However, .· when the'· loss is found .. to be partly- the result. of a , person's .participafion . .:.:. . . whether 'by · active . intervention,· neglect or failure to act .__:_ -tpe .wh9le .. occurrence ishumanized and removed from 'the r.iles . applicable, to a· fortuitous. event }.l\,sset Privatiz6(i8f1 -c Trust v, T.J. Enterprises; ,G.R. No. 167195, .May

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!=iements-: (KUF) . . 1. The _plain!iff must Know that t~e risk' is pr.esent; 2.· He. mus·t !!nc.ierstand its· natu(e; and :_. 3. · His- choice fo incur, it is .E.ree. an9 voluntafY (AQl)INO,· Torts.aod Damages, supra at-281). . .. . . -. .

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Exceptions:· , . . The- plaintiff is free from liability if: . 1. :An ernerqency isfound toexist] or 2. · .Jhe,life·or"property" of another-is in peril.when he : · : seeks to rescue his endangered. property, (uocos . · ': None Electric . Co. v. -cA, .. GR: No. L-53401; ':f!.ovemb~r 6; 1_989).· .• :, . . .,; · ..'. ·:.· .· votenti Non Fit tnjuri« · , . :''That _whicti a person assents are not esteemed ii:, .)aw_ as injury," One is not lega)ly injured' if he ha? co~ented ·10 t~e·act complained of or v{as will(ng that it ~ho\.Jld. occu_c.. .. \f\/hen the defe_rise of assumption of /isl<_ i_s ba~~~_oh this maxim; it negat~_s_n_e,gligence -~r . hap1l1ty.on)he!p.art-of ~he_9e_f~ndan!,~even t~o~gh his · conduct wou191otherw1se have constitutedactionabie _ne~li~e.r:icif a~~ ~it)lou~ ·r.egard_ to .the fact .-thg,t the. _.plamt1ff may have acted·m·du!3 care (SANGGO, Torts, · Sl.jpic;J;!:2).:::._ · ' ··· ·,·-·

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· · · · · · . ' . · · . . . _'.°ire. _i~ not ._:a natural C9lamity_ as it c;irises . afrnost . , · mvanably from.some actof m9n orrb(t°iuman means. < lt does. not fallwithin: t~e so-called ,~Gts .of God,''.~ e~·c~pt.·"."he_n · cpu_sed · by lightni9g (Easf.§r~ S/Jip§J.J?p . · ~ _Lm~s,. Inc .. v. !AC, _(1 _ _f}_: No, L-69.041, rMay __ 29,. 19·8/lJ.. _· -Illustration; eetitio~·eis , discontinuance fro·m . · !~aching ~a~ .. her: 0wn choic_e_,_ Whil~ the respondent~.:. This Coci"rt- wil) no i.o_n.ger qelve _o_n~ tt:ie issue_ of.'.. --admihedly ·. wanted . ~er. ~.'~rvice )ermina.ted,. they whether or not. the fire .which causea'Y' the loss of actually did.mq_thing to ·physic911y pr.event t)er from· _ a·nd/or d~rpage io .respondent';, p·e(sbnal effecisj,s · a . rea~suming, her. po~t. _a;,-._prd1re:d _by" the school's f~rtuito\JS -~ve ..rit.~s!n~e .JJot.h'.- th'e. trial _c~urt jlildf~he .... _B~_ar.d ~f. Dire9tO:rs. !~at·the. sc_ho~l._pri~~ipal and .F_r. ~. '· Gour! of Appe·aJs cor~ectly ruled that" tt:ie fire w.b1ch . · .· .W1ertz a1sagre_!3d .with~ the Board's dec1s1on to retain ,-, OC C~rred in this case. ~annot·be'.consiclere~ .ar:i acf~f .. ·. ·h~,: S?[Tle, teachers· .. al)~gedly".threatenep :-~~. -· . God since the same was not caused by ligh!nirig o·r a · reslgn_ eh. ·masse; even if· \rue;' did· not make them· . . · natu.r91 disaster·o~ ·ot_he(cafamity ·not aitr"ibqfoble. }o . . _liable·. ·10_· he·r, _for. · damage?> Tf:!ey · were simply ·_ · h:omcfri 'agenc_Y, (lnterriatio_nal . ContaJn~r Termina~. · ·. exercising their rig hf of free -speech, or their. right Services; Inc: 'ii .. Chua: ··G.R: .No: .f 95031,. March 26, . ·.·to di.ssent from the ~oard's dedsion. Their. acts 2014}: . ,·' . . . . ·were· n·ot co:ntra1y to. iaw: morals.,··goop' ~usto-ms · ·. · · .. -~ · ' · · ·.· '· · · . oi: puplic policy: Th'ey·di.d .not "illegally di~miss". her . . A~~id~n~ · , .. . ... ,, ~· :. . . , .... · · for the. Board's deciSion~ to refa.iri.= h.er.-.prevaiieCL She . . ' An· accident pertains to an u_nfqreqeen event.j~ wnich · . · was ordered to repo.rt. fo( work· on July 5; .1982, -but no fau!t_ or negligence· 9tt~c;:nEis .io i.h.e defenpc;ii,( It is·, . - she .. did. not. cop,ply. wit_h . th.sit cird.e'r. C_onsequ_ently, !'a fcirtuitoc:i~ circ~mstante.,.· eve·nt or: bappenihg; a'n whatever lo"ss,she :rna'y"h~ve incurred in the forin· of . event happeni~g.,with.ou!· ariyi hun:ian".. ag,e.ncy, oUf . lost·eamlngs was self-inflicted."(Garqianq v. CA, ·G.R. happenirfg ';','.)lolly or partly ttirciugh.J:1urnan c!gency,. an:, Nb. 961°26,,A!;lflUSt 1 O; 1_99?~- . } event-wtikti 'under the circum.stahces· is u'nusual or . It.does· NOT apRly: .. ~n~xpecied qy'tlie p.erson to whom it. happer:is·i. (Jarco.' Where.-one p.~rsorr createa a daAger ancl anotheir · ., . ··Mwketing' Corp_or?fion· v. CA,. 'G.R: No.-:_1297'92, .~ : person, 'with ·_knowledge .and ·1.appreciatio'h of its. De~e.f!Jber-?1~ 1999).·.: . ·c ,:.. e~istence, voh,intariJy assumes . •the risk of sucti danger but is ·.not injured. by it _even though . he is. -.: : injured in somEl other way_ in· attempting ·to withdraw . from the scene after the degree of 9anger in~rea?es,

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2019 SAN SEDA LAW .CEN.TRALIZED BAR OPERATIONS I 805

SAN BEDA I.AW CENTRALIZED BAR OPERATIONS·-

· Illustrations: i. The employees. assume the ordinary risks inherent in the industry in·which .he . is employed (Id. at 2{39): In abnormal risks arising unusual conditions, it is a question of fact and . there .must be coqent and convincing evidence of such consent (Id.). · ii'.J When a passenger boards a 'common . carrier,. he takes the· risks incideriial to. the rnode.of travel· he has taken (Yobfdov. CA; G.R. No. -113003, · October 17, 1997). . iii. In casethe plaintiff was employed by the defendants as ', caretaker .of· their carabaos, he was gored to death by one . of these carabaos. The Court held that if · .w~s the caretaker's .business. to ·try to . ). : prevent the animal-from causing injury or dama~e- to anyone, includinq .~~mseJ.L ._ · E\etng 1~Jured ~y the .saic a~1maJ w~s one o~· the risks· ~f the occupation,. which _he had~oh,mtarily assumed and for . which · 1 • -~m.~s~take t~e cbnseq_uences (Afi?Jld.a V!. · v. -~1sole, G.R: No. L-20l5, Novemb,er I&. .: 29· ~~· ·

the defense of assumption of- risk cannot be made available ~SANGCO, Torts, supra at 171) .. Tbedefense ofassurnption of risk is not available to the 'employer :in cases covered by. the vvorkmen's · Compensation Act. Here, the burden . of risk. of industrial accidents has been transferred by the law from the- employee to the. employer. Under the said act.s.the -ernployer is liable (or .darnaqes or compensation to theemployee for any injurieswhich . the employee may suffer from any accidentsartslnq oLit of and in the course of his employment or. other illness · directly caused .. by · "such employment (P1NEDA, forts and Damages, supra a/·74).

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Kinds:. _ ~ _ 1. Express Waiver of the.Riqht.to Recover (CIVIL· .· COPE, Ait: 6). · · · _ · · There is .assurnption of risk .if· the plaintiff in. advance has · expressly waived his right to . recover. damages the neglig~r:it defendant (AQUINO; Torts an.sJD~rr,ages~supra et 282-283).. . ~

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Pers?~~ voluntarily 2. ·implied Assuf!1ptions ~ . ~~ l:l!J ~1JJ/· p•~rt1c1pa~ng m dangerous act1v1t1es assome a:- Dal')g~roui C~nditi~~i- A person wb0~~ 1.r·e risk? 11.s~~!)j pres.ent [n such .activities. !_noyving that _h~ is exp0s}d to(a]a{1gerou,~ ·emB:pro rss1on.al a\hletes -(AQUINO, !orls_ conditioi;i an?,. Volunlafi!tiss.um~i~tQa~ n_q.,.., -. -~· .. !tf9;qam/qg~,~/s"upra at ~90). / recqver from th;eidefeAdan~ho~~W~n~g:',. ,..~,t(l'.:;y' "f -.' · .. · · . such.dangerous· conditions·(/ci. at 28J.:i2 4Jrfi, ~:v ~~!~~,Sf~nt_s. J~egh_genc.e .- Wh!,m . the . '·.· . ·. ·. . . . · :·. ~ __ .-·., ~· . ····\ p!a1.1;JJff 1s ;a.wa_re .~!Jhe nsk ·.c~~a.ted .by t~e. · ~inds.o_t-Da~~erous_:C.ondition~· · . '.-"-~C . . . d~~TJ?JJ.nt;s/neghgence, but ..h_e .. ~o)unt.an!y. ·. I.- ·Those _wti.J5::,h-are,1n.h~en~ly djnger:o ~;...../dec~d. ~pr?~~e.?· tQ er)~Oun_te~ 1t, .there 1~ 'ii:.. Those .. wh·~re a ·p~rs·on Rlac_(s4a-1~il'rg~.;,'(~ adm1ss1on e.g. Pl~1[ll_1ff .assui:neswhic.h-. is not - danger0us rn~·tsJJf/,Jm· a A. u~1.ng u~safe pro?u~t 1( he kne~ 1t to dang~_r'ous po~it.ion. - . . . . . ~\":_.be unsafe (Id.). . . . .. . . . . . . . . ··.iii.·· Those~, _in~olving · ·product~· and ot~er · . :· • ,-: . ·· · . '. · · . . · · · . :· things. 'whiCh<_are. 'dangerous'. qecal!Se ' . Pre.~.c~1 10n .. ··. ; . . . .. . ' . ' . . ·c.. . ,. . . :- _/ Jbe.y. are d~JeGtive. . . : . . .. ·-~ An .. a~tlOrJ b13~ed.on quas1-de.l~1?t· ~~~scribes m four. (4) · . ·. · . • · . · years from the date qf \h~ accident (CJ.Vil,. COOE, ·Ari·. ,. lllustr~tiOf)S:: ···: ,~ _ .. , . :.,;·1146) - fo·l:Je· counle'd fr'om the last· element'of the. i. .. A' hous·e placed .nea'r· a ·railroad,· track :Com.mjS$iOh an act or omission violative of.the· right - assumes JI,~ u·sµal :dangers .attendant to . .. . of the plainti_ff. the~oReration of a locomotive. · ·. . . R ,~ t: · ·s·· . 1-. D · t · · .. . :· .. . . ·· . ··. -..,. ::. · · . · · · . .·. ea ions aci-- oc rme · · . ii, ·Spectators·atspocts.event;·customers at ·A··· ta· '..,t · ... ..: · ·· · ·d· ~ · . amusement. parks; and ciest who· find : v , ... n ac , o_ne a .. one 't1m~ 1s,cons1. er~d b~:D.C!IO~ ~f l~w .. . q~rige'rous· conditions. w~en · they· enter . -- to ha~e_ 9een. done at s~rne. antec.ed.ent-pen~d (Allied . . bi:Jsiness':preniis'es}ldi at 283-284). ·,_ · .. · . · .Ban_k!n_g.sorp G,..F?; ~o. ~-858_6~,,.(!c;tober, 13, .. .:_ . . ·· · ., . .: · · 1989). The pres.cnpt1ve period should· commence to . r~n only 'u'po"h discovery b(the}njµry'(AQUlflO;f611i . . b. Coot.ractmil: Relatioris --: .There may. be '. andL}amage.s:~upra at'296): · · .. '·· ·· implied ·assumption :of ·risk .if· the plaintiff :entered' into ·a . contractual relation with· the · lllustratio~: A doctor.negligently t~ahsftised blood.to. defe~dan·t' /Id.{ , · a patien~ that was contaminated 0ith HIV:.lf-the effect.

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TORTS .:AN_.D DAMAG-ES . SAN DEDA LAW CENTRALIZED BAR OPERATIONS·-

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Involuntariness . It is a complete defense in quasi-delict cases and the' defendant is therefore not liable if force was exerted on hin:, (l,;J: at 298).· · 111u~tration: \i\lhe~ the defendant\vas forced to drive. hii vehicle by~?~med"men who were-escapinq from · the policemen: the.: defendant cannot be held liable if a_ ~](_stander is hit as ·a consequence (Id. at Id.). · · . · Persons uslnqvlolence or causing-fear are primarily liable for. acts . committed "by third persons actinq" 'under irresistible force or uncontrollable fear. _If.there · .be no. such persons, those doing the act shall be· liable secondarily (REV/SEO PENAL CODE, 'Art. 101). ..:· · . ... '. . · .._ ~

I~ Philippine Bani< ~f--Com~erce. v: ·CA. (G.R. · No. 97626, March 14, f9[!7), the doctrine of last dear chance was applied to a banking· institution. The Supreme Court ruled that ihe bank, thru its.teller. had ·the last clear op·portunity to avert the·irijury incurred by its· ·client,..simply by faithfully observing their self. imposed validat_ion procedure .. , .

.Cases whei'l:the doctrine ""(as held inapplicable: 1. If the plaintiff wa$ not.neglig~nt; 2. Th~ defendant is.required to act "[nstantaneously, and if the injury cannot be··. avoid¢p' by the application of all the 'means at hand after thi:l peril is.or should have been discovered; _:_ . .' 3.-·· -If defenqant's'negligenc'e is' a:· concurrent cau~e . and'which_-wai;still in ope-ration up to the:_time the inj1,1iy was· inflicted; . . '•' _-· . Doctrine of Last Clear ·ch~nce · ' ' ·4·_ Where the plaintiff, a passenger, filed an ·action .This principle ·states 11,at 1he contribufory negligence . again'st a carrier ba~ed on·'contract; arid . · of it\e per.sor:i · injure.ct will· not .defeat·:u,e· claim. fO.f·lf'the . a ctor, though·.neglige·nt,. was not aware of .. d~mages if it is shown· that the aefenda.nt might, bY.· thed anger or risk brought about by the:rprior.fral,ld ' the exercise of r~as·o·rab,l_e-:-care <;1nd prupence, h~~./? _q'r negligi,mf act:' (Bank ·or the Philfppine Islands . avoided the consequences of the, riegligen~e of tl'i&/ v.: CA, G.R: No. :102~83, Nove'inber 26, 1992) .. . . injLi"red party·(ALBANO,. Torts and 09m_gges, ·su12ra. a.t 40). · ' . . '-u""'rn_,d ...~-- the· ~tri~e·:of ~ast· Clear ·C.hance, th-~ o_ne · Wli6 fiastthe"1ast reasonable opportunity tO .avo,id the I uri'cter this doctrine, the n~gligent act e1na~ates . impending ha~!\ and fails to: do ·so is charg~a-~le .wi~h . originplly_from·tl:ie pJaintiff but the defenaant is av..,arJ the conseq~ences·, with9ut. reference to- 'the· prior .. Of . that pEfril,' tq wh°ich th._e piair)tiff f':las b(ee~ expos~d . . . . ·. .-,; ,. . · . negligencefof.~hi\othEfr party (Gla[I_ People'? Lamper . · tq·.~_yet.-he does·. not perfo_rm 'an. ac to av.01a: the · ·Hard_w_arf... /AC, -~·Ff-·NO. 70493, May 18,.198f}). . ·.accident.-. The-~: defEir,_.c;lant is·).iaole· .for, aarnages, The. Doctnnef of h.ast Clear Chance .. ~annal be · ; . b~9aus·e he has not- exercised ttre _required degree of• diligence .(Id.). ' · · · · · · exten~ 1nte<:rne~fi~9);bfjoint torttei:is~rs ·as .a test of .. · \,\/hether.ooly..;.9~0hhem-sh9uld be held liable·to the . . . injured p~rson ·arid it· t;:ahhot .be-.'invoked- as. bet~een : Sometimes· referred to·as: . . : d,efendants· ~qncurrently' _ _negligent- '(Bustam·ante v. _ 1.· .. bisco~ered_ Peri.I (~QUINO, .To s an? Da/!}aqes;. ~A,~:__.~- 8988_0, i=eb~'u?Jry.~,-rn91), ··'. : . . .supra. at 34_7); . . . . . _2-.. Ooctrine. of ,~µ~e-rvening' Negligerfc;§l (Sing1,, b~, : .. ~~ Other .defenses: · · . Senq G1ap _&.:Sons, -_Inc., . G.R. c1.Jo. 170.596, 1 .. Mistake . .. · . Nov_ember ?8, 2008)-; or · · · . : . As a. rule., torts :are. committed 'l:>y -onewho acts . :t .. Hurrian'itari~n Negligence l)ocfrin.e. ·. · under a'rnistake of law or [eqal fight;,; however;" if . rortiand 6a,r.ipg~s,. supra 58). the defendant .acts' under .a" mistake· that· -a . . reasonable 'person would 'make 'under specific Even~ tt:iough.a ·p~rson'.s o0h- acts riiay·have_placed_. · 'privileges protecting the. defendant. in-such act, - hi_m ,iri a_ p~sition_ o.Lpe,ril;0.and .an injury re~ults, the .. then mistake is" at least relevant in determining. injure,d person is· ehtitlE?d to recov:ery (,ft.QUINO, torts . whether the· defendant acted· as- a reasonable arid-Damages, supra af ;348). - . . . . . .. persqn (DE LEON, Torts 'endDemeqes, supr~ at Elements: (f>oL_KA) · . . . . . _: . . 58). ·. . . ... ': ·. . .. . :· . · . · . . ... · :· · . , . · 1. ', Plaintiff ~as:._i.n. a ·P·a;itiori of dange~-a~d. by his . ·. . . . _. .. _ own-r:i~_glige!')ce_-, became unable to escape from ' ; . · 'Illustration: In case of self-defense, the . · ... : such position by the .. use of ordinary care; · . .• def¢hpan't_ . is. · privileged to: _ respond. ::wfth · 2.· Defendant .!S.new that . th~· plaintiff: was in· a· · reasonable .arnount cf forcein self-defense. It is.' 'position ·of danqer or in the-exercise of ordinary the objective reasonableness of his conduct that. . 'careshould have known such; · . , relielies him from liability.: ... ·._ ., . . · 3. Defendant had theLast dear chance fo avoid the 2. · llle~-al Trans'adion · · . . . .. · -- · . . . accident by the - exercise of ordinary care' but . ' Although the-.court·s do not ·permit the plaintiff"to · . : 'failed Jo exercise suet, last clearchance: and . · · · take c1dvantage of his own.·wmng br iniqu(ty, an 4: . The ~cciderit'oc~urrea as a proximate result' of - such failure (o~· LEO{:J, Torts and Damages, action mcJy . still lie if the uniawful act. ·of the . supra at:249-250). -, · .yrongdoer is one which. the as . . . I.aw recognizes . .

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TORTS AND DAMAGES SAN BEDA LAW CENTRAUZED BAR OPERt,T/ONS - MEMORY, AID 2019 ·

.,. having causal connection complained of (Id. af..59). 3..

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Necessity or Self-Protection . In gener.~I. acts pertaining· to public ·-welfare, convenience, necessity or safety which conflict with private rights are not tortious. However, a subsequent exceeding one's "authority may constitute one a-trespasser ab initio.tki. a(60). :.

Hlustration: .Defense of life or property: self, defense; destruction of. plaintiff's property: to prevent spread ·of fire (Id. at 60). . . 4. When the' act is In the exercise of a ~ig~t or the performance of. a duty, unless there· is abuse (CfV/L C_QDE, Art. 19). . : .' , . ..... .:

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'Proximate Cause That cause . v./hich, in natural .. and ·coritinuoµs · sequence •. unbroken by any efficient. intervening cause-, produces the injury, without which ·the result . would.not have occurred (Dela Cruz Vi~no, G.R. No. 219q49,.July 46, 2017). . . . .

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Remote Cause

Thar. cause which 'some. independent force merely took advantaqeof to accomplish som.etning noi.the naturaleffectthereof (AQUINO, Torts and pairiages, supra at 30?).. ·, ,. . . ·

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There:is no etfic;:ient intervening. cause if the force c;:re.ated by tM negligent 'act,. or omission have E:ither: 1: .Remained ·active itseH; . . 2. Created another force which .remained active. Untfl.it dfrectly,~aused the result, or ,· r. 3.. Created.a new active risk of being acted upon by . th·e.acilve th.~: result (Id_. at 334). . ·. force : that.caused .. . .. . ·.

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Te.st 9_f:Suttidiei:ic;:y: . . ' (. .. ..; , , Articles" 19, 20, and 21'. are provisions on human 1. · ~t. must. be).new and, inde~en~e,nt and ~ot under relations that'"were,lntendea to expand the ·concept .the control of the wronqdoer, or one which by the of forts iri this j0risdi¢tion g~ant!~9:.adeguat~_~le$'~1 exercise of reasonable, foresight· and. diligence, ·remedy forthe untold .nurriber of moral ..wr.ongs which he should haveanticipatedand guarded aqainst · is· impossible for human· foresiqht.fo specifically .it: : . : . . I . . provide. in tt,e~. statutes.v. (AQ!JINO: ''.' Torts ·and' 2.' 1( must break '-the · continuity of. the causal Damages; supra at _7}:'_ . . . cohne'cti~.n· between the 'cirigina'i.- n~gligent act . .: . . . . -:;·,. and ornissiono'and . .'-...:- · . · ·: · . . .. . . Abuse Right . ~i ·-: ': · ,.,,. · ::: . : . -: . ·, · ·.... .. -, ·' th t ·u1 · 't mer cannot be· said to Standards in the exercise: of one's: rights and. . . . in Ihe . 3 . .Th e inJury so. a . ~- or . have been the efficient cause .of the latter (la. at . performance of one's. duties:' '', .. · 33.4-335): - .: _... · . . 1. To act-with jusflce: . ' . ': . . . .. -, · · 2. To give e.veryone his due; and .,.. · ._ ·· ·' · For'es·eeable lritervenlnq" Cause . 3. To.observe honesty and good f,aith (CIVIL COD~. ·.,.This cannot.be considered as a s·utticient·intervening Ait. 19).· . ,. '.· . · '' . causetbecause there .' is c;1'n opportunity to' guard aqains] it;(fd, at 337). : . ' Jhe ~eipl~ abuse
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. .ca.~~·e_~~eq.~__u_s'.e .!.t .is__ .fo~-e~:e.e__ab_l_e (~,'a_/ ..;.~.37)'. . _· · · . Gonzqles J:'P~1i/ippii1e_·C6nimer¢ial ~n_d _lnterna~iC?.nal • ~ _,. Bani<, G.P.t No. 1 BfJ257, ,Feb(u.ary,._23,. 2011 ).' · · , A .t.?rtfeasor .:i!>.. liable ··for/me,._ c~~9-ue~~e o~ - , · ·· · ..• · .· ·. · ·._· ·, · -: neghge.nc~. m1st;:ike qr-.lack of sk1!~01:a_p~¥s1.c1~or A riglit,. th,ough oy it~lf.l,!3,9al(~ecaus~ it.is r.~cogn_ized · .. ~~rgeon ':"'hOS!:):_tr~~in,ent- ;'~911.~~!~9 tfiiongl~fl . or w~n!e~ b¥ l<:lW;~·~:_such;_m.ay-n_e_v,~rt,h~le_ss_beson:ie · inJ!.lry·. ·Jlie. same ·1s cons1derea a norm a) · and • the ·source' o_f sorne-,1ll~gahty-(Ard1e~te. v. Sp~: J_av,er forese.eable risl({/d.-at 337). · · · · ... -, ....· · • -'· · ·· and.:.Ma: Theres'cJ Pastorfic{e, G:R. No. ·161921; July_ • •. : •• : • :...0 ·. .· . . . ' • . 17, 2013). . -:- . . . . . The;ciriginal. fortfea.~~r-·is ;not lic'!b le 'where. the' inJtireil-----~· pc;1rty failed .to exercise)~a~onable' carJ if) s·tcuring Wh~n a.right' i!(~xen;:jsed i~· a J'Jl·an.ne'r°wh.ith_doeiinot' .the.'s~rvice's: c;>T. a c9mpeteJ)_t sur:gecln 0r PliY.Si¢.ian.. coriform· to these· standards and· results.Jn'damage to. Such c·an .be· con.s1d!:)red as· ar\':'e~~ient'intervehing . another,.a legal yvrong is thereby .c.om'mitted.fdr wh1ch cause:(Ufbano !AO.-, GR No. ·1'87926, Fiebiuary 15, · .the wrongdoer must .be tie Id. responsible ~Arclient.e v.. : . ,:-2012).~ · .. ·: ,':' ·.· ... _ ...-·. .: · .. ~"· (, ... ·· '· .... :.. · . ', Sps."Javier:and)vta, '·Ther.esff:PasforMe,-~G.R'. No.".· :_ · 161921,Jiliy17,'2013);°'_:··''.'° :.. , .. ,·~~·::.··:.· :.· · . 0 U~tore.~een:a~~:Unexpi_~ted_Ac(dt Ga~-~e· ·. · . . • , • • • .... The intervention· of. 'an unforeseen and onexpecied ' Wh_en is. there :a.buse ofright- · . : ... · ·. . . ,, . , · : . cai.ise is not sufficient 'to re.li~ve'.th.e wrongdoer frQm. .There is aouse .of right wh~n 'it is .exercise'd;only for. ~onsequences, of:. negligence . if' SIJ~li ·, regligence . . the' P'L!rpbse.of p~ejudicifig or iiijurif'lg arioth~r: .. <3oqa , .. direotly- and· · prqximately. :cooperates,. with. : the - 'fait.h is P.res~n:ied .·and th..at thf bLirderfoFP,r\iving:bad__ : .'. indep~cje·nt cau$~ in the .. resulting injury. (Africa v.· 'f~J.th reits . ljpon .-the. party·. al)egin·g . it. '.'(AL°BANO,: · . Caltex;'G.R ... fyo. L-129.ljtJ; Match 3·11966Y,: · ,; ' -:. Reviewer,'·suprJat 32).' ~ ·, · .... , ..... · ·.·,. -·''., . ' . • / . • . •. . . . . I ~ •• ~ . . , . .• .... ., . .:.· . . . . ... . ~·,.._..• . . . An µn,fcice.s~E?n· and Linexp~ct~d ·act:'b(a third"pers.on' EIE,iments: .. ,.... · · :. ·.:- , may not b!::! COl)Sidered·an effjcientintervening cause .' . 1. 1h~re is a·legal ,right of duty;;.· :· '. .. "~-· '. · .. · . if it is.~_uplicative .iD .Jlature or if if merel{'~ggravated 2 .. yYhich· is exercised .in b·a·d faith; th.e injury. that res1;1ltea .because of the prior cau·se.· .3.· For.- the ·sole· intent_ of: prejudicing· m· injuring The. same GOnc[usibn · can 'be reached if .'the third. .- ano.the·r (Ses/;)reno v. GA, G.R. No.'·'f75540, April person's act is"p'ari of the.causal.set, togetherwihthe . 7, 2,014).' . · .... : . . . " . , ; ... ·, .. · ;·-'defend;:;mt'irnegligen9e, 'that operated to cause the injury (AQUl~O; 'T6rts and.Da!Tfages; supra .at 339). · '( .. ,, 0

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TORTS-AND DAMAGES SAN BEDA LAW.CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

Good Fafth refers to the state of mir:id which· mani.fested by the.acts of the individual concerned. · consists of the intention· to .abstain from taking_ u·nconscionable and . unscrupulous advantage another (California. Clothing Inc. v.. Shirley" · • Quinones, G.R. No. 17582_2, October'23, 2013) ...

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Where th.ere was m9ral seduction (Id.}:

Malice or Bad Faith impli~s a conscious and intentional design to,do a.wrongful ;3ct for a dishonest ·purpose .o"r'moral- obliquity (California- Clothing Inc;. v. Shir_ley G. duiiiones,. G.R. No. ;_1!5842, October 23, . 2,013).

Moral seduction,· although not punisha.ble, connotes ih'e idea of 'aeceit,.' enticement, . supe,rior po~er.or a~us~ of confidence on the part of the. sed.ucer to which. the woman ha_s yieided (Baksh ._:v•. CA, G.R. No. ,97336, Febr_ua;y 19; 1993). ·

Acts Contra_ry to Law (CIVIL 90DE, Art. 20) . This article speaks of the general sanction for all. . other provisions of law, whi~h do not .especially . provi<;ie 'for thei_r qwn sanction (DE LEON, Torts and ·. Da((Jages,-·supra ·at 77). · · .

No dati:iages c·ah be recovered und~r Art. 1 ~ · arid 21 .where the sexual intercourse is a product -of voluntarir.iess :ind· mutual desire (Constantino v. Mendez;_ .GR.· No. 57227," May 14,° .1~92). .

N~t~: ·Art. -20 does not .distingui~h;~h(;l ac ·mar'6eu· done-willfully or negligently (Id.). .·

2r:~exual ~ssau.lt. . . . . .· -: .. ·. . J>voete_na. antis ~able forall'forms o,f sex_uc!I a.?s~u.lt_. TJ{es{i9-~d~ the ~ti.m_es defined in,t_~-~· R~_v.1sed Acts Contrary to _M.oral~. or Act~ContraAo.nµs . · _ P_e~·Code:1uch as rape, acts of lasc1v1ou~_ness, 0Tof"!s Mo(e's (C?IVI~ C.Of?E,Art. 21) . T .~ / ~. · . ·. :.:fc . s~duf.t1opn".·~A._QU/NO; .Damages, . __T_h~s article .. rs d_es_1gned to fill_in_~e,~~f.t~e's_s gatBT. T :w supra inthe statutes.which leave.so':manY,!\t:1ctJms of mofal ~ · 11\\. . \ .: \ · : ., . · ·wro~gs helpless- even thofJh thqy·· havf actuaily Not~.Def~n,d5'F}s iable ev~n if-h~_.satisfied his suffered ma_teriar and moral inj~>(/d. at 78). _ =· ~!~; l~st i_thout\P.r~slng 16 ~~rry. the ~ff~ndea ~~"~;::.11(11 ,.,.....,-1:] party. _It may ~ot eve, ma~ter tn.~t the plaintiff and · · Ele~en~s_).L~q) _ · ·:. -~ . . !ef~~S°ttJe.~efe. n.. danU:1res~f h~ sameqender (Id.).. . . . 1. Act whichis- Legal· ~ ·2. jhe ad i~ ontr~ry to ~orals go~.c~9ms.;· ·. 2~~-ctiinh)~UlUiiies . . . _' .' · . . · · .. public orqer or public polidy!a . J¥:., -, J::&),,1_,~;,cc:ise a_person..·!.'}ils:to, pay \of 2 ov.er@e bills 3. - ...T_~~ act is Qon~ with inte~t to. iriju':f (M_eJzy~{~ · I .-~~a~~onsjfiuent_!j h,i~ line gets , disconn~~t~d ·. ·--~-$poys.~s Gone!, ·G.,_R. .1£5,01. 1);30, .-~~out_Jp~r no~e; th.e SC: rµ!eJ.I. that:the·state. . 2Q14). . . . ~-,. . .• :. ScJEN'f\~D1~~2gulate(~S·iCh~s· done thrbugh:·Section· 97 . : · .. . ·· 7 - . · · _ ~tm~ ~s.eEI 0rder No. 1 of the'PLiblic·Servics) Not~: D~n;ages ?fe r.ec_overqble e e-ti ii!n9),p9~fi.'?'e .....-.-,Cfr{J~,s~t~e.,~on_d!ti?ns.~_ri,der 'A'.hich ahd lh~. lc1w._ was.x1ol~t~9· (DI; -~EON, Tgrts :flrt~~a!J1!1_9. l. ,f /\.. 1 m:~nr:i_fili,loywh!ch_a e~, publ1c:y.t1hty su·ch a~ M~ralco supra at-:361).·. . . . · ·. lVJ.n. y'.°"effect a .. d1sconnect1on ,;.Jof service to~-a. ' • \• • · . ·-:- ._.. ·/ . ;.· .·~ . : ·· · · · ·· · · · · d~li.nq~ent cu~to:mer. ·Among .oth~js, ·:a· prior· ·.~inq_?: {BAp-STAMPID.). written notice to_Jhe c·ustom~r-is re.quired before,.-~ _:, . 1 .. · . .§.re ·: , ... , .. _··. Damages, s_upra at 382). . · .. · · ·· .· :... · -~ · . .' ~·· '= .' · . · · · : .: . , . .. . . . . . . . 4: §eciucti~-riWitho~"t.Breach'.~f°Pr{im'is~ to riirry : . ·.·· .. · : Exception~: .;_In ca~es where. there is·. an act _ Seduction:. by. it~e.lf,. is. also_ an act- contrary to·, . ir:,depencl~nt of th'e'· b_rea.ch. qf pro~ise to' m~rry :. .morals'i good .. customs . and . -pubiic. polit'y, .. which gives rise. to liability:. · -·· · · . (AGJUlfjO, -Tor(s·-a_odDa_mag~s; s·up~~ af:~87). . . a. Cases whe;e there was fihan6iai°_damage (Id.' at 383). . : ·. .· . .. .. . . · .ThEf'de(e.ndant·i~-.Jiable· if .he .employed gec;;eit; . T9;· torm~ily-sEit a _wedding: and::go. th.rough: .. gnUc;ernent;. :·-~uperipr · p,owS:r·; .or. ~,2buse ··. of a_n9 s·R~.ndJor au. th~ wed,di!')g_p,r:eparations ·· conf)demce·(PE$A):in ~qccessful_ly liavihg:sexu.al. ar:,d.puoJicity, oni~ t_o walk out.of it when the ij,te'rcourse. with· ~nottiec even if he -saljsf!~d tiis n:iatr_imony was ·about to tie ·solemnized is .. lusr wilh,'out. promisi_n·g .'to· ·marry.·the offend~d · palpably a6d unjust\fiably. ~ontra; to 'g~od . party. .. ·. ·· . _ . . ·, .. · ·custqms.. fqr · which the defendant. is · . ~ .. ·answerable tor damages {Wassmer v.-Velez, It may not evei:i m_atte( _!hat the plaintiff and th~ _·G.R. No.' L-20089, December26, 19"64). .· defendant ·are of .'the same _ge_nder {Id.).

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In the case of Baksh v. CA (G..R. No. 97336, · February 1'9, 1993); the 'Supreme Court held that the existing rule is thata- breach of promise-to . marry per · se is not. an actionable wronq. But where a man's promise. to marry is in.fact the proximate cause- of the acceptance of his love bf a woman and his representation, to . fulfill ,!hat · promise thereafter becomes· the proximate cause of. the giving 'of herself unto him in' a· 'sexual. .conqress.. proof that -he ·had. in reality, no . intention of marryinq li~r and· that the· promise.. . was only a subtle scheme. or decepnve'device. to entice orinveiqleher to accept him and to obtain · -". her consent to. sexual . . . . the' . . . . act, could 'Justify ·.. . . the ~/" .: ..... award. of damages pursuant to Article. 21 not - because of.suc_h pr.omise to marry.bµtblicaJJs_e1 of " . the fraud and deceit behind it and the willful injury ."to . her' honor' and. "reputation . \;Vhic_ti . followed . _thereafter. It is essential," however, that such. · / 'injury should havebeen committed in a. manner contrary to morals, good customs or public policy.'. · 5. :_trespass and Deprivation.of Property

Illustration: 1. Petitioners, 1n. the case of Magbanua v, /AC, were-deniedirriqation water for. their farm lots ii') order to make them vacate . their landholdiriqs. The 'defendants violated .the _plafntiffs' rights· and caused · prejudice-to the Latter by the unjustified , ·. diversion of the water. Thus, petitioners" are entitled to· damaqes. (Magbani.Ja v, iAC, G.R. No. L-66870~72, June 29, 1985).. . . .

2 .. · A group of ddvers took .over all jeapneys of a transportation company as well as operation of . the service in the company's .route . without autfiority. The . : Supreme 'Court.declared that the act was in .v(olation· of Alticle. ~1 (Cogeo .:.....Cubao .Operators and Drivers Assoc[ation v: CA, G:R No:·100727, Mar~h 18/1992). ·

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Abortion' and, Wrongful Death _ · , .. Damaqes may be recovered by both spouses if: . a. The abortion was ' .caused through the . · ·p_tiysician's. n_egiigence~ or .. _Was _pbne·int_eiitionally_without their consent. . -A d~ct0r who. pertorrns an illegal abortion _is crimjn\llY. liable under Article 259 · of the R}tis~d 'iD.~na.l ~od_e .. .- · . _ . . ·

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under th_e Re~i~Od ,P,on'a)CQcl£:-.anO· f:rticle 451- of ·the Crv.rl G_o?e to ·~ttagj ('AQJ!JJNO,

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·~ woman who voluntarily. _- · _-'."I5focurea nl2~9rtron: r:na_y:rec.over d.a.mages· Torts.and Dg.mages, suwa_ alj388). frqm.J~~~ysrc1an,w~o ,caused th~ sa~e. on ' · - . : · . ·- :· . · ·. _ acco_unt Qf:-distress and. mental anguish N~ action for damages is al p_wed "Y~~re. he _ .. · . att.e~dant to the lciss of. th~ unborn .child'.anp · . pu1lder, planter, or sower actea_ in good faith·; the·,. disappointm~nt of · his · parental TJ:le. !andpwner .. _ is'· limited ·fol,the;:"-?r:>t~ns~, -~·. ,·.~expecJation·?Ge/uz v:- ·~A, -G.R. (\Jo. L-f6439, ·. provrded for under Article ~4.8_ (€/VIL t:;QpE, . · . ·,, . ·. · . JuJy.20,: 1961 ) .. : ·. · Arl:44{3;·456).· ·. .·,_-·. . . . ··. :.. · ' · .· 7. Mali~ipus pr~s.ecutio'n (see .. C/VJL CODE, -Arts. A builaer in good.faith.who: acted negligently · ·1~-21, 26, :3?, .3.3, 35/?,217, 2219,' Par. 8) ::" ... ·maybe .ti_eld li_able under 'Article ·2176. An action foF damages br0ugl)t by one ·against · ,_. . '. · . another,,· against. 'whom. a· crimina_l. prosecution"; b. ·. Tr~spass -. to 9r dep~ivation . of personal · . , ' .. GivJI.' suit, or other legal pr6ceeaing. ba.s been . property. . . . i~_stituted malici9usly · an~ . with_out ·. prob~ble . cause, after-the termination.of such pro$ecutiori, .Theft or robbery. of ·personal· property-: Js · . .suit or·. proceedil)g in' favor. of the I defendant trespas~, ' · · · ' · . :« therein :(Ma?}l)µnua v..· Juns~y, G.R. No. 132659., 'February. 1~; 2007). · · · .:..:...,. · ·~ . ·. In the. field,tor:t. trespass· extefids '-to..'all case.s whete a per~on · is depriveq bf· his . _It· is. for, the me'fe. purp~s'e. of vexati~n· 9r fnjury persoiial ·property '.even-. in. the abserice of · ·(Driton v:: G:t~. Np:_,1070'!.9,_March 20,-1997). · · . . . ·. ,, criminal ·liability.·· ·(AQUINO, ·. ·-rorls: .. and Damages, supra at 390). :._ . .· · Elements: . . . . . 'fh~ fact .of th'e~ prosecution. ar:id" the .furthe'r N9te: ,, It. rnay -(::Over ·. q1s.es . v/here· · the · .. fact (hat the defendan( was . himself . the -_-·defendant was.d~prived of persqn.al.prop!:)rty pr<;>secutor;_ and that the actiori" was finally ,,-- . for the purpose .of obtainin·g possessi~h of terminated with ah acquittal; . . .. . real pr6p.erty (Id.) . · . . .·

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Illustrations: a. False . imputation of misdeed .. to j!JStify dismissai (Quisaba. v. Sta: 'Ines Me/ale- . Verieer and Plywood Inc., G:R .. No.. L-38088, August·3,0, 1974). . . b: The ·ground relied· upon .is a .figment of · '-employer's imagination (Globe Mackay and . Radio Corp. v.·. GA, G.R. No. 81_262, Augus( ?5, 1989). ~

b. · That in bringing the action, the pr~secutor acted without probable cause; and . . c. The prosecutor. was actuated or impelled by . legal mal(ce-(AQUINO, Torts and-Damages, supra ·at 393-3.94). · ··

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··Presence of prpb13tile c~~se·\signifies. ·absence of . . . ·malice·(ld.). · · -- ,_ · . Note: Probabl_e· ca1:1se is. the existenc~ of such facts and circumstances as . woul.d excite the · belie~.of the pro'secutor that the pe~son cjl~rge'd . is guilty if the·crim~ for- which he is prosecuted :- ({d.). . .

10: Desertion by A Spouse. · A spouse has a legal obligation to live with his/her· spouse. Failure of spouse to perform duty-to the other' entitles the other to damages, for such omission is: 'contrary to law: morals'. . good customs and public policy. (AQUINO; ''supra et 387)-,

· Absence of malice signifies goqd faith on the part , -of the defendant: good faith-may even be based. ·,, . on·mistake.ofJaW0(id.):., ··.,: ... : : ·'-·.,. : ,,.:-· . :·· . · . .· · . · · · : . .' . -~g~nt_ drlvlnq not a l_egal ..~ct_ _ . ·. .· . . Acquittal.presupposes ~hat c~1m1nal informaticn 1su · l~an:~ar~ly be sa1d._that.Me~doz_a s negl1gent::d~1vin~ , filed in' .court a~d ,rmal Judgm_;,.nt're~red . 2nf1olat1r;n of tra~1c_ laws· are leg~! acts. Mo~~o~_er, dismissing th_~. case.oprior: ac;:qujtc.Jl~y--).D~~E!. ~,l wasf n.ot!_ g.ro:1en tha~ Me~doza intended :to ._1n1u.re ·di~".nissal by the,:· pros~cytor.1tter. p~im1~a~y. .. Pe~e~aL 1fl~s,0rl1cle 2.1 fin~_s no application to . investiqation (;Globe Mackaffen~dio,J_orp'!"_rr.'"·: .'Ji-'. 'the . . case at ·b~r(M~en(jo?_a,v. soouses Gomez, G.R. _ . _.pA, _G.R: ~o._81262, _Augil~~2?,;!198f, ·Ma'l~? f¥/J-,1601f0, Juf.e 1·8, ..201'4).. . · . · . .· .: Gas Corp v. °-A, GR Ne/_L "44;J.90, Oetobe( 3b, .!E::i. .•.. \ •• ( _ . . ,

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· The ·r[ght.of the enwloyer to di_smiss.'.an ~mployee. , ·dr:iv,en. by fiood,)o. B's cufti_vated tiighland.:·.A should · '·sh.otjld j':)·ot- be confused· With the manner iri·.WliiGh · 'ind~ryinlfy'B. fo'r tfie destrtk:tio_n of th:e lafter's-'crops .. · . . · ,t_h.~.: right,. is.. ex,e'fcise.-~'>.a.rid .. the' ,eff~qts·~flQWJng · . I . , , . . .. ·:.there.fro'm (AQlJ.IN.Q;Jbrts-and'Da{[lages, supra .. , p·a"y'ment by Mistake .. · . . : ,at392):•' ..... · .... , .. _.·. :.. ·.: ·,· lf.?o~efhing.is.recefved w~en,ther!:J·.is no ~jghtlo. ·' · ·-:' ;..· 9emand· it,.. and·: it· was .·unduly d~!ivered· -through }f t~~ 9\s~_is.~al ~"°:,~~don~ oppressiye.iy_or. in_ .§3. ~istak_~·. 'lh¢ .. -bblig~ti_on. to r.etutri',it ar.is_es: (C/V/t: . · .m~mne~. contrary to· morals;, good. 'cus,to'fns an'd CODE, Art: 22). · ·· . .' - . -- . . . p·ubliq p'oli'cy, ·.the efrnployer-should be deemed,to . .. ~ .. ·, . . . . , · · · .. ·· · :. ·'..;· .. · ·· .. ·. ·., . . have violated ·Art.' 17.01. ·of th'e· Civil 'cod~; ~hi2h. . ' Artides 36 ~f the, Civil' C6de· se;/as! basis 'c)f .prqhibits ·a~ts bf-oppression, by ei.ther..:capital irh~g_in9b_le tort. ·a.ct ion;, ·th.ese aj~ .. pr.(?yis'jo~riS Ori .. : . ·. laqo'r agaihst·f~~ other,· ~bdiArtide 21 'of the .. Ci\'.il_ ·. · · human·.relations that "wE!re intended to ·expa·na · the ·· (}ode (/dJ,' ·_. . . COrlGept, . of tC>rtS 'jn · thi$ j_Lirispi¢tion-" )y/graiiting -· ·adequafe,l~gal reme9y:fcif. t.he untoJd number of moral . . . .~ : w~origs which is imp·ossible for human .for.es19ht ·to ., s'pecifically_ provide ·in . the·, statutes (Philippin~

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Violation of the Right of Pr:ivacy · The essence. of privacy is th.e right to be left alone (Op/~\/.· Torres, G.R. No. 127685; July 23, 1998).

Reasonableness of Expectation of Privacy . . ·, l.vto-P~rt.Tesf:: .. - . : .· . ;. I ... •, . . '---' . . ..._ q·. .Whether by ·his conduct, th~ 'in.d1vid.ual hc:is. exhibite·d,an exp.ectation of privacy; and b .. vyhether this., expe.~t~Jion- is one that t~~ society ·recognizes a.s reasonable (Opie v. Tdm~s, G.R:Nd: .1.27685, Juiy23, 1998). ' · .. ,

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Exce'J:>tion; ..-The. rig_h.t against unreasonable searches and seizure can be. invoked by a ·· juridical entity·{Bciche &'= (Phils.), Inc. v. Ruiz;. G.R. f.J.o. L-32;409; February 27;· 1971) . . . -

National Bank v.· CA, et al., G.R.-No. L-27155, May 1{3, 1978): . . . . TORTS AGAINST HUMAN D.IGNITY (see CIVIL · CODE, Art,,26) . ·. . . Torts against h1Jman·djgnity, personality, privacy and peace .of mind of his neighbors· ·~rnd oth~r pei'sons1 thqugh the'y may not gonstitute a .criminal offense, . shall ,produce a c·ause of action for, damages, :-preven~)~n a~d othe~~elief .. : ·· , · 1.

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Gene,ral Rule: Right to P.rivacy is purely personal ln nature,,hence:·-i. : It can be irivoked only .by· the perso11 ·- whose "p~ivacy rs ciaimed to have been violated.· :. · · · .. · ii, It can be .subject to wai~er of the p.erson ~ .who.se··privaci·.is sought to ~-e intruded into.. '" iii. The right ceases ·upon the death of the . person· (AQUINO, Torts and Damages,' . ·. ~upra at,416}:· >' . .. ·' ~-.

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. E.~e·ptjon:. A privilege .. may. b~ given I? the · surviving rela\ives o~ a ·deceased person to · , ·. , . prot~ct his m~mory·bLit the prjvil.ege exi.~ts for · the .benefit··or: the living,· to· pt_otect. their feelings arid to prevent the v.iolation oJ, their. own rights in the.:chara.cter and memo.ry of :the deceased (Jd. 416X' . . . . ~.

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.. Illustrations: ;: ' '. :, . ~ - ' ... · i. .. ·'ifIn some· cases, the law. ... allows. .• the heirs ··• . .· of tl'Y§·de.cease<;rto,enter into 'a licensing , · .> .• • : ?~re~r.-ent for the depiction the 'life of . _. / the deceased- (Lagunzad · v:- Vda. .' De. · Glaza1e{·GR 'No: L-32066/:A.'ugusr ( .--- .....1.9,%9).., . . . -· ·. ' · .' : .... ·. ·.ii. C0u tl . li.av·e allowed. :. recovery of. . . : . darnc;iges;.for- the 1,.(na't,.1thcirized use of. the: -------- . , ·. nameor picture of a deceased person for' . ~. . .advertlsjhq ·or trade purposes ·(AQUINO, . .. ·· ···- ·. . ·' ToHs"and Damage~,. 'supra ~(.416). · , . ... ;' . . . . .. . . . ·.. : .,. :~. : . . Foux· Types of l~vasiO:n·otf:rivacy_:_._(F,>fFA) .. · · · . a: ·R_ublicatio.n,- of·· Emb}m:a,s.sing· Private ·. · · ... , -, ·· Facts , .. · · · :. · . ~ ·, ... _. · . :.. Consists of a 'cause of action· in ·pub.licity, 'of a · -. : ·.· :,'- .highly,.objettio,nable· kihd/:gi.ven 'IQ private. . ·.· ... :· -mforrnatlon about .the,plainti.ff,,~ven thouqh it ·· :; ';is true·.and n.o·actionwb1Jld.liefor'defamation · , . ,. ·· .The int~r~st- so~·ght t6 b~ pr~t~~ted is ihe'·· .. . .· right to:. be fr.efe lr6r:n .ur,iyVarra~ted. pubiicity, .. : .'. · · .. :'fr~m-:1th¢ wro~·gful. P.Ubl.i.<:;i:?:ing of ,the pr.ivate . ·. · · .:.affairs ·and .. activities.; of ·an. individual-~wHich · .. :.:: .. )' ·.. are outsi~e thE;f: realm ·of l~gitimate· public. · . concern·. (AQUINOf-. . T:orts:. and. Damages, · ,supra ..... · · . . at 438):.

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especially with respect to c~rrespondenGe, ; . conversation, and records: c: -Ri:.op'rietary .privacy:~ lirnil~: the !JSe · elf'· a . . ·pe'rson's· narne.. l_lkehe.~s.: identity, 'Of other ·. . c;,1t~rib4tes_, ' ·or':, ider,tlty and. exclusive . - · p6ssession · . , r: c:J:: Privacy .tn .a decisional sense .: .denotE?S·; . libertv,' free'doin, ch.oice, or. autonomy .in .,._:.d§!cision.'.·making· about- sex, reproduction, . - mwriage,'family, .and.health.care (AQUINO, .. :. ' Torts a:1d· _[)arri_a~e's; iSUpra at 4 H,412).

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.Basis .·of ..1,\1bi'lit{;ft>·r Damage_s (see. CIVIL . CODE;Art.·32)'_· .: .-. : ,....... ~ .,wh:cicc)n'·in.v_oke:' :-... -..... :_: ··: ... ·:·;· .a,· ,.General Rule: T:_he ri°ght :to privacy can be · · invoke.d .or:iW bY. 'nafu.ral. persons ... Jurj9ical · ·· · - ·. persons ·c~nnot invoke' s~cb right. beca.use .- ... the_ entire:basis pf·right.to privacy is an. injury IQ the· fee)ings and'se.nsiqilitie~· .of a· party; a·. :coq:~ci~atlon .would have. no,,su·ch ·ground. fo"r relief ('!lalr:nonte,. v,.., Belmo()te, . G.R. No. 14930, Fe_piuary 13, 1989). · ·

·.:

Requisites: ·· .. . ·~ . · . 'i. · · Publicity. is given to any private ·or pu'rely · personal iriform~tio,r:i: apout ·a p~frson: · · · , ii. . WiJ~9ut the_ latter's ~ons-ent and · iii. That the publicatio·n was/made with intent_ .of gain or for commercial. and

2019 SAN. BEDA. LAw CENTRALIZ~D 'BAR OPERATIONS I . 813

TORTS.AND DAMAGES SAN BEDA LAW CENTRA[JZED BAR OPERATIONS - MEMORY AID 2019

concern and not one which relates to his · being a private citizen f.ld. at 431) .

business purposes . aggravates the violation . of the . right, regardless of . whether. ornot such publicity constitutes a criminal offense, · like libel or defamation (Id ·at .438.). .

R.A. ~200 or the Anti-Wiretapping Law . It is illegal for any person not authorized by all the parties to any private communication to secretly record. such communication. by means. of a tape recorder (Remirez .v, CA, G.R. No. 93833, September 28, 1995).

N.ote: Because of the· i_nterest they generate . ·an·d their newsw.orthiness, pu_blic · figures, most especially those holding· responsible pos.itions ·in government enj9y a more limited . T.he use · of a telephone extension .. for right. to privacy. compared . to or.din"ary·. purposes of . overhearing private · · individuals (Aye,: Pro_ductions ·v. Capulong,.· conversation without authorization does not . G.R. 82380; April 29, 1988). -· violate· R,.A.· .4200 as it cannot be placed in Rule . on Publication · of. Official the same . category as . a _..dictaphone. : Proceedings '-dictaqraph or the other devices enumerated · The publication of .facts derived from the. . in. Section 1 of RA No. 4200 thus -the use records of official· proceediriqs ..which -ar~ 11().t . . · 'thereof can not ~i:r-cqn·sidered.-·as· "tappinq" otherwise de_~lar~d by law ·as_ co~~d~~ the wire or cable of a telephone line.(Gaa~an .cannot be ccnsidered a. tort1ou~conclucl'J T' G.~. No. L-69809, October 16, 19.86). (AQUINO, Totts and· Damages, _s·u[:Je at I: Ji"'·. · · · -~43). · . . _· / .("'""\ j_ ~ . ·. Limitatiqn_s onthe Right.to. Information: . · '· · '· i.Vi'tJ.:~ite9 _to matters of p~blic coricern.. 1 b. · !nt_r_u'\;ion · u?on ~lai_~Ji~:s~ec_l ;J.p-~--o~ .,~ - ....~:. . c1~ .,,~. _: '. . _. . . · · · · .r . · S~htud~ o_r into ~1s Pr,1x_ate1~iri': jr' W·,. IL. l~~/!~Ject to such hm1tat1ons 'as may be 11», It tsnot limited to case's wlte1Y.l~e defendant ~ Le~ . pr0v1tled By law· (Sereno v. Committee physically frespa{Ped . :)nto" '{another's _ _,-~ . -. . . brr iraq~a~dRelated Matters; G_ -.R_. No. -- property. _It· incl.u1e~c~_~es lne~_·:~~e t:lj ·. 1752a~~bru_ary 1, 2016)_-· · . defendant mvacles one s-m'hva~y by locils.inw:, f:o~ outside: (e.g.;f_ie~1n~-tonj) Jrd is{o<6b·\\l@f't:i · ~ule on r.~s~-~~~e~'s_B-~ggage_ Search .: limited . to... C?Se$ wfi~4; ,t'\"E(T<;lefendari · · . · [~C_Ontract-1orcar~1ag·e~ a- passenger _IS ·,, physically trespass ti J"nto~oti\~~~~p~rl~ . ~1. . rwyecht.~rLva1 and c·ann?t be· ~u-~jecte.d·t~y· Jf:-[?UINOi Tort~ _and7 _Damag6)~ sup~~fJ= -.<&,>: -y ~1'Jsual"'<searc~., _Inquiry. may o_nly be - at._,f-24-425). : .- · ·.. \ .·-. \: ..H!'.1,! · : W ~ · _ad?a~e-tball/ as' to the ~ature of' ~is .. 1 ~he~ ,._:, plaintiff 1s popular or not· (Id: a_t.42§~ · : __ , · ... ·. CollQ,~~s _are already dan·g_er of b~m·g : ·· : . · -"'- ...( ~ r-) . · · · ~'\\1r.f1QSgie~Sl?,d·(Nocum·~- .~ag_una ,Tayabas ?eneral ~ul_e:.-~_o invasion of ~~ .. p~ri?c!cy,·li,A: ~..,,,.\.....-;.B~(Company, No._ L-23733,_ ~ctdb_ej . whei:, a ·iou~m1hst ~e~_ords, photo.g_rap s ~3"1, 19.69; G. V. Florida_ Tra·nsport, Inc. v. Heirs writes ab9ut somethi_ng that _occtirs in p_u6 IC . . . · ''or Batt,ung,.:J,::; G.R. No: 208802,. Oc;tober 14,' . . . . places (Id. fl!:42!?)_. ~ · · · , )015).. . · --~· ~' ... , ..

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Reason:· . People in publiC' places . must ass"unie th.at "theY: migh(_be photographed _recorded_ (Id: at 425). - -,

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EXC!;!pti.on_: IJl{he~t the acts._ofthe'. journal(sris . '. ·to such extent-that it constitutes harassment . Of OV~rze::Jlo_i:JS .. shadowing ([d at"_426). ' .. .

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. . lntq.1si"on in the ·internet . . . . · ,· :· · . .T~eri:i- wilr be' iritrusi9n through the intern.~t if. ,' ·.-: . .-.<. a_ persory is ·eng~gep~in,.what-:.[s, knp"."n. as, .. ·: · · · :Jml.a""'.ful acce~it' con.t~mplat_~d" unde:r. the Electronic Con:imerce· Act, to Wit: · . ·

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·No.intrusion·.when::· -. . . ~.... i. ·An ·employer inves,ti'gates. an ~mpl~yee . ,or. vyhen . u'ie: .school . investi!;iafes. its .. student (Id. af--426). .. ·, · . · · ,. ii. · The infori-nat_ion sought' are. m.qtters: of yubli_c,record (Tig(if to ·inforrria.tion). This .. . includes matl(;lf"S tnvolvirig pOblic officers but o_nly:_when'·the matter''is of- public ,,

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"Access, to. an electrohic. file. or.: an .el~;irori°ic . . signature of ~n electronic data message or .elettrqni~\Joc0men( sha1fo·o1y be'authorrzed . 9nd,' . enforce'd of the individual or .. .... ' _;in . "favor: ~ . . ··. ~r;it1t1r:·hc1vin~(a- legal righrto the possession. c:irthe us~ ofplaJrit~~t. el~ctro_nic sigriat~re or -f)le or.solely ~or.I.he· authorized-purposes. The •0 · el_ectrc;mic keyfor·idef\lity:·9r.iritegrity ~hc!II not . g_e._mad.e available 'to "any person or· 'party ·. withqut ,he consent 6f the indivicluc;1I or. e.oti~y.

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Publicity which Places a Perso.n in a False . · L.:ight in the P·ublic.Eye What . is protected. is the Interest- of the indivldual .in not being made to appear before the· public in an .objectionable false ·light or false·position·(AQUINO, Torts and Damages, supra at 452). .·

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Interference with Family-and Other Relations It may be:' a. · Alien.~tion of affection of spouse b. ·DisturbiQg family relations· (Id. at 456-459).

It-extends· the family' is induced himselfor 'of married

. ·. Illustration: Publishing an unauthorized biography -cif famous baseball player, exaqqeratinq his feats. on the baseball field, portrayinq him as·war hero (Id. at 4?3). . ·

to all case~ of wronqful inJ~rferenc~ in affairs of others whereby one spouse to leave the other spouse or-to conduct herself in such a way that the comfort life is destroyed (Id. at 45!)- . ·

There is no evidence that the parents of Vicenta, ·. out of improper motives," aided and abetted her o"rigin"al suit for annulment.' or her subsequent" divorce; .she appears' to' have . acted independently, and being of-age; she was entitled to judge. what was best for her and ask that her decisions be respected. Herparents, inso doing, certainly cannot be charged with alienation' of affections in the··absence of malice or unworthy motives;··wt)i"ch'have not·beei,.-shown,(gpod faith being jways pr~sumei:l .until the · co11trary i~ provedb~~a'nj~nco· v'. ~.R. No.· L-18630,-

Note: In many' cases, the publicity given to"' · the plaintiff is defamatory, 'hence an action for libel is also warranted; the action for invasion of privacy wili afford an alternative remedy (Id. at 453). · . . ' Putti~g An~_ther.in

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Alienation ofAffection · · This. consists· of depriving one spouse of the affection, society, .cornpanionship and comfort of the other (ld . .et 457), ·

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. Pi. 12erson m~y be..tJ!eiq Ji~ble. if h_e di?turb~ 'family ~elations (QYI~ CODE,_Art 26).

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service may be held_liable· for def~y in th~ transmittal·· ·of· t_elegiam , (Radio Communic.atio{Js of thfl - Philippines, · Inc v. ·:Ver_che,z, G.R. No. 16~3'49, January 31, 2006).

Th·e.. statement st:io.uld be Publicati~n is sati~fiea~if actually.made 1n publit: . 9 letter is" ,sent. to a. trnrd . · · ' ' ' person.. . · ·

Defendant may •. _stiil be v. lield liable; even-, if the statement~. tell something good about theptairuitf ..

_The· law recqgnjzei the ~ight of ·the parent to ·. ad_vise the· ~ori 'or·daugnte'r: . · · · . · . · - . a. -W~en the a_dyice was giv~nJn·g_ood faith; and · -·. ' re~ul_ts i_n separation; the. act does .no"t · give .... · th~ injure<;l party the right o·f action.. , ·. b. .Malice must. _b·e. '.eslablisheq, and .it must . !3ppear ··that defendaril's 'acts1• were "the. controlling cause of the loss of 'affection to rec.o"ver .d.afnages (Terichavez :_;.. Escano, . ... G.R. No: t-1$671; Novem6er 29; 1965). · · .., . . ..... .. .~ ' ...

What is pdblished 16wers the .esteern in 'which the "plaintiff. · is · held (Id.. at 453). : ' · . ·. · : -.·. r.

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_!.:;ommer~ial ~ppropriation .of Likene~s The unwarranted publication of a person's name .. or the . unauthorized us"e o(" hls · photoqraph or: likeness .to·r 'commercial . purposes is ·an invasion . of. privacy (Id.. at .. 454) '; : ' · . ·. . · .

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,~·It is an invasion of privacy to another's· life or the· Jife of, a deceased Without his . consent or. the consent of therelatives the case .rnay be (Id: at 454).

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Vexati.~n and Humili~ti9n '· Vexation . ._. . . . . _ This-refers'fo.an act of ~nnoya·nce'or irritation that caLJ~es· di~tre.ss :or . .c,!gitation (MVRS Publications,· Inc. v: lslmaic Da'Wah, Council . of . thf Philippines, Inc., . et. al., G.R> No .. 13530=6, Janua,x-28, 2()~3).

2019 SAN.SEDA

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May Consist Of: ' a.; Infliction of Emoti'onal Distress Requisltes: (MICE) . · - i. Plaintiff's Mental distress. was..extreme and severe: . . ii. conduct of the defendant was [ntentional . · or- in reckless disregard of the· plaintiff; iii. . g,ausal connection between defendant's· conduct and plaintiff's mental distress; and . . iv. Conduct was gxtreme and outraqeous >beyond all possible bounds of decency'; .reqarded as atrocious, · and · utterly intolerable · in civilized· society .(MVRS · Publication, tnc. v istemic ·_Da'wah Council, G.R. No. 135306, ·January 2_a; . ~20Q3) ..

Sexual Harassment The special law on 'sexual.harassment is RA No .. 7877 or the Anti-Sexual Harassment Act 6f1sss .. • · · Kinds ofSexual Harass'me.nt: i. Quid Pro a'uo cases - when sexual : favor ismade as a condition in the hiring . . or employment or when sexual favor is made a condition to the. giving of a · PclSSing:gra.dB or granting of honors and . scholars_hips((R.A. No. 7877;· Sec.: 3) .. IL . Hostile environment cases - when the employees-or 'students work orrstudy in . offensive ... or· abusive :_ environment (AQUINO, Torts and Damages, supra at

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. b. · the requirement of proof beyond reasonable doubt. often prevented" the appropriate · punishment. .An independent civil action would afford ·.the proper.' remedy. by preponderance-of evidence. c. Direct' .an·d open violationsof the =Revised · Penal Code trampling Jpon the freedom named are not _so frequent as those subtle, cleyer and indirect ways which 'do,riot come ·vyit~in t_he pale of the penal law (lei: at 498). ,. . ~

Art. 3_0. v. Art. 31. .

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)'niepend.en_t"Civil. Actions include': (~D~Fi,N~i.17? 1. Yiolatio'n of'civil and politicalriqhts (Ait.32)/ ·, .. ,2. ·. Qefqmatiqn (Ari. ~:J);. , . ·· . -: 3 .. J:raud (Art. 33); . ' ,· ., . :4. · Physical [njuries (Art. 33);. · ', · , _.q: .. ~egle·ct.of9.LJty·9y p.u.bli,c Qfficers.-(Art. 'j4J; and · . .--' ·5_ . _Art. -~1'77-.of the Civil Codt=)in c~se of1gwasi-tl~licf

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Public Officers or'Ernpl~yee~ should-be made with' respect to those acts· done within the scope of official · ·. authority and acts done without or· in excess . of_9ffi~ial'authority._A supertorofflcer may be .,_ · .. held ', liaq17- · for · the' violation of his subordinates. I

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: ,.indepe~d-~oj ci~jl _ac:tion~ g(a:c,~<;id_· uoder.' 1>:rtic:les : 3~. 3~ and 34 1s:not the .._civil l[abilit{?J~ising.,fro"'m .. . Art. 32· spe~ks of an offic:~·r ·~r .. employee··:or .. crime~. The basis :is ·said t?: be \:>~UC>l.iS _actions. . : .per.son "directly or lndirectly" respoqsible for-. . : . FryQ~~ - of the: rature . oJ. ~.u{pa:. i9!'i~i~h~nd,. . ~ vi9latiori 6fth.e. cons'titutional. rights' and · t~~r.efofe: ,S'?.p~rate:and. d1stinc.t fr©m. Cl~il liabili,..ty.,_.,i....;........,.-.. - . ..L"liberti.es Of aripttier~ :-Ui.us.'·ifis· nc)l° the -~Ct~r -' . . arising from c'rime ... : . . .. . .. •· .. alon_e (i;~., th_e ·one directly iespons(~le) who . . •. , . ... :,' •1 . . . . · . .. · ~.• . . .· . must·answer for damages under Ari. 32·:the · ·iris ·believed .Jnat. the latter ·view is ·lii~i be her· view. . :.'pfi~sqr:i · in9_ire.~tly · r~sponsible has,:· als6 to · becaus~ even the, Report .of- th'e· C'bd~; Coriimissi~~ ' .. · ~riswer tor. the dama_g~s injury c~:4sed to · cit_ed. iri"M~deja v: '.Car.o, refer~ -to·_civjLactions that are: . . ' the. aggri.evea. party:(Aoerc·a y. Ver, -GJ~.: No. · absol_utely sepJ:lrate·· an-d '_in9epericl_e.n((G.R. :No. L·. ~ .. 69866, ;A°pru· 15,· :1988; Silahis intern~tional

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TORTS-AND: DAMAGES SAN BEDk LAW CEN_TRAUZED BAR OP~RATIONS ~ MEMORY AID 20r9

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Defamation (CIVIL CODE, AH. 33) . 'Defamatlori, which· includesvtibel an_d slander, means the 'offense of .. injuring·. a' person's "character, fame,' or reputation through false and . malicious statements (MVRSPublications, Inc. v. · tstemlcDe'wenCouncii of the Pbils., lnc., G.R. No. 135306, January·28, 2003).:

It must be Malicious; and Existence of malice in fact maybe shown by extrinsic evidence that the defendant bears a grudge against the offended ·party, .or that · "th,e°re is rivalry or' ill f~eling between triem (Id . at 5?5). · -

d. It must beqiven ~ublici[y. It· is that" which tends to injure reputation or It is not required that publication isrnade in · dirnlnisf the 'esteem, respect, qeod will, .or the media publication. Cqrrimuf')ication to· a · confidence in the plaintiff.or to excite derogatory single individual ·:is sufficient 'publication: feelings or opinions about' the plaintiff· (MVRS· dissemination to a numberofpersons is not Publications, Inc. v. Islamic Da'wah Council of required. . the PfJils:,. Inc.; G.R.. No. 135306, .January .28, No liability will result if·the defamatory matter 2003). · is not seen· or heard by ·.ii'nyori~ except the 0 defendant and. plaintiff (Id: a{523) . . Itls "the publication 0J~c1hything ·whi~h is. injurious . _ . ". . . to 'the-qcod .narne or_ reputation of another or. Testin Determlnlnq.the Defamatory Character tends to .bring .him . into -disrepute . (MVRS.-' · ofthe Words.Used . - - . · __ . .Publiceiions, Inc. v. islamic Da:wah .f;»lln'tfr'ofr charge is sufficient· if the words are calculated the Phils., _Inc., GJ:?. No. 13~306 qanu~. 28, V 1. \Jto lf1duc~earers: _· · . 2003).· , . · · , ~~·~ -..,.,._,, a,,( 1}.,_;~uppose and. understand .. that .. the. · · I' ~ , . · perso]/:> against whom tqE?Y· were uttered !t. is an. invasion" ~f. a -relatw.nal i¢!,ey . t ~Jl.c~· i~ ~e~~-il~~ of .a ~erta/n~ oft'.e~~~; . . · .. - ... involves: ._the.. opmion wfl~otne_rs[ .in t~ b: \re s~fflc!$1}'to·1m.peach their honesty, v1rt~e community.may have, orf.fend'(\cf ha\!e, of . t~e ~ it,\ .or reput~f1on;.or . . · .-·-· . pla(ntiff.. '(MVR~ Publicitfo~_s, "l[nc.. _ls[arr:ic · -~ c. ~o holo. t!:Ef'p~soi:i/s ~p to pub!ic_ r(di~ule Da Wcih - Council of the! Pnilslf-lnc_._, 'f'll<;J. · - _ , _ (jc1zon t,_ CA,~ 13,R. No. 12071.~~ -M_arch 29, •135306, Janu~w28,'200BN · .. :_1;'r;.t: 1996). ,~

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·" Re·qu1s1tes Jor: __ · One to be· LJal:5le o ·. . : /. .. · · . . . . · ·_ bef~tn~toi:y·t111puta't\ot:1s: .. (E>IMR)°'· · .• · ,~,.-r\~lllt.is~_t_ioiis: .· . ·: .. .·· _ .: . _.. ~ . . .- a. It must be Qefamator:y; '. '1'. - ~VII must. be stre.ss~d th.at words which· are .. }he st~.tement'is defc3:rr,atory as(~~tter_ ~f~,\~~i~~ultingcir~ nq_f actionapl~ as· n~el or: . :· la~ where ir:11¢.utatio_n·is·_the com°:11sJJn7of a :sl~d~er per. se,.-and mer~ wo~?s nf Qeneral. '. 9n~.e.; th~ aefa!11at10~ 1s so. pl~th~c!PU.se· · ~ow~v1::r Qpp~o~no~s. ·111-Q;:itu.r,ed;. or . ·· charge:is aLitomaticalJy·deetned libelous .. ·. · - - . . vexatious, whether, written or spq~en, do n6t -.. .. ' . . .•.. -';--· ,-.:.. ' . ···constitute'a'bas[s..fqranacfkin.fo_r'defamatlon· '.".": .'!f°the statement-' is "not defamatory a matter in .·th_e absen~¢'a)legat,io"n,: io_~ "special of law,':. the Court -m0st then: mak.e - a: d~n:i~~~~- The '·_..f9ct _ t.h_at }~e !an·guage ,f~_ _ · .determinatio'n._d"n,the:·d~fa'rnatory.capability·of . off~r:1s1ve to,. the ;plaintiff does _not make· 1t . the .·statement. ·:(AQUiNO, ':-Torts . and .. ·a.CtionaBle,by_it_self (MVRSPub/ications, Inc., . .Dam.ages, sup!a _at'{,13) . . . ' et v. lsiwr/c·. Of:i'w.a,h : Coupci/. .-.!he. Ph(lippines, Inc.; ·et aJ., .G.R.' _ No. 135306, . • J . January. 28,. 2003),:. .· · .. , · · b~· i:he victim must.qe ,!dent1fiaple; - · . . b.: : P~ti;"onal: hwrt em·barras.smen·t :or.-offerise; - ·· - ,· .H~ ·-. ~ust '· _esjabli~h_., th~t/'th_e .. 9~fama.toiy . statfiment referred ·to him.'alttiough it is ·n_dt even _if rea1:·is ·notaCtomati¢ally equ_\vai~nt .to .· neces!,,ary .. that he ,be. ha'med. Ttie:-. plaintiffs . . defamation .. .The 'law, agains"t' defamation .. · in.clud,e-b:Oth:natw_a.J'-arid joridic9l·pers0ns. 'proteqts orie's .. interest i~' a~q'uiring,:retain1n'g,c artcJ.:.,eojoyirig-.a reputation '_as: gciolas one.'_s . lt · is · i'ri'suffi~ien~ : that-. the- offe~dedi · party' .. _.c~ar_acter., aqd ·- iori"duct . w<;1rra11t:·:.in ~he ... · :recognized himself as the·person att~cked or· .. conimlinity,_lt_is l):ie, comm~nfty, nqr,oersonal . .:'_ .. . defamed. 'it must be .shown 'that·:·at leas.Ca" standard$, ·wtiicb is taken into account io _ . thircl person csiuld identify_ hiin as. the object . evaluating an'y .. alle.m:iti6ns liber'and any . of the· libelous·. publication (l
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'oelivered rn said proceedings or of any other Network and VidGJI. v. Bustos, G.R. No. act performed by public 'officers 'in the 1.46846, October 17, 2006). · exercise of their functions (REVISED PENAL · c. · Alleqed defamatory statements· should. be . CODE;_ Art. 354): ' taken -in :their. entirety. and the statements · should not be interpreted by taking the words uttered one.by one out of context and giving Cases. . . , · .. . . them twisted meanings (AQUINO, ·The a. The exceptions refer to, a qualified privileged .· Re.vised ·penai Code ''(1998),· p.f?-14 · communication, the character of whichis a [hereinafter AQUINO, The· Revised Penal matter of defense. that maybe lost by positive Cotje])._ · . .. ·. · proof. of express malice on the part of the d. Slight unintentional errors will be excused. 'If . · accused. -Qnce it is .establishd that the: . ' : a 'writer in the- course' of temperate and article ls.of 'privileqed character, the onus leqitirnate criicism falls into error as to some of proving· actual rnal lee rests-on the _plciintiff . detail; 'or draws an .incorrect.inference from . who must then 'convince the court, that the facts :b.efore him and. thus goes beyond. the. . oftender was prompted malice or· ill' will. ~ . . . . limits of strict'lruth, such inaccuracies·will·ncit Wheri "this ls -accompushed. the defense of .... ·.:cause j'udgmen't' to go· ag~sine~ statement must' .be · shown to have been h)m . of public reputation or deprive Written publlshedwith knowledge tha,tlh.ey c~-~fid~nce (lnsula,: Life I'd. . . : are false or lnreckless .disregard of whether v . . Serrano, .G.R. No. 163255, June 22, .they'are.false or not. Reckless disreqard of . 2007j.' ; .. whii f!{f~'ise -o"r'no't° means thatthe author : f. _.A publication claimed to· be defapiatory must . or pub~$her ..entertains _s_er(ous. doubt. as to. .. be read and construed·in theeser.ise in whieh thejf.ru h (_)f. t.~e pubhc?t1on,· or th9t he ' · Jhe '.i~aqer~. to whom it· i; ad~~s~ed wo.ul?.. pqssesses. a :h.igh ·. c!ewee of awar\~ness_· of · :- ~rdina_ril_Y- u~d?tsta.~d it.. So, f~e ·~~ it~m, · .. _t~~~ ?/'?b\"J?le falsity ( YfllapuevfJ v. Pbi~qpine I :inf!uding_ d1s_play~_1_1n_~s:._~h?uld~ _r~_ad a~ . {J)a1/y V]_qu!rer;. ef: c!f._,"f'G.R: 0}0, _1.64_437; May tons!rued togetfi'er . and! J!§.-~eaning~d· . . ·· •1srr2009}; · · . ,, .·, · · . . · . signific~tion_ tJ:ius 'detlrminect=(Arafilem. .. ~- .. Every c~ _o:r_sourse h~~ th_e· right.to ~~jo~ ., ... ·.Philipp_ine'!ournalis(s:"f~c,, G1J)N6. 1502f6, ·. ·a gooo.r,a_me ar.id _r~pµtat1on, butwe d~ not . . .Marcf'!. 25, 2004). . . . . cor:i.sider' tliat t_h~ ·_respondents'; una~r. the_ . · ' g_. . In, civil a_cti_.?n for ..d_arriclQeS, no H~Jity_ will . circumstances of this,case,::i,ad viola'ted said .r~.sulfif thtf,def~Q,-atory·i:11aJteyis not t;ig_iit or abused __ th~ . freed_Orl)· Of th~ p?ess. - or. l)eard .. by anyone excee,t.ttie defendant Newspap~rs shq!,Jld ·be given -sucb leeway ·oint 'of suppression, -'.fo'r . . presun:,ed to be malicicius, ev.en· if it is tr~e; if no . : nonest mf;takes _or.imperf~ction iri 'ihe choic~ ·. good ii:,tenti9ri or.justifiable moti'{e for making il isr .., . ,. of wo~d~ ·(Ara files·: v. Pni/ippine~ Jow~nali~ts . · .-...shown· (Malic~Jn law as· contemplated in Article . 'lric., G.R. No.-1-5_025_6,' March 25, 2004) ..... ." ' ;354·ofth_e Revised-Penal Code).·· . . . . . ., -~·L.. . . Kin_d~·-~f~afi~·e:_ ·.,. , ·.·J _ ·._ .. · .... = .. , .. . : . '·: ,.- Ex:teptip~~: ·. . a. _Mans·e' in. (,aw. is. a;,p_r~s·umpti9n, of law.'· It private .. communicatio.n ·. m·ade· by ··any . ··. dispenses. wit~. the proof of maiice when · . . . person to another in ih~ ·performance ·_of any' : . :words that raise tlie··presumptiqn are shown ,.··,.h~gai; mo(af or-social duty;' and . . ,. . . .. 'ta:·have been .uttered:' It is also.:khown 'as . . b: . N fair ·and true .te.port, mad_e. in good,_faith, cq.nstructive 'm·a!ice, legal malice:; or .implied . wi.tho'u_t·any .. comments,.or remarks, of .9ny . m_alice (AQUIN.O, Torts anif Oa(n?ges, supra ~ .·judicial,"' . legislative or·.· - other . :official at 526). . ,. · proceedings ·which are not· of c·onfidentia1·. nat1,1re, or of any ~tatel"(lent, report, or·speect\ .

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TORT.S A·N·o ·_DAMAG.ES SAN BcDA._ LAW CENTRALIZED BAR OPERATION_S --M_Ei:,iORYAID 2~19

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Two Kinds .of Privileged Cqmmuriication: a. Absolutely Privlleqed - not-actionable even if- 'the author acted in .bad faith · (Manila . Bulletin Publishing Coro.:v. Dominqo, G.R. · No: 170341, July 5, 2017). ·

Malice in: Fact is ,a positive desire and intehfion to annoy .and injure. It is also called·. · express malice> actual 'malice, real malice, ' true malice, or particular malice (Y.uehengco v. · The. Manila ·Chronicle Publishing 'corporation, 'G.R. No:. 184315,. November·~ 25, 2009).' r

Group Libel .Requisttes: a. Libel directed aqainst a fc!frly large g"roup; b. Libel canreach beyond the mere .collectlvity to . _do dam_age. ·to an jndividual qroupmember's reputation: and .c. jh'e" ·.statgrne"nt .. is,.:so sweeping .and all- ) embracing as to apply to every individual in that .group. or class.so .that he.can bfing the . action separately]f necessary _(Nf!W,Sweel<, Inc., v. lAC, G.R. No L-63559, May?P, 1986)~

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In _or9er to· escape .liabil)ty, _th,e.de~a~ay' cl~i.m. that the ~1at.ements __ r:nade~re. Wiy,ileg~cf~ (A_QUINQ, Tort_s_an_d Damage:(~;JP~a;c_at-537) .. - r ·

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Illustrations: i. . Allegations and .averrnents in .. pleadings filed .in court .as long as: relevant ano pertinent to jhe issues., : · · ii. A member of the Congress is exempt . from liability for any speech or debate in 'the Congress or any Committee thereof ·(CONST. -Art. ~I. Sec. 11). . ... ' .b, Ouallfiedly Privileged - riot 'actionable ·., . unless '..found , to ha5,e_ been made without . :-good _intehtio_i:, .~f justifiable - f):~~i~!:l. (Manila Bu/letm Publlshmg..,_~fJrp .. v. Dom11;go; G.R .. j- No._170341, July 5, 2017). .

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. e. Defendant-must have intended that the false · The doctrine· of fair comment means that while in repre~entation·should'be acted on; and qeneral ev.ery" discreditable _imputation publicly . \ ..' . made is deemed false,' because ~v~ry man is f. Pl_aintiff suffered damage as a resuit of acting .Qn thi:i° false "rep·resen_tation (~QUiNO, To.rts · presumed innocent until- his guilt, is judicially ·and Daf:lages, sl.jpra at_ 561) .. ' _ · : proved: 'and every false imputa:tion is deemed malicious; nevertheless, wheri - the. discreditable. ,. . .·imP,utaliori is directedaqainst a public· person in. Rule on Opinion -. 'his •. public . capacity, it , is 'not necessarily General Rule: A mere.matter of opinion does not actionable. In, .order . that· such' discreditable signify 'fraud"(id. at 563)..,' , · . imputation 'fo: a· publlc official may actionable, .. .r .. it. musf either::b(). false alleqation ·of -Iact. or a Exception: When made by a'n expert and the COnJ!11ent -based on. a false. 'supposition .. If the other- party reJie~ · "on th~ _for_mer's. special . comment is expression of opinion, based on , · knowl~dg.e(CIVIL GODE/Art.. 1_341); · .. 1 . established· facts; ,th.en it .. is immaterial that the . . .. · . _· . . . ·.. . . . . -~ . ·.. : . : . , cipihkiri. happens-to be· mistaken, as long as· it . 4. Physical lnju_ries· (CIVIL· CODE, Aii 33) . : . might· reasonably be iriferred from ~he .tacts Battery - an intentional inflict1on of a har.rnful-or . (Manila Bblletin. Publishing Corp. v. Domingo, · - · · offensive. bodily 'contact (AQUINO, "Torts. and· - ·.

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3. -Fraud (CIVIL CODE, Art. 33) . . . . Th.ere is-fraud when,' through· insidious'"wqrds-"'.or . . '. ·. machinalions-of :bne "bf. the·. contr,{cting~ptirtie"s, . . . . the other IS ."indu-cedto ente'r. into~·contract;which, . . . . . .. . . . .' I . -._ : ' . without them, -he; w.olild not have· agreed .to

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~f .th"e divii c~-d~ ··_. : ..includks."t"be':f9J(owing: .., . ' . , ·. . . . : a·. _,Estafa ·u_naer·.the Rev.is~d Feri,aVCo.d.e;· . . . b::. - Violation df_th~ Anti-Trust Receipts.·La'w: and ... · . ·:, · c. . H~lf.:truths;"i°r t0.e witti~o-ltji_nQ of th\-a~ichJs~ . ):, .. •. ~cit state9 ·. ·makes '_-,that 'whjch IS . stated . · ...__._. · · abs_olulely fl:llse. / . ·· · · . :, . · . ·,·: ·. . . ~ , ·.. .~. . ,· ..

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~:l~rn,~nts o/qec.~.it:".. . . . :. . . . a. ·.:Defendant made false re.presentation to the· plai~ti_tt" t~rougti: · · · · . : · ·. ·. · i:" Written or ~RO~en words, or . . · .,- ._ ./ -ii. .Conduct;- .. : . · .· .. ·' .: ~ ·,· . . / . . ·:, .. ::, . . .. - . . . . ~ . ·. b..: 1he repr~fent~tiqn !11,ust, be one .Cif. fact; , . . . . . . . . . . . . •. \ ... · . · ~eason:. The :vi~-«-. ttiat propositions. qf law . :·:., ' ~re. gen,e_rally":,:i,atters of p.Litilic. record.)i:i .. which the-pfain_tiff\md_· defe.ndant have ·equal · access:- ' · · · · ·· - · -

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'Offensive-·· ·Bodily·. C~r:itact· .:... offer,id~ a . reasonable--' pEf~son's . sens.e 'Of dignfty. ev~n ,. though it is. intended -only as 8" joke or .a . . compliment· (Id. 1it 564). ·. . · -. . , ..., . . ~ . ~ssa'ult...;l iotentional conduct,: by' one -person · . · directe_q- ,~t '.;anoth_~r '. placirig. .the; l~tter.' in - . apprehension of . immediate.' bo'dily :.harm' cir · offensive. a& It· inclu.des: bodily injuries causing . 'd_eath (ld}at564),° . ~'. - ., ;. . ., '.· < • ;

. , · ~-h;s{~i lj:ls ·re~~/u·~g 'fr.om, negligenc~ ·or . . ifn(roaence- 1sn°tt'iiicluded in Article 33; _th~y are · . · ". a!reaay,..G.Q.ie.r,ed'by Article 2'17q, .Thus,'.the,crirrie . . . ci( homicide· d~'e to~· reckJess ihlpcudenc~·-js -~ot: . :· ·-c~v_!:Jre_d 'bY: f'1~~Je,-3f~~t-py ~~-!cl.~ -~1!f.c5f. th~ €1v1I Code (Id. at. 567); . ·• : . · · ~-. . ,.. ·. , ... • :.:·

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Su6·sidiary '.. Liabiliiy .. oh:::, _ Citie$_.· . and ··: -M_fi.nicip~lities · in,pose9 ~ so. tba't" . they:· ·will .: :exe_r~ise:. , . . .. '. · ·,. ;, . :· -· . ·. . : . ' .. . a·. · Gteat :ca_r.e. ,in .,seled.ing. conscientious and ... : . . , : duly qyali.fie1 poli~er;nen; an'fj. : · '.. · ·. ~ · _ ·. . .; p. · Supe~isiori. bver them in tl:le per(qrman<>e: of· .' tl:leir duties (I~. ~t)67). · , , : . · · ·. ·. .. · '.. ,~ .. .. .

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a. -Criminal Liability .: An offense against the State. b. Civil Liability· - An offense .aqainst the private person. injured (DE LEON, Torts and · Damages, supra at 520). . . '. . ·

5. In . cases .. · of : lndependent. civil , actions . (CIVIL CODE, Art. 32: 33, . and-3.4); · 6. In civil actions under : Article 2177 of the Civil Code: a~d - · 7. When acquitted in · a .criminal action but.

Special Criminal Laws The- dual character of crimes is present not only in felonies defined under the Revised Penal Code but also. in casesqoverned by special laws such ... . -as: . · . a.: R.A. 9262 - . Anti-Violence Against Women -an_d Their Children Act 2004; b. B,P: 22 - Bouncing Checks Law: and · c. · -Rule' 10·· of A,M .. ·No. 09-6-8-SC~Ruies of . .Procedure of Environmental Cases.

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or. 'Evil) lawful· act. with (REVISED due . care, PENAL CObE, causes an inJur.y: by. mere · accident · without . facih or intention· · · of . causing · · it '(Revised Pen.al. Code, · Art. · 12,

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person ... who" falls to .perform arr act required : '; : by law •. wrien'. , prevented · by some lawful ·or insuperable, cause . .' (REViSED . : PENAL CODE, Art. 121 Pa(. 7)_.

Obligations, under .. the C.ivil Code, fare ' extinguished by· I payment, loss: of the thing, condonation or remission of debt," 'confusion or merqer of the riqhts of the debtor and creditor, compensation, novation and prescription (PIVIL: COD_E, A.rt.- 1231).

Pardon does not 9fase. . Civil liability . (Id. · a{ 584).

· Effeet of-Pardon' . · . Pardon does nof erasecivil liability (Monsanto v. · _ Fecioren, G.R.· No. 78239, February 9, ·ui_89). It · - . is not one ofqrourids recognized under-the Civil·
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Deattf before Final Judgment_:·· _'. · General Ruie:·. Defendant' is relieved from . cri~fr1al a~d . eivii'. Uability arising From the _otrenst (lg) .. ~ · ' .

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Ther~· ·1s- strict. "liability _;f · :_ci-~e is. -~·age ;)~~le indepenqerit .of· fault. negligence or_" i!)tenL ~fter:_ :establishing,....certair_, facts . specifiea by law. ?trict .. . liabll)tY to_~ car be co~mi~ed ~ven if re~rsonaqle,ca!e- -· was exercis.ed .regardless of the state of mi rid of-.the · · acior ar.that time· (AQUINO, -Tort~ and Damages,,: supra at 694). .. · . · · . ·.. · ·

~11d s~i:isid_ia~.. _ . . .· · · . Separate . . Liability·.· ' . ·/ .. . . Tne .. .court may.·fix-' the .arnount for Which the . . prfn"cipal· is ·primarily' liable ;~n.d determine. a. . . · separate .arnount of liabHity of the": accessory. - · . _~- : E:9ch ofthem shall be subsidiarily' lia_bl_~ fof the.,. , . '':· · · other's share in caseof. the latter's .lnsolvency · ... ·_(AQUINO, Torts a9d~Darj,agti:s:--supra.at'572). . . 1 .. Animals (C,VIL' CODE, Ail: ?183), . . .. . . . .' ·.~- ·.· . ; . . . ... -. Gerier~I· Rule:. The pc:issesS:pr of an .animal or : Wf:lat is Included in.Civil L.ta!:>i(ity: ... · · . ~ .whoever niaY,;) m:ake'<' use of the - s~me is . - ; a:". ~istitt,1fion. '(REVISED' PENAL'· CODE, Art. responsib_le fqr tne:damages which_it_m,ay_cause ··,'. 105)'; . . ' . . . ,· al.th?u,g~ it·may_ escap~"or be.l_ost: :· : -~ . . b.'--: Reparation. (FiE;VISEIY"PENAL -__cqpE, Art .. :...> ..... 1Q6); and · . . · -~. -· : ·:. Exceptio·n-s: When th_e_ da~agEf was· caus'eo: _ .. a:: · ByJorce ma}etJre;.:or : . · · ... · ·.. · :.. . : . c, _. · lndemniflcation (FJE.VISED Pf NAL CODE, -· Art. 107). ·,.. . .. · ... .· b. · .By· th~ person who. sufferesJ the damage . •·. . . .. . _:. (AQUINO,: .-Torts .and· b~inag,esi ·s1,1pra- at ·.: 694). ·. . · ·, . . Extiriction. and .Surit.ival·_of Liability ·civil [iabllity undertlie Revised Penal Code shall '. Note: T~-~ law "us~d the gerie~ic t~rm ·ani~al. It . be extinguished in ttie . same -manner as. .·: - ·.obligations·, in . accordance with Givil: ·La~ ·: . -. covers all kinds of animals· (P_!N!;DA,. Torts and Damages, 122). ' (REV/SEO PENAL CODE, . . .supra·at . . . . . ··. .. . . Art. . )12). •

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· This is applicable whether.theanimal is domestic, domesticated or wild (Vestil v. /AO; G.R. No. .' 74:4_31;· November 6, 1989),·. : Note: Wild :~·nimpls are possessed only, whiie they are under one's control; domesticated or - tame animals-are considered ddmestic or tame, - if they retain the habitofretuminq tci the premises of the po_~sessot (C:,VIL. GODE; Art .. 560). · Possessor or user is. still.liable even if damage is · caused by the. negligenGe. or fault of third person ., unless 'equated with torce mejeure (AQUINO, · Jcrts an·,;J Damages, si.Jpra;~f .~95J: ·

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· Rules qn . Empl_oyer's Liabllity for lnjurles caused byFellow-worker: . . a.' If the death or injwry:i$.due to the n_egligence ·of a .fellow-workrrian the latter and· the· employer shall . b(f. solidarily . liable for corripensatiorij-and . . . b. If. a fellow-worker's intentional· or malicious act is the· only causethe death ot injury, the .employer shall not be. answerable unless· ii should be shown that the latter· did not exercise due-'diligence in the selection .or supervision of the' plaintitt's fellow-worker (CiVIL CODE, Art. 1712) ..

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Proc:f uct ancJ ~ervice Liability Product Liability Law. · This··g·civerns the liability o.f manufacturers an.c:!.'sellers for damage's resulting from. defective products •. ~ (A.QLJINQ;,-Torls. and Damages, supra at 712) . .. . --:--. ·Liabi)ity for .defective· products_ may be based on. fraud.- ~arranty, negligence -or: stri_ct liability (Coca-· Cola Bo{tfers Phils. v.. CA, G-.R..No. 110295; October

A nuis~nce may also be classified as to ·wn~theiit is susceptible toa leqalsumrnary abatement, in · which case, it may· either be: (a) a· nuisance per se, ~when. \t affects the irnrnediate safety of .persons and property, which may be· summarily · . · abated under the undefined. law of necessity; .3'6or, (t:>) a., ··n!,Jisa.nce .· per accidens, . which . "depends upon certain · conditions _and circumstances, and its existence being a . questiori of fact. it cannot be 'abatedwithou(due · .: - he~aring thereon ln'a tribunal authorized todecide . whethersuch a thing does-in law constitute a · nuisance (Cruz. v.. Pendecen Hiker's Club, lnc., . _.·. G. R.: No. ·188213, Jfinl!lary 11, 201'6/ . , . ..

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Ariy person injured by a private· nuisance may abate -it- by;. removing, or· ·if ·nec~ssary, destroying · the · thing_, which, d,,hstit1ttes the r. nui~anc_~ .. wi.lho~t. cq,nmityrig~ .(' brd'aclu:cif t~ peace or doing. u.nnecessa,fyirij_ury.. H~.ever, it isi · in'dis_pensable .. that·the .pro~~dure- for,.~~.!fajuai~al . al;)~t.e_[l')_e?t of·.Q ·. public,nCilsanc~~x-f P:.ivate· per.so;n be followed (CIVIL C.ObE~,-P.,70fj); /. ..

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· : · . · · de·ceptive1penever the producer, manufactu~er.- __ _sup_plief ~(\seller, throuqh conceal,ment,. false ·· _. ~epre~inJatid'q or . fraudu_l~n_t ·. manipul.ati0n, i . · :inql,!9es atcon,ume,r to enter into a sale. or' leas~ ·· · ·trans~c.tiom of any consume~- proc;luct or service _· (R."A. 7:39'1-,. AJf." 50).' · ... ' · · ~: ·· . 2: .• Warr~nti~s · ·. ' . . . .. . · ., · E.~force.ment . pf ·:.Wa~ranty ·Righ~s- -:--· · ·sy· · preseritme,r.it 'of cf ·C)~im. It_., is .sufficient for toe . purnha~er.'. ~o ,.present·. to. _th.e . im'm~diate,.,_seller .· ·., eith~r.tti~· i.yarranty. card 'or- the ··officia1 receipf . "'along·witfi.th'e·procju.ct·t9.be servfc_ed or re.turned ·. to ttie i(l11T)e9iat_e seller (R.A No. 73:94, Art.· 6.8). ··· · · . .. . ..... . ·. S~b~idi~ty .:u~bflity ·of _R«;=!.ta1l~( --' Retaih,:ir is· · ~ubsi_diarily Jiabie unde_r' the'\v~rranty. _in ·ca·se of ·. _... faih.1~e o(both the manufacturer'and dis.tributor to. ,:_ · · ~-o~or'"_.. :.-w~fraiity .:' (AQUJNQ, .·· .-T_oris . and 'Daina?~\ siJp/a :at. 720). ":, . \. · · . 1 • . . . privily otco~tr~c;t is n9t necessary in.'~u~cess~ully - pursuing an ai:;tionffor' breach·of warranty or in erifbrcfng-.t,tie-sam.~ uri'der_'th'e Con~u~e~,Act (Id.) .. · ·. · ' · · · · · · · ... · .. G9v.~rnin~ Law: T_he provi~ions ~fthe'Ciy°il'Co'de' ... on cdn'ditions and _warranties shall govern all :
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Liability. by M.~s'ed,' _alt~-6L1gh .'no. . : /cqn_tracttfal. relati_on_/:~istf . . . .- : .. . . · · · : · ·,. ·. :-. Requi~ites-~ (MUNIF)' · '·· · a. : . Ttier :defenda~t,. is th,~. · M.aril!fqctur~~ _ or ., ·.· pr9cessor of -_foodstuff; dririks, ,toilet •a'rt1cles . . ·:, a_n/simila_r. ~9ods invcilye·d; ~. •. . b. · _Plaintiff_ 1!.sed: ·or. con.sumed such ·woduct , . unaware .of. t.he· i,njwioo;, · condition 6f :tf:ie ·. : '. _<'· .. pfopuct;:) . . ' . . : :· c·.. 'rtii:L defendant used ·-Noxious· -or ·harmful substa'nceS" _:in, - the .. -:-~ahufacturing- ··or ·prbcessing of ··the· f66'dst1:Jff; drink. or toilet : articles'.and· similar goods;: . '.: .· . . . d .. · P_lair1tiff'$ Jnjury'or deaih-w'as caused'.by .the · . ,product used··or consumed; and · .. ·_· -· ~- :the .Eorms: or ·k,nds 0f darn~gis suffereq and · tbe. amount thereof (PINEDA :Tort's· ·and . ·. Damafles, stipra at .132f,

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~-,----_-Exce~tioJ:.·An ac;~r- ~racti;~ shall be deemed:·

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Consumer Act . . ,. . . . lqv./ lhat is . meant to protect the consumers _by· . providing for certain. safe~uards when. they purchase or use co.nsu'mei- prodt..icts.(R.Ji. Na.· 7394, Consumer . :.r . . · ·· ·. · · · ·· · · · · ·. · A1te·rn_ati~'e ;t11~'o;ies. that ~~Y be "us.ed ta 'justify product irability:·.' . . - . ... 1, Fraud' gr Misrepreseritat19n . Ge'ner.al· Rule': i'Jot allexpressions of opinion or usual . exaggerations. in . trade _are actionable . misrepresentations if'they 'aJe established.to be : inaccurate. . . .

Note: i'An · action lb abate · nuisance s imprescriptible- (AQUINO, Torts and Damages,

· ·.·· · .: ·supra'-~t ..:706). ·.

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. Liability of Succesaive Owl]er or Possessor . · Every successive owner or possessor of property . · Gvho fails .or refuses to abate a nuisance in. that . _proper.ty started-by a former' owner. Of possessor - ·'_is ii able therefore inthe .sarne manner as the one who.created it.(CIVIL 'coot; Art..q~6)..

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MEMORYWD 2019

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?01~ SAN.RFf)A I AW C:ENTRALIZED-BAR'C)PERATIONS

I 825

TORTS.AND.·D·A·MAG·ES SAN BEDA LAW

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CENTRALIZ~D BAR OPERATIONS - MEMORY AID 2019.

W!CS!foitS Bbi;#f ;u:e~ttetlMl'fi f 'WAA@ W??Hi© dttlMi6iMSl#!$Fii5t'3£#6§f S Si 51,iii9,@!Mt&il&,k4&1 . ' . ' . .

Warranty Under the-Consumer Act b. Any person who attaches his own br~nd name to the. consumer ·, products, In addition to ·the Civil. Code provisions on sale with .: warranties, the following · persons shall manufactured, assembled, or processed for. him {Id.). . · gov~(n the sale of consumer products with warranty: . · .Defective Produ.ct _ or Servi_ce -=-When it does_ not . a. Set forth the terms of-warranty in clear and offer the safety th.at the consumer may. rightfully 'readily understandable language and clearly expE:_ct of it (R.A. No. 739.4, Art. 97; p_ar, 1). ldentify'hlrnself as the-warrantor: b. Identify the party to .whorn the- warranty is extended; · Kinds of Defective- Product's: (MD-PA) c. State the products or parts covered;' . · i. Manufqtturing <defect · ·- . 'resultinq from . d. State the warrantor will do in the event of a . manufacture. assembly and erection; defect, malfunction or ·failure· to conform· to :2.' ·Design defect ._ r·esultir\g from design; . the w~itten·warranty .and at whose expense .· 3. Presentation defect - resulting from handling, e. State what the consumer must do to avail od, making up, -pt~sentation or pc,1_cking_ of the. the riqhts which accrue to the warranty; and , products; or . · · . . . ·_ . . .· . . .f. - StiR\J.l~te · theperiod, within 't'8)f!\ ~ft~r· n'oti~e . · 4,-: · ·~bs~nce ofappropriate ~~~oing -· r.esultin~ from of defect, malfunction orfailure to conform '. 'the insufficient or inadequate information on the. with the written _yv~_rranty,. the ~c!~~(6t~wi.1Lj-u· ~s.~d hazards .of-the products (A.Ql.f/NO, Torts· . pe~osm any obliqation under th~ "".'arra~ty 1. ges, supr~ at 733). : _ . (R.A. No.-7394, Sec.-6~8. -~ ~ r , •• _.,... • • -,.Not~,: _D.efec~-.tidJ ·.r_esul_te,d . because of th~ .. ·3_ Neghgerrce · .. . '. · .. · V.. . .; ~PJ(IGkagmg a_nctrpre$entat1on .of the product, can _be ,, It is considered negligenc PJ.!}Sy_,.i is/anac~er iil_uqea~una~.,_t~l:iroad concept of.rnanufacturlnqomission in violation oft- · . ¥,[_:.- .. - ·- -Jr' . defect or de~ign pefec (Id. at739). . . · · -·.a .. T_ho~~ expre.ssly . P.rohibitecl' 'bYi. Proquct ~. . __ . :-__:_\. . · :. L_1'.3b1hJy statutes; . [!,.~§'1l_1ty \or Def~<#Ye~ Rroduct or Sery1ce:· . .' b. St<;1ndards. in:1pose J ·~-~~eci_?I Jars,: ~ ;~ i r1.:i:-Manufacturer ~ liibility_ shall- be .imposed upqn · ~nd_ ~egula_t1ons f~_-irofer>gwer~':1.~\!fili_IDlJ;;.']7 manp~orer,~t,.m?rPiendent . qf ,Jau_lt . (R.A_ .._ · Nq. . ageric1es :with res pf cl~ t01Prof u0 \L1ab1hty, · · - · · 739 f~,,r.5s.,_9fand 9j).. · .. · · · · .. law (AQU/f:JO, Torts,ncfIDam_a~~ Tradestna~o~Sffi~er .--' 'ndt gen~r-'ally. iiabl~ .-for'_ · - 721). : · ·.. · ~-\· :~. · .---~-· ~'.'d'a~~ca_~s~d~ydefec\iveproductsunderthe.'· . · · · · .. · ·;'\· _ ·r~·. • · ~¥urn/ A7t":o "R.A:1394". . · · . . Liability· attache; 'if· tj~~ _care' of0• a.{ ~r~.i'n

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· pr_ude~~-n:ian was n9_t exe)'~i~d _i~:ma_~.j altu_:~xc~g~ns: · ·.. · :.· . . .. ~ · ·~-. ·: pack_ag1ng,~ marketing·. _or.· d1.stnbu~g") 0. ··the ·-a-l\1sy10~oss1ble to 1de.nt1fy .th.e m1:1nufa~ture~ . . pr~.du~t.(la.1021),. _ ... . . "l .,f /\~~t;!~f, Wpdu<:~r.o!.ir:1:~:~rter;, .· : . ··, .. , . . . · · .. · · · . 1VJ.r'-'.b-. I8e · product .. 1s . st,Jpphe9, without .clear Delict . . :. . ' . , iden~ificc1tio;l' of th~ ni13nufacture,r,' producer, Basis of L_iabi.lity: . . - . · . : -. . ,. . . . ,· ·. bu1lcler o(irriportei:... : ;-..,. . . :.· .. ' . ·. . a .... Crimin.al negligence uncler the· Revis'eciP.enaJ' c .. · not adequately 'preserve p_eris.hab.lE? : · C.ode; and·.' . ., ·.. ... . . .. _goods.(RA. ·Na. '7394; Art. 98):. . b. Violation ~f 9ny spicial law: even. in the . .' . . .) absence ofi,ntent.(id: a(l42).· _ . ·:.,, · pon'sym·~~J::xpettati9t1.T~st:° . .. . . . . . ·.· .. · ·' ,· . Un_der the. consurner_ expe.ct.atron test,,a p'roquct.'irf9y .. b'es_. found' . defecti.v~ in :design, .... if: the: plaintiff. 5._ - ·strkfliabi,lity . It is .. imposed : on in_a-nufacturers 'under' .the de-monstrat~s tl']ali·the. ·pro9uct .failed:to perform ·a·s Con.SL!mer .Ait and·- p~1vjty .. bf is" r:iot safely,as _an,ord}n§i'i.y consu):ner:~ould.~xpe~t wh~n .. required (Id. -at 723). . . u~ed· i[l an· inte'nqed.: or · r easonably foreseeabie . ' . .• .. 'rn·anner:(B{lrker:v. Lull l;=ngineering, S:F.· No. '23519,· . . ·'·' · ·· If. doe's · not .·preclude· a~ action. basefd, on'·- . Jal)uary~·f6, }978) .. : · oegligence lquasi~delict)·-'for· the· ~arne~ aGt ·fi:?'st. under. i:ne·. coi-isu·me.r - Act. : usin_g noxious oj harmfuJ.sub$tances (Id. ar·l.23). · .... . . ·,. The Consumer .. ·Act · adopts the '.'Consumer Manufacturer·. · · Exp~ctatiorr- Test" ,iri ·cie'termining-what is"' defective. (AQUiNo; Torf$ a'ndDamag~s, supra at ,7,35).·: .. ·a: · Includes any person, who. manufactlirei, a's,sembles o'r processes ccinsume~ products; and 1• ·_ · . · . ·. - ·

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826 · 1 2019 SAN BEDA LAW CENi'RAL~·io BAR OPERATIONS

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TORTS A··N.D DAMAG£.S . SAN BEDA LAW CENTRA~/Zf.D BAR OPERATIONS _: MEMORY AID 2019.

· Exceptions: . a. 'Stipulation in favor _of third person; b. 'Contracts ·· intended · to defraud . , (CIVIL CODE, Art-1313j.

Defenses 1.

!Vlanuf~cturer, · builder, producer, or importer shall not be-liable when it proves: a. That. it djd not place .the product on· the . ·.··.market;· . . b. That although it did place the product the .. market SUGh product hasno . defect; and - . .c: Thatthe consumer.or a thirdparty is solely at , :· · :faulf (_R.A. No. 7394, Art. gt). . .

on

It is tortuous because itviolatesthe riqhtsof the contracting parties to fulfill the contract and to have it f.ulfilleq, to reap .the profits resulting therefrom, and to-compelthe performance by the other party (AQUIN_O, Torts and Damages, supra ai 748-749).. . · ,_

2. · Supplier of. the services shall not be liable when 'jt lsproven:">, . . _a.·· That. there no .defect in the service rendered; ~rid · _ -.'. b. · Thatthe consumer or a.third party is solely at · · - ·. fault (R.A. No. 7394, Art. 99). , · ·

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Requisites betendant

for Enforcinq. . .

Liability.

Elements: .. -·a. 'Existence.

against· the. .. b.

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-3: _)h.E) defective.product was th1 cause. in.ta;.P~fhi~ injury (AQl)/NO; TORTS and DAMAGES, ·sLJpra,,I - · fl(

745f. · . . ·

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Biistness Torts : · · Ki rids': ·

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of a yali_d contract:

Note: No· action can b~_maint~inep_ if co11!ra~t [s void (AQUINO, T.orts,a09 Damages, supra ~.at 75_2). · · .

. The-plaintiff should alleqe 'and prove that: Theproduct was· defective; . . . . . 11. 2 .. · The. productwas mahufactured by the defendan ; . . and· . : . . -~-·. . . . .. . . . -, . -: . ,. ..

... ,

creditors

Khowledqe on the part of the -third person of the existence.ofthe contract; and .

.__,... frite·r,e,ence of the. third pe~?on without legal . )ustjfi~ation (Go v. . Cordero,. GR. . Na;· 164703, May4, 2Q10}r · -.·'. ' · ,. . ·

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mu~t· occur ~~.c~use at' .the ' allegecl act ~f~terference .(Bun\v. C~ G:R. No._1_205.Q4, September 21., .1999): ·. .. . ..... : " .. ~ .. .. . -·

.._ ......-~tlenients ot·P-~ivilE::9;

.toJnt~_riir.~:· . . . . _ a .. The defendant's purpose rs a justitiable one; ., ,.....,._._. ......__..·-and · .. , · :. or . _b ... "fl_1e actor~ ·not empl?Y r]ieans of_ fra~d .· _ deception, . which ·are regarded as; unfair (f!Q(!INQ, .. iind Damages, .. supra at .· .

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Torts

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· ··: Extent'of.~ia.bili1Y=:.. . ::-::.. . a. The· ex.tent.of the ·ii ability -for the breach .of.'a 2. lnterf~renc_e- ofcContrads : :- · __ · c.ontract mus~ be. ·det~rmirie9 in the light' of . Statutory ·Basi.s~ Any. third. person who induce$ _, ., the situation in existen'ce 'at· ihe time .. the· ·another t0 violate'his.tontract shall.be iiable: for ... 'confract i~·niade; ·and damages ordinarily . . ~amageii to. th'e other conti-ac;tin~· p·arly (CIVIL ·. ·. . recoverable· ar~-in events limited !'o;such. · CODE, A_rt. 1_314) .. . · ·. . .. . as :might · be reasonable . are·· in _all· events limited·_ to; sucli as . might . b.e . reasonably . , General .Rule:·:Only the parties to contract a~e . ;">. 'foreseen ln:the !ighrof the:tac\s'-theri known ..·. p9tind .by ·tb¢Jerms · 9f ·the·.' cor\tr_act )nd: oply 'a· -. ·· to _the.:·.c·ontracffrig parffe~··(Daywalt .. v: La . party can file ·an $ction for' breach of contract ·or Corporacion, G. R. . ,Yo. L:13505;. F~b,:uary :4; .. for rescission oi . ·1mn.ulment ·:·\liere-of '_{CIVIL ·- '1919); -. . . . .. . . . · .· · · .,CODE, Art. ·1312).. . b·.· Defend.aot cannot 'be held. liabl'e fpr ri)ore than :t~·e amoun·t ..for which the ccin.tra~ting . ... ·. party who was 'induced 'to break the .contract . can be held liable_; and · · ·

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··2019 SAN BEDA LAW CENTRALIZED'BAR OPERATIONS I 827.·

TO.R.TS AND DAMA:GES -·. 51\N BEDA_l.AWCENTRALIZED BAR OPERl)TIONS - MEMORY AID 2019 '

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c. · Rule under Articles 2201 and 2202 of the· Civil Code.

Cases included: (P.IMM) a. Eassing off and disparagement of products; b. Jn.ter.fere-nGe; · · · - ., Unfair cornpetitioh includes; cases involving the tort of ·. interference. with .. contractual . relations ~nd in.tedere"nce with prospective . advantage'. . . . . c. Misappropriation; r ·. Unfc!ir competition' is likewise present if the '- defendapt . committed . . f_raudulent misappropriation aqains] a competition. d. ME?nopolies and predatory pricing ·(R.k No. 8293,. S_ec;: .168). . .

If in bad faith: "Defendant ·is liable· for .. all natural and. probable consequences of his act. qr omission, whether the .sartie . is foreseen· or unforeseen ·(Go v. Cordertio, G.R: No. 164703, May 4, ~010). . . If in. qood-faith: Defendant-l5° liable only for consequences, that can be foreseen. . I.

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.828 I ·2019 SAN BE!)A-LAW CENTRALIZED BA·R-OPERATIONS •

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TO.RTS AND DAMAGE:s· SAN BEDA I.AW CENTRf\LiZEO BAR OPERATIQNS - MEMORY A/{) 2oi9 ·.·/

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.. DAMAGES.' ,-.. :,

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Noter Both restitution-and injunction are occasionally .. av~ilable in tort cilses_l(d. at '613). _ .· :

:Aw.ard must be Monetary . : '1n. actions· for damages, courts 'should ', aware an amount to the winni_ng_ party and not its equivalentin property. Th~ money value of such __damaqesmust be awarded :{AQUINO, Torts and Demeqes, supra at 769).· . . . . . . Damage · -. ' ~ . . -, Qamnum Absque.lnjuria (Damage without injury) This· refers to the detriment, lnjury-o~ Joss which are ·· Under this pririciple,' .the legiti!Tic\te._exercise .. of ~· · occasioned by reason of faulf of , another -in. the person's rights, even if it causes loss to another, does · property or person (AQUINO; ·-rqrts end Damag~s, · . riot automatically _result in an actionable injury: The supra at _768)..' . . . . . . . ·.: .. , ,l :. . Jaw doe's not prescribe· )3 remedy for- theloss (Ambnor, Gutierrez, G.R:·Nd. 140420, February·15;2001;.· . I'" Damaqes ·._·. . ·.• ,· · .. ·.·;, .. . ·· · .../. . . '; ' .v: , · .. , ,- . The .. · pecuniary . compensation, ·., recompense, or . HEince,. ir{the .cise of Setetino v." FEB TC· {G.·R. Ne{.: satisfactiorr 'tor · ari injury sustained, :·a( as ci\he-~isf · ... 171845; Octobertt), 20·1_2); the- Supreme Court-ruled . _,.exp'.-~ssef thEfl:~ecuriiary_ c°~rise~u_ences W~i~~. th/. that in. the absence ?f any positlvaduty Qf. to.an law. 1mpose_s for" the breach of. some· duty or' the ·· · ad.verse claimant thece could. b~ no breach that , viola.iici~ of some· r.fghts -(People_ v. Bal/ester~s, G.R . , entitle; ih_e latt13r- t~ rnor~I dam.ages. No... t20921;:Janu.ary 29, 1"998,' People .v. Oan·dasan, . .: '· .'. · jr.;. G.R:' No.: 194605, ·Junei'f4; '2a1'6J: · .'::· ·'~ . · Pec_un'ia,-y Los?.' . ,· . toss' of nidney or som~thing by which m.~i:i~y or .. Dani·age vs~.lnjury ,,. · . . . .. , ·: · .· . . ~om_ething~f money .valu¢ may be yicquired .(f?E ·Damage.is. th.e,,io.8.emnity r~co_verable--by' a pers'on · · O· who. has· sustained. an injury .either, in· person,' fY, . .FOf!jS\s~prf!. ati624)-. · _ ·. ·. ;_ • . :_ _- .-: .. ::.:·.'. · ~.-. . ·. "\·. . . " . . ~ The. provisions on Damage~ fou~d in Articles 2195 2235 of .the .. c"ivil. Code ar.e applicable~to ·a(I kinds. of .. -obligations-'{Arl. {157)wha.te.ver-rnay be· their .i5ource~ ' · . · (CJVIL.CODE, ArJ.'21fJ~): · . . . .

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, -'.~~lsi~iv~ ~ight~}!Jwugt:i"the: actco(d¢fault ~ G,ener;~l §\ er~ ju__d_g_rnert_fo_ r_da. mag,_~$. w... hetr¢_r _ . _.. 1s tt,e !nJury or los_ s_, f~r.:wh1c_h·_c_qmper.i_§at1qn 1s:_soyght , " ~ ih f th It f 'c{ b arif:iing fr:{at -b~eao~ b cor:itr~ct or ,e resu o ~or~\~ ,. 0 7 -4g· . · _(B2uvier'?'s ''Law.·. PJctionar.y, -75 c!te: ,'..' ·, Y . _provision of, la'f'. , mus, t rest· upon sa.t1s_fact6ry pr0o__ f. of.· · A__ LBANO, sup_ra.a.t--4.00). .. · ~ + ·;;-·: ._ .'· 'the __damag~s alJeged to ha.ve beeri - suffered {Id,_ at . . ' l~jury°'i~ th_e.wr~ng.fui·act ort&rt'Whlcn causes)i,~~ 'to. . ·. , .625).. ' _· . . . · -:· . . :"; . · · . · -: anb~-~~i . .T~e_.~9r~ .. '.'i~jury"- de1:io~~s· tlilrn-e.gc?t~E!;·:tpf·: . ,:. , . :" .· . · ' -: . :. · · : · · .:. · . · · ' . term· '.'aamag_es" means. the· ~um recoverable. \:Vhl.~h ·. ..Note:·. G,redence_ can· b.e given· or:ily. to dqim? .. '.9~.IY .. 'am.ends for°th·e. \j,jrong_ (ld. a( 401). . . ' " :- · . · sup o"rted .-by -receipt~ (Comsa·vin~s. Bat;~ .. . _.: ·. · ·_; ·. ·~-. · .. : \. ,, · _-· · Ca istrand, G.R. No. -17094,2,./wgust 2a;:2q_t-3). ·.:, . D~m~ge ·v. Injury v. ·Df11J1ages· . . . ~ . ·. ~ .. ·. . · · · :. · . ·-.·"\ · . : .- · . . ·. . . ·.i - .. ·: ·. oain'age is. ttie.·1~·s;1huft, o.( harm V-.:hipli"res'til.t.~.Jr9m ·. . ··.Exteptfon'~ .1.n~:..~~~e moral.. no'.,:nfna1,._· te'n::i"R~raf~.; _tne injury; l_nju_ry i~·the.legal inva_§ion of a legfa) rig~t_;· , ··-liquidat~.d exemplary da_m"pgef.s (CJVl!-,.CQDf, Art:"· _. .. ~n'd·Dam·a:ges~a~e.'tbe rec<;>mp_ense _o{co"nip~~s_aticin: 2216/'.:.:~Being. inca·p_~ble . oL -e~act" pecuniary,_ . aw.arded "(cir the· <;lam;:ige st.iffered~(Fpr East 1$,~JJ)_fan~ . ·· estimation,. the ;3S$e·ssrnenJ qf·s.uc;:h damagesi·.except . ·Trust:9,o,j,pady P,adlan,.'Jr--:;:G:F{.N_o. 1°$73)/t;"July · .. ·'f9r.liquidated damages whi.ch.the parties·{hern$~Jves. -29; 2005): ··' · ~ \ · ~-- · · · · · · · · · fix, .. is".leftto the_sol.lpd·discretion·oufi"e comt:(f..~bp_J~ ·.

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-,\1.-Qiilnos, ~-.R: No~-_f19$_1'1, Octqbei~7~-.199S).~.h· .,,

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. : :· Money . _". ·.. g~_quir~S:t~e. ·ayVarded1o ~he. defendant ta··• . .. person injured ,' "resto,e"'aoy .·' ' ·'.. . . "py the ·tort 9f- . gains'he. m~de . /rn'6ther (DE- : ·ir:i _a tran;:;ac!ism: .LEON, Torl_s cir .by. his·act or and D;:image~;:· omission (Id. ·at · . sµpra at 612) .. _ 613): · · .

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h'C>w~ver, not: oQiy°;on-what t~.e plai_ntiff clpill'JS tO'"_t;>e . just._ib.ut also :oo .wt;1~t rn~Y:be:·deemed con;:;ci(:)naRle 'considering the. situation -.of t~e · defendaoJ .c!nd:· the evidence ··oh. ·t;and (SUAREZ, Torts :.and .D.amf!fifts· , . (2011}, . p:151-. "[hereihafter .. SUAREZ,.·-: T~its" and · . · ;_ Damages]): ; . :. ·:' ... · .. : ·:.4·.

F~roi.ds<. ::..... thr~atened ··. · · ·actions; fe'quir.e's -the "defehcfr(nt·t6 .. ~: Kinds of Dam~ges': (MENTAL) ... ,:· ... ·alter harrrjfµI '.· . 1._, Moral; . ' _., . . -~ . : . . . . . · conduct or . · 2.. .s_xemplary or eorrecti\'.e; · · · repair.its ·.. ·.3. · Nominal; · cdi:isequences 4_. re.mperate modei:ate·: - , . : -~ (lc!i ~t 6_{3): ·. B. · ~ctual or Compensatory; .!:iquid~t~d· (CIVJL CODE, Art. 2197).

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20i$ SAN'BEDALAW

CENTRAUZ!=D BAR OPERATIONS

I 829

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.TORTS AN.D DAM:AGES . SAN BWA LAW CENTfy\OZED BAR OPERATiONS - MEMCJRY AJD-20i9

.. ACTUAL OR COMPENSATORY,: DAMAGES ·Damages·awarqed to a person 'as compensation or indemnity fa(such pecunia_ry loss suffered by him as -he has ...duly proved Art.. 2199~2215) . -._ .(CIVl(CODE, .. . .. . ....

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Spea~s of dar:nag·es_ in contracts and -q·uasi-c6r1tracts:. · 1. Obligor in Goop:Faith · ' Liable : for ·n.atural. a'rid probable 'cohseque-rices of the breach of. the . obligation and which the· parties ·have·. foreseen or could _hav·e .reasonably . been fore.seen at the time the obligation . was constituted ... 2. · Obligo{in Bad Faith ...,. ·. 'liable ~or all damages which may· be reasociably attrib0ted . · to . ttfe · non'~ performanc'e of th'e obl1gation._. .

. Purpose: To repair th'e wrong th~t h~s been done,'to. . compensate for the injmy inflicted .ar,id·not'to irn'pose penalty (PNOC Shipping and T-ransport Corp. v. CA, GR.·N_p. 1Q7518; October$; 19_98)._ .

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... The amount to _be: awarded to the plaintiff.shoi.JJd ·be that sum of mon\:)y WQi~h v,,,ill put the -party Who has b~en lnjun~d or. who has -~uffered in the. same position - as. 'he' would 't'iave been ifhe _ _h.iid. not sustained the- ' wron'g for .which h~ is'_now g~tti6g .hi~ compe'n~ati9~'. or- reparatiori- (AQU/N(J, .Torts and,bamages, supra . , a·t ·7_75/ · · - · · · ·· · · ·

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, The· primary object 6f'a"fl·._award of a civil aGtid,r'i; andu ' the' ft,Jn?i:iITientai_.'prindpl~ or)he_or.y; ~~f~t-'is : . . ~ based, rs Just compensation, 1ndem~1t5t
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be '111.at'.vhich wd~ld.-put p!aiotiff :the same positki_ri' as tie y,rou1d:have been Jf h_e had nqt,sustained·the·wr9ng. fqrwhich .he: is [JOY,., getting )iis ·compensation, or r,ep.ara;ticin (AQUINO,. Torts andDamages, . 'supra atl/4-775):. ·· . - . · · ... ';-. · · ..

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?ctlr~~ ~,~oi_dab_l~ :~~ns~~-~~~-~e.~:. l_nJUre~ wt1_m,}h9Ve a respOrlSlb_1hty to·~ct -~~soJably~ct !imit 6r' · rii!~igate ,. ,loss'es . ~cu·rrE:\!'Failut. to:._mitigate th_e. injury will ot h~lor.-_th'EJ ~:e_f~~?q_nt· fc?r . 1n!':re_meri,tal : §,/_~~-~that ...oz· erw1~e- c~uld ·_h.ave_·· bee_n__ ~~-1d/e· ~~. . . . . ,... . . . . .

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IJ\':,her~i a~. ~:jpri~eqtl~_ric~'.;Jf th~- re~~'sal-pf :.!~rij~reclJ.fb _ suqhJ{t9; ~11: Qper~tio~! ~a . ~series pfjirifections,:eiisue·d .aha required :c_~sJ~(ai:i9. ex~~rJ~i_ve n:i'e:cl!c_al tre8;t.i:n~rit · · 02vera_l.y,i;_l~r~; Uj;e c!efe~d_ant_$h?Wdr10~ e -chargec!::W,1th. t_he ·ex,p.~nS!:?$. (L?Js.am v. Smith, G.R._-Np.) [!495,)=ebi:i.Jary.,2, :1.9.24);., '

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'tnqre·~se_ ..oi-· R~d.uctiorf·'ot .. ·Crim·~ ... -.-.-._· .. : :·,-:· ... · . _,_ .·. :fM'e'.- ,li_ab.iJi,ty ·. tor . :darilag~s .· may ' ~e :respettfvely ·•:'.iricri:ias!;id•.- ·: 01' _; . lesser(ed ;qepending cm t_be'pr~se"nee:-Ci mitigating_or, aggravatir:ig·drcumst,qnces, _ . . ·. ··:.~--~ . . ~· .. ...: ... ,· . \ .. -·-~ ...... '_Mitfo'atio~:of Li'~bility

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1:1jn' f 201!;! _SAN BEDA L.AW:CE~TRAUZED BAR O,PERATIONS

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TORTS A,ND D:AM·AGES SAN BEQA l.J\W CENT(lAUiED BAR OPERATIONS ., MEMORY

Doctrine of Avoidable Conseqtien~es Contributory Negligence .

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AID =1019

Whe,re .. howe·yer, it is reasonably 'certain that injury consis,ting of .faHure to _realize otherwise reasoAably expected profits had been incurred, uncertainty as to - ll:l~ preci~e amount of such unrealized profits will NOT prevent recovery or the award. damages .- (T_alisay~Silay · Milling · - Co: v Asociacion de Agricultores de Tal/say-Silay, In~., _G.R. 'No. ~i 852, - Aug.ust 15, · 1995), · ·

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~~!Sil!~~~~~~~~-~-~~ : Acts·._9f the plaintiff occur after the act or omission of . the . defendant (AQUINO, Torts · and Damages, supra a.( 813). .

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May.Actual Damages Recove(ed on the Basis of Mere Testimony, . . . No. The Supreme Court ruled in Fuentes;_ CA (G:R .No. 111692, February.9, i.996). that as there is no · tanqible document up'qn which the actual darriaqesls

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based: actual damages cannot be recovered on the basis of. mere .1;:5timony.1To seek recovery fo·r actual damaqes, ifis essentialthat the injured: partyproves ' .. the actual amount of loss· with. 'reasonable deqree - premised upon .cornpetent proof and on the best - ev_id~~ce·available (JURADO, supra a_t 1279).

Ge~er~I Rule: Actual da~a~es- m~-st ~e ·-proved ~/{. . Doctrine .of Foreseeable or · Anticipated a reasonable degree Qf certainty. A courtcannot rely, Consequences . qn speculation, conjecture.sor guesswork as tlthe "0nl'S:< thos.e injuries - which could have· .'been fact ·and amount of damages but. must' d<:;Jpend.:on r~asonably. foreseen. by the, parties at 'the time· the ... competent proof that" they have sufferecf,' arid o,t · contract was· entered· into. are recoverable ·contract . ·evid_ence of the actual amount thele.fa · {fi?!?il1f'P.loe damaqes (SAMSCO; Torts 'end Demeqes; supre 'at . Nat/Ona/ · Railways v. Brunty, ~o. 169891, November 2; .2006; Loa<;Jstar}iti1pping tnc . .Jf· ': ·Malc!xan · Insurance Co., _tnc.f..,ti.R.FN0.·1855§.5, November 26, 2014). · ·-. . . · · · 'Exceptions: (PLLaFDI) · ,__ .1 .. : _Whe'n a Eer:ialty.:clause' is. agreeitl!PO~··iri the. _ contract between the parties (C/Vlb e,GDE,.-Art. 1226); ... .,. ·

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- If· there a ~tip~ated. date of delivery of'-qoods, da_ma·g:es may cqrt1e-i11 the form of- the ditference . between. t_b.e. valJ.!e~ the _goods at the time· they should have been delivered and al the time of actual' d~~i~~~ (Uy ~h?coy. A.d_mi(a/Une, GiR.- No. 2J1'34, 0ctol}e'i.J!~ · 1924); ·(ALBA,YO, Torts and·Damages, supr'a-at,4·19).:. · · ·

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2019. SAN SEDA LAW CENTRALIZED BAR OPERATIONS.

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TO:RTSAND DAM·AGES. SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMORY AID 2019

In addition, the defendant shall be liable for: 1. Loss of the earninqcapacity the. deceased: to be paid .to the heirsof the deceased; Exception: ·.if· the -deceased.. had· no.: earninq capacity at the time of his death. . . 2.: · The recipient of support who is not an heir called to· the decedent's inheritance by the Jaw of testate or intestate succession," may demand support from the person, .causing .the death, for a period not.exceedinq 5. years, the exact duration·to be fixed bythe court; and -·. . 3., The spouse, · Jegitjinate · and illeqitimate , descendants and ascendants. of. the 'deceased rnay demand moral darnaqes ·(CIVIL CQDE, Art.

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. . earniJ'}gS -and. J_ess . _li_yi~~ -~-r,.,\·~tJe~i-,ae':7J:~!?.ctor~ -~~~-, ~o_~s1~_e:-~?- b~s19~.~ _t~~ _ . (Villa Rey_Tran?,t v. ·cA, ~R. !\Jo: L~25499 :,F.ebjyary_·M ~the~~t1c,al_-computat10~ of; c;1nr-iuat _mc;:.ori:_~~- _times·, . . 18,.1970).· .-·· ! : •.. ·, .. • .• ·, --1~~;,c?e'citancy. Allow.ances ·are .·made.·, for_ , ·.· -' --.-- ... ·. · ::· :·-,,' .; .,···; ·: ,:.·.·.· -~:.-- .. :._ .. ·.c1rc.uri;ii.tanie~-whlch,c~Lld.redu.c~Wlccim~tedlife.:_ ... The pl?intiff is- als0. entiged.-to. c:larjJ_q"Q!3S_for· loss· of·. , e~p¢~t,!fncy. 9f fhe. viqtinj! .e.g., nc3.tur_~ ~f. the wor~i_hi_s. earning . _capadty · when' th~· ,defendar:irs· act or .· . .- life -_style-,-_age,-and stat~ jf healfh.J>r.ior.JoJ1Js' death ?m.i~~ioti' ri:isult~d in his, p~rniarient:inCpJ?a,ci.!Y:/rh,us;· . . ~llprq at-:~~O). :. _.I.. _· I ~;:·; ·:. . . 1n . BorrQmeo.v.. Ma'nila-Electrii:;' Railro}1d:&::Light1Cd. ,.. ·: . ',!· · ... ·. ...... ·:,. ,, ,: ' ,_ •.. _ .. ·. ·_i-.. · ,._ . ( G~R: No .. 1·831{5, ·Dec~!nb'~r 5~ }t/22), ;tHe-,SLipreme · .~aY-tlie-F.ina.~cj~I., 9~P.~-~ltx° C?-!:..a'C~i:r.ie'r;9'ef~n~a11t-· •, Cou·~ av..iarqe-d, "in" favqr.of t_he,pll;li~ti~~an' ?3mou-nt Hir . . . bEfCons!d.er_etJn.._t?e .f.".'f.a~_d;?tP.~n:i~ge~7.-· '; .... his J.o.?s,of-earning ·ccipadty beta:us~ he· l.9s.t- tiis left .· .. Yes. Ttie}nc;1~~1al cap~,f}tY 9f th~_-qarn_err!lay not _be:.. Joo~;~b9 _be~au?$ of su~~-iqss·; h~ :e9u1d loji"~fer !'.le- . · · ·nec~s~a~fiD-?~!<:rrrij~i~$/w~¥.~h~(~r."not it.J~Jifble;._ .: · employed ... as a·· marihe .. engineer~ on .any . .ves?el. . but_ }>UC~. fina.r1c.1;:iJ ,capac1ty. ~~?ori,e~ reley1m~ a_~,d .. · (AQUINO Torts and Damages supra at 7.Blj. . · Q_e_c;,~s?~ry ib d(:)l¢imi6ing._ a· r~~~-o'ni:!bh;{Q( eqyitaole

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G·ener_al. Rule: . Docum~ntary · ~vidence. ·:Should si.Jbstanti'atEi'itre. ciairrf for damag·e~ fo~ los{o,f earning - . capacity (AO.VINO, To'its ·:and Damages, 1supra . at' .. z94)."'. .. . . :-,{ .\

. 8_32 . I ?019 SA~ SEDA LAW C~NTRAUZED BAR.OP~_Rt: T~O~.S.

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TORTS·AND DAM-AGES· .

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· SAN BEDA LAW CENTRALIZED BAR OPERATIONS - MEMOfiY.A/0' 2019

No!e: Nothin_g in tt1e Rules of Court requires that o.nly · documentary evidence is· allowed in civil cases. All ·that is_ required is th'e satisfacibn of'the -quantum _of· evidence, th·at is, . preponderance of evidence. In · . · addition, tf-te· civil CoJ:le. cioes ·n.ot prohibit a claim for .,, _ loss of e'arning capacity' on the basis that it is not:. pr;oven ~y: · documentary evidence. , Te~timonial. : evidence; if n0t qu~stioned for credibility.~'bears the . san::ie weight .as aocumentary evidence (Torreon V. Agarra, J_r., G.R. No. 188493, December 13, 2017). •

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Exceptio)ls:· 1. The awar.d of temperate damages .for loss of · .. · earn!ng.capacity ir lieu of docurnentaryevidence; · 2,. t';lon·-worl
Demeqes, supra at 794). \. . . . . ,. . . . · : Loss of Earriinq 'Capacity of Non-worlf los~. ~J¢.arrnng,.....caJac:;1ty_a~d not necessarily actual loss of income ,(/q .at-79Z). "'""· .

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Attorney's Frees: · 1. Ordinary·.-- t~e attprney's fee is the reasonable · c6mpeosation- paid· to a lawyer by his ·.client for · the legal services he ti'as rend~m:fd'.to . , the iatter . ,'

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. Basis: the. fact of his-e~plbym~rit by and hi; a~reement wi_th .tbe. ciient (Trad~rs · Roya}_ 'aan.k Err_ployee_s Union v. NLR.C; G.R .. No. · 120!5n, March 14,~.1.997). -. · :,

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::/ .th~ attorney's fee 'is an ind~mnity·for 'dam~ges orde(ed by-the to_uif to b·~ ·paid ~Y ·the losing ·party in· a_)itigation· to the prev~iling party. ·

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· Attorney's may J:>e>awarde9 =when·-~-- _party is compelled to 1\tigat:e,or incur expenses· to-protect 'its interest; or when _the' courtdeems it just andequitable .. (Dprban Aparlments'.Gorp::.v. Pioneer-ln.surance and Surety' (!bip.,}~R~No._ 179419; January tz, 2011). ' ' Ari. _av,:arq of attorney's fees :-is th~ -exce'ptioh rather than therule.tas theyar'e·riot always awarded every -tirne a)qrtY,wevails in.,a suit.because cifJhe· policy that no-premium shall be placed on the ~ight.to litigate (Financial Buil&ing- Corp v.: ~ul:ilir1 'tntemetione! Cqrp, . · et et., GR. Nto1186; October 4, 201 Of ·· · · ·. · . 'Paya bl,~ ~r,c/.tCJt.t_he l~°wy_ei-_ but l~ \h_~ client, ~n~ess-they. . . h9v_e. ag~eed _t_~at award, sha.11 pertain to !lie lawyer ·-as · _add1t1on~. co~nsat1on _.or ..as. part· thereof· (Beneilicfov. v'illaflores;:GR: No: 1EJ5020, Oclober ·_6,'20'10). · ,. _ _.·. , : . . .. · ·,

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. Can the ·_c.pµrt Award _lnd~hlriification for, Loss of · ..__ ,:-·:Eafn{pg.J:'apa_d_!Y ~itho~t ~d~q~a ~e . :· . No. Well setfled IS th~nule-that the·1r)d!3mn[fication for ·. }aw' alio~s ''pa_r:tieS',:to rec;'ov_~~ 'attorriey's··'fees': . los~ ?f e~~ni~g capacit/ must be. duly ~roven. r:lence~ 1:1nder,; a ·wr-itten . agreem~nt. ·In Bwons Marketing · ~he ,tJ.are test1m·ony _of .tlie,·brother of the~eceasea is. ~ Gerp. ".' SA t_G,:R_.~No: ~26486, Februa,Y-9, '1.998), the · -_n_ot_su~_cie~·f proof:!~jem~ificf~ion for·1ot~ of,ec!/njng. . Court ruled··tl{at t~~ ~tto?n_~·y·s /~.es prov_ided_- in }he:. capac1fy partakes of Jhe :nature. of actualjlamag!:ls· · · c~mtract ate }n)he ~ah.{f.e of liquidated damages and · ·'1hich f!l·~st b~ ~GI¥ proven. f:. self=serviQg st~teajerit,. :tl:)e_,st,pl.i_lati9~ therefor)$ ·aptly callee;! a.'pena:r clause .. bei!1g·l!nr,e.liable. is QOt enoygh .. Sut fo'r the. lost ir.icom'e .! .so:10ng ·a;=;"such' stipu.iation-'dois:iiot oontraVEJne law, : .· to be recovere·a; tliere- ml.isf be iikewisi:r an ..unbiase'd· . motals; 'o"i p_ublic_·order/it is stri,ctiy biQdirig~_0pori' the · .. proof of .!he de"c'Eia$ed's average; ~ot" just gross, . defer]dan1;. :·· ·' ·' . . · ·,

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. - in.come (P,eople v. J:uenco, G.R: No_.· 143.819; . J.anuaiy 29, ·-2~.0?J: / . ... · .... Loss_pf-Profits > . • . · _Oetermine9_:by· consid_ering the average profit fpr the·. . --preceding years multiplied. by )h~ 'number of .Vear.s . ·during:_:_whi.ch the~ bU$iness. was. -~ffec~etj ·by ''ihe . ·. Wr~t:!gfu}. a_ct_9r_ b:e~~~ , (Id.. at 801) (Cpt]_§olidated . mi,ry Pr?du_cts et al. v.I:CA; G.R. f\Jo. 100401, ;?.ugust· 24,--1-992)... ~ . . . . . '( , _ ~.· .

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lnju~t.o·business:standing · ·· . · ·. ·. : lf'a ·suit7'i_S filed by Ofle agajrist a,nothet- in bad faith · · resuifing in -besmifched rep.utation :which a{fected th~ l~tter's 'business standin_g, an award. of .damages' is . prop_er (ALBANO, supra at 424).

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·.P,la,i_ntf h)~s.f ail~~e "t~e·. b9s_i{of hi_s· 'claim for attorne.y'.s. fees in the _complaih'f (A~UINO;.,Torts and Dama_ge:3,'~l!Pra _at 807r : ., :· ·. : . . . ... . ,". . .: ~ -· .. .· .··:"" .. ) ' ··. . . ... · / .. . : .. . . ~asJs_:.Any"_b.f.t~e ~af~·s.provid~d by[aw where ~uch a_ward: cap qe. m~de; SU.Ch as tho'se authorized: in Art.·· . 22~8 • 'ire iyif Ccicl~; .(Cons(ruction'.o'ev~loprrieni'. Corp. v.; Estrella_{ .GR. :No. ·1477.9.1,. SepJem.bef. 8, : ' 2_006). ·_·· .·. . . . : . -.:- . . .. ~-

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TORTS . AND DAMAGES SAN BEDA LAW CENTllAUZED,B~R OPERATIONS - MEMORY..A/0<2019

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.\ . b. No interest shall be adjudqed'on unliquidated Grounds for claiming attorney's fees: .(Sl2UMD20W2G) .· claims or damaqes.. except. when' or until demand can be established withreasonable 1. In a §.eparate civil action to recover civil liability arising from acrlme: .. certainty. . , .. . c. Where the .. demand is established with 2. When defendant's act or omission compelled the· reasonable certainty, the interest shall begin plaintiff to .bitig~te_ with.third. persons or to -incur to· run-from-the time· Lhe claim ·is made· · expenses to protect his interest;. judicially or extrajudicially (Bernal v. Villaflor, 3. In actions for .begal support·; . G.R. No. _213_617; April 18, 2018). . 4.· In a clearl/!J.nfo_unded civil action or proceedinq against the plaintiff; · Interest- dtte shall .earn ·interest not frcim default but s. lri criminal cases of Malicious -prosecution . aqairist the plaintiff; . . . . from the time of judici.al.demand. (ALBANO, sup~a 'at. 452). . . . 6. When exemplary Qamages are awarded: 7. When at least Double judicial costs are awarded;· 8. · In any Qther case where the' court deems it just. Brief Ru Ii rigs on-Co~pensa.tory Damages: : and equitable that attorney's fees arid expenses 1. Actual damages must be i;pecificaliy_pleaded and . I . ' of ljtigc:Jtfon should be recovered; · ..- ·. :i . :·.·. .· prayed for (DE ~~ON, Torts .arid.Q.amags:s, sl!pra. 9. In actions forthe recovery of Wage_s 6f household et 636). . . . . . . . · helpers, laborers and.skilled'workers; · · · ·· 2, .. May _be -executed. pending .appeal but riot a11 10. In actions "for indemnity'. under· W.ork~u·· -~ ·~~for rnora" or exemplary darnaqeswhich · compensation 'and employer's _liab~~w~r : 1. '\jt"cfrjnot b,e reg'a~ded ci'(fixed until there ls 9 final 11. Where defendant acted irrQros?andevidfnt:~u,ggm~~(~d~oCommuniceiions of the Ph_ils. · · !aith in refusing to. s_atisfy}he /,~iJ:!.tim~Jilid1u.st. · _7'f!e-.~};. Lailt'f\.q_._R. No. L-59311, -fa~uary 311 · •. and demandable claim (CIVjf 90~0 · ,, ~1.)208)~ ~\-, -.,1~). ~, ..._'\ _ . ·: :- . . 3\v.r'They,..siri:J.P{Y:t1nake ·QOf t~e murd_ere(l.\iictim Interest . . . - : . ·. · · -r~;~1~~!31:\01.,mtJ~om,1nsur?_~ce -~Ill not ~_ff,e~t. (CIVIL_ CPDE,__Art .. ?20fl, 221.0. ~n.rf. 2212) '].- · M·Nh~ ~ward o_f-act~a_! dai:n.a_Qe.s· (Catu,za. v. :Pe~ple, ·· h. f" · • · . · , • f. . , f ·· . G.~o. L-204.55, lyfarch 31, 1965).. ·, ~.' . · · · : - · '. · ·. · - · . ·.: •;. · . -~ 1 ,·· B. reac o ob 1,,1_ga_t1oq CO.f\l?l~t,ng···o ;:_,·pc1yn:,ent~q ~ .. s0rn ..of- ~or)ey· (e.g., ,·a. l?fn. or forb · t~e . tfrri~ iL 'i~ , judicially'. ...-·1. ~·_g_esmirC~E:,ld reputati9"i:J;. . : . . · -' . . . derri'anded_. .. . . .) ... -~ : . ·,. . . . ...... '• ." ·:.:·, 2.. Moral shock .. , . . ·,:· .. . b. The rate of interest ·shall be· 6% per a[inurn", - · · 3: . Woundetl- feelings; · in the apsence of~XRre~.s.contrad as to .s.u~b '·: 4. ·.- £right; · · · _, -. rate. of'inlere"st, inq!uc;ii.ng the ra.ie: allow~d-_)fr \ _. . 5. fhys(cal suff~~ihg;: .j~dgrri~nfa'.(,$SP Gin No, 799, _series'of 20.13). · 6.: Mental anguish; · -~ · · ··· · ,· cproputed from default,. _i.~,; .frof!1.)udicial oc . . 7.. §.~'rioi.Js _am:<1e_ty;. , . ex1r~~judic.ial·demand.subj~c:lto Art. 116~9 .of·:.· 8 .. Social humiliatiori · <. . . ' ·• . the Civil Code, ) ·: . .. . "9 ... ~frnilar injury.(CIV/L .c.opE, Ari. 221'7).

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Breach of obligation not constituting loan or: forbearance of money: · · a. An.lnterest on' the amount of darnaqes lo b~ awarded may be imposedat.the discretionof .: the court.at the rate b_f six percent (6%) per .. ·annum ..

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SAN CENTRALIZED-BAR . BEDA LAW . ~ . . ..... .

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Article 22·17··. of .the Civil. Code states wlfat· are rrich.ided . in moral · damages- while Article'·: 2219 e~~rrierat~s thecases wtie_re th~y-may·be re99)ered .. .:·· .

TORTS AND DAMAGES .

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SAN BWA l.AW CENTRAL(ZEP BAR OPERATIONS - MEMORY AID 201~ f# :4iSf4Ec:%PtaXAL#'

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Note: Th_e _. cases when . moral . <;famages may be aw.arded are spf.:)cific. Unless the case falls ·under the_enumeration ·as provided in Article 2219, which is . ·exclusive, a.nd Article 22·20 of· tne Givil Code' moral _damages _may not be a1ward.~d (Coca-Cola Bottlers Phils., Inc. vs:}Meiiez, G.R:No. 2099061 November 22_, 2Q17}. . .. · · r ·.: ·, '. , . _ • ·

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The -award . of moral damaqes is designed to comperisate.the claimants for actual injury and is not ' meant ~o enrich-the· complainantat the expensect the . . defendant, The grant of moral damages is· based on "the ancient maxim "wherr there is a wr~ng there is a remedy'.' .(AQ.UINO/Torts· and Damages, suore a't ~1_9) .. : .'. . . ... : ; . . . :---~ ~": ) . . . Among Irie. factors ,·u:iat · can be· considered· in assessinq m~r~il.. damages is the . st.andi.ng '. of . the offended. party, in the-community, or,i the one hand, . , · · and ~th~ financial, capability .of.thf offender, upon the· other hand, without either being preclusive of other circumstances e-ven perhaps more primordial, like the· gravity of injury and.the .wrong causjnq it, ~hat.mayJ;ie attendant to each case (Parmer Mayor 8(/gido,Jr. v. Martinez, G.R. No. 156025, Jenuery 31r·2.dov.

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Proximate Result Such. darnages '°m.ist _be the proximate' result of a wrongfui act or omission the' factual basis of .which is'. sci'tisfact~:>rily established tiy_ the .ag_grieved. p_ar'ty (Lim v. Go'JleZ, G.R. No. _160110, June 18, 201.4). · -~eneral ·_Rule: The plaintiff n:iµst alleg~ an_d prove: 1.. The factual basiS"fOr mora.1 dama_ges; a"rid 2.. Its causal relatioo to-· the defendant's· act · (AQUINO: Torts and Damages, sup/; at 822). Exception: Moral damages may be awarded':to .the vi~tim in crimin.al proceedi11gs-.with9ut · the 'nE~ed fqr pleading of proof of the basis !_hereof (Id. at 822). /

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Nature and Purpose . . .•. -. ~-o~;:il. camaqes are 'not pu~itive' and not inte~de~to <, enrich __ .the ,c.on:iplamant in. order ta .p1,1h1str• the defendant, fhE:,Y., we for ·re13ar~~n ·of_ toe spiritual steius qoo a17(e; a_ means ";_to~.~s.sua'ge the -morall. -sufferinq' :of _.,the .... _co1;1ple:3in·a~t(~ro_a!1nt abo&t by· _defendant~ · c~lpa~l_e . action (M.,?nila ·· Ele"ttr~c. Compenyv, .Ma, y,ctona~.Jose; '@.R/No. 152769, . Febrµary 11, 2007; _Manila,Elecfric_Co.:v. Spoufes

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a. . A .crimina_l ...· offense . resulting . in .. physical . injuries; , · . . . o .. Ouasi'delicts causing physical injuries; c. Sed~c~tif>n,· . abduction, . rape, or other . las~v~ous acts: . . . . r , d. Acfo1lte[/'or.con·cub.iQage~ -_ .. ·. e.' .. IIJ!g_~I ~r_.a{q~t_r~ry d~tenti?n or arrest: · f.. 11re9al seamh; : . · · · -~- · gr-$i1Del, slal')~er or: any .other, ' form of . . d~~t" . .. .· · · · h. 'Mahclousprosecution: or . --...,i. Acts mentioned in Art. 309; Acts.an·c:1 actions·c'.

. .. .. in Ar.r. ir. 26,:27', 28;·29, 30, 32,-. .Aaf/Ji:r... ~....:..;~.....:. referr.ed~to 3],, and 35 (DE .LEON,. Torts-~nd Qamc:1ges,

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Proof. and. Causatron, · .· . · ·· . : · sup~c! a_t 774).. ·· No proof"of.pecuni.ary .'l9s~ is he·c~ssaiy in.. 0rdedhat :· · · '':>· m~~aL· qarrif9e:s,.... may be . adjudicc;1ted: :.- The ·M?r~I Da~~ges .in. C_ulp~ (;on.t.raitua[ : .._ . . ~: . · assessment pf.such damages is .left:tci"ihe discretion · In. culpa.toi]tractuaf, tn()_ral .d'?mages.~re.recover9ble .the court accqrding· tb the circ.unista"nces of each only if the·defen_d_ant acted fraudulentiy or 'iri b,;:id faith, · easer. Ho"wever; th.ere must b.e.'pro.of that defendant or is found__ gDilty.t;>fgross negligerfoe' a.m.o~nting 'to. di"use<;f phyS-ical_ suff~.[!.').g; mental.~angllish,. fright, b,ad "faith, or in wanton aisregatd'·of.his contractual se_rib\JS .. anx_iely, be:3t')1irched 'reputation, Wounded ooligatio1Js: The "breach :·must be wanton·. reckless .. feeling!,, moral st:iock, so~ial humiliation, similar.injury· •. _"ryiali_c(o0, .. or. in'. bad . faith; .. oppr~ssiv~. abµsiv~· . to t11e plainliff. (AQUINO, 'Tort.s·and Damages, at 822) · · (Emm_anuel B. Aznar_v. ·Citibank; t:J.A., (Philippines), · ·. · · G.R. No. 164273, March 28, 200_7). · .: . ··Amo"~htof.M6ra1'.t>a~·a~es to.be"·Awarded: ·.... · . ·.· · · · . . ' . · .- It .. must be . COIT]~e'nsi.ir~te' to. the . -suff~ring or . _: A ·conscious or. intentional design\ne.ed n~.t alway;;be. propo~ionate t_o the wfonQ c~mmittecj (Manila ·Electric . p·resent- since regllgence ·· may. bccas.ionally be s·o Cpmpahy ·v. Jose, G.R. No.' 15U-69,· February. 14, gross as to arT)9unt to malice or b'ad faith. Bad faith in-·· 2007). . --. ·. . .. ·.· .. : ·, . tne 'Gontext .of Article 2220 .o(the" Civil C6de"·iriclu8es gr~ss.:negligence (B?nka_(d, file. II. FeiicianQ, G.R: ~ . ... . . . ·No. 141,761, Jufy:2°8, 2906).- · · . · . Factors·i11 Deterf'T')ir:tingAmount: (EPS) 1. ~gxterit of Hvmiliation;. . . -. . Mor~I. darn.ages rnay also be . ~-warde~ , in ca~e · ~h~ 2: Eain :andisuffering; ·~nd .. . .... · · : de~tr :·of. a passengefr results . froni a. breach . 3. Offidi:11/: political,. sociai and. financial ·§landing _coritracf. of carrjage (CIVIL rCODE, Art.·· 1764· fn (A?UINO, Torts and Damages;-supra at 830).·. relation to Art. 2206): · · '

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Mo.ral 'darnaqes in case· of physical injuries are recoverat:,ie\c:inly by the party injured (Manila Doctors Hospital v. ·so _un· Ctiu«, G.R. No. 15oj55,' July 31, 200'[5). ' .. · A patient can . leave . the hospital despite. nonpaymentsof bill? 'but 'the hospital can pursue other . . remedies (A:fanf/9 Doctors Hospital' v. So- Un CIJua, G.R_. No: 150355, Ju(y 31-; 2006).

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A slap·on the face is an unlawful·aggression .. The face . personifies' one's diqnity.and slapping it is a.serious personal affront: It is .a physical assault coupled with a ·willful disregard. tothe 'integrity of one's person (ALBANO, supra a_t 493). ·.. · 'Persons who· may Recover M_oral Darnaqes . ' General Rule: Only the victim can recover.

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Exception: The follo,wing relatives of the victim may Mor~!' Damages'in Quasi-delict .. . . recover: ·.. · .. .. · .. : '· · When 'an.act.oromission caUS!:)S physical .injuries or 1'; . The· spouse, legitimate and : illegitimate. _:,where thedefendant is Quilty of intentional tort, moral descendants. and ascendants of the deceased damages may be 'aptly recovered (DE t:.EON, Torts (CIVIL CODE; Art. 220!;!).: ... . and Damages, supra ·at 7,!5):,:> . . . 2 .. The parents of female seduced, abducted, . _ . ·. raped, or abused (CIVIC·coo~;'Art. 2219 par 3)'. , Moral Dam_,!9esj'n Crimes or Felonies· .. . . · 3 . .>the spouse: ···d_escendarit~i.: ascendants, 'and It could be. ·lawfully due:.when· the. accused· is found . brothers and sisters,' in the order.narned.iaqainst ·._.:guilty b~'I:ihysic.~i injuries, ias?ivious·.agts,:~dult~~ny prrson ~licrshOv:,'S ~i_sJespe:ct t9,t~e dead, or con~ub1~ag_e, .1l_ll:~~t-or ·arb~tr~ry_' ~etent1QD,"."~I_J~gal T _f1 Sllf~Ogf~lly interferes' . m the funeral · pf the . arrest .. or : search,· 'defamation A""malic1ous 1, \/Jeceased. · r ,

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.. ~;o:e~~~~~;·~f:~1vi1 _ i~·d.~m·~i.ty. is ~a~.}~~~~-<-~l?m~1so·~1Juer/ne_nta_1 anguish: .?eri.o_us need of proof other than the con.)mit's~,~gfrfl~.cn,m~ ,._.cf? •anx1ety..i.. w~~a.ea·/eelrngs, moral ~hock and other (People v:·'.Gredo, G.R_._~No_. 19}3~,"'{uly 3, t2Q13).1b) )f s~tilar injuries (f€:W'tNq, Torts ahdDamages/suprfJ . · .t n- Jh.\ cffil337) .,. Though R:A 9346 · pro~ibit~jthe· imgos.iti?~f death-~~\ penalty,.the civil:in9emnity is p~~re~/because it 1s"not ,: Note;,liowever, tia~~-righf to claim damages by the d~pen~.ent ori_, the·~actu.al:l~p~:s.(~tb0 ?!,° \lie ~dta_h~ l_:!;·t.zSi~J;J~s·(1~roth·~riand1siste~s) is !fmited only to !h_e penal.ty bul on the fac~ th·at:~!..la1Jf¥rng· c1rcumstant.e( ...- · ~-tl:m,~ enumeratron:~+=len·~e, rn: the cas~ qf 'Sulp1c10 war~ant_ing_· !he,-, im-~o~iti?nt. b1-l.:~~· penaltY,~1~#'L~nes ~t .~1..,. i~e-~up~em~:~q~_rt ·~o_le.d:_{hc!f atte,n~ed .. the cornmrSSl!?!"l' oi tbe,.qff~nM;~~eop e .\C"f I~- r~:r);fr:f'@s1blmt1s o(Jp~S$enger dunng_.a·y?yage Cre_d.o, G.R. No .. ·197:}60, _-Ju/\f.@/ 2013):_.·\0,~ · · ~ -<-tJI._ffL~'(zg,siP,/'~irzmoralJdamag~s beh_alf ··of the . . . . ,· .. ,:.· __, .."'. · · ,. ·.:\ · .. ·'.. :. /~&{j)~~.J ~b:. 1 ..M~rch .1!, 2Q10J:. . .-: . >

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·· · _Brec!"cti ·of Pr9~ise,~? Marr.y? ·. . . · , : ·. .f~~G.!tJP.al. ~t1l'4 A~~porati_Qh_ not :b!=l -~""'.arded\ . No .. ·_m9ral dar:nages. and ~~e~plary:?~a~ arj·~~t~~~rc1"drrci~}le ~ ·b~Jl'}_9_ a JUnd1c_al.persop; 1t ,sa.nnot recove~c1bl~ 1~·, .·d51~~9.~·. .,a?t1o~s. yrecliG@_!e~}o_r_. _a su~~!'Ir_om ounded feel1n~~,:.s.E;)n?~.s·anx1e~y, ~eQt~I .~r~a,·~~- qf.,emm1_sg~ t~·l)'.1arry:_Th~-.r~as9.ri"Ta~1:? - ·,~g~li. Of: m9r~l_:shock. ·(M~nila .. El~ctn~. Co:."'.: clear.· The..,mere ·9re,c1ch: qf.~prorn1se ·to_ r.narry 1s ,flo( . . . T,E.A.M.':Gorporat,on, :G.R: No.. 1-31723,JJ(Jcember · actii:>n~bhf~ N'6(fa~irfg·'actl6Y1a b!e.- tli.ere cc'.iif:be ·no . 1·3,.2001). · .· ,.. , ,_, y, .. :·. :'. ; : : . ,.:, , . -· :· ·v },· · P.os'sioie 'oasi{for:'a'r-1 awcifd'.fof:-darri'age(.:~hether . . · .:.'· ·: · / . ·0 · ••• ··: ·...· • • < · ' ~f..exehiplary ... , . . .... · · ... · · : ... · · ·:·· · · . Eicep_tio'f{:. l!ibel, sland(:ll"·· or · any .. bth~~ ~j ·. · . · ', ·.,:, . ,.. ·, . ' ·· '; ··. derama'iion: But'there m'Qst be~~v1den.te t6.-prove'"';t;to . . It. iot:ild·· bi/ d'fttere~t. however.;·jf" the --~~t '.ihe . ju's{ffy' ·.~he. awar'd\civii:.: CODE;'Art._;-227-g_··par .. . :·qef$ndi:1n(in. ·bric1~inl)1.i~'. pr6'niise~.)!? niarry-' is Filipinas 'Brq?Jdca.stfng.Nt;Jiwdr'/f,)nc, A'go·:Medical ~ . . · accompani_ed·_by' of tt}e ·act~ ·~numerate8 in Art and. Education·a( Cei?fef '--Bicq/"Christian College· . -2~19 .. : 9f th~ _Giyil _g:9.a~ .. · In: ·.suer ·i;:ases, IJ'l~rcj_l Medicine>GR .. Nb:0.f4199.4f,JahUary, fl; 2005) .. - . · · :.·,a~fr1-~9f~·,m~y}~."re'~h~~-~ed.J?~t·;:ev~~0Jl{·_!~~- l;ici,~i-~. . / ... · '·:.. ·. ·. _·:.:/ :: ./· ··::· -~.: ·'(. _. . ·:.. '-"'<'.,. of r_ec.overy will ·not' qe brea.ch· of- pr0m1se to marry NoJe;'ln Manila Electric Co .. y. T.E,A.M, Corporation (~/..!B:4DO,;: ~ufJ~ ._. its .:go9d','fill 'and : be Held Li~bl«?. for parl)c1gis?. ·:, · ; .. · .... , .:· ·repu~ati~::i_t is,essential·t6Pf-0Ve'.the e.xistence:of.'the· · ~es.·' l;,he _act ',gf,.,~l_app}n.g an~~hkr .. ill t~e.. fpce is . factual ba?is pflhe damage 'c!.n..r.fits causal· relati9n tq, . '\ . c'ontr~rx to mq_r.a.1~, ah~:~9:<=lOp ,Sl:,l,!~t()~S .·?Ind_ LHJder:. th~ ": peti_tio.nets. a.els ... lq the presen.t:.ca·s.~,jhe.f¢.c9rq.s c1re circlir,sta·nces·, c<:>uld .not .but tiave caus~d tt"\'e 'latter . bereft:of..ahy evidei:fce that- ttie name or re'pUfation of. merit.al ·an.~iuish_, ·morai'ishock,,. wcit:irJded. fee.lfngs.an~ TE.C/jpC :: has .J?e.e:n. :a.~bas~d'. as a .. result ot, .. social'humifiation. · , petition~(s ads:. Besides,. the trial court simply

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H_owever: 1. In·· cases where the r_esulting injµry might ti.e continuing and possible fwture complications directly c;1risi"11g ,from th~ injury, while certain' to · ,occur are difficult to pre.dkt, temperate damages· ca[)· and should. be awarded on top of .actual 'or. . compensatory,damages. · In such cases, there·js. · rio incombatibility_ betwe.en ~ctual and temperate · damage·s ·when.both are provided; or 2.) In , cases of .additional,· damages to .cover _: ·estimated.tutu.re .cosi·_o( proper c;;are whei:e it · . would· not be equ_itabie fol'lhe victim to constantly come to. coL\rt -~nd invok'e their aid. in seek(ng - adjustments to· the .compens'at_ory" daroage? .pr."e;v(ously awarded,. temperate d·ainages. are · .appropriate/(Ramo~. ··v:~ QA G~R. tyo. t?4354,'. . 'Apn/'f1,'.200?). ':' ,· .. : · ·'., . _, •. . . ·_-.• ·. . .~ : '. . ·',. ~ .) .,.

awarded moral damages in the dispositive portion of its decision without statf~g the basis. thereof. . . .

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NOr.:'!INAL DAMAGES (CIVIL CODE,_." Art. 2221- . , · 2223) . . They. are. those recoverable w.here a if?gal ri~ht is. technically violated and must be: vindicated against · . an invasion that +ias produced ·no actual present loss of any kjnd, or .where, from. the 'nature of thecase, there has-been spme.inj1.:Jr.y"a(isi"ng froma breach oj, · ': contract or legal duty the. amount thereof. has not· been or cannot be-shown .. Purpose: In 'order that a ~ight .of the plaintiff.lwhich

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· has been violated or invaded by. the defendant, may · be vindicated or recognized. It is not for the ·purpose·. .of lndemnlfylnq the plain~iff for _any loss suffered .by. .hin1,(C/V/L CODE, Aft. 2221.)." .: ..: .

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. ·i-leirsJof· the victim -. of murder . are· entitled h .Php:50~000 a·~-ci~il"indemnity, which. i~ m_andal
However, the -~rant of nominal .. damages is. a. bar tp _recovery · of actual 'or compensatory, moral, · .or temperate darnaqes (-DE LEON, Torts and Oamageli supie at·814).- . · · .· · . ,· · . . . ·. ':. .• .

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. The l~w . presu,:n_es _d!:Jm?ge_ alt_hough : ~et,\:!,al .. or compe~satory. darnaqes are not p~oven- (G~nzales \i'.'.. · . People,-, G.R. No. -15.9~50," February 12; 2.007). ·

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Te_mperate-E>amages· in_Lieu of Actual Da~ages · · · Sin.c.e.the hei~undeniably ihcurred·el'.(p.ens~s.for, the wak'e ·. andjburii:il·, - the ·supreme ·Court awarded . ~empera.te/g~a9~s~ .in-.-·tbe . ~~o.u~t>.Qr pis-.ooo . • pursuant to prf~~1lmg Junspr_ude~nce_, 1n: 1.1eµ of..actual damage·l as i~uld be unfair-to" the victim's heirs to.• get n~wh~~sgite~Hi~ .ae·afo of_ thei_r kin, ·f~r'r.eason ... · alone t~a~ tl}gy c:arfrfot _pro.duce receipts ,(E/ji!ippine. Na.(iprj'al.failVf?YS V.. EtherBrunty, qR; Np." 169891, . ' ovember 2,· ioo6J. · · ·,·' · ·

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. 'i-~e ,l?du~f dJ~' ~~t aw9rd'·,a6t413_I a~m~~e.~;-d·~·e;t; ·lack pf. procif- of "actual /expenses;. but. instea'd grantea . ..fe!ll·P~r'tite. cfah)ag_es, in .the· ~rp'o·µnt_;of f:'50,000, . ·. temperate '·da.m9ges ·may be.. recovered· ... wlien ~ -.:._, pecuoiarY loss 'Has· ·b'een. suffered" but iis.-,amouni . · ca11not b~ ·provecj w_itti certai~ty'(People -v: Berondo; .. 'G.R .. No .. 177827, March.'S0;:2009) ... :. . . :· . . . : ,' ··~ . . - ...... _ . : . ·._;. .: .

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·Li°nd,er .· A_rticl~ 2224, of the ·~_ivi,I ,Cod·~·. ·tem'~e;~t,~·. ·;·damages•may be recovered.when the court fii:,d~ that some pecuniary loss "rias . been. suffered tiut its amount. cannot-frorn .the: nature of. tbe~·e:ase, _pe

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.. \Vhen the _crime. i~ heinou·s, the. ·S"uprem·~ ~OLJrl . i.~¢rea~~d the,"award for, rtlaridatory- civjl ·ihd.efm'flity fo :· 1?75,0QO:Ob '.· to·._;confcimi:)o-., recent Ju_r.isprtJderic·e (Peopie ii. Ver_gara, G.R.· No .. 177.7f33//uly 3; 2013) .. '.

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~~·e~~ -~~e ,'~~;~-~g~s;-i~ibh · a~e mo~~--tha-~\bmi~~I . but less than. c_ompensat,_o"rx,·?nd. may b.e-~lt9'.Ned. in- . cases where from the nature of the case, 'definite .. proof of p~cuhi~r/l~s~ cannot be·.addu¢e"c;( althqugh" the court is . ·COrWif)pecj_'-'that ·. the '.agg'rie\ied. party . suffered . ·pe_cur:ii~ry· lo~s·: (!?,cirlano::_-v. .. LasfJla, ~G.'R. No. 1.97842, October 9,: .?013). ·; · ~ '-

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Temperate, 'and . aCtU91 · ·a~·mages ~i'r.e. m~tvaliy: "exclusive in thatboth mayno('be awarded at ·.the sarrie" time.{P
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circumstances, which makes the- amount grossly disproportionate to the .damage .sufferec by the creditor.' In such cases, the court may reduce the amount at 512) . . of penalty·(ALBl\NO, supra . .

Liquidated darriages, whether· intended as an indemnity or a penalty, shall be equitably reduced if · they are iniquitous or· unconscionable (CIVIL COQE, . !',rt.· 2227).

Exe_mplary or Corrective Damages (CIVIL CODE, Art. 2229-2235) . . .\ . . Imposed. by Way of example or correction for the · public g·ood, ih addition to· the· moral, temperate, liquidated or compensatory damages. It is required by public policy to suppress wanton acts (AQUINO; · Torts and Damages, supre at.855). ·

Liquidated damages are· those. agreed upon by the parties. No proof is necessary. It is not subject to any contingency or determination as.. it is already agreed upon. The reason why thereis no ·need·for proof to· recover liquidated damaqes is because · the. agreement is the law· between the parties (ALBANO, supra at 512). ·.

Liquidated· Damages

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. . Should" the : _.p.rin~ip.a! :. ribligaHbn b~ 'void,' the stipulation on· liquidated darnaqes.witl -also bevoid: . both damaqes beinqaccessory 6blig'a'tfons to ·the ... principal obiigation (CIVIL C()DE, Art. _12_3,0): ·. '.: ....~~ . ...

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The amount of-penalty is liot'c;te_termined ~y.the.injury suffered.by the· creditor, b,ufby' wjlat_.ha_s. b:eer'i agreec! upon by· the parties· who free to determine 'st.kb arnount.Trie limits.of good.customs; however, should not be infringed. Apenalty would becontrary to good customs if it would occasion ilie economic ruin· and represent unoueexploitation ofthe debtor. It may also. be iniquitous by a. superveninq . change of

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Exemplary · . AIHi6ugh· · · th!3 Agreeme.nt damaqes cannot. amour)! . . .· . . ·of to, -, renounce .be. recovered exemplary .. ···~ -: ·,. rierppl.ary ·... matter of r]gbt. .damaqes'need damaqes . in ·T~}_s. /rJ:18)' · beproved, pfc1int[ff. yldV~f.lCf , :: .. : ·: granted: · at . the· rnust show that he 'shall b~ · null discretion of the' lsentilled lo m6raf 'and void. · . _t~Urt .if ri'ot'_te~·P,E}ate . . d~ . · .. · ·-· .~xpressly . . , . t:Qmpe11s.atory · 'pleaded.. ··..or- damc!ges. . p~yed

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·(RAL v. Ci\ G..R. No_- L-54470, May S, 1990; SUAREZ, Toils and Damaf!es, supr_a at -1-7).

Other- Kinds of Darnaqes

. Suriima_ry of Demages: In People. ·v. Jugueta: (G.1R. No.. 202124, April 5, 2016), the Supreme Court 'provided a· summary of damages. · · '

· for_ This· covers · damages Compensation Workmen and - other awarded_ when there is no proof 'at pecuniary employees.-loss. This ·is left to· the T.his·coyers damages for discretio_n of the 'court, workmen · · and other according · to the employees in case· of ·circumstances of each death,· injury or illness. case (e.g. damages . under special law. (e.g.' arising from tort or . ind~_mnity for\~orker). ~ crime). . . ' . ~· . . .

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For those crimes like Murder, Parricide, · - Serious· lntentional Mutilation, 'Infanticide, and other crimes: involvinq' death ·of a victim ~here 'the penalty consists of indivisible penalties:' , . . . .;Wh-~re the -penalty .imposed "is death but-. · · reduced to reclusion perpeule- because of ·.. R.A.~9346: ·· .. . i. - Consummated: '. · .. :_: .-·. . · ·1.)"-:Civil"lnde,:nnity- P100,0_QO.OO' ., · 2,Y Moral Damaqes'-- P100,000.00'• ·3.) Exemplary Damages - PfOO,OOQ.00 · · r v . ii. Frustrated: . 1.) Civil lndernnity-> P75,000.00 2:-)- Moral Darnaqes ~ P75,000.00 . 3j E_xempla1y_Darriag~s ..:_P_75.QOO.OO _ · · · -iii. Attempted· ·· . : · · .-.. ..

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' ·· · When.May Exemplary Damages be imposed? 1. ·: in-criminal offenses, it maybe imposed when the crime was: committed with one or more'< . aqqravatinq circumstances; . 2. In quasi delicts, it may be. imposed . if the . defendant acted with-gross-negligence; r · 3.._ In. contracts and. quasi-contracts .. it may. 'be · imposed if defendant acted in wanton, fraudufent, reckless,. oppressive, or_ malevolent m~nne,: (JURADO, Givil La'k_ Reviewer, supre at, 1315). · -'

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Factors Considered jn Determinin°9 Damages ·in Case ..ofDeath; · · · .,, 1. · Loss of earning caoactty--. - · '· a. The ·court "can .. consider the nature of : '. · · deceased's .: occ gation,.;_~ . educational . .. attainment-and the stit~ of his.'.HeMth at-tfi'e _· time ~f death (Pantr'a~co N.orl!J Exp,:e;s (. B GR N 0: 79050 51 14· aesa, · · . ·. ~ ' ovE:m er ' 1989); ·. · .. · . . .. . b. ·considenng .the circum~tq_,nces: of· ti.le,.. __ ,_

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. pthetitdi~.rn~r!?, .. !dheir:dnuthm~~ra~ dteP••t~diQJhs.to . e ecea,s_e , an e1r ·anx1e y lu sea re mg ·· 'tor~ tbeir ·par~nts. am.ong_ the· survivors· and. : corpses recovered from the sea (Mecenas v~ . . · · · . CA, G.R. No. 88052,_ De~ember 14,--1989). c. ; Under Art. ·.1764. in relation -to Art .. 2206 of the · Civil ·code: the ·amount o( P3,000 is.. now : .· incre13s~~- to. P75,000 (People v. Dela c'r'uZ:. ..:.. • G.~. Nd. 171272,· ·:June-7;·2007). · · ·, 2 .. , The· earning cap13city . of 1he deceased, his· qpligation to support dependents, and the moral, · . damages 'suffered' by his .kin are.·also considered . ·. ,(-AQUINO, Tort_s andDa17?ages, .sup'ra-at·,793). .. . . 3 .. If the financial capacity of the Garrier enable.s-it to pay mQr~. q gr~ater .sun, ;sh·oul_d. be, :give,n · (12..~ntranco v: Leg~_sp;," G._R. · /Yo. L-20916~·17, December.2:), 1964). · . <"" .. 4. Life' e_~pectancy of the decease_d (AQUINO; Torts and Damages, supra at 791). · · . . 5. The rate 9f. inflatiO['! .that depleted the VplUe of the judgment wa.s con.sider.ed iri:imposing _legal rate · ·of interes! on tbe· _indemnity due the deceased ·

Civil lndemnity - p50,000.00 . 2,L_ ~orc:JI· Da_n:iages_--=:l50:000,00· ., . 3.J. :E ernplary Darnaqes - P90,090.oo ·

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Where--· the PJrialty imposed is ,:ec(usion . '~erpettJa, ~er than theabove-rnentioned: . I. Gcqnsumrriated_: . .· .. .. : ... 1,) Civil-lndefyrnityp75190Q.OO 2.) Moral .D._arnages.-- P75_.ooo.. oo. ._3,)' ·Exemplary_ 0:=3mages :-- P75,000.00 . ii.

F.p.istrated; .. '- _ . . .. 1.) c,ivit. indem. nity -'_P5Cl',000·.00 _ . 2-) Moral d·amages..::.. P50,000.00· 3.) .Exemp.lary dam9ges - P50,000,00 · . . . : · . .. -· ·... · ... iii. 'Aft~i11pt~d: .. ·· · ·.. . 1.) Civil indemnity- P25,ooo:oo· · : . · _.: · 2,) Mora!~darr;iag_~s P~S;09Q.OO ... :::. ·, 3:)'.'-~xemplary'da~ages ..!..:._r'25,opo:oo· . .. 2. For.Simp!e Rape/Q~alifi~d_- Rape: -~ _, · '· a_. Whe·re t~e~penalty· i_mposed is Death ·but 7 . Te.duced. t~ reCl(!Sion:·1ferp~tua beG~lJ~·e:..of . 'R:A. 9346: · . · :~ ·.· . i. ~-- ~9nsummatE:lp: :: · . . · 1.) Civil indemnity-_ P100,000:'00 · 2.) Mor.al ·damages - P1 oo_._ooo.oo-- · .. · 3.) Exemplary da~ages :--P100'.o'OO.OO _. ·' ·

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i_i.. Attetnpte{. · .... .'. · - 1.)--"CiviJ·in~~ninity...:. P50,000:00 . . . .2.) M9rai dcimages..:. P50,ooo.oo 3:) Exemplary damages - P50,000.00 .

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fn Robbery· with· Intentional Mutilation, ·the amount of damages is the same as . : t~~ abo_ve·i\he'Reralty:impbsed is Death . buf reduced to r:_ec/usi&r. -oerpetue althouqh death did notoccur: , · iii. , For.the victims .. who suffered mortal/fatal wounds and.could have died if not.for a timely medical intervention, the following shallbeawarded; ' . -, ' 1.). Clvil indemni~y..-·P?.5,000.00 2:) · Moral damages.- P75,bOO.Ob 3-.) Exernplary.darnaqes -. P75,,000.0.0

W~ere .the penalty imposed ..is reclusion perpetue, .other, than.the above-mentioned: i: . Consummated: . 1..) Civil indemnity-. P7,5,000.0.0. .. . 2.) Moraldarnaqes - P75,0QO.OO. . 3.) Exemplary damaqes-'- P7~iOQO.OO. #

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entitled to the same damages 'unless the .other crimes of rape are treated as- separate crimes; in . w.fiiph,.' cas.e, t~e. dam'a_g~s:' awarded t,o-- slmple. ·raP.e/qu.alifiedJape shall apply. ·. · ·, ,- · .:

. ·.· In all of the abov~ insta'nces, when no documentary e,i'id~nce of·. buriill. or .fun~r'al ' ·expeilses·'js pre'sented in colirt,.tlie amount of .. . PS0,0°00.00 as tempei:ate ci.~mag~s .shall be ai.varded . "°;• • • • ,. i c .• ... ·: . •

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5. 'In btli~~ crimesfhat.result in the deatti victim and the penalty consists of divisible .penalties,. i.e_;, <: Horntctde;' :" Death , under. Tumultuous Affray, Infanticide-to concealthe . · dishonotir. , of', the offender, ''Reckless · Imprudence Res~·li(ng·-' to Homicide, .- Duel, Intentional .. • i Abortion and 'Unlritentiorial Abortion,' etc ..':. . . ·a.:. Whei're: the·crfme·was consummated: -' :., 1.) .Civ1I fndemnity ":- P50,000 ..do ,·. , · . . · 2,.) Moral . . ., damages--: . . ... RS0,8'00,00 . .

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For th~:vicii~s who suffered non-mortal/non. f?,ta! (njurie~,:- ... _· . . . ... . . ' · -- . · i. · Givil'in1demriity·-·p50,ooo.bo · · ii. Morakdamaqes - PSO,q_00.00 · iii, Exemplary damages - PS0,000.00

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Notef-Arl'. 2206. of·the Civil -Code· provides: that .. . the minimum amo.unf for awards of civH indemnity ·· is P3,ooo:oo; but does not provide ·to/a· ceiling.·· Thus; altho~gh the minimun:i ,am9unt for the· a~a·r~ cannot be changed, in~rErasing the amount a:wardep cis civil indemni_ty qan be validly " modified' . and : increased .. when ; the present · circumstance wa·rrants · it (People' v:~ Jugueta, . GR.''No. 2021-24, April . 5, 2016): .. \ · . . . .. .

.. ·•· ; . . the crime committed was 1101. co~surilmated,' except' those,.crimes where. are" no .; stages;:·· i.e.,. Reckless. lrrtprudence :and_: Death· under tumultuous · affray/ · · · · · · .. . - · i: · Frustrated:· · ·. ~ : · . ; . . . . 1.)° Civil indemnity·_:.. P30-,000.00 :2.) .·ry,or.al da[llages :- P.30;ooo;oo · .

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BAR O~ERATID°NS I .841

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B.IBLIOGRAPHY SAN BEDMJ\W CENTRALIZED BAR OPERATIONS - MEMORY AID 2iJi9

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(2000). Contlicio! Laws: Ceses, Mat~,:i;1is, and Comments. Quezon . .• . .... · · '. .· · · · · · ··. · · "'~;._'. · · .' ,. : ', _;, - . ~ · z: .. .. ,

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De. ~eo_i:/ r-1.-. _s>.& ·.~e Leon,, H. :~ .. J;. -.(2014 ). Coriii"(le~ts. ~nd ~qses o~ O~li~~iions and:G~~tr§cts: ·M-~nila:· · Philippines: REX Book Stor"e Inc. . · , · · · - · ~ · · · ·. · . ·. ~ . .. . . . .' '

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· De teon, H,. ·S., &. De Leon, H, M., Jr.' (2014 )._Comments and Cc1ses·on Pi}rtner;hip, Age;cy, and.Trusts. Manila, Philippines:.R~~Bbo~.$tor-elnc/ · :_· .· .< :-- . '·> , :· · ::.. ·:·.· ···._.· ··.:: . · · De Leon., H. S., & De Leon, Store 1.nc. · ·

H. M.,

_Jr. (2015). Com;,,~nts amj b;~e; on Pr6p'ertl Ma'nila;._Phii°ip~in~s:.REX ·.-

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BI.B·LIO-GRAPHY SAN BEOA l.AW C~TRl)LIZED BAR OPERATIO/;JS - MEMORY A/0·2019.

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Civil L~w Reviewer, z2nl1.E<Jition. M~~ila: Philippines: Rex .Printin~ Com·p~ny. . . \ . . . .

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Pineda-; E. L. (2009). Property. Quezon City,_-Philrppines:· Centr:-al Book S(:Jpply, ·inc. . .... .. . . .. . . . . . .. . .. . . . . •,. . . . .. . . . ;

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L. (2009). ·succession ·a'.1d Prescriptio~. Que.zon City, -Phflippin~s: Centr~I Book Supply, Inc..

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Rabuya; E. (2017).· Civil Law_ Reviewer.· Mariila! Phjlippin_es: REX- Book ·s·tare. Inc .... · .. '. :Ra6uya, E. (2017). Properly. Manila,

Pt:,i_lippines: REX Book Store. Irie. ·· ·

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and. Family . . Relations. Manila, .

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Phil_ippines: ' .

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