CIVIL LAW

BY: ATTY. ARTURO M. DE CASTRO

1. Prejudicial Question (Torres vs. Garchutorina, December 27, 2003)

A marries B while A’s marriage to C has not been dissolved. C sues A

for Bigamy. Thereafter, A files a case for annulment of marriage against C
on the ground of fraud.

May the criminal action be suspended on the ground of Prejudicial

Question? Give 2 reasons.

ANS: No. (1) Under the new rule, the civil action must have been filed
ahead of the criminal action for prejudicial question to apply.

(2) The issue in the civil case is not determinative of the guilt or
innocence of A in the criminal case. Bigamy is committed by a
person who contracts a second marriage while the first marriage is
subsisting and has not been dissolved. Whether the prior marriage
is dissolved or not, bigamy may be committed.

2. Is same sex marriage permitted in the Philippines? Will your answer by

the same if one of the parties has a sex change from male into female?

ANS: No. to both questions. The parties to a valid marriage must be male
and female. Procreation is an essential marital obligation.

3. Is the blood test conclusive proof of filiation?

ANS: When the supposed father and the child have different blood types,
it is conclusive that they are not father and child by consanguinity.
Being of the same blood type is not conclusive proof of filiation.

4. Is DNA test admissible proof of parentage?

ANS: Yes, “it would be usefull to all concerned in the prompt resolution of
parentage and identity issues”. (Tijung vs. CA, 354 SCRA 17
[2001])

5. Define DNA. It refers to the chain of molecules found in every cell of the
body, except in red blood cells, which transmit hereditary characteristics
among individuals.

6. Who may adopt under the Domestic Adoption Law? (Sec. 7, amending
Articles 183 and 184 of the Family Code)

ANS:

(a) Any Filipino citizen

1. of legal age
2. in possession of full capacity and legal rights
3. good moral character
 4. has not been convicted if any crime involving moral turpitude
5. emotionally and psychologically capable of caring for children
6. at least 16 years older than the adoptee (may be waived if
adopter is the biological parent of the adoptee or the spouse of
the adoptee’s parent)
7. in a position to support and care for his/her children in keeping
the means of the family

(b) Any alien possessing the same qualifications above stated for
Filipino Nationals, provided:
1. that his/her country has diplomatic relations with the Philippines
2. he/she has been living in the Phils. for at least three (3) years
prior to the filing of the application for adoption and maintains
such residence until the adoption decree is entered
3. certification from diplomatic or consular office or any appropriate
government agency that he/she has legal capacity to adopt in
his/her country, and that his/her government allows the adoptee
to enter the country as his/her daughter/son

Requirements for residency and certification may be waived for the

following:

1. a former Filipino citizen who seeks to adopt a relative within the

fourth (4th) degree of consanguinity or affinity;
2. one who seeks to adopt the legitimate son/daughter of his/her
Filipino spouse;
3. one who is married to a Filipino citizen and seeks to adopt
jointly with his/her spouse a relative within the fourth (4 th) degree
of consanguinity or affinity of the Filipino spouse

(c) the guardian with respect to the ward after the termination of the
guardianship and clearance of his/her financial liabilities.

* Husband and wife shall jointly adopt, except in the following cases:
1. if one spouse seeks to adopt the legitimate son/daughter of the
other
2. if one spouse seeks to adopt his/her own illegitimate
son/daughter; provided however that the other spouse has
signified his/her consent thereto; or
3. if the spouses are legally separated from each other

7. Who may adopt under the Inter-Country Adoption Law? (Sec. 9)

ANS: any alien or a Filipino citizen permanently residing abroad may file
an application for inter-country adoption of a Filipino child if:

1. at least 27 years of age

2. at least 16 years older than the adoptee at the time of the
application unless the adopter is the parent by nature of the
child to be adopted or the spouse of such parent
3. if married, his/her spouse must jointly file for adoption
4. has the capacity to act and assume all rights and responsibilities
of parental authority under his national laws
5. has undergone appropriate counseling from an accredited
counselor in his/her country
6. has not been convicted of a crime involving moral turpitude

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 7. eligible to adopt under his/her national law
8. is in a position to provide the proper care and support and give
the necessary values and example to all his children
9. agrees to uphold the basic rights of a child under Phil. Laws and
UN Convertion on the Rights of the Child
10. comes from a country with whom the Philippines has diplomatic
relations and whose government maintains a similarly
authorized and accredited agency and that adoption is allowed
in his/her national laws
11. possess all the qualifications and none of the disqualifications
provided herein and in other applicable Philippine laws.

8. What are the requisites of Reserva Troncal?

ANS:
a. the property should have been acquired by
operation of law by an ascendant from his descendant upon the
death of the latter,
b. the property should have been previously acquired
by gratuitous title by the descendant from another descendant,
brother or sister,
c. the descendant should have died without any
legitimate issue in the direct descending line who could inherit
from him;
d. there must be relative of the descendant who are
within the third degree and who belong to the line from which
the property came.

9. What is agency coupled with an interest?

ANS:
a) when the agency is created not only for the
interest of the principal but also for the interest of a third person
b) when the agency is created for the mutual
interest of both the principal and the agent (Art. 1927)

10. May agency coupled with an interest be unilaterality revoked by the

principal?

ANS: No, because it is tied to a bilateral contract.

11. What is the concept of “Presumptive Legitime?”

ANS: Presumptive legitime means the delivery to the common children of

a share of their parents’ estate, equivalent to the said children’s
legitime during the lifetime of said parents, which delivery of the
presumptive legitimes “shall not prejudice the ultimate successional
rights of the children accruing upon the death of either or both of
the parents”. The purpose of the rule on presumptive legitimes is
the protection of the common children against the possibility of
prejudice in case either or both of their parents remarry.

12. In what cases or proceedings is delivery of presumptive legitimes to the

common children required?

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 ANS: In the following cases or proceedings:
1. Annulment of marriage – Art. 50, pars. 1 & 2
2. Declaration of nullity of a subsequent marriage contracted by a
spouse of a prior void marriage before the latter is judicially
declared void – Art. 50, pars. 1 & 2, in relation to Art. 40 (Valdes
vs. RTC, 260 SCRA 221)
3. Legal separation – Art. 63, par. 2 in relation to Art. 102(5) and
Art. 129(8)
4. Termination of a marriage due to the reappearance of the former
spouse – Art. 43(2) in relation to Art. 102(5) and Art. 129(8)
5. Dissolution of the absolute community or of the conjugal
partnership – Art. 126(4) 135-136, 102(5), and 129(8)

13. What are the grounds for legal separation?

ANS:
(1) Repeated physical violence or grossly
abusive conduct directed against the petitioner, a common child, or a
child of the petitioner;
(2) Physical violence or moral pressure to
compel the petitioner to change religious or political affiliation;
(3) Attempt of respondent to corrupt or
induce the petitioner, a common child, or a child of the petitioner to
engage in prostitution, or connivance in such corruption or
inducement;
(4) Final judgment sentencing the
respondent to imprisonment of more than six years, even if
pardoned;
(5) Drug addiction or habitual alcoholism
of the respondent;
(6) Lesbianism or homosexuality of the
respondent;
(7) Contracting by the respondent of a
subsequent bigamous marriage, whether in the Philippines or
abroad;
(8) Sexual infidelity or perversion;
(9) Attempt by the respondent against the
life of the petitioner; or
(10) Abandonment of petitioner by
respondent without justifiable cause for more than one year.
For purpose of this Article, the term “child” shall include a child by nature
or by adoption. (97a)

14. What are the requisites of Fideicommissary Substitution?

ANS: They are:

(1) There must be a FIRST HEIR called
primarily or preferentially to the enjoyment of the property.
(2) There must be an obligation which
clearly imposes upon him to preserve and transmit to a third
person the whole or part of the inheritance (part only if the
substitution refers merely to that part)
(3) A SECOND HEIR. (6 Manresa 134;
Perez v. Garchitorena, 54 Phil. 431).

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 (4) The 1st and the 2nd heirs must be only
one degree part. (Art. 863).
(5) Both heirs must be alive (or at least
conceived) at the time of the testator’s death. (Art. 863).
(6) Must be made in an EXPRESS
manner (Art. 867, part. 1).
(7) Must not burden the legitime. (Arts.
864, 872, 904). (This is true for all kinds of substitutions, for
after all, the compulsory heirs are entitled to the legitime as of
RIGHT.
(8) Must not be conditional. (TS, Nov. 18,
1914).

15. Is the principle of rebus sic stantibus applicable in Civil law, specifically
to modify the terms and conditions of a contract?

ANS: Yes, in the following cases:

1. Unconscionable or iniquitous penalty clause may be reduced or

disregarded
2. When the prestation in obligation to do becomes legally or
physically impossible without the fault of the obligor (Art. 1266)
3. When the service has become so difficult as to be manifestly
beyond the contemplation of the parties. (Art. 1267)

16. Reciprocal Obligation

Corollary, private respondents did not incur in delay when they did not yet
deliver payment nor make a consignation before the expiration of the
contract. In reciprocal obligations, neither party incurs in delay if the other
does not comply, or is not ready to comply in a proper manner with what is
incumbent upon him. Only from the moment one of the parties fulfills his
obligation, does delay in the other begin. (Heirs of Bacus vs. Court of
Appeals, el. al., G.R. No. 127695, 12/03/2001)

17. What the law requires in an assignment of credit is not the consent of the
debtor but merely notice to him. A creditor may, therefore, validly assign
his credit and its accessories without the debtor’s consent (National
Investment and Development Co. v. De Los Angeles, 40 SCRA 489
[1971]). The purpose of the notice is only to inform the debtor. From the
date of the assignment payment should be made to assignee and not to
original creditor.” (South City Homes, Inc., et. al. vs. BA Finance
Corporation, G.R. No. 135462, 12/07/2001)

18. Is there a right of legal redemption in assignment of credit and other

incorporeal right under litigation? If so, how may it be exercised and within
what period?

ANS: Yes, by reimbursing the assignee for the price, the judicial costs
and the interest on the price from the date it was paid. The right
may be exercised within 30 days from the date the assignee
demands payment from the debtor. (Art. 1634, Civil Code)

19. RULES ON ABSENCE.

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 a. Declaration of Absence:

1. without administrator – 2 years

2. with administrator – 5 years from the lapse of time without news
about the absentee or since the receipt of last news.

b. Presumption of Death:

1. 7 years – it being unknown whether or not the absentee still

lives, he is presumed dead for all purposes except for those of
succession.
2. 10 years – for purposes of opening succession
3. disappearance after the age of 75 – an absence of 5 years is
sufficient

c. Qualified/Extra-Ordinary Absence:

 For all purposes including succession, a period of 4 years

is sufficient under the following circumstances:

1. on board a vessel lost during a sea voyage or an aeroplane

which is missing; period is counted from the loss of the vessel or
aeroplane;
2. in the armed forces who has taken part in war;
3. in danger of death under other circumstances and his
existence has not been known.

20. What is the doctrine of attractive nuisance?

ANS: One who maintains on his premises dangerous instrumentalities or

appliances of a character likely to attract children in play, and who
fails to exercise ordinary care to prevent children from playing
therewith or resorting thereto, is liable to a child of tender years
who is injured thereby, even if the child is technically a trespasser in
the premises.

21. The term of the lease for a fixed period, “and with option to renew” is
subject to reciprocal agreement before the expiration, and not subject to
automatic renewal. (LL and Company Development and Agro-Industrial
Corporation vs. Huang Chao Chun, 378 SCRA 612[2002])

22. How is filiation of illegitimate children established?

ANS: The filiation of illegitimate children, like legitimate children, is

established by (1) the record of birth appearing in the civil register
or a final judgment; or (2) an admission of legitimate filiation in a
public document or a private handwritten instrument and signed by
the parent concerned. In the absence thereof, filiation shall be
proved by (1) the open and continuous possession of the status of
a legitimate child; or (2) any other means allowed by the Rules of
Court and special laws. (Article 172, Civil Code)

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23. RA 9255, approved Feb. 4, 2004, “An Act allowing illegitimate children to
use the Surname of their Father,” as an amendment to Art. 176 of the
Family Code provides:

“Article 176. Illegitimate children shall use the surname and

shall be under the parental authority of their mother, and shall be
entitled to support in conformity with this code. However, illegitimate
children may use the surname of their father. If their filiation has
been expressly recognized by their father through the record of birth
appearing in the civil register, or when an admission in a public
document or private handwritten instrument is made by the father.
Provided, the father has the right to institute an action before the
regular courts to prove non-filiation during his lifetime. The
legitimate of each illegitimate child shall consist of one half of the
legitimate of a legitimate child.”

There is no need to go to court to establish filiation and

authorization to use the surname of their father if their filiation has been
expressly recognized by the father through the record of birth appearing in
the civil register, or when an admission in a public document or private
handwritten instrument is made by the father. It is enough that such
recognition is made in those documents. They do not have to establish
filiation, for these documents are already considered as consummated
acts of recognization.

24. CHAVEZ VS. PUBLIC ESTATE AUTHORITY, 403 SCRA 1 (2003)

a. The sale of the reclaimed lands in Manila Bay registered in the name
of PEA falling under lands of the public domain in favor of AMARI, a
private corporation is void for being contrary to Section 3, Article XII of
the 1987 Constitution which prohibits private corporations from
acquiring any kind of alienable land of the public domain.

b. The sale of the still submerged area of Manila Bay to AMARI is void for
being contrary to Sec. 2, Art XII of the 1987 Constitution which
prohibits the alienation of natural resources other than agricultural
lands of the public domain.

c. Private corporations cannot hold, except by lease, alienable lands of

the public domain.

d. Submerged lands, like the waters (sea or bay) above them, are part of
the State’s inalienable natural resources. Submerged lands are
property of public dominion, absolutely inalienable and outside the
commerce of man. This is also true with respect to foreshore lands.
Any sale of submerged or foreshore lands is void being contrary to the
Constitution.

25. The settled rule is that a free patent issued over a private land is null and
void, and produces no legal effects whatsoever. Private ownership of land
– as when there is a prima facie proof of ownership like a duly registered
possession, information or a clear showing of open, continuous, exclusive,
and notorious by present or previous occupants—is not affected by the
issuance of a free patent over the same land, because the Public Land
law applies only to lands of the public domain. (Santiago vs. Santiago, 404
SCRA 193 (2003)

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26. The settled rule is that a free patent issued over a private land is null and
void, and produces no legal effects whatsoever. Private ownership of land
– as when there is a prima facie proof of ownership like a duly registered
possessory information or a clear showing of open, continuous, exclusive,
and notorious possession, by present or previous occupants – is not
affected by the issuance of a free patent over the same land, because the
Public Land law applies only to lands of the public domain. (Santiago vs.
Santiago, 404 SCRA 193 [2003])

27. What are the two stages in expropriation proceedings?

ANS: Expropriation proceedings consists of two stages: first,

condemnation of the property after it is determined that its
acquisition will be for a public purpose or public use and, second,
the determination of just compensation to be paid for the taking of
private property to be made by the court with the assistance of not
more than three commissioners. (NHA vs. Givelondo, 404 SCRA
[2003])

28. What is the concept of public use?

ANS: The concept of public use is no longer limited to traditional

purposes. Here, as elsewhere, the idea that “public use” is strictly
limited to clear cases of “use by the public” has been abandoned.
The term “public use” has now been held to be synonymous with
“public interest”, “public benefit,” “public welfare,” and “public
convenience.” (Reyes vs. NHA, 395 SCRA 494 [2003])

29. In a postponement of an extrajudicial foreclosure sale of mortgaged

property under Article 3135, republication and reposting of notice for the
postpone sale should be strictly complied with and cannot be waived on
grounds of public policy. (Ouano vs. Heirs of zouano, 398 SCRA 525
[2003])

30. The Writ of Possession is ministerial duty of the trial Court to issue under
Section 7 of Act 3135 governing extra-judicial foreclosure of Real Estate,
except where the foreclosed property is in the actual possession of the
third party adversely against the mortgagor (China Bank vs. Ordinario, 399
SCRA 430 [2003]).

31. Whenever a piece of rural land not exceeding one hectare is alienated,
the law grants to the adjoining owners a right of redemption except when
the grantee or buyer does not own any other rural land. In order that the
right may arise, the land sought to be redeemed and the adjacent property
belonging to the person exercising the right of redemption must both be
rural lands. (Primary Structure Corp. vs. Sps. Valencia, 409 SCRA 371
[2003])

32. Is a medical examination a condition sine qua non to a finding of

psychological incapacity?

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 ANS: No, as long as the totality of evidence presented is enough to
establish psychological incapacity (Choa vs. Choa, 392 SCRA 656
[2002])

33. Sexual infidelity and abandonment do not constitute psychological

incapacity (David B. Debel vs. CA, et al., G.R. No. 151867, 1/29/2004

RA 9048: CORRECTION OF ENTRIES IN THE CIVIL REGISTER FOR

CLERICAL ERRORS OR CHANGE OF NAME OR NICKNAME

34. May entries in the civil registry be changed or corrected without juridical
order?

ANS: Under the law, no entry in a civil register shall be changed or

corrected without a judicial order, except for clerical or
typographical errors and change of first name or nickname which
can be corrected or changed by the concerned city or municipal
registrar or consul general in accordance with the provisions of RA
9048 and its implementing rules and regulations. (Sec. 1, R.A.
9048)

35. Who can file a petition for correction of a clerical error or change in a
name or nickname and where to file?

ANS: Any person having direct and personal interest in the correction of a
clerical or typographical error in an entry and/or change of first
name or nickname in the civil register may file in person a verified
petition with the local civil registry office of the city or municipality
where the record being sought to be corrected or changed is kept.

36. How many times may a person avail of the right to change his first name?

ANS: All Petitions for the correction of clerical or typographical errors

and/or change of first names or nicknames may be availed of only
once. (Sec. 3, RA 9048)

37. What are the grounds for change of first name or nickname?

ANS: The petition for change of first or nickname may be allowed in any
of the following cases:

1. The petitioner finds the first name or nickname to be ridiculous, tainted

with dishonor or extremely difficult to writ or pronounce;
2. The new first name or nickname has been habitually and continuously
used by the petitioner and he has been publicly known by that first
name or nickname in the community; or
3. The change will avoid confusion (Sec. 4, RA 9048).

38. What is the nature of the relationship of the co-owners with each other?

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 ANS: The relationship of the co-owner to the other co-owner is fiduciary
in character. Each co-owner is a trustee for the benefit of his co-
owners and may not do any act prejudicial to the interest of his co-
owners (Sotto vs. Teves, 86 SCRA 154).

39. Sale by a co-owner binds only his share (Coronel vs. Constantino, Feb. 7,
2003)

40. A will has no effect and no right can be claimed thereunder until it is
admitted to probate (Ceniza vs. CA, 68 SCRA 640)

41. Action for reconveyance is imprescriptible if the conveyance is null and

void ab initio. The action for the declaration of the inexistence of a contract
does not prescribe (Aznar Brothers Realty Co. vs. Aniceto, et. al., May 23,
2004).

42. What are the elements of Force Majeure?

ANS: That in order that a party to a contract may be exempt from non-
compliance with its obligations due to force majeure, the following
elements must be established: (1) the event must be independent
of human will; (2) the occurrence must render it impossible for the
debtor to fulfill the obligation in a normal manner; (3) the obligor be
free of participation in, or aggravation of, the injury to the creditor.
Philcomsat and Globe had no control over the non-renewal of the
term of the Treaty when it expired in 1991, because the prerogative
to ratify the Treaty belonged to the Senate. Neither did they have
control over the subsequent withdrawal of the US military forces
and personnel from the bases. The aforementioned events made it
impossible the continuation of the Agreement until the end of its 5
year term without fault on the part of either party. Hence, the CA
was correct in holding that the non-ratification of the Treaty was a
fortuitous event which rendered Glove exempt from payment of the
rentals for the remainder of the term of the Agreement. (Phil.
Communications Satellite Corp. vs. Globe Telecom, Inc., G.R. Nos.
147324; 147334, May 25, 2004).

43. Define NOVATION and give its requisites.

ANS: Novation is the extinguishment of an obligation by the substitution.

or change of the obligation by a subsequent one which
extinguishes or modifies the first, either by changing the object or
principal conditions, or, by substituting another in place of the
debtor, or by subrogating a third person in the rights of the creditor.
In order for novation to take place, the concurrence of the following
requisites is indispensable:

1. there must be a previous valid obligation. .

2. there must be an agreement of the parties concerned to a new
contract.
3. there must be the extinguishment of the old contract, and .
4. there must be the validity of the new contract. (Azolla Farms, et
al. vs. CA, et al., G. R. No. 138085, November 11, 2004).

44. Explain the concept of “Contract-implied-in-fact”.

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 ANS: A contract implied-in-fact is one implied from facts and
circumstances showing a mutual intention to contract. It arises
where the intention of the parties is not expressed, but an
agreement in fact creating an obligation. It is a contract, the
existence and terms of which are manifested by conduct and not by
direct or explicit words between but is to be deduced from conduct
of the parties, language used, or things done by them, or other
pertinent circumstances attending the transaction. To creat
contracts implied in fact, circumstances must warrant inference that
one expected compensation and the other to pay. (17 Corpus Juris
Secundum, Contract, pp. 559-560). An implied-in-fact contract
requires the parties’ intent ot enter into a contract; it is a true
contract. (G.T. Fogle & Co. vs. US, 135 F. 2d. 117 [1943]). The
conduct of the parties is to be viewed as a reasonable man would
view it, to determine the existence or not of an implied-in-fact
contract. (Raebling & Dillon, 288 F. 2 386 [1961]). The totatlity of
the acts/conducts of the parties must be considered to determine
their intention. An implied-in-fact contract will not arise unless the
meeting of minds is indicated by some intelligent conduct, act or
sign. (Baltemore & O.R. No. vs. US, 261 U.S. 592 [1923]). Philab
knew that UP was only a donee-beneficiary but the contract was
entered into between Philab and FEMF. The preparation and
fabrication of the laboratory furniture were upon the instruction of
FEMF, hence, UP cannot be made to pay. (UP vs. Philab
Laboratories, Inc., G.R. No. 152411, September 29, 2004, Callejo,
J.).

45. Is the rule in double sale registered land applicable to double sale of
unregistered land?

ANS: No. Between two buyers of the same immovable property

registered under the Torrens system, the law gives ownership
priority to (1) the first registrant in good faith; (2) then, the first
possessor in good faith; and (3) finally, the buyer who in good faith
presents the oldest title. This provision, however, does not apply if
the property is not registered under the Torrens system. (Sps. Noel
& Julie Abrigo vs. De Vera, G.R. No. 154409, June 21, 2004).

Registration of the second buyer under Act 3344, providing for the
registration of all instruments on land neither covered by the
Spanish Mortgage Law nor the Torrens System (Act 496), cannot
improve the standing of a party since Act 3344 itself expresses that
registration thereunder would not prejudice prior rights in good faith
(see Carumba vs. Court of Appeals, 31 SCRA 558). Registration,
however, by the first buyer under Act 3344 can have the effect of
constructive notice to the second buyer that can defeat his right as
such buyer in good faith see Arts. 708-709, Civil Code; see also
Revilla vs. Galindez, 107 Phil 480; Taguba vs. Peralta, 132 SCRA
700). Art. 1544 has been held to be inapplicable to execution sales
of unregistered land, since the purchaser merely steps into the
shoes of the debtor and acquires the latter’s interest as of the time
the property is sold. (Carumba vs. Court of Appeals, 31 SCRA 558;
see also Fabian vs. Smith, Bell & Co., 8 Phil 496), (Remalante vs.
Tibe, 158 SCRA 138).

46. Is the mere execution of a deed of sale sufficient as delivery of the object
sold where the buyer never took possession of the thing sold? Explain.

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 ANS: In a contract of sale, the buyer acquired the thing sold only upon its
delivery “in any of the ways specified in Articles 1497 to 1501, or in
any other manner signifying an agreement that the possession is
transferred from the vendor to the vendee.” With respect to
incorporeal property, Article 1498 lays down the general rule: the
execution of a public instrument shall be equivalent to the delivery
of the thing that is the object of the contract if, from the deed, the
contrary does not appear or cannot be clearly inferred.

However, ownership is transferred not by contract but by tradition or

delivery. Nowhere in the Civil Code is it provided that the execution
of a deed of sale is a conclusive presumption of delivery of
possession of a piece of real estate.

It has been held that the execution of a public instrument gives rise
only to a prima facie presumption of delivery. Such presumption is
destroyed when the earlier ruled that such constructive or symbolic
delivery, being merely presumptive, was deemed negated by the
failure of the vendee to take actual possession of thhe land sold.
(Ten Forty Realty and Development Corporation vs. Cruz, G.R. No.
151212, September 10, 2003)

47. Distinguish judicial rescission from rescission by notarial act?

ANS: The judicial resolution of a contract gives rise to mutual restitution

which is not necessarily the situation that can arise in an action for
reconveyance. Additionally, in an action for rescission (also often
termed as resolution), unlike in an action for reconveyance
predicated on an extrajudicial rescission (rescission by notarial act),
the Court, instead of decreeing rescission, may authorize for just
cause the fixing of a period (Art. 1191, NCC). (Olympia Housing,
Inc. vs. Panasiatic Travel Corp., et. al., G.R. No. 140468, January
16, 2003)

48. Under PD 957, the mortgage of a subdivision lot or a condominium unit is

void, if executed by a property developer without the prior written approval
of the Housing and Land Use Regularatory Board (HLURB). That an
encumbrance has been constituted over an entire property, of which the
subject lot or unit is merely a part, does not affect the invalidity of the lien
over the specific portion at issue. (Far East Bank vs. Marquez, 1/20/04)

49. What requirement must be complied with in order that the sale of a real
property belonging to the principal may be valid?

ANS: There must be authority specifically authorizing the agent to sell the
property. Article 1878 of the New Civil Code provides that a special
power of attorney is necessary to enter into any contract by which
the ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration, or to create or convey
real rights over immovable property, or for any other act of strict
dominion. Any sale of real property by one purporting to be the
agent of the registered owner without any authority in writing from
the said owner is null and void. (325 SCRA 385). The declaration of
the agent alone are generally insufficient to establish the fact or
extent of her authority. (328 SCRA 717 (2000). The testimony that

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 alleged agent was authorized by the owners is not sufficient
because written authority is required for the validity of such sale.
(Litonjua vs. Fernandez, et al., G.R. No. 148116, April 14, 2000,
Callejo, J).

50. What is the effect of iniquitous and unconscionable interest rate?

Ans: Stipulations authorizing iniquitous or unconscionable interest are

contrary to morals (contra bonos mores), if not against the law.
Under Article 1409 of the Civil Code, these contracts are inexistent
and void from the beginning. They cannot be ratified nor the right to
set up their illegality as a defense be waived.

Since the stipulation on the interest rate is void, it is as if there were

no express contract thereon. (Tongoy vs. CA, 123 SCRA 99 (1983).
Hence, courts may reduce the interest rate as reason and equity
demand.

In Medel vs. CA, 359 SCRA 820 (1998) it was held that the
stipulated interest rate of 5.5 percent per month, or 66 percent per
annum, was unconscionable. In the present case, the rate is even
more iniquitous and unconscionable, as it amounts to 192 percent
per annum. When the agreed rate is iniquitous or unconscionable, it
is considered contrary to morals, if not against the law. Such
stipulation is void. (Ibarra vs. Aveyro, 37 Phil. 274 (1917); Sps.
Almeda vs. CA, 326 Phil. 309 (1996). (Imperial vs. Jancian, April
14, 2004)

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