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Article 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. (1258)

CASE DIGEST: SM Investments Corporation vs. Posadas I G.R. No. 200901 | December 7, 2015 | PEREZ, J.

FACTS:

SM Investments Corporation (SMIC) and respondents Estela Marfori Posadas, Maria Elena Posadas, and Aida Macaraig Posadas own 27.6 hectares of land in Makati City. On August 8, 1995, SMIC, through its President Henry Sy, Jr., proposed a joint venture to develop the property into a commercial/residential subdivision. The offer included a goodwill payment of PHP 70 million and a 60/40 profit-sharing scheme favoring the respondents. On August 18, 1995, the respondents countered, requesting an increase in the goodwill money to PHP 80 million, which SMIC accepted on August 24, 1995. SMIC sent development drawings on December 2, 1995. On December 6, 1995, the respondents informed SMIC of receiving better offers and demanded an improved offer from SMIC. On February 27, 1996, SMIC reiterated its offer with revised terms, including a goodwill payment of PHP 140 million. When the respondents did not honor the joint venture agreement, SMIC filed a case for Specific Performance and Damages on April 21, 1997. The Regional Trial Court of Makati City ruled in favor of SMIC on December 18, 2007, declaring the joint venture agreement valid and enforceable. The respondents appealed, and the Court of Appeals reversed the decision on September 13, 2011. SMIC filed a Petition for Review with the Supreme Court.

ISSUE:

Whether or not there is a perfected contract for a joint venture

RULING:

Yes, there was a perfected contract for a joint venture between SMIC and the respondents. The Supreme Court found that a contract is perfected by mere consent of the parties, as per Article 1315 of the Civil Code. The essential elements of a contract—consent, object certain, and cause—were present in this case. The letter of August 8, 1995, from SMIC contained a complete offer, and the respondents' letter of August 18, 1995, was a counter-offer that SMIC accepted on August 24, 1995. This exchange of correspondences indicated a meeting of the minds, thus perfect.

Source:

Obligations and Contracts  (2022); Atty. Ronaldo F. Flores | Central Book

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Article 1288. Neither shall there be compensation if one of the debts consists in civil liability arising from a penal offense. (n)

CASE DIGEST: Mondragon vs. Sola I G.R. No. 174882 | January 21, 2013 | PERALTA, J.

FACTS:

Petitioner Mondragon Personal Sales and respondent Sola signed a Contract of Services wherein the latter agreed to provide service facilities (bodega/office) to the petitioner's products, sales force, and customers in exchange for a commission or service fee that would be deducted from Mondragon's monthly sales at a specific rate. Respondent's wife had a previous duty to petitioner before the aforementioned contract was signed. The respondent acknowledged and affirmed this responsibility, and he and his spouse were accountable for its repayment in installments. As a result, the petitioner treated the respondent's service fees as partial payments toward the debt he was required to pay and withheld their payment from the respondent. After that, the respondent shut down and ceased operations at his office/bodega and launched a revocation and accounting action against the petitioner.

ISSUE:

Whether legal compensation under Art. 1279 and Art. 1288 of the Civil Code would apply in this case.

RULING:

Yes. The petitioner's act of withholding respondent's service fees/commissions and applying them to the latter's outstanding obligation with the former is merely an acknowledgment of the legal compensation that occurred by operation of law between the parties. Compensation is a mode of extinguishing to the concurrent amount the obligations of persons who in their own right and as principals are reciprocally debtors and creditors of each other. Legal compensation takes place by operation of law when all the requisites are present, as opposed to conventional compensation which takes place when the parties agree to compensate their mutual obligations even in the absence of some requisites. Legal compensation requires the concurrence of the following conditions: 1. That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other; 2. That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated; 3. That the two debts be due; 4. That they be liquidated and demandable; 5. That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the debtor. All the requisites for legal compensation are present in this case. Petitioner and respondent are both principal obligors and creditors of each other. Their debts to each other consist in a sum of money. Respondent acknowledged and bound himself to pay petitioner the amount of P1,973,154.73 which was already due, while the service fees owing to respondent by petitioner become due every month. Respondent's debt is liquidated and demandable, and petitioner's payments of service fees are liquidated and demandable every month as they fall due. Finally, there is no retention or controversy commenced by third persons over either of the debts. Thus, compensation is proper up to the concurrent amount where petitioner owes respondentP125,040.01 for service fees, while respondent owes petitionerP1,973,154.73

Source:

Obligations and Contracts  (2022); Atty. Ronaldo F. Flores | Central Book

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Article 1261. If, the consignation having been made, the creditor should authorize the debtor to withdraw the same, he shall lose every preference which he may have over the thing. The co-debtors, guarantors and sureties shall be released. (1181a)

CASE DIGEST: Banco Filipino vs. Diaz I G.R. No. 153134 | June 27, 2006 | CALLEJO, SR., J.

FACTS:

On March 8, 1979, spouses Diaz secured a loan from Banco Filipino Savings and Mortgage Bank in the amount of P400,000.00 bearing an interest rate of 16% per annum. In November 1982, the said loan was restructured or consolidated in the increased amount of P3,163,000.00 payable within a period of 20 years at an interest rate of 21% per annum. The obligation was to be paid in equal monthly amortization of P56,227.00, and secured by a real estate mortgage over two commercial lots situated at Bolton and Bonifacio Streets in Davao City. As additional collateral, the respondents assigned the rentals on the mortgaged properties in favor of petitioner bank. Despite repeated demands made on them, the respondents defaulted in the payment of their obligation beginning October 1986. The Diaz spouses tried to settle their account by tendering the sum of P1,034,600.00as full payment but bank refuses to accept it. The spouses then deposited by way of consignation with the RTC of Makati City, a manager’s check dated December 5, 1991, in the amount of P1,034,600.00 as full payment of their loan obligation. Petitioner bank was duly informed of such consignation. The CA relied on Article 1260 of the Civil Code which provides, in part, that “ before the creditor has accepted the consignation, or before a judicial declaration that the consignation has been properly made, the debtor may withdraw the thing or sum deposited, allowing the obligation to remain in force.” As a result, interest rate became more than 60% per annum, CA said it is “excessive, iniquitous, unconscionable and exorbitant”

ISSUE:

Whether or not the consignation of Diaz be withdrawn?

RULING:

YES the Diaz spouses have a right to withdraw the consignation made. The bank has not accepted the deposit. Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior tender of payment. Before the consignation has been accepted by the creditor or judicially declared as properly made, the debtor is still the owner of the thing or amount deposited, and, therefore, the other parties liable for the obligation have no right to oppose his withdrawal of such thing or amount. The debtor merely uses his right, and unless the law expressly limits that use of his right, it cannot be prevented by the objections of anyone. Our law grants to the debtor the right to withdraw, without any limitation, and we should not read anon-existing limitation into the law. Although the other parties liable for the obligation would have been benefited if the consignation had been allowed to become effective, before that moment they have not acquired such an interest as would give them a right to oppose the exercise of the right of the debtor to withdraw the consignation.

Source:

Obligations and Contracts  (2022); Atty. Ronaldo F. Flores | Central Book

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Article 1257. In order that the consignation of the thing due may release the obligor, it must first be announced to the persons interested in the fulfillment of the obligation.

The consignation shall be ineffectual if it is not made strictly in consonance with the provisions which regulate payment. (1177)

CASE DIGEST: Cacayorin v. AFPMBAI I G.R. No. 171298 | April 15, 2013 | DEL CASTILLO, J.

FACTS:

Oscar Cacayorin filed an application with AFPMBAI to purchase a property which the latter owned through a loan facility. Oscar and his wife, Thelma, and the Rural Bank of San Teodoro executed a Loan and Mortgage Agreement with the former as borrowers and the Rural Bank as lender, under the auspices of PAG-IBIG. On the basis of the Rural Bank's letter of guaranty, AFPMBAI executed in petitioners' favor a Deed of Absolute Sale, and a new title was issued in their name. Then, the PAG-IBIG loan facility did not push through and the Rural Bank closed. Meanwhile, AFPMBAI somehow was able to take possession of petitioners' loan documents and the TCT, while petitioners were unable to pay the loan for the property. AFPMBAI made written demands for petitioners to pay the loan for the property. Then, petitioners filed with the RTC a complaint for consignation of loan payment, recovery of title and cancellation of mortgage annotation against AFPMBAI, PDIC and the Register of Deeds of Puerto Princesa City. AFPMBAI filed a motion to dismiss claiming that petitioners' Complaint falls within the jurisdiction of the Housing and Land Use Regulatory Board (HLURB), as it was filed by petitioners in their capacity as buyers of a subdivision lot and it prays for specific performance of contractual and legal obligations decreed under Presidential Decree No. 957(PD 957). It added that since no prior valid tender of payment was made by petitioners, the consignation case was fatally defective and susceptible to dismissal.

ISSUE:

Whether or not the case is within the exclusive jurisdiction of the HLURB.

RULING:

NO. Consignation is inherently judicial, as opposed to tender of payment, which is extrajudicial; as such, the RTC, not the HLURB, has jurisdiction. Article 1256 of the Civil Code states that in the following situations: when the creditor is unidentified or absent; when he is unable to receive the payment on time; when multiple parties assert a right to collect; or when the obligation's title has been lost, the debtor shall be released from liability by consigning the thing or sum due, without the need for prior payment tendering. The aforementioned clause expressly forbids consignment outside of courtrooms.

Source:

Obligations and Contracts  (2022); Atty. Ronaldo F. Flores | Central Book

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Article 1234. If the obligation has been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, less damages suffered by the obligee. (n)

CASE DIGEST: Transcept v. Aguilar I G.R. No. 177556 | December 8, 2010 | CARPIO, J.

FACTS:

Transcept and Aguilar entered into a contract for the construction of a vacation house located in Batangas. The estimation of the project would cost ₱3,486,878.64 and was to be completed within 2103 working days from the date of the First Contract or on 7 June 2005. Aguilar paid a downpayment of ₱1 million on 27 August 2004. Thereafter, Aguilar hired ASTEC, a duly accredited testing laboratory, to test Transcept’s quality of work. The test showed substandard works done by Transcept. ASTEC, through Engr. Jaime E. Rioflorido, sent Aguilar an Evaluation of Contractor’s Performance which showed that aside from the substandard workmanship and use of substandard materials, Transcept was unreasonably and fraudulently billing Aguilar. Of the downpayment amounting to ₱1,632,436.29, Engr. Rioflorido’s reasonable assessment of Transcept’s accomplishment amounted only to ₱527,875.94. Engr. Rioflorido recommended the partial demolition of Transcept’s work. Transcept and Aguilar entered into another contract to extend the completion from 7 June 2005 to 29 July 2005 and to use up the ₱1.6 million downpayment paid by Aguilar. Aguilar hired the services of Engr. Edgardo Anonuevo to ensure that the works would comply with the plans in the Second Contract. Transcept failed to finish the Project on 29 July 2005, alleging that the delay was due to additional works ordered by Aguilar. Transcept also asked for payment of the additional amount of ₱290,824.96. Aguilar countered that the Second Contract did not provide for additional works. On 2 September 2005, Aguilar sent a demand letter to Transcept asking for payment of ₱581,844.54 for refund and damages. Transcept ignored the demand letter. On 6 September 2005, Aguilar filed a complaint against Transcept before CIAC.

ISSUE:

Whether or not the CA erred in awarding Aguilar liquidated damages. (2) W/N the CA erred in deleting the CIAC’s award of ₱189,909.91 to Transcept representing additional works done under the Second Contract.

RULING:

NO. Section 20.11(A)(a) of the Construction Industry Authority of the Philippines (CIAP) Document No. 102 provides that "[t]here is substantial completion when the Contractor completes 95% of the Work, provided that the remaining work and the performance of the work necessary to complete the Work shall not prevent the normal use of the completed portion." According to CIAC’s computation, Transcept’s accomplishment amounted to 98.16% of the contract price. It is beyond the 95% required under CIAP Document No. 102 and is considered a substantial completion of the Project. We thus agree with CIAC’s application of Article 1234 of the Civil Code, which provides that "[i]f the obligation had been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, less damages suffered by the obligee." There being a substantial completion of the Project, Aguilar is not entitled to liquidated damages but only to actual damages of ₱30,076.72, representing the unaccomplished works in the Second ADR DIGESTS – MODULE 7 ARIEL A. MOLINA, CPA Contract as found by the CIAC, which is the difference between the contract price of ₱1,632,436.29 and the accomplishment of ₱1,602,359.97

Source:

Obligations and Contracts  (2022); Atty. Ronaldo F. Flores | Central Book

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Article 1207. The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestation. There is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity. (1137a)

CASE DIGEST: Sinamban vs. China Banking I G.R. No. 193890  | March 11, 2015 | REYES, J.

FACTS:

The spouses Danilo and Magdalena Manalastas (spouses Manalastas) executed a Real Estate Mortgage (REM) in favor of respondent China Banking Corporation (Chinabank) over two real estate properties to secure a loan from Chinabank as working capital in their rice milling business. During the next few years, they executed several amendments to the mortgage contract progressively increasing their credit line secured by the aforesaid mortgage. The spouses Manalastas executed several promissory notes (PNs) in favor of Chinabank. In two of the PNs, petitioners Estanislao and Africa Sinamban (spouses Sinamban) signed as co-makers. Chinabank filed a Complaint for sum of moneyagainst the spouses Manalastas and the spouses Sinamban (collectively called the defendants) before the RTC. The complaint alleged that they reneged on their loan obligations under the PNs which the spouses Manalastas executed in favor of Chinabank on different dates. They averred that they do not recall having executed two PN's and had no participation in the execution of one of the PN. They however admitted that they signed some PN forms as co-makers upon the request of the spouses Manalastas who are their relatives; although they insisted that they derived no money or other benefits from the loans. They denied knowing about the mortgage security provided by the spouses Manalastas, or that the latter defaulted on their loans. They also refused to acknowledge the loan deficiency of P1,758,427.87 on the PNs, insisting that the mortgage collateral was worth more than P10,000,000.00, enough to answer for all the loans, interests and penalties. They also claimed that they were not notified of the auction sale, and denied that they knew about the Certificate of Sale and the Statement of Account and insisted that Chinabank manipulated the foreclosure sale to exclude them therefrom. By way of counterclaim, the Spouses Sinamban prayed for damages and attorney's fees of 25%, plus litigation expenses and costs of suit

ISSUE:

Whether or not the spouses Sinamban are solidarily liable to the remaining obligation

RULING:

If a person binds himself solidarily with the principal debtor, the provisions of Articles 1207 to 1222 of the Civil Code (Section 4, Chapter 3, Title I, Book IV) on joint and solidary obligations shall be observed. Thus, where there is a concurrence of two or more creditors or of two or more debtors in one and the same obligation, Article 1207 provides that among them, "[t]here is a solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity." It is settled that when the obligor or obligors undertake to be "jointly and severally" liable, it means that the obligation is solidary. In this case, the spouses Sinamban expressly bound themselves to be jointly and severally, or solidarily, liable with the principal makers of the PNs, the spouses Manalastas Article 1216 of the Civil Code provides that "[t]he creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected." Article 1252 42 of the Civil Code does not apply, as urged by the petitioners, because in the said article the situation contemplated is that of a debtor with several debts due, whereas the reverse is true, with each solidary debt imputable to several debtors. As the Court has noted, by deducting the auction proceeds from the aggregate amount of the three loans due, Chinabank in effect opted to apply the entire proceeds of the auction simultaneously to all the three loans. This implies that each PN will assume a pro rata portion of the resulting deficiency on the total indebtedness as bears upon each PN's outstanding balance. Contrary to the spouses Sinamban's insistence, none of the three PNs is more onerous than the others to justify applying the proceeds according to Article 1254 of the Civil Code,in relation to Articles 1252 and 1253. 44 Since each loan, represented by each PN, was obtained under a single credit line extended by Chinabank for the working capital requirements of the spouses Manalastas' rice milling business, which credit line was secured also by a single REM over their properties, then each PN is simultaneously covered by the same mortgage security, the foreclosure of which will also benefit them proportionately. No PN enjoys any priority or preference in payment over the others, with the only difference being that the spouses Sinamban are solidarily liable for the deficiency on two of them.

Source:

Obligations and Contracts  (2022); Atty. Ronaldo F. Flores | Central Book

https://lawphil.net/judjuris/juri2015/mar2015/gr_193890_2015.html

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Article 1180. When the debtor binds himself to pay when his means permit him to do so, the obligation shall be deemed to be one with a period, subject to the provisions of article 1197. (n)

CASE DIGEST: Yamamoto vs. Nishino Leather I G.R. No. 150283  | April 16, 2008 | CARPIO MORALES, J.

FACTS:

The wrongful or unfair act in violation of a plaintiff's legal rights, as well as the distinct juridical personality of a business, must be convincingly demonstrated. Furthermore, a simple offer results in no obligation absent accep ance. Ikuo Nishino and Ryuichi Yamamoto decided to form a joint venture in which Nishino would purchase shares of stock equal to 70% of the company's authorized capital stock. But Nishino and Yoshinobu Nishino, his brother, ended up owning more than 70 percent of the authorized capital stock. Negotiations then took place in light of Nishino's intended takeover, which involved buying out Yamamoto's stock shares. Yamamoto was informed in writing that he could keep all of the equipment and machinery he had contributed to the business (for his own use and sale), as long as the value of those machines was subtracted from the capital contributions that he would receive. That being said, the letter asked that he provide his "comments on all the above, as soon as possible." Yamamoto tried to retrieve the machinery based on the aforementioned letter, but Nishino prevented him from doing so, prompting him to file a Writ of Replevin. The writ was issued by the Trial Court. On appeal, Nishino asserted that the corporation was the rightful owner of the properties being retrieved and that the aforementioned letter was only a proposal that had not yet received board approval. Yamamoto claimed that the corporation is only a tool of the Nishinos, but the Court of Appeals overturned the trial court's ruling.

ISSUE:

Whether or not machineries remained part of the capital property of the corporation

RULING:

Indeed. The defendant's use of control to commit fraud or other wrongdoing, to continue breaking a statute or other positive legal duty, or to engage in dishonest and unjust behavior in violation of the plaintiff's legal rights, is one of the factors determining the applicability of the doctrine of piercing the veil of corporate fiction. In order to overlook a corporation's distinct juridical identity, the unlawful or unjust act that violates a plaintiff's legal rights must be amply demonstrated; it cannot be assumed. It is not applicable until there is evidence that any of the ills that the concept aims to avert exist. The act of making a promise may result in estoppel. It is important to remember, too, that the letter was followed with a request for Yamamoto to provide his "comments on all the above, soonest." In other words, what was put forth to Yamamoto was an offer, contingent upon his acceptance, rather than a commitment. A simple offer results in no obligation if it is not accepted. As a result, Yamamoto's investment in machinery and equipment continued to be included in the corporation's capital.

Source:

Obligations and Contracts  (2022); Atty. Ronaldo F. Flores | Central Book

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EXECUTIVE ORDER NO. 209

THE FAMILY CODE OF THE PHILIPPINES

TITLE IV

PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE

Chapter 5. Separation of Property of the Spouses and Administration of Common Property by One Spouse During the Marriage

Art. 136. The spouses may jointly file a verified petition with the court for the voluntary dissolution of the absolute community or the conjugal partnership of gains, and for the separation of their common properties. All creditors of the absolute community or of the conjugal partnership of gains, as well as the personal creditors of the spouse, shall be listed in the petition and notified of the filing thereof. The court shall take measures to protect the creditors and other persons with pecuniary interest. 

CASE DIGEST: Alfonso Lacson vs. Carmen San Juan-Lacson I G.R. No. L-23482  | August 30, 1968 | CASTRO, J.

FACTS:

Carmen San Jose-Lacson and Alfonso Lacson married on February 14, 1953. Four live children were born to them. The respondent spouse moved to Manila on January 9, 1963, leaving the marital residence in Santa Clara Subdivision, Bacolod City. She filed a lawsuit for custody of all of their children as well as support for herself and them in the Juvenile and Domestic Relations Court of Manila on March 12, 1963, with the case docketed as civil case E-00030. Nonetheless, with the help of their own attorneys, the couple was able to come to a friendly agreement over child custody, child support, and property division. They filed a joint petition on April 27, 1963, with the date of April 21, 1963. It was docketed as special proceeding 6978 of the Negros Occidental Court of First Instance. The CFI issued an order on April 27, 1963, finding the aforementioned joint petition to be "conformable to law," giving judgment and approving and implementing in toto their compromise agreement. As stipulated in paragraph 4 of their mutual agreement (par. 3 of the compromise judgment), the petitioner spouse gave the respondent spouse full custody of all four children and sent financial support for their education. Respondent spouse claimed to have "entered into and signed the  Joint Petition as the only means by which she could have immediate custody of the… minor children who are all below the age of seven" in a move filed before the JDRC.

ISSUE:

Whether or not the compromise agreement and the judgement of the CFI grounded on said agreement conformable to law

RULING:

Yes, In accordance with article 191 of the Civil Code, as stated in the Article 136 of the Family code, as far as the separation of the property of the spouses and the dissolution of the conjugal partnership are concerned. In the absence of an express declaration in the marriage settlements, the separation of property between spouses during the marriage shall not take place save in virtue of a judicial order. The husband and the wife may agree upon the dissolution of the conjugal partnership during the marriage, subject to judicial approval. All the creditors of the husband and of the wife, as well as of the conjugal partnership, shall be notified of any petition for judicial approval of the voluntary dissolution of the conjugal partnership, so that any such creditors may appear at the hearing to safeguard his interests. Upon approval of the petition for dissolution of the conjugal partnership, the court shall take such measures as may protect the creditors and other third persons.

Source:

Family Code of the Philippines (2022); Judge Ed Vincent S. Albano , Ed Vincent A. Albano, Jr.

https://www.officialgazette.gov.ph/1987/07/06/executive-order-no-209-s-1987/

https://chanrobles.com/cralaw/1956julydecisions.php?id=269

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EXECUTIVE ORDER NO. 209THE FAMILY CODE OF THE PHILIPPINES

TITLE IV - PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE

Chapter 3. System of Absolute Community - Section 6. Liquidation of the Absolute Community Assets and Liabilities

ARTICLE 103. Upon the termination of the marriage by death, the community property shall be liquidated in the same proceeding for the settlement of the estate of the deceased. If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the community property either judicially or extra-judicially within six months from the death of the deceased spouse. If upon the lapse of the six months period, no liquidation is made, any disposition or encumbrance involving the community property of the terminated marriage shall be void. Should the surviving spouse contract a subsequent marriage without compliance with the foregoing requirements, a mandatory regime of complete separation of property shall govern the property relations of the subsequent marriage.

Source:

Family Code of the Philippines (2022); Judge Ed Vincent S. Albano , Ed Vincent A. Albano, Jr.

https://www.officialgazette.gov.ph/1987/07/06/executive-order-no-209-s-1987/

https://chanrobles.com/cralaw/1990decemberdecisions.php?id=2834

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IMPORTANT WORDS DEFINED.

Extrinsic Validity, defined.

The lex loci celebrationis principle is expressed in the first paragraph of Article 26 of the Family Code: “All marriages solemnized outside the Philippines in accordance with the laws in force in the country where they were solemnized, and valid there as such, shall also be valid in this country. Extrinsic validity of marriage relates to the conduct of third persons such as public officers in solemnizing the marriage, the issuance of the marriage license or performance of the marriage ceremony; it does not relate to acts attributed to the parties getting married.6 As long as there is compliance with the requirements imposed in the country where the marriage was celebrated, the marriage is considered valid there and everywhere. Reference: FUNDAMENTAL CONFLICT OF LAWS CONCEPTS AS APPLIED TO THE PHILIPPINE LAW ON PERSONAL AND PROPERTY RELATIONS OF COUPLES WITHIN AND WITHOUT MARRIAGE by ELIZABETH AGUILING-PANGALANGAN

Intrinsic Validity, defined.

The new Civil Code of the Philippines provides for the application of the nationality principle on significant issues in family law: “Article 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad.” The municipal laws of each State specify the rules governing marriage and its termination, and the rights and duties of members of the family. For the Philippines, the substantive requirements for a valid marriage are found in Article 2 of the Family Code. These essential elements of marriage are: (1) legal capacity of the contracting parties who must be a male and a female; and (2) consent freely given in the presence of the solemnizing officer. Legal capacity to marry means that the parties entering into the marriage must be at least 18 years of age, that one party is a female and the other a male, and that neither is barred by any impediment to marry the other. The second substantive requisite is consent freely given by the parties in the presence of an authorized solemnizing officer. Reference: FUNDAMENTAL CONFLICT OF LAWS CONCEPTS AS APPLIED TO THE PHILIPPINE LAW ON PERSONAL AND PROPERTY RELATIONS OF COUPLES WITHIN AND WITHOUT MARRIAGE by ELIZABETH AGUILING-PANGALANGAN

Paraphernal Property, defined.

According to the Civil Code in force in the Philippines, by paraphernal property is meant that which the wife brings to the marriage without including it in the dowry, and that which she later acquires without adding it thereto. The wife retains the ownership over such property; the husband cannot exercise any action of any sort with respect to such property without the intervention or consent of his wife, who has the management of said property, unless she has made it over to him before a notary in order that he may administer it, in which case the husband is bound to give a mortgage for the value of the personal property received by him, or to give security therefor in the manner provided for in dowered estate. The husband's personal obligation shall not be collected from the income of the paraphernal property, unless it be proved that they have been for the benefit of the family. (Arts. 1381, 1382, 1384, and 1386 of the Civil Code.) Reference: GASPI VS. HONORABLE JUDGE MARIA CLARISSA L. PACIS-TRINIDAD - G.R. No. 229010. November 23, 2020 

Presumptive Legitime, defined.

It is not defined in the law. Its definition must have been taken from Act 2710, the Old Divorce Law, which required the delivery to the legitimate children of "the equivalent of what would have been due to them as their legal portion if said spouse had died intestate immediately after the dissolution of the community of property." As used in the Family Code, presumptive legitime is understood as the equivalent of the legitimate children's legitimes assuming that the spouses had died immediately after the dissolution of the community of property. Presumptive legitime is required to be delivered to the common children of the spouses when the marriage is annulled or declared void ab initio and possibly, when the conjugal partnership or absolute community is dissolved as in the case of legal separation. Failure of the parents to deliver the presumptive legitime will make their subsequent marriage null and void under Article 53 of the Family Code. Reference: BAR 1999

Source:

Family Code of the Philippines (2022); Judge Ed Vincent S. Albano , Ed Vincent A. Albano, Jr.

[paolawdiary]

EXECUTIVE ORDER NO. 209

THE FAMILY CODE OF THE PHILIPPINES

TITLE IV

PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE

CHAPTER 3: SYSTEM OF ABSOLUTE COMMUNITY

ARTICLE 93. Property acquired during the marriage is presumed to belong to the community, unless it is proved that it is one of those excluded therefrom. (160)

EXPLANATION:

This Article emphasized the rule on the Absolute Community of Property that properties acquired during the marriage form part of the absolute community of property. But, even if they were acquired during the marriage, if the other spouse or heirs of the other spouse can prove that it was acquired by gratuitous title, where no provisions exist that it shall form part of the Absolute Community, the same is exclusive, or if it ca be proven that the property is for the personal and exclusive use of either the spouse. The presumption applies regardless of the source of the fund used to acquire the property. What gives rise to the presumption is the fact that it is acquired by onerous title through labor, industry, or other valuable considerations, such as payment or money.

CASE DIGEST: Villanueva vs. International Appellate Court et. al. I G.R. No. 74577 |  December 4, 1990 | NARVASA, J.

FACTS:

Lot 13 was inherited by Modesto and Frederico Aranas from their parents, Nicolasa Bunsa and Graciano Aranas. Said lot was split up into two parts, one for the north and the other for the south (Lot 13-C), and given to Modesto and Frederico, respectively. The names of Modesto's two illegitimate children are Teodoro C. Aranas and Dorothea Aranas Ado. These two obtained a P18,000.00 loan from Jeusu Bernas, which was backed by Lot 13-C. The siblings and Bernas signed a Loan Agreement with Real Estate Mortgage in which they declared themselves to be the only owners of Lot 13. As witnesses, Raymundo Aranas and Consolacion Villanueva signed the paperwork. In their complaint against Bernas, Villanueva and Aranas claimed that they should be recognized as co-owners of the land because Victoria Comorro's will left all of her "interests, rights and properties, real and personal, x x as her net share from the conjugal partnership property with her husband, Modesto Aranas x x." In contrast, Modesto Aranas' will left Dorothea and Teodoro all of his interests in his conjugal partnership with Victoria, "as well as his own capital property brought by him to his marriage with his said wife.”

ISSUE:

Whether or not Victoria Camorro's last will and testament grants Consolacion Villanueva any ownership or rights to Lot 13-C and the improvements thereon.

RULING:

No, Consolacion Villanueva has no rights relating to Lot 13-C and its improvements. Comorro and Aranas' conjugal partnership property did not include Lot 13-C. It was the latter's personal, private property, registered only in his name and inherited from his parents. Whether he acquired the property after he married Comorroo is irrelevant because Article 148 of the Civil Code states that among other things, "that which is brought to the marriage as his or her own" and "that which each acquires, during the marriage, by lucrative title" are considered to be among the spouses' exclusive property. This is the situation with Modesto's purchase of Lot 13-C. Comorro never acquired anything from her husband, as evidenced by the fact that she passed just two years before Aranas. In order to establish whether an improvement is the property of the married couple as a whole or of each spouse individually, documentation regarding the date of construction and the source of funding is required in order to make a claim for the improvements made thereon. Villanueva did not provide any such evidence.

Source:

Family Code of the Philippines (2022); Judge Ed Vincent S. Albano , Ed Vincent A. Albano, Jr.

https://www.officialgazette.gov.ph/1987/07/06/executive-order-no-209-s-1987/

https://chanrobles.com/cralaw/1990decemberdecisions.php?id=2834

[paolawdiary]

EXECUTIVE ORDER NO. 209

THE FAMILY CODE OF THE PHILIPPINES

TITLE II

LEGAL SEPARATION

ARTICLE 58. An action for legal separation shall in no case be tried before six months shall have elapsed since the filing of the petition. (103)

EXPLANATION:

The basic purpose of the law in suspending the trial of an action for legal separation for six (6) months is to give place for a possible reconciliation. If there's a reconciliation before the trial, the court can dismiss the action for legal separation. Also, even if there's already a judgement, the court can still set aside the degree of the legal separation. In the case of Araneta vs. Conception, the court emphasized the suspension period as a cooling-off period. The case revolves around the issue on whether or not the rule for six (6) months suspension period for the hearing of an action for legal separation, preclude the court to try and act on the Omnibus petition for the support and custody of the children.

CASE DIGEST: ARANETA VS. CONCEPTION I G.R. No. L-9667 |  July 31, 1956 | LABRADOR, J.

FACTS:

Luis Araneta (petitioner) filed for legal separation from his wife Emma Benitez Araneta on the ground of adultery. Emma filed an omnibus petition to secure custody of their children and a monthly support of. The respondent judge Concepcion granted the omnibus petition. He refused to reconsider so Luis Araneta filed with the court a petition for certiorari and mandamus to compel the respondent judge to both parties to submit evidence before deciding for the omnibus petition. The court granted a writ of preliminary injunction against the order of the judge. The Respondent Judge’s reason for refusal for the request for the presentation of evidence to be allowed before deciding was because it is the prohibition contained in Art. 103 of the Civil Code. This reads: “An action for legal separation shall in no case be tried before six months shall have elapsed since the filing of the petition.” The respondent Judge interpreted the provision by saying that every single step it should take within the period of six months above the stated should be taken toward reconciling the parties. Admitting evidence now will make the reconciliation difficult if not impossible. The children must be given custody for him or her who by family custom or tradition is the custodian of the children. The court should ignore the defendant had committed any act of adultery or the plaintiff, any act of cruelty to his wife. The status quo of the family must be restored as much as possible. In a typical Filipino family, it’s the wife/mother who keeps the children in her company or custody.

ISSUE:

Whether or not the presentation of evidence as petitioned by the husband is needed in determining the custody of the children.

RULING:

YES, The six month period fixed in Art. 103 of the Civil Code is evidently intended as a cooling off period to make possible reconciliation between the spouses. However, it does not have the effect of overriding other provisions such as the determination of the custody of the children and alimony, and support according to the circumstances. The law expressly enjoins that these should be determined by the court according to the circumstances. If these are ignored, rank in justice may be caused. The determination of the custody of the children should be given and effect and force provided it does not go to the extent of violating the policy of the cooling off period which means that the evidence will not be the cause of the separation.

Source:

Family Code of the Philippines (2022); Judge Ed Vincent S. Albano , Ed Vincent A. Albano, Jr.

https://www.officialgazette.gov.ph/1987/07/06/executive-order-no-209-s-1987/

https://chanrobles.com/cralaw/1956julydecisions.php?id=269

Blaze

0 notes

[paolawdiary]

CASE DIGEST: GLOBE MACKAY CABLE V. COURT OF APPEALS | G.R. No. 81262| CORTES, J. | August 25, 1989

CIVIL CODE OF THE PHILIPPINES ARTICLE 19. Any   person   must,   in   the   exercise   of   his   rights   and   in   the performances   of   his   duties,   act   with   justice,   give   everyone   his   due and observe honesty and good faith.

FACTS:

Private respondent Tobias was an employee of petitioner GLOBE MACKAY as its purchasing agent and administrative assistant. Anomalies in the petitioner’s company were later allegedly discovered by Tobias regarding fictitious purchases and other fraudulent transactions. Hendry, Executive Vice-­President and General Manager of GLOBE MACKAY, confronted Tobias stating the latter as the number one suspect and ordered a one week forced leave. When Tobias reported for work after the forced leave, petitioner Hendry called him a “crook” and a “swindler.” He was also asked to take a lie-­detector test and the specimen of his handwriting, signature, and initials for examination by the police investigators to determine his complicity in the anomalies. The police investigators, however, cleared private respondent from the said anomalies. Later, petitioners filed criminal complaints for estafa which were all dismissed by the fiscal. Tobias was also terminated by petitioners from his employment. Tobias sought employment with the Republic Telephone Company (RETELCO). However, petitioner Hendry, without being asked by RETELCO, wrote a letter to the latter stating that Tobias was dismissed by GLOBE MACKAY due to dishonesty. Eventually, private respondent Tobias filed a civil case for damages anchored on alleged unlawful, malicious, oppressive, and abusive acts of petitioners.

ISSUE:

1. Whether or not petitioners are liable for damages to private respondent under the Civil Code.

RULING:

Yes, petitioners are liable for damages to private respondent under the provisions of the Civil Code. Art. 19 of the Civil Code commonly referred to as the principle of abuse of rights sets certain standards which must be observed not only in the exercise of one’s rights but also in the performance of one’s duties. These standards are the following: to act with justice;; to give everyone his due;; and to observe honesty and good faith.  The Court said that when a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Thus, generally, an action for damages under either Article 20 or Article 21 would be proper. In the present case, petitioner Hendry showed belligerence(having an aggressive or fighting attitude) and told the private respondent that he was the number one suspect and to take a 1 week vacation leave, not to communicate with the office, and to leave his keys to said defendant (petitioner Hendry). Moreover, the imputation of guilt without basis and the pattern of harassment during the investigations of Tobias transgress the standards of human conduct set forth in Article 19 of the Civil Code. Hence, petitioners were ordered to pay actual, moral, and exemplary damages to private respondent.

Source:

Family Code of the Philippines (2022); Judge Ed Vincent S. Albano , Ed Vincent A. Albano, Jr.

[paolawdiary]

CASE DIGEST: ALFREDO M. VELAYO vs. SHELL | G.R. No. L-7817 | FELIX, J. | October 31, 1956

CIVIL CODE OF THE PHILIPPINES ARTICLE 19. Any   person   must,   in   the   exercise   of   his   rights   and   in   the performances   of   his   duties,   act   with   justice,   give   everyone   his   due   and observe honesty and good faith.

FACTS:

Domestic airline CALI met with its creditors and told them that the company was about to go bankrupt and would have to cease operations. While CALI announced that it would file for bankruptcy in the event that creditors could not agree on a pro rata distribution of the company's assets, the creditors decided that it would be better to work toward a fair pro rata division of the company's assets in order to ensure payment of their claims against CALI. Following the meeting, defendant Shell Philippines one of the creditors of CALI—assigned its credit to its sister company, Shell USA. Subsequently, Shell USA filed an action in a California court to collect the assigned credit and requested a writ of attachment against CALI's Douglas C-54 plane, which was located in the state. Shell Philippine turned down an offer from CALI to sell the plane before the creditors' meeting. Velayo filed this lawsuit for damages against defendant Shell Philippines in his capacity as the assignee of CALI's other creditors. He contends that the agreement on the pro rata distribution of assets was broken and that the fraudulent assignment of Shell Philippines' credit to Shall USA hurt the interests of the other creditors.

ISSUE:

1. Whether Shell Philippines acted in bad faith by using its knowledge of CALI's airplane in the US to assign credit to its sister company, thereby undermining the pro-rata allocation of CALI's assets among its creditors, remains to be seen.

RULING:

Yes, Shell Philippines committed bad faith when it gave its sister company credit, thereby undermining the pro rata allocation of CALI's assets among its creditors. The defendant planned and carried out the transfer to its sister company in the US, where CALI's C-54 plane was located. The insolvent and the later-appointed assignee were deprived of the chance to retrieve the plane due to the quick and unexpected action that effectively disposed of the latter's property. The author of this decision does not doubt for a moment that the defendant schemed and carried out the transfer of its sister corporation in the United States, where CALI's plane C-54 was by that swift and unsuspected operation effectively disposed of said insolvent's property, depriving the latter and the assignee that was later appointed of the opportunity to recover. In addition to Section 37 previously mentioned, the following is provided in Chapter 2 of the Civil Code's PRELIMINARY TITLE, which deals with human relations: "Art   19.   Any   person   must,   in   the   exercise   of   his   rights   and   in   the performances   of   his   duties,   act   with   justice,   give   everyone   his   due   and observe honesty and good faith". Although it is true that this article consists solely of declarations of principles, we discover that these declarations are put into practice by Article 21 and the subsequent sections of the same Chapter, which specify the following:  "Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage".

Source:

Family Code of the Philippines (2022); Judge Ed Vincent S. Albano , Ed Vincent A. Albano, Jr.

[paolawdiary]

EXECUTIVE ORDER NO. 209

THE FAMILY CODE OF THE PHILIPPINES

TITLE I

MARRIAGE

Chapter 1. Requisites of Marriage

ARTICLE 23. It shall be the duty of the person solemnizing the marriage to furnish either of the contracting parties the original of the marriage certificate referred to in Article 6 and to send the duplicate and triplicate copies of the certificate not later than fifteen days after the marriage, to the local civil registrar of the place where the marriage was solemnized. Proper receipts shall be issued by the local civil registrar to the solemnizing officer transmitting copies of the marriage certificate. The solemnizing officer shall retain in his file the quadruplicate copy of the marriage certificate, the copy of the marriage certificate, the original of the marriage license and, in proper cases, the affidavit of the contracting party regarding the solemnization of the marriage in place other than those mentioned in Article 8. (68a)

Source:

Family Code of the Philippines (2022); Judge Ed Vincent S. Albano , Ed Vincent A. Albano, Jr.

https://www.officialgazette.gov.ph/1987/07/06/executive-order-no-209-s-1987/

[paolawdiary]

CASE DIGEST: Roehr v Rodriguez | G.R. No. 142820 | QUISUMBING, J. | June 20, 2003

CIVIL CODE OF THE PHILIPPINES ARTICLE 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. 

FACTS:

This case revolves around the issue of whether the legal effects of the petitioner’s decree of divorce obtained in Germany still need to be determined by our court. Wolfgang Roehr, a German citizen, married Carmen Rodriguez, a Filipina, on December 11, 1980, in Germany. They had two daughters. On August 28, 1996, Carmen filed a petition for the declaration of the nullity of marriage at the Makati RTC, but the petition was denied. Meanwhile, Wolfgang Roehr obtained a decree of divorce from the Court of First Instance of Hamburg-Blankenese, promulgated on December 16, 1997. The custody of the two children was granted to Wolfgang by the said court. In this regard, Wolfgang filed a Second Motion to Dismiss on May 20, 1999, on the ground that the trial court had no jurisdiction over the matter since there was already a divorce decree obtained abroad. The public respondent, Judge Guevara-Salonga, granted the motion to dismiss. Carmen, however, filed a Motion for Partial Reconsideration, praying that the case should proceed for the purpose of determining the issues of custody of their children and the distribution of the properties. The RTC issued an order partially setting aside her order to dismiss for the purpose of tackling the issues of property relations between the spouses as well as the custody of the children.

ISSUE:

1. Whether or not the legal effects of the petitioner’s decree of divorce obtained in Germany still need to be determined by our court

RULING:

Yes, the Supreme Court declared that the trial court had jurisdiction over the dispute between the parties regarding parental custody, which includes the upbringing, care, and education of Carolynne and Alexandra Kristine Roehr's children. The decisions made on March 31, 2000, and September 30, 1999 by Makati Branch 149 of the Regional Trial Court are AFFIRMED with MODIFICATION.

Source:

Family Code of the Philippines (2022); Judge Ed Vincent S. Albano , Ed Vincent A. Albano, Jr.

[paolawdiary]

CASE DIGEST: Garcia v Recio | G.R. No. 138322 | PANGANIBAN, J. | Oct 2, 2001

CIVIL CODE OF THE PHILIPPINES ARTICLE 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. 

FACTS:

This case revolves around the issue of the respondent’s legal capacity to remarry. Rederick Recio, a Filipino, married an Australian citizen, Editha Samson, in Malabon in March 1987. After 2 years, a divorce decree was issued by the Australian family court to dissolve the marriage. In 1992, the respondent became an Australian citizen, as shown by a Certificate of Australian Citizenship. The petitioner and the respondent married in 1994 in Cabanatuan City. The respondent's application for a marriage license was declared as single and Filipino. While living in Australia, their conjugal assets were divided in accordance with the statutory declaration in Australia. Upon learning of the prior marriage of the respondent, the petitioner filed a complaint for the declaration of nullity of marriage in RTC. But in 1998, while the suit for the declaration of nullity was pending, the respondent was able to secure a divorce decree from a family court in Sydney, Australia. The trial court declared the marriage dissolved on the ground that the divorce issued in Australia was valid and recognized in the Philippines. However, the trial court erred in interpreting the law.

ISSUE:

1. Whether or not the respondent, upon having a valid foreign divorce decree in his prior marriage, has a legal capacity to remarry the petitioner

RULING:

The court held to remand to RTC to receive evidences. In January 12, 1994, respondent, an Australian citizen at the time, married petitioner, but the court cannot find that respondent had the legal capacity to do so. The court agreed with petitioner's argument that the court a quo erred in concluding that respondent had the legal right to marry again ipso facto, without needing to present adequate evidence to demonstrate the Australian personal law governing his status, or at the very least, to demonstrate his ability to marry again. Additionally, the court is unable to grant the petitioner's request to have her marriage to the respondent ruled void due to bigamy. Ultimately, it could turn out that he was, in fact, legally permitted by the divorce decree to marry the petitioner in Australia. That being said, the court considers that it would be most practical to remand this case again to the trial court so that any evidence demonstrating the petitioner's legal capacity to marry would be received therein. If that fails, the court a quo may declare the marriage of the parties to be null and void on the grounds of bigamy, provided that two marriage certificates—one from Malabon, Metro Manila, dated March 1, 1987, and the other from Cabanatuan City, dated January 12, 1994—are already in evidence.

Source:

Family Code of the Philippines (2022); Judge Ed Vincent S. Albano , Ed Vincent A. Albano, Jr.