USUFRUCT Explained

USUFRUCTS

Art. 562. Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides.

Characteristics of usufruct

(1) It is a real right (whether registered or not in the Registry of Property) of use and enjoyment

(2) It is of temporary duration

(3) It is transmissible

(4) It may be constituted on real or personal property, consumable or non-consumable, tangible or intangible, the ownership of which is vested in another.

Normal usufruct or that which involves non-consumable things which the usufructuary can enjoy without altering their form or substance, though they may deteriorate or diminish by time or by the use to which they are applied such as a house, a piece of land, furniture, etc. It is also known as perfect or regular usufruct.

Abnormal usufruct or that which involves things which would be useless to the usufructuary unless they are consumed or expended, such as money, grain, liquors.

It is also called imperfect, irregular, or quasiusufruct.

Creation of usufruct

(1) Legal or that created by law or declared by law, such as the usufruct of the parents over the property of their unemancipated children

(2) Voluntary or that created by will of the parties, either by act inter vivos, such as contract or donation, or by act mortis causa, such as in a last will and testament

(3) Mixed or that acquired by prescription, such as where one believing himself the owner of the property of an absentee, gave in his will the usufruct of the property to his wife and the naked ownership to his brother, and the wife possessed in good faith the property as usufructuary for the requisite prescriptive period.

As to extent of object:

(a) Total, if it is constituted on the whole of a thing

(b) Partial, if it is constituted only on a part of a thing

As to number of beneficiaries:

(a) Simple, if there is only one usufructuary; or

(b) Multiple, if there are several usufructuaries, and the latter may be:

1) Simultaneous (at the same time); or

2) Successive (one after another);

(3) As to effectivity or extinguishment:

(a) Pure, if there is no term or condition;

(b) With a term, if there is a period which may be either suspensive (from a certain day) or resolutory (up to a certain day); or

(c) Conditional, if it is subject to a condition which may be either suspensive (from the beginning of a certain event) or resolutory (until the happening of a certain event); and

(4) As to subject matter:

(a) Over things, if it involves tangible property; or

(b) Over rights, if it involves intangible property as rights are, but the rights must not be strictly personal or intransmissible; thus, the right to receive support cannot be the subject matter of usufruct.

RIGHTS OF THE USUFRUCTUARY

(1) As to the thing and its fruits:

(a) To receive the fruits of the property in usufruct and half of the hidden treasure he accidentally finds on the property. (natural, industrial and civil fruits)

 (b) To enjoy any increase which the thing in usufruct may acquire through accession.

(c) To personally enjoy the thing in usufruct or lease it to another.

(d) To make on the property in usufruct such improvements or expenses he may deem proper and to remove the improvements provided no damage is caused to the property.

 (e) To set-off the improvements he may have made on the property against any damage to the same

(f) To retain the thing until he is reimbursed for advances for extraordinary expenses and taxes on the capital.

(2) As to the usufruct itself:

(a) To alienate (or mortgage) the right of usufruct except parental usufruct.

(b) In a usufruct to recover property or a real right, to bring the action and to oblige the owner thereof to give him proper authority and necessary proof.

(c) In a usufruct of part of a common property, to exercise all the rights pertaining to the co-owner with respect to the administration and collection of fruits or interests from the property.

3) As to advances and damages:

(a) To be reimbursed for indispensable extraordinary repairs made by him in an amount equal to the increase in value which the property may have acquired by reason of such repairs.

(b) To be reimbursed for taxes on the capital advanced by him.

(c) To be indemnified for damages caused to him by the naked owner.

Right of usufructuary to pending natural and industrial fruits.

Fruits growing at beginning of usufruct. — They belong to the usufructuary who is not bound to refund to the owner the expenses of cultivation and production incurred.

Fruits growing at the termination of usufruct. — They belong to the owner but he is bound to reimburse the usufructuary the ordinary cultivation expenses out of the fruits received.

Rents are civil fruits. As they are deemed to accrue from day to day, they belong to the usufructuary in proportion to the time the usufruct may last.

Art. 571. The usufructuary shall have the right to enjoy any increase which the thing in usufruct may acquire through accession, the servitudes established in its favor, and, in general all the benefits inherent therein.

Art. 572. The usufructuary may personally enjoy the thing in usufruct, lease it to another, or alienate his right of usufruct, even by a gratuitous title; but all the contracts he may enter into as such usufructuary shall terminate upon the expiration of the usufruct, saving leases of rural lands, which shall be considered as subsisting during the agricultural year.

EXEMPTION:

1.       Legal usufruct of the parent over his or her unemancipated children cannot be alienated, pledged, or mortgaged.

2.       A usufruct given in consideration of the person of the usufructuary to last during his lifetime is also personal and, therefore, intransmissible.

Art. 573. Whenever the usufruct includes things which, without being consumed, gradually deteriorate through wear and tear, the usufructuary shall have the right to make use thereof in accordance with the purpose for which they are intended, and shall not be obliged to return them at the termination of the usufruct except in their condition at that time; but he shall be obliged to indemnify the owner for any deterioration they may have suffered by reason of his fraud or negligence.

Art. 574. Whenever the usufruct includes things which cannot be used without being consumed, the

usufructuary shall have the right to make use of them under the obligation of paying their appraised value at the termination of the usufruct, if they were appraised when delivered. In case they were not appraised, he shall have the right to return the same quantity and quality, or pay their current price at the time the usufruct ceases.

Art. 578. The usufructuary of an action to recover real property or a real right, or any movable property, has the right to bring the action and to oblige the owner thereof to give him the authority for this purpose and to furnish him whatever proof he may have. If in consequence of the enforcement of the action he acquires the thing claimed, the usufruct shall be limited to the fruits, the dominion remaining with the owner.

Art. 579. The usufructuary may make on the property held in usufruct such useful improvements or expenses for mere pleasure as he may deem proper, provided he does not alter its form or substance; but he shall have no right to be indemnified therefor. He may, however, remove such improvements, should it be possible to do so without damage to the property.

Art. 580. The usufructuary may set-off the improvements he may have made on the property against any damage to the same.

Art. 581. The owner of property the usufruct of which is held by another, may alienate it, but he cannot alter its form or substance, or do anything thereon which may be prejudicial to the usufructuary.

OBLIGATIONS OF THE USUFRUCTUARY

 (1) Those before the usufruct begins:

(a) to make an inventory of the property

** Contents of inventory. — The inventory shall contain an itemized list and an appraisal of the movables and description of the condition of the immovables. The movables must be appraised because, compared to immovables, they are subject to greater danger of loss and deterioration.

(b) to give security

Purpose:  to insure the fulfillment by the usufructuary of the obligations imposed upon him including the duty to return to the owner the thing in usufruct upon the termination of the usufruct.

(2) Those during the usufruct

(a) to take care of the property

(b) to replace with the young thereof animals that die or are lost in certain cases when the usufruct is constituted on flock or herd of livestock

(c) to make ordinary repairs

(d) to notify the owner of urgent extraordinary repairs

(e) to permit works and improvements by the naked owner not prejudicial to the usufruct

(f) to pay annual taxes and charges on the fruits

(g) to pay interest on taxes on capital paid by the naked owner

(h) to pay debts when the usufruct is constituted on the whole of a patrimony

(i) to notify the owner of any prejudicial act committed by third persons

(j) to pay for court expenses and costs regarding usufruct

(3) Those at the termination of the usufruct

(a) to return the thing in usufruct to the naked owner unless there is a right of retention

(b) to pay legal interest for the time that the usufruct lasts, on the amount spent by the owner for extraordinary repairs and the proper interest on the sums paid as taxes by the owner

(c) to indemnify the naked owner for any losses due to his negligence or of his transferees.

Exemption to giving security

1.       donor who has reserved the usufruct of the property donated

2.       parental usufruct

3.       where the naked owner renounces or waives his right to the inventory or security

4.       where the title constituting the usufruct relieves the usufructuary from the obligation

5.       where the usufructuary asks that he be exempted from the obligation and no one will be injured thereby.

Art. 586. Should the usufructuary fail to give security in the cases in which he is bound to give it, the owner may demand that the immovables be placed under administration, that the movables be sold, that the public bonds, instruments of credit payable to order or to bearer be converted into registered certificates or deposited in a bank or public institution, and that the capital or sums in cash and the proceeds of the sale of the movable property be invested in safe securities.

The interest on the proceeds of the sale of the movables and that on public securities and bonds, and the proceeds of the property placed under administration, shall belong to the usufructuary.

Furthermore, the owner may, if he so prefers, until the usufructuary gives security or is excused from so doing, retain in his possession the property in usufruct as administrator, subject to the obligation to deliver to the usufructuary the net proceeds thereof, after deducting the sums which may be agreed upon or judicially allowed him for such administration.

Art. 587. If the usufructuary who has not given security claims, by virtue of a promise under oath, the delivery of the furniture necessary for his use, and that he and his family be allowed to live in a house included in the usufruct, the court may grant this petition, after due consideration of the facts of the case.

The same rule shall be observed with respect to implements, tools and other movable property necessary for an industry or vocation in which he is engaged.

Art. 588. After the security has been given by the usufructuary, he shall have a right to all the proceeds and benefits from the day on which, in accordance with the title constituting the usufruct, he should have commenced to receive them.

Art. 589. The usufructuary shall take care of the things given in usufruct as a good father of a family.

Art. 592. The usufructuary is obliged to make the ordinary repairs needed by the thing given in usufruct.

By ordinary repairs are understood such as are required by the wear and tear due to the natural use of the thing and are indispensable for its preservation. Should the usufructuary fail to make them after demand by the owner, the latter may make them at the expense of the usufructuary.

Art. 593. Extraordinary repairs shall be at the expense of the owner. The usufructuary is obliged to notify the owner when the need for such repairs is urgent.

Art. 594. If the owner should make the extraordinary repairs, he shall have a right to demand of the

usufructuary the legal interest on the amount expended for the time that the usufruct lasts.

Should he not make them when they are indispensable for the preservation of the thing, the usufructuary may make them; but he shall have a right to demand of the owner at the termination of the usufruct, the increase in value which the immovable may have acquired by reason of the repairs.

If made by the usufructuary, he shall have the right to demand of the owner the payment provided the following requirements are present:

1.       He notified the owner of the urgency of the repairs

2.       The owner failed to make the repairs notwithstanding such notification

3.       The repair is necessary for the preservation of the property.

Right of retention. — The usufructuary, like a possessor in good faith  has the right of retention even after the termination of the usufruct until he is reimbursed for the increase in value of the property caused by extraordinary repairs for preservation.

Art. 596. The payment of annual charges and taxes and of those considered as a lien on the fruits, shall be at the expense of the usufructuary for all the time that the usufruct lasts.

Art. 597. The taxes which, during the usufruct, may be imposed directly on the capital, shall be at the expense of the owner.

If the latter has paid them, the usufructuary shall pay him the proper interest on the sums which may have been paid in that character; and, if the said sums have been advanced by the usufructuary, he shall recover the amount thereof at the termination of the usufruct.

EXTINGUISHMENT OF USUFRUCT

Art. 603. Usufruct is extinguished:

1.  By the death of the usufructuary, unless a contrary intention clearly appears;

2.  By the expiration of the period for which it was constituted, or by the fulfillment of any resolutory condition provided in the title creating the usufruct

3.  By merger of the usufruct and ownership in the same person;

4.  By renunciation of the usufructuary;

5.  By the total loss of the thing in usufruct;

6.  By the termination of the right of the person constituting the usufruct;

7.  By prescription.

Art. 604. If the thing given in usufruct should be lost only in part, the right shall continue on the remaining part.

Art. 605. Usufruct cannot be constituted in favor of a town, corporation, or association for more than fifty years. If it has been constituted, and before the expiration of such period the town is abandoned, or the corporation or association is dissolved, the usufruct shall be extinguished by reason thereof.

Art. 606. A usufruct granted for the time that may elapse before a third person attains a certain age, shall subsist for the number of years specified, even if the third person should die before the period expires, unless such usufruct has been expressly granted only in consideration of the existence of such person.

Art. 607. If the usufruct is constituted on immovable property of which a building forms part, and the latter should be destroyed in any manner whatsoever, the usufructuary shall have a right to make use of the land and the materials.

The same rule shall be applied if the usufruct is constituted on a building only and the same should be destroyed.

But in such a case, if the owner should wish to construct another building, he shall have a right to occupy the land and to make use of the materials, being obliged to pay to the usufructuary, during the continuance of the usufruct, the interest upon the sum equivalent to the value of the land and of the materials.

Usufruct of land and materials of building. — The destruction of the building terminates the usufruct on the building but not the usufruct on the land. Therefore, the usufructuary is still entitled to the use of the land and in place of the building, the materials thereof. This is a case of partial loss.

Art. 609. Should the thing in usufruct be expropriated for public use, the owner shall be obliged either to replace it with another thing of the same value and of similar conditions, or to pay the usufructuary the legal interest on the amount of the indemnity for the whole period of the usufruct. If the owner chooses the latter alternative, he shall give security for the payment of the interest.

Art. 610. A usufruct is not extinguished by bad use of the thing in usufruct; but if the abuse should cause considerable injury to the owner, the latter may demand that the thing be delivered to him, binding himself to pay annually to the usufructuary the net proceeds of the same, after deducting the expenses and the compensation which may be allowed him for its administration.

Art. 611. A usufruct constituted in favor of several persons living at the time of its constitution shall not be extinguished until the death of the last survivor.

Finals Reviewer in Land Titles and Deeds

CERTIFICATE OF TITLE

A Torrens title is the certificate of ownership issued under the Torrens system of registration by the government, thru the Register of Deeds naming and declaring the owner in fee simple of the real property described therein, free from all liens and encumbrances except such as may be expressly noted thereon or otherwise reserved by law.

Who has right to possess owner’s duplicate certificate.

Section 41 of Act No. 496, as amended by P.D. No. 1529, provides that the owner’s duplicate certificate shall be issued by the Register of Deeds in the name of the person in whose favor the land was decreed, and further disposes that said duplicate shall be delivered to the registered owner.

Protection of innocent third person.

Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, the court cannot disregard such rights and order the total cancellation of the certificate.

CASE

Evidence in the case at bar discloses that when petitioner purchased the subject property on June 10, 1970, the title thereto was in the name of her vendor Rafaela Donato alone. The rule that all persons dealing with property covered by Torrens certificate of title are not required to go beyond what appears on the face of the title is well-settled. The remedy of the defrauded party is to bring action for damages against those who caused the fraud or were instrumental in depriving him of the property. In the case at bar, because the action prescribes in 10 years from the issuance of the Torrens title over the property, the action is said to have already prescribed because it was fi led 15 years after the issuance to TCT No. T-32682.

An “innocent purchaser for value” or any equivalent phrase shall be deemed, under the Torrens system, to include an innocent lessee, mortgagee; or other encumbrancer for value.

Good faith, how determined.

Good faith, or the lack of it, is in its last analysis a question of intention; but, in ascertaining the intention by which one is actuated on a given occasion, we are necessarily controlled by the evidence as to the conduct and outward acts by which alone the inward motive may, with safety, be determined. So it is that “the honesty of intention,” “the honest lawful intent,” which constitutes good faith, implies freedom from knowledge and circumstances which ought to put a person on inquiry,” and so it is that proof of such knowledge that overcomes the presumption of good faith in which the courts always indulge in the absence of proof to the contrary. “Good faith, or the want of it, is not visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs.’’

It has been held that a purchaser in good faith is one who buys the property of another without notice that some other person has a right to or interest on such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim or interest of some other person in the property.

When actual knowledge of purchaser does not constitute bad faith.

In a case where A sold the same property fi rst to B and then to C, C as a purchaser in good faith for value registered the deed and obtained a title in his name, free from all liens and encumbrances.

Thereafter, C sold the same property to D who relied on C’s good title. But before D finally acquired the property, he became aware of the fact that there was some trouble or pending litigation involving the same property between A and B, the information having been relayed to him by the tenant of the place. From these facts two questions have been raised, namely: (1) whether D is a purchaser in good faith, notwithstanding his knowledge of the pending litigation; and (2) whether D acquired valid title to the property free from lien or encumbrance.

With respect to the fi rst question, it was held that D is still a purchaser in good faith, notwithstanding his knowledge of the pending litigation, because of the fact that C from whom he bought the property was not a party to the litigation. D stepped only into the shoes of C, a previous purchaser in good faith, and thereby he became entitled to all the defenses available to C, including those arising from the acquisition of the property in good faith and for value. With respect to the second question, it was held that C acquired valid title to the property, in view of Article 1544 of the Civil Code providing that registration in the Registry of the real property the ownership of which is claimed by different persons shall have the effect of transferring ownership thereof to the party who, in good faith, fi rst recorded it in the Registry of Property. Furthermore, Article 526 of the Civil Code provides that “He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any fl aw which invalidates it.’’ Again, under Section 39 of Act No. 496, as amended by Act No. 2011, “every person receiving a certifi cate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certifi cate of title for value in good faith shall hold the same free of all encumbrances except those noted on said certifi cate.” When the pending litigation between A and B is fi nally decided, the decision of the court cannot operate to divest the right of D who is not and has never been a party to the litigation, either as plaintiff or as defendant.

Sale by co-owners

Under Article 493 of the Civil Code, the owner of an undivided interest in the property has the right to freely sell and dispose of only his rights, participation and interest in an undivided property held in common with others, but has no right to sell a specifi c part, by metes and bounds, of the property. The sale or other disposition can affect only his undivided share, and the transferee gets only what corresponds to his grantor in the property owned in common.

it was held that a co-heir who signs a deed of sale executed by the other co-heirs conveying the community property in favor of someone, not as vendor but only as an instrumental witness, without objecting to the sale of his alleged share in the property, is bound by the conveyance, and he cannot afterwards sue for partition after the vendee has already acquired ownership of the property by adverse possession.

Registration of sale with right of legal redemption

right of legal pre-emption or redemption that may be exercised within thirty days from the date of written notice by the vendor.

Torrens title not subject to prescription.

No title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.

Right to recover possession equally imprescriptible.

To a registered owner under the Torrens system, the right to recover possession of the registered property is equally imprescriptible, since possession is a mere consequence of ownership.

Evidentiary value of certifi cate of title

A certifi cate of title is conclusive evidence with respect to the ownership of the land described therein, and other matters which can be litigated and decided in land registration proceedings.

Torrens title not subject to collateral attack.

Torrens title can be attacked only for fraud, within one year after the date of the issuance of the decree of registration. Such attack must be direct, and not by a collateral proceeding The title represented by the certificate cannot be changed, altered, modified, enlarged, or diminished in a collateral proceeding.

VOLUNTARY DEALINGS WITH REGISTERED LANDS

An innocent purchaser for value of registered land becomes the registered owner and in the contemplation of law the holder of a certificate thereof the moment he presents and files a duly notarized and lawful deed of sale and the same is entered on the day book and at the same time he surrenders or presents the owner’s duplicate certificate of title to the property sold and pays the full amount of registration fees, because what remains to be done lies not within his power to perform. The Register of Deeds is in duty bound to perform it. We believe that is a reasonable and practical interpretation of the law under consideration — a construction which would lead to no inconsistency and injustice.

FORMAL DETAILS REQUIRED OF VOLUNTARY INSTRUMENTS.

requires that every deed or other voluntary instrument presented for registration shall contain or have endorsed upon it the full name, nationality, place of residence, post office address of the grantee or other person acquiring or claiming an interest under such instrument, and every such instrument shall also state whether the grantee is married or unmarried, and, if married, the full name of the husband or wife. If the grantee is a corporation or association, the deed must show that such corporation or association has the requirements prescribed by existing law for acquiring public land, in case the land sold or conveyed was originally public land. This latter requirement may be expressed in the deed by means of a statement to the effect that such corporation or association has at least sixty (60) percent of its capital belonging to Filipinos.

Register of Deeds not authorized to determine whether or not fraud was committed in the deed sought to be registered. The duties enjoined upon the Register of Deeds by Section 57 of the Land Registration Act are clearly ministerial and mandatory in character, not only as indicated by the auxiliary “shall” but by the nature of such functions required to be performed by him.

nature of such functions required to be performed by him.

The requirements for deeds and other voluntary instruments of conveyance to be registrable there under are specified in the law, thus:

 (1) The presentation of the owner’s duplicate certificate whenever any duly executed voluntary instrument is filed for registration;

(2) the payment of the prescribed registration fees and the requisite documentary stamps;

(3) the evidence of full payment of real estate tax as may be due; and

(4) the inclusion of one extra copy of any document of transfer or alienation of real property, to be furnished the city or provincial assessor.

 Sales of Land to Aliens

Krivenko vs. Register of Deeds of Manila held that aliens are not allowed to acquire ownership of

urban or residential lands in the Philippines, and as a consequence, all acquisitions made in contravention of the prohibition since the fundamental law became effective are null and void per se and ab initio.

*** No entity, except the legislature itself, may add to or detract from or otherwise alter or amend the requirements it has so enumerated — and then only by the corresponding amendment of the existing statutes or the enactment of new ones. The local government cannot impose additional requirements; and for a chartered city to add new requirements for registration not otherwise provided by statutory law in the matter is tantamount to amending or modifying the law, a power which is not vested in such a chartered city.

REAL MORTGAGE

MORTGAGE, according to Sanchez Roman, is a real right constituted to secure an obligation upon real property or rights therein to satisfy with the proceeds of the sale thereof such obligation when the same becomes due and has not been paid or fulfilled.

Kinds of mortgages.

1.       conventional - or voluntary mortgage is one created by agreement of the parties.

2.       legal mortgage - is one created by operation of law, wherein the creditor is given a mortgage on the property of his debtor, without the necessity of the parties actually stipulating for it.

-  as one required by express provision of law to be executed in favor of certain persons to secure the performance of a principal obligation.

3. judicial mortgage is one resulting from a judgment.

4. equitable mortgage is one that is not a mortgage in form but in substance a mere security for a debt or obligation. This commonly occurs in the case of pacto de retro sales.

ESSENTIAL REQUISITES OF MORTGAGE.

POF

(a) That it be constituted to secure the fulfillment of a principal obligation;

(b) That the mortgagor be the absolute owner of the thing mortgaged;

(c) That the person constituting the mortgage has the free disposal of the property, and in the absence thereof, that he be legally authorized for the purpose.

DBP vs. CA Thus, a person who deliberately ignores a signifi cant fact that would create suspicion in an otherwise reasonable person is not an innocent purchaser for value

Who may constitute a mortgage.

It is only the absolute owner of the property who can constitute a valid mortgage on it.

Consent of both parties not necessary to registration of mortgage.

A mortgage may be registered at the instance of the mortgagee alone, even over the objection of the mortgagor.

Special characteristics of real mortgage.

The following are the special characteristics of a real mortgage:

(a) Realty as subject matter: Only real property or alienable rights and interests therein may be the subject matter of a mortgage. Thus, not only the land and improvements thereon may be mortgaged, but also the credits or rights of the mortgagee or other encumbrancers.

(b) Real right: A mortgage lien is a real right and as such it is good and binding against the whole world, and may be enforced by real action against all persons who may have existing rights or interests in the same property, not registered prior to the mortgage.

(c) Accessory obligation: As an obligation, a mortgage is only accessory and presupposes the existence of a principal obligation. In the absence therefore of a principal obligation, a mortgage cannot stand.

(d) Indivisibility: Even though the debt secured may be divided among the debtors or the creditors or their successors in interest, the mortgage shall remain as one and indivisible, unless there have been several things given in mortgage and each of them guarantees only a determinate portion of the obligation.

(e) Inseparability: The mortgage lien and the property affected are inseparable, so much so that whoever may subsequently acquire title to the mortgaged property is bound by the terms of the mortgage, whether the transfer be with or without the consent of the mortgagee. In other words, the mortgage, until discharged, follows the property to whomever it may be transferred no matter how many times over it changes hands as long as the annotation is carried over.

(f) Retention of possession. The mortgagor generallyretains possession of the mortgaged property inasmuch as a mortgage is a mere lien and title to the property does not pass to the mortgagee.

The contract shall be presumed to be an equitable mortgage, in any of the following cases:

(1) When the price of a sale with right to repurchase is usually inadequate;

(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;

(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.

Registration of mortgage; how effected.

The procedure in the registration of a mortgage is outlined in Section 61 of Act No. 496, as amended by P.D. No. 1529. The mortgage deed is fi led together with the owner’s duplicate certifi cate of title with the Register of Deeds of the city or province where the land lies. Thereupon, this offi cial enters upon the original certifi cate of title and the owner’s duplicate certifi cate a memorandum of the purport of the mortgage deed, the time of fi ling, and the fi le number of the deed, signing the memorandum after the entry. He also notes down upon the mortgage deed the time of fi ling and a reference to the volume and page of the registration book where it is registered.

*** that in a mortgage of real estate the improvements on the same are included; therefore, all objects permanently attached to a mortgaged building or land, although they may have been placed there after the mortgage was constituted, are also included.

May mortgage be registered without the owner’s duplicate

title?

Where a mortgage deed has been fi led for registration and the owner’s duplicate certifi cate of title is being withheld by the owner or otherwise could not be presented at the time of registration, the Register of Deeds may be requested to proceed in accordance with Section 72 of Act No. 496 (now Section 71, P.D. No. 1529), in which case he shall send within twenty-four hours notice by mail to the registered owner, stating that such mortgage has been registered, and requesting that the owner’s duplicate certifi cate be produced in order that the corresponding memorandum of the mortgage could be made thereon. If the owner neglects or refuses to comply within a reasonable time the Registrar may suggest the fact to the court, and the court, after notice, may enter an order to the owner to produce his certifi cate at a time and place to be named therein, and may enforce the order by suitable process.

Stipulation against subsequent mortgage.

stipulation not to make a new mortgage not being contrary to law, morals, or public order, is valid and is, therefore, an obstacle to the registration of subsequent mortgages in the registry of property.

*** whether the agreement that the mortgagor cannot sell the mortgaged property without the consent of the mortgagee such that if it is sold

without his consent, valid or not?

Held:

It is not valid as it contravenes Article 2130, NCC which provides that a stipulation forbidding the owner from alienating the immovable mortgaged shall be void.

Pactum commissorium -  is a stipulation empowering the creditor to appropriate the thing given as guaranty for the fulfi llment of the obligation in the event the obligor fails to live up to his undertakings, without further formality, such as foreclosure proceedings, and a public sale.

Extrajudicial foreclosure of mortgage.

A mortgage may be foreclosed extrajudicially only if there has been inserted in or attached to the real estate mortgage a special power of attorney conferring upon the mortgagee the power to sell the mortgaged property at public auction in the event of foreclosure, conformably to the procedure prescribed in Act No. 3135, as amended by Act No. 4118.

A power to sell extrajudicially conferred upon the mortgagee is a power that survives the death of the mortgagor because it is an agency coupled with interest. To constitute such power coupled with interest, the rule is that there should coexist in the agent, along with the power given him, an interest or estate in the thing to be disposed of. It is not meant an interest in the exercise of the power but an interest in the property on which the power is to operate.

As to the place of sale, it cannot be made legally outside of the province or city in which the property is situated; and in case the place within said province or city in which the sale is to be made is the subject of stipulation, such sale shall be made in said place or in the municipal building of the municipality in which the property or part thereof lies.

Publication is also required by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, by publishing such notice once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city. In order that a newspaper may be said to be of general circulation in a municipality, it must have regular subscribers, buyers and readers therein. The law does not require that notice of auction sale be given by the mortgagee to the mortgagor.

Right of redemption in foreclosure of mortgage.

may redeem the same within the term of one year from and after the sale.

Reckoning point – from the date of registration of the sale.

The pendency of an action questioning the validity of a mortgage cannot bar the issuance of the writ of possession after title to the property has been consolidated in the mortgagee.

 CASE

The period of redemption is not interrupted by the fi ling of an action assailing the validity of the mortgage, so that at the expiration thereof, the mortgagee who acquires the property at the foreclosure sale can proceed to have the title consolidated in his name and a writ of possession issued in his favor. To rule otherwise, and allow the institution of an action questioning the redemption would constitute a dangerous precedent. A likely offshoot of such a ruling is the institution of frivolous suits for annulment of mortgage intended merely to give the mortgagor more time to redeem the mortgaged property. (Union Bank of the Philippines vs. CA)

CHATTEL MORTGAGE - is a sale of personalty conveying the title to the mortgagee under the condition that, if the terms of redemption are not complied with, then the title becomes absolute in the mortgagee.

-           it is a transfer of personal property as security for a debt or obligation in such form that, upon failure of the mortgagor to comply with the terms of the contract, the title to the property will be in the mortgagee.

*** the true nature of a chattel mortgage as a sale only in form, while in substance essentially a contract of security.

Union Motors Corporation vs. CA, 361 SCRA 506, it was ruled that the accessory contract of chattel mortgage has no legal effect whatsoever inasmuch as the mortgagors are not the absolute owners thereof, ownership of the mortgagor being an essen tial requirement of a valid mortgage contract. The manifestations of ownership are control and enjoyment over the thing owned.

Subject matter of chattel mortgage -- Only personal property

House as object of chattel mortgage

If the owner of the building is distinct and different from the owner of the land, it may be considered a

personal property upon stipulation of the parties, for the purpose of constituting a chattel mortgage. So, also, where a building erected on land belonging to another is merely superimposed on the soil or is sold for immediate demolition, the same may be considered as movable or personal property.

Register of Deeds in respect to the registration of chattel mortgages are purely of a ministerial character, and he is clothed with no judicial or quasi-judicial power to determine the nature of the property, whether real or personal, which is the subject of the mortgage. Generally speaking, he should accept the qualifi cation of the property adopted by the person who presents the instrument for registration and should place the instrument on record, upon payment of the proper fees, leaving the effects of registration to be determined by the court if such question should arise for legal determination. Registration adds nothing to the instrument, considered as a source of title, and affects nobody’s rights except as a species of constructive notice.

it was held that the view as above enunciated that the parties to a deed of chattel mortgage may agree to consider a house as personal property, for purposes of such a contract, shall be deemed good only insofar as the contracting parties are concerned and is not applicable to strangers to the contract or to a case where there is no contract whatsoever with respect to the status of the house.

Machinery and fixture as subject matter.

Gen. Rule

Machinery and fi xture are personal property by their very nature

Exemption: 

if they are attached to real property or placed in a factory building or plant, with the character of permanence according to their purpose and in such manner that they cannot be detached therefrom without causing destruction of, or material injury to, the things real with which they are connected, they would be regarded as part of the real estate.

Exemption to the exemption:

if they are so placed by a tenant, or a usufructuary, or someone else having only a temporary right on the real property – movable

An interest in a business mortgageable if properly described. – personal property

Shares of stock as security of an obligation – personal property

Growing crops as personal property.

Growing crops, like ungathered sugar cane in the fi eld, are personal property and as such may be subject matter of chattel mortgage.

Vessels are considered personal property under the civil law.

Motor vehicle when object of chattel mortgage.

whenever any owner mortgages any motor vehicle as security for a debt or other obligation, the creditor or person in whose favor the mortgage is made is required, within seven days, to notify the Chief of the Motor Vehicles Offi ce in writing to that effect, stating the registration number of the motor vehicle, date of mortgage, names and addresses of both parties, and such other information as may be required by said offi ce.

Mortgage of after-acquired property valid.

The problem of whether after-acquired property may be object of a chattel mortgage has confronted stores open to the public for retail business, where the goods are constantly sold and substituted with new stock from time to time.

Large cattle as object of chattel mortgage; how described.

Large cattle includes the horse, mule, ass, carabao, or other domesticated member of the bovine family.

the description thereof shall include the brands, class, age, knots of radiated hair commonly known as

remolinos, or cowlicks, and other marks of ownership as described and set forth in the certifi cate of ownership of said animal or animals,together with the number and place of issue of such certifi cates ofownership.

Where to register chattel mortgage.

a chattel mortgage shall be recorded in the offi ce of the Register of Deeds of the province or city where the mortgagor resides as well as where the property is situated or ordinarily kept.

Government lien superior to mortgage lien.

Taxes due the government are preferred and superior to the mortgage lien.

Effect of registration.

While registration adds nothing to the instrument, considered as the source of title of the mortgagee, it operates as a constructive notice of the existence of the chattel mortgage. The transaction

thereby becomes binding against third persons. An otherwise invalid or legally defective document is not validated or cured of its legal defects by registration.

Mortgage binding on subsequent purchasers.

Instruments of mortgage are binding, while they subsist, not only upon the parties executing them but also upon those who later, by purchase or otherwise, acquire the mortgaged properties. The right of those who so acquire said properties should not and cannot be superior to that of the creditor who has in his favor an instrument of mortgage executed with the formalities of the law, in good faith, and without the least indication of fraud.

Sale of chattel without consent of mortgagee.

Art 319 par. 2 of RPC

incurs criminal responsibility. A mere stipulation in the deed of sale that it revokes the chattel mortgage and quashes, nullifi es and terminates all proceedings, judicial or extrajudicial, arising out of and incident to the transaction, does not and cannot have the effect of wiping out the criminal liability.

Effect of failure to register.

Where there exists a chattel mortgage contract in due form, but for some reason or another it was not, as it should be, registered in the offi ce of the Register of Deeds concerned, the effect would be that it still remains a valid chattel mortgage as against the mortgagor, his executors or administrators,54 but void as against third persons, such as intervening purchasers or creditors claiming liens by attachment, judgment or execution.

Affi davit of good faith; effect of omission.

The absence of such affi davit vitiates a mortgage as against creditors and subsequent encumbrancers

Foreclosure of chattel mortgage; condition precedent.

Before foreclosure may be resorted to, it is necessary as a condition precedent that there be a violation of the condition of the chattel mortgage and that at least thirty days shall have elapsed since then.

Procedure in foreclosure of chattel mortgage.

The procedure prescribed in Section 14 of the Chattel Mortgage Law for the foreclosure of chattel mortgage may be outlined as follows:

“1. Notices are posted for at least ten days in at least two public places in the municipality where the mortgaged property is to be sold, designating the time, place, and purpose of the sale.

“2. The mortgagee, his executor, administrator or assign, notifies in writing, at least ten days before the sale, the mortgagor or person holding under him and other persons holding subsequent mortgages of the time and place of the sale, said notice to be delivered personally to the party if

residing in the same municipality or sent by mail if residing outside.

“3. The mortgaged property is sold at public auction by a public officer at a public place in the municipality where the mortgagor resides or where the property is situated,

as designated in the notice.

“4. Within thirty days after the sale, the public official who conducted the sale makes a return of his doings, the same to be filed and recorded with the Office of the Register of Deeds where the mortgage has been recorded. The officer’s return describing the articles sold and stating the amount received for each article operates as a discharge of the lien created by the mortgage.

“5. The proceeds of the sale will be distributed and applied to the following payments:

(a) Cost and expenses of keeping and sale;

(b) Amount of demand or obligation secured by the chattel mortgage;

(c) Obligations due to persons holding subsequent mortgages, in their order, and

(d) Balance turned over to the mortgagor or person holding under him on demand.”

INVOLUNTARY DEALINGS WITH REGISTERED LAND — ATTACHMENT AND OTHER LIENS

ATTACHMENT is a writ issued at the institution or during the progress of an action, commanding the sheriff or other public offi cer to attach the property, rights, credits, or effects of the defendant to satisfy the demands of the plaintiff.

Attachment may be classifi ed into three kinds, namely:

(1) preliminary attachment;  is that issued at the institution or during the progress of an action.

(2) garnishment; plaintiff seeks to subject to his claim property of the defendant in the hands of a third person called the garnishee, as well as money owed by such third person to defendant. Garnishment proceedings are usually directed to personal property.

(3) levy on execution. is the attachment issued after the fi nal judgment in satisfaction thereof.

ADMINISTRATIVE LAW CASES DOCTRINE

PERALTA VS. CSC

When an administrative or executive agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing law; and the administrative interpretation of the law is at best advisory, for it is the courts that finally determine what the law means. It has also been held that interpretative regulations need not be published.

Javellana vs. DILG

As a matter of policy, this Court accords great respect to the decisions and/or actions of administrative authorities not only because of the doctrine of separation of powers but also for their presumed knowledgeability and expertise in the enforcement of laws and regulations entrusted to their jurisdiction.

Notice  and Hearing or Publication

Commissioner of Internal Revenue vs. CA, CTA, Fortune Tobacco

An administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare issuance for it gives no real consequence more than what the law itself has already prescribed.  When, upon the other hand, the administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the implementation of the law but substantially adds to or increases the burden of those governed, it behooves the agency to accord at least to those directly affected a chance to be heard, and thereafter to be duly informed, before that new issuance is given the force and effect of law.

Commissioner of Customs vs. Hypermix Feeds

Accordingly, in considering a legislative rule a court is free to make three inquiries: (i) whether the rule is within the delegated authority of the administrative agency; (ii) whether it is reasonable; and (iii) whether it was issued pursuant to proper procedure.  But the court is not free to substitute its judgment as to the desirability or wisdom of the rule for the legislative body, by its delegation of administrative judgment, has committed those questions to administrative judgments and not to judicial judgments.  In the case of an interpretative rule, the inquiry is not into the validity but into the correctness or propriety of the rule.  As a matter of power a court, when confronted with an interpretative rule, is free to (i) give the force of law to the rule; (ii) go to the opposite extreme and substitute its judgment; or (iii) give some intermediate degree of authoritative weight to the interpretative rule.

Considering that the questioned regulation would affect the substantive rights of respondent as explained above, it therefore follows that petitioners should have applied the pertinent provisions of Book VII, Chapter 2 of the Revised Administrative Code, to wit:

Section 3. Filing. – (1) Every agency shall file with the University of the Philippines Law Center three (3) certified copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within three (3) months from that date shall not thereafter be the bases of any sanction against any party of persons.

Section 9. Public Participation. - (1) If not otherwise required by law, an agency shall, as far as practicable, publish or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to the adoption of any rule.

(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in a newspaper of general circulation at least two (2) weeks before the first hearing thereon.

(3) In case of opposition, the rules on contested cases shall be observed.

VICTORIA MILLING vs. SSS

There is a distinction between an administrative rule or regulation and an administrative interpretation of a law whose enforcement is entrusted to an administrative body. When an administrative agency promulgates rules and regulations, it "makes" a new law with the force and effect of a valid law, while when it renders an opinion or gives a statement of policy, it merely interprets a pre-existing law. Rules and regulations when promulgated in pursuance of the procedure or authority conferred upon the administrative agency by law, partake of the nature of a statute, and compliance therewith may be enforced by a penal sanction provided in the law. A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory authority granted by the legislature, On the other hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means.

NFA VS. MASADA Security

The general rule is that construction of a statute by an administrative agency charged with the task of interpreting or applying the same is entitled to great weight and respect. The Court, however, is not bound to apply said rule where such executive interpretation, is clearly erroneous, or when there is no ambiguity in the law interpreted, or when the language of the words used is clear and plain, as in the case at bar. Besides, administrative interpretations are at best advisory for it is the Court that finally determines what the law means. Hence, the interpretation given by the labor agencies in the instant case which went as far as supplementing what is otherwise not stated in the law cannot bind this Court.

SGMC REALTY CORP. vs. Office of the President

Administrative rule or regulation, in order to be valid, must not contradict but conform to the provisions of the enabling law.

For it is axiomatic that administrative rules derive their validity from the statute that they are intended to implement. Any rule which is not consistent with statute itself is null and void.

Prospective or retroactive operation

CIR VS. AZUCENA

An administrative rule interpretive of a statute, and not declarative of certain rights and corresponding obligations, is given retroactive effect as of the date of the effectivity of the statute.

DADULO vs. CA

Well-settled is the rule that procedural laws are construed to be applicable to actions pending and undetermined at the time of their passage, and are deemed retroactive in that sense and to that extent. As a general rule, the retroactive application of procedural laws cannot be considered violative of any personal rights because no vested right may attach to nor arise therefrom.

SAN MIGUEL VS. INCIONG

The Supplementary Rules and Regulations Implementing Presidential Decree 851 is even more emphatic in declaring that earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th-month pay.

ASTURIAS VS. COMMISSIONER OF CUSTOM

Considering that the Bureau of Customs is the office charged with implementing and enforcing the provisions of our Tariff and Customs Code, the construction placed by it thereon should be given controlling weight.

          In applying the doctrine or principle of respect for administrative or practical construction, the courts often refer to several factors which may be regarded as bases of the principle, as factors leading the courts to give the principle controlling weight in particular instances, or as independent rules in themselves. These factors are the respect due the governmental agencies charged with administration, their competence, expertness, experience, and informed judgment and the fact that they frequently are the drafters of the law they interpret; that the agency is the one on which the legislature must rely to advise it as to the practical working out of the statute, and practical application of the statute presents the agency with unique opportunity and experiences for discovering deficiencies, inaccuracies, or improvements in the statute.

CARINO VS. CHR

The CHR has the power to investigate but not to adjudicate alleged human right violation.

Investigate – means to examine, inquire, explore.

Adjudicate – to resolve, rule, settle, decide.

Megaworld Globus Asia vs. DSM Construction

Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when affirmed by the Court of Appeals.

NAPOCOR vs. LEASTO

Arbitral decision accord respect and finality by the Court

Exemption to the rule : 

1.       on the ground of promissory estoppels

2.       And involving a legal issue and not a factual finding.

LUPANGCO vs. CA

Quasi-judicial is defined as a term applied to the action, discretion, etc., of public administrative officers or bodies required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action, and to exercise discretion of a judicial nature. To expound thereon, quasi-judicial adjudication would mean a determination of rights, privileges and duties resulting in a decision or order which applies to a specific situation .  This does not cover rules and regulations of general applicability issued by the administrative body to implement its purely administrative policies and functions like Resolution No. 105 which was adopted by the respondent PRC as a measure to preserve the integrity of licensure examinations.

 JURISDICTION - the competence of an office or body to act on a given matter or decide a certain question.

CHIN vs. Land Bank of the Philippines

The court has no jurisdiction over the subject matter of the petition.

AZARCON vs. Sandiganbayan

The court has no jurisdiction over the person of Azarcon.

DUE PROCESS

SANTIAGO vs. Alikpala

First requirement of procedural due process, namely, the existence of the court or tribunal clothed with judicial, or quasi-judicial, power to hear and determine the matter before it.

There is the express admission in the statement of facts that respondents, as a court-martial, were not convened to try petitioner but someone else, the action taken against petitioner being induced solely by a desire to avoid the effects of prescription; it would follow then that the absence of a competent court or tribunal is most marked and undeniable. Such a denial of due process is therefore fatal to its assumed authority to try petitioner.

NDC vs. Collector of Customs

Even in admin proceeding due process must be observed.

We find this action proper for it really appears that petitioner Rocha was not given an opportunity to prove that the television set complained of is not a cargo that needs to be manifested as required by Section 2521 of the Tariff and Customs Code. Under said section, in order that an imported article or merchandise may be considered a cargo that should be manifested it is first necessary that it be so established for the reason that there are other effects that a vessel may carry that are excluded from the requirement of the law, among which are the personal effects of the members of the crew. The fact that the set in question was claimed by the customs authorities not to be within the exception does not automatically make the vessel liable. It is still necessary that the vessel, its owner or operator, be given a chance to show otherwise. This is precisely what petitioner Rocha has requested in his letter. Not only was he denied this chance, but respondent collector immediately imposed upon the vessel the huge fine of P5,000.00. This is a denial of the elementary rule of due process.

FABELLA vs. CA

In administrative proceedings, due process has been recognized to include the following: (1)  the right to actual or constructive notice of the institution of proceedings which may affect a respondent’s legal rights;  (2)  a real opportunity to be heard personally or with the assistance of counsel, to present witnesses and evidence in one’s favor, and to defend one’s rights;  (3)  a tribunal vested with competent jurisdiction and so constituted as to afford a person charged administratively a reasonable guarantee of honesty as well as impartiality;  and  (4)  a finding  by said  tribunal  which is  supported by substantial evidence submitted for consideration during the hearing or contained in the records or made known to the parties affected.

In the present case,  the various committees formed by DECS to hear the administrative charges against private respondents did not include “a representative of the local or, in its absence, any existing provincial or national teacher’s organization” as required by Section 9 of RA 4670.  Accordingly, these committees were deemed to have no competent jurisdiction.  Thus, all proceedings undertaken by them were necessarily void.  They could not provide any basis for the suspension or dismissal of private respondents.  The inclusion of a representative of a teachers’ organization in these committees was indispensable to ensure an impartial tribunal.  It was this requirement that would have given substance and meaning to the right to be heard.  Indeed, in any proceeding, the essence of procedural due process is embodied in the basic requirement of notice and a real opportunity to be heard.

LUPO vs. Administrative Action Board

The requirements of due process in administrative proceedings and these are:

(1) the right to a hearing which includes, the right to present one's case and submit evidence in support thereof;

(2) the tribunal must consider the evidence presented;

(3) the decision must have something to support itself,

(4) the evidence must be substantial, and substantial evidence means such evidence as a reasonable mind must accept as adequate to support a conclusion;

(5) the decision must be based on the evidence presented at the hearing, or at least contained in the record and disclosed to the parties affected;

(6) the tribunal or body or any of its judges must act on its or his own independent consideration of the law and facts of the controversy, and not simply accept the views of a subordinate;

(7) the board or body should in all controversial questions, render its decision in such manner that the parties to the proceeding can know the various issues involved, and the reason for the decision rendered.

MADENILLA vs. CSC

No denial of due process.

"Due process of law implies the right of the person affected thereby to be present before the tribunal which pronounces judgment upon the question of life, liberty, and property in its most comprehensive sense; to be heard, by testimony or otherwise, and to have the right of controverting, by proof, every material fact which bears on the question of the light in the matter involved."

The essence of due process is the opportunity to be heard. The presence of a party is not always the cornerstone of due process. In the case at bar, any defect was cured by the filing of a motion for reconsideration.

KANLAON Construction vs. NLRC

 Gen. Rule : Only lawyers are allowed to appear before the labor arbiter

Exemption:

Non-lawyer member of the organization

Non-lawyer representing himself as party to the case

Member of the legal aid duly recognized by IBP or DOJ

Engineer Estacio can appear however his appearance on behalf of Kanlaon required written proof of authorization.  Absent this authority whatever statement and declaration made before the arbiter is not binding to the petitioner.

First LEPANTO vs. CA

Clearly, Circular 1-91 effectively repealed or superseded Article 82 of E.O. 226 insofar as the manner and method of enforcing the right to appeal from decisions of the BOI are concerned. Appeals from decisions of the BOI, which by statute was previously allowed to be filed directly with the Supreme Court, should now be brought to the Court of Appeals.

Manuel vs. Villena

Technical rule of procedure are not strictly enforced and due process of law in the strict judicial sense is not indispensable. It is sufficient that substantive due process requirement of fairness and reasonableness be observed.

RES JUDICATA

Judge Basilla vs. Becamon

Applying the principle of res judicata or bar by prior judgment, the present administrative case becomes dismissible.

The Court held that applied the principle of res judicata or bar by prior judgment. Under the said doctrine, a matter that has been adjudicated by a court of competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between the same parties and for the same cause. It provides that a final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies; and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of action. Res judicata is based on the ground that the party to be affected, or some other with whom he is in privity, has litigated the same matter in the former action in a court of competent jurisdiction, and should not be permitted to litigate it again. This principle frees the parties from undergoing all over again the rigors of unnecessary suits and repetitious trials. At the same time, it prevents the clogging of court dockets. Equally important, res judicata stabilizes rights and promotes the rule of law.”

NHA vs. Almeida

In fine, it should be remembered that quasi-judicial powers will always be subject to true judicial power—that which is held by the courts. Quasi-judicial power is defined as that power of adjudication of an administrative agency for the "formulation of a final order." This function applies to the actions, discretion and similar acts of public administrative officers or bodies who are required to investigate facts, or ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official action and to exercise discretion of a judicial nature. However, administrative agencies are not considered courts, in their strict sense. The doctrine of separation of powers reposes the three great powers into its three (3) branches—the legislative, the executive, and the judiciary. Each department is co-equal and coordinate, and supreme in its own sphere. Accordingly, the executive department may not, by its own fiat, impose the judgment of one of its agencies, upon the judiciary. Indeed, under the expanded jurisdiction of the Supreme Court, it is empowered to "determine whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government."

Abelita vs. Doria

While the present case and the administrative case are based on the same essential facts and circumstances, the doctrine of res judicata will not apply.

There is no identity of causes of action in the cases.  While identity of causes of action is not required in the application of res judicata in the concept of conclusiveness of judgment, it is required that there must always be identity of parties in the first and second cases.  

For res judicata to apply, the following requisites must be present:

         (a) the former judgment or order must be final;

         (b) it must be a judgment or order on the merits, that is, it was rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of the case;

         (c) it must have been rendered by a court having jurisdiction over the subject matter and the parties; and

         (d) there must be, between the first and second actions, identity of parties, of subject matter, and of cause of action; this requisite is satisfied if the two actions are substantially between the same parties.

SEC vs. INTERPORT SERVICES

SEC retains jurisdiction to investigate

Section 53 of the Securities Regulations Code clearly provides that criminal complaints for violations of rules and regulations enforced or administered by the SEC shall be referred to the Department of Justice (DOJ) for preliminary investigation, while the SEC nevertheless retains limited investigatory powers. Additionally, the SEC may still impose the appropriate administrative sanctions under Section 54 of the aforementioned law.

SEC vs. GMA Network, Inc.

Rate-fixing is a legislative function which concededly has been delegated to the SEC by R.A. No. 3531 and other pertinent laws. The due process clause, however, permits the courts to determine whether the regulation issued by the SEC is reasonable and within the bounds of its rate-fixing authority and to strike it down when it arbitrarily infringes on a person’s right to property.

VIGAN ELECTRIC CO. vs. Public Service Commission

Partakes of the nature of a quasi-judicial function and that having been issued without previous notice and hearing said order is clearly violative of the due process clause, and, hence, null and void.

QJ – notice and hearing requirement.

DOCTRINE OF PRIMARY JURISDICTION

Bagonghasa vs. DAR

The doctrine of primary jurisdiction precludes the courts from resolving a controversy over which jurisdiction was initially lodged with an administrative body of special competence. The doctrine of primary jurisdiction does not allow a court to arrogate unto itself authority to resolve a controversy, the jurisdiction over which is initially lodged with an administrative body of special competence. The Office of the DAR Secretary is in a better position to resolve the particular issue of non-issuance of a notice of coverage.

NESTLE PHILIPPINES, INC. vs. UNIWIDE SALES

Under the doctrine of primary administrative jurisdiction, courts will not determine a controversy where the issues for resolution demand the exercise of sound administrative discretion requiring the special knowledge, experience, and services of the administrative tribunal to determine technical and intricate matters of fact.

            In other words, if a case is such that its determination requires the expertise, specialized training, and knowledge of an administrative body, relief must first be obtained in an administrative proceeding before resort to the court is had even if the matter may well be within the latter's proper jurisdiction.

            The objective of the doctrine of primary jurisdiction is to guide the court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court.

EXEMPTION to Doctrine of Primary Jurisdiction

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner, vs. COMMISSION ON AUDIT

The doctrine of primary jurisdiction would ordinarily preclude us from resolving the matter, which calls for a ruling to be first made by the Board.  It is the latter that is vested by law with exclusive and original jurisdiction to settle any dispute arising under RA 8291, as well as other matters related thereto.

However, both the GSIS and respondents have extensively discussed the merits of the case in their respective pleadings and did not confine their arguments to the issue of jurisdiction.  Respondents, in fact, submit that we should resolve the main issue on the ground that it is a purely legal question. Respondents further state that a remand of the case to the Board would merely result in unnecessary delay and needless expense for the parties.

GREGORIO VIGILAR SEC. of DPWH VS. ARNULFO AQUINO

There is a question of law when the doubt or difference arises as to what the law is on a certain state of facts, and not as to the truth or the falsehood of alleged facts. Said question at best could be resolved only tentatively by the administrative authorities. The final decision on the matter rests not with them but with the courts of justice.

Geraldine Gaw Guy vs. The Board of Commissioners of the Bureau of immigration

Judicial intervention, however, should be granted in cases where the claim of citizenship is so substantial that there are reasonable grounds to believe that the claim is correct in deportation proceeding.

DOCTRINE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES

NEW SUN VALLEY HOMEOWNERS' ASSOCIATION vs. SB BRGY. SUN VALLEY PARANAQUE

The doctrine of exhaustion of administrative remedies is a cornerstone of our judicial system.  The thrust of the rule is that courts must allow administrative agencies to carry out their functions and discharge their responsibilities within the specialized areas of their respective competence. The rationale for this doctrine is obvious.  It entails lesser expenses and provides for the speedier resolution of controversies.  Comity and convenience also impel courts of justice to shy away from a dispute until the system of administrative redress has been completed.

ARLIN OBIASCA VS. JEANE BASALLOTE

The doctrine of exhaustion of administrative remedies requires that, for reasons of law, comity and convenience, where the enabling statute indicates a procedure for administrative review and provides a system of administrative appeal or reconsideration, the courts will not entertain a case unless the available administrative remedies have been resorted to and the appropriate authorities have been given an opportunity to act and correct the errors committed in the administrative forum. In Orosa v. Roa, the Court ruled that if an appeal or remedy obtains or is available within the administrative machinery, this should be resorted to before resort can be made to the courts. While the doctrine of exhaustion of administrative remedies is subject to certain exceptions, these are not present in this case.

EXEMPTION

REPUBLIC vs. CARLITO LACAP

Nonetheless, the doctrine of exhaustion of administrative remedies and the corollary doctrine of primary jurisdiction, which are based on sound public policy and practical considerations, are not inflexible rules. There are many accepted exceptions, such as:

(a) where there is estoppel on the part of the party invoking the doctrine;

(b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction;

 (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant;

(d) where the amount involved is relatively small so as to make the rule impractical and oppressive;

 (e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice;

(f) where judicial intervention is urgent;

(g) when its application may cause great and irreparable damage;

(h) where the controverted acts violate due process;

(i) when the issue of non-exhaustion of administrative remedies has been rendered moot;

(j) when there is no other plain, speedy and adequate remedy;

(k) when strong public interest is involved; and,

(l) in quo warranto proceedings. Exceptions (c) and (e) are applicable to the present case.

KHRISTINE REA REGINO VS. PANGASINAN COLLEGES OF SCIENCE AND TECHNOLOGY

Petitioner is not asking for the reversal of the policies of PCST. Neither is she demanding it to allow her to take her final examinations; she was already enrolled in another educational institution. A reversal of the acts complained of would not adequately redress her grievances; under the circumstances, the consequences of respondents' acts could no longer be undone or rectified.

Second, exhaustion of administrative remedies is applicable when there is competence on the part of the administrative body to act upon the matter complained of. Administrative agencies are not courts; they are neither part of the judicial system, nor are they deemed judicial tribunals. Specifically, the CHED does not have the power to award damages. Hence, petitioner could not have commenced her case before the Commission.

Third, the exhaustion doctrine admits of exceptions, one of which arises when the issue is purely legal and well within the jurisdiction of the trial court. Petitioner's action for damages inevitably calls for the application and the interpretation of the Civil Code, a function that falls within the jurisdiction of the courts.