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DIRECTOR OF LANDS VS FUNTILLAR G.R. No. L-68533 May 23, 1986

FACTS:

This is a petition to review the decision of the respondent court which affirmed the adjudication by the land registration court of a parcel of land in favor of the private respondents. The land was part of the property originally belonging to one Candida Fernandez whose ownership and possession began sometime during her lifetime and extended until 1936 when she died. Sometime in 1940 or 1941, the parcel of land was forfeited in favor of the government for failure to pay real estate taxes. However, the same was redeemed in 1942 by Vitaliano Aguirre, one of the three children of Candida Fernandez, who was then the administrator of the property. A final deed of sale was executed by the Provincial Treasurer in favor of Vitaliano Aguirre. The heirs of Candida Fernandez later partitioned the property among themselves. The particular lot now was adjudicated in favor of the applicants-respondents. In 1972, private respondents, who were the grandchildren of Fernandez, applied for the registration of a parcel of land. The Director of Lands and Director of Forest Development filed an opposition alleging that neither applicants nor their predecessor-in-interest possessed sufficient title to the land; that neither applicants, nor their predecessors have been in open, continuous, exclusive and notorious possession and occupation of the land for at least thirty (30) years immediately preceding the filing of the application; and that the land is a portion of the public domain belonging to the Republic of the Philippines.

The fact of possession is bolstered by the forfeiture in 1940 of the land in favor of the government. It would be rather absurd under the circumstances of this case to rule that the government would order the forfeiture of property for non-payment of real estate taxes if the property is forest land. It is also reasonable to rule that the heirs of Candida Fernandez redeemed the property because they wanted to keep the land of the deceased in the possession of their family, thus continuing prior possession. From 1936 and earlier up to 1972 is more than the required period. 2 ARRADAZA VS CA & LARRAZABAL

ISSUE: Whether or not private respondents have established possession for at least thirty years to entitle them to confirmation of imperfect title and registration under the law

HELD: Yes. Long before Candidas death in 1936, she already possessed the disputed property. This possession must be tacked to the possession of her heirs, through administrator Vitaliano Aguirre, and later to the possession of the private respondents themselves, who are Candida's grandchildren.

G.R. No. 50422 February 8, 1989 FACTS: The petitioners were the legitimate children of spouses Ignacio Arradaza and Marcelina Quirino who died on August 31, 1974 and sometime in July 1944, respectively. In 1941, Ignacio Arradaza and Marcelina Quirino purchased from spouses Gervacio Villas and Jovita Tabudlong a piece of land. The deed of sale was lost during the war and Original Certificate of Title No. 35901 was therefore issued in the name of Gervacio Villas and Jovita Tabudlong but they recognized the vendee spouses as the real owners of the land. On October 21, 1947,Ignacio Arradaza sold the same land to Estelita Magalona Bangloy. She took over possession of the land, declared it for taxation purpose and paid taxes thereon. On February 13, 1963 while the land was still in the name of spouses Villas, Larrazabal purchased the property from Estelita Magalona Bangloy which was evidenced by a "Deed of Sale of a Parcel of Land" executed in favor of Larrazabal. Original Certificate of Title No. 35901 was cancelled and Transfer Certificate of Title No. 4581 was issued in the name of private respondent and the land was declared for taxation purposes. On January 18, 1975, petitioners filed an action against private respondent before the CFI of Leyte to recover their pro-indiviso one-half (1/2) share of the land as heirs of Ignacio Arradaza and Marcelina Quirino, and to exercise the right of legal redemption over one-half (1/2) of the property sold by their deceased father while he was already a widower on October 21, 1947. Private respondent on the other hand, maintains that prescription has set in because the predecessors-ininterest of petitioners were not registered owners protected by Act 496, He asserts that when the transaction occurred on October 21, 1947 the Code of Civil Procedure was still in force. The prescriptive period was only ten (10) years irrespective of the good or bad faith of Estelita M. Bangloy. The trial court rendered a Summary Judgment in favor of the private respondent which was affirmed by the Court of Appeals. Hence, this petition. ISSUE:

Whether or not the action of petitioners has prescribed and is barred by the statute of limitations HELD: Yes. On the issue of prescription, the Court has ruled in numerous decisions that an action for recovery of title, or possession of, real property or an interest therein can only be brought within ten (10) years after the cause of action accrues. In the instant case, the cause of action for reconveyance must be deemed to have occurred on October 21, 1947 when the deed of sale in favor of Estelita M. Bangloy who immediately took possession of the land was executed. In the same manner, petitioners' action is inevitably barred by the equitable principle of laches. Petitioners were aware that the land was in the actual possession of private respondent and his predecessorin-interest, but did nothing to immediately claim it or verify the status of their possession. The Court finds it unbelievable that in the span of more than twenty-seven (27) years, the petitioners would not have taken any step to verify the status of the land of their father which had been in the possession of private respondents during all that time. 3 DAVID VS BANDIN

G.R. No. L-48322 April 8, 1987 FACTS: During their lifetime, the spouses Juan Ramos and Fortunate Calibo, were the owners of two parcels of land; the Talon Property and Laong property. Both spouses died intestate, leaving as heirs two legitimate children, Candida and Victoriana Ramos, and granddaughter, Agapita Ramos, daughter of their deceased Sora Anastacio. Candida and Victoriana died intestate on February 16, 1955 and December 12,1931, respectively. Candida Ramos; her niece, Agapita Ramos; and her nephew, Eulogio Bandin, sold a portion of the Talon property to the spouses Rufino 0. Miranda and Natividad Guinto. This portion was divided into three lots. Parcel 1 was subsequently sold to Narciso Velasquez and Albino Miranda. Parcels 2 and 3 were subsequently sold to Jose Ramirez and Sotero Ramirez, repectively, who registered these properties and obtained OCT Nos. 2027 and 2029 in their respective names. The remaining portion of the Talon property was extrajudicially partitioned on September 17, 1955 among the heirs of Candida Ramos and was subdivided in seven lots. Lot 5 was given to Victoria Martin, who was able to register the land and was issued OCT No. 3706. Lot 6 was given to Maximina Martin, who also was able to register the land and was issued OCT No. 3707. A portion of these lots were subsequently sold to Magno de la Cruz who was able to obtain TCT. The Laong property was sold by Candida Ramos and her children on December 19, 1943 to Hermogenes Lucena, husband of Juanita Martin, one of

the daughters of Candida. On September 23, 1959, Juanita (then widowed) sold the property to the spouses Gregorio and Mary Venturanza. On January 21, 1965, the Venturanzas, in a deed of sale also signed by Juanita Martin, conveyed a portion of the property to the spouses Felipe and Antonia David. Juanita Martin was able to register the property in her name and was issued OCT No. 8916 on July 1, 1971. On June 14, 1963, respondents, who were the heirs of Victoriana except for Agapita, filed a complaint for the recovery and partition of property. A decision was rendered by the trial court, in favor of the plaintiffs, declaring, however, that certain properties could no longer be reconveyed to plaintiffs since they had been transferred to purchasers who bought them in good faith for value. Not satisfied with the decision, both plaintiffs and defendants appealed to the Court of Appeals which nullified the transfers made to the defendants who were declared by the trial court as purchasers in good faith. ISSUES: 1. Whether or not private respondents' claim is barred by prescription 2. Whether or not petitioners were buyers in good faith HELD: 1. No. Respondents claim is not barred by laches and prescription since it was not shown that they were guilty of negligence or slept on their rights. They sent a letter of demand to the heirs of Candida Ramos on April 23, 1963, and filed their complaint against them on June 14, 1963, or within a period of approximately eight (8) years from Candida's death. 2. G.R. No. L-48322: Petitioners Felipe David and Antonia G. David were buyers in bad faith. They bought the property when it was still unregistered land. The defense of having purchased the property in good faith may be availed of only where registered land is involved and the buyer had relied in good faith on the clear title of the registered owner. One who purchases an unregistered land does so at his peril His claim of having bought the land in good faith, i.e. without notice that some other person has a right to, or interest in, the property, would not protect him if it turns out that the seller does not actually own the property. G.R.No. L-49867: The court held that petitioners Jose Ramirez and the heirs of Ambrocia P. Vda. de Ramirez (widow of Sotero Ramirez), were not purchasers in good faith, not having made diligent investigation of the true ownership of the properties they bought, but relied merely on the tax declaration shown to them by the seller, Rufino Miranda. The issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is registered land and the purchaser is buying the same from the registered owner, whose title to the land is clean. In such case, the purchaser who relies on the clean title of the registered owner is protected if he is a

purchaser in good faith for value. In the instant case, what petitioners bought were unregistered lands. G.R. No. L-49712: Petitioner Magno de la Cruz was a purchaser in good faith. The property purchased by him from Victoria Martin and Maximina Martin were registered lands, covered by Torrens title. Being a purchaser in good faith for value, Magno de la Cruz is protected by the law. In the absence of a showing that he had actual notice of the defect in the title of the vendors or that he is a buyer in bad faith the deed of sale in his favor and the corresponding certificate of title issued in his name cannot be nullified and cancelled. 4 GALLARDO VS. INTERMEDIATE APPELLATE COURT G.R. No. 67742; Oct. 29, 1987 5 BUENAVENTURA VS. COURT OF APPEALS

which would invalidate, or even affect, the Deeds of Sale. Indeed, there is no requirement that the price be equal to the exact value of the subject matter of sale. All the respondents believed that they received the commutative value of what they gave.

FRANCISCO VS. CA

FACTS OF THE CASE: Records show that Francisco Lim, entered into a contract of lease with Benito Dy for a period of 3 years, from 1976 to 1979. After the stipulated term expired the respondent refused to leave the premises, so Francisco Lim filed an ejectment suit against Benito Dy. This case was then taken over by a judicially approved compromise agreement which provides an automatic increase in rent of 20% every 3 years. On 1985 Dy, informed Lim of his intention to renew the lease up to 1988, Lim did not agree to the renewal. In 1987 another ejectment suit was filed by Lim after the failure of Dy to vacate the premises. It was dismissed by the RTC and later affirmed by the CA for the following reasons: (1) the stipulation in the compromise agreement which allows the lessee (Benito Dy) to stay on the premises as long as he needs it and can pay rents is valid, being a resolutory condition, and therefore beyond the ambit of art 1308 of the NCC; and (2) the compromise agreement has the effect of res judicata. ISSUES OF THE CASE:

FACTS: Sought to be declared null and void ab initio are certain deeds of sale of real property executed by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children. The petitioners contend that there was no actual valid consideration and that assuming that there was consideration in the sums reflected the properties are more than three-fold times more valuable than the small sums appearing therein. The RTC ruled in favor of the defendants and dismissed the case. RTCs ruling was affirmed by CA. Hence the appeal. ISSUE: Whether or not there was a valid consideration in the deeds of sale HELD: If there is a meeting of the minds of the parties as to the price, the contract of sale is valid, despite the manner of payment, or even the breach of that manner of payment. If the real price is not stated in the contract, then the contract of sale is valid but subject to reformation. Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence. Article 1470 of the Civil Code further provides:Gross inadequacy of price does not affect a contract of sale, except as may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract. Petitioners failed to prove any of the instances mentioned in Articles 1355 and 1470 of the Civil Code

Was the stipulation in the compromise agreement which allows the lessee to stay on the premises as long as he needs it and can pay rents is valid? - No, since the stipulation for as long as the defendant needed the premises and can meet and pay said increases is a purely potestative condition because it leaves the effectivity and enjoyment of leasehold rights to the sole and exclusive will of the lessee. - The continuance, effectivity, and fulfillment of a contract of lease cannot be made to depend exclusively upon the free and uncontrolled choice of the lessee between continuing payment of the rentals or not, completely depriving the owner of any say in the matter. Mutuality does not obtain in such a contract of lease and no equality exists between the lessor and the lessee. 7 MATEO VS. DIAZ

G.R. No. 137305; Jan. 17, 2002 FACTS: The petitioners, are the sons of Simeona Manuel-Matias and her husband, in her second marriage, Claro Mateo.

The respondents, are the children of the petitioners' half-sisters. Both parties are after the 11-hectare land with OCT no. 206 under the name of Claro Mateo, married to Simeona Mateo. On February 15, 1979, in San Carlos City, Pangasinan, the brothers Quirino Mateo and Matias Mateo executed a DEED OF EXTRA-JUDICIAL PARTITION whereunder they partitioned between themselves alone, to the exclusion of their half-sisters Cornelia Mateo-Diaz and Felisa Mateo-Policarpio, that 11-hectare parcel of Riceland covered by OCT No. 206. It was not explained if, at the time the brothers executed the deed, any or both of their half-sisters were already dead. In any event, the deed of extra-judicial partition was duly published in a daily newspaper, the Balita. It was through this publication that the respondents found out about said partition. Hence, they filed a civil complaint of Declaration of Nullity of ExtraJudicial Partition with Damages with the CFI of Bulacan and a separate criminal complaint for falsification of documents, both against the petitioners. The CFI, now RTC, ruled in favor of the respondents. The petitioners appealed with the CA but the latter affirmed the RTC's decision. Hence, the petition for review on certiorari with the Supremen Court. ISSUE: Whether or not the prescription and the equitable principle of laches are applicable in derogation of the title of the registered owner. HELD: No, the prescription and the equitable principle of laches are applicable in derogation of the title of the registered owner. The Supreme Court held in Barcelona v. Barcelona that: The property in litigation, being registered land under the provisions of Act 496, is not subject to prescription, and it may not be claimed that imprescriptibility is in favor only of the registered owner, because as we have held in the cases of Teofila de Guinoo, et al., v. Court of Appeals, (97 Phil. 235) and Gil Atun, et al., v. Eusebio Nuez (97 Phil. 762), prescription is unavailing not only against the registered owner, but also against his hereditary successors because the latter merely step into the shoes of the decedent by operation of law and are merely the continuation of the personality of their predecessor in interest. In the present case, the land involved is registered under the Torrens system in the name of petitioners father Claro Mateo. There is no question raised with respect to the validity of the title. The factual issue now raised is that petitioners had slept on their rights and had not taken any positive step to assert their rights and interests over the land covered by OCT No. 206. The records will show that immediately after petitioners discovered the existence of OCT No. 206 in 1977 or 1978, they took steps to assert their rights thereto. They divided the land between the two of them

in an extra-judicial partition. Then petitioners filed the case below to recover ownership and possession as the only surviving children of the original owner, the late Claro Mateo. 8 FEBTC V. QUERMIT

G.R. No. 148582; Jan. 16, 2002 FACTS: Respondent Estrella O. Querimit worked as internal auditor of the Philippine Savings Bank (PSB) for 19 years, from 1963 to 1992. On November 24, 1986, she opened a dollar savings account in petitioner's Harrison Plaza branch,4 for which she was issued four (4) Certificates of Deposit, each certificate representing the amount of $15,000.00. The certificates were to mature in 60 days, on January 23, 1987, and were payable to bearer at 4.5% interest per annum. In January 1993, her husband died and Estrella returned to the Philippines. She went to petitioner FEBTC to withdraw her deposit but, to her dismay, she was told that her husband had withdrawn the money in deposit.Through counsel, respondent sent a demand letter to petitioner FEBTC. In another letter, respondent reiterated her request for updating and payment of the certificates of deposit, including interest earned. As petitioner FEBTC refused respondent's demands, the latter filed a complaint, joining in the action Edgardo F. Blanco, Branch Manager of FEBTC Harrison Plaza Branch, and Octavio Espiritu, FEBTC President. Petitioner FEBTC alleged that it had given respondent's late husband Dominador an "accommodation" to allow him to withdraw Estrella's deposit.

ISSUE: 1. Whether or not the petitioner had already paid the respondent.

2. Whether or not the petitioner observed the diligence required by the nature of its business.
HELD: 1. No, the PetiTiconderoga has not paid the respondent. The Supreme Court held that a certificate of deposit is defined as a written acknowledgment by a bank or banker of the receipt of a sum of money on deposit which the bank or banker promises to pay to the depositor, to the order of the depositor, or to some other person or his order, whereby the relation of debtor and creditor between the bank and the depositor is created. The principles governing other types of bank deposits are applicable to certificates of deposit, as are the rules governing promissory notes when they contain an unconditional promise to pay a sum certain of money

absolutely.The principle that payment, in order to discharge a debt, must be made to someone authorized to receive it is applicable to the payment of certificates of deposit. Thus, a bank will be protected in making payment to the holder of a certificate indorsed by the payee, unless it has notice of the invalidity of the indorsement or the holder's want of title. A bank acts at its peril when it pays deposits evidenced by a certificate of deposit, without its production and surrender after proper indorsement. As a rule, one who pleads payment has the burden of proving it. Even where the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment. In this case, the certificates of deposit were clearly marked payable to "bearer," which means, to "[t]he person in possession of an instrument, document of title or security payable to bearer or indorsed in blank." Petitioner should not have paid respondent's husband or any third party without requiring the surrender of the certificates of deposit. 2. No, the petitioner bank did not observe the proper dilI gence required by the nature of its business. The Supreme Court held that the business of banks is impressed with public interest, the degree of diligence required of banks is more than that of a good father of the family or of an ordinary business firm. The fiduciary nature of their relationship with their depositors requires them to treat the accounts of their clients with the highest degree of care. A bank is under obligation to treat the accounts of its depositors with meticulous care whether such accounts consist only of a few hundred pesos or of millions of pesos. Responsibility arising from negligence in the performance of every kind of obligation is demandable. In the present case, Petitioner failed to prove payment of the subject certificates of deposit issued to the respondent and, therefore, remains liable for the value of the dollar deposits indicated thereon with accrued interest. 9 DBP V. CA AND CAJES G.R. No. 129471; april 28, 2000 FACTS: The land in dispute consisting of 19.4 hectares was originally owned by Ulipiano Mumar, whose ownership since 1917 was evidenced by Tax Declaration No. 3840. In 1950, Mumar sold the land to respondent Cajes who was issued Tax Declaration No. R-1475 that same year. Cajes occupied and cultivated the said land. In 1969, unknown to Cajes, Jose Alvarez succeeded in obtaining the registration of a parcel of land with an area of 1,512, 468.00 square meters, in his name for which he was issued OCT No. 546 on June 16,

1969. The parcel of land included the 19.4 hectares occupied by respondent. Alvarez never occupied nor introduced improvements on said land. In 1972, Alvarez sold the land to the spouses Gaudencio and Rosario Beduya to whom TCT No. 10101 was issued. That same year, the spouses Beduya obtained a loan from petitioner DBP for P526,000.00 and, as security, mortgaged the land covered by TCT No. 10101 to the bank. In 1978, the SAAD Investment Corp., and the SAAD Agro-Industries, Inc., represented by Gaudencio Beduya, and the spouses Beduya personally executed another mortgage over the land in favor of DBP to secure a loan of P1,430,000.00. The spouses Beduya later failed to pay their loans, as a result of which, the mortgage on the property was foreclosed and sold to DBP as the highest bidder. As the spouses Beduya failed to redeem the property, DBP consolidated its ownership. It appears that Cajes had also applied for a loan from DBP in 1978, offering his 19.4 hectare property under Tax Declaration No. D-2247 as security for the loan. Cajes loan application was later approved. However, it was found that the land mortgaged by Cajes was included in the land covered by TCT No. 10101 in the name of the spouses Beduya. DBP, therefore, cancelled the loan and demanded immediate payment of the amount. Cajes paid the loan to DBP for which the former was issued a Cancellation of Mortgage releasing the property in question from encumbrance. DBP asked Cajes to vacate the property. As the latter refused to do so, DBP filed a complaint for recovery of possession with damages against him. The RTC of Tagbilaran City declared DBP the lawful owner of the entire land covered by TCT No. 10101 on the ground that the decree of registration was binding upon the land. ISSUE: Who has better right to the land in dispute, DBP or Cajes?

HELD: Cajes has better right. In the present case, Cajes has been in actual, open, peaceful and continuous possession of the property since 1950. His claim based on actual occupation of the land is bolstered by the Tax Declarations issued in his name. Together with his actual possession of the land, these tax declarations constitute strong evidence of ownership of the land occupied by him. More importantly, it was established that respondent, having been in possession of the land since 1950, was the owner of the property when it was registered by Jose Alvarez in 1969, his possession tacked to that of his predecessor-in-interest, Mumar, which dates back to 1917. Clearly, more than 30 year had elapsed before a decree of registration was issued in favor of Alvarez. This uninterrupted adverse possession of the land for more than 30 years could only

ripen into ownership of the land through acquisitive prescription which is a mode of acquiring ownership and other real rights over immovable property. Prescription requires public, peaceful, uninterrupted and adverse possession of the property in the concept of an owner for ten (10) years, in case the possession is in good faith and with a just title. Accordingly, the land in question must be reconveyed in favor of Cajes, the true and actual owner thereof, reconveyance being clearly the proper remedy in this case.

Villamor spouses brought the petition for review on certiorari before the Supreme Court. ISSUE: Whether or not the Deed of Option whereby the private respondents agreed to sell their lot to petitioners is valid. HELD: No. An optional contract is a privilege existing in one person, for which he had paid a consideration and which gives him the right to buy, for example, certain merchandise or certain specified property, from another person, if he chooses, at any time within the agreed period at a fixed price . The deed of option entered into by the parties in the present case had unique features. The first part covered the statement on the sale of the 300 sq. m. portion of the lot to Spouses Villamor at the price of P70 per sq. m. which was higher than the actual reasonable prevailing value of the lands in that place at that time (of sale). The second part stated that the only reason why the Villamor spouses agreed to buy the said lot at a much higher price is because the vendor also agreed to sell to the Villamors the other half-portion of 300 square meters of the land. Had the deed stopped there, there would be no dispute that the deed is really an ordinary deed of option granting the Villamors the option to buy the remaining 300 sq. m.-half portion of the lot in consideration for their having agreed to buy the other half of the land for a much higher price. But, the deed of option went on and stated that the sale of the other half would be made whenever the need of such sale arises, either on our part or on the part of the Spouses Julio Villamor and Marina V. Villamor. It was not only the Villamors who were granted an option to buy for which they paid a consideration. The Reyes as well were granted an option to sell should the need for such sale on their part arise. 11 PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE COMPANY VS. VALENCIABAGALACSA [GR 139776, 1 August 2002] FACTS: On 20 June 1995, Eduardo, Celso and Ruben Z. Lumaniog, as legitimate children and forced heirs of their late father, Faustino Lumaniog, filed with the Regional Trial Court of Libmanan, Camarines Sur, a complaint for recovery of sum of money against the Philippine American Life and General Insurance Company (Philamlife) alleging that: their father was insured by Philamlife under Life Insurance Policy1305486 with a face value of P50,000.00; their father died of coronary thrombosis" on 25 November 1980; on 22 June 1981, they claimed and continuously claimed for all the proceeds and interests under the life insurance policy in

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VILLAMOR VS. CA

[G.R. No. 97332. October 10, 1991.] FACTS: Macaria Labingisa Reyes was the owner of a 600-square meter lot located at Baesa, Caloocan City (TCT [18431] 18938, Register of Deeds of Rizal). In July 1971, Macaria sold a portion of 300 sq. ms. of the lot to the Spouses Julio and Marina Villamor for the total amount of P21,000.00. Earlier, Macaria borrowed P2,000.00 from the spouses which amount was educted from the total purchase price of the 300 sq. m. Lot sold. The portion sold to the Villamor spouses is now covered by TCT 39935 while the remaining portion which is still in the name of Macaria Labingisa- is covered by TCT 39934. On 11 November 1971, Macaria executed a Deed of option in favor of Villamor in which the remaining 300 sq. m. portion (TCT No. 39934) of the lot would be sold to Villamor under the conditions stated therein. According to Macaria, when her husband, Roberto Reyes, retired in 1984, they offered to repurchase the lot sold by them to the Villamor spouses but Marina Villamor refused and reminded them instead that the Deed of Option in fact gave them the option to purchase the remaining portion of the lot. The Villamors, on the other hand, claimed that they had expressed their desire to purchase the remaining 300 sq. m. portion of the lot but the Reyes had been ignoring them. On 13 July 1987, after conciliation proceedings in the barangay level failed, the Villamors filed a complaint for specific performance against the Reyes before the RTC Caloocan City (Branch 121, Civil Case C-12942). On 26 July 1989, judgment was rendered by the trial court in favor of the Villamor spouses, ordering the Reyeses to sell the land to the Villamors, to pay the the latter the sum of P3,000 as attorneys fees, and to pay the cost of suit. The court dismissed the counterclaim for lack of merit. Not satisfied with the decision of the trial court, the Reyes spouses appealed to the Court of Appeals (CA-GR CV 24176). On 12 February 1991, the Court of Appeals rendered a decision reversing the decision of the trial court and dismissing the complaint. The reversal of the trial courts decision was premised on the finding of respondent court that the Deed of Option is void for lack of consideration. The

the amount of P641,000.00, despite repeated demands for payment and/or settlement of the claim due from Philamlife, the last of which is on 1 December 1994, Philamlife finally refused or disallowed said claim on 14 February 1995; and so, they filed their complaint. Philamlife filed an Answer with Counterclaim and Motion to Dismiss, contending that the cause of action had prescribed and that the Lumaniogs are guilty of laches; that it had denied the latter's claim in a letter dated 12 March 1982, signed by its then Assistant Vice President, Amado Dimalanta, on ground of concealment on the part of the deceased insured Faustino when he asserted in his application for insurance coverage that he had not been treated for indication of "chest pain, palpitation, high blood pressure, rheumatic fever, heart murmur, heart attack or other disorder of the heart or blood vessel" when in fact he was a known hypertensive since 1974; that the Lumaniogs sent a letter dated 25 May 1983 requesting for reconsideration of the denial; in a letter dated 11July 1983, it reiterated its decision to deny the claim for payment of the proceeds; more than 10 years later, or on 1 December 1994, it received a letter from Jose C. Claro, a provincial board member of the province of Camarines Sur, reiterating the early request for reconsideration which it denied in a letter dated 14 February 1995. The Lumaniogs opposed the motion to dismiss. On 7 June 1996, the RTC issued an Order as to the necessity of trial on merits. Philamlife's motion for reconsideration was denied by the RTC in its Order dated 22 December 1997 upholding however in the same Order the claim of the Lumaniogs' counsel that the running of the 10-year period was "stopped" on 25 May 1983 when they requested for a reconsideration of the denial and it was only on 14 February 1995 when Philamlife finally decided to deny their claim that the 10year period began to run. Philamlife filed a petition for certiorari (CA-GR 47885) in the Court of Appeals and after the comment of the Lumaniogs and reply of Philamlife, the appellate court rendered its Decision, dated 30 April 1999, dismissed the petition for lack of merit. Philamlife filed the petition for review on certiorari. ISSUE: Whether the complaint filed by the Lumaniogs for payment of life insurance proceeds is already barred by prescription of action, or whether an extrajudicial demand made after an action has prescribed shall cause the revival of the action. HELD: Philamlife had specifically alleged in the Answer that it had denied the Lumaniogs' claim per its letter dated 11 July 1983. Hence, due process demands that it be given the opportunity to prove that the Lumaniogs had received said letter. Said letter is crucial to Philamlife's defense that the filing of the complaint for recovery of sum of money in June 1995 is beyond the 10-year rescriptive period. The RTC committed a grave

abuse of discretion when, in resolving the motion for reconsideration of Philamlife, it arbitrarily ruled in its Order dated 12 December 1997, that the period of 10 years had not yet lapsed. It based its finding on a mere explanation of the Lumaniogs' counsel and not on evidence presented by the parties as to the date when to reckon the prescriptive period. The ruling of the RTC that the cause of action of the Lumaniogs had not prescribed, is arbitrary and patently erroneous for not being founded on evidence on record, and therefore, the same is void. Consequently, while the Court of Appeals did not err in upholding the 7 June 1986 Order of the RTC, it committed a reversible error when it declared that the RTC did not commit any grave abuse of discretion in issuing the Order dated 12 December 1997. The Supreme Court thus partially granted the petition, setting aside the decision of the Court of Appeals dated 30 April 1999 insofar only as it upheld the RTC Order dated 12 December 1997. A new judgment was entered reversing and setting aside the Order dated 12 December 1997 of the Regional Trial Court of Libmanan, Camarines Sur (Branch 56) and affirming its Order dated 20 June 1995. Said RTC was directed to proceed with dispatch with Civil Case L-787. 12 BASA V. REPUBLIC

G.R. NO. 45277; AUGUST 5, 1985 FACTS: In a demand letter dated August 31, 1967, the Commissioner of Internal Revenue assessed against Augusto Basa deficiency income taxes for 1957 to 1960 totalling P16,353.12.[*] As may be noted, the deficiencies were based on the taxpayer's failure to report in full his capital gains on the sales of land. This omission or underdeclaration of income justified the imposition of 50% surcharge. The taxpayer did not contest the assessments in the Tax Court. On the assumption that the assessments had become final and incontestable, the Commissioner on September 3, 1975 sued the taxpayer in the Manila Court of First Instance for the collection of said amount. The trial court in a decision dated April 20, 1976 affirmed the assessments and ordered Basa to pay P16,353.12 plus 5% surcharge and one percent monthly interest from August 31, 1967 to August 31, 1970. Instead of appealing to this Court directly, Basa tried to appeal, to the Court of Appeals. He did not perfect his appeal within the reglementary period. The trial court dismissed it in its order dated October 1, 1976. On December 23, 1976 Basa filed the instant special civil action of certiorari wherein he assailed the trial court's decision.

ISSUE: Whether the decision of the Court of First Instance of Manila (not the Tax Court) in an income tax case is reviewable by the Appellate Court or by this
Court.

HELD: Yes In Art 1150 CC The time for prescription of all kinds of actions, when there in no special provision which ordains otherwise, shall be counted from the day they may be brought. Art 1149 CC Period of prescription is 5 years from the right of action accrues. The action has long prescribed because she married Arturo Tolentino on April 21, 1945; Civil Code took effect on August 30, 1950; She acquired knowledge that Consuelo David was still using the surname Tolentino in 1951. She should have filed the case after she obtained knowledge that Consuelo David was still using the surname Tolentino. The case was filed on November 23, 1971 or 20 years after she obtained knowledge. 16 17 18 L D P

HELD: The issue of prescription raised by him is baseless. The assessments were predicated on the fact that his income tax returns, if not fraudulent, were false because he underdeclared his income. In such a case, the deficiency assessments may be made within ten years after the discovery of the falsity or omission. The court action should be instituted within five years after the assessment but this period is suspended during the time that the Commission is prohibited from instituting a court action. As explained in the Solicitor General's memorandum, Basa's requests for reinvestigation tolled the prescriptive period of five years within which court action may be brought (Commissioner of Internal Revenue vs. Capital Subdivision, Inc., 119 Phil. 1051; Collector of Internal Revenue vs. Suyoc Consolidated Mining Company, 104 Phil. 819). Moreover, the issue of prescription should have been raised in the Tax Court.

13 14

REPUBLIC VS. RICARTE 19 20

15

TOLENTINO VS. CA 21 22 PNB VS. CA

FACTS: Private respondent Consuelo David married Arturo Tolentino in 1931. The marriage was dissolved and terminated in 1943 pursuant to the law during the Japanese occupation by a decree of absolute divorce on the grounds of desertion and abandonment by the wife for at least 3 continuous years. Arturo Tolentino then married Pilar Adorable but she died soon after the marriage. After that, Constancia married Arturo Tolentino on April 21, 1945 and they had 3 children. Constancia Tolentino is the present legal wife of Arturo Tolentino. Consuelo David continued using the surname Tolentino after the divorce and up to the time that the complaint was filed. Her usage of the surname Tolentino was authorized by the family of Arturo Tolentino (brothers and sisters). In RTC, Consuelo David should discontinue her usage of the surname of Tolentino. The CA decision reversed that of the RTCs. ISSUE: WON the petitioners cause of action has already prescribed

FACTS: Province of Isabela issued several checks drawn against its account with PNB (P) in favor of Ibarrola (R), as payments for the purchase of medicines. The checks were delivered to Rs agents who turned them over to R, except 23 checks amounting to P98k. Due to failure to receive full amount, R filed case against P LC, CA and SC ordered PNB to pay however, all 3 courts failed to specify the legal rate of interest 6% or 12% ISSUE: WoN the rate to be used is 6% HELD: YES! This case does not involve a loan, forbearance of money or judgment involving a loan or forbearance of

money as it arose from a contract of sale whereby R did not receive full payment for her merchandise. When an obligation arises from a contract of purchase and sale and not from a contract of loan or mutuum, the applicable rate is 6% per annum as provided in Art. 2209 of the NCC 6% from filing of complaint until full payment before finality of judgment. 12% from finality of judgment. 23 HEIRS OF LUIS BACUS, ET. AL., VS. CA

other HELD:

begin.

The petition is DENIED nad the decision of the Court of Appeals is AFFIRMED. Obligations and Contracts Terms:

FACTS: On 1984 Luis Bacus leased to Faustino Duray a parcel of agricultural land with total land area of 3,002 of square meters, in Cebu. The lease was for six years ending in 1990, the contract contained an option to buy clause. Under the said option, the lessee had the exclusive and irrevocable right to buy 2,000 square meters 5 years from a year after the effectivity of the contract, at P200 per square meter. That rate shall be proportionately adjusted depending on the peso rate against the US dollar, which at the time of the execution of the contract was 14 pesos. Close to the expiration of the contract Luis Bacus died on 1989, after Duray informed the heirs of Bacus that they are willing and ready to purchase the property under the option to buy clause. The heirs refused to sell, thus Duray filed a complaint for specific performance against the heirs of Bacus. He showed that he is ready and able to meet his obligations under the contract with Bacus. The RTC ruled in favor of the Durays and the CA later affirmed the decision. ISSUE: Can the heirs of Luis Bacus be compelled to sell the portion of the lot under the option to buy clause? - Yes, Obligations under an option to buy are reciprocal obligations. The performance of one obligation is conditioned on the simultaneous fulfillment of the other obligation. In other words, in an option to buy, the payment of the purchase price by the creditor is contingent upon the execution and delivery of the deed of sale by the debtor. - When the Durays exercised their option to buy the property their obligation was to advise the Bacus of their decision and readiness to pay the price, they were not yet obliged to make the payment. Only upon the Bacus actual execution and delivery of the deed of sale were they required to pay. - The Durays did not incur in delay when they did not yet deliver the payment nor make a consignation before the expiration of the contract. In reciprocal obligations, neither party incurs in delay if the other party does not comply or is not ready to comply in a proper manner with what is incumbent upon him. Only from the moment one of the parties fulfills his obligation, does delay by the

Reciprocal Obligations- Those which arise from the same cause, and in which each party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be performed simultaneously such that the performance of one is conditioned upon the simultaneous fulfillment of the other