Topic: Jurisdiction of RTC over land registration cases

Ponente: Estela M. Perlas-Bernabe

Nicomedes Lozada v. Eulalia Bracewell, et al.
G.R. No. 179155
02 April 2014
Facts: On December 10, 1976, Nicomedes Lozada filed an application for
registration and confirmation of title over a parcel of land which was granted
on February 23, 1989 by the RTC of Makati City, Branch 134, acting as a land
registration court. Consequently, on July 10, 1997, the Land Registration
Authority issued Decree No. N-217036 in the name of Lozada, who later
obtained an original certificate of title.
Subsequent thereto, James Bracewell, Jr. filed on February 6, 1998 a
petition for review of a decree of registration under Section 32 of PD 1529
(Property Registration Decree) before the RTC of Las Pias City claiming that
a portion of his property was fraudulently included in Decree No. N-217036.
He allegedly filed on September 19, 1963 an application for registration and
confirmation of the subject lot situated in Las Pias City, which was granted
by the RTC of Makati City on May 3, 1989.
Lozada opposed the same arguing that the Las Pias City-RTC had no
jurisdiction over a petition for review of a decree of registration under
Section 32 of PD 1529, which should be filed in the same branch of the court
that rendered the decision and ordered the issuance of the decree. He added
that his survey plan was approved in 1951 while Bracewells plan was
surveyed in 1960.
Issue: Whether or not the Las Pias City-RTC has jurisdiction over the
petition for review of Decree No. N-217036, which was issued as a result of
the judgment rendered by the RTC of Makati City, Branch 134.
SC: Yes.
Under both Act No. 496 (Land Registration Act, as amended)
which was the law in force at the time of the commencement by both parties
of their respective registration proceedings and PD 1529 (Property
Registration Decree), which updated and codified land registration laws,
jurisdiction over all applications for registration of title was conferred upon
the Courts of First Instance (now RTC) of the respective provinces or cities in
which the land sought to be registered is situated.
In this case, however, the applications of Lozada and Bracewell were
cognizable by the RTC of Makati City since during those times, there were no
RTC branches yet in Las Pias City.

Subsequently, pursuant to BP 129 (The Judiciary Reorganization Act of

1980) which took effect on August 14, 1981, the RTC of Las Pias City was
established in 1994. Hence, Bracewell filed his petition for review before the
Las Pias City-RTC in 1998, considering that the subject lot is situated in Las
Pias City.
NOTE: With the passage of PD 1529, the distinction between the
general jurisdiction vested in the RTC and the limited jurisdiction conferred
upon it as a cadastral court was eliminated. RTCs now have the power to
hear and determine all questions, even contentious and substantial ones,
arising from applications for original registration of titles to lands and
petitions filed after such registration.

Topics: Revocation of a donation with a resolutory condition;

Recovery of property
Ponente: Bienvenido L. Reyes
Philippine Woman's Christian Temperance Union, Inc. v. Teodoro R.
Yangco 2nd and 3rd Generation Heirs Foundation, Inc.
G.R. No. 199595
02 April 2014
Facts: During his lifetime, Teodoro Yangco donated a parcel of land to the
Philippine Woman's Christian Temperance Union, Inc. (PWCTUI), which was
originally registered with the SEC in 1929 under SEC Registration No. PW959. The property was intended as a home for needy and unfortunate
women and children. It was provided that should the property ceased to be
used for its intended purpose, it will revert back to Yangco or his
predecessors-in-interest.
The property was then registered in the name of PWCTUI. In 1979,
PWCTUIs corporate term expired. Five years later, using the same corporate
name, PWCTUI obtained SEC Registration No. 122088 and immediately
applied for the issuance of a new owners duplicate copy of title over the
subject property, which was granted in LRC Case No. 20970.
In 2004, Teodoro R. Yangco (2nd and 3rd Generation Heirs) Foundation,
Inc. (TRY Foundation) filed before the RTC, acting as a Land Registration
Court, a Petition for the Issuance of New Title over the subject property. It
claimed that the expiration of PWCTUIs corporate term in 1979 effectively
rescinded the donation pursuant to the resolutory condition. Being
comprised of the heirs of the donor, TRY Foundation claimed that it is entitled
to petition for the issuance of a new title in their name, docketed as LRC
Case No. Q-18126(04), pursuant to Section 108 of P.D. No. 1529.
PWCTUI opposed the same arguing, among others, that: TRY
Foundation has no legal personality to bring the action because the donation
has never been revoked and any right to demand for its revocation already
prescribed; although PWCTUIs corporate term was not extended upon its
expiration in 1979, it nonetheless registered anew and continued the
operations, affairs and social work of the corporation; and it also continued to
possess the property and exercised rights of ownership over it.
Issue: Whether or not the subject property should revert to TRY Foundation.
SC: No.

The petition filed by TRY Foundation was a disguised complaint

for revocation of donation: TRY Foundation is actually seeking to recover
the possession and ownership of the subject property from PWCTUI and not
merely the cancellation of PWCTUIs title over the subject property. No
judgment proclaiming TRY Foundation as the absolute owner of the property
can be arrived at without declaring the deed of donation revoked.
An action which seeks the recovery of property is outside the
ambit of Section 108 of P.D. No. 1529 because of the following
reasons:
(1) Whether the donation merits revocation and consequently effect
reversion of the donated property to the donor and/or his heirs cannot be
settled by filing a mere petition for cancellation of title under Section 108 of
P.D. No. 1529;
(2) TRY Foundations exposed action for revocation of the donation
necessarily includes a claim for the recovery of the subject property. The
petition of TRY Foundation had the effect of reopening the decree of
registration in the earlier LRC Case No. 20970 which granted PWCTUIs
application for the issuance of a new owners duplicate copy of title. As such,
it breached the caveat in Section 108 of P.D. No. 1529 that this section shall
not be construed to give the court authority to reopen the judgment or
decree of registration;
(3) The petition of TRY Foundation also violated that portion in Section
108 stating that all petitions or motions filed under this section as well as
any other provision of this decree after original registration shall be filed and
entitled in the original case in which the decree of registration was entered.
The petition of TRY Foundation in LRC Case No. Q-18126(04) was clearly not
a mere continuation of LRC Case No. 20970; and
(4) The petition filed by TRY Foundation is not within the ambit of
Section 108 because the relief thereunder can only be granted if there is
unanimity among the parties, or that there is no adverse claim or serious
objection on the part of any party in interest. On the contrary, PWCTUI
maintained that it remains and continues to be the true and sole owner in
fee simple of the property and that TRY Foundation has no right thereto;
(4) The enumerated instances for amendment or alteration of a
certificate of title under Section 108 are non-controversial in nature. They are
limited to issues so patently insubstantial as not to be genuine issues. The
proceedings thereunder are summary in nature, contemplating insertions of
mistakes which are only clerical, but certainly not controversial issues.
Certainly, revocation of donation entails litigious and controversial matters

especially in this case where the condition supposedly violated by PWCTUI is

not expressly stated in the deed of donation.
Court intervention is imperative in automatic reversion: As ruled
in Vda. de Delgado v. CA (G.R. No. 125728, August 28, 2001), although
automatic reversion immediately happens upon a violation of the condition
and therefore no judicial action is necessary for such purpose, still judicial
intervention must be sought by the aggrieved party if only for the purpose of
determining the propriety of the rescission made. In addition, where the
donee denies the rescission of the donation or challenges the propriety
thereof, only the final award of the court can conclusively settle whether the
resolution is proper or not. Here, PWCTUI unmistakably refuted the allegation
that the expiration of its corporate term in 1979 rescinded the donation.

Topic: Damages
Ponente: Diosdado M. Peralta
Dr. Filoteo A. Alano v. Zenaida Magud-Logmao
G.R. No. 175540
07 April 2014
Facts: On March 1, 1988, Arnelito Logmao was brought to the East Avenue
Medical Center (EAMC) in Quezon City. The patients data sheet identified the
patient as Angelito Lugmoso of Boni Avenue, Mandaluyong. Subsequently, he
was transferred to the National Kidney Institute (NKI) where his name was
recorded as Angelito Lugmoso. Efforts were also made to locate his family by
enlisting police and media assistance.
On March 3, 1988, Arnelito was pronounced brain dead. Since his
organs were viable for donation, Dr. Filoteo Alano, Executive Director of NKI,
authorized the removal of specific organs from the body of Arnelito for
transplantation purposes, considering that the search for his relatives was
unsuccessful. Nonetheless, permission was also obtained from the MedicoLegal Office of the National Bureau of Investigation (NBI), on the assumption
that the death of Arnelito was a medico legal case.
Thereafter, a medical team removed some organs from the body of
Angelito and were later transplanted to other patients. Arnelitos body was
then transferred to La Funeraria Oro. It was there where Arnelitos relatives
discovered his body in a cheap casket after learning of the incident from the
news.
Consequently, Zenaida Magud-Logmao, the mother of Arnelito, filed a
complaint for damages against the attending physicians involved in the

incident including Dr. Alano, and several other persons. She alleged that the
defendants conspired to remove the organs of Arnelito while the latter was
still alive and that they concealed his true identity.
The trial court rendered a judgment finding only Dr. Alano liable for
damages and dismissing the complaint against the others.
Issue: Whether or not Zenaidas sufferings were brought about by Dr.
Alano's alleged negligence in granting authorization for the removal or
retrieval of the internal organs of the formers son who had been declared
brain dead.
SC: No.
Dr. Alano was not negligent because, in a Memorandum, he instructed
his subordinates to make certain that all reasonable efforts are exerted
to locate the patient's next of kin, even enumerating ways in which to ensure
that notices of the death of the patient would reach said relatives. It was also
stated that permission or authorization to retrieve and remove the internal
organs of the deceased was being given only if the provisions of the
applicable law had been complied with. Such instructions reveal that Dr.
Alano acted prudently by directing his subordinates to exhaust all reasonable
means of locating the relatives of the deceased.
Furthermore, the doctors and personnel of NKI disseminated notices of
the death of Arnelito to the media and sought the assistance of the
appropriate police authorities even before Dr. Alano issued his Memorandum.
Prior to the removal of the deceased's internal organs, the doctors concerned
sought the opinion and approval of the Medico-Legal Officer of the NBI.
Thus, the foregoing show that Dr. Alano employed reasonable means to
disseminate notifications intended to reach the relatives of the deceased.
If Zenaida failed to immediately receive notice of her son's death
because the notices did not properly state the name or identity of the
deceased, fault cannot be attributed to Dr. Alano. It was the EAMC, who had
the opportunity to ascertain the name of the deceased, who recorded the
wrong information regarding the deceased's identity to NKI. The NKI could
not have obtained the information from the patient himself because he was
already unconscious by the time he was brought to the NKI.
Finding Dr. Alano liable for damages is improper. It should be
emphasized that the internal organs of the deceased were removed
only after he had been declared brain dead; thus, the emotional
pain suffered by Zenaida due to the death of her son cannot in any
way be attributed to Dr. Alano. Neither can Zenaidas emotional

suffering at the sight of the pitiful state in which she found her
son's lifeless body be attributed to Dr. Alano's conduct.

Topics: Contract of Suretyship; Arbitration; Legal interest

Ponente: Maria Lourdes Sereno

Gilat Satellite Networks, Ltd. vs. United Coconut Planters Bank

General Insurance Co., Inc.
G. R. No. 189563
07 April 2014

Facts:
GILAT received a purchase order from One Virtual for various
telecommunications equipment, accessories, spares, services and software
US$2,128,250.00. One Virtual, to be able to pay to GILAT the promised
amount of US$1.2 Million, it obtained defendant UCPB General Insurance CO.,
Inc.s surety bond.
GILAT shipped the subject of the purchase order to One Virtual and the
same are received by the latter. Under an endorsement, the surety issued an
amendment to the surety bond correcting the expiry date from May 30, 2001
to July 30, 2001.

One Virtual failed to pay the amount of US$400,000.00 on the due date
of May 30, 2000. GILAT then wrote a demand letter to UCPB on June 5, 2000
for the payment of the said amount. Neither One Virtual nor UCPB paid. For
the succeeding payment, One Virtual also failed to pay which prompted
GILAT to send another demand letter for the payment of US$1.2 Million
guaranteed under the surety bond plus interests and expenses. UCPB failed
to settle the amount or any part of it.
GILAT then filed a complaint against UCPB to recover the amounts
supposedly covered by the surety bond, plus interests and expenses.
RTC ruled in favor of GILAT but denied its claim of interest stating that
while a surety can be held liable for interest even if it becomes more onerous
than the principal obligation, the surety shall only accrue when the delay or
refusal to pay the principal obligation is without any justifiable cause. Here,
respondent failed to pay its surety obligation because of the advice of its
principal (One Virtual) not to pay.
On appeal with the Court of Appeals, it dismissed the appeal for lack of
jurisdiction. It ordered GILAT and One Virtual to proceed to arbitration, the
outcome of which shall necessary bind the parties, including the surety,
defendant-appellant United Coconut Planters Bank General Insurance Co.,
Inc. Further, it ruled that in "enforcing a surety contract, the
complementary-contracts-construed-together doctrine finds application."
According to this doctrine, the accessory contract must be construed with
the principal agreement. CA considered the Purchase Agreement entered
into between petitioner and One Virtual as the principal contract, whose
stipulations are also binding on the parties to the suretyship. Bearing in mind
the arbitration clause contained in the Purchase Agreement, the trial courts
Decision was vacated; petitioner and One Virtual were ordered to proceed to
arbitration. Hence, this petition.
Issues: 1. Whether or not it is proper to order GILAT and One Virtual to
arbitrate;
2. Whether or not GILAT is entitled to legal interest due to the delay in
the fulfillment by UCPB of its obligation under the Suretyship Agreement.
SC: 1. No.
The Court ruled that in suretyship, a suretys liability is joint and
solidary with that of the principal debtor. This undertaking makes a surety
agreement an ancillary contract, as it presupposes the existence of a
principal contract. Nevertheless, although the contract of a surety is in
essence secondary only to a valid principal obligation, its liability to
the creditor or "promise" of the principal is said to be direct,
primary and absolute; in other words, a surety is directly and
equally bound with the principal. He becomes liable for the debt and

duty of the principal obligor, even without possessing a direct or personal

interest in the obligations constituted by the latter. Thus, a surety is not
entitled to a separate notice of default or to the benefit of excussion. It may
in fact be sued separately or together with the principal debtor.
In this case, GILAT had delivered all the goods to One Virtual and
installed them. Despite these compliances, One Virtual still failed to pay its
obligation, triggering respondents liability to petitioner as the formers
surety. In other words, the failure of One Virtual, as the principal debtor, to
fulfill its monetary obligation to petitioner gave the latter an immediate right
to pursue respondent as the surety.
An arbitration agreement, being contractual in nature, is binding
only on the parties thereto, as well as their assigns and heirs. Section 24 of
Republic Act No. 9285 is clear in stating that a referral to arbitration may
only take place "if at least one party so requests not later than the
pre-trial conference, or upon the request of both parties thereafter."
Respondent has not presented evidence to show that either petitioner or One
Virtual submitted its contesting claim for arbitration. Lastly, sureties do not
insure the solvency of the debtor, but rather the debt itself. They are
contracted precisely to mitigate risks of non-performance on the part of the
obligor. This responsibility necessarily places a surety on the same level as
that of the principal debtor. The effect is that the creditor is given the
right to directly proceed against either principal debtor or surety.
This is the reason why excussion cannot be invoked. To require the
creditor to proceed to arbitration would render the very essence of
suretyship nugatory and diminish its value in commerce.
2. No. Interest, as a form of indemnity, may be awarded to a creditor
for the delay incurred by a debtor in the payment of the latters obligation,
provided that the delay is inexcusable.
Article 2209 provides that "[i]f an obligation consists in the payment of
a sum of money, and the debtor incurs a delay, the indemnity for damages,
there being no stipulation to the contrary, shall be the payment of the
interest agreed upon, and in the absence of stipulation, the legal interest."
In this case, in order for the debtor (in this case, the surety) to be in
default, it is necessary that the following requisites be present: (1) that the
obligation be demandable and already liquidated; (2) that the debtor delays
performance; and (3) that the creditor requires the performance judicially or
extrajudicially. Thus, a surety can be held liable for interest if it fails to pay
despite demand. The delay, however, must be inexcusable. In this case
there was no proof that UCPBs delay was not justified by any circumstances.
Interest shall accrue from the time judicial or extrajudicial
demand is made on the surety.

As to the rate of interest, NACAR v. GALLERY FRAMES (August 13,

2013) had modified the guidelines established in Eastern Shipping
Lines v. CA (July 12, 1994). In the absence of an agreement as to
interests, the court is compelled to award petitioner legal interest at the rate
of 6% per annum from 5 June 2000, its first date of extra judicial demand,
until the satisfaction of the debt in accordance with the revised guidelines
enunciated in Nacar.

Topics: Act of Reconveyance; Contract of Sale v. Contract to Sell

Ponente: Estela M. Perlas-Bernabe

Spouses Roque vs. Aguado, et al.

G.R. No. 193787
07 April 2014

Facts:
On July 21, 1977, Spouses Jose Roque and Beatriz dela Cruz Roque,
and Velia R. Rivero (Rivero), Magdalena Aguilar, Angela Gonzales, Herminia
R. Bernardo, Antonio Rivero, Araceli R. Victa, Leonor R. Topacio, and Augusto
Rivero- original owners of unregistered LOT 18089- executed a Deed of
Conditional Sale of Real Property over a 1,231-sq. m. portion of Lot 18089
(subject portion) for a consideration of P30,775.00. It was agreed that Sps.
Roque shall make an initial payment of P15,387.50 upon signing, while the
remaining balance of the purchase price shall be payable upon the
registration of Lot 18089, as well as the segregation and the concomitant
issuance of a separate title over the subject portion in their names.
On August 12, 1991, Fructuoso Sabug, Jr., former Treasurer of the
National Council of Churches in the Philippines (NCCP), applied for a free
patent over the entire Lot 18089 and was eventually issued Original
Certificate of Title (OCT) No. M-59558 in his name on October 21, 1991. On
June 24, 1993, Sabug, Jr. and Rivero, in her personal capacity and in
representation of Rivero, et al., executed a Joint Affidavit acknowledging that
the subject portion belongs to Sps. Roque and expressed their willingness to
segregate the same from the entire area of Lot 18089.
Sabug, Jr., later sold Lot 18089 to Ma. Pamela Aguado, the latter
caused the cancellation of OCT No. M-5955 and the issuance of Transfer
Certificate of Title (TCT) No. M-96692 in her name. Aguado, then mortgaged
the land to Land Bank of the Philippines. The mortgage was foreclosed; the
lot was sold in a public auction to Land Bank; Aguado failed to redeem the
subject property, thus the ownership of the lot was consolidated in Land
Banks name.
Sps. Roque then filed a complaint for reconveyance, annulment of sale,
deed of real estate mortgage, foreclosure, and certificate of sale, and
damages before the RTC. NCCP filed a separate complaint also for
declaration of nullity of documents and certificates of title and damages,
docketed as Civil Case No. 05-003. It claimed to be the real owner of Lot
18089 which it supposedly acquired from Sabug, Jr. through an oral contract
of sale. RTC dismissed both complaints.
Issue: Whether or not the subject portion be reconveyed to Sps. Roque.
SC: No.
An action for reconveyance is for the purpose of transferring a property
which was wrongfully or erroneously registered in another persons name to
its rightful owner or to one with a better right. Thus, it is incumbent upon the
aggrieved party to show that he has a legal claim on the property superior to
that of the registered owner and that the property has not yet passed to the
hands of an innocent purchaser for value.

The deed of conditional sale executed between the spouses and the
Riveros are in the nature of a contract to sell and not one of sale. In this
relation, it has been consistently ruled that where the seller promises to
execute a deed of absolute sale upon the completion by the buyer of
the payment of the purchase price, the contract is only a contract to sell
even if their agreement is denominated as a Deed of Conditional Sale, as in
this case. This treatment stems from the legal characterization of a contract
to sell, that is, a bilateral contract whereby the prospective seller, while
expressly reserving the ownership of the subject property despite delivery
thereof to the prospective buyer, binds himself to sell the subject property
exclusively to the prospective buyer upon fulfillment of the condition agreed
upon, such as, the full payment of the purchase price. Elsewise stated, in a
contract to sell, ownership is retained by the vendor and is not to
pass to the vendee until full payment of the purchase price.
In this case Sps. Roque have not paid the final installment of the
purchase price. The condition which would have triggered the parties
obligation to enter into and thereby perfect a contract of sale in order to
effectively transfer the ownership of the subject portion from the sellers (i.e.,
Rivero et al.) to the buyers (Sps. Roque) cannot be deemed to have been
fulfilled. Consequently, the latter cannot validly claim ownership over the
subject portion even if they had made an initial payment and even took
possession of the same.
It is It is essential to distinguish between a contract to sell and
a conditional contract of sale specially in cases where the subject
property is sold by the owner not to the party the seller contracted with, but
to a third person, as in the case at bench. In a contract to sell, there being
no previous sale of the property, a third person buying such property
despite the fulfillment of the suspensive condition such as the full
payment of the purchase price, for instance, cannot be deemed a
buyer in bad faith and the PROSPECTIVE BUYER CANNOT SEEK THE
RELIEF OF RECONVEYANCE OF THE PROPERTY. There is no double sale
in such case. Title to the property will transfer to the buyer after registration
because there is no defect in the owner-sellers title per se, but the latter, of
course, may be sued for damages by the intending buyer.
On the matter of double sales, Sps. Roques reliance on Article 1544
of the Civil Code has been misplaced since the contract they base their
claim of ownership on is, as earlier stated, a contract to sell, and
not one of sale. The following circumstances must concur to determine the
applicability of Article 1544, none of which are obtaining in this case, viz.:
(a) The two (or more) sales transactions in issue must pertain to exactly the
same subject matter, and must be valid sales transactions;

(b) The two (or more) buyers at odds over the rightful ownership of the
subject matter must each represent conflicting interests; and
(c) The two (or more) buyers at odds over the rightful ownership of the
subject matter must each have bought from the same seller.

Topics: Trust; Nullification of Titles and Deeds of Extrajudicial

Settlement and Sale
Ponente: Bienvenido L. Reyes
Jose Juan Tong, et al vs. Go Tiat Kun, et al.
G.R. No. 196023
21 April 2014
Facts:
Herein petitioners are children of Spouses Juan Tong and Sy Un,
while respondents are heirs of Luis Juan Tong, Sr., who was one of the ten
children of the former.
Juan Tong, in 1957, decided to purchase a lot for the familys lumber
business. However, Juan Tong was disqualified to acquire one due to his
Chinese citizenship, thus he decided that to register said lot in the name of
his eldest son, Luis Sr. The acquired lot (Lot 998) was then registered in the
name of Luis, Sr., and TCT No. 10346 was issued in his name.
Juan Tong Lumber, Inc. was incorporated, but Sy Un and Juan Tong died
intestate.
After the death of Luis, Sr., herein respondents claimed ownership over
Lot 998 by succession, thus they executed a Deed of Extra-Judicial
Settlement of Estate of Luis, Sr., adjudicating unto themselves Lot 998 and
claiming that the said lot is the conjugal property of Luis, Sr., and his wife.
They subdivided Lot 998, and new titles were issued: (1) TCT No. 97068 over
Lot 998-A in the name of Go Tiat Kun and her children; and (2) TCT No. T96216 over Lot 998-B in the name of Luis, Jr.
Luis Jr. sold Lot 998-B to Fine Rock Development Corporation (FRDC),
which in turn sold the same to Visayas Goodwill Credit Corporation (VGCC). It
was only after the petitioners received a letter from VGCC, on August 31,
1995, that they discovered about the breach of the trust agreement
committed by the respondents. Petitioners then filed an action for Annulment
of Sales, Titles, Reconveyance and Damages of Lot 998-B docketed as Civil
Case No. 22730 against Luis, Jr., FRDC and VGCC. Lot 998-B was reconveyed
to petitioners.
As to Lot 998-A, Go Tiat Kun executed a Deed of Sale of Undivided
Interest of the same in favor of her children, thus a new title was issued.
Petitioners again filed the instant case for Nullification of Titles, and Deeds of
Extra-judicial Settlement and Sale and Damages.
The court in favor of petitioners, ruling that there was an implied trust
resulting between Juan Tong, Luis Sr., the petitioners and the respondents
over Lot 998; that that any right that the respondents may have over Lot
998-A would have been merely derived from that of their predecessor-ininterest, Luis Sr. Since the respondents were not the owners of Lot 998-A,
they could not appropriate the property unto themselves, much less convey
the same unto third persons. On appeal, the CA reversed and set aside the

trial courts decision, since there was an express trust was created because
there was a direct and positive act from Juan Tong to create a trust.
Issue: Whether or not there was an implied resulting trust over Lot 998
when Juan Tong purchased the property and registered it in the name of Luis,
Sr.
SC: Yes.
The principle of a resulting trust is based on the equitable doctrine
that valuable consideration and not legal title determines the equitable title
or interest and are presumed always to have been contemplated by the
parties. They arise from the nature or circumstances of the consideration
involved in a transaction whereby one person thereby becomes invested with
legal title but is obligated in equity to hold his legal title for the benefit of
another. On the other hand, a constructive trust, unlike an express trust,
does not emanate from, or generate a fiduciary relation. Constructive trusts
are created by the construction of equity in order to satisfy the demands of
justice and prevent unjust enrichment. They arise contrary to intention
against one who, by fraud, duress or abuse of confidence, obtains or holds
the legal right to property which he ought not, in equity and good
conscience, to hold.
The Court is in conformity with the finding of the trial court that an
implied resulting trust was created as provided under the first sentence of
Article 1448 which is sometimes referred to as a purchase money resulting
trust, the elements of which are: (a) an actual payment of money, property
or services, or an equivalent, constituting valuable consideration; and (b)
such consideration must be furnished by the alleged beneficiary of a
resulting trust..
In this case, the petitioners have shown that the two elements are
present in the instant case. Luis, Sr. was merely a trustee of Juan Tong and
the petitioners in relation to the subject property, and it was Juan Tong who
provided the money for the purchase of Lot 998 but the corresponding
transfer certificate of title was placed in the name of Luis, Sr.
The principle that a trustee who puts a certificate of registration in his
name cannot repudiate the trust by relying on the registration is one of the
well-known limitations upon a title. A trust, which derives its strength from
the confidence one reposes on another especially between families, does not
lose that character simply because of what appears in a legal document.

Topic: Duty and right to make funeral arrangements for the

deceased
Ponente: Jose Catral Mendoza

Valino v. Adriano et al.

G.R. No. 182894
22 April 2014

Facts:
Adriano Adriano was married to Rosario Adriano. The spouses
had three children. They, however separated-in-fact; and Adriano later
courted Valino, until they decided to live as husband and wife. Adriano
continued to provide financial support to Rosario and their children.
In 1992, Adriano died. At that time Rosario was in the US with her
children. Valino took it upon herself to shoulder the funeral and burial since
no one of his family was present. The remains were interred at the
mausoleum of the family of Valino at the Manila Memorial Park. Respondents
were not able to attend the interment. Upon knowledge of Adrianos death,
Rosario called Valino to request the delay of interment, which request was
not heeded. Thus, respondents commenced suit against Valino praying that
they be indemnified for actual, moral and exemplary damages and attorneys
fees. On her part, Valino countered by stating that Rosario and Atty. Adriano
had been separated for more than twenty (20) years before he courted her;
that throughout the time they were together, he had introduced her to his
friends and associates as his wife; that she took care of Adriano and paid for
all his medical expenses when he got seriously ill; and that it was Adrianos

last wish that his remains be interred in the Valino family mausoleum at the
Manila Memorial Park.
RTC dismissed the complaint for lack of merit. It ruled that it was Valino
who performed all the duties and responsibilities of a wife, the RTC wrote
that it could be reasonably presumed that he wished to be buried in the
Valino family mausoleum.
On appeal, the court reversed and set aside the RTC decision. CA
explained that Rosario, being the legal wife, was entitled to the custody of
the remains of her deceased husband. Citing Article 305 of the New Civil
Code in relation to Article 199 of the Family Code, it was the considered view
of the appellate court that the law gave the surviving spouse not only the
duty but also the right to make arrangements for the funeral of her husband.
For the CA, Rosario was still entitled to such right on the ground of her
subsisting marriage with Atty. Adriano at the time of the latters death,
notwithstanding their 30-year separation in fact.
Issue: Whether or not Valino is entitled to the remains of Adriano.
SC: No.
Article 305 of the Civil Code, now Article 1996 of the Family Code,
specifies the persons who have the right and duty to make funeral
arrangements for the deceased. Thus:
Art. 305. The duty and the right to make arrangements for the funeral
of a relative shall be in accordance with the order established for support,
under Article 294. In case of descendants of the same degree, or of brothers
and sisters, the oldest shall be preferred. In case of ascendants, the paternal
shall have a better right.
Article 199, on the other hand provides that: whenever two or more
persons are obliged to give support, the liability shall devolve upon the
following persons in the order herein provided: (1) The spouse; (2) The
descendants in the nearest degree; (3) The ascendants in the nearest
degree; and (4) The brothers and sisters.
Further, Article 308 of the Civil Code provides that no human remains
shall be retained, interred, disposed of or exhumed without the consent of
the persons mentioned in Articles 294 and 305. And Section 1103 of the
Revised Administrative Code provides that the immediate duty of burying the
body of a deceased person, regardless of the ultimate liability for the
expense thereof, shall devolve upon the persons herein below specified: (a) If
the deceased was a married man or woman, the duty of the burial shall
devolve upon the surviving spouse if he or she possesses sufficient means to
pay the necessary expenses; x x x.

Thus, law simply confines the right and duty to make funeral
arrangements to the members of the family to the exclusion of ones
common law partner. In this case, it is clear that the law gives the right and
duty to make funeral arrangements to Rosario, she being the surviving legal
wife of Atty. Adriano. The fact that she was living separately from her
husband and was in the United States when he died has no controlling
significance. The alleged waiver or renunciation , expressly or impliedly, of
Rosario of her right and duty to make arrangements for the funeral of her
deceased husband is baseless. The right and duty to make funeral
arrangements, like any other right, will not be considered as having been
waived or renounced, except upon clear and satisfactory proof of conduct
indicative of a free and voluntary intent to that end. While there was
disaffection between Atty. Adriano and Rosario and their children when he
was still alive, the Court also recognizes that human compassion, more often
than not, opens the door to mercy and forgiveness once a family member
joins his Creator. Notably, it is an undisputed fact that the respondents
wasted no time in making frantic pleas to Valino for the delay of the
interment for a few days so they could attend the service and view the
remains of the deceased. As soon as they came to know about Atty.
Adrianos death in the morning of December 19, 1992 (December 20, 1992
in the Philippines), the respondents immediately contacted Valino and the
Arlington Memorial Chapel to express their request, but to no avail.
It is generally recognized that the corpse of an individual is outside the
commerce of man. However, the law recognizes that a certain right of
possession over the corpse exists, for the purpose of a decent burial, and for
the exclusion of the intrusion by third persons who have no legitimate
interest in it. This quasi-property right, arising out of the duty of those
obligated by law to bury their dead, also authorizes them to take possession
of the dead body for purposes of burial to have it remain in its final resting
place, or to even transfer it to a proper place where the memory of the dead
may receive the respect of the living. This is a family right. There can be no
doubt that persons having this right may recover the corpse from third
persons.

Topic: Rescission of Contract

Ponente: Maria Lourdes Aranal-Sereno
Sangguniang Panlungsod ng Baguio City v. Jadewell Parking
Systems Corporation
GR
Nos.
160025/163052/164107/165564/172215/172216/173043/174879/181
488]
23 April 2014
Facts: The two principal parties executed a Memorandum of Agreement
(MOA) on 26 June 2000, whereby the City of Baguio authorized Jadewell to
regulate and collect parking fees for on-street parking in the city, as well as
to implement the installation of modern parking meters. The legal disputes
embodied in the nine Petitions began when the Sangguniang Panlungsod of
Baguio City revoked the MOA through City Resolution No. 037, Series of 2002

(Resolution 37), alleging substantial breach of the MOA on the part of

Jadewell. Then Mayor Alfredo Vergara vetoed the Resolution. The Sanggunian
Panlungsod overrode the veto through an unnumbered Resolution dated 17
April 2002. These twin Resolutions constitute what we call here as the first
act of Rescission of the MOA by the city officials of Baguio. Jadewell denied
the breach and commenced an action before the Regional Trial Court of
Baguio, questioning the validity of the MOAs revocation and the
Sanggunians capacity to pass a resolution revoking the MOA.
Issue: Whether or not the act of rescission is considered as valid.
SC: Yes.
At the outset that on 22 November 2006, 60 days had lapsed from
receipt of the letter dated 22 September 2006, informing Jadewell of the
decision of the City of Baguio to rescind the MOA under Section 12 thereof. It
may be recalled that Section 12 requires that notice of the intention to
rescind be given 60 days prior to the effectivity of the rescission. Jadewell
has not questioned the legal efficacy of this notice. It has brought this matter
of a second rescission to the Courts attention only as a matter of
contumacious behavior on the part of the respondents in G.R. No. 174879, in
the same way that it brought various actions of the public respondents
before the Court in its other contempt petitions. Since the legal efficacy of
the rescission in 2006 has not been contested by Jadewell in any of the
petitions before us, we thus consider this notice of rescission to have taken
legal effect and therefore, at the latest, the MOA between the City of Baguio
and Jadewell has ceased to legally exist as of 22 November 2006.
Note:
1. Jadewell has not questioned the implication of the RTC and CA Decisions to
the effect that the Sanggunian had the authority to perform acts of
contractual rescission on behalf of the City of Baguio when both these courts
ignored the issue raised by Jadewell in its Petition before the RTC, and we
therefore do not consider this to be a genuine issue in this Petition before us;
2. While the Sangguniang Panlungsod has insinuated that there was fraud
and excess of authority on the part of the mayor in the execution of the MOA
- because the latter provided for a smaller sharing of "20 % from the gross
profit of the operation or 50% of the net profit whichever is higher" instead of
the intended "20% of gross receipts,"- petitioners in G.R. No. 160025
conceded even at the RTC level that they are not assailing the MOA for being
defective but for having been breached in the performance. We thus
disregard all arguments in G.R. No. 160025 regarding the validity of the
execution of the MOA, for being a non-issue in this case;
3. The Court also immediately set aside claims of Jadewell in its Petition
before the RTC that an alternative relief should be provided by the courts in
the form of compensation for terminated Build-Operate-Transfer (BOT)
contracts under the BOT Law (Republic Act No. 6957) as there is not the

slightest basis on record that the administration of on-street parking can be

classified as an infrastructure contract, a basic element that must be present
for any contract to come within the terms of the BOT Law.

Topic: Double Sale

Ponente: Diosdado M. Peralta
Skunac Corporation v. Roberto S. Sylianteng
GR No. 205879
23 April 2014

Facts: Roberto Sylianteng and Caesar Sylianteng base their claim of

ownership over the subject lots a Deed of Absolute Sale executed in their
favor by their mother, Emerenciana Sylianteng, on June 27, 1983. Appellants
further allege that Emerenciana acquired the lots from the late Luis Pujalte
through a Deed of Sale dated June 20, 1958 as reflected in Entry No. P.E.
4023, annotated on the covering TCT, by virtue of which she was issued TCT
No. 42369. Then, when she sold the lots to appellants, TCT No. 39488,
covering the same, was issued in their names. Skunac Corporation and
Alfonso F. Enriquez, on the other hand, claim that a certain Romeo Pujalte
who was declared by the RTC of Pasig City, Branch 151 in Special
Proceedings No. 3366 as the sole heir of Luis Pujalte, caused the
reconstitution of the Mother Title resulting to its cancellation and the
issuance of TCT No. 5760-R in his favor. Romeo Pujalte then allegedly sold
the lots to Skunac and Enriquez in 1992. Thus, from TCT No. 5760-R, TCT No.
5888-R, for Lot 1 was issued in the name of Skunac, while TCT No. 5889-R for
Lot 2 was issued in the name of Enriquez.
Respondents contend that they have a better right to the lots in
question because the transactions conveying the same to them preceded
those claimed by petitioners as source of the latter's titles. Respondents
further assert that petitioners could not be considered as innocent
purchasers in good faith and for value because they had prior notice of the
previous transactions as stated in the memorandum of encumbrances
annotated on the titles covering the subject lots. Petitioners maintain that
respondents acquired the lots under questionable circumstances it appearing
that there was no copy of the Deed of Sale, between Emerenciana and Luis
Pujalte, on file with the Office of the Register of Deeds.
Issue: Whether or not petitioners are the lawful owners of the subject lots.
SC: No.
Section 4 (b), Rule 130 of the Rules of Court provides that "when a
document is in two or more copies executed at or about the same time, with
identical contents, all such copies are equally regarded as originals.
In addition, evidence of the authenticity and due execution of the subject
deed is the fact that it was notarized. The notarization of a private document
converts it into a public document. Moreover, a notarized instrument is
admissible in evidence without further proof of its due execution, is
conclusive as to the truthfulness of its contents, and has in its favor the
presumption of regularity. This presumption is affirmed if it is beyond dispute
that the notarization was regular. To assail the authenticity and due
execution of a notarized document, the evidence must be clear, convincing
and more than merely preponderant. In the present case, petitioners failed to
present convincing evidence to prove that the notarization of the subject
deed was irregular as to strip it of its public character. On the contrary, a
certified copy of page 26 of the notarial register of the notary public who
notarized the subject deed of sale, which was issued by the Records

Management and Archives Office of Manila, shows that the sale of the
subject lots by Luis to Emerenciana was indeed regularly notarized.
Petitioners, nonetheless, insist that they have valid title over the
subject properties. They trace their respective titles from that of Romeo.
Romeo, in turn, derives his supposed ownership of and title over the subject
lots from his claim that he is the sole heir of the estate of his alleged
predecessor-in-interest, Luis. Evidence, however, shows that Romeo never
became the owner of the subject properties for two reasons. First, as shown
above, the disputed lots were already sold by Luis during his lifetime.
Second, even granting that the subject lots formed part of the estate of Luis,
it was subsequently proven in a separate case that Romeo is not his heir. any
right whatsoever over the subject lots, even if he was able to subsequently
obtain a title in his name. It is a well-settled principle that no one can give
what one does not have, nemo dat quod non habet. One can sell only
what one owns or is authorized to sell, and the buyer can acquire no more
right than what the seller can transfer legally. Since Romeo has no right to
the subject lots, petitioners, who simply stepped into the shoes of Romeo, in
turn, acquired no rights to the same.

Topic: Action for Reconveyance

Ponente: Diosdado M. Peralta
Rodolfo V. Francisco v. Emiliana M. Rojas
GR No. 167120
23 April 2014
Facts: The entire hacienda used to be owned by one Don Buenaventura
Guido y Santa Ana upon whose death left a portion thereof, consisting of the
said 3,181.74 hectares, to his two sons Francisco Guido and Hermogenes
Guido. Sometime in September 1911, Decreto No. 6145, covering the same
3,181.74-hectare portion of Hacienda de Angono was issued in favor of the
brothers Francisco and Hermogenes. Original Certificate of Title (OCT) No.
633 over the same 3,181.74 hectares was issued in the names of the two
brothers. On May 12, 1933, OCT No. 633 was cancelled, Transfer Certificate
of Title No. 23377 was issued. Nine years later, or sometime in 1942, the
heirs of Francisco and Hermogenes adjudicated among themselves the same
3,181.74 hectares and transferred the one-half portion thereof to Jose Rojas.
Allegedly, the adjudication was formalized by the heirs of Francisco and
Hermogenes only on December 17, 1973, when they purportedly executed
an Extra-Judicial Settlement of Estate With Quitclaim.
On March 29, 1976, Alfredo Guido, Sr., representing the other heirs,
filed with the Registry of Deeds of Morong a petition for reconstitution of TCT
No. 23377, alleging that the original of the same title could not be located in
the files of the Registry of Deeds of Rizal when he and his co-heirs sought the
registration of their aforementioned [Extra]-Judicial Settlement of Estate With
Quitclaim. The petition was supported by the owners duplicate copy of the
title sought to be reconstituted. On the same date that Guido, Sr. filed the
petition for reconstitution, the same was granted and a reconstituted
certificate of title TCT (23377) RT-M-0002 was issued.
Thereafter, the heirs who executed the aforesaid document of extrajudicial settlement, including the now spouses Jose Rojas and Emiliana Rojas,
sold the property to Pacil Management Corporation, and new titles were
issued in favor of Pacil on June 26, 1976. Three months later, or on August
26, 1976, Pacil reconveyed all the 21 lots to the former owners. On August
25, 1978, fourteen of the 21 lots were exchanged for shares of stock of
Interport Resources Corporation. On April 25, 1980, all the named heirs in the
same Extra-Judicial Settlement of Estate With Quitclaim renounced their
rights over the remaining portion of the 3,181.74 hectares in favor of their
co-heir Alfredo Guido, Sr., in exchange for monetary considerations.
It appears, however, that on August 13, 1976, barely five months from the
time Alfredo Guido, Sr. filed his petition for reconstitution of TCT No. 23377
on March 29, 1976, which petition was approved on the same date, an
Application for Registration of Title over four parcels of land (lots 1, 2, 3 and
4), which lots are presently alleged by the Rojases to be "overlapping a
portion of the area covered by TCT No. 23377," x x x was filed with the then

Court of First Instance of Rizal, Branch 10, by Rosalina, Rodolfo, Carmela and
Carmen, all surnamed Francisco, about which petition the Rojases now claim
to be unaware of.
Issue: Whether or not an Action for Reconveyance is the appropriate
proceeding.
SC: Yes.
The "appropriate proceeding" referred to in Guido is a case where the
Franciscos must present specific acts of ownership to substantiate their claim
that they are bona fide occupants of Lots 1-4 of Psu-04-001463 while, at the
same time, respondents are accorded due process of law by availing of the
opportunity to oppose and refute the representations made by the
Franciscos. Whatever the "appropriate proceeding" may be, the decisive
factor is that the same should be a proceeding in personam wherein personal
service of summons and copy of the complaint/petition is necessary.
Truly, one of the appropriate legal remedies that should have been
availed of by the Franciscos is an action for reconveyance. Contrary to
petitioners declaration, proof of actual fraud is not required as it may be
filed even when no fraud intervened such as when there is mistake in
including the land for registration. In the action for reconveyance, the decree
of registration is highly respected as incontrovertible; what is sought instead
is the transfer of the property wrongfully or erroneously registered in
anothers name to its rightful owner or to the one with a better right.
An action for reconveyance resulting from fraud prescribes four years
from the discovery of the fraud and if it is based on an implied or a
constructive trust it prescribes ten (10) years from the alleged fraudulent
registration or date of issuance of the certificate of title over the property.
However, an action for reconveyance based on implied or constructive trust
is imprescriptible if the plaintiff or the person enforcing the trust is in
possession of the property. In effect, the action for reconveyance is an action
to quiet the property title, which does not prescribe. In this case, the
Franciscos claim to be in open, continuous, exclusive, and notorious
possession and occupation of the subject lots. It appears that they never lost
possession of said properties, and as such, they are in a position to file the
complaint to protect their alleged rights and clear whatever doubts has been
cast thereon.

Topics: Land transfer; Encumbrances - Annotations; Liens Registration and Effect; Buyer in good faith and for value; Contract
of Sale v. Contract to Sell; Ripening of Ownership; Laches; Builder in
Good Faith
Ponente: Jose Catral Mendoza
Saberon, et al. v. Ventanilla, Jr.
G.R. No. 192669
21 April 2014
Facts: This case is an offshoot of two (2) cases involving the same property,
which had been decided, respectively, by the Supreme Court with finality.
Manila Remnant Co., Inc. (MRCI) owned several parcels of land
constituting a subdivision. It entered into a contract with A.U. Valencia & Co.
Inc. (AUVC), whereby for a consideration, the latter was to, among others,
develop the aforesaid subdivision with authority to manage the sales thereof
and execute contracts to sell to lot buyers. At that time, the president of
AUVC, was Artemio U. Valencia (Valencia)*.
Subsequently, MRCI and AUVC executed two (2) contracts to sell in
favor of Oscar C. Ventanilla, Jr. and Carmen Gloria D. Ventanilla (Ventanillas).
Afterwards, Valencia, holding out himself as president of MRCI*, and
without the knowledge of the Ventanillas, resold the same property to Carlos
Crisostomo (Crisostomo), without any consideration. Valencia transmitted the
fictitious contract with Crisostomo to MRCI while he kept the contracts to sell
with the Ventanillas in his private office files. All the amounts paid by the
latter were deposited in Valencias bank account and remitted to MRCI as
payments of Crisostomo. The Ventanillas continued to pay the monthly
installment.
Thereafter, MRCI terminated its business relationship with AUVC on
account of irregularities discovered in its collection and remittances.
Consequently, Valencia was removed as president by the Board of Directors
of MRCI*. He then stopped transmitting the Ventanillas monthly installments,
which appearing in MRCIs records as credited under the name of
Crisostomo.
AUVC sued MRCI to impugn the abrogation of their agency agreement.
AUVC then informed the Ventanillas that it was still authorized by the trial
court to collect the monthly amortizations and requested them to continue

remitting their payment, with the assurance that said payments would be
deposited later in court.
For AUVCs failure to forward its collections to the trial court as
ordered, MRCI caused the publication of a notice cancelling the contracts to
sell of some lot buyers including those of Crisostomo in whose name the
payments of the Ventanillas had been credited.
It was only after some time when the Ventanillas discovered Valencias
deception. Believing that they had already remitted a substantial
amount for the lots, the Ventanillas offered to pay the balance to
MRCI. To their shock, their names as lot buyers did not appear in MRCIs
records. Instead, MRCI showed them a copy of the contract to sell signed by
Valencia, in favor of Crisostomo. MRCI refused the Ventanillas offer to
pay for the remainder of the contract price.
Aggrieved, the Ventanillas commenced an action for specific
performance, annulment of deeds and damages against MRCI, AUVC, and
Crisostomo. The then CFI rendered a decision declaring the contracts to sell
in favor of the Ventanillas as valid and subsisting, and annulling the contract
to sell in favor of Crisostomo.
On separate appeals filed by AUVC and MRCI, the CA sustained the CFI
Quezon Citys decision in toto.
The 1990 Case
MRCI then filed before the Supreme Court a petition for certiorari. The
decision of the CA was affirmed and declared the judgment of the CFI
Quezon City immediately executory.
Encouraged by the seeming triumph of their cause, the Ventanillas
moved for the issuance of a writ of execution, and was duly issued. A notice
of levy was annotated in the titles of MRCI on May 31, 1991.
In a manifestation and motion, however, MRCI alleged that the subject
properties could no longer be delivered to the Ventanillas because they had
already been sold to Samuel Marquez (Marquez) on February 7, 1990,
while its petition was pending. Nevertheless, MRCI offered to reimburse the
amount paid by the Ventanillas, including legal interest plus damages. MRCI
also prayed that its tender of payment be accepted and that all
garnishments on their accounts lifted.
The Ventanillas accepted the
amount of P210,000.00 as damages and attorneys fees but rejected the
reimbursement.
MRCI then moved for reconsideration praying that it be ordered to
reimburse the Ventanillas and that the garnishment of its bank deposit be
lifted. This plea was denied twice by the trial court prompting MRCI to file
another petition for certiorari with the CA, which ruled that the contract
to sell in favor of Marquez did not constitute a legal impediment to the
immediate execution of the judgment.
The 1994 Case

From the CA, the case was elevated to the Supreme Court where MRCI
argued that the sale of the properties to Marquez was valid because at the
time of the sale, the issue of the validity of the sale to the Ventanillas had
not yet been resolved. Further, there was no specific injunction against it reselling the property. As a buyer in good faith, Marquez had a right to rely on
the recitals in the certificate of title. The subject matter of the controversy
having been passed to an innocent purchaser for value, the execution of the
absolute deed of sale in favor of the Ventanillas could not be ordered by the
trial court.
The Ventanillas countered that the validity of the sale to them had
already been established even while the previous petition was still awaiting
resolution. The petition only questioned the solidary liability of MRCI to the
Ventanillas. Hence, the portion of the decision ordering MRCI to execute an
absolute deed of sale in their favor had already become final and executory
when MRCI failed to appeal it to the Court. Thus, an order enjoining MRCI
from reselling the property in litigation was unnecessary. Besides, the
unusual lack of interest, on the part of Marquez, to protect and assert his
right over the disputed property was, to the Ventanillas, a clear indication
that the alleged sale to him was merely a ploy of MRCI to evade the
execution of the absolute deed of sale in their favor.
The Court settled the controversy in favor of the Ventanillas and cited
circumstances that cast suspicion on the validity, not to say the very
existence, of the contract with Marquez.
Yet, Samuel Cleofe, Register of Deeds for Quezon City (ROD Cleofe) revealed
to them, that on March 11, 1992, MRCI registered a deed of absolute
sale to Marquez who eventually sold the same property to the
Saberons (herein petitioners), which conveyance was registered in July
1992. ROD Cleofe opined that a judicial order for the cancellation of the titles
in the name of the Saberons was essential before he complied with the said
writ of execution. Apparently, the notice of levy, through inadvertence, was
not carried over to the title issued to Marquez, the same being a junior
encumbrance which was entered after the contract to sell to Marquez had
already been annotated.
Civil Case No. Q-96-26486
Once again, the Ventanillas were constrained to go to court to seek the
annulment of the deed of sale executed between MRCI and Marquez as well
as the deed of sale between Marquez and the Saberons, as the fruits of void
conveyances. The case was filed with the Regional Trial Court (RTC), which
ruled for the Ventanillas.
The defendants filed separate appeals. The Saberons relied on one
central argumentthat they were purchasers in good faith, having relied on
the correctness of the certificates of title covering the lots in question; and
therefore, holders of a valid and indefeasible title.

The CA said that MRCI and the other defendants were found guilty of
bad faith for selling the lots to Marquez at a time when litigation as to the
validity of the first sale to the Ventanillas was still pending. In other words,
MRCI was sufficiently aware of the Court decision confirming its failure to
supervise and control the affairs of its authorized agent, AUVC, which led to
the explicit pronouncement that the first sale to the Ventanillas was valid.
This should have served as a warning to MRCI that it could no longer deal
with the property in deference to the Courts ruling and affirmation of the
trial courts order to execute the deed of sale in favor of the Ventanillas.
Thus, the Saberons filed the instant petition, reiterating that they were
innocent purchasers for value and in good faith. It was only upon receipt of
the summons in the case filed by the Ventanillas with the RTC that they
learned of the present controversy.
Issues: 1. Whether or not the registration of the notice of levy had produced
constructive notice that would bind third persons despite the failure
of the ROD-QC to annotate the same in the certificates of title.
2. Whether or not the rights or interests of the Ventanillas in the
subject properties ripened into ownership.
3. Whether or not laches could be attributed to the Ventanillas.
4. Whether or not the Saberons were builders in good faith.
SC: 1. Yes.
Sections 51 and 52 of P.D. No. 1529 explain the purpose and effects of
registering both voluntary and involuntary instruments, to wit:
Section 51. Conveyance and other dealings by registered owner. An owner of
registered land may convey, mortgage, lease, charge or otherwise deal with
the same in accordance with existing laws. He may use such forms of deeds,
mortgages, leases or other voluntary instruments as are sufficient in law. But
no deed, mortgage, lease, or other voluntary instrument, except a will
purporting to convey or affect registered land shall take effect as a
conveyance or bind the land, but shall operate only as a contract between
the parties and as evidence of authority to the Register of Deeds to make
registration.
The act of registration shall be the operative act to convey or affect the
land insofar as third persons are concerned, and in all cases under this
Decree, the registration shall be made in the office of the Register of Deeds
for the province or city where the land lies.
Section 52. Constructive notice upon registration. Every conveyance,
mortgage, lease, lien, attachment, order, judgment, instrument or entry
affecting registered land shall, if registered, filed or entered in the office of
the Register of Deeds for the province or city where the land to which it

relates lies, be constructive notice to all persons from the time of such
registering, filing or entering.
These provisions encapsulate the rule that documents, like the
certificates of title do not effect a conveyance of or encumbrances on a
parcel of land. Registration is the operative act that conveys
ownership or affects the land insofar as third persons are
concerned. By virtue of registration, a constructive notice to the whole
world of such voluntary or involuntary instrument or court writ or processes,
is thereby created.
The Court is thus beckoned to rule on two conflicting rights over the
subject properties: the right of the Ventanillas to acquire the title to the
registered land from the moment of inscription of the notice of levy on the
day book (or entry book), on one hand; and the right of the Saberons to rely
on what appears on the certificate of title for purposes of voluntary dealings
with the same parcel of land, on the other.
The Saberons maintain that they had no notice of any defect,
irregularity or encumbrance in the titles of the property they purchased. In
its decision, however, the RTC pointed out that their suspicion should have
been aroused by the circumstance that Marquez, who was not engaged in
the buy-and-sell business and had the property for only a few months, would
offer the same for sale. Although the RTC found that the Saberons may not
be considered as innocent purchasers for value because of this
circumstance, it, nonetheless, ruled that they, who might well be unwilling
victims of the fraudulent scheme employed by MRCI and Marquez, were
entitled to actual and compensatory damages.
To this latter finding, the Court agrees. The Saberons could not
be said to have authored the entanglement they found themselves
in. No fault can be attributed to them for relying on the face of the
title presented by Marquez. This is bolstered by the fact that the
RTC decision shows no categorical finding that the Saberons
purchase of the lots from Marquez was tainted with bad faith. That
the Saberons should have harbored doubts against Marquez is too high a
standard to impose on a buyer of titled land. This is in consonance to the rule
that the one who deals with property registered under the Torrens system is
charged with notice only of such burdens and claims as are annotated on the
title. All persons dealing with property covered by Torrens certificate of title
are not required to explore further than what the Torrens title upon its face
indicates in quest for any hidden defect or inchoate right that may
subsequently defeat his right thereto. These rules remain as essential
features of the Torrens system. The present case does not entail a
modification or overturning of these principles.

Be that as it may, no fault can likewise be imputed to the Ventanillas.

It has already been established in the two previous cases decided by the
Court that the contracts to sell executed in favor of the Ventanillas are valid
and subsisting. Clearly, it has been acknowledged, even by MRCI, as can be
seen in the latters own choice to only question their solidary liability in the
1990 case and its failure to assign the same as an error in the 1994 case. In
the same vein, the issue on Marquezs title had already been passed upon
and settled in the 1994 case. That he purchased the lots prior to the
annotation of the notice of levy in MRCIs title was of no moment. In fact, the
Court explicitly declared that MRCIs transaction with Marquez "cannot
prevail over the final and executory judgment ordering MRCI to execute an
absolute deed of sale in favor of the Ventanillas."
These favorable findings prompted the Ventanillas to register the
notice of levy on the properties. The records show that on the strength of a
final and executory decision by the Court, they successfully obtained a writ
of execution from the RTC and a notice of levy was then entered, albeit on
the primary entry book only. The contract to sell to Marquez was registered
on May 21, 1991, while the notice of levy was issued ten (10) days later, or
on May 31, 1991. In February 1992, MRCI executed the Deed of Sale with
Marquez, under whose name the clean titles, sans the notice of levy, were
issued. A year later, or on March 11, 1992, MRCI registered the deed of sale
to Marquez who later sold the same property to the Saberons.
This complex situation could have been avoided if it were not for the
failure of ROD Cleofe to carry over the notice of levy to Marquezs title,
serving as a senior encumbrance that might have dissuaded the Saberons
from purchasing the properties.
Distinctions between a contract to sell and a contract of sale are wellestablished in jurisprudence. In a contract of sale, the vendor loses
ownership over the property and cannot recover it until and unless
the contract is resolved or rescinded; whereas, in a contract to sell,
title is retained by the vendor until full payment of the price. In the
latter contract, payment of the price is a positive suspensive condition,
failure of which is not a breach but an event that prevents the obligation of
the vendor to convey title from becoming effective.
It is undeniable, therefore, that no title was transferred to Marquez
upon the annotation of the contract to sell on MRCIs title. As correctly found
by the trial court, the contract to sell cannot be substituted by the Deed of
Absolute Sale as a "mere conclusion" of the previous contract since the
owners of the properties under the two instruments are different.

Considering that the deed of sale in favor of Marquez was of

later registration, the notice of levy should have been carried over
to the title as a senior encumbrance.
Corollary to this is the rule that a levy of a judgment debtor creates a
lien, which nothing can subsequently destroy except the very dissolution of
the attachment of the levy itself. Prior registration of the lien creates a
preference, since the act of registration is the operative act to convey and
affect the land. Jurisprudence dictates that the said lien continues until the
debt is paid, or the sale is had under an execution issued on the judgment or
until the judgment is satisfied, or the attachment is discharged or vacated in
the same manner provided by law. Under no law, not even P.D. No. 1529, is it
stated that an attachment shall be discharged upon sale of the property
other than under execution.
Additionally, Section 59 of P.D. No. 1529 undoubtedly speaks of the
ministerial duty on the part of the Register of Deeds to carry over
existing encumbrances to the certificates of title.
From the foregoing, ROD Cleofes theory that a deed of sale, as a mere
conclusion of a contract to sell, turns into a senior encumbrance which may
surpass a notice of levy, has no leg to stand on. It was, in fact, properly
rejected by the courts a quo. Verily, the controversy at hand arose not from
the Ventanillas fault, but from ROD Cleofes misplaced understanding of his
duty under the law.
Surely, the Ventanillas had every right to presume that the Register of
Deeds would carry over the notice of levy to subsequent titles covering the
subject properties. The notice was registered precisely to bind the properties
and to serve as caution to third persons who might potentially deal with the
property under the custody of the law.
While the Court is not unmindful that a buyer is charged with notice
only of such burdens and claims as are annotated on the title, the RTC and
the CA are both correct in applying the rule as to the effects of involuntary
registration. In cases of voluntary registration of documents, an innocent
purchaser for value of registered land becomes the registered owner, and, in
contemplation of law the holder of a certificate of title, the moment he
presents and files a duly notarized and valid deed of sale and the same is
entered in the day book and at the same time he surrenders or presents the
owner's duplicate certificate of title covering the land sold and pays the
registration fees, because what remains to be done lies not within his power
to perform. The Register of Deeds is duty-bound to perform it. In cases of
involuntary registration, an entry thereof in the day book is a sufficient notice
to all persons even if the owner's duplicate certificate of title is not presented
to the register of deeds. Therefore, in the registration of an

attachment, levy upon execution, notice of lis pendens, and the like,
the entry thereof in the day book is a sufficient notice to all persons
of such adverse claim.
Thus, the Court must sustain the notice of levy registered by the
Ventanillas notwithstanding the nonfeasance of ROD Cleofe. Again, the
prevailing rule is that there is effective registration once the registrant has
fulfilled all that is needed of him for purposes of entry and annotation, so
that what is left to be accomplished lies solely on the Register of Deeds.
Suffice it to say, no bad faith can be ascribed to the parties alike.
Nevertheless, the equal footing of the parties necessarily tilts in
favor of the superiority of the Ventanillas notice of levy, as
discussed.
2. Yes.
It bears stressing that the previous decisions discussed herein
already sealed the validity of the contract to sell issued to the
Ventanillas decades ago. As found by the RTC, it was MRCIs obstinate
refusal to accept their tender of payment, not to mention the devious
transfer of the property, which caused the decade-long delay of the
execution of the deed of sale in their favor. This is a finding that the Court,
which is not a trier of facts, will have to respect.
3. No.
Their failure to learn about the structures being built on the subject
lands and the payment of real property taxes by the Saberons is not
sufficient justification to withhold the declaration of their ownership over
it. Against a different factual milieu, laches may be said to have set it but not
so in this case. While the Ventanillas may have been unaware that
improvements were being erected over the lots, this obliviousness can, by
no means, be treated as a lack of vigilance on their part. It bears stressing
that the Ventanillas are now of advanced age and retired as university
professors. Considering the length of litigation which they had to endure in
order to assert their right over the property which they have painstakingly
paid for decades ago, to hold now that they have been remiss in the
protection of their rights would be the height of impropriety, if not injustice.
To exact from them an obligation to visit the land in litigation every so often,
lest they be held to have slept on their rights, is iniquitous and unreasonable.
All told, the Ventanillas remain as innocent victims of deception.
4. Yes.
No less than the court a quo observed that "no actual evidence that
the Saberons connived with the MRCI and Marquez to have the titles
registered in their names to the prejudice of the (Ventanillas)" and that what
was obvious was that "the Saberons dealt with clean certificates of titles."

Consequently, Article 448 in relation to Article 546 of the Civil Code will
apply. The provisions respectively read:
Article 448. The owner of the land on which anything has been built, sow or
planted in good faith, shall have the right to appropriate, as his own the
works, sowing, or planting, after payment of the indemnity provided for in
Article 546 and 548, or to oblige the one who built or planted to pay the price
of the land, and the one who sowed, the proper rent. However, the builder or
planter cannot be obliged to buy the land and if its value is considerably
more than that of the building or trees. In such case, he shall pay reasonable
rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the
lease and in case disagreement, the court shall fix the terms thereof.
Article 546. Necessary expenses shall be refunded to every possessor; but
only the possessor in good faith may retain the thing until he has been
reimbursed therefore.
Useful expenses shall be refunded only to the possessor in good faith with
the same right of retention, the person who has defeated him in the
possession having the option of refunding the amount of the expenses or of
paying the increase in value which the thing may have acquired by reason
thereof.
Thus Two options available to the Ventanillas:
1) they may exercise the right to appropriate after payment of indemnity
representing the value of the improvements introduced and the necessary
and useful expenses defrayed on the subject lots; or
2) they may forego payment of the said indemnity and instead, oblige the
Saberons to pay the price of the land.
Consequences:
1. Should the Ventanillas elect to appropriate the improvements, the trial
court is ordered to determine the value of the improvements and
the necessary and useful expenses after hearing and reception of
evidence.
Should the Ventanillas, however, pursue the option to oblige the Saberons to
pay the "price of the land," the trial court is ordered to determine said
price to be paid to the Ventanillas.
Depending on the option exercised by the Ventanillas, the Court
remanded the case to the court of origin for further proceedings as to the
determination of reimbursement due to the petitioners or of the "price" of
the subject lots due the Ventanillas.

Topic: Extinguishment of Liability

Ponente: Mariano Del Castillo
Jacinto v. Gumaru, Jr.,
G.R. No. 191906, June 2, 2014
Facts: In December 2004, a decision was rendered in favor of Gumaru in a
certain Labor Case. Petitioner Jacinto posted an appeal which was not
perfected; hence, the said decision attained finality. As a result, a writ of
execution was issued and properties of petitioner were levied.
This act was challenged by elevating the case to the Court of Appeals.
Petitioner alleges that the petition was unsigned and unverified by the
complainant himself but only by counsel, and thus is a jurisdictional infirmity.
Issue: Whether or not Petitioners contention could be given way.
SC: No.
The case has been rendered moot and academic. While the
Court takes the petitioner's side with regard to the procedural issue dealing
with verification and the certification against forum shopping, it nonetheless
appears that the Petition has been overtaken by events. In a May 24, 2011
Manifestation, respondent informed this Court that the judgment award
has been satisfied in full. The petitioner does not dispute this claim, in
which case, the labor case is now deemed ended. It is axiomatic that
after a judgment has been fully satisfied, the case is deemed terminated
once and for all.
When a judgment has been satisfied, it passes beyond review,
satisfaction being the last act and the end of the proceedings, and payment
or satisfaction of the obligation thereby established produces permanent and

irrevocable discharge; hence, a judgment debtor who acquiesces to and

voluntarily complies with the judgment is estopped from taking an appeal
therefrom.
With the above development in the case, the instant Petition is
rendered moot and academic. The satisfaction of the judgment in full has
placed the case beyond the Court's review. Indeed, there are no more
proceedings to speak of inasmuch as these were terminated by the
satisfaction of the judgment.
Topic: Co-Ownership v. Conjugal Partnership
Ponente: Arturo Brion
PNB v. Garcia, et al.
G.R. no. 182839, June 2, 2014
Facts: The spouses Rogelio and Celedonia Garcia (Spouses Garcia) obtained
a loan facility from the petitioner, Philippine National Bank initially for
P150,000.00. The loan was secured by a Real Estate Mortgage over their
property covered by TCT No. 177585. The spouses Garcia increased their
loan to P220,000.00 and eventually to P600,000.00. Jose Sr. agreed to
accommodate the spouses Garcia by offering property he acquired during his
marriage with Ligaya Garcia as additional collateral security for the latters
increased loan. All of these transactions, however, were without the
knowledge and consent of Jose Sr.s children.
On maturity of the loan, the spouses Garcia failed to pay their loan to
the petitioner bank despite repeated demands. Respondents filed before the
RTC a Complaint for Nullity of the Amendment of Real Estate Mortgage,
Damages with Preliminary Injunction against the spouses Garcia and the
petitioner bank.
Respondents alleged that the subject property was a conjugal property
of Jose Sr. and his deceased spouse, Ligaya, as they acquired the subject
property during their marriage; that upon Ligayas death, Jose Sr., together
with his children Nora, Jose Jr., Bobby and Jimmy, by law, became owners pro
indiviso of the subject property rendering the mortgage void ab initio for lack
of authority.
Issue: Whether or not the mortgage over the subject property is valid.
SC: No.
The subject property is conjugal. Since Jose Sr. and Ligaya were
married prior to the effectivity of the Family Code, their property relations
were governed by the conjugal partnership of gains as provided under Article

119 of the Civil Code. Under Article 160 of the Civil Code, all property of
the marriage is presumed to belong to the conjugal partnership,
unless it can be proven that it pertains exclusively to the husband
or to the wife.
Upon the death of Ligaya on January 21, 1987, the conjugal
partnership was automatically dissolved and terminated pursuant to Article
175(1) of the Civil Code, and the successional rights of her heirs vest, as
provided under Article 777 of the Civil Code, which states that the rights to
the succession are transmitted from the moment of the death of the
decedent.
Consequently, the conjugal partnership was converted into an
implied ordinary co-ownership between the surviving spouse, on the
one hand, and the heirs of the deceased, on the other.
The law provides that each co-owner has the full ownership of his part
or share in the co-ownership and may, therefore, alienate, assign or
mortgage it except when personal rights are involved. Should a co-owner
alienate or mortgage the co-owned property itself, the alienation or
mortgage shall remain valid but only to the extent of the portion which may
be allotted to him in the division upon the termination of the co-ownership.
In the present case, Jose Sr. constituted the mortgage over
the entire subject property after the death of Ligaya, but before the
liquidation of the conjugal partnership. While under Article 493 of the Civil
Code, even if he had the right to freely mortgage or even sell his undivided
interest in the disputed property, he could not dispose of or mortgage the
entire property without his childrens consent. As correctly emphasized by
the trial court, Jose Sr.s right in the subject property is limited only to his
share in the conjugal partnership as well as his share as an heir on
the other half of the estate which is his deceased spouses share.
Accordingly, the mortgage contract is void insofar as it extends to the
undivided shares of his children (Nora, Jose Jr., Bobby and Jimmy) because
they did not give their consent to the transaction.

Topics: Property; Action for Reconveyance; Vested Right

Ponente: Diosdado Peralta
Campos v. Ortega
G.R. no. 171286, June 2, 2014
Facts: Plaintiff Campos is a lessee of a building constructed on government
lands. In 1977, after a census, they were qualified as bona fide occupants
which operated to the effect that if they could buy the building they were
leased, then they would be awarded the said lot. Negotiations ensued.
In 1988 however, plaintiff learned that the property has already been
awarded to herein respondents and that a deed of absolute sale was
executed between respondents and Clarita Boloy, owner of the leased
building. This happened despite the fact that during the said initial meeting
for the negotiations, plaintiff was given one month to exercise the option of
buying the property. Plaintiff, thru her representative, inquired with the
National Housing Authority (NHA) and questioned the award of the lot to
defendants who are disqualified for not having been duly censused either as
renters or sharers, and also the matter regarding the alteration the lot
number actually being occupied by plaintiff. Hence, this recourse.
Issue: Whether or not plaintiff has a vested right over the property, which, in

the affirmative, would render the award to respondents void.

SC: No.
A censused owner with assigned NHA tag number acquired no
vested right over the subject property. While it is true that NHA
recognizes plaintiff as the censused owner of the structure built on the lot,
the issuance of the tag number is not a guarantee for lot allocation. Plaintiff
had petitioned the NHA for the award to her of the lot she is occupying.
However, the census, tagging, and plaintiff's petition, did not vest upon her a
legal title to the lot she was occupying, but a mere expectancy that the lot
will be awarded to her. The expectancy did not ripen into a legal title.
A vested right is one that is absolute, complete and unconditional
and no obstacle exists to its exercise. It is immediate and perfect in itself
and not dependent upon any contingency. To be vested, a right must have
become a title legal or equitable to the present or future enjoyment of
property.
The appropriate legal remedy that petitioner should have
availed is an action for reconveyance. Proof of actual fraud is not
required as it may be filed even when no fraud intervened such as when
there is mistake in including the land for registration.
Under the principle of constructive trust, registration of property by one
person in his name, whether by mistake or fraud, the real owner being
another person, impresses upon the title so acquired the character of a
constructive trust for the real owner, which would justify an action for
reconveyance. In the action for reconveyance, the decree of registration is
respected as incontrovertible but what is sought instead is the transfer of the
property wrongfully or erroneously registered in another's name to its rightful
owner or to one with a better right. If the registration of the land is
fraudulent, the person in whose name the land is registered holds it as a
mere trustee, and the real owner is entitled to file an action for
reconveyance of the property.

Topic:
Ponente: Presbitero Velasco, Jr.

Sale

Rebusquillo, et al v. Sps. Gualvez, et al.

G.R. No. 204029, June 4, 2014
Facts: Eulalio died intestate on July 3, 1964, survived by his wife Victoria,
six legitimate children, and one illegitimate child. They are herein petitioners
and respondents. Petitioner Avelina was supposedly made to sign two (2)
documents by her daughter and her son-in-law, herein respondents on the
pretext that the documents were needed to facilitate the titling of the lot. It
was only in 2003, so petitioners claim, that Avelina realized that what she
signed was an Affidavit of Self-Adjudication and a Deed of Absolute Sale in
favor of respondents.
Avelina sought the intervention of the RTC to declare null and void the
two (2) documents and to correct the injustice done to the other heirs of
Eulalio.
Issue: Whether or not the deed of sale is valid.

SC: No.
It is apparent from the admissions of respondents and the records of
this case that Avelina had no intention to transfer the ownership, of
whatever extent, over the property to respondents. Hence, the Deed
of Absolute Sale is nothing more than a simulated contract.
In absolute simulation, there is a colorable contract but it has no
substance as the parties have no intention to be bound by it. The main
characteristic of an absolute simulation is that the apparent contract is not
really desired or intended to produce legal effect or in any way alter the
juridical situation of the parties. As a result, an absolutely simulated or
fictitious contract is void, and the parties may recover from each other what
they may have given under the contract. However, if the parties state a false
cause in the contract to conceal their real agreement, the contract is
relatively simulated and the parties are still bound by their real agreement.
Hence, where the essential requisites of a contract are present and the
simulation refers only to the content or terms of the contract, the agreement
is absolutely binding and enforceable between the parties and their
successors in interest.
In the present case, the true intention of the parties in the execution of
the Deed of Absolute Sale is immediately apparent from respondents very
own Answer to petitioners Complaint. As respondents themselves
acknowledge, the purpose of the Deed of Absolute Sale was simply to
"facilitate the titling of the subject property," not to transfer the
ownership of the lot to them. Furthermore, respondents concede that
petitioner Salvador remains in possession of the property and that there is no
indication that respondents ever took possession of the subject property
after its supposed purchase. Such failure to take exclusive possession of the
subject property or, in the alternative, to collect rentals from its possessor, is
contrary to the principle of ownership and is a clear badge of simulation that
renders the whole transaction void.
The fact that the questioned Deed of Absolute Sale was reduced to
writing and notarized does not accord it the quality of incontrovertibility
otherwise provided by the parole evidence rule. The form of a contract does
not make an otherwise simulated and invalid act valid.

Topic: Alienable Lands

Ponente: Jose Catral Mendoza
Republic v. Sese, et al.
G.R. No. 185092, June 2, 2014
Facts: In 2002, respondents filed with the MTC an application for original
registration of land over a parcel situated in Pulilan Bulacan. Respondents
alleged that on July 22, 1972, they acquired, through a donation inter vivos
from their mother, the subject agricultural land; that they, through their
predecessors-in-interest, had been in possession of the subject property; and
that the property was not within a reservation.
As part of their evidence, they submitted a survey plan certified by the
Bureau of Forestry stated that it is outside any civil or military reservation.

The OSG interposed an appeal and argued that there was no proof that
the subject property was already segregated from inalienable lands of the
public domain. Verily, it was only from the date of declaration of such lands
as alienable and disposable that the period for counting the statutory
requirement of possession would start. Also, there was absolutely no proof of
respondents supposed possession of the subject property.
Issue: Whether or not the land is alienable and disposable.
SC: No.
For the original registration of title, the applicant must overcome the
presumption that the land sought to be registered forms part of the public
domain. Unless public land is shown to have been reclassified or
alienated to a private person by the State, it remains part of the
inalienable public domain. Indeed, "occupation thereof in the concept of
owner, no matter how long, cannot ripen into ownership and be registered as
a title." To overcome such presumption, incontrovertible evidence must be
shown by the applicant. Absent such evidence, the land sought to be
registered remains inalienable.
In the present case, petitioners cite a surveyor geodetic engineers
notation indicating that the survey was inside alienable and disposable land.
Such notation does not constitute a positive government act validly changing
the classification of the land in question. Verily, a mere surveyor has no
authority to reclassify lands of the public domain. By relying solely on
the said surveyors assertion, petitioners have not sufficiently proven that
the land in question has been declared alienable."
The burden of proof in overcoming the presumption of State
ownership of the lands of the public domain is on the person
applying for registration (or claiming ownership), who must prove that
the land subject of the application is alienable or disposable. To overcome
this presumption, incontrovertible evidence must be established that the
land subject of the application (or claim) is alienable or disposable. The
applicant must establish the existence of a positive act of the government
such as a presidential proclamation or an executive order; an administrative
action; investigation reports of Bureau of Lands investigators; or a legislative
act or a statute. The applicant may also secure a certification from the
government that the land claimed to have been possessed for the required
number of years is alienable and disposable.

Topic: Reconstitution Proceedings

Ponente: Jose Catral Mendoza
Paulino, et al. v. Court of Appeals, et al.
G.R. no 205065, June 4, 2014
Facts: The late Celso Fernandez purchased, in a public auction conducted by
the Quezon City government, a real property owned and registered in the
name of Lolita G. Javier (Javier),married to Pedro Javier, as evidenced by a
certificate of sale of delinquent property. The subject property appeared to
be covered by an owners duplicate of TCT No. 301617 of the QCRD.
After his death, the surviving heirs of Celso Fernandez executed an

Extra-Judicial Settlement of Estate with Absolute Sale covering the subject

property, selling it in favor of the petitioners, spouses Vergel L. Paulino and
Ciremia Paulino (Spouses Paulino),for a consideration of P1,805,000.00.
On June 11, 1988, a fire broke out in the Quezon City Hall which burned
a portion thereof which included the office of the QCRD.
Consequently, on March 9, 2010, Spouses Paulino filed a petition for
reconstitution of the original copy of TCT No. 301617 with the RTC, alleging
that its original copy was among those titles that were razed during the fire.
Meanwhile, on August 17, 2010, the RTC received the LRA
Report, stating that TCT No. 301617was registered in the name of a certain
Emma B. Florendo and that it was previously the subject of an application for
administrative reconstitution. It was also discovered that the original copy of
the title on file in the Registry of Deeds was among those saved titles from
the fire that gutted the office of QCRD on June 11, 1988.
The case was appealed to the CA and the decision of the RTC was later
annulled; hence, this recourse.
Issue: Whether or not the RTC lacked jurisdiction over the petition for
reconstitution.
SC: Yes.
The governing law for judicial reconstitution of title is R.A. No.
26. The following must be present for an order for reconstitution to issue:
(a) that the certificate of title had been lost or destroyed;
(b) that the documents presented by petitioner are sufficient and
proper to warrant the reconstitution
of the lost or destroyed certificate
of title;
(c) that the petitioner is the registered owner of the property or had an
interest therein;
(d) that the certificate of title was in force at the time it was lost and
destroyed; and
(e) that the description, area and boundaries of the property are
substantially the same as those
contained in the lost or destroyed
certificate of title.
In reconstitution proceedings, the Court has repeatedly ruled that
before jurisdiction over the case can be validly acquired, it is a
condition sine quo non that the certificate of title has not been
issued to another person. If a certificate of title has not been lost but is in
fact in the possession of another person, the reconstituted title is void and
the court rendering the decision has not acquired jurisdiction over the
petition for issuance of new title. The courts simply have no jurisdiction over

petitions by (such) third parties for reconstitution of allegedly lost or

destroyed titles over lands that are already covered by duly issued subsisting
titles in the names of their duly registered owners. The existence of a prior
title ipso facto nullifies the reconstitution proceedings. The proper recourse is
to assail directly in a proceeding before the regional trial court the validity of
the Torrens title already issued to the other person.
In the case at bench, the CA found that the RTC lacked jurisdiction to
order the reconstitution of the original copy of TCT No. 301617, there being
no lost or destroyed title over the subject real property, the respondent
having duly proved that TCT No. 301617 was in the name of a different
owner, Florendo, and the technical description appearing on that TCT No.
301617 was similar to the technical description appearing in Lot 939, Piedad
Estate covered by TCT No. RT-55869 (42532) in the name of Antonino. In fact,
TCT No. RT-55869 (42532) was already cancelled by TCT Nos. 296725 to
296728 also in the name of Antonino. The Court, thus, finds no reversible
error in the findings of the CA.

Topic: Damages
Ponente: Arturo Brion
Princess Joy Placement and General Services, Inc. v. Binalla,
G.R. No. 197005, June 4, 2014

Facts: Binalla, a registered nurse, alleged that in April 2002, he applied for
employment with Princess Joy who referred him to Reginaldo Paguio and
Cynthia Latea for processing of his papers. After completing his documentary
requirements, he was toldthat he would be deployed to Al Adwani. On April
12, 2002, he signed a four-year contract with Al Adwani as staff nurse. He
paid Latea P4,500.00 and Paguio, P3,000.00, although no receipts were
issued to him. Later, he was given a telegram notifying him of his departure
on April 19, 2002.
Binalla further alleged that on the day of his departure, Paguio met him
at the airport and gave him a copy of his employment contract, plane ticket,
passport, a copy of his Overseas Employment Certificate from the Philippine
Overseas Employment Administration (POEA) and other documents. It was
only after boarding his Saudi Arabia Airlines plane that he examined his
papers and discovered that CBM was his deploying agency. Under the
contract certified by the POEA, his salary was supposed to be US$550.00 for
twenty-four (24) months or for two years.
Binalla also saw that under the four-year contract he signed, his
monthly salary was only 1,500 Saudi Riyals (SR) equivalent to $400. He
worked under his contract for only two years and returned to the Philippines
in April 2004 after posting a bond of SR 3,000.00, supposedly to guarantee
that he would come back to finish his contract. He opted not to return and
file a complaint against herein petitioner and claims among other, damages.
Issue: Whether or not respondent is entitled to damages.
SC: Yes.
After an examination of the facts substantial evidence shows that
Binalla was employed by Al Adwani in Saudi Arabia through a fraudulent
scheme or arrangement, called "reprocessing" or otherwise, participated in
by Princess Joy. Under the circumstances, Princess Joy is as liable as CBM and
Al Adwani for the contract substitution, no matter how it tries to avoid
liability by disclaiming any participation in the recruitment and deployment
of Binalla to Al Adwani. As a result he is legally entitled to the award of
damages.
However, the Court found the award of damages to Binalla
of P500,000.00 in moral damages and P500,000.00 in exemplary
damages excessive. While Princess Joy, CBM and Al Adwani were complicit
in the substitution of Binallas employment contract which resulted in the
violation of his rights as an overseas Filipino worker, the award of
damages is unusually high, an award that even the Court "does not
mete out in labor cases. Under the circumstances, an award
of P50,000.00 in moral damages and P50,000.00 in exemplary damages to
Binalla to be appropriate.
Topic: Damages

Ponente: Diosdado Peralta

McMer Corporation Inc., et al. vs. NLRC, et al.
G.R. No. 193421, June 4, 2014
Facts: Private respondent was employed by petitioner McMer Corporation,
Inc. (McMer) on August 5, 1999 as Legal Assistant and was eventually
promoted as Head of Legal Department, and concurrently, as Officer-inCharge of petitioner McMers Legal and Administrative Department. ccording
to private respondent, for quite some time, he and petitioners, specifically
Macario D. Roque, Jr. (Roque) and Cecilia R. Alvestir (Alvestir), McMers
General Manager and President, respectively, have been on a cold war
brought often by the disagreement in the design and implementation of
company policies and procedures.
Private respondent, sensing some unusual development in the attitude
of petitioner Roque, instead of responding to the summon, went to petitioner
Alvestirs office, and informed her of petitioner Roques disposition and his
fear of a perceived danger to his person. He then requested for petitioner
Alvestir to go to petitioner Roques office instead, of which petitioner Alvestir
conceded. Moments later, petitioner Roque, at the height of anger,
confronted private respondent and commanded him to proceed to his office.
At this juncture, private respondent was too scared to confront Roque as the
latter
may
inflict
physical
harm
on
him.
As a consequence of the foregoing, private respondent elected to
discontinue work that afternoon and immediately proceeded to the
Valenzuela Police Headquarters to report on the incident in the police
blotter. Private respondent did not report for work from July 21, 2007 up to
July 30, 2007. Because of this, petitioner McMer, through petitioner Alvestir,
issued a Memorandum8 dated July 30, 2007 directing private respondent to
explain within five (5) days why no disciplinary action should be imposed
upon him for being in absence without official leave (AWOL). In response,
private respondent sent a letter9 dated August 6, 2007 explaining the reason
why he refused to report for work during the aforesaid period.
On August 6, 2007, private respondent Feliciano C. Libunao, Jr. filed a
complaint for unfair labor practices, constructive illegal dismissal, nonpayment of 13th month pay and separation pay, moral and exemplary
damages, as well as attorneys fees, against petitioners McMer Corporation,
Inc., Roque, and Alvestir.
Issue: Whether or not respondent is entitled to damages.
SC: Yes.
Evidence

shows

that

private

respondent

was

actually

constructively dismissed from employment.

It cannot be gainsaid that private respondent was unjustly treated
in the workplace, and, consequently, bore wounded feelings and
suffered mental anguish during his tenure with petitioner McMer until he
was constructively dismissed from service. Thus, the Court upheld the
grant of moral, exemplary and nominal damages in the aggregate amount of
P90,000.00 in favor of private respondent due to the wanton, oppressive and
malevolent manner by which private respondent was illegally and
constructively terminated.
In moral damages, it suffices to prove that the claimant has
suffered anxiety, sleepless nights, besmirched reputation and social
humiliation by reason of the act complained of. Exemplary damages,
on the other hand, are granted in addition to, inter alia, moral damages by
way of example or correction for the public good if the employer acted in a
wanton, fraudulent, reckless, oppressive or malevolent manners.

Topic: Damages
Ponente: Mariano Del Castillo
JOSE ESPINELI A.K.A. DANILO
PHILIPPINES
G.R. No. 179535, June 09, 2014

ESPINELI v. PEOPLE

OF

THE

Facts: Alberto Berbon y Downie (Alberto), a 49-year old Senior Desk

Coordinator of the radio station DZMM, was shot in the head and different
parts of the body in front of his house in Imus, Cavite by unidentified
malefactors who immediately fled the crime scene on board a waiting car.
Meanwhile, Atty. Orly Dizon arrested Romeo Reyes for illegal possession of
unlicensed firearms. Reyes later on confided his willingness to testify for the
resolution of Berbons case and said that he saw petitioner and Sotero
Paredes (Paredes) board a red car while armed with a .45 caliber firearm and
armalite, respectively; and that petitioner told Paredes that ayaw ko nang
abutin pa ng bukas yang si Berbon. His statement was also corroborated by
testimonies coming from other witnesses including Sabina Berbon, the
deceaseds wife, Rodolfo Dayao, and Dr. Ludivino J. Lagat (Dr. Lagat), the NBI
Medico-Legal Officer who conducted a post-mortem examination on Alberto
confirming that the death of Alberto is due to multiple gunshots. RTC
convicted Jose to murder. The CA affirmed the same but modified the crime
to homicide. The accused was also ordered by the RTC, as affirmed by the
CA, to pay the decedent's heirs the following amounts:
1. the civil indemnity of P50,000.00, and
2. actual and compensatory damages in the total amount of P135,000.00 as
funeral expenses, interment fee of P8,360.00, medical expenses in the total
amount of P1,519.45 and for the contract fees of Memorial Park Care the
amount of P15,700.00.
Issue: Whether or not awards for damages are correct.
SC:

Partly.
While the CA correctly imposed the amount of P50,000.00 as civil
indemnity, it failed, however, to award moral damages. These awards are
mandatory without need of allegation and proof other than the
death of the victim, owing to the fact of the commission of murder or
homicide.Thus, for moral damages, the award of P50,000.00 to the heirs of
the
victim
is
only
proper.
Anent the award of actual damages, this Court found no reason to
disturb the amount awarded by the trial court as upheld by the CA since the
itemized medical and burial expenses were duly supported by receipts and

other

documentary
evidence.
The CA did not grant any award of damages for loss of earning
capacity and rightly so. Though Sabina testified as to the monthly salary of
the deceased, the same remains unsubstantiated. Such indemnity cannot
be awarded in the absence of documentary evidence except where the
victim was either self-employed or a daily wage worker earning less than the
minimum wage under current labor laws. The exceptions find no application
in
this
case.
In addition and in conformity with current policy, an interest at the
legal rate of 6% per annum is imposed on all the monetary awards for
damages from date of finality of this judgment until fully paid.

Topic: Actual Damages

Ponente: Mariano Del Castillo
Charles Bumagat, et al. vs. Regalado Arribay Charles Bumagat, et al.
vs. Regalado Arribay
G.R No. 194818, June 9, 2014
Facts: Petitioners filed a complaint for forcible entry against respondent
before the 2nd Municipal Circuit Trial Court (MCTC) of Cabagan-Delfin Albano,
Isabela. In an Amended Complaint, petitioners alleged that on May 9, 2005,
respondent with the aid of armed goons, and through the use of
intimidation and threats of physical harm entered the subject parcels of
land and ousted them from their lawful possession. Subsequently,
respondent then took over the physical possession and cultivation of these
parcels of land. Because of that, petitioners incurred losses and injuries by
way of lost harvests and other damages. Petitioners thus prayed for
injunctive relief, actual damages in the amount of not less than P40,000.00
for each cropping season lost, P30,000.00 attorneys fees, and costs.
Issue: Whether or not actual damages should be awarded.
SC: Yes.
There is sufficient basis for the MCTC to award petitioners the total
amount of P598,679.00 by way of actual damages. The trial courts findings
on this score are based on the evidence presented by the petitioners and the
respective statements of their witnesses, who themselves are farmers
cultivating lands adjacent to the subject property.
Topics: Accion Publiciana; Torrens Title
Ponente: Jose Mendoza
Paul P. Gabriel, Jr., Ireneo C. Calwag, Thomas L. Tingga-an and Heirs
of Juliet B. Pulkera vs. Carmeling Crisologo
G.R No. 204626, June 9, 2014
Facts: Crisologo alleged, among others, that she was the registered owner
of two parcels of land with a total area of approximately 2,000 square
meters, described in, and covered by, two (2) certificates of title Transfer

Certificate of Title (TCT) Nos. T-13935 and T-13936; that the properties were
covered by an Assessment of Real Property; that the payments of realty
taxes on the said properties were updated; that sometime in 2006, she
discovered that petitioners unlawfully entered, occupied her properties by
stealth, by force and without her prior consent and knowledge, and
constructed their houses thereon; that upon discovery of their illegal
occupation, her daughter, Atty. Carmelita Crisologo and another, personally
went to the properties and verbally demanded that petitioners vacate the
premises and remove their structures thereon; that the petitioners begged
and promised to buy the said properties for P3,500.00 per square meter; that
she gave petitioners time to produce the said amount, but they reneged on
their promise to buy them; that petitioners refused to vacate the subject
properties despite several demands; that the petitioners knew full well that
the subject premises they were occupying were titled properties but they
insisted on unlawfully holding the same; and that she was unlawfully
dispossessed and displaced from the subject properties due to petitioners
illegal occupation.
The petitioners countered that Crisologo's certificates were void since
she did not comply with the legal requirements. They added that they had
been in open, actual, exclusive, notorious, uninterrupted, and continuous
possession of the subject land, in good faith, and that Crisologo was never in
prior possession and had no valid title over the subject land.
Issues: 1. Whether the petitioners or the respondent have/has the right of
ownership over the properties.
2. Whether or not the action of petitioners in questioning respondent's
title was correct.
SC: 1. The respondent.
The testimonial and documentary evidence on record prove that
respondent Crisologo has a preferred claim of possession over that of
petitioners. It cannot be denied that she bought the subject properties from
the previous owner in 1967, which was why the transfer certificates of title
were subsequently issued in her name. Records further show that she has
been paying the realty taxes on the said properties since 1969. She likewise
appointed her attorney-in-fact, Isican, as administrator of the disputed lands.
More importantly, there is no question that she offered to sell to petitioners
the portions of the subject properties occupied by them. Hence, she
deserves to be respected and restored to her lawful possession as provided
in Article 539 of the New Civil Code.
2. No.
Accion publiciana is an ordinary civil proceeding to determine the
better right of possession of realty independently of title. It refers to an
ejectment suit filed after the expiration of one year from the accrual of the
cause of action or from the unlawful withholding of possession of the realty.

The
objective
of
the
plaintiffs
in accion
publiciana is
to
recover possession only, not ownership. When parties, however, raise the
issue of ownership, the court may pass upon the issue to determine who
between the parties has the right to possess the property. This adjudication,
nonetheless, is not a final and binding determination of the issue of
ownership; it is only for the purpose of resolving the issue of possession,
where the issue of ownership is inseparably linked to the issue of possession.
The adjudication of the issue of ownership, being provisional, is not a bar to
an action between the same parties involving title to the property. The
adjudication, in short, is not conclusive on the issue of ownership.
In respondent Crisologo's action, she prayed that she be declared the
lawful possessor of the land. Thus, clearly, her intention pertains to an
accion publiciana. When the petitioners raised the question on the legality of
the titles, this by nature is a collateral attack on the question of ownership.
This cannot be entertained since the action is essentially only on the
question of possession.
In addition to the above reason, as a holder of a Torrens certificate of
title, the law protects Crisologo from a collateral attack on the same. Section
48 of P.D. No. 1529, otherwise known as the Property Registration Decree,
provides that a certificate of title cannot be the subject of a collateral attack.
Thus, under Sec. 48: Certificate not subject to collateral attack. A
certificate of title shall not be subject to collateral attack. It cannot
be altered, modified, or canceled except in a direct proceeding in accordance
with law.
Registration of land under the Torrens system, aside from perfecting
the title and rendering it indefeasible after the lapse of the period allowed by
law, also renders the title immune from collateral attack. A collateral attack
transpires when, in another action to obtain a different relief and as an
incident of the present action, an attack is made against the judgment
granting the title.
Topic: Laches
Ponente: Jose Medoza
Department of Education, represented by its Regional Director
Teresita Domalanta vs. Mariano Tuliao
G.R No. 205664, June 9, 2014
Facts: Mariano Tuliao (Tuliao) filed an action for recovery of possession and
removal of structure with damages against the Department of
Education (DepEd) with the Municipal Trial Court in Cities of Tuguegarao
City (MTCC). He alleged that he was the registered owner of the subject
parcel of land and that a portion of the said propety was allowed by his
predecessors-in-interest to be used by the Atulayan Elementary
School (AES) as an access road for the schoolchildren in going to and from
the school. In March 2000, upon discovering that a structure was being

constructed on the land, he demanded that the DepED cease and desist and
vacate the property. The respondent, however, refused. Tuliao likewise
demanded payment for reasonable rent, but his demand was also ignored.
In its defense, the DepEd denied the material allegations of the
complaint and averred that it did not state a cause of action. Even if there
was, the same was already barred by prescription and/or laches. Its
occupation of the subject land was adverse, peaceful, continuous, and in the
concept of an owner for more than fifty (50) years. It also alleged that it did
not receive a notice to cease and desist or notice to vacate. As owner of the
school site, it could not be compelled to pay rent or its reasonable value.
Issue: Whether Tuliao or the DepEd has a better right over the disputed
property.
SC: Tuliao.
The DepEd 's defense of laches has no merit. It avers that its
possession of the subject land was open, continuous, exclusive, adverse,
notorious and in the concept of an owner for at least thirty-two (32) years
already at the time Tuliao filed the complaint. It must be noted, however,
that Tuliao's claim that the DepEd's possession of a portion of his land to be
used as a passageway for the students was mere tolerance was not refuted.
Thus, the same is deemed admitted. This means that the DepEd's possession
was
not
truly
adverse.
The Court once ruled that mere material possession of the land
was not adverse as against the owner and was insufficient to vest
title, unless such possession was accompanied by the intent to
possess as an owner. Accordingly, the DepEd 's possession can only be
considered as adverse from the time the gymnasium was being constructed
in 1999 on the subject portion of Tuliao's property. In March 2000, Tuliao
discovered the construction and demanded that the DepEd cease and desist
from continuing the same. When DepEd refused, Tuliao filed a complaint for
recovery of possession of the subject lot in 2002. Thus, only two (2) years
had elapsed from the time the DepEd resisted Tuliao 's claims. Clearly, he
did not sleep on his rights. There was no prolonged inaction that
barred him from prosecuting his claims.

Topics: Exclusive property; Successional rights

Ponente: Martin Villarama, Jr.
CALALANG-PARULAN vs. CALALANG-GARCIA, et al.
G.R. No. 184148, June 9, 2014
Facts: According to the respondents, their father, Pedro Calalang, contracted
two marriages during his lifetime. The first marriage was with their mother
Encarnacion Silverio. During the subsistence of this marriage, their parents
acquired the subject parcel of land from their maternal grandmother,
Francisca Silverio. Despite enjoying continuous possession of the land,
however, their parents failed to register the same. On June 7, 1942, the first
marriage was dissolved with the death of Encarnacion Silverio.
On November 6, 1967, Pedro Calalang entered into a second marriage,
with Elvira B. Calalang, who then gave birth to Nora B. Calalang-Parulan and
Rolando Calalang. According to the respondents, it was only during this time
that Pedro Calalang filed an application for free patent over the parcel of land
with the Bureau of Lands. Pedro Calalang committed fraud in such
application by claiming sole and exclusive ownership over the land since

1935 and concealing the fact that he had three children with his first spouse.
As a result, an Original Certificate of Title was issued in favor of Pedro
Calalang only.
On February 17, 1984, Pedro Calalang sold the said parcel of land to
Nora B. Calalang-Parulan executed by both Pedro Calalang and Elvira B.
Calalang. Accordingly, a Transfer Certificate of Title in the name of Nora B.
Calalang-Parulan was issued. On December 27, 1989, Pedro Calalang died.
The respondents assailed the validity of such TCT on two grounds. First,
the respondents argued that the sale of the land was void because Pedro
Calalang failed to obtain the consent of the respondents who were co-owners
of the same. As compulsory heirs upon the death of Encarnacion Silverio, the
respondents claimed that they acquired successional rights over the land.
Thus, in alienating the land without their consent, Pedro Calalang allegedly
deprived them of their pro indiviso share in the property. Second, the
respondents claimed that the sale was absolutely simulated as Nora B.
Calalang-Parulan did not have the capacity to pay for the consideration
stated in the Deed of Sale.
In their Answer, the petitioners argued that the parcel of land was
acquired during the second marriage of Pedro Calalang with Elvira B.
Calalang. They stressed that the OCT itself stated that it was issued in the
name of "Pedro Calalang, married to Elvira Berba [Calalang]." Thus, the
property belonged to the conjugal partnership of the spouses Pedro Calalang
and Elvira B. Calalang. The petitioners likewise denied the allegation that the
sale of the land was absolutely simulated as Nora B. Calalang-Parulan was
gainfully employed in Spain at the time of the sale.
The lower courts ruled in favor of the respondents. The appellate court
reversed said decisions but ruled that the parcel of land was Pedro's
exclusive property.
Hence, this petition.
Issues: 1. Whether or not Pedro Calalang was the exclusive owner of the
disputed property prior to its
transfer to his daughter Nora B. CalalangParulan.
2. Whether or not the respondents were deprived of their successional
rights.
SC: 1. Yes.
The records are bereft of any concrete proof to show that the
subject property indeed belonged to respondents maternal grandparents.
The evidence respondents adduced merely consisted of testimonial evidence
such as the declaration of Rosario Calalang-Garcia that they have been
staying on the property as far as she can remember and that the property
was acquired by her parents through purchase from her maternal
grandparents. However, she was unable to produce any document to
evidence the said sale, nor was she able to present any documentary
evidence such as the tax declaration issued in the name of either of her

parents. Moreover, the Court noted that the free patent was issued solely in
the name of Pedro Calalang and that it was issued more than 30 years after
the death of Encarnacion and the dissolution of the conjugal partnership of
gains of the first marriage.
Thus, the subject property did not originally belong to the parents of
Encarnacion and was acquired by Pedro Calalang and Encarnacion.
Neither the disputed property belongs to the conjugal
partnership of the second marriage of Pedro Calalang with Elvira B.
Calalang on the ground that the title was issued in the name of "Pedro
Calalang, married to Elvira Berba [Calalang]."
The contents of a certificate of title are enumerated by Section 45 of
Presidential Decree No. 1529, otherwise known as the Property Registration
Decree:
SEC. 45. Statement of personal circumstances in the certificate. Every
certificate of title shall set forth the full names of all persons whose interests
make up the full ownership in the whole land, including their civil status, and
the names of their respective spouses, if married, as well as their citizenship,
residence and postal address. If the property covered belongs to the conjugal
partnership, it shall be issued in the names of both spouses.
A plain reading of the above provision would clearly reveal that the
phrase "Pedro Calalang, married to Elvira Berba [Calalang]" merely
describes the civil status and identifies the spouse of the registered
owner Pedro Calalang. Evidently, this does not mean that the
property is conjugal.
Hence, as the sole and exclusive owner, Pedro Calalang had the
right to convey his property in favor of Nora B. Calalang-Parulan.
2. No.
It is hornbook doctrine that successional rights are vested only at the
time of death. Article 777 of the New Civil Code provides that "[t]he rights to
the succession are transmitted from the moment of the death of the
decedent."
Thus, it is only upon the death of Pedro Calalang on December 27,
1989 that his heirs acquired their respective inheritances, entitling them to
their pro indiviso shares to his whole estate. At the time of the sale of the
disputed property, the rights to the succession were not yet
bestowed upon the heirs of Pedro Calalang. And absent clear and
convincing evidence that the sale was fraudulent or not duly
supported by valuable consideration (in effect an in officious
donation inter vivas), the respondents have no right to question the
sale of the disputed property on the ground that their father
deprived them of their respective shares. Well to remember, fraud must
be established by clear and convincing evidence. Mere preponderance of
evidence is not even adequate to prove fraud. The Complaint for Annulment

of Sale and Reconveyance of Property must therefore be dismissed.

Topic: Disposable and alienable lands of public domain

Ponente: Martin Villarama, Jr.
Republic of the Philippines vs. Crisanto Raneses

G.R No. 189970, June 9, 2014

Facts: Crisanto S. Raneses (respondent) filed an Application for Original
Registration of Land Title over two parcels of land, near the Laguna Lake. He
said his parents had been in continuous possession and occupation of the
same as early as June 1945. He said that his predecessors-in-interest
planted crops in the area and irrigated the same using the water from the
lake. Respondent claimed that he acquired ownership over the subject
properties when his mother, Nina Raneses, and his sisters, Annabelle R. San
Juan and Belinda R. Bayas, executed an Extrajudicial Settlement of Estate
with Deed of Waiver. Respondent also testified that there were no other
persons or entities who occupied the subject properties. Correlatively, a
Conversion Subdivision Plan covering the subject properties was prepared by
a private Geodetic Engineer named Andrew DG.Montallana. Said Plan noted
that the subject properties were surveyed and according to such survey the
subject properties were inside alienable and disposable land area as certified
by the Bureau of Forestry.
In its Opposition to the application, the Laguna Lake Development
Authority alleged that the subject properties are below the 12.50-meter
elevation, hence, forming part of the bed of Laguna Lake and are, therefore,
inalienable, indisposable and incapable of registration.
Issue: Whether or not the properties involved are land alienable and
disposable.
SC: No.
Under Section 14 (1) of P.D. No. 1529, a petition may be granted upon
compliance with the following requisites: (a) that the property in question is
alienable and disposable land of the public domain; (b) that the
applicants by themselves or through their predecessors-in-interest have
been in open, continuous, exclusive and notorious possession and
occupation; and (c) that such possession is under a bona fide claim of
ownership since June 12, 1945 or earlier.
The Regalian doctrine, embodied in Section 2, Article XII of the 1987
Constitution, provides that all lands of the public domain belong to the State,
which is the source of any asserted right to ownership of land. All lands not
appearing to be clearly within private ownership are presumed to belong to
the State. Unless public land is shown to have been reclassified or alienated
to a private person by the State, it remains part of the inalienable public
domain for land classification or reclassification cannot be assumed. It
must be proved. And the applicant bears the burden to overturn, by
incontrovertible evidence, the presumption that the land subject of an
application for registration is alienable and disposable.
Respondent failed to hurdle this burden.

It bears noting that in support of his claim that the subject properties
are alienable and disposable, respondent merely presented the Conversion
Subdivision Plan which was prepared by Engr. Montallana with the annotation
that the subject properties were "inside alienable and disposable land area
Proj. no. 27-B as per LC Map No. 2623 certified by the Bureau of Forestry on
January 3, 1968" and the Inter-Office Memorandum from the LLDA.
Respondents reliance on the said annotation and Inter-Office
Memorandum is clearly insufficient. Absent any clear declaration from
the government for the alienability and disposability of such lands,
then all lands shall still belong to the State.

Topic: Rescission
Ponente: Estela Perlas-Bernabe
GOLDEN VALLEY EXPLORATION, INC. (GVEI) v. PINKIAN MINING
COMPANY (PMC) and COPPER VALLEY, INC. G.R. No. 190080, June 11,
2014
Facts: PMC is the owner of 81 mining claims located in Kayapa, Nueva
Vizcaya, 15 of which were covered by Mining Lease Contract (MLC) No. MRD56. On October 30, 1987, PMC entered into an Operating Agreement (OA)
with GVEI, granting the latter control over all matters regarding the mining
claims. However, PMC later rescinded the OA with GVEI citing violations of
several terms in the same OA. GVEI in its defense, contested PMCs extrajudicial rescission of the OA averrig therein that its obligation to pay royalties
to PMC arises only when the mining claims are placed in commercial
production which condition has not yet taken place. It also reminded PMC of
its prior payment of the amount of P185,000.00 as future royalties in
exchange for PMCs express waiver of any breach or default on the part of
GVEI.
Issue: Whether or not there was a valid rescission of the OA.
SC: Yes.
In reciprocal obligations, either party may rescind the contract upon
the others substantial breach of the obligation/s he had assumed
thereunder. The basis therefor is Article 1191 of the Civil Code.
The injured party has the following options:
1. fulfillment of the obligation, plus payment of damages, or
2. the rescission of the obligation, plus payment of damages.
He may also seek rescission, even after he has chosen fulfillment, if
the latter should become impossible.
More accurately referred to as resolution, the right of rescission under
Article 1191 is predicated on a breach of faith that violates the reciprocity
between parties to the contract. This retaliatory remedy is given to the
contracting party who suffers the injurious breach on the premise that it is
"unjust that a party be held bound to fulfill his promises when the other
violates his."
General rule: the power to rescind an obligation must be invoked
judicially and cannot be exercised solely on a partys own judgment that the
other has committed a breach of the obligation. This is so because rescission
of a contract will not be permitted for a slight or casual breach, but
only for such substantial and fundamental violations as would defeat

the very object of the parties in making the agreement.

Exception: An injured party need not resort to court action in order to
rescind a contract when the contract itself provides that it may be revoked or
cancelled upon violation of its terms and conditions.
Therefore, the Court upheld PMCs unilateral rescission of the OA due
to GVEIs non-payment of royalties considering the parties express
stipulation in the OA that said agreement may be cancelled on such
ground. This is found in Section 8.01, Article VIII in relation to Section 5.01,
Article V of the OA.

Topic: Degree of Diligence

Ponente: BIENVENIDO L. REYES
Asian Terminals, Inc. v. First Lepanto-Taisho Insurance Corp., G.R.
No. 185964, June 16, 2014
Facts: There was a shipment owned by China Ocean Shipping Co. (COSCO)
in favor of consignee, Grand Asian Sales, Inc. (GASI). Based on a Certificate
of Insurance, it appears that the shipment was insured against all risks by
GASI with FIRST LEPANTO.
The shipment arrived in Manila and was discharged into the possession
and custody of herein petitioner Asian Terminals, Inc (ATI), a domestic
corporation engaged in arrastre business. The shipment remained for quite
some time at ATIs storage area until it was withdrawn by broker, Proven
Customs Brokerage Corporation (PROVEN) for delivery to the consignee.
Upon receipt of the shipment, GASI subjected the same to inspection and
found that the delivered goods incurred shortages and spillage incurring
loss/damage valued at P166,772.41.
After the requisite investigation and adjustment, FIRST LEPANTO paid
GASI the amount of P165,772.40 as insurance indemnity. As such subrogee,
FIRST LEPANTO demanded from COSCO, its shipping agency in the
Philippines, SMITH BELL, PROVEN and ATI, reimbursement of the amount it
paid to GASI.
ATI denied liability for the lost/damaged shipment and claimed that it
exercised due diligence and care in handling the same.
Issue: Whether or not ATI exercised due diligence while the shipment was
under its custody, control and possession as arrastre operator.
SC: NO.

The relationship between the consignee and the arrastre

operator is akin to that existing between the consignee and/or the
owner of the shipped goods and the common carrier, or that
between a depositor and a warehouseman.

Hence, in the performance of its obligations, an arrastre

operator should observe the same degree of diligence as that
required of a common carrier and a warehouseman. Being the
custodian of the goods discharged from a vessel, an arrastre
operators duty is to take good care of the goods and to turn them

over to the party entitled to their possession.

In a claim for loss filed by the consignee (or the insurer), the
burden of proof to show compliance with the obligation to deliver
the goods to the appropriate party devolves upon the arrastre
operator. Since the safekeeping of the goods is its responsibility, it
must prove that the losses were not due to its negligence or to that
of its employees.

To avoid liability, the arrastre operator must prove that it

exercised diligence and due care in handling the shipment.
ATI failed to discharge its burden of proof. Instead, it insisted on
shifting the blame to COSCO on the basis of the Request for Bad Order
Survey dated August 9, 1996 purportedly showing that when ATI received
the shipment, one jumbo bag thereof was already in damaged condition.
To prove the exercise of diligence in handling the subject cargoes, an
arrastre operator must do more than merely show the possibility that some
other party could be responsible for the loss or the damage. It must prove
that it used all reasonable means to handle and store the shipment with due
care and diligence including safeguarding it from weather elements, thieves
or vandals.

Topic: Quieting of Title/Proving Equitable title or ownership

Ponente: PRESBITERO J. VELASCO, JR.
Vilma Quintos, represented by her Attorney-in-Fact Fidel I. Quintos,
Jr., et.al v. Pelagia I. Nicolas, et.al. G.R. No. 210252, June 16, 2014
Facts: Petitioners Vilma Quintos, Florencia Dancel, and Catalino Ibarra, and
respondents Pelagia Nicolas, Noli Ibarra, Santiago Ibarra, Pedro Ibarra, David
Ibarra, Gilberto Ibarra, and the late Augusto Ibarra are siblings. Herein
petitioners Bienvenido and Escolastica Ibarra were the owners of the subject
property located in Tarlac. By 1999, both Bienvenido and Escolastica had
already passed away, leaving to their ten (10) children ownership over the
subject property. Subsequently, sometime in 2002, respondent siblings
brought an action for partition against petitioners which was dismissed by
the trial court and such decision became final.
Having failed to secure a favorable decision for partition, respondent
siblings instead resorted to executing a Deed of Adjudication to transfer the
property in favor of the ten (10) siblings. Subsequently, respondent siblings
sold their 7/10 undivided share over the property in favor of their corespondents, the spouses Recto and Rosemarie Candelario.
Petitioners filed a complaint for Quieting of Title and Damages against
respondents wherein they alleged that during their parents lifetime, the
couple distributed their real and personal properties in favor of their ten (10)
children.
Issue: Whether or not the petitioners were able to prove ownership over the
property;
SC: No.

Quieting of title is a common law remedy for the removal of

any cloud, doubt, or uncertainty affecting title to real property.

For an action to quiet title to prosper, two indispensable

requisites must concur, namely:

(1) the plaintiff or complainant has a legal or equitable title to or

interest in the real property subject of the action; and
(2) the deed, claim, encumbrance, or proceeding claimed to be
casting cloud on the title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or efficacy.
In the case at bar, the CA correctly observed that petitioners cause of
action must necessarily fail mainly in view of the absence of the first
requisite.
The cardinal rule is that bare allegation of title does not suffice. The
burden of proof is on the plaintiff to establish his or her case by
preponderance of evidence. Petitioners, as such plaintiff, in this case failed to
discharge the said burden imposed upon them in proving legal or equitable
title over the parcel of land in issue.

Topic: Unlawful Detainer

Ponente: ESTELA M. PERLAS-BERNABE
Bonifacio Piedad, Maria Piedad represented by Inspiracion Danao
vs. Spouses Victorio Qurieza and Emeteria M. Gurieza
G.R. No. 207525, June 18, 2014
Facts:
A Complaint for Unlawful Detainer and Damages was filed by
Bonifacio against Sps.Gurieza. In his complaint, Bonifacio alleged that he is
the absolute owner of the 1/3 middle portion of a parcel of residential land
designated as Lot 1227 which he acquired through intestate succession from
his late father who inherited the same from the latters parents, Alejandro
Piedad (Alejandro)and Tomasa Villaray (Tomasa). He also claimed that his
ownership of the subject lot took place even before his fathers death and
was validated through a Deed of Confirmation of an Adjudication and
Partition (Deed of Confirmation) executed by Alejandro and Tomasas legal
heirs. Further, Bonifacio alleged that before migrating to Hawaii, he built a
bungalow on the subject lot and assigned numerous caretakers to look after
it, the last of which were Sps. Gurieza. Sometime in 2005, however, Sps.
Gurieza allegedly took interest of the bungalow and the subject lot after
learning from an employee of the Department of Environment and Natural
Resources (DENR) that Lot 1227 is public land. Using such information, Sps.
Gurieza had the subject lot declared under their name for tax purposes,
caused a subdivision survey of Lot 1227, and filed an application for survey
authority and titling with the Bureau of Land Management, Community
Environment and Natural Resources Office of the DENR, Bayombong, Nueva
Vizcaya (CENRO DENR Nueva Vizcaya).
When Bonifacio learned of Sps. Guriezas acts, he authorized Ofelia
Bay-ag to file a protest before the DENR which deferred further action on
their (Sps. Guriezas) application before it. Thereafter, Bonifacio sent his
daughter, Maria Inspiracion Piedad-Danao (Danao), to the country to
personally demand that Sps. Gurieza vacate the subject lot unconditionally;
and for this purpose, Danao initiated a complaint before the barangay court.
However, during the mediation proceedings, Sps. Gurieza refused to heed
Danaos demand and even challenged her to go to higher courts. Thus,
Bonifacio was constrained to file the instant case as his last resort.
In their defense, Sps. Gurieza denied Bonifacios claim and maintained
that in 1974, the subject lot was a vacant and virginal public land and that

the DENR allowed them to possess and occupy the same in the concept of an
owner. As such, they acquired the same through acquisitive prescription.
They likewise assailed the authenticity and validity of the Deed of
Confirmation, contending that it was only signed by a few heirs of Alejandro
and Tomasa.
Issue: Whether or not Bonifacio had clearly established his cause of action
for unlawful detainer.
SC: Yes.

Unlawful detainer is an action to recover possession of real

property from one who unlawfully withholds possession thereof
after the expiration or termination of his right to hold possession
under any contract, express or implied.

The possession of the defendant in unlawful detainer is

originally legal but became illegal due to the expiration or
termination of the right to possess.

The only issue to be resolved in an unlawful detainer case is

the physical or material possession of the property involved,
independent of any claim of ownership by any of the parties.

An ejectment case, based on the allegation of possession by

tolerance, falls under the category of unlawful detainer. Where the
plaintiff allows the defendant to use his/her property by tolerance
without any contract, the defendant is necessarily bound by an
implied promise that he/she will vacate on demand, failing which, an
action for unlawful detainer will lie.
Under Section 1, Rule 70 of the Rules of Court, the complaint
must be filed "within one (1) year after such unlawful deprivation or
withholding of possession" and must allege that: (a) the defendant originally
had lawful possession of the property, either by virtue of a contract or by
tolerance of the plaintiff;
(b) eventually, the defendants possession of the property became illegal or
unlawful upon notice by the plaintiff to defendant of the expiration or the
termination of the defendants right of possession;
(c) thereafter, the defendant remained in possession of the property and
deprived the plaintiff the enjoyment thereof; and
(d) within one (1) year from the unlawful deprivation or withholding of
possession, the plaintiff instituted the complaint for ejectment.
Bonifacio had clearly established his cause of action for unlawful
detainer. The following established facts impel this conclusion:

First, the evidence shows that as early as the 1950s, Bonifacio already
had possession of the subject lot and even built a bungalow-type house
thereon. Moreover, when he migrated to Hawaii, Bonifacio appointed
numerous caretakers to the said house and lot, the last being Sps. Gurieza.
Thus, despite his migration to Hawaii, Bonifacio never relinquished said
possession over the house and lot. Consistent with Article 524 of the Civil
Code, it is well-settled that "it is not necessary that the owner of a parcel of
land should himself occupy the property as someone in his name may
perform the act. In other words, the owner of real estate has possession,
either when he himself is physically in occupation of the property, or when
another person who recognizes his rights as owner is in such occupancy."
Thus, the Sps. Guriezas stay on the subject lot was only made possible
through the mere tolerance of Bonifacio.
Second, when Bonifacio learned that Sps. Gurieza declared the subject
lot under their name for tax purposes, caused a subdivision survey of Lot
1227, and filed an application for survey authority and titling with the
CENRODENR Nueva Vizcaya, he immediately took steps to terminate their
tolerated stay on the subject lot and house and demanded that they leave
immediately, rendering the Sps.Guriezas stay on the subject lot illegal.
Third, instead of vacating the subject lot, Sps. Gurieza defied
Bonifacios demand and asserted their ownership over the same. Moreover,
they even challenged Danao to go to the courts to have them removed from
such lot. In effect, Sps. Gurieza was able to unlawfully withhold possession of
the subject lot from Bonifacio.
Lastly, Bonifacio, through Danao, made his final demand to Sps.
Gurieza on January 14, 2008, as evidenced by a Certificate to File Action
issued by the Barangay Captain of the area where the subject lot was
located, stating that the Sangguniang Barangay had tried to settle the
dispute between the parties but failed to do so, and filed his complaint on
June 24, 2008, or within the one (1) year period from his last demand.

Topic: Obligations and Contracts

mortgages
Ponente: J. BIENVENIDO L. REYES

vitiated

consent

vis-a-vis

Spouses Victor and Edna Binua vs. Lucia P. Ong

G.R. No. 207176, June 18, 2014
Facts:
Petitioner Edna Binua was found guilty of Estafa. Petitioner Edna
was also ordered to pay the respondent the amount ofP2,285,000.00, with
ten percent (10%) interest, and damages.
Petitioner Edna sought to avoid criminal liability by settling her
indebtedness through the execution of separate real estate mortgages over
petitioner Victors properties and covering the total amount ofP7,000,000.00.
Thereafter, petitioner Edna filed a motion for new trial, which was
granted by the RTC. The trial court ruled that the presentation of a
promissory note executed in favor of Ong novated the original agreement
between them into a civil obligation.
Issue: Whether or not petitioners were compelled by duress or intimidation
when they executed the mortgage contracts.
SC: No.
Article 1390(2) of the Civil Code provides that contracts where
the consent is vitiated by mistake, violence, intimidation, undue
influence or fraud are voidable or annullable.

Article 1335 of the Civil Code, meanwhile, states that "there is

intimidation when one of the contracting parties is compelled by a
reasonable and well-grounded fear of an imminent and grave evil
upon his person or property, or upon the person or property of his
spouse, descendants or ascendants, to give his consent." The same
article, however, further states that "a threat to enforce ones claim through
competent authority, if the claim is just or legal, does not vitiate consent."
In De Leon v. Court of Appeals, the Court held that in order that
intimidation may vitiate consent and render the contract invalid, the
following requisites must concur:
(1) that the intimidation must be the determining cause of the contract, or
must have caused the consent to be given;
(2) that the threatened act be unjust or unlawful;
(3) that the threat be real and serious, there being an evident disproportion
between the evil and the resistance which all men can offer, leading to the
choice of the contract as the lesser evil; and
(4) that it produces a reasonable and well-grounded fear from the fact that
the person from whom it comes has the necessary means or ability to inflict
the threatened injury.
In cases involving mortgages, a preponderance of the evidence is
essential to establish its invalidity, and in order to show fraud, duress, or
undue influence of a mortgage, clear and convincing proof is necessary.
Based on the petitioners own allegations, what the respondent did was
merely inform them of petitioner Ednas conviction in the criminal cases for
estafa. It might have evoked a sense of fear or dread on the petitioners part,
but certainly there is nothing unjust, unlawful or evil in the respondent's act.
The petitioners also failed to show how such information was used by the
respondent in coercing them into signing the mortgages.

Topics: Torts Negligence of an employee/vicarious liability of

employer; Damages
Ponente: JOSE PORTUGAL PEREZ
Mariano C. Mendoza and Elvira Lim v. Spouses Leonora J. Gomez and
Gabriel V. Gomez
G.R. No. 160110, June 18, 2014
Facts: An Isuzu truck owned by respondent Leonora J. Gomez (Leonora) and
driven by Antenojenes Perez (Perez), was hit by a Mayamy Transportation bus
(Mayamy bus) registered under the name of petitioner Elvira Lim (Lim) and
driven by petitioner Mariano C. Mendoza (Mendoza).
An Information for reckless imprudence resulting in damage to
property and multiple physical injuries was filed against Mendoza. Mendoza,
however, eluded arrest, thus, respondents filed a separate complaint for
damages against Mendoza and Lim, seeking actual damages, compensation
for lost income, moral damages, exemplary damages, attorneys fees and
costs of the suit.
Issues: 1. Whether or not Mendozas negligence was duly proven.
2. Whether or not the doctrine of vicarious liability or imputed
negligence is applicable in this case.

3. What damages may be awarded?

SC:

1. Yes.

Under Article 2176 of the Civil Code, whoever by act or omission

causes damage to another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.
In impleading Lim, on the other hand, respondents invoke the latters
vicarious liability as espoused in Article 2180 of the same Code: The
obligation imposed by Article 2176 is demandable not only for ones own
acts or omissions, but also for those of persons for whom one is responsible.
xxxx
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business of industry.
Negligence is defined as the failure to observe for the protection of the
interests of another person, that degree of care, precaution and vigilance
which the circumstances justly demand, whereby such other person suffers
injury.
Mendoza was negligent in driving the subject Mayamy bus. Having
encroached on the opposite lane, Mendoza was clearly in violation of traffic
laws.
Article2185 of the Civil Code provides that unless there is proof to
the contrary, it is presumed that a person driving a motor vehicle has been
negligent if at the time of the mishap, he was violating any traffic regulation.
In the case at bar, Mendozas violation of traffic laws was the proximate
cause of the harm.
Proximate cause is defined as that cause, which, in natural and
continuous sequence, unbroken by any efficient intervening cause, produces
the injury, and without which the result would not have occurred.
Proximate legal cause is that acting first and producing the injury,
either immediately or by setting other events in motion, all constituting a
natural and continuous chain of events, each having a close causal
connection with its immediate predecessor, the final event in the chain
immediately effecting the injury as a natural and probable result of the cause
which first acted, under such circumstances that the person responsible for
the first event should, as an ordinary prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default that an
injury to some person might probably result therefrom.

2. Yes.
Under the doctrine of vicarious liability or imputed negligence, a
person who has not committed the act or omission which caused damage or
injury to another may nevertheless be held civilly liable to the latter either
directly or subsidiarily under certain circumstances. Such is embodied in
Article 2180 of the Civil Code and the basis for damages in the action
under said article is the direct and primary negligence of the employer in the
selection or supervision, or both, of his employee.
General Rule: When an injury is caused by the negligence of a
servant or employee, there instantly arises a presumption of law that there
was negligence on the part of the master or employer either in the selection
of the servant or employee (culpa in eligiendo) or in the supervision over him
after the selection (culpa vigilando), or both. The presumption is juris tantum
and not juris et de jure; consequently, it may be rebutted.
Accordingly, the general rule is that if the employer shows to the
satisfaction of the court that in the selection and supervision of his employee
he has exercised the care and diligence of a good father of a family, the
presumption is overcome and he is relieved of liability.
Exception: With the enactment of the motor vehicle registration
law, the defenses available under Article 2180 of the Civil Code - that the
employee acts beyond the scope of his assigned task or that it exercised the
due diligence of a good father of a family to prevent damage are no longer
available to the registered owner of the motor vehicle, because the motor
vehicle registration law, to a certain extent, modified Article 2180.
Under the civil law principle of unjust enrichment, the registered owner
of the motor vehicle has a right to be indemnified by the actual employer of
the driver; and under Article 2181 of the Civil Code, whoever pays for the
damage caused by his dependents or employees may recover from the latter
what he has paid or delivered in satisfaction of the claim.
3.
Actual or Compensatory Damages. Actual or compensatory
damages are those awarded in satisfaction of, or in recompense for, loss or
injury sustained. They simply make good or replace the loss caused by the
wrong.
Article 2202 of the Civil Code provides that in crimes and quasi delicts, the
defendant shall be liable for all damages which are the natural and probable
consequences of the act or omission complained of. It is not necessary that
such damages have been foreseen or could have reasonably been foreseen
by the defendant. Article 2199 of the same Code, however, sets the
limitation that, except as provided by law or by stipulation, one is entitled to
an adequate compensation only for such pecuniary loss suffered by
him as he has duly proved. As such, to warrant an award of actual or

compensatory damages, the claimant must prove that the damage sustained
is the natural and probable consequences of the negligent act and,
moreover, the claimant must adequately prove the amount of such damage.
Moral Damages. Moral damages are awarded to enable the injured
party to obtain means, diversions or amusements that will serve to alleviate
the moral suffering he has undergone, by reason of the defendant's culpable
action.
In fine, an award of moral damages calls for the presentation of
1) evidence of besmirched reputation or physical, mental or
psychological suffering sustained by the claimant;
2) a culpable act or omission factually established;
3) proof that the wrongful act or omission of the defendant is the
proximate cause of the damages sustained by the claimant; and
4) the proof that the act is predicated on any of the instances
expressed or envisioned by Article 2219 and Article 2220 of the Civil
Code.
Moreover, respondents were not able to show that their claim properly
falls under Articles 2219 and 2220 of the Civil Code, and Art. 21.
Article 21 deals with acts contra bonus mores, and has the
following elements:
(1) There is an act which is legal;
(2) but which is contrary to morals, good custom, public order, or public
policy;
(3) and it is done with intent to injure.
Thus, Article 21 finds no application to the case at bar.
Exemplary Damages. Article 2229 of the Civil Code provides that
exemplary or corrective damages are imposed, by way of example or
correction for the public good, in addition to moral, temperate, liquidated or
compensatory damages. Article 2231 of the same Code further states that in
quasi-delicts, exemplary damages may be granted if the defendant acted
with gross negligence.
In motor vehicle accident cases, exemplary damages may be
awarded where the defendants misconduct is so flagrant as to transcend
simple negligence and be tantamount to positive or affirmative misconduct
rather than passive or negative misconduct. In characterizing the requisite
positive misconduct which will support a claim for punitive damages, the

courts have used such descriptive terms as willful, wanton, grossly negligent,
reckless, or malicious, either alone or in combination.
Gross negligence is the absence of care or diligence as to amount to a
reckless disregard of the safety of persons or property. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid
them.
Attorneys Fees. Article 2208 of the Civil Code enumerates the
instances when attorneys fees may be recovered:
Art. 2208. In the absence of stipulation, attorneys fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendants act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiffs valid and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmens compensation and employers
liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorneys fees and expenses of litigation should be recovered;
In all cases, the attorneys fees and expenses of litigation must be
reasonable.
General Rule: Attorneys fees are not recoverable in the absence of a
stipulation thereto, the reason being that it is not sound policy to set a
premium on the right to litigate.
Exception: It is clearly intended to retain the award of attorneys fees in
Article 2208 of the Civil Code, as the exception in our law.

Topics: Sales (Bids and Bidding); The Civil Code and the Asset
Specific Bidding Rules (ASBR); The issuance of a notice of award, as
admitted by Philippine Estate Corporation (PHES)
Ponente: MARIA LOURDES P. A. SERENO
ASSET PRIVATIZATION and MANAGEMENT OFFICE, v. STRATEGIC
ALLIANCE DEVELOPMENT CORP., and/or PHILIPPINE ESTATE CORP.
G.R. No. 200402, June 18, 2014/
STRATEGIC ALLIANCE DEVELOPMENT CORP., as substituted by
PHILIPPINE ESTATE CORP., v. PRIVATIZATION AND MANAGEMENT
OFFICE (formerly Asset Privatization Trust), and PHILIPPINE
NATIONAL CONSTRUCTION CORP.
G.R. No. 208127, June 18, 2014
Facts: PMO, then operating as the Asset Privatization Trust (APT), held a
public bidding to sell the PNCC properties in order to generate maximum
cash recovery for the government. The Asset Specific Bidding Rules (ASBR)
governed the bidding process, which had the following pertinent rules: (1)
the indicative price of the PNCC properties shall be announced on the day of
the bidding; (2) the winning bidder is the one that submits the highest total
bid and that complies with all the terms of the ASBR; (3) PMO reserves the
right to reject any or all bids, including the highest bid; and (4) the delivery
of financial information regarding the PNCC properties shall not give rise to a
warranty with respect to the said data or information. Strategic Alliance
Development Corporation, as a participant in the bidding process, signified
its acceptance under these terms.
On the day of the bidding, the indicative price was announced at
P7,000,000,000. None of the bidders met the threshold. Strategic Alliance
Development Corporation, despite giving the highest offer, only gave
P1,228,888,800 as its bid offer. Consequently, PMO rejected all the bids.
As a result, Strategic Alliance Development Corporation protested the
rejection of its bid and insisted that a notice of award of the PNCC properties
be issued in its favor. PMO refused. Subsequently, the former filed a
Complaint for Declaration of Right to a Notice of Award and/or Damages.
Issues:
1.
Whether or not the announcement of the indicative price
after the submission of the sealed bids constituted an act of fraud on the
part of PMO.

2.

Whether or notthe notice of award is tantamount to sale.

SC: No.
1.
According to PHES, the late announcement of the indicative price
amounted to fraud. But PMO timely announced the indicative price on the
day of the bidding pursuant to the ASBR. Therefore, absent a clear and
convincing evidence of fraud, and given that PMO followed the protocol,
fraud on its part cannot be presumed.
To justify the acceptance of its bid for the PNCC properties, PHES reiterates
that PMO erred in computing and explaining the indicative price of 7 billion,
in violation of the publics right to due process.

However, its allegations are irrelevant . Under the Civil Code and
the ASBR, bids are mere offers, which may be rightfully rejected by PMO.

Moreover, PHES unsuccessfully anchors its claim on a violation of the

publics right to information because the said right merely gives access
to public records, and does not precipitate a positive right to obtain
an award of the PNCC properties.
2.
The second issue has become moot and academic considering that the
issuance of a notice of award, as admitted by PHES itself, is the initial step
towards the perfection of the contract of sale involving the auctioned PNCC
properties. The second new issue is likewise flawed. Considering that the
amended rulings of the CA are the subjects of the instant appeal in G.R. No.
208127, its Amended Decision dated 13 February 2012 and Resolution dated
12 July 2013 cannot be considered as final and executory rulings that will
effectively vacate its Decision dated 27 January 2012.23
Therefore, the denial of the prayer for the issuance of a notice of award to
Strategic Alliance Development Corporation.

Topic: Contracts (Contract to Sell)

Ponente: J. ARTURO D. BRION

HELEN E. CABLING, assisted by her husband ARIEL CABLING v.
JOSELIN TAN LUMAPAS, as represented by NORY ABELLANES
G.R. No. 196950, June 18, 2014
Facts:
The petitioner was the highest bidder in an extrajudicial
foreclosure sale over a parcel of land and eventually a new TCT was issued to
the petitioner. The petitioner, then, filed an Application for the Issuance of a
Writ of Possession with the RTC which granted the same and issued a Writ of
Possession and Notice to Vacate.
Respondent Joselin Tan Lumapas intervened as a third party in actual
possession of the foreclosed property. She claimed that the property had
previously been sold to her by Aida Ibabao, the propertys registered owner
and the judgment debtor/mortgagor in the extrajudicial foreclosure sale,
pursuant to a Deed of Conditional Sale.
This case was elevated to SC contending that the present case is not
an exception to the ministerial issuance of a writ of possession. While
recognizing the respondents actual possession of the subject property, the
petitioner contends that such possession is not adverse to that of the
judgment debtor/mortgagor. Neither is possession in the concept of an owner
because in a conditional sale, ownership is retained by the seller until the
fulfillment of a positive suspensive condition, that is, the full payment of the
purchase price.
Issue: Whether or not ownership is retained by the seller until the fulfillment
of a positive suspensive condition, that is, the full payment of the purchase
price.
SC: Yes.

General Rule: Under Act No. 3135 (as amended), the issuance of
a writ of possession is ministerial upon the court after the foreclosure sale
and during the redemption period when the court may issue the order for a
writ of possession upon the mere filing of an ex parte motion and the
approval of the corresponding bond.

The writ of possession also issues as a matter of course,

without need of a bond or of a separate and independent action,
after the lapse of the period of redemption, and after the
consolidation of ownership and the issuance of a new TCT in the
purchasers name.

Exception to the rule: Under Section 33, Rule 39 of the Rules of

Court, which is made applicable to extrajudicial foreclosures of real estate

mortgages, the possession of the property shall be given to the purchaser or
last redemptioner unless a third party is actually holding the property in a
capacity adverse to the judgment obligor. Thus, the courts obligation to
issue an ex parte writ of possession in favor of the purchaser in an
extrajudicial foreclosure sale ceases to be ministerial when there is a third
party in possession of the property claiming a right adverse to that of the
judgment debtor/mortgagor. This exception contemplates a situation in
which a third party holds the property by adverse title or right, such as that
of a co-owner, tenant or usufructuary, who possesses the property in his own
right, and is not merely the successor or transferee of the right of possession
of another co-owner or the owner of the property.
In the present case, the respondent cannot be said to possess the
subject property by adverse title or right as her possession is merely
premised on the alleged conditional sale of the property to her by the
judgment debtor/mortgagor.

The execution of a contract of conditional sale does not

immediately transfer title to the property to be sold from seller to
buyer. In such contract, ownership or title to the property is
retained by the seller until the fulfillment of a positive suspensive
condition which is normally the payment of the purchase price in the
manner agreed upon.
In the present case, the Deed of Conditional Sale between the
respondent (buyer) and the subject propertys registered owner (seller)
expressly reserved to the latter ownership over the property until full
payment of the purchase price, despite the delivery of the subject property
to the respondent. It is provided in paragraph 6 of the parties contract that
only upon full payment of the total sale value of P2.2 million that the seller
shall execute a deed of absolute sale in favor of the respondent.
No deed of absolute sale over the subject property has been executed
in the respondent's favor. Thus, the respondent's possession from the time
the subject property was "delivered" to her by the seller cannot be claimed
as possession in the concept of an owner, as the ownership and title to the
subject property still then remained with the seller until the title to the
property was transferred to the petitioner in March 2009. In order for the
respondent not to be ousted by the ex parte issuance of a writ of possession,
her possession of the property must be adverse in that she must prove a
right independent of and even superior to that of the judgment
debtor/mortgagor.

Under these circumstances, the general rule, and not the

exception, applies.

Topic: Obligations (Foreign Currencies)

Ponente: Lucas P. Bersamin
Netlink Computer Inc. v. Eric Delmo
GR No. 160827, June 18, 2014
Facts: Netlink hired Eric S. Delmo as account manager. He was able to
generate sales worth P35,000,000.00, more or less, from which he earned
commissions amounting to P993,558.89 and US$7,588.30. He then
requested payment of his commissions, but Netlink refused and only gave
him partial cash advances chargeable to his commissions. Thereafter, Delmo
was refused entry into the company premises by the security guard pursuant
to a memorandum detailing his supposed infractions of the companys
attendance policy. Delmo then filed a complaint for illegal dismissal. Netlink
was then ordered to pay Delmo, among others, the amount of US$7,588.30
for his unpaid commission. Netlink argued that Delmo is not entitled to the
commissions payable in US Dollars, and that the computation of these
commissions must be based on the value of the peso in relation to a Dollar at
the time of sale.
Issue: Whether or not the payment of the commissions should be in US
dollars
SC: Yes.
General Rule: All obligations shall be paid in Philippine currency.
However, the contracting parties may stipulate that foreign currencies
may be used for settling obligations, pursuant to Republic Act No. 8183,
which provides:
Section 1. All monetary obligations shall be settled in the Philippine
currency which is legal tender in the Philippines. However, the parties
may agree that the obligation or transaction shall be settled in any
other currency at the time of payment.
Jurisprudence provides that the repeal of Republic Act No. 529 had the
effect of removing the prohibition on the stipulation of currency other than
Philippine currency, such that obligations or transactions could already be
paid in the currency agreed upon by the parties. However, both Republic
Act No. 529 and Republic Act No. 8183 did not stipulate the

applicable rate of exchange for the conversion of foreign currencyincurred obligations to their peso equivalent. It follows, therefore,
that the jurisprudence established under Republic Act No. 529 with
regard to the rate of conversion remains applicable. Also, the real
value of the foreign exchange-incurred obligation up to the date of its
payment should be preserved.
There was no written contract between Netlink and Delmo stipulating
that the latters commissions would be paid in US dollars. The absence of the
contractual stipulation notwithstanding, Netlink was still liable to pay Delmo
in US dollars because the practice of paying its sales agents in US dollars for
their US dollar-denominated sales had become a company policy. This was
impliedly admitted by Netlink when it did not refute the allegation that the
commissions earned by Delmo and its other sales agents had been paid in
US dollars. Instead of denying the allegation, Netlink only sought a
declaration that the US dollar commissions be paid using the exchange rate
at the time of sale. The principle of non-diminution of benefits, which has
been incorporated in Article 100 of the Labor Code, forbade Netlink from
unilaterally reducing, diminishing, discontinuing or eliminating the practice.
Verily, the phrase "supplements, or other employee benefits" in Article 100 is
construed to mean the compensation and privileges received by an
employee aside from regular salaries or wages.

Topic: Property (Ownership)

Ponente: Jose Catral Mendoza
Heirs of Yabao v. Paz Lentejas Van Der Kolk
GR No. 207266, June 25, 2014
Facts: The heirs of Yabao alleged in their complaint that they are the sole
surviving heirs of the late spouses Yabao, and that they are the absolute coowners of the parcel of land declared in the name of the late Paciano Yabao.
The Heirs of Yabao prayed that they be declared the co-owners and
possessors of the subject property occupied and possessed by Paz Lentejas
Van Der Kolk (Van Der Kolk), who also asserted claim of ownership over the
same.
Van Der Kolk started possessing the land in 1996 and refused to vacate
the same despite demands from the said heirs. Also, she filed a petition for

original patent regarding such land. This was timely oppsed by the heirs,
according to them.
Aside from these material averments in the complaint, nothing else
was presented to prove the heirs' right over the subject property.
Issue: Whether or not the Heirs of Yabao are the rightful owners of the
subject property.
SC: No.
Ownership by the heirs cannot be established by mere lip service and
bare allegations in the complaint. As in all matters, a party must establish
his/her averments in the complaint by sufficient evidence necessary to prove
such claim.
In the case at bench, the heirs of Yabao merely alleged that they are
the heirs of Paciano Yabao without presenting any proof why they are the
latters heirs and in what degree or capacity.
The basis of the heirs claim of ownership was a mere tax declaration
that was supposedly in the name of their putative ancestor Paciano Yabao.
However, a tax declaration is not a proof of ownership; it is not a
conclusive evidence of ownership of real property. In the absence of
actual, public, and adverse possession, the declaration of the land for tax
purposes does not prove ownership. It can only be a strong indication of
ownership if coupled with possession.
In the case at bench, it was Paz Lentejas who was in possession of the
property and not the heirs of Yabao. Consequently, the tax declaration,
standing alone, is not an acceptable proof of ownership.

Topics: Ownership; Damages

Ponente: Martin S. Villarama, Jr.
Charlie Lim v. Spouses Danilo Ligon
GR. No. 183589, June 25, 2014
Facts: Tomas Fernandez filed a Free Patent Application over a parcel of land.
After the death of Tomas Fernandez, his son Felicisimo pursued the
application and was approved by the Bureau of Lands.
In 1985, the spouses Isaac and Concepcion Ronulo asked the

assistance of the Office of the President and requested investigation of their

claim that a parcel of land containing 1,000 square meters which they have
been occupying since the 1950s was included in the approved survey plan in
the name of Tomas Fernandez.Regional Director Antonio Prinsipe of DENR
Provisional Region IV-A issued an Order cancelling the earlier plan approved.
The spouses Ronulo are then advised to cause the survey and to file the
appropriate public land application over the land actually possessed and
occupied by them. The said order was appealed by Felicisimo Fernandez to
the Office of the DENR Secretary
Thereafter, widowed Concepcion Ronulo executed an Affidavit of
Waiver of Rights over the parcel of land in favor of defendant Lim . On the
same date, the children of Concepcion Ronulo executed an affidavit of
conformity to the waiver, conveyance and transfer of the property in favor of
Charlie Lim. In the meantime, Spouses Danilo Ligon and Generosa VitugLigon purchased the subject property from Felicisimo Fernandez and
introduced improvements thereon, including a beach house. TCT was issued
in the name of the spouses Ligon based on Free Patent issued and an
analogous Original Certificate of Title both in the name of Felicisimo
Fernandez.
Defendant Lim then filed a complaint for forcible entry against the
Spouses Ligon involving the subject property. The trial court based its
decision on the alleged finality of the Order by Regional Director Prinsipe. As
a result of the finality of the judgment in the ejectment case, the Spouses
Ligon were evicted from the subject property. They then filed a complaint
against defendant Lim for Quieting of Title, Recovery of Possession and
Damages with prayer for a TRO and Preliminary Injunction, to restore them to
their possession of the subject property and to enjoin defendant Lim from
demolishing their beach house. The Court denied their application for
injunctive relief as a result of which their beach house was demolished on
the motion of defendants. Spouses Ligon then filed a supplemental complaint
for additional damages as a result of the demolition of their beach house
worth about P7 million.
The MTC ruled in favor of defendant Lim. The RTC affirmed the decision
of the MTC. The CA also dismissed the appeal of the spouses. On appeal to
Supreme Court, a Resolution was issued denying the appeal with finality.
Hence, petitioner Lim now contends that the finality of the ejectment case
"determining the issues of possession and prior possession serves as res
judicata between the parties in as much as the case involves the same
parties, same issues and same property therein."
Issues: 1. Whether or not the finality of the judgment in the ejectment case
served as res judicata with respect to the issue of prior possession of the
Spouses Ronulos (the predecessor-in-interest of the petitioners).
2. Whether or not the Spouses are entitled to moral damages for the
demolition of their beach house.

SC:
First Issue
No.
An ejectment suit is brought before the proper court to recover
physical possession or possession de facto and not possession de jure. The
use of summary procedure in ejectment cases is intended to provide an
expeditious means of protecting actual possession or right to possession of
the property and not to determine the actual title to an estate. If at all,
inferior courts are empowered to rule on the question of ownership raised by
the defendant in such suits, only to resolve the issue of possession. Its
determination on the ownership issue is, however, not conclusive.
The following discussion in the case of Spouses Diu v. Ibajan (2000) is
instructive:
Detainer, being a mere quieting process, questions raised on real property
are incidentally discussed. (Pealosa v. Tuason, 22 Phil. 303.) In fact, any
evidence of ownership is expressly banned by Sec. 4 of Rule 70 (Sec. 4, Rule
70 provides: "Evidence of title, when admissible. - Evidence of title to the
land or building may be received solely for the purpose of determining the
character and extent of possession and damages for detention.") except to
resolve the question of possession. (Tiu v. CA, 37 SCRA 99; Calupitan v.
Aglahi, 65 Phil. 575; Pitargue v. Sorilla, 92 Phil. 5.) Thus, all that the court
may do, is to make an initial determination of who is the owner of the
property so that it can resolve who is entitled to its possession absent other
evidence to resolve the latter. But such determination of ownership is not
clothed with finality. Neither will it affect ownership of the property nor
constitute a binding and conclusive adjudication on the merits with respect
to the issue of ownership.
Thus, under Section 18, Rule 70 of the Rules on Civil Procedure:
SEC. 18. Judgment conclusive only on possession; not conclusive in
actions involving title or ownership. The judgment rendered in an
action for forcible entry or detainer shall be conclusive with respect to
the possession only and shall in no wise bind the title or affect the
ownership of the land or building. Such judgment shall not bar an
action between the same parties respecting title to the land or
building.
The legal limitation, despite the finality of the ruling in the ejectment
case, however, is that the concept of possession or prior possession which
was established in favor of petitioners predecessors-in-interest in the
ejectment case pertained merely to possession de facto, and not possession
de jure. The favorable judgment in favor of petitioners
predecessors-in-interest cannot therefore bar an action between

the same parties with respect to who has title to the land in
question. The final judgment shall not also be held conclusive of the facts
therein found in a case between the same parties upon a different cause of
action not involving possession. As what took place in the case at bar, the
final judgment was not bar to this subsequent action to quiet respondents
title in order to settle ownership over the said property.
Second Issue
No.
There is no basis for the award of moral damages of P1,000,000.00.
Lim caused the demolition of the beach house of respondents pursuant to a
writ of execution issued by the MTC in the ejectment case the same
judgment which was affirmed by the RTC, the CA and Supreme Court. As Lim
states in this petition, it will become an absurdity if he will be penalized and
required to pay moral damages over a property the rightful possession of
which has been awarded to them in the ejectment case.

Topics: Alternative Obligation; Novation; Damages

Ponente: Marvic Mario Victor F. Leonen
Arco Pulp and paper Co., Inc. v. Dan T. Lim
GR No. 206806, June 25, 2014
Facts: Dan T. Lim works in the business of supplying scrap papers, cartons,
and other raw materials, under the name Quality Paper and Plastic Products,
Enterprises, to factories engaged in the paper mill business. He delivered
scrap papers worth 7,220,968.31 to Arco Pulp and Paper through its Chief
Executive Officer and President, Santos. The parties allegedly agreed that
Arco Pulp and Paper would either pay Lim the value of the raw materials or
deliver to him their finished products of equivalent value.
On the same day, Arco Pulp and Paper and a certain Eric Sy executed a
memorandum of agreement where Arco Pulp and Paper bound themselves to
deliver their finished products to Megapack Container Corporation, owned by
Eric Sy, for his account. According to the memorandum, the raw materials
would be supplied by Dan T. Lim, through his company, Quality Paper and
Plastic Products.
It has been agreed further that the Local OCC materials to be used for
the production of the above Test Liners will be supplied by Quality Paper &
Plastic Products Ent.
Lim sent a letter to Arco Pulp and Paper demanding payment of the
amount of 7,220,968.31, but no payment was made to him. Lim then filed a
complaint for collection of sum of money. The trial court rendered a judgment
in favor of Arco Pulp and Paper and dismissed the complaint, holding that
when Arco Pulp and Paper and Eric Sy entered into the memorandum of
agreement, novation took place, which extinguished Arco Pulp and Papers
obligation to Dan T. Lim. CA reversed said decision and ruled that the facts
and circumstances in the said case clearly showed the existence of an
alternative obligation.
Issue: 1. Whether or not the obligation between the parties was an
alternative obligation.
2. Whether the obligation between the parties was extinguished by
novation.
3. Whether moral damages, exemplary damages, and attorneys fees
can be awarded.
SC:
First Issue
Yes.

Article 1199 states that A person alternatively bound by

different prestations shall completely perform one of them.
The creditor cannot be compelled to receive part of one and part of the
other undertaking.
"In an alternative obligation, there is more than one object,
and the fulfillment of one is sufficient, determined by the choice of
the debtor who generally has the right of election." The right of
election is extinguished when the party who may exercise that option
categorically and unequivocally makes his or her choice known.
The choice of the debtor must also be communicated to the
creditor who must receive notice of it since: The object of this notice is
to give the creditor opportunity to express his consent, or to impugn the
election made by the debtor, and only after said notice shall the election
take legal effect when consented by the creditor, or if impugned by the
latter, when declared proper by a competent court.
In the case at bar, the original contract between the parties was for
Lim to deliver scrap papers to Arco Pulp and Paper. The payment for this
delivery became Arco Pulp and Papers obligation. By agreement, Arco Pulp
and Paper, as the debtor, had the option to either (1) pay the price or(2)
deliver the finished products of equivalent value to Lim.
Thus, the obligation between the parties is identified as an alternative
obligation, whereby Arco Pulp and Paper, after receiving the raw materials
from Lim, would either pay him the price of the raw materials or, in the
alternative, deliver to him the finished products of equivalent value.
When Arco Pulp and Paper tendered a check to Lim in partial payment
for the scrap papers, they exercised their option to pay the price. Lims
receipt of the check and his subsequent act of depositing it constituted his
notice of Arco Pulp and Papers option to pay.
This choice was also shown by the terms of the memorandum of
agreement, which was executed on the same day. The memorandum
declared in clear terms that the delivery of Arco Pulp and Papers finished
products would be to a third person, thereby extinguishing the option to
deliver the finished products of equivalent value to Lim.
Second Issue
No.
Novation is a mode of extinguishing an obligation by changing its
objects or principal obligations, by substituting a new debtor in place of the
old one, or by subrogating a third person to the rights of the creditor.
"Art. 1293. Novation which consists in substituting a new debtor in the
place of the original one, may
be made even without the knowledge or
against the will of the latter, but not without the consent of the
creditor.

Payment by the new debtor gives him rights mentioned in articles 1236 and
1237."
2 Modes of substituting the person of the debtor:
(1) Expromision
The initiative for the change does not come from and may even be made
without the knowledge of the debtor, since it consists of a third persons
assumption of the obligation. As such, it logically requires the consent of the
third person and the creditor.
(2) Delegacion
The debtor offers, and the creditor accepts, a third person who consents to
the substitution and assumes the obligation; thus, the consent of these three
persons are necessary.
Both modes of substitution by the debtor require the consent of the creditor.
Novation may also be:
Extinctive
It is extinctive when an old obligation is terminated by the creation of a
new one that takes the place of the former.
Modificatory
It is merely modificatory when the old obligation subsists to the extent
that it remains compatible with the amendatory agreement.
Whether extinctive or modificatory, novation is made either by
changing the object or the principal conditions, referred to as objective or
real novation; or by substituting the person of the debtor or subrogating a
third person to the rights of the creditor, an act known as subjective or
personal novation.
For novation to take place, the following requisites must concur:
1)
2)
3)
4)

There must be a previous valid obligation.

The parties concerned must agree to a new contract.
The old contract must be extinguished.
There must be a valid new contract.

Novation may also be express or implied. It is express when the new

obligation declares in unequivocal terms that the old obligation is
extinguished. It is implied when the new obligation is incompatible with the
old one on every point. The test of incompatibility is whether the two
obligations can stand together, each one with its own independent existence.
Because novation requires that it be clear and unequivocal, it
is never presumed.
In the case at bar, there is nothing in the memorandum of agreement

that states that with its execution, the obligation of Arco Pulp and Paper to
Lim would be extinguished. It also does not state that Eric Sy somehow
substituted Arco Pulp and Paper as Lims debtor. It merely shows that Arco
Pulp and Paper opted to deliver the finished products to a third person
instead.
The consent of the creditor must also be secured for the novation to be
valid:
Novation must be expressly consented to. Moreover, the
conflicting intention and acts of the parties underscore the absence
of any express disclosure or circumstances with which to deduce a
clear and unequivocal intent by the parties to novate the old
agreement.
In this case, Lim was not privy to the memorandum of agreement,
thus, his conformity to the contract need not be secured.
If the memorandum of agreement was intended to novate the original
agreement between the parties, Lim must have first agreed to the
substitution of Eric Sy as his new debtor. The memorandum of agreement
must also state in clear and unequivocal terms that it has replaced the
original obligation of Arco Pulp and Paper to Lim. Neither of these
circumstances is present in the case.
Arco Pulp and Papers act of tendering partial payment to Lim also
conflicts with their alleged intent to pass on their obligation to Eric Sy. When
Lim sent his letter of demand to Arco Pulp and Paper, and not to Eric Sy, it
showed that the former neither acknowledged nor consented to the latter as
his new debtor. These acts, when taken together, clearly show that novation
did not take place. Since there was no novation, Arco Pulp and Papers
obligation to Lim remains valid and existing. Arco Pulp and Paper, therefore,
must still pay Lim the full amount of P7,220,968.31.
Third Issue
Yes.
Moral Damages
To recover moral damages in an action for breach of contract, the
breach must be palpably wanton, reckless and malicious, in bad
faith, oppressive, or abusive. Hence, the person claiming bad faith must
prove its existence by clear and convincing evidence for the law always
presumes good faith.
Bad faith does not simply connote bad judgment or negligence. It
imports a dishonest purpose or some moral obliquity and conscious doing of
a wrong, a breach of known duty through some motive or interest or ill will
that partakes of the nature of fraud. It is, therefore, a question of intention,
which can be inferred from ones conduct and/or contemporaneous
statements.

When Arco Pulp and Paper issued a check in partial payment of its
obligation to Lim, it was presumably with the knowledge that it was being
drawn against a closed account. Worse, it attempted to shift their obligations
to a third person without the consent of Lim.
Arco Pulp and Papers actions clearly show "a dishonest purpose or
some moral obliquity and conscious doing of a wrong, a breach of known
duty through some motive or interest or ill will that partakes of the nature of
fraud." Moral damages may, therefore, be awarded.
Exemplary Damages
Requisites:
(1) They may be imposed by way of example in addition to
damages, and only after the claimant's right to them has been
(2) That they cannot be recovered as a matter of right, their
depending upon the amount of compensatory damages
awarded to the claimant; and
(3) The act must be accompanied by bad faith or done
fraudulent, oppressive or malevolent manner.

compensatory
established;
determination
that may be
in a wanton,

Business owners must always be forthright in their dealings. They

cannot be allowed to renege on their obligations, considering that these
obligations were freely entered into by them. Exemplary damages may also
be awarded in this case to serve as a deterrent to those who use fraudulent
means to evade their liabilities.
Since the award of exemplary damages is proper, attorneys fees and
cost of the suit may also be recovered.
Article 2208. In the absence of stipulation, attorney's fees and
expenses of litigation, other than judicial costs, cannot be recovered,
except when exemplary damages are awarded

Topic: Innocent purchaser for value

Ponente: Maria Lourdes P. A. Sereno
Spouses Dominador Peralta and Ofelia Peralta v. Heirs of Bernardina
Abalon v. Marissa Andal, et al.
GR No. 183448/183464, June 30, 2014
Facts: The subject parcel of land was originally covered by OCT (O) 16 and
registered in the name of Bernardina Abalon. It appears that a Deed of
Absolute Sale was executed over the subject property in favor of Restituto M.
Rellama. By virtue of such conveyance, the OCT No. (O) 16 was cancelled
and in lieu thereof a TCT was issued in the name of Rellama. The subject
property was then subdivided into three portions. One of the subdivided lot
was first sold to Eduardo Lotivio who thereafter transferred his ownership
thereto to the Andals through a Deed of Absolute Sale. A TCT was then
issued in the name of the Andals. The Andals likewise acquired the other lot
as evidenced by the issuance of another TCT in their favor.
Claiming that the Deed of Absolute Sale executed by Bernardina
Abalon in favor of Rellama was a forged document, and claiming further that
they acquired the subject property by succession, they being the nephew
and niece of Abalon who died without issue, Mansueta Abalon and Amelia
Abalon filed a case against Rellama, Spouses Peralta, and the Andals.
They alleged that the defendants-appellants are not buyers in good
faith as they were aware that the subject land was in the possession of the
plaintiffs-appellees at the time they made the purchase. They thus claim that
the titles issued to the defendants-appellants are null and void.
Rellama alleged that the deed of absolute sale executed by Abalon is
genuine and that the duplicate copy of OCT No. (O) 16 had been delivered to
him upon the execution of the said deed of transfer.
As for Spouses Peralta and the Andals, they mainly alleged that they
are buyers in good faith and for value.
Issue: Whether a forged instrument may become the root of a valid title in
the hands of an innocent purchaser for value, even if the true owner thereof
has been in possession of the genuine title, which is valid and has not been
cancelled.
SC: Yes.
Jurisprudence has defined an innocent purchaser for value as one
who buys the property of another without notice that some other
person has a right to or interest therein and who then pays a full
and fair price for it at the time of the purchase or before receiving a
notice of the claim or interest of some other persons in the
property. Buyers in good faith buy a property with the belief that the person
from whom they receive the thing is the owner who can convey title to the

property. Such buyers do not close their eyes to facts that should put a
reasonable person on guard and still claim that they are acting in good faith.
Despite the determination that fraud marred the sale between
Bernardina Abalon and Rellama, a fraudulent or forged document of sale may
still give rise to a valid title. This is because if the certificate of title had
already been transferred from the name of the true owner to that
which was indicated by the forger and remained as such, the land is
considered to have been subsequently sold to an innocent
purchaser, whose title is thus considered valid.
In the instant case, there is no evidence that the chain of registered
titles was broken in the case of the Andals. Neither were they proven to have
knowledge of anything that would make them suspicious of the nature of
Rellamas ownership over the subject parcel of land. Hence, the Andals were
buyers in good faith. Consequently, the validity of their title to the parcel of
the land bought from Rellama must be upheld.
As for Spouses Peralta, they are indeed buyers in bad faith. In the
factual finding that in purchasing the subject property, the Spouses Peralta
merely relied on the photocopy of the title provided by Rellama. A mere
photocopy of the title should have made Spouses Peralta suspicious that
there was some flaw in the title of Rellama, because he was not in
possession of the original copy.

Topics: Estoppel; Unenforceable Contract

Ponente: Arturo D. Brion
NPC Driver and
Corporation, et al.

Mechanics

Association

v.

National

Power

GR No. 156208, June 30, 2014

Facts: In September 26, 2006, the Court declared null and void the NPC
Resolution Nos. 2002-124 and 2002-125 which directed the termination from
the service of all employees of the NPC in line with the restructuring of the
NPC under RA. 9316 or the Electric Power Industry Reform Act of 2001
(EPIRA).
The NPC insists that only 16 employees(all belonging to the
executive/VP levels and above) were actually separated from their
employment on January 31, 2003 pursuant to NPB Resolution Nos. 2002-124
and 2002-125, which were nullified by the Court in its September 26, 2006
Decision. The nullity of these NPB Resolutions, however, did not preclude the
NPC from issuing subsequent resolutions, such as NPB Resolution No. 200311, which effected the separation of all other NPC employees beginning
February 28, 2003.
Thus, the NPC claims that the termination from employment of all the NPC
employees were affected pursuant to NPB Resolution NO. 2003-11, and not
under the nullified NPB Resolution nos. 2002-124 and 2002-125. The validity
of NPB Resolution No. 2003-11, however, was never questioned before the
Court. In fact, NPB Resolution No. 2003-11 was ratified by NPB Resolution No.
2007-55 on September 14, 2007.
The petitioners, on the other hand, allege that around 8,018 NPC
employees were illegally terminated from their employment pursuant to the
nullified NPB Resolution Nos. 2002-124 and 2002-125. The Courts
September 26, 2006 Decision and September 17, 2008 Resolution were clear
that the employment of all NPC employees illegally terminated under the
nullified NPB Resolutions were covered by the judgment, regardless of their
actual date of termination.
The petitioners further contend that the NPC can no longer insist on a
different interpretation with respect to the number of employees illegally
terminated since it failed to deny or question this matter in its pleadings
before the Court.
Issues:

1. Whether or not the NPC can assail the implementation of the

previous final ruling of the court.

2. Whether or not the nullified NPB Resolutions are unenforceable
contract.
SC:
First Issue
No.
The NPC having represented that all NPC employees were affected by
the nullified NPB resolutions, and aware of NPB resolutions amending the
date of actual termination from employment of the majority of NPC
employees which it omitted to disclose, is now estopped from assailing the
implementation of the said final rulings. The representations of the NPC, as
embodied in its pleadings, necessarily bind it under the principle of estoppel.
Article 1431 of the Civil Code defines estoppel as follows:
Art. 1431. Through estoppel an admission or representation is
rendered conclusive upon the person making it, and cannot be denied
or disproved as against the person relying thereon.
In this regard, Section 2(a), Rule 131 of the Rules of Court provides:
SEC. 2. Conclusive presumptions. The following are instances of
conclusive presumptions:
(a) Whenever a party has, by his own declaration, act, or omission,
intentionally and deliberately led another to believe a particular thing is true,
and to act upon such belief, he cannot, in any litigation arising out of such
declaration, act or omission, be permitted to falsify it.
"In estoppel, a party creating an appearance of fact, which is false, is
bound by that appearance as against another person who acted in good faith
on the representation made. Estoppel is based on public policy, fair dealing,
good faith and justice. Its purpose is to forbid one to speak against his own
act, representations, or commitments to the injury of one who reasonably
relied thereon. It springs from equity, and is designed to aid the law in the
administration of justice where without its aid, injustice might result.
"Estoppel may arise from silence as well as from words. Estoppel by
silence arises when a person, by force of circumstances, otherwise obliged to
speak, refrains from doing so and thereby induces the other to believe in the
existence of a state of facts in reliance on which he acts to his prejudice.
Silence may support an estoppel whether the failure to speak is intentional
or negligent."
Based on the following facts, the NPC is estopped from claiming that
not all NPC employees were covered by the final rulings:
(1) After the filing of the petition on December 16, 2002, the NPC issued NPB
Resolution No. 2003-11 (dated January 22, 2003) and NPC Circular No. 200309 (dated March 24, 2003) amending the date of actual termination from

employment of NPC employees;

(2) The NPC did not deny the petitioners allegation in their petition that the
nullified NPB resolutions affected about 5,648 employees and officials of the
NPC, 2,370 of whom would be displaced due to NPCs restructuring;
(3) The NPC represented in its Comment and Memorandum that the nullified
NPB Resolution Nos. 2002-124 and 2002-125 affected all NPC employees;
(4) The NPC, in its first and second motions for reconsideration, represented
that it would shoulder financial liability amounting to P4,701,354,073.00,
representing the backwages and wage adjustments of employees;
(5) The NPC did not file a motion for reconsideration or otherwise inform the
Court of its change inposition despite its receipt of the September 17, 2008
Resolution; and
(6) The NPC allowed to lapse into finality the final rulings that the Court
rendered based on the consideration that all NPC employees were separated
from employment under the nullified NPB Resolution Nos. 2002-124 and
2002-125.
Thus, the rule on finality of judgment applies.
Second issue
No.
The previous final rulings already declared the nullified NPB resolution
Nos. 2002-124 and 2002-125 as void and without legal effect for having
contravened Section 48 of the EPIRA. In light of this final declaration, the NPC
can no longer insist on a different conclusion. As the nullified NPB resolutions
are null and void (and not merely unenforceable), they cannot be revived or
ratified.
Besides, the nullified NPB resolutions are not unenforceable
contracts according to the enumeration in Article 1403 of the Civil
Code, since they are not, in the first place, contracts defined and
contemplated under Article 1305 of the Civil Code.
Assuming that the nullified NPB resolutions may be deemed as
contracts, in the September 26, 2006 Decision, it was ruled that the infirmity
in the nullified NPB resolutions did not stem from the absence of consent or
authority, which would have made them unenforceable contracts under
Article 1401(1) of the Civil Code. The infirmity comes from the failure of the
NPC to comply with the requirements set forth in the EPIRA.
On this basis, they cannot be classified as an unenforceable contract
under Article 1403(1) of the Civil Code, but as void contracts under Article
1409(7) of the Civil Code for being "expressly prohibited or declared void by
law." The last paragraph of Article 1409 of the Civil Code expressly provides

that void contracts cannot be ratified.

Topic: Buyer in good faith

Ponente: Lucas P. Bersamin
Hector Uy v. Virginia Fule, et al.
GR No. 164961, June 30, 2014
Facts: Upon the death of Conrado Garcia, his heirs entered into an
extrajudicial settlement of his estate, including the vast track of land.
Thereafter, his heirs caused the registration of the vast track of land under
TCT No. RT-8922 (16498), covering Lot 1, PSU-81269 and Lot 2, PSU-81269.
In 1985, the DAR engaged Engr. Sales to conduct a survey of the
disputed land. A joint certification was then issued to the effect that the
disputed land was an "untitled" property owned by Conrado Garcia. The joint
certification was buttressed by the certification issued by the Office of the
Register of Deeds of Camarines Sur to the effect that no title covering said
lot appeared on record. As a result, the disputed land was included in the
Operation Land Transfer (OLT) program of the DAR pursuant to Presidential
Decree No. 27.
In 1988, the DAR and the Office of the Register of Deeds of Camarines
Sur respectively issued emancipation patents (EPs) and original certificates
of title (OCTs) covering the disputed land to the farmers beneficiaries.
In the interim, farmer-beneficiary Mariano Ronda sold his portion to
Chisan Uy who then registered his title thereto under TCT No. 29948 and TCT
No. 29949. On the other hand, the heirs of farmer-beneficiary Mariano Ronda

(Isabel Ronda, et al.) sold their land to petitioner Hector Uy. The petitioner
registered his title thereto under TCT No. 31436 and TCT No. 31437, both of
the Registry of Deeds of Camarines Sur.
In 1997, TCT No. RT-8922 (16498) was cancelled following the partition
of the property covered therein. Subsequently, TCT No. 30136 and TCT No.
30111 were issued in the names of respondents heirs of the late Conrado
Garcia. TCT No. 30111 covered the disputed land.
In 1998, the President, acting through the DAR Secretary, issued EPs to
the farmers-beneficiaries pursuant to P.D. No. 27 and P.D. No. 266
On December 21, 1998, the respondents filed a complaint for
cancellation of titles, quieting of title, recovery of possession, and damages
alleging that they had been denied due process; and that the titles of the
defendants (who included the petitioner)in the disputed land constituted
clouds on their own title.
Issue: Whether or not the petitioner is a buyer in good faith.
SC: No.
In determining whether or not a buyer of property is a purchaser in
good faith, he must show that he has bought the property without notice that
some other person had a right to, or interest in, such property, and he should
pay a full and fair price for the same at the time of his purchase, or before he
had notice of the claim or interest of some other persons in the property. He
must believe that the person from whom he receives the property was the
owner and could convey title to the property, for he cannot close his eyes to
facts that should put a reasonable man on his guard and still claim he acted
in good faith.
Jurisprudence enunciates the requisites
considered a purchaser in good faith, viz:

for

the

buyer

to

be

A buyer for value in good faith is one who buys property of another,
without notice that some other person has a right to, or interest in, such
property and pays 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
persons in the property. He buys the property with the well- founded belief
that the person from whom he receives the thing had title to the property
and capacity to convey it.
To prove good faith, a buyer of registered and titled land need
only show that he relied on the face of the title to the property. He
need not prove that he made further inquiry for he is not obliged to explore
beyond the four corners of the title.
Such degree of proof of good faith, however, is sufficient only
when the following conditions concur:
(1) The seller is the registered owner of the land;

(2) The latter is in possession thereof;

(3) At the time of the sale, the buyer was not aware of any claim or interest
of some other person in the property, or of any defect or restriction in the
title of the seller or in his capacity to convey title to the property.
Absent one or two of the foregoing conditions, then the law
itself puts the buyer on notice and obliges the latter to exercise a
higher degree of diligence by scrutinizing the certificate of title and
examining all factual circumstances in order to determine the
sellers title and capacity to transfer any interest in the property.
Under such circumstance, it was no longer sufficient for said buyer to merely
show that he had relied on the face of the title; he must now also show that
he had exercised reasonable precaution by inquiring beyond the title. Failure
to exercise such degree of precaution makes him a buyer in bad faith.
Evidently, the petitioner entered into the deed of sale without having
been able to inspect TCT No. 31120 and TCT No. 31121 by virtue of such TCTs
being not yet in existence at that time. If at all, it was OCT No. 9852 and OCT
No. 9853 that were available at the time of the execution of the deed of sale,
and such OCTs were presumably inspected by petitioner before he signed the
deed of sale. It is notable that said OCTs categorically stated that they were
entered pursuant to an emancipation patent of the Ministry of Agrarian
Reform pursuant to the Operation Land Transfer (OLT) Program of the
government. Furthermore, said OCTs plainly recited the following prohibition:
"it shall not be transferred except by hereditary succession or to the
Government in accordance with the provisions of Presidential Decree No. 27,
Code of Agrarian Reforms of the Philippines and other existing laws and
regulations."
The foregoing circumstances negated the third element of good faith
as abovecited, i.e., that "at the time of sale, the buyer was not aware of any
claim or interest of some other person in the property, or of any defect or
restriction in the title of the seller or in his capacity to convey title to the
property." Such absence put the petitioner on notice and obliged him to
exercise a higher degree of diligence by scrutinizing the certificates of title
and examining all factual circumstances in order to determine the sellers
title and capacity to transfer any interest in the lots. Consequently, it is not
sufficient for him to insist that he relied on the face of the certificates of title,
for he must further show that he exercised reasonable precaution by
inquiring beyond the certificates of title. Failure to exercise such degree of
precaution rendered him a buyer in bad faith. It is a well-settled rule that
a purchaser cannot close his eyes to facts which should put a
reasonable man upon his guard, and then claim that he acted in
good faith under the belief that there was no defect in the title of
the vendor.
The petitioner was not an innocent purchaser for value; hence, he
cannot be awarded the disputed land.

Topics: Nuisance; In pari delicto; Recovery of Property

Ponente: Estela M. Perlas- Bernabe
Linda Rana v. Teresita Lee Wong, et al./ Sps. Rosario Uy, et al. v.
Sps. Reynaldo and Linda Rana
GR No. 192861/ 192862, June 30, 2014
Facts: Teresita Lee Wong and Spouses Shirley and Ruben Ang Ong are coowners pro-indiviso of a residential land abutting a 10-meter wide
subdivision road.
On the opposite side of the subject road, across the Wong-Ong
property, are the adjacent lots of Spouses Wilson and Rosario Uy and
Spouses Reynaldo and Linda Rana. The said lots follow a rolling terrain with
the Rana property standing about two (2) meters higher than and
overlooking the Uy property, while the Wong-Ong property is at the same
level with the subject road.
Sometime in 1997, Sps. Rana elevated and cemented a portion of the
subject road that runs between the Rana and Wong-Ong properties (subject
portion) in order to level the said portion with their gate. Sps. Rana likewise
backfilled a portion of the perimeter fence separating the Rana and Uy
properties without erecting a retaining wall that would hold the weight of the
added filling materials. The matter was referred to the Office of the Barangay
Captain well as the Office of the Building Official of Cebu City (OBO) but to no
avail. Thus, Wong, Sps. Ong, and Sps. Uy filed a Complaint for Abatement of
Nuisance with Damages against Sps. Rana.
Issues: 1. Whether or not the remedy of abatement of nuisance is proper.
2. Whether or not in pari delicto is applicable in this case.
3. Whether or not Sps. Rana are entitled for recovery of property.
SC:
First Issue
No.
Jurisprudence classifies nuisances in relation to their legal susceptibility to
summary abatement (that is, corrective action without prior judicial
permission).
In this regard, a nuisance may either be:
(a) nuisance per se (or one which "affects the immediate safety of persons
and property and may be summarily abated under the undefined law of
necessity");
(b) nuisance per accidens (or that which "depends upon certain conditions
and circumstances, and its existence being a question of fact, it cannot be
abated without due hearing thereon in a tribunal authorized to decide

whether such a thing does in law constitute a nuisance.")

It is a standing jurisprudential rule that unless a nuisance is a
nuisance per se, it may not be summarily abated.
With respect to the elevated and cemented subject portion, the same is not a
nuisance per se. By its nature, it is not injurious to the health or comfort of
the community. It was built primarily to facilitate the ingress and egress of
Sps. Rana from their house which was admittedly located on a higher
elevation than the subject road and the adjoining Uy and Wong-Ong
properties. Since the subject portion is not a nuisance per se(but actually a
nuisance per accidens) it cannot be summarily abated. As such, Wong, et
al.s demolition of Sps. Ranas subject portion, which was not sanctioned
under the RTCs Order, remains unwarranted.
Second Issue
No.
The principle of in pari delicto provides that when two parties are
equally at fault, the law leaves them as they are and denies
recovery by either one of them. However, this principle does not apply
with respect to inexistent and void contracts.
Clearly, no void or inexistent contract is herein at issue, hence, the principle
of in pari delicto is inapplicable in this case.
Third Issue
Yes.
Settled is the rule that in order that an action for the recovery of property
may prosper, the party prosecuting the same need only prove the
identity of the thing and his ownership thereof. In the present cases,
the Report of the court-appointed commissioner, Atty. Pintor, who conducted
a relocation survey of the Rana and Uy properties identified and delineated
the boundaries of the two properties and showed that Sps. Uys perimeter
fence intruded on 2 sq. m. of the Rana property. Both the RTC and the CA
relied upon the said report; thus, absent any competent showing that the
said finding was erroneous, the Court sees no reason to deviate from the
conclusions reached by the courts a quo. Having sufficiently proven their
claim, Sps. Rana are, therefore entitled to the return of the 2 sq.m.
encroached portion.

Topic: Civil Indemnity and other award of damages to a rape victim

Ponente: Jose Portugal Perez

People v. Balino
G.R. No. 194833
02 July 2014

Facts:
AAA was 8 years old when she was raped by Porferio Balino. The
incident happened sometime in August, 2001 when she was watching MTV at
the house of Balino. When she was done watching television and was about
to leave she noticed that her slippers were missing. She later on found them
at the back of the house. When she was leaving Porferio pulled her and
brought her inside the house closed the door of the kitchen and sala and
raped her in the room of the house. Porferio threatened to kill AAA if she tells
anyone about it. It was eventually discovered that she was raped when her
mother brought her to the hospital because her vagina was swelling.
Porferio was convicted in the RTC and was thus sentenced to suffer the
penalty of reclusion perpetua, and to pay the victim a fine of P50,000.00 as
civil indemnity, P50,000.00 as moral damages, and P25,000.00 for actual
damages which was subsequently affirmed by the CA.
Issue: Whether or not the civil indemnity imposed was correct.
SC: No.
The award to the rape victim is mandatory when rape is found to have
been committed; while moral damages must also be awarded in rape cases
without need of proof other than the fact of rape since it is assumed that the
victim suffered moral injuries entitling her to such an award. However, in
view of the most recent pronouncements of the Court, it modified the awards
of civil indemnity and moral damages by the appellate court and increase
the respective amount to P100,000.00.
Insofar as actual or compensatory damages are concerned, Article
2199 of the Civil Code of the Philippines provides as follows:

Art. 2199. Except as provided by law or by stipulation, one is entitled to

an adequate compensation only
for such pecuniary loss suffered by him
as he has duly proved. Such compensation is referred to as actual
or
compensatory damages.
Thus, there must be pleading and proof of actual damages
suffered for the same to be recovered. In addition to the fact that the
amount of loss must be capable of proof, it must also be actually proven with
a reasonable degree of certainty, premised upon competent proof or the best
evidence obtainable. The burden of proof of the damage suffered is,
consequently, imposed on the party claiming the same who should adduce
the best evidence available in support thereof, like sales and delivery
receipts, cash and check vouchers and other pieces of documentary
evidence of the same nature. In the absence of corroborative evidence, it has
been held that self-serving statements of account are not sufficient basis for
an award of actual damages. Corollary to the principle that a claim for actual
damages cannot be predicated on flimsy, remote, speculative, and
insubstantial proof, courts are, likewise, required to state the factual bases
of. The award.
Thus, in the instant case, failure to comply with the twin requirements
of pleading and proof for the grant of actual damages, the amount
of P25,000.00 cannot be awarded.
Lastly, The Court found it proper to award exemplary damages in the
amount of P100,000.00. The award of exemplary damages is justified under
Article 2229 of the Civil Code to set a public example and serve as deterrent
against elders who abuse and corrupt the youth.

Topic: Marriage: Requisites to be Valid Solemnization

Ponente: Arturo Brion
Ronulo v. People
G.R. No. 182438
02 July 2014
Facts: Joey Umadac and Claire Bingayen were scheduled to marry each
other on March 29, 2003 at the Sta. Rosa Catholic Parish Church of San
Nicolas, Ilocos Norte. However, on the day of the wedding, the supposed
officiating priest, Fr. Mario Ragaza, refused to solemnize the marriage upon
learning that the couple failed to secure a marriage license. As a recourse,
Joey, who was then dressed in barong tagalog, and Claire, clad in a wedding
gown, together with their parents, sponsors and guests, proceeded to the
Independent Church of Filipino Christians, also known as the Aglipayan
Church. They requested Rene Ronulo, an Aglipayan priest, to perform a
ceremony to which the latter agreed despite having been informed by the
couple
that
they
had
no
marriage
certificate.
Ronulo prepared his choir and scheduled a mass for the couple on the
same date. He conducted the ceremony in the presence of the groom, the
bride, their parents, the principal and secondary sponsors and the rest of
their invited guests.
An information for violation of Article 352 (Performance of illegal
marriage ceremony) of the Revised Penal Code (RPC), as amended, was filed
against Ronulo before the Municipal Trial Court (MTC) of Batac, Ilocos Norte.
Issue: Whether or not Rene Ronulo has the authority to solemnize the
marriage.
SC: No.

Under Article 3(3) of the Family Code, one of the essential requisites of
marriage is the presence of a valid marriage certificate. In the present case,
Ronulo admitted that he knew that the couple had no marriage license, yet
he
conducted
the
blessing
of
their
relationship.
Undoubtedly, Ronulo conducted the marriage ceremony despite
knowledge that the essential and formal requirements of marriage set by law
were lacking. The marriage ceremony, therefore, was illegal. Ronulos
knowledge of the absence of these requirements negates his defense of
good
faith.
The Court did not agree with Ronulo that the lack of a marriage
certificate negates his criminal liability in the present case. For purposes of
determining if a marriage ceremony has been conducted, a marriage
certificate is not included in the requirements provided by Article 3(3) of the
Family
Code,
as
discussed
above.
Neither does the non-filing of a criminal complaint against the couple
negate criminal liability of the petitioner. Article 352 of the RPC, as amended,
does not make this an element of the crime.

Topic: Contracts (Art. 1371) - Doctrine of unjust enrichment

Ponente: Mariano C. Del Castillo
Spouses Velasco v. Waterfields Industries Corporation
G.R. No. 177484
18 July 2014
Facts:
The spouses Manzanilla are the owners of a 25,000-square meter
parcel of land in Barangay San Miguel, Sto. Tomas, Batangas, covered by
Transfer of Certificate of Title No. T-35205. On May 24, 1994, they leased a
6,000-square meter portion of the above-mentioned property to Waterfields.
The parties executed on June 6, 1994 an Amendment to the Contract of
Lease. Save for the commencement of the lease which they reckoned on the
date of the execution of the amendment and the undertaking of the spouses
Manzanilla to register the agreements, the parties agreed therein that all
other terms and conditions in the original Contract of Lease shall remain in
full force and effect. Beginning April 1997, however, Waterfields failed to pay
the monthly rental. Hence, the spouses Manzanilla received a letter
promising to pay the unpaid rentals and stipulating new amendments to the
lease contracts.
On July 30, 1998, the spouses Manzanilla filed before the MTC a
Complaint for Ejectment against Waterfields. The Manzanillas said that
Waterfields had committed violations of the lease agreement by not paying
the rentals on time. And in yet another violation, it failed to pay
the P18,000.00 monthly rental for the past six months prior to the filing of

the Complaint, that is, from December 1997 to May 1998 or in the total
amount of P108,000.00. Demands upon Waterfields to pay the accrued
rentals and vacate the property were unheeded so the spouses Manzanilla
considered the contract terminated and/or rescinded. And since Waterfields
still failed to comply with their final demand to pay and vacate, the spouses
filed the Complaint and prayed therein that the former be ordered to (1)
vacate the subject property and, (2) pay the accrued rentals of P108,000.00
as of May 1998, the succeeding rentals of P18,000.00 a month until the
property is vacated, the interest due thereon, attorneys fees, and cost of
suit. On the other hand, Waterfields claimed that it did not fail or refuse to
pay the monthly rentals but was just utilizing the rental deposit in the
amount of P216,000.00 (equivalent to one year rentals) as rental payment in
accordance with Section 4 of the original Contract of Lease.
Hence,
it
argued that the spouses Manzanilla have no cause of action against it.
Waterfields also asserted that the precipitate filing of the Complaint against
it is tainted with bad faith and intended to cause it grave injustice
considering that it already spent an enormous amount of almost
P10,000,000.00 in developing the property. By way of compulsory
counterclaims, Waterfields sought that the spouses Manzanilla be ordered to
pay it moral damages and attorneys fees.
Issue: Whether or not there was unjust enrichment.
SC: There was none.
Waterfields avers that sustaining the trial courts ruling would amount
to unjust enrichment since it would be constrained to hand over to the
spouses Manzanilla, even before the expiration of the lease, the subject
premises for which it had already spent substantial amounts in terms of
improvements.
The principle of unjust enrichment requires two conditions: (1) that a
person is benefited without a valid basis or justification, and (2) that such
benefit is derived at the expense of another. It does not, however, apply in
this case since any benefit that the spouses Manzanilla may obtain
from the subject premises cannot be said to be without any valid
basis or justification. It is well to remind Waterfields that they violated
the contract of lease and that they failed to vacate the premises upon
demand. Hence, the spouses Manzanilla are justified in recovering the
physical possession thereof and consequently, in making use of the property.
Besides, in violating the lease by failing to pay the rent, Waterfields took the
risk of losing the improvements it introduced thereon in favor of the spouses
Manzanilla. This is because despite the fact that the lease contract provides
that in case of termination of the lease agreement all permanent
improvements and structures found in the subject premises shall belong to
the lessors it still violated the lease.

Topics:
Marriage;
Property Settlement

Marriage

Settlement;

Bigamous

Marriage

Ponente: Lucas P. Bersamin

Soledad L. Lavadia v. Heirs of Juan Luces Luna
G.R. No. 171914
23 July 2014

Facts:
Atty. Luna and Eugenia Zaballero-Luna were married civilly on Sept. 10,
1947 and such marriage was solemnized in the church on Sept. 12, 1948.
They begot seven children. However eventually agreed to live apart from
each other in February 1966 and agreed to separation of property, to which
end, they entered into a written agreement entitled "AGREEMENT FOR
SEPARATION AND PROPERTY SETTLEMENT" dated November 12, 1975,

whereby they agreed to live separately and to dissolve and liquidate their
conjugal partnership of property.
On January 12, 1976, Atty. Luna obtained a divorce decree of his
marriage with Eugenia in Dominican Republic. Later on, Atty. Luna married
Soledad and the two came back to the Philippines and settled in the country.
On February 14, 1978, LUPSICON through Atty. Luna purchased from Tandang
Sora Development Corporation the 6th Floor of Kalaw-Ledesma
Condominium Project for P1,449,056.00, to be paid on installment basis for
36months starting on April 15, 1978. Said condominium unit was to be used
as law office of LUPSICON. After full payment, the Deed of Absolute Sale over
the condominium unit was executed on July 15, 1983, and CCT No. 4779 was
issued on August 10, 1983 which states that Atty. Luna was married to
Soledad. LUPSICON was dissolved and the condominium unit was partitioned
by the partners but the same was still registered in common under CCT No.
21716. The parties stipulated that the interest of ATTY. LUNA over the
condominium unit would be 25/100 share. Atty. Luna thereafter established
and headed another law firm with Atty. Renato G. Dela Cruz and used a
portion of the office condominium unit as their office. The said law firm
lasted until the death of Atty. Luna on July 12, 1997.
After the death of Atty. Juan and his share in the condominium unit
including the law books, office furniture and equipment found therein were
taken over by Gregorio Z. Luna, Atty. Lunas son of the first marriage.
Gregorio Z. Luna then leased out the 25/100 portion of the condominium unit
belonging to his father to Atty. Renato G. De la Cruz who established his own
law firm named Renato G. De la Cruz & Associates.
The 25/100 pro-indiviso share of Atty. Luna in the condominium unit as
well as the law books, office furniture and equipment became the subject of
the complaint filed by Soledad against the heirs of Atty. Juan with the RTC of
Makati City on September 10, 1999.
The complaint alleged that the subject properties were acquired during
the existence of the marriage between Atty. Luna and Soledad through their
joint efforts that since they had no children, Soledad became co-owner of the
said properties upon the death of Atty. Luna to the extent of pro-indiviso
share consisting of her share in the said properties plus her share in the
net estate of Atty. Luna which was bequeathed to her in the latters last will
and testament; and that the heirs of Atty. Luna through Gregorio Z. Luna
excluded Soledad from her share in the subject properties. The complaint
prayed that Soledad be declared the owner of the portion of the subject
properties; that the same be partitioned; that an accounting of the rentals on
the condominium unit pertaining to the share of Soledad be conducted; that
a receiver be appointed to preserve ad administer the subject properties;
and that the heirs of Atty. Luna be ordered to pay attorneys fees and costs of
the suit to Soledad.
Issues:

1. Whether or not the divorce between Atty. Luna and Eugenia ZaballeroLuna (Eugenia) had validly dissolved the first marriage
2. Whether or not the agreement to separate property between Atty. Luna
and Eugenia was valid
3. Whether or not Soledad is entitled of any share in the properties of
Atty. Luna
SC:
1. No.
It is true that the Court of First Instance (CFI) of Sto. Domingo in the
Dominican Republic issued the Divorce Decree dissolving the first marriage
of Atty. Luna and Eugenia. Conformably with the nationality rule, however,
the divorce, even if voluntarily obtained abroad, did not dissolve the
marriage between Atty. Luna and Eugenia, which subsisted up to the time of
his death on July 12, 1997. This finding conforms to the Constitution, which
characterizes marriage as an inviolable social institution, and regards it as a
special contract of permanent union between a man and a woman for the
establishment of a conjugal and family life. The non-recognition of
absolute divorce in the Philippines is a manifestation of the respect
for the sanctity of the marital union especially among Filipino
citizens. It affirms that the extinguishment of a valid marriage must be
grounded only upon the death of either spouse, or upon a ground expressly
provided bylaw. For as long as this public policy on marriage between
Filipinos exists, no divorce decree dissolving the marriage between them can
ever be given legal or judicial recognition and enforcement in this
jurisdiction.
2. No.
The husband and the wife may agree upon the dissolution of the
conjugal partnership during the marriage, subject to judicial approval. All the
creditors of the husband and of the wife, as well as of the conjugal
partnership shall be notified of any petition for judicial approval or the
voluntary dissolution of the conjugal partnership, so that any such creditors
may appear at the hearing to safeguard his interests. Upon approval of the
petition for dissolution of the conjugal partnership, the court shall take such
measures as may protect the creditors and other third persons.
After dissolution of the conjugal partnership, the provisions of articles
214 and 215 shall apply. The provisions of this Code concerning the effect of
partition stated in articles 498 to 501 shall be applicable. (1433a)
But was not the approval of the Agreement by the CFI of Sto. Domingo
in the Dominican Republic sufficient in dissolving and liquidating the conjugal
partnership of gains between the late Atty. Luna and Eugenia?

The query is answered in the negative. There is no question that the

approval took place only as an incident of the action for divorce instituted by
Atty. Luna and Eugenia, for, indeed, the justifications for their execution of
the Agreement were identical to the grounds raised in the action for divorce.
With the divorce not being itself valid and enforceable under
Philippine law for being contrary to Philippine public policy and
public law, the approval of the Agreement was not also legally valid
and enforceable under Philippine law . Consequently, the conjugal
partnership of gains of Atty. Luna and Eugenia subsisted in the lifetime of
their marriage.
3. No.
Under Article 144 of the New Civil Code, the rules on co-ownership
would govern. But this was not readily applicable to many situations and
thus it created a void at first because it applied only if the parties were not in
any way incapacitated or were without impediment to marry each other (for
it would be absurd to create a co-ownership where there still exists a prior
conjugal partnership or absolute community between the man and his lawful
wife). This void was filled upon adoption of the Family Code.
Article 148 provides that: only the property acquired by both of the
parties through their actual joint contribution of money, property or industry
shall be owned in common and in proportion to their respective
contributions. Such contributions and corresponding shares were prima facie
presumed to be equal. However, for this presumption to arise, proof of
actual contribution was required. The same rule and presumption was to
apply to joint deposits of money and evidence of credit. If one of the parties
was validly married to another, his or her share in the co-ownership accrued
to the absolute community or conjugal partnership existing in such valid
marriage. If the party who acted in bad faith was not validly married to
another, his or her share shall be forfeited in the manner provided in the
last paragraph of the Article 147. The rules on forfeiture applied even if both
parties were in bad faith. Co-ownership was the exception while conjugal
partnership of gains was the strict rule whereby marriage was an inviolable
social institution and divorce decrees are not recognized in the Philippines.
Soledad was not able to prove by preponderance of evidence that her
own independent funds were used to buy the law office condominium and
the law books subject matter in contention in this case proof that was
required for Article 144 of the New Civil Code and Article 148 of the Family
Code to apply as to cases where properties were acquired by a man and a
woman living together as husband and wife but not married, or under a
marriage which was void ab initio. Thus, she has no share therein.
Topics:
Contracts; Credit Agreement; Increase in the Rate of
Interest: Escalation Clause; Truth in Lending Act (Republic Act No.
3765)

Ponente: Mariano C. Del Castillo

Spouses Silos v. PNB
G.R. No. 181045
02 July 2014
Facts: Spouses Eduardo and Lydia Silos (petitioners) have been in business
for about two decades of operating a department store and buying and
selling of ready-to-wear apparel. Respondent Philippine National Bank (PNB)
is a banking corporation organized and existing under Philippine laws.
To secure a one-year revolving credit line of P150,000.00 obtained from
PNB, petitioners constituted in August 1987 a Real Estate Mortgage. In July
1988, the credit line was increased to P1.8 million and the mortgage was
correspondingly increased to P1.8 million.
And in July 1989, a Supplement to the Existing Real Estate Mortgage
was executed to cover the same credit line, which was increased to P2.5
million, and additional security was given in the form of a 134-square meter
lot covered by TCT T-16208. In addition, petitioners issued eight Promissory
Notes and signed a Credit Agreement. This July 1989 Credit Agreement
contained a stipulation on interest which provides as follows:
1.03. Interest. (a) The Loan shall be subject to interest at the rate of
19.5% per annum. Interest shall be payable in advance every one hundred
twenty days at the rate prevailing at the time of the renewal.
(b) The Borrower agrees that the Bank may modify the interest rate in
the Loan depending on whatever policy the Bank may adopt in the
future, including without limitation, the shifting from the floating
interest rate system to the fixed interest rate system, or vice versa.
Where the Bank has imposed on the Loan interest at a rate per annum,
which is equal to the Banks spread over the current floating interest
rate, the Borrower hereby agrees that the Bank may, without need of
notice to the Borrower, increase or decrease its spread over the
floating interest rate at any time depending on whatever policy it may
adopt in the future.
The eight Promissory Notes, on the other hand, contained a stipulation
granting PNB the right to increase or reduce interest rates "within the limits
allowed by law or by the Monetary Board. The Real Estate Mortgage
agreement provided the same right to increase or reduce interest rates "at
any time depending on whatever policy PNB may adopt in the future."
An Amendment to Credit Agreement was executed by the parties.
Under this Amendment to Credit Agreement, petitioners issued in favor of
PNB the following 18 Promissory Notes, which petitioners settled.

Respondent regularly renewed the line from 1990 up to 1997, and

petitioners made good on the promissory notes, religiously paying the
interests without objection or fail. But in 1997, petitioners faltered when the
interest rates soared due to the Asian financial crisis. Petitioners sole
outstanding promissory note for P2.5 million PN 9707237 executed in July
1997 and due 120 days later or on October 28, 1997 became past due, and
despite repeated demands, petitioners failed to make good on the note.
Incidentally, PN 9707237 provided for the penalty equivalent to 24%
per annum in case of default. PNB prepared a Statement of Account as of
October 12, 1998, detailing the amount due and demandable from
petitioners in the total amount of P3,620,541.60.
Despite demand, petitioners failed to pay the foregoing amount. Thus,
PNB foreclosed on the mortgage, and the lands were sold to it at the auction.
Petitioners filed a case, seeking annulment of the foreclosure sale and
an accounting of the PNB credit. Petitioners theorized that after the first
promissory note where they agreed to pay 19.5% interest, the succeeding
stipulations for the payment of interest in their loan agreements with PNB
which allegedly left to the latter the sole will to determine the interest rate
became null and void. Petitioners added that because the interest rates were
fixed by respondent without their prior consent or agreement, these rates
are void, and as a result, petitioners should only be made liable for interest
at the legal rate of 12%.
Issue: Whether the escalation clause is valid.
SC: NO. In making the unilateral increases in interest rates, petitioner bank
relied on the escalation clause contained in their credit agreement which
provides, as follows:
The Bank reserves the right to increase the interest rate within the
limits allowed by law at any time depending on whatever policy it may
adopt in the future and provided, that, the interest rate on this
accommodation shall be correspondingly decreased in the event that
the applicable maximum interest rate is reduced by law or by the
Monetary Board. In either case, the adjustment in the interest rate
agreed upon shall take effect on the effectivity date of the increase or
decrease in maximum interest rate.
This clause is authorized by Section 2 of Presidential Decree (P.D.) No.
1684 which further amended Act No. 2655 ("The Usury Law"), as amended.
P.D. No. 1684 and C.B. Circular No. 905 no more than allow contracting
parties to stipulate freely regarding any subsequent adjustment in the
interest rate that shall accrue on a loan or forbearance of money, goods or
credits. In fine, they can agree to adjust, upward or downward, the interest
previously stipulated. However, contrary to the stubborn insistence of
petitioner bank, the said law and circular did not authorize either

party to unilaterally raise the interest rate without the others

consent.
It is basic that there can be no contract in the true sense in the
absence of the element of agreement, or of mutual assent of the parties. If
this assent is wanting on the part of the one who contracts, his act has no
more efficacy than if it had been done under duress or by a person of
unsound mind.
Similarly, contract changes must be made with the consent of the
contracting parties. The minds of all the parties must meet as to the
proposed modification, especially when it affects an important aspect of the
agreement. In the case of loan contracts, it cannot be gainsaid that the rate
of interest is always a vital component, for it can make or break a capital
venture. Thus, any change must be mutually agreed upon, otherwise, it is
bereft of any binding effect.
The Court cannot countenance petitioner banks posturing that the
escalation clause at bench gives it unbridled right to unilaterally upwardly
adjust the interest on private respondents loan. That would completely take
away from private respondents the right to assent to an important
modification in their agreement, and would negate the element of mutuality
in contracts.
Escalation clauses are not basically wrong or legally objectionable so
long as they are not solely potestative but based on reasonable and valid
grounds.
In the face of the unequivocal interest rate provisions in the credit
agreement and in the law requiring the parties to agree to changes in the
interest rate in writing, the Court held that the unilateral and progressive
increases imposed by respondent PNB were null and void. Their effect
was to increase the total obligation on an eighteen million peso loan to an
amount way over three times that which was originally granted to the
borrowers. That these increases, occasioned by crafty manipulations in the
interest rates is unconscionable and neutralizes the salutary policies of
extending loans to spur business cannot be disputed.
Courts have the authority to strike down or to modify provisions in
promissory notes that grant the lenders unrestrained power to increase
interest rates, penalties and other charges at the latters sole discretion and
without giving prior notice to and securing the consent of the borrowers.
This unilateral authority is anathema to the mutuality of contracts
and enable lenders to take undue advantage of borrowers. Although
the Usury Law has been effectively repealed, courts may still reduce
iniquitous or unconscionable rates charged for the use of money.
Furthermore, excessive interests, penalties and other charges not revealed in
disclosure statements issued by banks, even if stipulated in the promissory
notes, cannot be given effect under the Truth in Lending Act.

Plainly, with the present credit agreement, the element of consent or

agreement by the borrower is now completely lacking, which makes
respondents unlawful act all the more reprehensible.
Accordingly, petitioners are correct in arguing that estoppel should not
apply to them, for "estoppel cannot be predicated on an illegal act. As
between the parties to a contract, validity cannot be given to it by estoppel if
it is prohibited by law or is against public policy."
It appears that by its acts, respondent violated the Truth in Lending
Act, or Republic Act No. 3765, which was enacted "to protect x x x citizens
from a lack of awareness of the true cost of credit to the user by using a full
disclosure of such cost with a view of preventing the uninformed use of credit
to the detriment of the national economy." The law "gives a detailed
enumeration of the specific information required to be disclosed, among
which are the interest and other charges incident to the extension of credit."
Section 4 thereof provides that a disclosure statement must be furnished
prior to the consummation of the transaction.
Topics: Damages (rentals and interest); Tolerance v. Tolerated Acts;
Tolerance - Effect of Withdrawal thereof
Ponente: Mariano C. Del Castillo
Pro-Guard
Security
Services
Development Corporation
G.R. No. 176341
07 July 2014

Corporation

v.

Tormil

Realty

Facts: Manuel A. Torres, Jr., (Manuel) assigned to respondent Tormil three

parcels of land and all the improvements thereon in exchange for shares of
stock in the said corporation. Despite the assignment, however, title to the
real properties remained in Manuels name. Later, Manuel unilaterally
revoked the transaction.
Subsequently, Manuel, together with two other persons, one of whom
is Edgardo Pabalan (Edgardo), established Torres Pabalan Realty,
Incorporated (Torres-Pabalan). As part of his capital contribution, Manuel
assigned the same aforesaid parcels of land to Torres-Pabalan. In the
meantime, construction of the Torres Building on the subject real properties
was completed in1985 and its units rented out.
In March 1987, Tormil filed a case before the Securities and Exchange
Commission (SEC) to compel Manuel to fulfill his obligation by turning over
the documents necessary to effect the registration and transfer of titles in its
name of the properties assigned to it by Manuel. The SEC rendered judgment
in favor of Tormil, and this was later affirmed by the SEC en banc. Manuel

appealed to the CA. During the pendency thereof, Pro-Guard entered into an
agreement with Edgardo in March 1994 for the rent of a unit in the 3rd floor
of Torres Building. As payment, Pro-Guard was to provide security services to
Torres-Pabalan. Subsequently, the CA, and later the Supreme Court, upheld
the ruling in the SEC case such that it became final and executory on
December 12, 1997. By October 1998, not only were the titles to the subject
parcels of land registered in Tormils name, but also the tax declaration over
the Torres Building.
Tormil sent letters to validate their possession/enter into a lease
contract with Tormil and at the same time settle their past and current
rentals. Since these letters were ignored, Tormil, sent them separate
demands to vacate the premises and pay the monthly rental of P20,000.00
from the time of their occupation thereof until the same are actually turned
over to Tormil. As these were unheeded, Tormil filed separate ejectment suits
against Edgardo and Augustus, and Pro-Guard . The cases were later on
consolidated.
The MeTC adjudged that Tormil has proven its right to possess the
property. It then ruled against Edgardo, Augustus and Pro-Guard. On appeal
to the RTC, the court did not find merit in the appeal. On appeal to the CA, it
adjudged that Tormil have sufficiently proven its case for unlawful detainer.
In asking for a reconsideration, one aspect which Edgardo, Augustus
and Pro-Guard objected to was the order for them to pay P20,000.00 monthly
rental and the reckoning point of payment. Pro-Guard, in its Supplemental
Motion for Reconsideration, argued that the CA should have modified the RTC
judgment by reckoning the payment from the date of Tormils notice to
vacate.
The CA found no reason to reverse its judgment, impelling Pro-Guard to
elevate the case to this Court.
Issue: When is the reckoning date of payment of rentals?
SC: While indeed Tormil, as the victor in the unlawful detainer suit, is entitled
to the fair rental value for the use and occupation of the unit in the building,
such compensation should not be reckoned from the time Pro-Guard
began to occupy the same, but from the time of the demand to
vacate.
In unlawful detainer cases, the defendant is necessarily in prior lawful
possession of the property but his possession eventually becomes unlawful
upon termination or expiration of his right to possess. In other words, the
entry is legal but the possession thereafter became illegal. Additionally, the
Rules of Court requires the filing of such action within a year after the
withholding of possession, meaning that "if the dispossession has not lasted

for more than one year, [then] an ejectment proceeding (in this case
unlawful detainer) is proper x x x."
Here, from the moment Pro-Guard started to occupy the unit in March
1994 up to November 15, 1998, the right of Pro-Guard to possess the
premises was not challenged. It was only after Tormil prevailed over Manuel
in its ownership of the same that it terminated Pro-Guards right to possess
the unit it was occupying through a letter to vacate dated November 16,
1998. Hence, it is only from that point that Tormil is considered to have
withdrawn its tolerance of Pro-Guards occupation. Conversely, Pro-Guards
possession became unlawful at that same moment. This is supported by the
allegation in the complaint for ejectment that Tormil initiated the same not
because of non-payment of rentals, but because of withdrawal of tolerance.
Tolerance or "toleration is defined as the act or practice of permitting
or enduring something not wholly approved of," while tolerated acts are
"those which by reason of neighborliness or familiarity, the owner of the
property allows his neighbor or another person to do on the property; they
are generally those particular services or benefits which ones property can
give to another without material injury or prejudice to the owner, who
permits them out of friendship or courtesy."
With regard to the effects of withdrawal of tolerance, it is settled that a
person who occupies the land of another at the latters tolerance or
permission, without any contract between them, is necessarily
bound by an implied promise that he will vacate upon demand,
failing which a summary action for ejectment is the proper remedy
against him. His status is analogous to that of a lessee or tenant
whose term of lease has expired but whose occupancy continued by
tolerance of the owner. In such a case, the date of unlawful
deprivation or withholding of possession is to be counted from the
date of the demand to vacate.
Topics: Validity of a deed of absolute sale; Property relations of
Husband and Wife before the effectivity of the Family Code
Ponente: Diosdado M. Peralta
Serconsision R. Mendoza v. Aurora Mendoza Fermin
G.R. No. 177235
07 July 2014
Facts: Leonardo G. Mendoza (Leonardo), allegedly married to petitioner
Serconsision R. Mendoza, died on November 25, 1986. In the testate
proceedings of her fathers estate, respondent Aurora Mendoza Fermin, being
the legitimate and eldest daughter of Leonardo, was appointed as one of the
administratix.

In March 1989, petitioner submitted to the probate court an inventory of

Leonardos properties and included therein a parcel of land. Sometime in
1990,when respondent was the one preparing an inventory of the properties
of her late father as directed by the probate court, she discovered that her
father and petitioner purportedly sold the said property to one Eduardo C.
Sanchez as evidenced by a Deed of Absolute Sale dated September 22, 1986
(the Deed of Absolute Sale), for and in consideration of the amount of
P150,000.00. However, the Deed of Absolute Sale was registered with the
Register of Deeds for the City of Paraaque only on April 30, 1991, or five (5)
years after the alleged transfer. Meanwhile, petitioner did not inform the
tenants of the property that a certain Eduardo C. Sanchez already owned the
same; and in fact, continued to collect the rentals of the property even after
the alleged sale.
Convinced that the signatures appearing in the Deed of Absolute Sale did not
fit that of the genuine signature of her father, respondent filed a case for
Annulment of Deed of Absolute Sale. On the other hand, petitioner denied
that the signatures of Leonardo on the Deed of Absolute Sale were forgeries.
The Regional Trial Court (RTC) rendered its Decision finding that there was no
forgery and declaring the sale of the property as valid, thereby dismissing
the Complaint. Respondent appealed the decision of the trial court to the CA.
The CA rendered a Decision reversing the Decision of the RTC. Hence, this
petition.
Issues: 1. Whether or not the deed of absolute sale is valid.
2. What is the remedy of respondent?
SC: 1. No.
After examining the supposed signatures of Leonardo and comparing
them with his accepted standard, conclude that the questioned signatures
were forgeries.
A scrutiny of the comparison charts of the NBI handwriting expert
witness and the PNP handwriting expert witness, consisting of the enlarged
photographs of the questioned signatures of Leonardo and the specimen
signatures submitted by the parties, would reveal that there are marked
differences between Leonardos signature on the Deed of Absolute Sale vis-vis the specimen signatures submitted by the parties. As seen in the
enlarged photographs of both parties, the most telling differences between
the questioned signatures and all the specimen signatures offered in
evidence, including the specimen signatures offered in evidence by
Serconsision, is in the initial and predominant letter which appears to be a
letter "O". Significantly, the manner of execution of all the standard
specimen signatures of Leonardo, reveal that the person who signed the

same used free rapid continuous execution or strokes in forming the letter
"O" which is indicative of the signatorys fluidity in movement. In the
questioned signatures, the initial and predominant letter was apparently
written in a hesitating slow drawn stroke indicating that the person, who
executed the same as hesitant when the signatures were made. In short, all
specimen signatures submitted in evidence by the parties were written
gracefully whereas the questioned signatures were written awkwardly. As
such, the samples and the questioned signatures in the instant case were
written by two different persons.
While it is recognized that the technical nature of the procedure in
examining forged documents calls for handwriting experts, resort to these
experts is not mandatory or indispensable, because a finding of forgery does
not depend entirely on their testimonies. Judges must also exercise
independent judgment in determining the authenticity or genuineness of the
signatures in question, and not rely merely on the testimonies of handwriting
experts.
The doctrine in Heirs of Severa P. Gregorio v. Court of Appeals
(December 29, 1998), is instructive, to wit:
Due to the technicality of the procedure involved in the examination of
forged documents, the expertise of questioned document examiners is
usually helpful. However, resort to questioned document examiners is
not mandatory and while probably useful, they are not indispensable in
examining or comparing handwriting. A finding of forgery does not
depend entirely on the testimony of handwriting experts. Although
such testimony may be useful, the judge still exercises independent
judgment on the issue of authenticity of the signatures under scrutiny.
The judge cannot rely on the mere testimony of the handwriting
expert. In the case of Gamido vs. Court of Appeals, December 8,
1995 (citing the case of Alcon vs. Intermediate Appellate Court, 162
SCRA 833), the Court held that the authenticity of signatures
"... is not a highly technical issue in the same sense that
questions concerning, e.g., quantum physics or topology or
molecular biology, would constitute matters of a highly technical
nature. The opinion of a handwriting expert on the genuineness
of a questioned signature is certainly much less compelling upon
a judge than an opinion rendered by a specialist on a highly
technical issue."
A judge must therefore conduct an independent examination of
the signature itself in order to arrive at a reasonable conclusion
as to its authenticity and this cannot be done without the original
copy being produced in court."

When the dissimilarity between the genuine and false specimens of

writing is visible to the naked eye and would not ordinarily escape notice or
detection from an unpracticed observer, resort to technical rules is no longer
necessary and the instrument may be stricken off for being spurious. In other
words, when so established and is conspicuously evident from its
appearance, the opinion of handwriting experts on the forged document is no
longer necessary.
More so when, as in this case, the forgery was testified to and thus
established by evidence other than the writing itself, as correctly observed
by the CA, thus:
Strongly indicative also of the forged signatures of Leonardo and the
fictitious character of the Deed of Absolute Sale is not only the physical
manifestation of imitation in the signature of Leonardo, but also the
questionable circumstances under which the Deed of Absolute Sale was
prepared and the actuations of the defendants-appellees after its execution.
Firstly, Serconsision admitted that she still occupied the property long
after the alleged sale in favor of Eduardo took place. This admission of
Serconsision substantiates the testimony of witness Teresita Rosales, that
Serconsision still occupied the subject property, continued to collect the
rentals from the tenants and that she never informed the tenants that the
property was already sold to Eduardo.
Secondly, the inventory prepared by Serconsision for the probate court
on March 8, 1989 clearly listed the subject property as part of the properties
of the late Leonardo. Lastly, there is an apparent lack of interest on the part
of Eduardo to protect his rights over the property, assuming that he had any.
As aptly pointed out by Aurora in her brief, Eduardo never appeared in court,
much less testify thereto to protect his alleged interest.
Being a forgery, the Deed of Absolute Sale conveyed nothing in favor
of Eduardo C. Sanchez, as claimed by petitioner.
2. As Leonardo and Serconsision were married sometime in 1985, the
applicable provision governing the property relations of the spouses is Article
172 of the Civil Code of the Philippines which states that the wife cannot bind
the conjugal partnership without the husbands consent.
In Felipe vs. Heirs of Maximo Aldon (February 16, 1983), a case
decided under the provisions of the Civil Code, the Supreme Court had the
occasion to rule that the sale of a land belonging to the conjugal partnership
made by the wife without the consent of the husband is voidable. The
Supreme Court further ruled that the view that the disposal by the wife of

their conjugal property without the husbands consent is voidable is

supported by Article 173 of the Civil Code which states that contracts
entered by the husband without the consent of the wife when such consent
is required are annullable at her instance during the marriage and within ten
years from the transaction questioned.
In the present case, the fictitious Deed of Absolute Sale was executed
on September 22, 1986, one month after or specifically on November 25,
1986, Leonardo died. Aurora as one of the heirs and the duly appointed
administratrix of Leonardos estate, had the right therefore to seek for the
annulment of the Deed of Sale as it deprived her and the other legal heirs of
Leonardo of their hereditary rights. Consequently, the title in the name of
Eduardo must be cancelled. Defendant appellees unauthorized and fictitious
transaction cannot be invoked as a source of right.
Considering that the questioned sale was concluded on September 22,
1986, before the Family Code took effect, the transaction could still be aptly
governed by the then governing provisions of the Civil Code.

Topic: Conditional Sale

Ponente: Marvic Mario Victor F. Leonen
Olivarez Realty Corporation and Dr. Pablo R. Olivarez v. Benjamin
Castillo
G.R. No. 196251
09 July 2014
Facts: Benjamin Castillo was the registered owner of a parcel of land.
Castillo and Olivarez Realty Corporation, represented by Dr. Olivarez, entered
into a contract of conditional sale over the property. Under the deed of
conditional sale, Olivarez Realty Corporation shall file the action against the
Philippine Tourism Authority "with the full assistance of Castillo." Castillo
alleged that Dr. Olivarez convinced him into selling his property to Olivarez
Realty Corporation on the representation that the corporation shall be
responsible in clearing the property of the tenants and in paying them
disturbance compensation.
After the parties had signed the deed of conditional sale, Olivarez
Realty Corporation immediately took possession of the property. However,
the corporation only paid 2,500,000.00 of the purchase price. Contrary to the
agreement, the corporation did not file any action against the Philippine
Tourism Authority to void the latters title to the property. The corporation
neither cleared the land of the tenants nor paid them disturbance
compensation. Despite demand, Olivarez Realty Corporation refused to fully
pay the purchase price Arguing that Olivarez Realty Corporation committed
substantial breach of the contract of conditional sale and that the deed of
conditional sale was a contract of adhesion, Castillo prayed for rescission of
contract under Article 1191 of the Civil Code of the Philippines.
In their defense, defendants alleged that Castillo failed to "fully
assist" the corporation in filing an action against the Philippine Tourism
Authority. Neither did Castillo clear the property of the tenants within six
months from the signing of the deed of conditional sale. Thus, according to
defendants, the corporation had "all the legal right to withhold the
subsequent payments to [fully pay] the purchase price."
Issue: Whether or not Castillo is entitled to cancel the contract of conditional
sale
SC: Yes.
Since Olivarez Realty Corporation illegally withheld payments of the
purchase price, Castillo is entitled to cancel his contract with petitioner
corporation. However, the Supreme Court properly characterizes the parties
contract as a contract to sell, not a contract of conditional sale.
Distinction between Contract to sell and Conditional Sale

In both, title to the property remains with the seller until the
buyer fully pays the purchase price.
Both contracts are subject to the positive suspensive condition
of the buyers full payment of the purchase price.
In a contract of conditional sale, the buyer automatically acquires
title to the property upon full payment of the purchase price. This transfer of
title is "by operation of law without any further act having to be performed
by the seller." In a contract to sell, transfer of title to the prospective buyer
is not automatic. "The prospective seller [must] convey title to the property
[through] a deed of conditional sale."
The distinction is important to determine the applicable laws
and remedies in case a party does not fulfill his or her obligations under the
contract. In contracts of conditional sale, our laws on sales under the
Civil Code of the Philippines apply. On the other hand, contracts to sell are
not governed by our law on sales but by the Civil Code provisions on
conditional obligations.
Specifically, Article 1191 of the Civil Code on the right to rescind
reciprocal obligations does not apply to contracts to sell. In Ong v. Court of
Appeals (July 6, 1999), failure to fully pay the purchase price in contracts
to sell is not the breach of contract under Article 1191. Failure to fully pay
the purchase price is "merely an event which prevents the [sellers]
obligation to convey title from acquiring binding force." This is because
"there can be no rescission of an obligation that is still nonexistent, the
suspensive condition not having [happened]."
In this case, Castillo reserved his title to the property and undertook to
execute a deed of absolute sale upon Olivarez Realty Corporations full
payment of the purchase price. Since Castillo still has to execute a deed
of absolute sale to Olivarez Realty Corporation upon full payment of
the purchase price, the transfer of title is not automatic. The
contract in this case is a contract to sell.
As this case involves a contract to sell, Article 1191 of the Civil Code of
the Philippines does not apply. The contract to sell is instead cancelled, and
the parties shall stand as if the obligation to sell never existed.

Topic: Damages
Ponente: Jose Portugal Perez
People v. Benjie Consorte
G.R. No. 194068
09 July 2014
Facts: Benjie Consorte (appellant) was found by the trial court guilty of
Murder, sentenced him to suffer the penalty of reclusion perpetua and
directed him to indemnify the heirs of Elizabeth Palmar the amounts
ofP50,000.00 as civil indemnity and P29,500.00 as actual damages. The CA,
however, modified the judgment of the trial court in that, in addition to
actual damages, appellant was further directed to pay moral and exemplary
damages in the amounts of P50,000.00 and P25,000.00,
Issue: Whether or not the award of damages is proper.
SC: Yes.
The Supreme Court sustained the grant of actual damages in the
amount of P29,500.00, the same being supported by official receipts. The
Supreme Court likewise affirm the CAs award of P50,000.00 as moral
damages to the heirs of the victim in addition to civil indemnity. The grant of
moral damages is mandatory in cases of murder and homicide without need
of allegation and proofs other than the death of the victim.
In conformity with current jurisprudence, however, the Supreme
Court increased the amount of civil indemnity from P50,000.00 to
P75,000.00. Civil indemnity is given without need of proof other than
the fact of death as a result of the crime and proof of appellants
responsibility for it. The Supreme Court also increase the award of
exemplary damages granted by the CA from P25,000.00 to P30,000.00
consisted with prevailing jurisprudence.

Topic: Damages
Ponente: Jose Portugal Perez
People v. Rael Delfin
GR. No. 201572
09 July 2014
Facts: Rael Delfin was found guilty by the trial court of the crime of murder
against Emilio Enriquez. The CA affirmed the decision of the lower court,
however, it deleted the award of P50,000.00 consequential damages and
replaced it with an award of P50,000.00 moral damages.
Issue: Whether or not the award of damages is proper.
SC: No.
In line with prevailing jurisprudence, the Supreme Court increase
the amount of civil indemnity and moral damages payable by the
appellant from P50,000.00 to P75,000.00.
In addition to the foregoing, the Supreme Court require the appellant
to also pay exemplary damages in the amount P30,000.00.
The Supreme Court further ruled that the civil indemnity, moral
damages and exemplary damages payable by the appellant are subject to
interest at the rate of six percent (6%) per annum from the finality of this
decision until fully paid.

Topic: Substitution of Heirs in placed of the deceased; Joint

Obligation
Ponente: Maria Lourdes Sereno
Spouses Rodolfo A. Berot and Lilia P. Berot v. Felipe C. Siapno
G.R. No. 188944
09 July 2014
Facts: Macaria Berot and spouses Rodolfo and Lilia Berot obtained a loan
from appellee Felipe Siapno. As security for the loan, the subject parcel of
land was mortgaged by Macaria, Rodolfo and Lilia. On June 23, 2003, Macaria
died. Mortgagors defaulted in payment which prompted appellee to file an
action for foreclosure of mortgage and damages in the RTC. In answer,
Rodolfo and Lilia alleged that their obligation is only joint and that the lower
court has no jurisdiction over Macaria for the reason that no summons was
served on her as she was already dead. The complaint was later amended by
substituting the estate of Macaria in her stead. ("ESTATE OF MACARIA BEROT,
represented by Rodolfo A. Berot, RODOLFO A. BEROT and LILIA P. BEROT").
The lower court allowed the foreclosure of the mortgage. Appellant filed a
motion for reconsideration of the decision but it was denied. On appeal, the
CA affirmed the RTC Decision but with modification where it deleted the
award of exemplary damages, attorneys fees and expenses of litigation.
Petitioners motion for reconsideration was denied. Hence, this Petition for
Review on Certiorari under Rule 45.
Issues: 1. Whether or not the intestate estate of Macaria Berot could be a
proper party by waiver expressly or impliedly by voluntary appearance.
2. Whether or not the obligation is joint.
SC: 1. Yes.
Upon Macaria Berots death on 23 June 2003, her legal personality
ceased, and she could no longer be impleaded as respondent in the
foreclosure suit. Her death opened to her heirs the succession of her estate,
which in this case was an intestate succession.

In Ventura v. Militante (October 5, 1999), the court ruled that a

deceased person does not have such legal entity as is necessary to bring
action so much so that a motion to substitute cannot lie and should be
denied by the court. Considering that capacity to be sued is a correlative of
the capacity to sue, to the same extent, a decedent does not have the
capacity to be sued and may not be named a party defendant in a court
action.
When respondent filed the foreclosure case on 15 June 2004 and
impleaded Macaria Berot as respondent, the latter had already passed away
the previous year, on 23 June 2003. Respondent then amended his
Complaint with leave of court and substituted the deceased Macaria by
impleading her intestate estate and identified Rodolfo Berot as the estates
representative. Note that the petitioners did not object when the estate of
Macaria was impleaded as respondent in the foreclosure case. Petitioner
Rodolfo Berot did not object either when the original Complaint was
amended and respondent impleaded him as the administrator of Macarias
estate, in addition to his being impleaded as an individual respondent in the
case. Indeed, petitioners impliedly waived any objection to the trial courts
exercise of jurisdiction over their persons at the inception of the case.
The defense of lack of jurisdiction over the person of the defendant may be
waived by a party to a case. In order to avail of that defense, one must
timely raise an objection before the court. In Gonzales v. Balikatan
Kilusang Bayan sa Panlalapi, Inc. (March 28, 2005), the Court held that
a defendants voluntary appearance in an action shall be equivalent to
service of summons. Further, the lack of jurisdiction over the person of the
defendant may be waived either expressly or impliedly. When a defendant
voluntarily appears, he is deemed to have submitted himself to the
jurisdiction of the court. If he does not wish to waive this defense, he must
do so seasonably by motion, and object thereto.
In Vda. De Salazar v. Court of Appeals (November 23, 1995), the
court ruled that a formal substitution of the heirs in place of the deceased is
no longer necessary if the heirs continued to appear and participated in the
proceedings of the case. The general rule is that formal substitution of heirs
must be effectuated for them to be bound by a subsequent judgment. The
rule on substitution of heirs and on appointment of a legal representative are
not jurisdictional requirements per se but the non-compliance therewith
results in the undeniable violation of the right to due process of those who,
though not duly notified of the proceedings, are substantially affected by the
decision rendered therein. For the case to continue, the real party in interest
must be substituted for the deceased. The real party in interest is the one
who would be affected by the judgment. In the instant case, the heirs are the
proper substitutes. Substitution consists of making the proper changes in the

caption of the case which may be called the formal aspect of it. Such
substitution also includes the process of letting the substitutes know that
they shall be bound by any judgment in the case and that they should
therefore actively participate in the defense of the deceased. This part may
be called the substantive aspect. It is this court's view that compliance with
the substantive aspect of the rule despite failure to comply with the formal
aspect may he considered substantial compliance.
In this case, Rodolfos continued appearance and participation in the
proceedings of the case dispensed with the formal substitution of the heirs in
place of the deceased Macaria. The failure of petitioners to timely object to
the trial courts exercise of jurisdiction over the estate of Macaria Berot
amounted to a waiver on their part. Consequently, it would be too late for
them at this point to raise that defense to merit the reversal of the assailed
decision of the trial court. We are left with no option other than to sustain the
CAs affirmation of the trial courts Decision on this matter.
2. Yes.
Under Article 1207 of the Civil Code of the Philippines, the general rule
is that when there is a concurrence of two or more debtors under a single
obligation, the obligation is presumed to be joint. The concurrence of two or
more creditors or of two or more debtors in one and the same obligation
does not imply that each one of the former has a right to demand, or that
each one of the latter is bound to render, entire compliance with the
prestations. There is a solidary liability only when the obligation expressly so
states, or when the law or the nature of the obligation requires solidarity. To
consider the obligation as solidary in nature, it must expressly be stated as
such, or the law or the nature of the obligation itself must require solidarity.
In PH Credit Corporation v. Court of Appeals (November 22,
2001), the court held that a solidary obligation is one in which each of the
debtors is liable for the entire obligation, and each of the creditors is entitled
to demand the satisfaction of the whole obligation from any or all of the
debtors. On the other hand, a joint obligation is one in which each debtors is
liable only for a proportionate part of the debt, and the creditor is entitled to
demand only a proportionate part of the credit from each debtor. A solidary
obligation cannot be inferred, it must be positively and clearly expressed. A
liability is solidary only when the obligation expressly so states, when the law
so provides or when the nature of the obligation so requires.
The contents of the real estate mortgage found no indication that the
debtors, the late Macaria and petitioners, had expressly intended to make
their obligation to respondent solidary in nature. Absent from the mortgage
are the express and indubitable terms characterizing the obligation as
solidary. Respondent was not able to prove by a preponderance of evidence
that petitioners' obligation to him was solidary. Hence, applicable to this case

is the presumption under the law that the nature of the obligation herein can
only be considered as joint. It is incumbent upon the party alleging otherwise
to prove with a preponderance of evidence that petitioners' obligation under
the loan contract is indeed solidary in character.

Topic: Action for Revival of Judgment; Failure to state cause of

action
Ponente: Diosdado Peralta
Petronio Clidoro, et al. v. Augusto Jalmanzar, et al.
G.R. No. 176598
09 July 2014
Facts: A complaint for revival of judgment was filed by Rizalina Clidoro, et al.
against Onofre Clidoro, et al., praying that the Decision of the CA (CA-G.R. CV
No. 19831), which affirmed with modification the RTC Decision (Civil Case No.
T-98) for partition, be revived and that the corresponding writ of execution be
issued. Defendants-appellees moved to dismiss the complaint on the ground
that the petition, not being brought up against the real parties-in-interest, is
dismissible for lack of cause of action.
The RTC dismissed the instant complaint for lack of cause of action.
The complaint shows that most of the parties-plaintiffs, parties-defendants

and interested parties are already deceased and have no more natural or
material existence. This is contrary to the provision of the Rules (Sec. 1, Rule
3, 1997 Rules of Civil Procedure). They could no longer be considered as the
real parties-in-interest. Besides, pursuant to Sec. 3, Rule 3 (1997 Rules of
Civil Procedure), where the action is allowed to be prosecuted or defended by
a representative or someone acting in fiduciary capacity, the beneficiary
shall be included in the title of the case. In the instant case the beneficiaries
are already deceased persons. Also, the Complaint states that they were the
original parties in Civil Case No. T-98 for Partition, but this is not so
(paragraph 2). Some of the parties are actually not parties to the original
case, but representing the original parties who are indicated as deceased.
On appeal, the CA reversed and set aside the Orders of the RTC, and
remanding the case to the RTC for further proceedings. Petitioners motion
for reconsideration of the Decision was denied. Hence, this petition.
Issue: Whether or not the complaint for revival of judgment may be
dismissed for lack of cause of action as it was not brought by or against the
real parties-in-interest.
SC: No.
Lack of cause of action is not enumerated under Rule 16 of the Rules of
Court as one of the grounds for the dismissal of a complaint for the
determination of a lack of cause of action can only be made during and/or
after trial. What is dismissible via that mode is failure of the complaint to
state a cause of action. Sec. 1(g) of Rule 16 of the Rules of Court provides
that a motion may be made on the ground "that the pleading asserting the
claim states no cause of action."
In a motion to dismiss, a defendant hypothetically admits the truth of
the material allegations of the ultimate facts contained in the plaintiff's
complaint. When a motion to dismiss is grounded on the failure to state a
cause of action, a ruling thereon should, as rule, be based only on the facts
alleged in the complaint.
In a motion to dismiss for failure to state a cause of action, the focus is
on the sufficiency, not the veracity, of the material allegations. The test of
sufficiency of facts alleged in the complaint constituting a cause of action lies
on whether or not the court, admitting the facts alleged, could render a valid
verdict in accordance with the prayer of the complaint.
In Manaloto v. Veloso III, a October 6, 2010 decision, the Court
reiterated that when the ground for dismissal is that the complaint states no
cause of action, such fact can be determined only from the facts alleged in
the complaint and from no other, and the court cannot consider other
matters aliunde. The test, therefore, is whether, assuming the allegations of

fact in the complaint to be true, a valid judgment could be rendered in

accordance with the prayer stated therein.
In this case, it was alleged in the complaint for revival of judgment that
the parties therein were also the parties in the action for partition. Applying
the foregoing test of hypothetically admitting this allegation in the
complaint, and not looking into the veracity of the same, it would then
appear that the complaint sufficiently stated a cause of action as the
plaintiffs in the complaint for revival of judgment, as the prevailing parties in
the action for partition, had a right to seek enforcement of the decision in the
partition case.
It should be borne in mind that the action for revival of judgment is a
totally separate and distinct case from the original Civil Case No. T-98 for
Partition.
In Saligumba v. Palanog (December 4, 2008), the court explained
that an action for revival of judgment is a procedural means of securing the
execution of a previous judgment which has become dormant after the
passage of five years without it being executed upon motion of the prevailing
party. It is not intended to re-open any issue affecting the merits of the
judgment. An action for revival of judgment is a new and independent action,
different and distinct from either the recovery of property case or the
reconstitution case [in this case, the original action for partition], wherein the
cause of action is the decision itself and not the merits of the action upon
which the judgment sought to be enforced is rendered.
The mere fact that the names appearing as parties in the complaint for
revival of judgment are different from the names of the parties in the original
case would not necessarily mean that they are not the real parties-ininterest. What is important is that, as provided in Section 1, Rule 3 of the
Rules of Court, they are the party who stands to be benefited or injured by
the judgment in the suit, or the party entitled to the avails of the suit.
Definitely, as the prevailing parties in the previous case for partition, the
plaintiffs in the case for revival of judgment would be benefited by the
enforcement of the decision in the partition case.

Topic: Torts and Damages - Vicarious liability (Art 2180)

Ponente: Arturo Brion
Josefa v. Manila Electric Company
G.R. No. 182705
18 July 2014

Facts:
At around 1 :45 p.m. on April 21, 1991, a dump truck, a jeepney
and a car figured in a vehicular accident along Ortigas Avenue, Pasig City. As
a result of the accident, a 45-foot wooden electricity post, three 75 KVA
transformers, and other electrical line attachments were damaged. Upon
investigation, respondent Manila Electric Company (Meralco) discovered that
it was the truck with plate number PAK-874 and registered in Vicente Josefas
name that hit the electricity post.
In a letter dated April 19, 1993, Meralco demanded from Josefa
reimbursement for the replacement cost of the electricity post and its
attachments, but Josefa refused to pay. Thus, on September 28, 1993,
Meralco sued Josefa and Pablo Manoco, the truck driver, for damages before
the Regional Trial Court (RTC) of Pasig City
In its complaint, Meralco alleged that Manocos reckless driving
resulted in damage to its properties. It also imputed primary liability on
Josefa for his alleged negligence in the selection and supervision of Manoco.
In defense, Josefa denied that Manoco was his employee when the accident
occurred. He also maintained that he exercised the diligence of a good father
of a family in the selection and supervision of all his employees.
Issue: Whether or not Josefa is vicariously liable for Bautistas negligence
under paragraph 5, Article 2180 of the Civil Code.
SC: Yes.
First, there is an employer- employee relation between Bautista and
Josefa.
The finding that Bautista acted with negligence in driving the truck
gives rise to the application of paragraph 5, Article 2180 of the Civil Code
which holds the employer vicariously liable for damages caused by his
employees within the scope of their assigned tasks. In the present case,
Josefa avoids the application of this provision by denying that Bautista was
his employee at the time of the incident.
Josefa cannot evade his responsibility by mere denial of his
employment relations with Bautista in the absence of proof that his truck
was used without authorization or that it was stolen when the accident
occurred. In quasi-delict cases, the registered owner of a motor vehicle is the
employer of its driver in contemplation of law. The registered owner of any
vehicle, even if not used for public service, would primarily be responsible to
the public or to third persons for injuries caused while the vehicle was being
driven on highways or streets. The purpose of motor vehicle registration is
precisely to identify the owner so that if any injury is caused by the vehicle,
responsibility can be imputed to the registered owner.

Second, Josefa failed to show that he exercised the diligence of a good

father of a family in the selection and supervision of Bautista
In order for Josefa to be relieved of his vicarious liability, he must show
that he exercised due diligence in the selection and supervision of Bautista.
In concrete terms, Josefa should show by competent object or documentary
evidence that he examined Bautista as to the latters qualifications,
experience and service records prior to employment. He should likewise
prove by competent objector documentary evidence that he formulated
standard operating procedures, monitored their implementation and imposed
disciplinary measures for breach of these procedures. However, Josefa failed
to overcome the presumption of negligence against him since he waived his
right to present evidence during trial.
The Court is thus left with no other conclusion other than to
rule that Josefa is primarily liable for all natural and probable
consequences of Bautistas negligence.

Topic: Award of damages

Ponente: Mariano C. Del Castillo

People of the Philippines v. Jojo Sumilhig, et al.

G.R. No. 178115
28 July 2014
Facts:
On October 31, 1998, at around 6:30 p.m., Jerry Masaglang
(Jerry), together with Eugenio Santander (Eugenio) and his son Mario, were in
the living room of Eugenios house in Sitio Overland, Kimlawis, Kiblawan,
Davao del Sur. Suddenly, they heard gun bursts and saw six persons firing at
the kitchen where members of the Santander family were having dinner.
Jerry and Mario recognized the assailants to be the appellants and their coaccused.
The strafing of the kitchen lasted for about two minutes. Before the
gunmen dispersed, Jojo shouted, "At last, I have retaliated!" In the aftermath,
the children of Eugenios other son Remegio Santander (Remegio), 3-year old
Cresjoy, 8-year old Rolly, and teeners Marissa and Micel, sustained gunshot
wounds. Unfortunately, Cresjoy expired while on the way to the hospital
while Rolly was pronounced dead-on-arrival. Marissa sustained gunshot
wounds at the right breast area and left wrist, while Micel was wounded in
the left sternal area and elbow.
Jojo Sumilhig and others, together with other three accused, were
charged with double murder and double frustrated murder. Jojo denied
involvement in the incident and interposed the defense of alibi. At the time
of the incident, he claimed to be in the house of his parents-in-law in Sitio
Ologo-o, Barangay Tacub, Kiblawan, Davao del Sur.

Issue:
SC:

Whether or not appellant is liable to pay damages.

No.

It must be noted at the outset that Carding died on June 24, 2011
during the pendency of this appeal. As decided in one case: In view of this
supervening event, it is unnecessary for the Court to rule on Cardings
appeal. Whether x x x he was guilty of the [crimes] charged has become
irrelevant since, following Article 89(1) of the Revised Penal Code, x x x, even
assuming that Carding had incurred any criminal liability, it was totally
extinguished by his death. Moreover, because the appeal was still pending
and no final judgment of conviction had been rendered against him before he
died, his civil liability arising from the crime, being civil liability ex delicto,
was likewise extinguished by his death.
The RTC noted in its Decision the existence of motive on the part of Jojo
for committing the crime as well as Pasots incredulous claim of ignorance on
almost about everything. It is well to note, however, that the said court

neither based the appellants conviction on the existence of such motive nor
on Pasots weak defense of ignorance alone, but upon the prosecution
witnesses identification of appellants as the assailants.
Topics: Ownership and possession; Double Sale
Ponente: Diosdado Peralta
Juanito Gopiao v. Metropolitan Bank and Trust Co.
G.R. No. 188931
28 July 2014
Facts:
This case stemmed from LRC Case No. 666, a Petition for the
Issuance of Writ of Possession of real properties, covered by Transfer
Certificate of Title (TCT) Nos. 489198-R, 489199-R, and 489200-R of the
Register of Deeds of San Fernando, Pampanga, filed by respondent
Metropolitan Bank & Trust Co. In said case, the RTC of San Fernando,
Pampanga issued, on November 5, 2007, a writ of possession in favor of
respondent Bank when it purchased the subject properties at a public auction
and registered the same in its name on October 1, 1998. Consequently, on
January 4, 2008, a Notice to Vacate was served on Green Asia Construction
and Development Corporation, represented by the spouses Renato and Delia
Legaspi.
Upon learning of the notice to vacate, petitioner filed an Affidavit of
Third Party Claim on January 8, 2008 and a Very Urgent Motion for
Intervention and to Recall and/or Stop the Enforcement/Implementation of
the Writ of Possession January 9, 2008. In said actions, petitioner alleged to
be in actual occupation of the subject properties and claimed ownership
thereof by virtue of a Deed of Sale dated May 20, 1995 executed by the
Spouses Legaspi in his favor.
The respondent bank was a mortgagee in good faith. It has shown that
prior to the approval of the loan application of the borrowers, it checked the
records of the properties offered as collaterals at the Registry of Deeds and
verified that the titles were clean. Moreover, it inspected the premises and
found no occupants. Thus, it approved the loan secured by the mortgage
over the subject properties which they caused to be registered. When the
borrowers defaulted, it foreclosed the mortgage, purchased the property at
the public auction and registered the Certificate of Sale on October 1, 1998.
The real properties are now covered by TCT No. 489198-R, TCT No. 489199-R
and TCT No. 489200-R registered in its name. Thus, a writ of possession was
issued in its favor
Issue:
Whether or not the CA erred in ruling as to the existence of
double sale instead of petitioner's preferred right.

SC: No.
The CA aptly noted the good faith of respondent Bank in this case. In
its decision, it ruled that respondent Bank has sufficiently shown that prior to
the approval of the loan application of the Spouses Legaspi, it checked the
records of the properties offered as collaterals at the Register of Deeds and
verified that the titles were clean. Moreover, it inspected the premises and
found no occupants. Thus, respondent Bank cannot be said to have acquired
the subject properties in bad faith as to negate its right of possession
thereof.
Nevertheless, it must be noted that the CAs discussion on double sale
and good faith was based on an assumption, for the sake of argument, that
the Spouses Legaspi actually sold the subject properties to both petitioner
and respondent Bank. The same is on the supposition that the first sale to
the petitioner had indeed taken place. However, as mentioned above, there
is doubt as to whether petitioner had truly purchased the properties subject
of this case. What can be derived from the CAs discussion is that even if
petitioner is able to establish his possession, he would still have to overcome
the rule on double sale wherein the good faith of respondent Bank is
material.
In view of the foregoing, the Court found no compelling reason to
disturb the findings of the RTC and the CA. The RTC did not gravely abuse its
discretion in denying petitioners Affidavit of Third-Party Claim and Very
Urgent Motion for Intervention and to Recall and/or Stop the
Enforcement/Implementation of the Writ of Possession, since petitioners
alleged possession of the subject real properties has not been adequately
proved. Thus, the general rule, and not the exception, applies to the instant
petition. Likewise, the CA did not err in invoking the rule on double sale and
appreciating the good faith of respondent Bank, the same being material
herein.

Topic: Real Estate Mortgage Validity

Ponente: Diosdado Peralta
Leonardo Castillo v. Security Bank Corp.
G.R. No. 196118
30 July 2014
Facts:
Petitioner Leonardo C. Castillo and respondent Leon C. Castillo, Jr.
are siblings. Leon and Teresita Flores-Castillo (the Spouses Castillo) were
doing business under the name of JRC Poultry Farms. Sometime in 1994, the
Spouses Castillo obtained a loan from respondent SBC in the amount of P45,
000,000.00. To secure said loan, they executed a real estate mortgage on
August 5, 1994 over eleven (11) parcels of land belonging to different
members of the Castillo family and which are all located in San Pablo City.
They also procured a second loan amounting to P2,500,000.00, which was
covered by a mortgage on a land in Pasay City. Subsequently, the Spouses
Castillo failed to settle the loan, prompting SBC to proceed with the
foreclosure of the properties. SBC was then adjudged as the winning bidder
in the foreclosure sale held on July 29, 1999. Thereafter, they were able to
redeem the foreclosed properties, with the exception of the lots covered by
Torrens Certificate of Title(TCT) Nos. 28302 and 28297.
On January 30, 2002, Leonardo filed a complaint for the partial
annulment of the real estate mortgage. He alleged that he owns the property
covered by TCT No. 28297 and that the Spouses Castillo used it as one of the
collaterals for a loan without his consent. He contested his supposed Special
Power of Attorney (SPA) in Leons favor, claiming that it is falsified.
In a Decision dated October 16, 2006, the RTC of San Pablo City ruled
in Leonardos favor. On November 26, 2010, the CA reversed and set aside
the RTC Decision, essentially ruling that the August 5, 1994 real estate
mortgage is valid. Leonardo filed a Motion for Reconsideration, but the same
was denied for lack of merit.
Issue:
Whether or not the real estate mortgage constituted over the
property under TCT No. T-28297 is valid and binding.

HELD: Yes.
The following are the legal requisites for a mortgage to be
valid:
(1) It must be constituted to secure the fulfillment of a principal
obligation;

(2) The mortgagor must be the absolute owner of the thing

mortgaged;
(3) The persons constituting the mortgage must have the free
disposal of their property, and in the absence thereof, they should
be legally authorized for the purpose

In view of the great ease with which CTCs are obtained these
days, there is reasonable ground to believe that, as the CA correctly
observed, the CTC could have been issued with the space for the date left
blank and Leonardo merely filled it up to accommodate his assertions. Also,
upon careful examination, the handwriting appearing on the space for the
date of issuance is different from that on the computation of fees, which in
turn was consistent with the rest of the writings on the document. He did not
likewise attempt to show any evidence that would back up his claim that at
the time of the execution of the SPA on May 5, 1993, he was actually in
America and therefore could not have possibly appeared and signed the
document before the notary.
And even if the Court were to assume, simply for the sake of argument,
that Leonardo indeed secured his CTC only on May 17, 1993, this does not
automatically render the SPA invalid. The appellate court aptly held that
defective notarization will simply strip the document of its public character
and reduce it to a private instrument, but nonetheless, binding, provided its
validity is established by preponderance of evidence
Here, the preponderance of evidence indubitably tilts in favor of the
respondents, still making the SPA binding between the parties even with the
aforementioned assumed irregularity. There are several telling circumstances
that would clearly demonstrate that Leonardo was aware of the mortgage
and he indeed executed the SPA to entrust Leon with the mortgage of his
property.

Topic:

Award of Damages

Ponente: Diosdado M. Peralta

Castillo v. Salvador
G.R. No. 191240
G.R. No. 191240, 30 July 2014
Facts:
Petitioner Cristina B. Castillo met respondent through a common
friend in December 2000 and became close since then. Respondent Philip
Salvador had told her that his friends, Jinggoy Estrada and Rudy Fernandez,
were engaged in the freight and remittance business and that Jinggoy even
brought him to Hong Kong and Singapore to promote the former's business.
As petitioner had deeply fallen in love with respondent and since she trusted
him very much as he even acted as a father to her children when her
annulment was ongoing, she agreed to embark on the remittance business.
Petitioner had raised and handed the amount of US$100,000.00 to
respondent as capital for the actual operation. However, the proposed
business never operated. When she asked respondent about the money and
the business, the latter told her that the money was deposited in a bank.
However, upon further query, respondent confessed that he used the money
to pay for his other obligations. Since then, the US$100,000.00 was not
returned at all. An action for Estafa under Article 315, par. 2 (a) of the
Revised Penal Code was filed against respondent before the Regional Trial
Court (RTC). The RTC convicted respondent (accused). Respondent appealed
his conviction to the Court of Appeals (CA). The CA rendered its Decision
reversing the decision of the RTC. Hence, the petition.

Issue:

SC:

Yes.

Whether or not petitioner is entitled to damages.

In Manantan v. CA (January 29, 2001), the Court discussed the

consequences of an acquittal on the civil liability of the accused as follows:
Our law recognizes two kinds of acquittal, with different effects on the
civil liability of the accused. First is an acquittal on the ground that the
accused is not the author of the actor omission complained of. This instance
closes the door to civil liability, for a person who has been found to be not
the perpetrator of any act or omission cannot and can never be held liable
for such act or omission. There being no delict, civil liability ex delicto is out
of the question, and the civil action, if any, which may be instituted must be
based on grounds other than the delict complained of. This is the situation
contemplated in Rule III of the Rules of Court. The second instance is an
acquittal based on reasonable doubt on the guilt of the accused. In this case,
even if the guilt of the accused has not been satisfactorily established, he is
not exempt from civil liability which may be proved by preponderance of
evidence only. This is the situation contemplated in Article 29 of the Civil
Code, where the civil action for damages is "for the same act or omission." x
x x.
A reading of the CA decision would show that respondent was acquitted
because the prosecution failed to prove his guilt beyond reasonable doubt.
Said the CA:
The evidence for the prosecution being insufficient to prove beyond
reasonable doubt that the crime as charged had been committed by
appellant, the general presumption, "that a person is innocent of the crime
or wrong, stands in his favor. The prosecution failed to prove that all the
elements of estafa are present in this case as would overcome the
presumption of innocence in favor of appellant. For in fact, the prosecution's
primary witness herself could not even establish clearly and precisely how
appellant committed the alleged fraud. She failed to convince us that she
was deceived through misrepresentations and/or insidious actions, in
venturing into a remittance business. Quite the contrary, the obtaining
circumstance in this case indicate the weakness of her submissions.
Thus, since the acquittal is based on reasonable doubt, respondent is
not exempt from civil liability which may be proved by preponderance of
evidence only. In Encinas v. National Bookstore, Inc. (November 19,
2004), the Court explained the concept of preponderance of evidence as
follows:
x x x Preponderance of evidence is the weight, credit, and value of the
aggregate evidence on either side and is usually considered to be
synonymous with the term "greater weight of the evidence" or "greater
weight of the credible evidence." Preponderance of evidence is a phrase
which, in the last analysis, means probability of the truth. It is evidence

which is more convincing to the court as worthy of belief than that which is
offered in opposition thereto.

Topic:

Contract of Sale v. Equitable Mortgage

Ponente: Jose P. Perez

Heirs of Reynaldo Dela Rosa v. Batongbacal

G.R. No. 179205
30 July 2014

Facts:
Sometime in 1984, Reynaldo offered to sell the subject property
to Guillermo Batongbacal (Guillermo) and Mario Batongbacal (Mario) for
P50.00 per square meter or for a total of P187,500.00. Pursuant to the
agreement, Reynaldo received an advance payment of P31,500.00 leaving a
balance of P156,000.00. As shown in the document denominated as Resibo
and signed by Reynaldo the parties agreed that the amount of P20,000.00 as
part of the advance payment shall be paid upon the delivery of the Special
Power-of-Attorney (SPA), which would authorize Reynaldo to alienate the
subject property on behalf of his co-owners and siblings namely, Eduardo,
Araceli and Zenaida. The balance thereon shall be paid in P10,000.00
monthly installments until the purchase price is fully settled.
Subsequent to the execution of the said agreement, Mario and
Guillermo, on their own instance, initiated a survey to segregate the area of
3,750 square meters from the whole area covered by TCT No. T-107449,
delineating the boundaries of the subdivided parts. As a result, they came up

with a subdivision plan specifically designating the subject property signed

by a Geodetic Engineer. Mario and Guillermo thereafter made several
demands from Reynaldo to deliver the SP A as agreed upon, but such
demands all went unheeded.
Consequently, Guillermo and Mario initiated an action for Specific
Performance or Rescission and Damages before the Regional Trial Court (RTC)
seeking to enforce their Contract to Sell. In their Complaint Mario and
Guillermo asserted that they have a better right over the subject property
and alleged that the subsequent sale thereof effected by Reynaldo to third
persons is void as it was done in bad faith. It was prayed in the Complaint
that Reynaldo be directed to deliver the SPA and, in case of its impossibility,
to return the amount of P31,500.00 with legal interest and with damages in
either case.
To protect their rights on the subject property, Mario and Guillermo,
after initiating the Civil Case, filed a Notice of Lis Pendens registering their
claim on the certificate of title covering the entire property.
In refuting the allegations of Mario and Guillermo in their Complaint.
Reynaldo in his Answer countered that the purported Contract to Sell is void,
because he never gave his consent thereto. Reynaldo insisted that he was
made to understand that the contract between him and the Batongbacals
was merely an equitable mortgage whereby it was agreed that the latter will
loan to him the amount of P3 l ,500.00 payable once he receives his share in
the proceeds of the sale of the land registered under TCT No. T-107449.
For failure of Mario and Guillermo as plaintiffs therein to adduce
sufficient evidence to support their complaint, the RTC dismissed the civil
case and ordered Reynaldo to return to the former the sum of P28,000.00
with 12% annual interest. Reynaldo failed to convince the court a quo that
the contract he entered into with Mario was an equitable mortgage. It was
held by the trial court, however, that the supposed Contract to Sell
denominated as Resibo is unenforceable under Article 1403 of the New Civil
Code because Reynaldo cannot bind his co-owners into such contract without
an SPA authorizing him to do so. As such, Reynaldo cannot be compelled to
deliver the subject property but he was nonetheless ordered by the court to
return the amount he received as the contract price since no one should be
allowed to unjustly enrich himself at the expense of another.
On Appeal, the Court of Appeals affirmed the earlier decision. In
seeking modification of the appellate court's decision, Mario and Guillermo
pointed out that the title of the subject property has not yet been transferred
to third persons, and thus, Reynaldo can still be compelled to execute a deed
of conveyance over his undivided share of the entire property. The Court of
Appeals granted the Motion for Reconsideration of Mario and Guillermo and
directed Reynaldo to convey the subject property to them.

In case of failure of [Reynaldo] to execute the deed of sale, the Branch

Clerk of Court of RTC is directed to execute the same and receive the
P156,000.00 balance on the purchase price on behalf of Reynaldo de la Rosa.
The appellate court was notified of the death or Reynaldo, and his heirs
sought to be substituted as party in this case. Petitioners Heirs of Reynaldo
are now before this Court via this instant Petition for Review on Certiorari
praying that the Court of Appeals Decision and Resolution be reversed on the
ground that it was rendered not in accordance with the applicable law and
jurisprudence.

Issue:
Whether or not there was a Contract of Sale (and not an
Equitable Mortgage) between Reynaldo Dela Rosa and Guillermo
Batongbacal.
SC: An equitable mortgage is defined as one although lacking in some
formality, or form or words, or other requisites demanded by a statute,
nevertheless reveals the intention of the parties to charge real property as
security for a debt, and contains nothing impossible or contrary to law. For
the presumption of an equitable mortgage to arise, two requisites must
concur: (1) that the parties entered into a contract denominated as a sale;
and (2) the intention was to secure an existing debt by way of mortgage.
Consequently, the non-payment of the debt when due gives the mortgagee
the right to foreclose the mortgage, sell the property and apply the proceeds
of the sale for the satisfaction of the loan obligation.18 While there is no
single test to determine whether the deed of absolute sale on its face is
really a simple loan accommodation secured by a mortgage, the Civil Code,
however, enumerates several instances when a contract is presumed to be
an equitable mortgage, to wit:

Article 1602. 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 unusually

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.
In any of the foregoing cases, any money, fruits, or other benefit to be
received by the vendee as rent or otherwise shall be considered as
interest which shall be subject to the usury laws.

A perusal of the contract denominated as Resibo reveals the utter

frailty of petitioners' position because nothing therein suggests, even
remotely, that the subject property was given to secure a monetary
obligation. The terms of the contract set forth in no uncertain terms that the
instrument was executed with the intention of transferring the ownership of
the subject property to the buyer in exchange for the price. Nowhere in the
deed is it indicated that the transfer was merely intended to secure a debt
obligation. On the contrary, the document clearly indicates the intent of
Reynaldo to sell his share in the property. The primary consideration in
determining the true nature of a contract is the intention of the parties. If the
words of a contract appear to contravene the evident intention of the parties,
the latter shall prevail. Such intention is determined not only from the
express terms of their agreement, but also from the contemporaneous and
subsequent acts of the parties. That the parties intended some other acts or
contracts apart from the express terms of the agreement, was not proven by
Reynaldo during the trial or by his heirs herein. Beyond their bare and
uncorroborated asseverations that the contract failed to express the true
intention of the parties, the record is bereft of any evidence indicative that
there was an equitable mortgage.
Neither could the allegation of gross inadequacy of the price carry the
day for the petitioners. It must be underscored at this point that the subject
of the Contract to Sell was limited only to '14 pro-indiviso share of Reynaldo
consisting an area of 3,750 square meter and not the entire 15,001-square
meter parcel of land. As a co-owner of the subject property, Reynaldo's right
to sell, assign or mortgage his ideal share in the property held in common is
sanctioned by law. The applicable law is Article 493 of the New Civil Code,
which spells out the rights of co-owners over a co-owned property, to wit:

Art. 493. Each co-owner shall have the full ownership of his part and of
the fruits and benefits pertaining thereto, and he may therefore alienate,
assign or mortgage it, and even substitute another person in its enjoyment,

except when personal rights are involved. But the effect of the alienation or
the mortgage, with respect to the co-owners, shall be limited to the portion
which may be allotted to him in the division upon the termination of the coownership.

Pursuant to this law, a co-owner has the right to alienate his proindiviso share in the co-owned property even without the consent of his coowners. This right is absolute and in accordance with the well-settled
doctrine that a co-owner has a full ownership of his pro-indiviso share and
has the right to alienate, assign or mortgage it, and substitute another
person for its enjoyment. In other words, the law does not prohibit a coowner from selling, alienating, mortgaging his ideal share in the property
held in common.

As the parties invoking equitable mortgage, the Heirs of Reynaldo did

not even come close to proving that the parties intended to charge the
property as security for a debt, leaving us with no other choice but to uphold
the stipulations in the contract. Basic is the rule that if the terms of the
contract are clear and leave no doubt upon the intention of the parties, the
literal meaning of its stipulations shall control, we find that the Court of
Appeals cannot be faulted for ruling, in modification of its original judgment,
that the sale effected by Reynaldo of his undivided share in the property is
valid and enforceable.

Topic:

Award of Damages

Ponente: Estela M. Perlas-Bernabe

National Transmmission Corp. v. Alphaomega Integrated Corp.

G.R. No. 184295
30 July 2014

Facts:
AIC, a duly licensed transmission line contractor, participated in
the public biddings conducted by TRANSCO and was awarded six ( 6)
government construction projects.
In the course of the performance of the contracts, AIC encountered
difficulties and incurred losses allegedly due to TRANSCOs breach of their
contracts, prompting it to surrender the projects to TRANSCO under protest.
In accordance with an express stipulation in the contracts that
disagreements shall be settled by the parties through arbitration before the
CIAC, AIC submitted a request for arbitration before the CIAC on August 28,
2006, and, thereafter, filed an Amended Complaint against TRANSCO
alleging that the latter breached the contracts by its failure to: (a) furnish the
required Detailed Engineering; (b) arrange a well-established right-of-way to
the project areas; (c) secure the necessary permits and clearances from the
concerned local government units (LGUs); (d) ensure a continuous supply of
construction materials; and (e) carry out AICs requests for power shut down.
AIC prayed for judgment declaring all six (6) contracts rescinded and
ordering TRANSCO to pay, in addition to what had already been paid under
the contracts, moral damages, exemplary damages, and attorneys fees at
P100,000.00 each, and a total of P40,201,467.19 as actual and
compensatory damages.
The Construction Industry Arbitration Commission (CIAC) Arbitral
Tribunal rendered its Final Award11 in CIAC Case No. 21-2006 ordering the
payment of actual and compensatory damages which AIC would not have
suffered had it not been for the project delays attributable to TRANSCO. The
CA affirmed the Arbitral Tribunals factual findings that TRANSCO failed to
exercise due diligence in resolving the problems regarding the right-of-way
and the lack of materials before undertaking the bidding process and
entering into the contracts with AIC.
The CA upheld the Arbitral Tribunals Final Award as having been
sufficiently established by evidence but modified the total amount of the
award after noting a supposed mathematical error in the computation.
Setting aside TRANSCOs objections, it ruled that when a case is brought to a
superior court on appeal every aspect of the case is thrown open for review,
hence, the subject error could be rectified. The CA held that the correct
amount of the award should be P18,896,673.31, and not P17,495,117.44 as
stated in the Arbitral Tribunals Final Award. Dissatisfied, TRANSCO moved for

reconsideration28 but was, however, denied by the CA, hence, the instant
petition.

Issue:
Whether or not AIC is entitled to its claims for damages as a
result of project delays

SC:

Yes.

In any case, the Court finds no reason to disturb the factual findings of
the CIAC Arbitral Tribunal on the matter of AICs entitlement to damages
which the CA affirmed as being well supported by evidence and properly
referred to in the record. It is well-settled that findings of fact of quasi-judicial
bodies, which have acquired expertise because their jurisdiction is confined
to specific matters, are generally accorded not only respect, but also finality,
especially when affirmed by the CA. The CIAC possesses that required
expertise in the field of construction arbitration and the factual findings of its
construction arbitrators are final and conclusive, not reviewable by this Court
on appeal.

Topic:

Medical Malpractice; Civil Liability

Ponente: Diosdado M. Peralta

Cabugao v. People of the Philippines

G.R. No. 163879
30 July 2014

Facts:
JR was under the medical care of the accused from the time of
his admission for confinement at the Nazareth General Hospital until his
death. Upon his admission, the initial working diagnosis was to consider
acute appendicitis. To assist the accused in the consideration of acute
appendicitis, Dr. Cabugao requested for a complete blood count (CBC) and a
diagnostic ultrasound on JR. The findings of the CBC and ultrasound showed
that an inflammatory process or infection was going on inside the body of JR.
Said inflammatory process was happening in the periumbilical region where
the appendix could be located. The initial diagnosis of acute appendicitis
appears to be a distinct possibility.
Dr. Ynzon ordered medications to treat the symptoms being manifested
by JR. Thereafter, he ordered that JR be observed for 24 hours. However, the
accused, as the attending physicians, did not personally monitor JR in order
to check on subtle changes that may occur. Rather, they left the monitoring
and actual observation to resident physicians who are just on residency
training and in doing so, they substituted their own expertise, skill and
competence with those of physicians who are merely new doctors still on
training. Not having personally observed JR during this 24-hour critical period
of observation, the accused relinquished their duty and thereby were unable
to give the proper and correct evaluation as to the real condition of JR. In
situations where massive infection is going on as shown by the aggressive
medication of antibiotics, the condition of the patient is serious which
necessitated personal, not delegated, attention of attending physicians,
namely JR and the accused in this case.
Throughout the course of the hospitalization and treatment of JR, the
accused failed to address the acute appendicitis which was the initial
diagnosis. They did not take steps to find out if indeed acute appendicitis
was what was causing the massive infection that was ongoing inside the
body of JR even when the inflammatory process was located at the
paraumbilical region where the appendix can be located.
There may have been other diseases but the records do not show that
the accused took steps to find out what disease exactly was plaguing JR. It

was their duty to find out the disease causing the health problem of JR, but
they did not perform any process of elimination. Appendicitis, according to
expert testimonies, could be eliminated only by surgery but no surgery was
done by the accused. But the accused could not have found out the real
disease of JR because they were treating merely and exclusively the
symptoms by means of the different medications to arrest the manifested
symptoms. In fact, by treating the symptoms alone, the accused were
recklessly and wantonly ignoring the same as signs of the graver health
problem of JR. This gross negligence on the part of the accused allowed the
infection to spread inside the body of JR unabated. The infection obviously
spread so fast and was so massive that within a period of only two and a half
(2 ) days from the day of admission to the hospital on June 15, 2000, JR
who was otherwise healthy died [of] Septicemia (Acute Appendicitis) on June
17, 2000.
On February 1, 2001, an Information was filed against accused for
reckless imprudence resulting to homicide. At their arraignment, both
accused, duly assisted by counsel, pleaded not guilty to the charge. The trial
court convicted the accused. On appeal, the Court of Appeals affirmed the
earlier conviction. Hence, the petition.

Issues:
1. Whether or not the respondents are guilty of medical malpractice.
2. Whether or not there is a civil liability on the part of Dr. Ynzon
despite his death pending appeal of his conviction

SC: 1. As to Dr. Ynzon

Yes.
Verily, whether a physician or surgeon has exercised the requisite
degree of skill and care in the treatment of his patient is, in the generality of
cases, a matter of expert opinion. The deference of courts to the expert
opinions of qualified physicians stems from its realization that the latter
possess unusual technical skills which laymen in most instances are
incapable of intelligently evaluating. From the testimonies of the expert
witnesses presented, it was irrefutably proven that Dr. Ynzon failed to
practice that degree of skill and care required in the treatment of his patient.
Among the elements constitutive of reckless imprudence, what
perhaps is most central to a finding of guilt is the conclusive determination
that the accused has exhibited, by his voluntary act without malice, an
inexcusable lack of precaution. It is that which supplies the criminal intent so
indispensable as to bring an act of mere negligence and imprudence under
the operation of the penal law. This is because a conscious indifference to
the consequences of the conduct is all that is required from the standpoint of
the frame of mind of the accused. Quasi-offenses penalize the mental
attitude or condition behind the act, the dangerous recklessness, the lack of
care or foresight, the "imprudencia punible," unlike willful offenses which
punish the intentional criminal act. This is precisely where this Court found
Dr. Ynzon to be guilty of - his seemingly indifference to the deteriorating
condition of JR that he as a consequence, failed to exercise lack of precaution
which eventually led to JR's death.
To be sure, whether or not a physician has committed an "inexcusable
lack of precaution" in the treatment of his patient is to be determined
according to the standard of care observed by other members of the
profession in good standing under similar circumstances bearing in mind the
advanced state of the profession at the time of treatment or the present
state of medical science. In accepting a case, a doctor in effect represents
that, having the needed training and skill possessed by physicians and
surgeons practicing in the same field, he will employ such training, care and
skill in the treatment of his patients. He, therefore, has a duty to use at least
the same level of care that any other reasonably competent doctor would
use to treat a condition under the same circumstances. Sadly, Dr. Ynzon did
not display that degree of care and precaution demanded by the
circumstances.

As to Dr. Cabugao

No.
Immediately apparent from a review of the records of this case is the
fact that Dr. Cabugao is not a surgeon, but a general practitioner specializing
in family medicine; thus, even if he wanted to, he cannot do an operation,
much less an appendectomy on JR. It is precisely for this reason why he
referred JR to Dr. Ynzon after he suspected appendicitis. Dr. Mateo, the
prosecutions expert witness, emphasized the role of the surgeon during
direct examination
Neither did the Court find the evidence that Dr. Cabugao has been
negligent or lacked the necessary precaution in his performance of his duty
as a family doctor. On the contrary, a perusal of the medical records would
show that during the 24-hour monitoring on JR, it was Dr. Cabugao who
frequently made orders on the administration of antibiotics and pain
relievers. There was also repetitive instructions from Dr. Cabugao to refer JR
to Dr. Ynzon as it appeared that he is suspecting appendicitis. The referral of
JR to Dr. Ynzon, a surgeon, is actually an exercise of precaution as he knew
that appendicitis is not within his scope of expertise. This clearly showed that
he employed the best of his knowledge and skill in attending to JR's
condition, even after the referral of JR to Dr. Ynzon. To be sure, the calculated
assessment of Dr. Cabugao to refer JR to a surgeon who has sufficient
training and experience to handle JRs case belies the finding that he
displayed inexcusable lack of precaution in handling his patient.
The Court likewise noted that Dr. Cabugao was out of town when JR's
condition began to deteriorate. Even so, before he left, he made
endorsement and notified the resident-doctor and nurses-on-duty that he will
be on leave.

2.

Yes.

While this case is pending appeal, counsel for petitioner Dr. Ynzon informed
the Court that the latter died on December 23, 2011 due to "multiorgan
failure" as evidenced by a copy of death certificate.33 Thus, the effect of
death, pending appeal of his conviction of petitioner Dr. Ynzon with regard to
his criminal and pecuniary liabilities should be in accordance to People v.
Bayotas (September 2, 1994), wherein the Court laid down the rules in
case the accused dies prior to final judgment:
1. Death of the accused pending appeal of his conviction extinguishes
his criminal liability as well as the civil liability based solely thereon. As
opined by Justice Regalado, in this regard, "the death of the accused
prior to final judgment terminates his criminal liability and only the civil
liability directly arising from and based solely on the offense
committed, i.e., civil liability ex delicto in sensor stricture."

2. Corollarily, the claim for civil liability survives notwithstanding the

death of accused, if the same may also be predicated on a source of
obligation other than delict. Article 1157 of the Civil Code enumerates
these other sources of obligation from which the civil liability may arise
as a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) x x x x x x x x x
e) Quasi-delicts

3. Where the civil liability survives, as explained in Number 2 above, an

action for recovery therefor may be pursued but only by way of filing a
separate civil action and subject to Section 1, Rule 111 of the 1985
Rules on Criminal Procedure as amended. This separate civil action
may be enforced either against the executor/administrator or the
estate of the accused, depending on the source of obligation upon
which the same is based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his
right to file this separate civil action by prescription, in cases where
during the prosecution of the criminal action and prior to its extinction,
the private-offended party instituted together therewith the civil action.
In such case, the statute of limitations on the civil liability is deemed
interrupted during the pendency of the criminal case, conformably with
provisions of Article 1155 of the Civil Code, that should thereby avoid
any apprehension on a possible privation of right by prescription.

In view of the foregoing, it is clear that the death of the accused Dr.
Ynzon pending appeal of his conviction extinguishes his criminal liability.
However, the recovery of civil liability subsists as the same is not based on
delict but by contract and the reckless imprudence he was guilty of under
Article 365 of the Revised Penal Code.1wphi1 For this reason, a separate
civil action may be enforced either against the executor/administrator or the
estate of the accused, depending on the source of obligation upon which the
same is based, and in accordance with Section 4, Rule 111 of the Rules on
Criminal Procedure:
Sec. 4. Effect of death on civil actions. The death of the accused after
arraignment and during the pendency of the criminal action shall

extinguish the civil liability arising from the delict. However, the
independent civil action instituted under section 3 of this Rule or which
thereafter is instituted to enforce liability arising from other sources of
obligation may be continued against the estate or legal representative
of the accused after proper substitution or against said estate, as the
case may be. The heirs of the accused may be substituted for the
deceased without requiring the appointment of an executor or
administrator and the court may appoint a guardian ad litem for the
minor heirs.
The court then ordered said legal representative or representatives to
appear and be substituted within a period of thirty (30) days from notice.

Topic: Legal Interest

Ponente: REYES, J.
G.R. No. 212689

August 6, 2014

ECE REALTY and DEVELOPMENT,

HERNANDEZ, Respondent.

INC.,

Petitioner,

vs.

HAYDYN

Facts:
On September 7, 2006, Haydyn Hernandez (respondent) filed a
Complaint for specific performance, with damages, against Emir Realty and
Development Corporation (EMIR) and ECE Realty and Development
Incorporated (ECE) before the Housing and Land Use Regulatory Board
Expanded National Capital Region Field Office (HLURB-Regional Office).
The respondent alleged that ECE and EMIR, engaged in condominium
development and marketing, respectively, sold to him a 30-square meter
condominium unit in the "Harrison Mansion" described as Unit 808, Building
B, Phase 1 (Unit 808). On July 22, 1997 the respondent paid the reservation
fee of P35,000.00, and on August 2, 1997 he paid P104,063.65 to complete
the downpayment.5 In the parties Contract to Sell6 dated November 5,
1997, EMIR and ECE promised that Unit 808 would be ready for occupancy by
December 31, 1999.
EMIR and ECE failed to deliver Unit 808 to the respondent on
December 31, 1999, by which date he had already paid a total of
P452,551.65. Moreover, the respondent discovered that Unit 808 contained
only 26 sq m, not 30 sq m as contracted, thus, he asked for a corresponding
reduction in the price by P120,000.00, based on the price per sq m of

P30,000.00. Instead, EMIR and ECE demanded that he settle all his
amortizations in arrears with interest. Sometime in 2005, the respondent
learned that EMIR and ECE had sold Unit 808 to a third party.
The respondent in his complaint inthe HLURB asked that EMIR and ECE
be ordered to accept his payment of the balance of the price of Unit 808, less
P120,000.00, without interest; and to pay him moral damages of
P500,000.00, actual damages of P100,000.00, exemplary damages of
P100,000.00, and attorneys fees of P50,000.00 plus P2,000.00 per
appearance fee. If Unit 808 is no longer available, the respondent asked that
EMIR and ECE reimburse him the amountof P452,551.65 he paid, plus legal
interest.
The HLURB-Regional Office ordered EMIR and ECE to reimburse the
respondent the amount of P452,551.65, plus legal interest, from the filing of
the complaint, and to pay the respondent P50,000.00 as moral damages,
P50,000.00 as attorneys fees, and P50,000.00 as exemplary damages.11
the HLURB Board of Commissioners upheld the HLURB-Regional Office
but dropped EMIR as defendant. ECE appealed to the OP, but the OP
dismissed ECEs appeal. the OP denied ECEs motion for reconsideration. The
Ca upheld the OP.
On the imposition of six percent (6%) interest, the appellate court cites
Eastern Shipping Lines, Inc. v. Court of Appeals14 and in Fil-Estate Properties,
Inc. v. Spouses Go, the amount to be refunded being neither a loan nor a
forbearance of money, goods or credit.
Issue:

What is the interest rate imposable?

Ruling:
The Court affirmed the CA decision with modification, by
reducing the interest imposable after finality fromtwelve percent (12%) to six
percent (6%).
Article 2209 of the New Civil Code provides that "If the obligation
consists in the payment of a sum of money, and the debtor incurs in delay,
the indemnity for damages, there being no stipulation to the contrary, shall
be the payment of the interest agreed upon, and in the absence of
stipulation, the legal interest, which is six per cent per annum."
There is no doubt that ECE incurred in delay in delivering the subject
condominium unit, for which reason the trial court was justified in awarding
interest to the respondent from the filing of his complaint. There being no

stipulation as to interest, under Article 2209 the imposable rate is six percent
(6%) by way of damages, following the guidelines laid down in the landmark
case of Eastern Shipping Lines v. Court of Appeals.
The legal interest at 12% per annum under Central Bank (CB) Circular
No. 416 shall be adjudged only in cases involving the loan or forbearance of
money. And for transactions involving payment of indemnities in the concept
of damages arising from default in the performance of obligations in general
and/or for money judgment not involving a loan or forbearance of money,
goods, or credit, the governing provision is Art. 2209 of the Civil Code
prescribing a yearly 6% interest.
The term "forbearance," within the context of usury law, has been
described as a contractual obligation ofa lender or creditor to refrain, during
a given period of time, from requiring the borrower or debtor to repay the
loan or debt then due and payable.
Eastern Shipping Lines, Inc. synthesized the rules on the imposition of
interest, if proper, and the applicable rate, as follows: The 12% per annum
rate under CB Circular No. 416 shall apply only to loans or forbearance of
money, goods, or credits, as well as to judgments involving such loan or
forbearance of money, goods, or credit, while the 6%per annum under Art.
2209 of the Civil Code applies "when the transaction involves the payment of
indemnities in the concept of damage arising from the breach or a delay in
the performance of obligations in general," with the application of both rates
reckoned "from the time the complaint was filed until the [adjudged] amount
is fully paid." In either instance, the reckoning period for the commencement
of the running of the legal interest shall be subject to the condition "that the
courts are vested with discretion, depending on the equities of each case, on
the award of interest."
Thus, from the finality of the judgment awarding a sum of money until
it is satisfied, the award shall be considered a forbearance of credit,
regardless of whether the award in fact pertained to one.20 Pursuant to
Central Bank Circular No. 416 issued on July 29, 1974, in the absence of
written stipulation the interest rate to be imposed in judgments involving a
forbearance of credit was twelve percent (12%) per annum, up from six
percent (6%) under Article 2209 of the Civil Code.1wphi1 This was
reiterated in Central Bank Circular No. 905, which suspended the effectivity
of the Usury Law beginning on January 1, 1983.

But since July 1, 2013, the rate of twelve percent (12%) per
annum from finality of the judgment until satisfaction has been
brought back to six percent (6%). Section 1 of Resolution No. 796 of
the Monetary Board of the Bangko Sentral ng Pilipinas dated May 16,
2013 provides: "The rate of interest for the loan or forbearance of any
money, goods or credits and the rate allowed in judgments, in the absence of
an express contract as to such rate of interest, shall be six percent (6%) per
annum." Thus, the rate of interest to be imposed from finality of judgments is
now back at six percent (6%), the rate provided in Article 2209 of the Civil
Code.

Topic: Prescription; Implied Trust: Accretion

Ponente: PERLAS-BERNABE, J.
G.R. No. 182908

August 6, 2014

HEIRS OF FRANCISCO I. NARVASA, SR., and HEIRS OF PETRA

IMBORNAL and PEDRO FERRER, represented by their Attorney-inFact, MRS. REMEDIOS B. NARVASA-REGACHO, Petitioners, vs.
EMILIANA, VICTORIANO, FELIPE, MA TEO, RAYMUNDO, MARIA, and
EDUARDO, all surnamed IMBORNAL, Respondents.

Facts:
Basilia Imbornal+ (Basilia) had four (4) children, namely,
Alejandra, Balbina, Catalina, and Pablo.Francisco I. Narvasa, Sr. (Francisco)
and Pedro Ferrer (Pedro) were the children of Alejandra, while petitioner Petra
Imbornal (Petra) was the daughter of Balbina. Petitionersare the heirs and
successors-in-interest of Francisco, Pedro, and Petra (Francisco, et al.). On
the other hand, respondentsEmiliana, Victoriano, Felipe, Mateo, Raymundo,
Maria, and Eduardo, all surnamed Imbornal, are the descendants of Pablo.
During her lifetime, Basilia owned a parcel of land situated at
Sabangan, Barangay Nibaliw West, San Fabian, Pangasinan with an area of
4,144 square meters (sq. m.), more or less (Sabangan property), which she
conveyed to her three (3) daughters Balbina, Alejandra, and Catalina
(Imbornal sisters) sometime in 1920.
Meanwhile, Catalinas husband, Ciriaco Abrio (Ciriaco), applied for and
was granted a homestead patent over a 31,367-sq. m. riparian land
(Motherland) adjacent to the Cayanga River in San Fabian, Pangasinan. He
was eventually awarded Homestead Patent No. 2499115 therefor, and, on
December 5, 1933, OCT No. 1462 was issued in his name. Later, or on May
10, 1973, OCT No. 1462 was cancelled, and Transfer Certificate of Title (TCT)
No. 10149516 was issued in the name of Ciriacos heirs, namely: Margarita
Mejia; Rodrigo Abrio, marriedto Rosita Corpuz; Antonio Abrio, married to
Crisenta Corpuz; Remedios Abrio, married to Leopoldo Corpuz; Pepito Abrio;
Dominador Abrio; Francisca Abrio; Violeta Abrio; and Perla Abrio (Heirs of
Ciriaco).
Ciriaco and his heirs had since occupied the northern portionof the
Motherland, while respondents occupied the southern portion.
Sometime in 1949, the First Accretion, approximately 59,772 sq. m. in
area, adjoined the southern portion of the Motherland. On August 15, 1952,
OCT No. P-318 was issued in the name of respondent Victoriano, married to
Esperanza Narvarte, covering the First Accretion.18 Decades later, or in
1971, the Second Accretion, which had an area of 32,307 sq. m., more or
less, abutted the First Accretion on its southern portion.19 On November 10,
1978, OCT No. 21481 was issued in the names of all the respondents
covering the Second Accretion.
Claiming rights over the entire Motherland, Francisco, et al., as the
children of Alejandra and Balbina, filed on February 27, 1984 an Amended
Complaint20
for
reconveyance,
partition,and/or
damages
against
respondents. They anchored their claim on the allegation that Ciriaco, with

the help of his wifeCatalina, urged Balbina and Alejandra to sell the
Sabangan property, and that Ciriaco used the proceeds therefrom to fund his
then-pending homestead patent application over the Motherland. In return,
Ciriaco agreed that once his homestead patent is approved, he will be
deemed to be holding the Motherland which now included both accretions
in trust for the Imbornal sisters.
Likewise, Francisco, et al. alleged that through deceit, fraud, falsehood,
and misrepresentation, respondent Victoriano, with respect to the First
Accretion, and the respondents collectively, with regard to the Second
Accretion, had illegally registered the said accretions in their names,
notwithstanding the fact that they werenot the riparian owners (as they did
not own the Motherland to which the accretions merely formed adjacent to).
In this relation, Francisco, et al. explained that they did not assert their
inheritance claims over the Motherland and the two (2) accretions because
they respected respondents rights, until they discovered in 1983 that
respondents have repudiated their (Francisco, et al.s) shares thereon. Thus,
bewailing that respondents have refused them their rights not only with
respect to the Motherland, but also to the subsequent accretions, Francisco,
et al. prayed for the reconveyance of said properties, or, in the alternative,
the payment of their value, as well as the award of moral damages in the
amount of P100,000.00, actual damages in the amount of P150,000.00,
including attorneys fees and other costs.
Issues:
1. Whether or not the causes of action pertaining to the Motherland and
the First Accretion are barred by prescription.
2. Whether or not there is an the existence of an implied trust between
the Imbornal sisters and Ciriaco.

Ruling:
1. Yes.
An action for reconveyance is one that seeks to transfer property,
wrongfully registered by another, to its rightful and legal owner. Thus,
reconveyance is a remedy granted only to the owner of the property alleged
to be erroneously titled in anothers name.3

When property is registered in anothers name, an implied or

constructive trust is created by law in favor of the true owner. Article 1456 of
the Civil Code provides that a person acquiring property through fraud
becomes, by operation of law, a trustee of an implied trust for the benefit of
the real owner of the property. An action for reconveyance based on an
implied trust prescribes in ten (10) years, reckoned from the date of
registration of the deed or the date of issuance of the certificate of title over
the property, if the plaintiff is not in possession. However, if the plaintiff is in
possession of the property, the action is imprescriptible.
Based on the foregoing, Francisco, et al. had then a period of ten (10)
years from the registration of the respective titles covering the disputed
properties within which to file their action for reconveyance, taking into
account the fact that they were never in possession of the said properties.
Hence, with respect to the Motherland covered by OCT No. 1462 issued
on December 5, 1933 in the name of Ciriaco, an action for reconveyance
therefor should have been filed until December 5, 1943; with respect to the
First Accretion covered by OCT No. P-318 issued on August 15, 1952in the
name of respondent Victoriano, an action of the same nature should have
been filed untilAugust 15, 1962; and, finally, with respect to the Second
Accretion covered by OCT No. 21481 issued on November 10, 1978 in the
name of the respondents, a suit for reconveyance therefor should have been
filed until November 10, 1988.
A judicious perusal of the records, however, will show that the
Amended Complaint covering all three (3) disputed properties was filed only
on February 27, 1984. As such, it was filed way beyond the 10-year
reglementary period within which to seek the reconveyance of two (2) of
these properties, namely, the Motherland and the First Accretion, with only
the reconveyance action with respect to the Second Accretion having been
seasonably filed. Thus, considering thatrespondents raised prescription as a
defense in their Amended Answer, the Amended Complaint with respect to
the Motherland and the First Accretion ought to have been dismissed based
on the said ground, with only the cause of action pertaining to the Second
Accretion surviving.
2. No.
An implied trust arises, not from any presumed intention of the parties,
but by operation of law in order to satisfy the demands of justice and equity
and to protect against unfair dealing or downright fraud.44 To reiterate,

Article 1456 of the Civil Code states that "if property is acquired through
mistake or fraud, the person obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the person from whom the
property comes."
The burden of proving the existence of a trust is on the party asserting
its existence, and such proof must be clear and satisfactorily show the
existence of the trust and its elements. While implied trusts may be proven
by oral evidence, the evidence must be trustworthy and received by the
courts with extreme caution, and should not be made to rest on loose,
equivocal or indefinite declarations. Trustworthy evidence is required
because oral evidence can easily be fabricated.
In this case, it cannot be said, merely on the basis of the oral evidence
offered by Francisco, et al., that the Motherland had been either mistakenly
or fraudulently registered in favor of Ciriaco. Accordingly, it cannot be said
either that he was merely a trustee of an implied trust holding the
Motherland for the benefit of the Imbornal sisters or their heirs.
As the CA had aptly pointed out, a homestead patent award requires
proof that the applicant meets the stringent conditions set forth under
Commonwealth Act No. 141, as amended. It must be presumed, therefore,
that Ciriaco underwent the rigid process and duly satisfied the strict
conditions necessary for the grant of his homestead patent application. As
such, it is highly implausible that the Motherland had been acquired and
registered by mistake or through fraud as would create an implied trust
between the Imbornal sisters and Ciriaco, especially considering the dearth
of evidence showing that the Imbornal sisters entered into the possession of
the Motherland, or a portion thereof, or asserted any right over the same at
any point during their lifetime.
In this light, the Court cannot fully accept and accord evidentiary value
to the oral testimony offered by Francisco, et al. on the alleged verbal
agreement between their predecessors, the Imbornal sisters, and Ciriaco
with respect to the Motherland. Weighed against the presumed regularity of
the award of the homestead patent to Ciriaco and the lack of evidence
showing that the same was acquired and registered by mistake or through
fraud, the oral evidence of Francisco, et al.would not effectively establish
their claims of ownership.

As Francisco, et al.failed to prove their ownership rights over the

Motherland, their cause of action with respect to the First Accretion and,
necessarily, the Second Accretion, must likewise fail.
Article 457 of the Civil Code states the rule on accretion as follows:
"[t]o the owners of lands adjoining the banks of rivers belong the accretion
which they gradually receive from the effects of the current of the waters."
Relative thereto, in Cantoja v. Lim, the Court, citing paragraph 32 of the
Lands Administrative Order No. 7-1 dated April 30, 1936, in relation to Article
4 of the Spanish Law of Waters of 1866, as well as related jurisprudence on
the matter, elucidated on the preferential right of the riparian owner over the
land formed by accretions, viz.:
Being the owner of the land adjoining the foreshore area, respondent is
the riparian or littoral owner who has preferential right to lease the foreshore
area. The reason for that preferential right is the same as the justification for
giving accretions to the riparian owner, which is that accretion compensates
the riparian owner for the diminutions which his land suffers by reason of the
destructive force of the waters. So, in the case of littoral lands, he who loses
by the encroachments of the sea should gain by its recession.
Accordingly, therefore, alluvial deposits along the banks of a creek or a
river do not form part of the public domain as the alluvial property
automatically belongs to the owner of the estate to which it may have been
added. The only restriction provided for by law is that the owner of the
adjoining property must register the same under the Torrens system;
otherwise, the alluvial property may be subject to acquisition through
prescription by third persons.
In this case, Francisco, et al. and, now, their heirs, i.e., herein
petitioners, are not the riparian owners of the Motherland to which the First
Accretion had attached, hence, they cannot assert ownership over the First
Accretion. Consequently, as the Second Accretion had merely attached to the
First Accretion, they also have no right over the Second Accretion. Neither
were they able to show that they acquired these properties through
prescription as it was not established that they were in possession of any of
them.

Topic: Attornerys Fees

Ponente: BRION, J.
G.R. No. 204651

August 6, 2014

OUR HAUS REALTY DEVELOPMENT CORPORATION, Petitioner, vs.

ALEXANDER PARIAN, JAY C. ERINCO, ALEXANDER CANLAS, BERNARD
TENEDERO and JERRY SABULAO, Respondents.
Facts:
Respondents Alexander Parian, Jay Erinco, Alexander Canlas,
Jerry Sabulao and Bernardo Tenederowere all laborers working for petitioner
Our Haus Realty Development Corporation (Our Haus), a company engaged
in the construction business.
Sometime in May 2010, Our Haus experienced financial distress. To
alleviate its condition, Our Haus suspended some of its construction projects
and asked the affected workers, including the respondents, to take vacation
leaves.
Eventually, the respondents were asked to report back to work but
instead of doing so, they filed with the LA a complaint for underpayment of
their daily wages. They claimed that except for respondent Bernardo N.
Tenedero, their wages were below the minimum rates prescribed in the
following wage orders from 2007 to 2010.
The respondents also alleged that Our Haus failed to pay them their
holiday, service incentive leave (SIL), 13th month and overtime pays.
Respondents was represented by the Public Attorneys Office

Issue:

Whether or not respondents are entitled to attorneys fees.

Ruling:

Yes.

It is settled that in actions for recovery of wages or where an employee

was forced to litigate and, thus, incur expenses to protect his rights and
interest, the award of attorney's fees is legally and morally justifiable.
Moreover, under the PAO Law or Republic Act No. 9406, the costs of the suit,
attorney's fees and contingent fees imposed upon the adversary of the PAO
clients after a successful litigation shall be deposited in the National Treasury
as trust fund and shall be disbursed for special allowances of authorized
officials and lawyers of the PAO.
Thus, the respondents are still entitled to attorney's fees. The
attorney's fees awarded to them shall be paid to the PAO. It serves
as a token recompense to the PAO for its provision of free legal
services to litigants who have no means of hiring a private lawyer.

Topic: Legal Interest

Ponente: MENDOZA, J.
G.R. No. 200250

August 6, 2014

UPSI
PROPERTY
HOLDINGS,
INC.,
CONSTRUCTION CO., INC., Respondent.

Petitioner,

vs.

DIESEL

Facts:
The present controversy stemmed from a complaint filed by
respondent Diesel Construction Co., Inc. (Diesel) against UPSI before the
Construction Industry Arbitration Commission (CIAC) for collection of unpaid
balance of the contract price and retention money under their construction
agreement, damages for unjustified refusal to grant extension of time,
interest, and attorneys fees.
This case reached the Supreme Court. In summary, the aggregate
award to Diesel shall be PhP3,717,027.64. From this amount shall be
deducted the award of actual damages of PhP 310,834.01 to UPSI which shall
pay the costs of arbitration in the amount of PhP 298,406.03. The Decision of
the Court became final and executory. Eventually, Diesel filed the Motion for
Issuance of Writ of Execution with the CIAC.

The CIAC granted the execution sought by Diesel. Still unsatisfied, UPSI
questioned by certiorari the execution granted by the CIAC before the CA,
docketed as CA-G.R. SP No. 108423. On July 9, 2009, the CA denied UPSI
petition and later its motion for reconsideration.
Meanwhile, pending the resolution of the petition for certiorariin CAG.R. SP No. 108423, Diesel sought the amendment of the writ of execution
before the CIAC so that the payment of legal interest be included in
the writ as well as in the reimbursement of half of the arbitration
costs. Despite the opposition by UPSI, CIAC partially granted Diesels motion
which considered the interest being claimed by Diesel. But as far as the
reimbursement of half of the arbitration costs was concerned, the CIAC
denied it. UPSI questioned the CIAC order via petition for certiorari with the
CA, docketed as CA-G.R. SP 110926. The CA denied the petition. The issue of
legal interest was never raised by the petitioner, making it final and binding
regardless of what the principal award may turn out to be.
Issue:
Propriety of the inclusion of legal interest in the writ of execution
despite the "silence" of the Court in the dispositive portion of its judgment
which has become final and executory.
Ruling:
It is true that a decision that has attained finality becomes immutable
and unalterable and cannot be modified in any respect, even if the
modification was meant to correct erroneous conclusions of fact and law, and
whether the modification was made by the court that rendered it or by this
Court as the highest court of the land. Any attempt on the part of the entities
charged with the execution of a final judgment to insert, change or add
matters not clearly contemplated in the dispositive portion violates the rule
on immutability of judgments."
The rule is that in case of ambiguity or uncertainty in the dispositive
portion of a decision, the body of the decision may be scanned for guidance
in construing the judgment.
After scrutiny of the subject decision, nowhere can it be found that the
Court intended to delete the award of legal interest especially that, as Diesel
argues, it was never raised. In fact, what the Court carefully reviewed was
the principal amount awarded as well as the liquidated damages because
they were specifically questioned. The CA modified the awards granted by
the CIAC, but not the legal interest. In finally resolving the controversy, the

Court affirmed the amount of unpaid balance of the contract price in favor of
Diesel but expressly deleted the award of liquidated damages. There being
no issue as to the legal interest, the Court did not find it necessary
anymore to disturb the imposition of such.
It is likewise observed that the CIAC itself is very mindful of the rule on
immutability of judgment. The motion of Diesel to modify and/or amend the
writ of execution involved not only the payment of legal interest but also the
reimbursement of arbitration costs. The CIAC, however, denied the
reimbursement.
Corollarily, had the inclusion of the legal interest in the writ been
violative of the rule on immutability ofjudgment, the CIAC would not have
granted it.
Consequently, the Court, in Nacar vs. Gallery Frames, instructs:
To recapitulate and for future guidance, the guidelines laid down in the case
of Eastern Shipping Lines are accordingly modified to embody BSP-MB
Circular No. 799, as follows:
I. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts is breached, the contravenor can be held
liable for damages. The provisions under Title XVIII on "Damages" of the Civil
Code govern in determining the measure of recoverable damages.
II. With regard particularly toan award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that
which may have been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.
When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed
at the discretion of the court at the rate of 6% per annum. No interest,
however, shall be adjudged on unliquidated claims or damages, except when
or until the demand can be established with reasonable certainty.

Accordingly, where the demand is established with reasonable certainty, the

interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in
any case, be on the amount finally adjudged.
When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph
1 or paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to
a forbearance of credit.
And, in addition to the above, judgments that have become final
and executory prior to July 1, 2013 shall not be disturbed and shall
continue to be implemented applying the rate of interest fixed
therein.
Following the foregoing ruling by the Court, the legal interest remains
at 6% and 12% per annum, as the case may be, since the judgment subject
of the execution became final on March 24, 2008. Interests accruing after
July 1, 2013, however, shall be at the rate of 6% per annum.

Topic: Lease
Ponente: REYES, J.

G.R. No. 189061

August 6, 2014

MIDWAY MARITIME AND TECHNOLOGICAL FOUNDATION, represented

by its Chairman/President PhD in Education DR. SABINO M.
MANGLICMOT, Petitioner, vs. MARISSA E. CASTRO, ET AL.,
Respondents.
Facts:
The petitioner Midway Maritime and Technological Foundation
(petitioner) is the lessee of two parcels of land in Cabanatuan City. Its
president, Dr. Sabino Manglicmot (Manglicmot), is married to Adoracion
Cloma (Adoracion), who is the registered owner of the property. Inside said
property stands a residential building, which is now the subject matter of the
dispute, owned by the respondents.
The two parcels of land, on a portion of which the residential building
stand, were originally owned by the respondents father Louis Castro, Sr. The
elder Castro was also the president of Cabanatuan City Colleges (CCC). On
August 15, 1974, Castro mortgaged the property to Bancom Development
Corporation (Bancom) to secure a loan. During the subsistence of the
mortgage, CCCs board of directors agreed to a 15-year lease of a portion of
the property to the Castro children, herein respondents, who subsequently
built the residential house now in dispute. The lease was to expire in 1992.
When CCC failed to pay its obligation, Bancom foreclosed the
mortgage and the property was sold at public auction in 1979, with Bancom
as the highest bidder. Bancom thereafter assigned the credit to Union Bank
of the Philippines (Union Bank), and later on, Union Bank consolidated its
ownership over the properties in 1984 due to CCCs failure to redeem the
property. When Union Bank sought the issuance of a writ of possession over
the properties, which included the residential building, respondents opposed
the same. The case reached the Court in G.R. No. 97401 entitled, Castro, Jr.
v. CA,1 and in a Decision dated December 6, 1995, the Court ruled that the
residential house owned by the respondents should not have been included
in the writ of possession issued by the trial court as CCC has no title over it.
In the meantime, Adoracions father, Tomas Cloma (Tomas), bought the
two parcels of land from Union Bank in an auction sale conducted on July 13,
1993. Tomas subsequently leased the property to the petitioner and
thereafter, sold the same to Adoracion. Several suits were brought by the
respondents against the petitioner, including the case at bench, which is an
action for Ownership, Recovery of Possession and Damages.

In their Amended Complaint the respondents alleged that: (1) they are
the owners ofthe residential building subject of the dispute, which they used
from 1977 to 1985 when they left for the United States of America and
instituted their uncle, Josefino C. Castro (Josefino), as the caretaker; (2)
Manglicmot, who was the President of the petitioner Midway Maritime and
Technological Foundation, leased the building (except for the portion
occupied by Josefino) from Lourdes Castro, mother of the respondents, in
June 1993 with monthly rent of P6,000.00, which was later to be increased to
P10,000.00 in October 1995 after Josefino vacates his occupied portion; (3)
the petitioner failed to pay rent starting August 1995, thus prompting the
respondents to file the action. The respondents prayed that they be declared
as the owners of the residential building, and that the petitioner be ordered
to vacate the same and pay rent arrearages and damages.
The petitioner, however, denied respondents ownership of the
residential building and claimed that Adoracion owns the building, having
bought the same together with the land on which it stands.
Issues:
Whether there was a lease agreement between the petitioner
and the respondents as regards the residential building.
Ruling:

Yes.

For a period of 26 months, the petitioner has been paying rentals for
the building in question. The petitioners payment of the foregoing rentals
confirms the existence of its agreement to lease the residential building from
the respondents.
Given the existence of the lease, the petitioners claim denying the
respondents ownership of the residential house must be rejected. The
respondents ownership of the residential building is already an established
fact.
Once a contact of lease is shown to exist between the parties, the
lessee cannot by any proof, however strong, overturn the conclusive
presumption that the lessor has a valid title to or a better right of possession
to the subject premises than the lessee." Section 2(b), Rule 131 of the Rules
of Court prohibits a tenant from denying the title of his landlord at the time
of the commencement of the relation of landlord and tenant between them.
"Nemo dat quod non habet. One can sell only what one owns or is
authorized to sell, and the buyer can acquire no more right than what the
seller can transfer legally." What Tomas bought from Union Bank in the

auction sale were the two parcels of land originally owned and mortgaged by
CCC to Bancom, and which mortgage was later assigned by Bancom to Union
Bank.
Contrary to the petitioners assertion, the property subject of the
mortgage and consequently the auction sale pertains only to these two
parcels of land and did not include the residential house.
Also, Adoracions subsequent acquisition of the two parcels of land
from her father does not necessarily entail the acquisition of the residential
building. "A building by itself is a realor immovable property distinct from the
land on which it is constructed and therefore can be a separate subject of
contracts." Whatever Adoracion acquired from her father is still subject to the
limitation pronounced by the Court in Castro, and the sale between
Adoracion and Tomas is confined only to the two parcels of land and excluded
the residential building owned by the respondents. It is beyond question that
Tomas, and subsequently, Adoracion, could not have acquired a right greater
than what their predecessors-in-interest CCC and later, Union Bank had.

Topic: Cosignation
Ponente: PERALTA, J.
G.R. No. 181723

August 11, 2014

ELIZABETH DEL CARMEN, Petitioner, vs. SPOUSES

SABORDO and MIMA MAHILUM-SABORDO, Respondents.

RESTITUTO

Facts:
Sometime in 1961, the spouses Toribio and Eufrocina Suico,
along with several business partners, entered into a business venture by
establishing a rice and com mill at Mandaue City, Cebu. As part of their
capital, they obtained a loan from the Development Bank of the Philippines
(DBP), and to secure the said loan, four parcels of land owned by the Suico
spouses,
The spouses reneged on their obligation and the mortgaged properties
were foreclosed.. Nonetheless, DBP later allowed the Suico spouses and
Reginald and Beatriz Flores (Flores spouses), as substitutes for Juliana Del
Rosario, to repurchase the subject lots by way of a conditional sale for the
sum of P240,571.00. The Suico and Flores spouses were able to pay the
downpayment and the first monthly amortization, but no monthly
installments were made thereafter. Threatened with the cancellation of the
conditional sale, the Suico and Flores spouses sold their rights over the said
properties to herein respondents Restituto and Mima Sabordo, subject to the
condition that the latter shall pay the balance of the sale price.
On September 3, 1974, respondents and the Suico and Flores spouses
executed a supplemental agreement whereby they affirmed that what was
actually sold to respondents were Lots 512 and 513, while Lots 506 and 514
were given to them as usufructuaries. DBP approved the sale of rights of the
Suico and Flores spouses in favor of herein respondents. Subsequently,
respondents were able to repurchase the foreclosed properties of the Suico
and Flores spouses.
Thereafter, respondent Restituto Sabordo (Restituto) filed with the then
Court of First Instance of Negros Occidental an original action for declaratory
relief with damages and prayer for a writ of preliminary injunction raising the

issue of whether or not the Suico spouses have the right to recover from
respondents Lots 506 and 514.
The RTC ruled in favor of the Suico spouses directing that the latter
have until August 31, 1987 within which to redeem or buy back from
respondents Lots 506 and 514.
On appeal, the CA modified the RTC decision by giving the Suico
spouses until October 31, 1990 within which to exercise their option to
purchase or redeem the subject lots from respondents by paying the sum of
P127,500.00.
In the meantime, Toribio Suico (Toribio) died leaving his widow,
Eufrocina, and several others, includingherein petitioner, as legal heirs.
Later, they discovered that respondents mortgaged Lots 506 and 514 with
Republic Planters Bank (RPB) as security for a loan which, subsequently,
became delinquent.
Thereafter, claiming that they are ready with the payment of
P127,500.00, but alleging that they cannot determine as to whom such
payment shall be made, petitioner and her co-heirs filed a Complaint6 with
the RTC of San Carlos City, Negros Occidental seeking to compel herein
respondents and RPB to interplead and litigate between themselves their
respective interests on the abovementioned sum of money.1wphi1 The
Complaint also prayed that respondents be directed to substitute Lots 506
and 514 with other real estate properties as collateral for their outstanding
obligation with RPB and that the latter be ordered toaccept the substitute
collateral and release the mortgage on Lots 506 and 514. Upon filing of their
complaint, the heirs of Toribio deposited the amount of P127,500.00 with the
RTC of San Carlos City, Branch 59.
The RTC rendered judgment, dismissing the Complaint of petitioner and
her co-heirs for lack of merit.8 Respondents' Counterclaim was likewise
dismissed.
Petitioner and her co-heirs filed an appeal with the CA contending that
the judicial deposit or consignation of the amount of P127,500.00 was valid
and binding and produced the effect of payment of the purchase price of the
subject lots.
The CA denied the appeal for lack of merit and affirmed the disputed
RTC Decision. Petitioner and her co-heirs filed a Motion for Reconsideration,
but it was likewise denied by the CA.

Issue:

Whether or not there is a valid consignation in this case.

Ruling:

No.

Consignation v. Tender of Payment

Consignation is the act of depositing the thing due with the court or
judicial authorities whenever the creditor cannot accept or refuses to accept
payment, and it generally requires a prior tender of payment. It should be
distinguished from tender of payment which is the manifestation by the
debtor to the creditor of his desire to comply with his obligation, with the
offer of immediate performance. Tender is the antecedent of consignation,
that is, an act preparatory to the consignation, which is the principal, and
from which are derived the immediate consequences which the debtor
desires or seeks to obtain. Tender of payment may be extrajudicial, while
consignation is necessarily judicial, and the priority of the first is the attempt
to make a private settlement before proceeding to the solemnities of
consignation. Tender and consignation, where validly made, produces the
effect of payment and extinguishes the obligation.
Compliance with the requisites of a valid consignation is
mandatory. Failure to comply strictly with any of the requisites will
render the consignation void. One of these requisites is a valid prior
tender of payment.
Under Article 1256, the only instances where prior tender of payment
is excused are: (1) when the creditor is absent or unknown, or does not
appear at the place of payment; (2) when the creditor is incapacitated to
receive the payment at the time it is due; (3) when, without just cause, the
creditor refuses to give a receipt; (4) when two or more persons claim the
same right to collect; and (5) when the title of the obligation has been lost.
None of these instances are present in the instant case. Hence, the
fact that the subject lots are in danger of being foreclosed does not excuse
petitioner and her co-heirs from tendering payment to respondents, as
directed by the court.

Topic: Usurious Interest

Ponente: VILLARAMA, JR., J.
G.R. No. 192304

August 13, 2014

ANCHOR SAVINGS BANK (now Equicom Savings Bank), Petitioner, vs.

PINZMAN REALTY AND DEVELOPMENT CORPORATION, MARYLIN
MANALAC AND RENATO GONZALES, Respondents.
Facts:
Sometime in December 1997, the private respondents obtained
a loan from the petitioner in the amount of P3,000,000 secured by a real
estate mortgage over parcels of land located in Cubao, Quezon City which
were registered in the name of herein private respondent Marylin Mafialac.
Private respondent Mafialac executed a Promissory Note and Disclosure
Statement in favor of the petitioner in the total amount of P3,308,447.74
which amount already included payment for three months interest.
The Promissory Note and Disclosure Statement imposed a monthly 5%
late payment charge, 25% attorneys fees, and 25% liquidated damages in
case of unpaid installments on the part of private respondent Maalac. On
December 3, 1997, the proceeds of the loan were released to private
respondent Maalac who then issued three checks for the payment of
monthly installments to the petitioner.

For failure to faifhtully satisfy the loan obligation, the mortgaged

properties were foreclosed. As private respondent Maalac failed to redeem
the properties, ownership of the foreclosed properties was eventually
consolidated in petitioners name. Petitioner later succeeded in acquiring
certificates of title over the disputed properties.
Private respondents filed a Complaint for the Annulment of
Extrajudicial Foreclosure of Mortgaged Properties, Auction Sale, Certificate of
Sale and Damages against the petitioner before the RTC. The private
respondents prayed for the nullification of the foreclosure sale alleging that
the amount demanded in the Notice of Extrajudicial Sale was exorbitant and
excessive.
Issue:
Whether the imposition of usurious interest rates on a loan
obligation secured by a real estate mortgage will result in the invalidity of
the subsequent foreclosure sale of the mortgage.
Ruling:
It is jurisprudential axiom that a foreclosure sale arising from a
usurious mortgage cannot be given legal effect. In Heirs of Zoilo Espiritu v.
Sps. Landrito, the Court struck down a foreclosure sale where the amount
declared as mortgage indebtedness involved excessive, unreasonable,
and unconscionable interest charges. In no uncertain terms, we ruled
that a mortgagor cannot be legally compelled to pay for a grossly inflated
loan.
In Castro v. Tan, the above doctrinal pronouncements were affirmed
nullifying a foreclosure proceeding where the amount demanded as
outstanding loan was clearly overstated due to exorbitant interest rates.
In the case at bar, the unlawful interest charge which led to the
demand for P4,577,269.42 as stated in the Notice of Extrajudicial Sale
resulted in the invalidity of the subsequent foreclosure sale held on June 1,
1999. The private respondents cannot be obliged to pay an inflated
or overstated mortgage indebtedness on account of excessive
interest charges without offending the basic tenets of due process
and equity.

Topic: Buyer in Bad Faith

Ponente: PERLAS -BERNABE, J.
G.R. No. 196117

August 13, 2014

KRYSTLE REALTY DEVELOPMENT CORPORATION, represented by

CHAIRMAN OF THE BOARD, WILLIAM C. CU, Petitioner, vs. DOMINGO
ALIBIN, as substituted by his heirs, namely: BEATRIZ A. TORZAR,
VIRGINIA A. TARA YA, ROSARIO A. MARCO, JESUS A. ALIBIN, and JAY
ALIBIN, as substituted by his children, namely: JAYNES ALIBIN, JAY
ALIBIN, and JESUS ALIBIN, JR., Respondents.
Facts:
Respondent Domingo Alibin (Domingo) owned an undivided onehalf portion of the subject lot registered in his name and that of Mariano

Rodrigueza (Mariano). On the strength of a contract to sell and a Deed of

Sale purporting to convey Domingos one-half (1/2) share of the said lot to
Caridad Rodrigueza (Caridad), as well as a Deed of Absolute Sale whereby
Mariano and Caridad (the Rodriguezas) transferred their respective rights to
the subject lot infavor of petitioner Krystle Realty Development Corporation
(Krystle Realty), the original certificate of title was cancelled.
Claiming that he had not sold his share to Caridad nor received any
consideration for the alleged transfer, and that the signature on the deed of
sale was not his, Domingo sought to annul the said deed. He died, however,
during the pendency of the case, and was consequently substituted by his
heirs, herein respondents.
Caridad, on the other hand, insisted that she had paid Domingo in two
(2) installments during which he signed the Deed of Sale. She then took
possession of Domingos one-half (1/2) portion of the subject lot and
declared the same for taxation purposes. For its part, Krystle Realty claimed
that it was a purchaser in good faith, and that the action, if at all, should be
directed against Caridad. In addition, it argued that the action of respondents
had already prescribed considering that the questioned deed of sale between
Caridad and Domingo was executed on August 23, 1962, whereas the latters
complaint was filed only on February 15, 1995.
Caridad likewise died, and was substituted first by her brother,
Mariano, and upon the latters death, by Rufino Rodrigueza.
The parties agreed to submit to a handwriting expert of the National
Bureau of Investigation (NBI) the determination of the genuineness of
Domingos signature on the deed of sale. It was found out that the uestioned
and the standard/sample signatures of Domingo submitted to it for
examination were written by one and the same person.
The RTC invalidated the Deed of Sale. The CA affirmed the findings of
the RTC.
Issues:
1. Whether or not the Deed of Sale should be annulled.
2. Whether or not Krystle Realty is a purchaser in bad faith.
Ruling:
1. Yes.

The authenticity of a signature is a matter that is not so highly

technical as to preclude a judge from examining the signature himself and
ruling upon the question of whether the signature on a document is forged or
not. The opinion of a handwriting expert, therefore, does not mandatorily
bind the court, the expert's function being to place before the court data
upon which it can form its own opinion.
In this case, both the RTC and the CA conducted independent
examinations of the specimen signatures, which is authorized by law, and
unanimously concluded that the questioned signature on the Deed of Sale
dated August 23, 1962 is different from the standard signatures of Domingo
as appearing on documents submitted in evidence by petitioner Caridad
Rodrigueza.
Absent any cogent reason to deviate from such finding of forgery,
which is the basis for the annulment of the said deed, the same should be
deemed conclusive and binding upon the Court.
2. Yes.
Krystle Realtys representative, Mr. William Cu, was aware of
Domingos interest in the subject lot, and that Caridad had no title in her
name at the time of the sale, thus, giving rise to the conclusion that it
(Krystle Realty) had been reasonably apprised of the ownership controversy
over the subject lot.
This notwithstanding, records show that Krystle Realty proceeded with
the transaction without further examining the sellers title and thus, could
not claim to have purchased the subject lot in good faith. Verily, one is
considered a buyer in bad faith not only when he purchases real
estate with knowledge of a defect or lack of title in his seller but
also when he has knowledge of facts which should have alerted him
to conduct further inquiry or investigation, as Krystle Realty in this
case.
As one asserting the status of a buyer in good faith and for value, it
had the burden of proving such status, which goes beyond a mere invocation
of the ordinary presumption of good faith.

Topic: Grave Abuse of Discretion

Ponente: VELASCO, JR., J.
G.R. No. 203655

August 13, 2014

SM LAND, INC., Petitioner, vs. BASES CONVERSION AND

DEVELOPMENT AUTHORITY and ARNEL PACIANO D. CASANOVA, ESQ.,
in his official capacity as President and CEO of BCDA, Respondents.

Facts:
Pursuant to Republic Act No. (RA) 7227 or the "Bases Conversion
and Development Act of 1992," the BCDA opened for disposition and
development its Bonifacio South Property, a 33.1-hectare expanse located at
Taguig City that was once used as the command center for the country's
military forces. Petitioner SM Land, Inc. (SMLI) submitted to the BCDA
unsolicited proposals for the development of the lot through a public-private
joint venture agreement.
Thereafter, the BCDA created a Joint Venture Selection Committee (JVSC) following the procedures prescribed under Annex "C" of the Detailed
Guidelines for Competitive Challenge Procedure for Public Private Joint
Ventures (NEDA JV Guidelines) promulgated by the National Economic
Development Authority (NEDA). The said committee recommended the
acceptance of the unsolicited proposal, which recommendation was
favorably acted upon by the BCDA.
The BCDA communicated to petitioner its acceptance of the unsolicited
proposal. Despite its acceptance, however, the BCDA clarified that its act
should not be construed to bind the agency to enter into a joint venture
agreement with the petitioner but only constitutes an authorization granted
to the JV-SC to conduct detailed negotiations with petitioner SMLI and iron
out the terms and conditions of the agreement.
The JV-SC and SMLI embarked on a series of detailed negotiations. SMLI
submitted its final revised proposal with guaranteed secured payments
amounting to a total of PhP 25.9 billion. Upon arriving at mutually acceptable
terms and conditions, a Certification of Successful Negotiations (Certification)
was issued by the BCDA and signed by both parties. The BCDA undertook to
"subject SMLIs Original Proposal to Competitive Challenge pursuant to Annex
C" and committed itself to "commence the activities for the solicitation for
comparative proposals."
In an attempt to comply with its obligations, the BCDA prepared for the
conduct of a Competitive Challenge to determine whether or not there are
other Private Sector Entities (PSEs) that can match the proposal of SMLI, and
concurrently ensure that the joint venture contract will be awarded to the
party that can offer the most advantageous terms in favor of the
government. In furtherance thereof, the agency issued Terms of Reference
(TOR), which mapped out the procedure to be followed in connection with
the Competitive Challenge. Consequently, SMLI was required, as it did, to

post a proposal security in the amount of PhP 187 million, following the
prescribed procedure outlined in the TOR and the NEDA JV Guidelines.

Afterwards, the BCDA set the Pre-eligibility Conference on September

3, 2010. Invitations to apply for eligibility and to submit comparative
proposals were then duly published on August 12, 16 and 20, 2010. Hence,
the pre-eligibility conference was conducted as scheduled. The companies
that participated in the conference included SMLI, as the Original Proponent,
and three (3) PSEs, namely Ayala Land, Inc., Rockwell Land Corp., and
Filinvest Land, Inc.
Thereafter, the BCDA sent a memorandum to the Office of the
President (OP), categorically recommending the Presidents approval for
BCDA to terminate the proceedings for the privatization and development of
the BNS/PMC/ASCOM/SSU Properties in Bonifacio South through Competitive
Challenge and proceed with the bidding of the property. The BCDA, via the
assailed Supplemental Notice No. 5, terminated the Competitive Challenge
altogether.
To support its position, the BCDA invoked Article VIII of the TOR on the
subject "Qualifications and Waivers. Thereafter, the BCDA informed SMLI of
the OPs decision to subject the development of the subject property to
public bidding.
Issue:
Whether or not the BCDA gravely abused its discretion in issuing
Supplemental Notice No. 5, in unilaterally aborting the Competitive
Challenge, and in subjecting the development of the project to public
bidding.
Ruling:

Yes.

SMLI has the right to a completed competitive challenge pursuant to

the NEDA JV Guidelines and the Certification issued by the BCDA. The
reservation clause adverted to by the respondent cannot, in any way,
prejudice said right.
"Grave abuse of discretion" implies such capricious and whimsical
exercise of judgment as is equivalent to lack of jurisdiction. It must be so
patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined or to act at all in contemplation of law.
While it is the general policy of the Court to sustain the decisions of

administrative authorities, not only on the basis of the doctrine of separation

of powers but also for their presumed expertise in the laws they are
entrusted to enforce, when said decisions and orders are tainted with
unfairness or arbitrariness that would amount to grave abuse of
discretion, the Courts are duty-bound to entertain petitions
questioning the formers rulings or actions.
The BCDA is duty-bound to proceed with and complete the competitive
challenge if the detailed negotiations proved successful. Afterwards, it
becomes mandatory for the competitive challenge to proceed. Whatever
rights and obligations that may have accrued to the parties by that time can
no longer be altered by a new disposition process. At most, the reservation
clause in the TOR can only serve to alter the rules of the eligibility process
under the Competitive Challenge.
After BCDA issued the assailed notice, the agency also returned
through registered mail the security posted by SMLI. Coupled with the fact
that BCDA subjected the property instead to straight bidding, it becomes
obvious that BCDA no longer intends to comply with its obligations to SMLI
and that it abandoned the Swiss Challenge process altogether, in
contravention of its statutory and contractual obligations.
Noticeably, in its November 8, 2010 Memorandum, the BCDA posited
that competitive challenge is more advantageous to the government than
straight bidding Over a year later, however, it made a complete turnaround
stating that straight bidding will be best for the Government.
The BCDA offered no explanation to reconcile its opposing positions. It
also neglected to inform SMLI of the provisions in its proposal that it deemed
disadvantageous to the government. The sweeping statement of the BCDA
that the terms are disadvantageous cannot be accepted at face value,
bearing in mind that a fruitful in-depth negotiation necessarily implies that
BCDA found the terms offered by SMLI acceptable. Consider also that should
the Competitive Challenge prove to be unsuccessful, it has no other recourse
but to award the project to SMLI, the Original Proponent. This caveat forces
BCDA to ensure that the terms agreed upon during the detailed negotiations
are advantageous to it, lest it run the risk of being bound to a project that is
not beneficial to the government in the first place.
Indeed, "the government cannot be estopped by the mistakes or errors
of its agents." However, the rule on estoppel cannot be used to perpetrate
an injustice.

To allow BCDA to renege on its statutory and contractual obligations

would cause grave prejudice to petitioner, who already invested time, effort,
and resources in the study and formulation of the proposal, in the adjustment
thereof, as well as in the negotiations. To permit BCDA to suddenly cancel the
procurement process and strip SMLI of its earlier-enumerated rights as an
Original Proponent at this pointafter the former has already benefited from
SMLIs proposal through the acquisition of information and ideas for the
development of the subject propertywould unjustly enrich the agency
through the efforts of petitioner. What is worse, to do so would be contrary to
BCDAs representations and assurances that it will respect SMLIs earlier
acquired rights, which statements SMLI reasonably and innocently believed.

Topic: Resolutory Condition v. Suspensive Condition

Ponente: VELASCO, JR., J.
EN BANC
G.R. No. 207348

August 19, 2014

ROWENA R. SALONTE, Petitioner, vs. COMMISSION ON AUDIT,

CHAIRPERSON MA. GRACIA PULIDO-TAN, COMMISSIONER JUANITO G.
ESPINO, JR., COMMISSIONER HEIDI L. MENDOZA, and FORTUNATA M.
RUBICO, DIRECTOR IV, COA COMMISSION SECRETARIAT, in their
official capacities, Respondents.
Facts:
On April 26, 1989, the City of Mandaue and F.F. Cruz and Co., Inc.
(F.F. Cruz) entered into a Contract of Reclamation in which F.F. Cruz, in
consideration of a defined land sharing formula thus stipulated, agreed to
undertake, at its own expense, the reclamation of 180 hectares, more or less,
of foreshore and submerged lands from the Cabahug Causeway in that city.
Later developments saw the City of Mandaue undertaking the Metro
Cebu Development Project II (MCDP II), part of which required the widening
of the Plaridel Extension Mandaue Causeway. However, the structures and
facilities built by F.F. Cruz subject of the MOA stood in the direct path of the
road widening project. Thus, the Department of Public Works and Highways
(DPWH) and Samuel B. Darza, MCDP II project director, entered into an
Agreement to Demolish, Remove and Reconstruct Improvement dated July
23, 19976 with F.F. Cruz whereby the latter would demolish the
improvements outside of the boundary of the road widening project and, in
return, receive the total amount of PhP 1,084,836.42 in compensation.
F.F. Cruz and Company, Inc. was paid P1,084,836.42 for the cost of the
property affected by the widening of Plaridel Extension, Mandaue Causeway.
A case was filed before the Ombudsman however against the public
officer who released said anount of money claiming that the City of Mandaue

was the owner of the property demolished, as such, the presence of

irregularity. The Ombudsman subsequently dismissed the same for lack of
merit.
The Commission on Audit is on the view that the Contract of
Reclamation establishes an obligation on the part of F.F. Cruz to finish the
project within the allotted period of six (6) years from contract execution in
August 1989. Prescinding from this premise, the COA would conclude that
after the six (6)-year period, F.F. Cruz is automatically deemed to be in delay,
the contract considered as completed, and the ownership of the structures
built in accordance with the MOA transferred to the City of Mandaue.
Issue:
Who between the City of Mandaue and F.F. Cruz owned during
the period material the properties that were demolished?
Ruling:

F.F. Cruz is the owner of the properties demolished.

The New Civil Code provides: Article 1193. Obligations for whose
fulfillment a day certain has been fixed, shall be demandable only
when that day comes.
Obligations with a resolutory period take effect at once, but terminate upon
arrival of the day certain.
A day certain is understood to be that which must necessarily come,
although it may not be known when.
If the uncertainty consists in whether the day will come or not, the obligation
is conditional, and it shall be regulated by the rules of the preceding Section.
A plain reading of the Contract of Reclamation reveals that the six
(6)-year period provided for project completion, or, with like effect,
termination of the contract was a mere estimate and cannot be
considered a period or a "day certain" in the context of the
aforequoted Art. 1193. To be clear, par. 15 of the Contract of Reclamation
states: "The project is estimated to be completed in six (6) years." As such,
the lapse of six (6) years from the perfection of the contract did not,
by itself, make the obligation to finish the reclamation project
demandable, such as to put the obligor in a state of actionable delay
for its inability to finish. Thus, F.F. Cruz cannot be deemed to be in
delay. Parenthetically, the Ombudsman, in a Resolution of June 29, 2006 in
OMB-V-C-03-0173-C, espoused a similar view in dismissing the complaint
against Solante, thus:

The lapse of six (6) years from the perfection of the subject
reclamation contract, without more, could not have automatically vested
Mandaue City, under the MOA, with ownership of the structures.
Moreover, even if we consider the allotted six (6) years within which
F.F. Cruz was supposed to complete the reclamation project, the lapse thereof
does not automatically mean that F.F. Cruz was in delay. As may be noted,
the City of Mandaue never made a demand for the fulfillment of its
obligation under the Contract of Reclamation. Article 1169 of the Civil
Code on the interaction of demand and delay and the exceptions to the
requirement of demand relevantly states:
Article 1169. Those obliged to deliver or to do something incur
in delay from the time the oblige judicially or extrajudicially
demands from them the fulfillment of their obligation.
However, the demand by the creditor shall not be necessary in order that
delay may exist:
(1) When the obligation or the law expressly so declares; or
(2) When from the nature and the circumstances of the obligation it appears
that the designation of the time when the thing is to be delivered or the
service is to be rendered was a controlling motive for the establishment of
the contract; or
(3) When demand would be useless, as when the obligor has rendered it
beyond his power to perform.
In reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent
upon him. From the moment one of the parties fulfills his obligation, delay by
the other begins.
Thus, in J Plus Asia Development Corporation v. Utility Assurance
Corporation the Court has held:
In this jurisdiction, the following requisites must be present in order
that the debtor may be in default:
(1) that the obligation be demandable and already liquidated;
(2) that the debtor delays performance; and

(3) that the creditor

extrajudicially.

requires

the

performance

judicially

or

In the instant case, the records are bereft of any document whence to
deduce that the City of Mandaue exacted from F.F. Cruz the fulfillment of its
obligation under the reclamation contract. And to be sure, not one of the
exceptions to the requisite demand under Art. 1169 is established, let alone
asserted. On the contrary, the then city mayor of Mandaue, no less, absolved
F.F. Cruz from incurring under the premises in delay.
As it were, the Mandaue-F.F.Cruz MOA states that the structures built
by F .F. Cruz on the property of the city will belong to the latter only upon the
completion of the project. Clearly, the completion of the project is a
suspensive condition that has yet to be fulfilled. Until the condition
arises, ownership of the structures properly pertains to F .F. Cruz.

Topic: Recognition of Divorce; Dissolution of Property

Ponente: PEREZ, J.
G.R. No. 188289

August 20, 2014

DAVID A. NOVERAS, Petitioner, vs. LETICIA T. NOVERAS, Respondent.

Facts:
David A. Noveras (David) and Leticia T. Noveras (Leticia) were
married on 3 December 1988 in Quezon City, Philippines. They resided in
California, United States of America (USA) where they eventually acquired
American citizenship. They then begot two children.
During the marriage, they acquired several properties in the Philippines
and in the USA, including a house and lot in Sampaloc, Manila (Sampaloc
property) used to beowned by Davids parents. The parties herein secured a
loan from a bank and mortgaged the property. When said property was about
to be foreclosed, the couple paid a total of P1.5 Million for the redemption of
the same.
Due to business reverses, David left the USA and returned to the
Philippines in 2001. In December 2002, Leticia executed a Special Power of

Attorney (SPA) authorizing David to sell the Sampaloc property for P2.2
Million.
According to Leticia, sometime in September 2003, David abandoned
his family and lived with Estrellita Martinez in Aurora province. Leticia
claimed that David agreed to and executed a Joint Affidavit with Leticia in the
presence of Davids father, Atty. Isaias Noveras, on 3 December 2003 stating
that: 1) the P1.1Million proceeds from the sale of the Sampaloc property shall
be paid to and collected by Leticia; 2) that David shall return and pay to
Leticia P750,000.00, which is equivalent to half of the amount of the
redemption price of the Sampaloc property; and 3) that David shall renounce
and forfeit all his rights and interest in the conjugal and real properties
situated in the Philippines. David was able to collect P1,790,000.00 from the
sale of the Sampaloc property, leaving an unpaid balance of P410,000.00.
Upon learning that David had an extra-marital affair, Leticia filed a
petition for divorce with the Superior Court of California, County of San
Mateo, USA. The California court granted the divorce on 24 June 2005 and
judgment was duly entered on 29 June 2005. The California court granted to
Leticia the custody of her two children, as well as all the couples properties
in the USA.
On 8 August 2005, Leticia filed a petition for Judicial Separation of
Conjugal Property before the RTC of Baler, Aurora. She relied on the 3
December 2003 Joint Affidavit and Davids failure to comply with his
obligation under the same. She prayed for: 1) the power to administer all
conjugal properties in the Philippines; 2) David and his partner to cease and
desist from selling the subject conjugal properties; 3) the declaration that all
conjugal properties be forfeited in favor of her children; 4) David to remit half
of the purchase price as share of Leticia from the sale of the Sampaloc
property; and 5) the payment of P50,000.00 and P100,000.00 litigation
expenses.

In his Answer, David stated that a judgment for the dissolution of their
marriage was entered on 29 June 2005 by the Superior Court of California,
County of San Mateo. He demanded that the conjugal partnership properties,
which also include the USA properties, be liquidated and that all expenses of
liquidation, including attorneys fees of both parties be charged against the
conjugal partnership

Issues:
1 Whether or not the foreign divorce decree can be properly recognized
in this case.
2 Whether or not respondent David A. Noveras committed acts of
abandonment and marital infidelity which can result into the forfeiture
of the parties properties in favor of the petitioner and their two (2)
children.
3 Whether or not Leticia T. Noveras is entitled to reimbursement of
onehalf of the P2.2 Million sales proceeds of their property in
Sampaloc, Manila and one-half of the P1.5 Million used to redeem the
property of Atty. Isaias Noveras, including interests and charges.
4 Whether or not the two common children of the parties are entitled to
support and presumptive legitimes.
Ruling:
1 No.
The requirements of presenting the foreign divorce decree and the
national law of the foreigner must comply with our Rules of Evidence. A copy
of the foreign judgment may be admitted in evidence and proven as a fact
under Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48(b) of
the Rules of Court.
Under Section 24 of Rule 132, the record of public documents of a
sovereign authority or tribunal may be proved by:
(1) an official publication thereof or
(2) a copy attested by the officer having the legal custody thereof. Such
official publication or copy must be accompanied, if the record is not kept in
the Philippines, with a certificate that the attesting officer has the legal
custody thereof. The certificate may be issued by any of the authorized
Philippine embassy or consular officials stationed in the foreign country in
which the record is kept, and authenticated by the seal of his office. The
attestation must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be, and must be under
the official seal of the attesting officer.
Section 25 of the same Rule states that whenever a copy of a
document or record is attested for the purpose of evidence, the attestation
must state, in substance, that the copy is a correct copy of the original, or a

specific part thereof, as the case may be. The attestation must be under the
official seal of the attesting officer, if there be any, or if he be the clerk of a
court having a seal, under the seal of such court.
Based on the records, only the divorce decree was presented in
evidence. The required certificates to prove its authenticity, as well as the
pertinent California law on divorce were not presented.
It may be noted that in Bayot v. Court of Appeals, the Court relaxed
the requirement on certification where it held that "petitioner therein
was clearly an American citizen when she secured the divorce and that
divorce is recognized and allowed in any of the States of the Union, the
presentation of a copy of foreign divorce decree duly authenticated by the
foreign court issuing said decree is, as here, sufficient." In this case however,
it appears that there is no seal from the office where the divorce decree was
obtained.
Even if we apply the doctrine of processual presumption, the
recognition of divorce is entirely a different matter because, to begin with,
divorce is not recognized between Filipino citizens in the Philippines. Absent
a valid recognition of the divorce decree, it follows that the parties are still
legally married in the Philippines. Thus, liquidation cannot be proceeded
with.
2 No.
As a general rule, any modification in the marriage settlements must
be made before the celebration of marriage. An exception to this rule is
allowed provided that the modification is judicially approved and refers
only to the instances provided in Articles 66, 67, 128, 135 and 136
of the Family Code.
Leticia anchored the filing of the instant petition for judicial separation
of property on paragraphs 4 and 6 of Article 135 of the Family Code, to wit:
Art. 135. Any of the following shall be considered sufficient cause for judicial
separation of property: xxx
(4) That the spouse of the petitioner has abandoned the latter or failed to
comply with his or her obligations to the family as provided for in Article 101;
xxx

(6) That at the time of the petition, the spouses have been separated in fact
for at least one year and reconciliation is highly improbable.
In the cases provided for in Numbers (1), (2), and (3), the
presentation of the final judgment against the guilty or absent
spouse shall be enough basis for the grant of the decree of judicial
separation of property.
The trial court had categorically ruled that there was no abandonment
in this case to necessitate judicial separation of properties under paragraph 4
of Article 135 of the Family Code.
In the instant case, the petitioner knows that the respondent has
returned to and stayed at his hometown in Maria Aurora, Philippines, as she
even went several times to visit him there after the alleged abandonment.
Also, the respondent has been going back to the USA to visit her and their
children until the relations between them worsened. The last visit of said
respondent was in October 2004 when he and the petitioner discussed the
filing by the latter of a petition for dissolution of marriage with the California
court. Such turn for the worse of their relationship and the filing of the said
petition can also be considered as valid causes for the respondent to stay in
the Philippines.
Separation in fact for one year as a ground to grant a judicial
separation of property was not tackled in the trial courts decision because,
the trial court erroneously treated the petition as liquidation of the absolute
community of properties.
The records of this case are replete with evidence that Leticia and
David had indeed separated for more than a year and that reconciliation is
highly improbable.
Having established that Leticia and David had actually separated for at
least one year, the petition for judicial separation of absolute community of
property should be granted.
The grant of the judicial separation of the absolute community
property automatically dissolves the absolute community regime, as stated
in the 4th paragraph of Article 99 of the Family Code. Under Article 102 of
the same Code, liquidation follows the dissolution of the absolute community
regime and the following procedure should apply,

The Philippine courts did not acquire jurisdiction over the California
properties of David and Leticia. Indeed, Article 16 of the Civil Code clearly
states that real property as well as personal property is subject to the law of
the country where it is situated. Thus, liquidation shall only be limited to the
Philippine properties.
3 Yes.
Leticia and David shall likewise have an equal share in the proceeds of
the Sampaloc property. While both claimed to have contributed to the
redemption of the Noveras property, absent a clear showing where their
contributions came from, the same is presumed to have come from the
community property. Thus, Leticia is not entitled to reimbursement of half of
the redemption money.
David's allegation that he used part of the proceeds from the sale of
the Sampaloc property for the benefit of the absolute community cannot be
given full credence. Only the amount of P120,000.00 incurred in going to and
from the U.S.A. may be charged thereto. Election expenses in the amount of
P300,000.00 when he ran as municipal councilor cannot be allowed in the
absence of receipts or at least the Statement of Contributions and
Expenditures required under Section 14 of Republic Act No. 7166 duly
received by the Commission on Elections. Likewise, expenses incurred to
settle the criminal case of his personal driver is not deductible as the same
had not benefited the family. In sum, Leticia and David shall share equally in
the proceeds of the sale net of the amount of P120,000.00 or in the
respective amounts of P1,040,000.00.
4 Yes.
Under the first paragraph of Article 888 of the Civil Code, "the legitime
of legitimate children and descendants consists of one-half or the hereditary
estate of the father and of the mother." The children arc therefore entitled to
half of the share of each spouse in the net assets of the absolute community,
which shall be annotated on the titles/documents covering the same, as well
as to their respective shares in the net proceeds from the sale of the
Sampaloc property including the receivables from Sps. Paringit in the amount
of P410,000.00. Consequently, David and Leticia should each pay them the
amount of P520,000.00 as their presumptive legitimes therefrom.

Topic: Damages
Ponente: REYES, J.
G.R. No. 210619

August 20, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. CHARLES REYES

y MARASIGAN, Accused-Appellant.
Facts:
In 2002, [AAA] was an eleven (11) year old girl. She is living with
her mother [BBB] and her common-law husband, [herein accused-appellant.]
Sometime in May 2002, while [AAA] was alone inside the room of their
house, [the accused-appellant] entered the room and touched her breasts,
after which, [the accused-appellant] removed her clothes, sando shirt, shorts
and panty; she tried to go out of the room but [the accused-appellant] did
not allow her to do so. Then, [the accused-appellant] removed his shorts and
briefs, placed himself on top of her and tried to insert his penis into her
vagina causing her to feel pain. Failing to insert his penis into her vagina,
[the accused-appellant] put on his shorts and briefs and went out of the
house. Although [AAA] was able to talk to her mother after the rape incident,
she did not inform her about it because she was afraid of the threat of [the
accused-appellant] that the latter will kill her and her mother.
On August 5, 2002, at around four oclock in the afternoon, [AAA] was
again alone in the room of their house when [the accused-appellant] entered
the room. He removed her blouse, skirt, sando shirt and panty. She was not
able to do anything because [the accused-appellant] threatened to kill her
and her mother. While naked, [the accused-appellant] placed himself on top
of her and tried to insert his penis into her vagina. She tried to push [the
accused-appellant] away but she was unsuccessful. She felt pain in her
vagina when [the accused-appellant] made a push and pull motion.
Thereafter, [the accused-appellant] put on his shorts and brief[s] and left her
in the room, after which, she put on her clothes. About one hour after the

incident, her mother and her two siblings arrived but she was not able to do
anything because she was afraid.
At around 8:00 oclock in the evening, she told her mother about the
rape incidents. Her mother and an employee of the Department of Social
Welfare and Development (DSWD) accompanied her to the Calapan City
Police Station where they reported the rape incidents.
Accused-appellant was charged with two counts of rape. The RTC
rendered a Joint Decision convicting the accused-appellant of two counts of
rape. The CA rendered the herein assailed decision affirming in toto the RTCs
judgment.
Issue:

Whether or not accused-appellant is liable for damages.

Ruling:

Yes.

For each of the two counts of rape, the Court awards in AAAs favor
P75,000.00 as civil indemnity ex delicto, P30,000.00 as exemplary damages
and P75,000.00 as moral damages in each count of rape. An interest of six
percent (6%) per annum on all the damages awarded, to be computed from
the date of the finality of this judgment until fully paid.

Topic: Damages
Ponente: MENDOZA, J.
G.R. No. 208170

August 20, 2014

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. PETRUS YAU

a.k.a. "John" and "Ricky" and SUSANA YAU y SUMOGBA a.k.a.
"Susan", Accused-Appellants.
Facts:
Petrus and Susana were charged with the crime of Kidnapping
For Ransom.
On January 20, 2004, at around 1:30 in the afternoon, private
complainant Alastair Onglingswam, who is a practicing lawyer and
businessman from the United States, hailed a white Toyota taxi cab with
plate number PVD-115. Private complainant noted that while he was on the
phone conversing with his associate, appellant Petrus Yau, whom he noted to
have short black hair, a moustache and gold framed eyeglasses, would from
time to time turn to him and talk as if he was also being spoken to.
Thereafter, he felt groggy and decided to hang-up his phone. He no longer
knew what transpired except that when he woke up lying down, his head was
already covered with a plastic bag and he was handcuffed and chained.
When private complainant complained that the handcuffs were too
tight, a man who was wearing a red mask and introduced himself as "John"
approached him and removed the plastic bag from his head and loosened his
handcuff. John informed him that he was being kidnapped for ransom and
that he will be allowed to make phone calls to his family and friends.

During private complainants twenty-two (22) days of captivity, while

he was allowed to communicate with his family almost daily to prove that he
was still alive and was served with meals almost five times a day either by
John or the other accused Susan Yau, he was also maltreated i.e. beaten with
sticks, made to lay-down biting a piece of wood which was made as target
for a rifle.
The Police Anti-Crime and Emergency Response Task Force (PACER)
received information that a taxi with plate number PVD 115 plying along
Bacoor was victimizing passengers. They were able to capture Petrus Yau, a
British national. When shown a picture of private complainant and asked if he
knew him, he answered that the man is being kept in his house. He was
immediately informed that he was being placed under arrest for kidnapping
private complainant Alastair Onglingswam after being informed of his
constitutional rights..
Appellant led the team to his house where Alastair Onglingswam was
found.
During the trial of the case, private complainant positively identified
Petrus Yau as his captor and the taxi driver. Test conducted by the United
States Federal Bureau of Investigation reveals that the DNA found in the
mask used by private complainants captor matched that of appellant Petrus
Yau.
The RTC convicted Petrus Yau, as principal, of the crime of kidnapping
for ransom and serious illegal detention, and Susana Yau,as an accomplice to
the commission thereof. The CA affirmed the conviction of Petrus and
Susana.
Issue: Whether or not accused-appellants are liable for damages.
Ruling:

Yes.

The Court sustains the RTC in awarding actual damages in the amount
of 273,132.00 plus interest committed from the filing of the information until
fully paid.
As regards the moral damages against the accused-appellants, the
Court finds the award of P1,000,000.00 to be exorbitant. Hence, the same is
being reduced to P200,000.00, as the reasonable compensation for the
ignominy and sufferings that Alastair and his family endured because of the
accused-appellants inhumane acts of detaining him in handcuffs and chains,

and mentally torturing him and his family to raise the ransom money. The
fact that they suffered the trauma from mental, physical and psychological
ordeal which constitutes the basis for moral damages under Article 2219 of
the Civil Code is too obvious to still require its recital at the trial through the
superfluity of a testimonial charade.
The Court also finds the award of exemplary damages to be in order in
view of the presence of the qualifying circumstance of demand for ransom,
and to serve as an example and deterrence for the public good. The Court,
however, reduces the amount from P200,000.00 to P100,000.00 in line with
prevailing jurisprudence.
The RTC, however, erred in ruling that Susana was solidarily liable with
Petrus for the payment of damages. This is an erroneous apportionment
of the damages awarded because it does not take into account the
difference in the nature and degree of participation between the
principal, Petrus, and the accomplice, Susana. In People v.
Montesclaros, the entire amount of the civil liabilities should be
apportioned among all those who cooperated in the commission of
the crime according to the degrees of their liability, respective
responsibilities and actual participation. Accordingly, Petrus should
shoulder a greater share in the total amount of damages than Susana who
was adjudged only as an accomplice.

Topic: Pactum Commissorium; Pledge; Rescission

Ponente: LEONARDO-DE CASTRO, J.:
G.R. No. 199420

August 27, 2014

PHILNICO INDUSTRIAL CORPORATION, Petitioner, vs. PRIVATIZATION

AND MANAGEMENT OFFICE, Respondent.
Facts:
The Development Bank of the Philippines and Philippine National
Bank, by virtue of foreclosure proceedings, became the holders of all the
shares of stock in Philnico Processing Corporation (PPC) (then still the Nonoc
Mining and Industrial Corporation). The banks eventually transferred their

PPC shares of stock to Privatization and Management Office (PMO) (then still
the Asset Privatization Trust (APT)) in 1987.
On May 10, 1996, PMO, Philnico Industrial Corporation (PIC) (then still
the Philnico Mining and Industrial Corporation), and PPC executed a contract,
denominated as the Amended and Restated Definitive Agreement (ARDA),
which laid down the terms and conditions of the purchase and acquisition by
PIC from PMO of 22,500,000 shares of stock of PPC (representing 90% of
ownership of PPC), as well as receivables of PMO from PPC. Under the ARDA,
PIC agreed to pay PMO the peso equivalent of US$333,762,000.00 as
purchase price, payable in installments and in accordance with the schedule
also set out in the ARDA.
In accordance with the ARDA, PMO executed and delivered to PIC the
necessary documents to transfer the formers rights, title, and interests to
and in the PPC shares of stock to the latter; and PPC issued new certificates
for the same shares of stock in the name of PIC and/or its nominees.
On May 2, 1997, PIC and PNPI as pledgors and PMO as pledgee
executed a Pledge Agreement.
On account of the huge financial cost of building a new nickel refinery
plant of PPC, coupled with the economic problems then affecting the Asia
Pacific Region, PMO, PIC, and PPC executed an Amendment Agreement which
provided for the restructuring of the payment terms of the entire obligation
under the ARDA, the repayment of advances, the conditions for borrowings
or financing, a new cash break-even formula, and the adoption of an
investment plan.
Three years later, PMO notified PIC that the latter had defaulted in the
payment of its obligations and demanded that PIC settle its unpaid
amortizations in the total amount of US$275,000.00 within 90 days, or on or
about February 5, 2003, or else the PMO would enforce the automatic
reversion of the PPC shares of stock under Section 8.02 of the ARDA.
PIC replied requesting PMO to set aside its notice of default; to not
rescind the sale of the PPC shares of stock; and to give PIC an opportunity to
conclude its fund-raising efforts for its business, particularly with a group of
investors from China.
In another letter to PIC, PMO clearly indicated its intention to enforce
Section 8.02 of the ARDA (ipso facto or automatic reversion of the PPC

shares of stock to PMO in case of default by PIC constitutes) should PIC fail to
settle its outstanding obligations after February 5, 2003.
Issues:
1. Whether Section 8.02 of the ARDA on ipso facto or automatic reversion
of the PPC shares of stock to PMO in case of default by PIC constitutes
pactum commissorium.
2. Whether or not there is a valid pledge agreement in this case.
Ruling:
1. Yes.
Section 8.02 of the ARDA constitutes pactum commissorium and, thus,
null and void for being contrary to Article 2088 of the Civil Code.
Pactum commissorium is among the contractual stipulations that are
deemed contrary to law. It is defined as "a stipulation empowering the
creditor to appropriate the thing given as guaranty for the fulfillment 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." It is
explicitly prohibited under Article 2088 of the Civil Code which provides:
ART. 2088. The creditor cannot appropriate the things given by way of
pledge or mortgage, or dispose of them. Any stipulation to the contrary is
null and void.
There are two elements for pactum commissorium to exist:
(1) that there should be a pledge or mortgage wherein a property is
pledged or mortgaged by way of security for the payment of the principal
obligation; and
(2) that there should be a stipulation for an automatic appropriation by
the creditor of the thing pledged or mortgaged in the event of nonpayment
of the principal obligation within the stipulated period.
Both elements of pactum commissorium are present in the instant
case: (1) By virtue of the Pledge Agreement dated May 2,1997, PIC pledged
its PPC shares of stock in favor of PMO as security for the fulfillment of the
formers obligations under the ARDA dated May 10, 1996 and the Pledge
Agreement itself; and (2) There is automatic appropriation as under Section
8.02 of the ARDA, in the event of default by PIC, title to the PPC shares of

stock shall ipso factorevert from PIC to PMO without need of demand. (Note
that: ARDA solely has the second element, while the Pledge
Agreement only has the first element).
In Blas v. Angeles-Hutalla, the Court recognized that the agreement of
the parties may be embodied in only one contract or in two or more separate
writings. In case of the latter, the writings of the parties should be read and
interpreted together in such a way as to render their intention effective.
The Court, in determining the existence of pactum commissorium, had
focused more on the evident intention of the parties, rather than the formal
or written form. Appreciating the ARDA together with the Pledge Agreement,
the Court can only conclude that Section 8.02 of the ARDA constitutes
pactum commissoriumand, therefore, null and void.
2. Yes.
PMO insists that there is no valid Pledge Agreement, arguing that PIC
could not have validly pledged the PPC shares of stock because it is not yet
the absolute owner of said shares. According to PMO, the sale of the PPC
shares of stock to PIC is subject to the resolutory condition of nonpayment by
PIC of the installments due on the purchase price.
The Court is unconvinced.
Among the requirements of a contract of pledge is that the pledgor is
the absolute owner of the thing pledged. Based on the provisions of the
ARDA, ownership of the PPC shares of stock had passed on to PIC, hence,
enabling PIC to pledge the very same shares to PMO.
PMO cannot maintain that the ownership of the PPC shares of
stock did not pass on to PIC, but in the same breath claim that nonpayment by PIC of the installments due on the purchase price is a
resolutory condition for the contract of sale these two arguments
are actually contradictory. As the Court clearly explained in Heirs of
Paulino Atienza v. Espidol:
Regarding the right to cancel the contract for nonpayment of an
installment, there is need to initially determine if what the parties had was a
contract of sale or a contract to sell. In a contract of sale, the title to the
property passes to the buyer upon the delivery of the thing sold. In a
contract to sell, on the other hand, the ownership is, by agreement, retained
by the seller and is not to pass to the vendee until full payment of the

purchase price. In the contract of sale, the buyers nonpayment of the price
is a negative resolutory condition; in the contract to sell, the buyers full
payment of the price is a positive suspensive condition to the coming into
effect of the agreement. In the first case, the seller has lost and cannot
recover the ownership of the property unless he takes action to set aside the
contract of sale. In the second case, the title simply remains in the seller if
the buyer does not comply with the condition precedent of making payment
at the time specified in the contract. x x x
So that it could invoke the resolutory condition of nonpayment
of an installment, PMO must necessarily concede that its contract
with PIC was a one of sale and that ownership of the PPC shares of
stock had indeed passed on to PIC. And even then, having lost
ownership of the shares, PMO cannot automatically recover the same without
taking steps to set aside the contract of sale.
Moreover, the general rule is that in the absence of a stipulation, a
party cannot unilaterally and extrajudicially rescind a contract. A party
must invoke the right to rescind a contract judicially. It is also settled
that the rescission of a contract based on Article 1191 of the Civil Code
requires mutual restitution to bring back the parties to their original situation
prior to the inception of the contract. Rescission creates the obligation to
return the object of the contract. It can be carried out only when the one who
demands rescission can return whatever he may be obliged to restore.
Even though PMO had previously acknowledged the need for
restitution or restoration following rescission, it also qualified that such
restitution or restoration shall still be "subject x x x to the fair
determination of the amount to be restored as may be deemed
reasonable and substantiated."
Section 8.02 of the ARDA provides for the ipso facto reversion
of the pledged shares of PIC to PMO in case of default on the part of
the former, which as explained above, is prohibited by Article 2088
of the Civil Code. The said Section does not mention the broader
concept of rescission of the entire ARDA.
PMO is asking the Court, among other things, to already declare the
ARDA rescinded. The Court cannot grant or deny such prayer at this point for
there are questions of fact and law which are still under litigation before the
RTC.

Topic: Buyer in Good Faith; Acquisitive Prescription; Laches

Ponente: DEL CASTILLO, J.
G.R. No. 177616

August 27, 2014

HEIRS OF SPOUSES JOAQUIN MANGUARDIA and SUSANA MANALO,

Petitioners, vs. HEIRS OF SIMPLICIO VALLES and MARTA VALLES,
represented by GRACIANO VALLES, SULPICIO VALLES, TERESITA
VALLES,
joined
by
her
husband,
LEOPOLDO
ALAIR,
and
PRESENTACION CAPAPAS-VALLES, Respondents.
Facts:
Marta, Simplicio, Melquiades, Rustico, Visitacion and Catalina, all
surnamed Valles, were siblings. Simplicio and Marta were the registered
owners of a parcel of land in Capiz known as Lot 835 and covered by Original
Certificate of Title.
Marta died in 1943 and was survived by her illegitimate daughter,
Encarnacion Ordas. On the other hand, Simplicio died on April 20, 1957. He
was survived by his wife Villarica Ordas, who passed away sometime in 1969,
and his children, Felicisimo, Adelaida, Rosario, Juan, and Dominica, all
surnamed Valles. With the exception of Felicisimo, all of Simplicio's children
died single and childless. Felicisimo was survived by his wife, Presentacion
Capapas, and his children Graciano, Sulpicio, Teresita and Antonio (now
deceased).
It appears, however, that on October 28, 1968, a notarized Deed of
Absolute Sale over Lot 835 was executed by Simplicio and Marta in favor of
their brothers, Melquiades and Rustico; Simplicios daughter, Adelaida Valles;
and Martas daughter, Encarnacion.
The Deed ofAbsolute Sale ostensibly bore the signature of Marta and
the thumb marks of Simplicio and his wife. On even date, said deed was

registered in the Registry of Deeds of Capiz, resulting in the cancellation of

OCT and the issuance of Transfer Certificate of Title (TCT).
The alleged buyers and new registered owners executed a Subdivision
Agreement, subdividing Lot 835 into four lots. Said Subdivision Agreement
was also registered y in the Registry of Deeds of Capiz.
Fast forward to December 13, 1999, the heirs of Simplicio and Marta,
namely, Graciano, Sulpicio and Teresita Valles, along with their mother
Presentacion and Teresitas husband, Leopoldo Alair (respondents),
commenced an action for the Declaration of Nullity of Certificates of Title and
Deeds of Sale, Cancellation of Certificates of Title, Recovery of Possession
and Damages against the heirs of spouses Manguardia and the heirs of
spouses Leonardo and Rebecca (petitioners).
Respondents alleged thatin September 1998 they discovered the
various documents of sale and titles covering Lot 835 when Teresita and her
siblings agreed to subdivide the lot among the heirs of Simplicio and Marta
and searched for the title of the property in the Registry of Deeds of Capiz.
They averred that the purported Deed of Absolute Sale dated October 28,
1968 is a forgery because Marta and Simplicio were long dead when the said
document was executed. Consequently, all titles emanating there from
including the titles covering the subdivided lots of Lot 835 registered in the
names of spouses Manguardia, Leonardo and Rebecca, and Adelaida, are all
null and void. Respondents, therefore, prayed that petitioners be ordered to
remove the improvements introduced on the disputed lot and vacate the
same, and that a new title be issued over Lot 835 in the names of Marta and
Simplicio as owners.
In their Answer, the heirs of spouses Manguardia averred that their
predecessors-in-interest were innocent purchasers in good faith and for
value, having acquired Lots 835-B and 835-C in 1980 from their registered
owners and occupants, Pedro and Soledad. They further averred that their
parents had been in possession of the lots since they purchased them in
1980, and had since then constructed four buildings thereon for their poultry
business, without opposition from anyone, including Graciano who occupies
the adjacent Lot 835-A. They maintained that the titles in the names of the
spouses Manguardia are valid and legal. In addition, since the documents of
sale and Torrens titles were duly registered in the Registry of Deeds, and that
actual possession by the different transferees spanning a period of over 30
years were known to the respondents and their predecessors without any

complaint or opposition, the claim of respondents is barred by prescription,

estoppel and laches. The heirs of the spouses Manguardia moreover asserted
that the Complaint against them fails to allege a cause of action and that the
same was not brought by the real parties-in-interest.
On the other hand, the heirs of Leonardo and Rebecca (except Antonio
Araza) in their Answer, averred that their Torrens title covering Lot 835-D is
valid and lawful having been issued as a result of their parents acquisition of
said lot from the registered owners, spouses Pedro and Soledad. They
averred that their parents were purchasers in good faith and for value and
that the document of sale is genuine and authentic. The heirs of Leonardo
and Rebecca further alleged that the matter ofthe subdivision and ownership
of the lots was known to respondents as they had been, from Mindanao,
coming back and forth to the subject property; and, that despite such
knowledge, they never claimed or complained about the ownership of
Leonardo and his heirs over the subject lot. By way of affirmative and special
defenses, the heirs of Leonardo and Rebecca contended that the action is
already barred by prescription, estoppel and laches. This is considering that
immediately after the sale in 1972, their parents possessed and exercised all
acts of dominion over Lot 835-D without opposition from anyone, including
Graciano.
The heirs of Enecita Araza Vargas raised the same averments,
affirmative and special defenses, and counterclaims as those raised by the
other heirs of Leonardo and Rebecca. Likewise, Antonio Araza adopted the
Answer of the other heirs in a Manifestation43 submitted to the court.
Issues:
1. Whether or not petitioners discharged the burden of proving that their
predecessors-in-interest were buyers in good faith.
2. Whether or not acquisitive prescription is available in the case at bar.
3. Whether or not petitioners are barred by laches.
Ruling:
1. No.
Petitioners do not dispute that the original Deed of Absolute Sale is a
forgery because the alleged vendors were already long dead when the
questioned deed was executed. While their ownership rights are
ultimately based upon this forged deed, petitioners assert that the good faith
of their predecessors-in-interest validates their title over the lots.

The Court, however, disagrees.

The general rule x x x that a person dealing with registered land has a
right to rely on the Torrens Certificate of Title without need of inquiring
further cannot apply when the party has actual knowledge of facts
and circumstances that would impel a reasonably cautious man to
make such inquiry or when the purchaser has knowledge of a defect
or lack of title in his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into the status of the title of the
property in litigation (Voluntad vs. Dizon, 313 SCRA 209).
If circumstances exist that require a prudent man to investigate and
he does not, he is deemed to have acted in mala fide, and his mere refusal
to believe that a defect exists or his willful closing of his eyes to the
possibility of the existence of a defect in his vendors title will not
make him an innocent purchaser for value (Voluntad vs. Dizon, supra).
The transfers of the properties in question did not go far, but were
limited to close family relatives by affinity and consanguinity. Circuitous and
convoluted as they may be, and involving more than two families but
belonging to a clan which, although living in different barangays, such
barangays belong to the same city and are adjacent to each other. Good
faith among the parties to the series of conveyances is therefore hard if not
impossible to presume.
Unfortunately for the petitioners, they did not provide any
sufficient evidence that would convince the courts that the
proximity of relationships between/among the vendors and vendees
in the questioned sales was not used to perpetrate fraud. Thus there
is nothing todispel the notion that apparent anomalies attended the
transactions among close relations.
Glaringly emphasized were the established facts that the parties to
the alleged original sale in 1968, and the witnesses thereto were close
relatives (siblings, children and nephew of Marta and Simplicio). Similarly,
the vendors and vendees in subsequent sale transactions were either the covendees themselves in the original sale, first cousins, and close relatives by
consanguinity and affinity. In addition, these transactions between close
relatives happened at a time when everybody knew everyone, in a place
where vendees lived in close proximity to the vendors, and to the disputed
properties.

This is not to say however, that a sale between close relatives

is automatically anomalous. It is just that in this particular case, the
circumstances strongly show that fraud was committed by relatives
against relatives and the evidence adduced by petitioners was
insufficient to remove the cloud of doubt pertaining to the good
faith of their predecessors-in-interest in acquiring the properties in
question.
It must be emphasized that "the burden of proving the status of a
purchaser in good faith and for value lies upon him who asserts that
standing. In discharging the burden, it is not enough to invoke the ordinary
presumption of good faith that everyone is presumed to act in good faith.
The good faith that is here essential is integral with the very status
that must beproved. x x x Petitioners have failed to discharge that
burden."
2. No.
Petitioners contention of acquisitive prescription cannot prevail over
the rights of respondents.
The disputed property is a duly registered land under the Torrens
system. "It is well-settled that no title to registered land in
derogation of that of the registered owner shall be acquired by
prescription or adverse possession. Neither can prescription be
allowed against the hereditary successors of the registered owner,
because they merely step into the shoes of the decedent and are
merely the continuation of the personality of their predecessor-ininterest. Consequently, since a certificate of registration covers it, the
disputed land cannot be acquired by prescription regardless of petitioner's
good faith."
3. No.
Laches is based upon equity and the public policy of discouraging stale
claims. Since laches is an equitable doctrine, its application is controlled by
equitable considerations. It cannot be used to defeat justice or to
perpetrate fraud and injustice. Thus, the assertion of laches to thwart
the claim of respondents is foreclosed because the deed upon which
[petitioners base their] claim is[, first and foremost, a forgery.

Topic: Property
Ponente: BIENVENIDO REYES
ROTAIRO v. ROVIRA
G.R. No. 173632, September 29, 2014
Facts: A parcel of land is owned by Alcantara and Ignacio, who mortgaged
the property to Pilipinas Bank in 1968. Two years after, the property was
parcelled out, through the firm Ignacio & Co. and separately sold to different
buyers. One of the buyers was Rotairo who bought a portion (Lot C-1) on

installment basis. After completing payments, a Deed of Absolute Sale was

executed on September 25, 1979 in his favor.
In the meantime, Alcantara and Ignacio defaulted in their loan
obligations causing Pilipinas Bank to foreclose the mortgage on the entire
property. Without redemption being made by Alcantara and Ignacio, title was
consolidated in the name of Pilipinas Bank being the highest bidder during
the auction sale. Pilipinas Bank then sold the property in a Deed of Absolute
Sale dated June 6, 1975 to Rovira, who happens to be Alcantara's daughter.
Rovira filed for recovery of possession and damages.
The RTC
dismissed and ruled in favor of defendant Rotario. On appeal, the CA set
aside the RTC decision and ordered the turnover of possession of the
property to Rovira. Petitioners sought reconsideration, which was denied by
the CA. The CA held that P.D. No. 957 is not applicable since the mortgage
was constituted prior to the sale to Rotairo. Section 1811 of P.D. No. 957
protects innocent lot buyers, and where there is a prior registered mortgage,
the buyer purchases it with knowledge of the mortgage. In the case of
Rotairo, P.D. No. 957 does not confer "more" rights to an unregistered buyer
like him, as against a registered prior mortgagee like Pilipinas Bank and its
buyer, Rovira. Hence, the present petition.
Issue: Whether or not Rovira is a buyer in good faith.
Held: No.
The Court found that Rovira cannot claim a better right to the property
because she is not a buyer in good faith. The determination of whether one
is a buyer in good faith is a factual issue, which generally cannot be
determined by the Court in a petition for review filed under Rule 45. The rule,
nonetheless, admits of exceptions, some of which are when the judgment of
the CA is based on a misapprehension of facts or when the CA overlooked
undisputed facts which, if properly considered, would justify a different
conclusion. A review of this case shows that the CA failed to appreciate the
relevance of certain undisputed facts, thus giving rise to its erroneous
conclusion that Rovira has a better right to the property in dispute.
General rule: As between two transactions concerning the same parcel of
land, the registered transaction prevails over the earlier unregistered right.
This is in accord with Section 50 of the Land Registration Act.
Exception: The conveyance shall not be valid against any person unless
registered, except (1) the grantor, (2) his heirs and devisees, and (3) third
persons having actual notice or knowledge thereof. Moreover, "when the
party has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry or when the purchaser has
knowledge of a defect or the lack of title in his vendor or of sufficient facts to

induce a reasonably prudent man to inquire into the status of the title of the
property in litigation, he cannot find solace in the protection afforded by a
prior registration. Neither can such person be considered an innocent
purchaser for value nor a purchaser in good faith.
In this case, two factors work against Rovira as a buyer in good faith.
One, she cannot be considered a third person for purposes of applying the
rule. She is the daughter and an heir of Alcantara, one of the parties to the
contract of sale executed in favor of Rotairo. "The vendor's heirs are his
privies." Based on such privity, Rovira is charged with constructive
knowledge of prior dispositions or encumbrances affecting the subject
property made by her father.
Further, this case show Rovira's actual knowledge of the disposition
of the subject property and Rotairo's possession thereof. Rotairo, and
subsequently, his heirs, has been residing on the property since then. Rovira,
who lives only fifty 50 meters away from the subject property, in fact, knew
that there were structures built on the property. Rovira, however, claims that
"she did not bother to inquire as to the legitimacy of the rights of the
occupants, because she was assured by the bank of its title to the property."
But it was incumbent upon Rovira to look beyond the title and make
necessary inquiries because the bank was not in possession of the property.
"Where the vendor is not in possession of the property, the prospective
vendees are obligated to investigate the rights of one in possession." A
purchaser cannot simply close his eyes to facts which should put a
reasonable man on guard, and thereafter claim that he acted in good faith
under the belief that there was no defect in the title of the vendor. Hence,
Rovira cannot claim a right better than that of Rotairo's as she is not a buyer
in good faith.
It is a settled rule that the Land Registration Act protects only holders
of title in good faith, and does not permit its provision to be used as a shield
for the commission of fraud, or as a means to enrich oneself at the expense
of others.

Topic: Period of redemption in Land Registration Proceeding

Ponente: ARTURO BRION
680 HOME APPLIANCES, INC. v. Court of Appeals
G.R. No. 206599, September 29, 2014
Facts: The case arose from the extrajudicial foreclosure proceedings
commenced by the creditor of petitioner 680 Home, Deutsche Bank AG
London, after the former defaulted in paying a loan secured by a real estate
mortgage over its commercial lot and building.
In the foreclosure sale, the respondent FSAMI emerged as the highest
bidder of 680 Homes mortgaged properties. A certificate of sale was issued
to FSAMI and later FSAMI consolidated its ownership after 680 Home failed to
redeem the property. A new certificate of was issued in FSAMIs name.
Petitioner filed an action to annul the mortgage and foreclosure with
the RTC. On the other hand, FSAMI filed a petition for the ex parte issuance
of a writ of possession. Petitioner moved to intervene and filed an opposition
but the RTC denied the motion. RTC granted FSAMIs application for a writ of
possession.
As the current occupant of the property, respondent Aldanco
intervened in the petition of FSAMI, claiming that it possessed the property
as lessee of 680 Home.
Petitioner filed a petition to cancel the writ of possession, invoking
Section 8 of Act No. 3135. It alleged the nullity of the foreclosure as well the
adverse possession of Aldanco that supposedly barred the ministerial
issuance of the writ of possession. The RTC denied.
On appeal, the CA affirmed the RTC ruling and declared 680 Homes
petition to cancel the writ as prematurely filed. The CA ruled that under
Section 8 of Act No. 3135, a judgment debtor may file a petition for
cancellation of the writ of possession within 30 days only after the purchaser
has obtained possession of the property. Although a writ of possession was
issued, the property remained in the possession of Aldanco as 680 Homes
lessee. Since FSAMI did not obtain possession of the property, the 30-day
period to file a petition to cancel the writ under Section 8 of Act No. 3135 has
not yet commenced. The CA relied on the Courts ruling in Ong v. CA, which
held that the purchaser must first be placed in possession of the mortgaged
property pending proceedings assailing the issuance of the writ of
possession. Hence, this petition.
Issue: Whether or not Section 8 of Act No. 3135 shall apply.

Held: No.
As the CA correctly pointed out, a debtor may avail of the remedy
under Section 8 of Act No. 3135 only after the purchaser has obtained
possession of the property. What it missed, however, is that this rule is
applicable only to a unique factual situation, when the writ of
possession sought to be cancelled was issued during the
redemption period. Thus, Section 8 of Act No. 3135 finds no application
when the redemption period has expired without the debtor exercising his
right, and the purchaser in the foreclosure sale has already consolidated his
ownership over the property and moved for the issuance of the writ of
possession.
Upon the lapse of the redemption period without the debtor exercising
his right of redemption and the purchaser consolidates his title, it becomes
unnecessary to require the purchaser to assume actual possession thereof
before the debtor may contest it. Possession of the land becomes an
absolute right of the purchaser, as this is merely an incident of his
ownership. In fact, the issuance of the writ of possession at this point
becomes ministerial for the court. The debtor contesting the purchasers
possession may no longer avail of the remedy under Section 8 of Act No.
3135, but should pursue a separate action e.g., action for recovery of
ownership, for annulment of mortgage and/or annulment of foreclosure.
FSAMIs consolidation of ownership therefore makes the remedy under
Section 8 of Act No. 3135 unavailable for 680 Home. 680 Home cannot assail
the writ of possession.

Topic: Medical Negligence and Damages

Ponente: BIENVENIDO REYES
DELA TORRE vs. IMBUIDO
G.R. No. 192973 September 29, 2014
Facts: Pedrito was married to one Carmen. Carmen was due to give birth on
February 2, 1992 but when Carmen still had not delivered her baby at the
expected time, Carmen was subjected under caesarian section. By 5:30 pm
of the February 3, 1992, Pedrito was informed of his wifes delivery of a baby
boy. In the early morning of February 4, 1992, Carmen experienced
abdominal pain and difficulty in urinating. She was diagnosed to be suffering
from urinary tract infection (UTI), and was prescribed medications by Dr.
Norma. On February 10, 1992, Pedrito noticed that Carmens stomach was
getting bigger, but Dr. Norma dismissed the patients condition as mere
flatulence (kabag). Carmens stomach still grew bigger despite medications.
On February 12, 1992, Carmen had her second operation. Dr. Norma
informed Pedrito that "everything was going on fine with his wife. On
February 13, 1992, Carmen vomited dark red blood and at 9:30 p.m. on the
same day, Carmen died.
Per her certificate of death upon information provided by the hospital,
the immediate cause of Carmens death was "cardio-respiratory arrest
secondary to cerebro vascular accident, hypertension and chronic nephritis
induced by pregnancy." However, an autopsy Report prepared by Dr.
Patilano, a Medico-Legal Officer claimed that peritonitis, the alleged cause of
Carmens death, could have been prevented through proper medical
procedures and medicines.
Pedrito filed a complaint against the respondents alleging that they
failed to exercise the degree of diligence required of them as members of the
medical profession, and were negligent for practicing surgery on Carmen in
the most unskilled, ignorant and cruel manner. The RTC ruled in favor of
Pedrito. The trial court gave greater weight to the testimony of Dr. Patilano.
On appeal, the CA rendered reversed and set aside the decision of the RTC.
For the appellate court, it was not established that the respondents failed to
exercise the degree of diligence required of them by their profession as

doctors. Hence, this petition.

Issue: Whether or not the petition shall be granted.
Held: No.
Medical malpractice or medical negligence, is that type of claim which
a victim has available to him or her to redress a wrong committed by a
medical professional which has caused bodily harm. In order to successfully
pursue such a claim, a patient, or his or her family as in this case, must
prove that a health care provider, in most cases a physician, either failed to
do something which a reasonably prudent health care provider would have
done, or that he or she did something that a reasonably prudent provider
would not have done; and that failure or action caused injury to the patient.
Jurisprudence provides that medical negligence cases involves a
physician-patient relationship between the doctor and the victim, but just like
in any other proceeding for damages, four essential elements must be
established by the plaintiff, namely: (1) duty; (2) breach; (3) injury; and
(4) proximate causation. All four elements must be present in order to find
the physician negligent and, thus, liable for damages. There is breach of duty
when the patient is injured in body or in health. Proof of this breach rests
upon the testimony of an expert witness that the treatment accorded to the
patient failed to meet the standard level of care, skill and diligence. To justify
an award of damages, the negligence of the doctor must be established to
be the proximate cause of the injury.
For the trial court to give weight to Dr. Patilanos report, it was
necessary to show first Dr. Patilanos specialization and competence to
testify on the degree of care, skill and diligence needed for the treatment of
Carmens case. Considering that it was not duly established that Dr. Patilano
practiced and was an expert in the fields that involved Carmens condition,
he could not have accurately identified the said degree of care, skill,
diligence and the medical procedures that should have been applied by her
attending physicians. Similarly, such duty, degree of care, skill and diligence
were not sufficiently established because the testimony of Dr. Patilano was
based solely on the results of his autopsy on the cadaver of Carmen. His
study and assessment were restricted by limitations that denied his full
evaluation of Carmens case.
Without sufficient proof from the claimant on a different degree of
care, skill and diligence that should be expected from the respondents, it
could not be said with certainty that a breach was actually committed.
Jurisprudence also states that the critical and clinching factor in a
medical negligence case is proof of the causal connection between the
negligence and the injuries. The claimant must prove not only the injury but

also the defendant's fault, and that such fault caused the injury. A verdict in
a malpractice action cannot be based on speculation or conjecture.
Causation must be proven within a reasonable medical probability
based upon competent expert testimony, which the Court finds absent
in the case at bar.

Topic: Dismissal of complaint for some of money on the ground of

prescription
Ponente: ESTELA PERLAS-BERNABE
H.H. HOLLERO CONSTRUCTION, INC. v. GOVERNMENT
INSURANCE SYSTEM AND POOL OF MACHINERY INSURERS
G.R. No. 152334, September 24, 2014

SERVICE

Facts: GSIS and petitioner entered into a Project Agreement where the latter
undertook the development of a GSIS housing project. Petitioner insured the
Project under a Contractors All Risks (CAR) Insurance with the GSIS General
Insurance Department. In turn, the GSIS reinsured with respondent Pool of
Machinery Insurers (Pool). Among the policy provides that all benefits
thereunder shall be forfeited if no action is instituted within twelve (12)
months after the rejection of the claim for loss, damage or liability
During the construction, three (3) typhoons hit the country, in June
1988 (Typhoon Biring), July 1988 (Typhoon Huaning), and October 1989
(Typhoon Saling), which caused considerable damage to the Project.
Petitioner filed several claims for indemnity with the GSIS on June 1988,
August 1988, and October 1989, respectively. The GSIS rejected petitioners
indemnity claims for the damages wrought by Typhoons Biring and Huaning,
finding that no amount recoverable pursuant to the average clause provision
under the policies. And also rejected the claim wrought by Typhoon Saling on
a no loss basis, it appearing from its records that the policies were not
renewed before the onset of the said typhoon.

In a letter dated April 18, 1991, petitioner impugned the rejection of its
claims for damages/loss on account of Typhoon Saling, and reiterated its
demand for the settlement of its claims. Unanswered, petitioner filed a
Complaint for Sum of Money and Damages which was opposed by the GSIS
through a Motion to Dismiss on the ground that the causes of action are
barred by the twelve-month limitation provided under the policies.
Subsequently, the GSIS filed a Third Party Complaint for indemnification
against Pool, the reinsurer.
The RTC granted petitioners indemnity claims. On appeal, the CA set
aside and reversed the RTC Judgment, dismissing the complaint. It ruled that
the complaint filed on September 27, 1991 was barred by prescription,
having been commenced beyond the twelve-month limitation provided under
the policies, reckoned from the final rejection of the indemnity claims on
April 26, 1990 and June 21, 1990. Hence, this petition.
Issue: Whether or not the complaint has already prescribed.
Held: Yes.
Section 1040 of the General Conditions of the subject CAR Policies
read: or if a claim is made and rejected and no action or suit is
commenced within twelve months after such rejection, xxx, all benefit under
this Policy shall be forfeited.
In a letter dated April 26, 1990 GSIS denied petitioners indemnity
claims wrought by Typhoons Biring and Huaning, it appearing that no amount
was recoverable under the policies. While the GSIS gave petitioner the
opportunity to dispute its findings, neither of the parties pursued any further
action on the matter; this logically shows that they deemed the said letter as
a rejection of the claims. The same conclusion obtains for the letter dated
June 21, 1990 denying petitioners indemnity claim caused by Typhoon Saling
on a no loss basis due to the non-renewal of the policies therefor before
the onset of the said typhoon.
The prescriptive period for the insureds action for indemnity should be
reckoned from the final rejection of the claim. Final rejection simply means
denial by the insurer of the claims of the insured and not the rejection
or denial by the insurer of the insureds motion or request for
reconsideration. The rejection referred to should be construed as the
rejection in the first instance. Thus, petitioners causes of action for
indemnity accrued from its receipt of the letters (April 26, 1990 and June 21,
1990), or the date the GSIS rejected its claims in the first instance filed on
September 27, 1991, its causes of action had already prescribed.

Topic: Loan, Mortgage Contract and Damages

Ponente: Jose Catral Mendoza
PNB v. Spouses Eduardo and Ma. Rosario Tajonera, et. al.
GR No. 195889, September 14, 2014
Facts: Respondent Eduarosa Realty Development, Inc. (ERDI) was engaged
in realty construction and sale of condominium buildings. Respondent Ma.
Rosario Tajonera (Rosario), as the Vice President of ERDI, also performed the
duties of president and marketing director dealing with banks, suppliers and
contractors. ERDI, through Rosario, obtained loans from petitioner Philippine
National Bank (PNB)and entered into several credit agreements to finance
the completion of the construction of their 20-storey Eduarosa Tower
Condominium.
Pursuant to the Credit Agreement, the principal amount of loan
extended by PNB to ERDI was Sixty Million Pesos (60,000,000.00). As security
for the initial loan, ERDI executed the Real Estate Mortgage (REM) consisting

of three (3) parcels of land. In addition, the loan was secured by the
assignment of proceeds of contract receivables arising from the sale of
condominium units to be constructed on the mortgaged Paranaque
properties.
ERDI executed an amendment to the Credit Agreement and obtained
an additional loan of Forty Million Pesos (P40,000,000.00). As additional
security to the increased amounts of loan, the respondent spouses
Greenhills propertywas mortgaged in favor of PNB. A Second Amendment to
Credit Agreement was executed by the parties to extend the repayment
dates of the loan and the additional loan subject to the terms set forth in the
said agreement.
The following year, a Third Amendment to the Credit Agreement was
entered into by the parties wherein PNB granted an additional loan of Fifty
Five Million Pesos to ERDI. ERDI failed to settle its obligation. As a
consequence, PNB filed an application for foreclosure of the Greenhills
property.
This prompted the respondents to file a complaint against PNB for
annulment of sale, cancellation oftitle, cancellation of mortgage, and
damages. In the complaint, the respondents alleged among others, that the
title to the mortgaged property that was transferred to PNB as a
consequence of the foreclosure proceedings was null and void as their
mortgage obligation had been novated and no new loans were released to
them, in violation of the provisions of the Supplement to REM.
Issues: 1. Whether or not the mortgage contract constituted over the
Greenhills property of the respondents
must be annulled.
2. Whether or not there is breach of contract in the case.
3. Whether or not respondents are entitled to damages
Held:
First Issue
No.
The agreement between PNB and the respondents was one of a loan.
Under the law, a loan requires the delivery of money or any other
consumable object by one party to another who acquires ownership thereof,
on the condition that the same amount or quality shall be paid. Loan is a
reciprocal obligation, as it arises from the same cause where one party is the
creditor, and the other the debtor. The obligation of one party in a reciprocal
obligation is dependent upon the obligation of the other, and the
performance should ideally be simultaneous. This means that in a loan, the
creditor should release the full loan amount and the debtor repays it when it

becomes due and demandable.

PNB, not having released the balance of the last loan proceeds in
accordance with the Third Amendment had no right to demand from the
respondents compliance with their own obligation under the loan. Indeed, if a
party in a reciprocal contract like a loan does not perform its obligation, the
other party cannot be obliged to perform what is expected of them while the
other's obligation remains unfulfilled.
When PNB and the respondents entered into the First, Second and
Third Amendments on they undertook reciprocal obligations. In reciprocal
obligations, the obligation or promise of each party is the consideration for
that of the other; and when one party has performed or is ready and willing
to perform his part of the contract, the other party who has not performed or
is not ready and willing to perform incurs in delay. The promise of the
respondents to pay was the consideration for the obligation of PNB to furnish
the P40,000,000.00 additional loan under the First Amendment as well as
theP55,000,000.00 the second additional loan under the Third Amendment.
When the respondents executed the Supplement to REM covering their
Greenhills property, they signified their willingness to pay the additional
loans. It should be noted, that the Supplement to REM was constituted not
only as security for the execution of the First Amendment but also in
consideration of the Second and Third Amendments.
Second Issue
Yes.
Breach of contract:
It is the "failure without legal reason to comply with the terms of a
contract." It is also defined as the "failure, without legal excuse, to perform
any promise which forms the whole or part of the contract."
PNB breached its contractual obligation when it failed to release to
Appellees the remaining balance of the approved loan. For its failure
to release the balance of the approved loan, the construction of the
Condominium project was not finished, transgressing the very purpose of the
credit agreements, that is, to finance the completion of the construction of
Eduarosa Towers.
Third Issue
No.
Moral damages are explicitly authorized in breaches of contract when
the defendant has acted fraudulently or in bad faith. Exemplary damages, on
the other hand, are intended to serve as an example or a correction for the

public good. Courts may award them if the defendant is found to have acted
in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
Concededly, PNB was remiss in its obligation to release the balance of the
additional loan it extended to the respondents. Nothing in the records or
findings of the RTC and the CA, however, would show that PNB acted with a
deliberate intent to maliciously cause damage or harm to the respondents.
And, inasmuch as the respondents were also found to have been remiss in
their obligation to pay their loan amortization, thus, there can be no award
for moral and exemplary damages in favor of the respondents.

Topic: Solidary Liability and Payment

Ponente: ARTURO BRION
BOGNOT v. RRI LENDING CORPORATION G.R. No. 180144
September 24, 2014
Facts: Petitioner and his younger brother, Rolando A. Bognot (Bognot

siblings), applied for and obtained a loan of P500k from the respondent RRI
Lending Corporation, payable on November 30, 1996. The loan was
evidenced by a promissory note and was secured by a post dated check
(November 30, 1996). Petitioner renewed the loan several times on a
monthly basis. He paid a renewal fee for each renewal, issued a new postdated check as security, and executed and/or renewed the promissory note
previously issued.
The respondent on the other hand, cancelled and
returned to the petitioner the post-dated checks issued prior to their renewal.
In March 1997, the petitioner applied for another loan renewal. He
again executed as principal and signed Promissory Note No. 97-0356 payable
on April 1, 1997; his co-maker was again Rolando. As security for the loan,
the petitioner also issued BPI Check No. 0595236,7 post dated to April 1,
1997.
The loan was again renewed on a monthly basis (until June 30, 1997).
The petitioner purportedly paid the renewal fees and issued a post-dated
check (June 30, 1997) as security. As had been done in the past, the
respondent superimposed the date June 30, 1997 on the upper right
portion of Promissory Note No. 97-035 to make it appear that it would mature
on the said date.
Several days before the loans maturity, Rolandos wife, Julieta Bognot
went to the respondents office and applied for another renewal of the loan
issuing in favor of the respondent Promissory Note No. 97-051, and
International Bank Exchange (IBE) Check No. 00012522 (July 30, 1997), in
the amount of P54,600.00 as renewal fee.
On the excuse that she needs to bring home the loan documents for
the Bognot siblings signatures and replacement, Mrs. Bognot asked the
respondents clerk to release to her the promissory note, the disclosure
statement, and the check dated July 30, 1997. Mrs. Bognot, however, never
returned these documents nor issued a new post-dated check. Consequently,
the respondent sent the petitioner follow-up letters demanding payment of
the loan, plus interest and penalty charges. These demands went unheeded.
Thus, respondent filed a complaint for sum of money before the RTC
against the Bognot siblings. Summons were served on the Bognot siblings.
However, only the petitioner filed his answer.
The RTC ruled in the respondents favor and ordered the Bognot
siblings to pay solidarily the amount of the loan. On appeal, the CA affirmed
the RTCs findings. The petitioner moved for the reconsideration of the
decision, but the CA denied his motion. Hence, this petition.
Issues: 1. Whether or not there was payment.

2. Whether or not the petitioner is solidarily liable.

Held: 1. There was none.
There was no evidence presented to establish the fact of payment.
Jurisprudence tells us that one who pleads payment has the burden of
proving it; the burden rests on the defendant to prove payment, rather than
on the plaintiff to prove non-payment. Once the existence of an
indebtedness is duly established by evidence, the burden of showing with
legal certainty that the obligation has been discharged by payment rests on
the debtor.
In the present case, the petitioner failed to satisfactorily prove that his
obligation had already been extinguished by payment. The petitioner
failed to present any evidence that the respondent had in fact
encashed his check and applied the proceeds to the payment of the
loan. Neither did he present official receipts evidencing payment,
nor any proof that the check had been dishonored.
Petitioner merely relied on the respondents cancellation and return to
him of the check dated April 1, 1997. The evidence shows that this check
was issued to secure the indebtedness. The acts imputed on the respondent,
standing alone, do not constitute sufficient evidence of payment.
2. No.
A solidary obligation is one in which each of the debtors is liable for the
entire obligation, and each of the creditors is entitled to demand the
satisfaction of the whole obligation from any or all of the debtors.
When is there solidary liability?
a. when the obligation expressly so states,
b. when the law so provides, or
c. when the nature of the obligation so requires.
Thus, when the obligor undertakes to be "jointly and severally"
liable, the obligation is solidary.
In this case, both the RTC and the CA found the petitioner solidarily
liable with Rolando based on Promissory Note No. 97-035 dated June 30,
1997. However, solidary obligation cannot be inferred lightly. It must
be positively and clearly expressed and cannot be presumed. In view
of the inadmissibility of the promissory note (a mere photocopy), and in the
absence of evidence showing that the petitioner had bound himself solidarily
with Rolando for the payment of the loan, the Court cannot but conclude that
the obligation to pay is only joint.

Topics: Innocent purchaser for value; Nominal damages

Ponente: Presbitero J. Velasco, Jr.
Enriqueta M. Locsin v. Bernardo Hizon, Carlos Hizon, Sps. Jose
Manuel & Lourdes
G.R. No. 204369, September 17, 2014
Facts: Petitioner Enriqueta M. Locsin (Locsin) was the registered owner of a
760-sq.m. lot covered by Transfer Certificate of Title (TCT) No. 235094,
located in Quezon City. In 1992, she filed an ejectment case, Civil Case No.
38-6633, against one Billy Aceron (Aceron) before the Metropolitan Trial
Court, Branch 38 in Quezon City (MTC) to recover possession over the land in
issue. Eventually, the two entered into a compromise agreement, which the
MTC approved on August 6, 1993. Locsin later went to the United States
without knowing whether Aceron has complied with his part of the bargain
under the compromise agreement. In spite of her absence, however, she
continued to pay the real property taxes on the subject lot.
In 1994, after discovering that her copy of TCT No. 235094 was missing,
Locsin filed a petition for administrative reconstruction in order to secure a
new one, TCT No. RT-97467.Sometime in early 2002, she then requested her
counsel to check the status of the subject lot. It was then that they
discovered
the
following:

One Marylou Bolos (Bolos) had TCT No. RT-97467 cancelled on February
11, 1999, and then secured a new one, TCT No. N-200074, in her favor
by registering a Deed of Absolute Sale dated November 3, 1979
allegedly executed by Locsin with the Registry of Deeds;
Bolos later sold the subject lot to Bernardo Hizon (Bernardo) for PhP1.5
million, but it was titled under Carlos Hizons (Carlos) name on August
12, 1999. Carlos is Bernardos son;
On October 1, 1999, Bernardo, claiming to be the owner of the
property, filed a Motion for Issuance of Writ of Execution for the
enforcement of the court-approved compromise agreement in Civil
Case No. 38-6633;
The property was already occupied and was, in fact, up for sale.

On May 9, 2002, Locsin, through counsel, sent Carlos a letter

requesting the return of the property since her signature in the purported
deed of sale in favor of Bolos was a forgery. In a letter-reply dated May 20,
2002, Carlos denied Locsins request, claiming that he was unaware of any
defect or flaw in Bolos title and he is, thus, an innocent purchaser for value
and good faith.

The RTC rendered a Decision dismissing the complaint and finding for
respondents, as defendants thereat, holding that: (a) there is insufficient
evidence to show that Locsins signature in the Deed of Absolute Sale
between her and Bolos is a forgery; (b) the questioned deed is a public
document, having been notarized; thus, it has, in its favor, the presumption
of regularity; (c) Locsin cannot simply rely on the apparent difference of the
signatures in the deed and in the documents presented by her to prove her
allegation of forgery; (d) the transfers of title from Bolos to Carlos and from
Carlos to the spouses Guevara are valid and regular; (e) Bernardo, Carlos,
and
the
spouses
Guevara
are
all
buyers
in
good
faith.
The CA, in its assailed Decision, ruled that it was erroneous for the RTC
to hold that Locsin failed to prove that her signature was forged. In its
appreciation of the evidence, the CA found that, indeed, Locsins signature in
the Deed of Absolute Sale in favor of Bolos differs from her signatures in the
other documents offered as evidence. The CA, however, affirmed the RTCs
finding that herein respondents are innocent purchasers for value.
Issues: 1. Whether or not respondents are innocent purchasers for value.
2. Whether or not nominal damages should be awarded.
SC: 1. No.
General Rule: An innocent purchaser for value is one who buys the
property of another without notice that some other person has a right to or
interest in it, and who pays a full and fair price at the time of the purchase or
before receiving any notice of another persons claim. As such, a defective
titleor one the procurement of which is tainted with fraud and
misrepresentationmay be the source of a completely legal and valid title,
provided that the buyer is an innocent third person who, in good faith, relied
on the correctness of the certificate of title, or an innocent purchaser for
value.
Complementing this is the mirror doctrine which echoes the doctrinal
rule that every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and is in no way obliged
to go beyond the certificate to determine the condition of the property.
Exception:
[A] person dealing with registered land has a right to rely on the Torrens
certificate of title and to dispense with the need of inquiring further except
when the party has actual knowledge of facts and circumstances that would
impel a reasonably cautious man to make such inquiry or when the
purchaser has knowledge of a defect or the lack of title in his vendor or of
sufficient facts to induce a reasonably prudent man to inquire into the status

of the title of the property in litigation. The presence of anything which

excites or arouses suspicion should then prompt the vendee to look beyond
the certificate and investigate the title of the vendor appearing on the face
of said certificate. One who falls within the exception can neither be
denominated an innocent purchaser for value nor a purchaser in good faith
and, hence, does not merit the protection of the law
In the case at bar, Bolos certificate of title was concededly free from
liens and encumbrances on its face. However, the failure of Carlos and the
spouses Guevara to exercise the necessary level of caution in light of the
factual milieu surrounding the sequence of transfers from Bolos to
respondents bars the application of the mirror doctrine and inspires the
Courts
concurrence
with
petitioners
proposition.
Carlos is not an innocent purchaser for value
Foremost, the Court is of the view that Bernardo negotiated with Bolos
for the property as Carlos agent. This is bolstered by the fact that he was
the one who arranged for the sale and eventual registration of the property
in Carlos favor.
At this point it is well to emphasize that entering into a compromise
agreement is an act of strict dominion. If Bolos already acquired ownership of
the property as early as 1979, it should have been her who entered into a
compromise agreement with Aceron in 1993, not her predecessor-in-interest,
Locsin, who, theoretically, had already divested herself of ownership thereof.
The spouses Guevara are not innocent purchasers for value
As regards the transfer of the property from Carlos to the spouses
Guevara, the Court found the existence of the sale highly suspicious. For
one, there is a dearth of evidence to support the respondent spouses
position that the sale was a bona fide transaction. Even if the Court would
repeatedly sift through the evidence on record, still it cannot find any
document, contract, or deed evidencing the sale in favor of the spouses
Guevara.
2. Yes.
Locsin
is
entitled
to
nominal
damages.
The reason is that, first, the Court notes that petitioner failed to
specifically pray that moral damages be awarded. Additionally, she
never invoked any of the grounds that would have warranted the award of
moral damages. As can be gleaned from the records, lacking from her
testimony is any claim that she suffered any form of physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, or any other similar circumstance.

Thus, the Court was constrained to refrain from awarding moral damages in
favor
of
petitioner.
Second, exemplary damages cannot be awarded in favor of petitioner.
Well-settled that this species of damages is allowed only in addition to moral
damages such that no exemplary damages can be awarded unless the
claimant first establishes his clear right to moral damages.
Consequently, despite the Court's finding that respondents acted in a
fraudulent manner, petitioners claim for exemplary damages is unavailing at
this
point.
Thus, an award for nominal damages was done. Under prevailing
jurisprudence, nominal damages are recoverable where a legal right is
technically violated and must be vindicated against an invasion that has
produced no actual present loss of any kind or where there has been a
breach of contract and no substantial injury or actual damages
whatsoever have been or can be shown.

Topic: Moral Damages

Ponente: Arturo D. Brion
WPM International Trading, Inc. and Warlito P. Manlapaz v. Fe
Corazon Labayen
G.R. No. 182770, September 17, 2014
Facts:
The respondent, Fe Corazon Labayen, is the owner of H.B.O.
Systems Consultants, a management and consultant firm. The petitioner,
WPM International Trading, Inc. (WPM), is a domestic corporation engaged in
the restaurant business, while Warlito P. Manlapaz (Manlapaz) is its president.
Sometime in 1990, WPM entered into a management agreement with
the respondent, by virtue of which the respondent was authorized to
operate, manage and rehabilitate Quickbite, a restaurant owned and
operated by WPM. As part of her tasks, the respondent looked for a
contractor who would renovate the two existing Quickbite outlets in
Divisoria, Manila and Lepanto St., University Belt, Manila. Pursuant to the
agreement, the respondent engaged the services of CLN Engineering
Services (CLN) to renovate Quickbite-Divisoria at the cost of P432,876.02. On
June 13, 1990, Quickbite-Divisorias renovation was finally completed, and its
possession was delivered to the respondent. However, out of the
P432,876.02 renovation cost, only the amount of P320,000.00 was paid to
CLN, leaving a balance of P112,876.02.
On October 19, 1990, CLN filed a complaint for sum of money and

damages before the RTC against the respondent and Manlapaz,. CLN later
amended the complaint to exclude Manlapaz as defendant. The respondent
was declared in default for her failure to file a responsive pleading.
The RTC, in its January 28, 1991 decision, found the respondent liable to pay
CLN actual damages in the amount of P112,876.02 with 12% interest per
annum from June 18, 1990 (the date of first demand) and 20% of the amount
recoverable as attorneys fees.
The RTC held that the respondent is entitled to indemnity from Manlapaz.
The RTC found that based on the records, there is a clear indication that WPM
is a mere instrumentality or business conduit of Manlapaz and as such, WPM
and Manlapaz are considered one and the same. The RTC also found that
Manlapaz had complete control over WPM considering that he is its
chairman, president and treasurer at the same time. The RTC thus concluded
that Manlapaz is liable in his personal capacity to reimburse the respondent
the amount she paid to CLN in connection with the renovation agreement.
The CA affirmed, with modification on the award of attorneys fees, the
decision of the RTC. The CA held that the petitioners are barred from raising
as a defense the respondents alleged lack of authority to enter into the
renovation agreement in view of their tacit ratification of the contract.
Issue: Whether or not the award of moral damages is in order.
SC: Yes.
This is in view of WPMs unjustified refusal to pay a just debt. Under
Article 2220 of the New Civil Code, moral damages may be awarded in cases
of a breach of contract where the defendant acted fraudulently or in
bad faith or was guilty of gross negligence amounting to bad faith.
In the present case, when payment for the balance of the renovation
cost was demanded, WPM, instead of complying with its obligation, denied
having authorized the respondent to contract in its behalf and accordingly
refused to pay. Such cold refusal to pay a just debt amounts to a breach of
contract in bad faith, as contemplated by Article 2220.

Topic: Torrens Title in relation to execution of judgments

Ponente: Arturo D. Brion
Juanario G. Campit vs. Isidra B. Gripa, et al.
G.R. No. 195443, September 17, 2014
Facts:
Subject of this case is a 2.7360-hectare agricultural land situated
in Umangan, Mangatarem, Pangasinan, presently occupied by respondents
Isidra B. Gripa, Pedro Bardiaga, and Severino Bardiaga, represented by his
son Rolando Bardiaga, but covered by a Transfer Certificate of Title issued in
the petitioners name.
The petitioner claimed to have purchased the
property from his father Jose Campit in 1977.
On the other hand, respondents Isidra Gripa, Pedro Bardiaga and
Severino Bardiaga (as represented by his son, Rolando Bardiaga) claimed to
be the rightful owners of the subject property, as earlier adjudged by the
court in Civil Case No. 11858 decided on June 12, 1961, and in Civil Case No.
15357 decided on August 8, 1978.
The Court, in these cases, cancelled the titles of the petitioner and his
father Jose because they were obtained through the misrepresentation of the
petitioners grandfather, Isidro Campit. The respondents further contended
that they have long desired to divide the subject property among
themselves, but the petitioner adamantly refused to surrender his title to the
property to them, or to the Register of Deeds, despite their formal demand.

Due to the petitioners continued refusal to surrender the subject TCT,

the respondents filed anew an action for annulment and cancellation of title.
The petitioner opposed the respondents action and argued that the August
8, 1978 decision in Civil Case No. 15357, which declared his title null and
void, could no longer be enforced because its execution was already barred
by the Statute of Limitations, as the said decision was never executed within
10 years from July 19, 1979 - the date of finality of the judgment.
The CA affirmed the RTC and held that: Not being the true owner of the
subject property, the subsequent issuance of a certificate of title to the
defendant-appellant does not vest him ownership over the subject land.
Registration of real property under the Torrens System does not create or
vest title because it is not a mode of acquiring ownership.
Issue: Whether or not the petitioners title to the subject property was
cancelled.
SC: Yes.
The issue on the validity of the petitioners title to the subject property
has long been settled in Civil Case No. 15357, where the court, in its decision
dated August 8, 1978, which became final and executory on July 19, 1979,
had found and declared the petitioners title null and void by reason of fraud
and misrepresentation. A matter adjudged with finality by a competent court
having jurisdiction over the parties and the subject matter already
constitutes res judicata in another action involving the same cause of action,
parties and subject matter.
The doctrine of res judicata 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 as an absolute bar to
subsequent actions involving the same claim, demand, or cause of action.
Thus, the validity of petitioners title, having been settled with finality in Civil
Case No. 15357, could no longer be reviewed in the present case.
The August 8, 1978 decision in Civil Case No. 15357, however, was not
executed or enforced within the time allowed under the law. Under Section
6, Rule 39 of the Rules of Court, a final and executory judgment may be
executed by the prevailing party as a matter of right by mere motion within
five (5) years from the entry of judgment, failing which the judgment is
reduced to a mere right of action which must be enforced by the institution
of a complaint in a regular court within ten (10) years from finality of the
judgment.
It appears that no motion or action to revive judgment was ever filed
by the respondents - the prevailing party in Civil Case No. 15357, to execute
and enforce the August 8, 1978 decision. The title to the subject property,
therefore, remained registered under the petitioners name.
As the
petitioner argued, his title had already become incontrovertible since the
Torrens system of land registration provides for the indefeasibility of the
decree of registration and the certificate of title issued upon the expiration of

one (1) year from the date of entry of the registration decree.
Petitioner, however, cannot be allowed to maintain his title and
benefit from the fruit of his and his predecessors fraudulent acts at
the expense of the respondents who are the rightful owners of the
subject property. The Torrens system of registration cannot be used to
protect a usurper from the true owner, nor can it be used as a shield
for the commission of fraud, or to permit one to enrich oneself at
the expense of others.
Notwithstanding the indefeasibility of the Torrens title, the registered
owner can still be compelled under the law to reconvey the property
registered to the rightful owner16 under the principle that the property
registered is deemed to be held in trust for the real owner by the
person in whose name it is registered. The party seeking to recover title
to property wrongfully registered in another persons name must file an
action for reconveyance within the allowed period of time.
General Rule: An action for reconveyance based on an implied or
constructive trust prescribes in ten (10) years from the issuance of the
Torrens title over the property.
Exception: When the plaintiff is in possession of the subject property,
the action, being in effect that of quieting of title to the property, does
not prescribe.
In the present case, the respondents, who are the plaintiffs in Civil
Case No. 18421 (the action for annulment and cancellation of title filed in
2003), have always been in possession of the subject property. Petitioner
never did dispute the respondents' possession; neither did he even possess
the land in question.
Therefore, considering that the action for annulment and cancellation
of title filed by the respondents is substantially in the nature of an action for
reconveyance based on an implied or constructive trust, combined with the
fact that the respondents have always been in possession of the subject
property, Civil Case No. 18421 was treated as an action to quiet title,
the filing of which does not prescribe. Accordingly, the respondents
filing of Civil Case No.18421 is proper and not barred by the time
limitations set forth under the Rules of Court in enforcing or executing a
final and executory judgment.

Topic: Damages
Ponente: Jose P. Perez
Cesar V. Areza and Lolita B. Areza v. Express Savings Bank, Inc. and
Michael Potenciano
G.R. No. 176697, September 10, 2014

Facts:
Petitioners Cesar V. Areza and Lolita B. Areza maintained two
bank deposits with respondent Express Savings Banks Bian branch: 1)
Savings Account No. 004-01-000185-5 and 2) Special Savings Account No.
004-02-000092-3. They were engaged in the business of buy and sell of
brand new and second-hand motor vehicles. On 2 May 2000, they received
an order from a certain Gerry Mambuay (Mambuay) for the purchase of a
second-hand Mitsubishi Pajero and a brand-new Honda CRV.
The buyer, Mambuay, paid petitioners with nine (9) Philippine Veterans
Affairs Office (PVAO) checks payable to different payees and drawn against
the Philippine Veterans Bank (drawee), each valued at Two Hundred
Thousand Pesos (P200,000.00) for a total of One Million Eight Hundred
Thousand Pesos (P1,800,000.00). About this occasion, petitioners claimed
that Michael Potenciano (Potenciano), the branch manager of respondent
Express Savings Bank (the Bank) was present during the transaction and
immediately offered the services of the Bank for the processing and eventual
crediting of the said checks to petitioners account. On the other hand,
Potenciano countered that he was prevailed upon to accept the checks by
way of accommodation of petitioners who were valued clients of the Bank
Sometime in July 2000, the subject checks were returned by PVAO to
the drawee on the ground that the amount on the face of the checks was
altered from the original amount of P4,000.00 to P200,000.00. The drawee
returned the checks to Equitable-PCI Bank by way of Special Clearing
Receipts. In August 2000, the Bank was informed by Equitable-PCI Bank that
the drawee dishonored the checks on the ground of material alterations.
Equitable-PCI Bank initially filed a protest with the Philippine Clearing House.
In February 2001, the latter ruled in favor of the drawee Philippine Veterans
Bank. Equitable-PCI Bank, in turn, debited the deposit account of the Bank in
the amount of P1,800,000.00.
On 9 March 2001, petitioners issued a check in the amount of
P500,000.00. Said check was dishonored by the Bank for the reason
Deposit Under Hold. According to petitioners, the Bank unilaterally and
unlawfully put their account with the Bank on hold. On 22 March 2001,
petitioners counsel sent a demand letter asking the Bank to honor their
check. The Bank refused to heed their request and instead, closed the
Special Savings Account of the petitioners with a balance of P1,179,659.69
and transferred said amount to their savings account. The Bank then
withdrew the amount of P1,800,000.00 representing the returned checks
from petitioners savings account.
Acting on the alleged arbitrary and groundless dishonoring of their
checks and the unlawful and unilateral withdrawal from their savings
account, petitioners filed a Complaint for Sum of Money with Damages
against the Bank and Potenciano with the RTC of Calamba and ruled ruled in

favor of petitioners.
Issue: Whether or not the acts of respondents warrant the award of
damages.
SC: Yes
The Bank incurred a delay in informing petitioners of the checks
dishonor. The Bank was informed of the dishonor by Equitable-PCI Bank as
early as August 2000 but it was only on 7 March 2001 when the Bank
informed petitioners that it will debit from their account the altered amount.
This delay is tantamount to negligence on the part of the collecting bank
which would entitle petitioners to an award for damages under Article 1170
of the New Civil Code which reads: Art. 1170. Those who in the
performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof,
are liable for damages.
The damages in the form of actual or compensatory damages
represent the amount debited by the Bank from petitioners account.
However, the Court deleted the award of moral damages. Contrary to
the lower courts finding, there was no showing that the Bank acted
fraudulently or in bad faith. It may have been remiss in its duty to
diligently protect the account of its depositors but its honest but mistaken
belief that petitioners account should be debited is not tantamount to bad
faith.
Likewise deleted was the award of attorneys fees for it is not a sound
public policy to place a premium on the right to litigate. No damages can
be charged to those who exercise such precious right in good faith,
even if done erroneously. To recap, the drawee bank, Philippine Veterans
Bank in this case, is only liable to the extent of the check prior to alteration.
Since Philippine Veterans Bank paid the altered amount of the check, it may
pass the liability back as it did, to Equitable-PCI Bank, the collecting bank.
The collecting banks, Equitable-PCI Bank and the Bank, are ultimately liable
for the amount of the materially altered check. It cannot further pass the
liability back to the petitioners absent any showing in the negligence on the
part of the petitioners which substantially contributed to the loss from
alteration.

Topic: Legitimacy or Illegitimacy of a child; Extrajudicial Settlement;

Torrens Title
Ponente: Jose P. Perez
Heirs of Valentin Basbas, et al. vs. Ricardo Basbas
G.R. No. 188773, September 10, 2014
Facts:
Severo Basbas was married to Ana Rivera. Severo died on July
14, 1911. They had a child named Valentin (Basbas). During Severos
lifetime, he acquired a parcel of land in Santa Rosa, Laguna otherwise known
as Lot No. 39 of the Santa Rosa Detached Estate.
Ricardo and Crispiniano filed a petition for the reconstitution of the title
covering said property. They succeeded. Thereafter, claiming to be Severo's
only heirs, Ricardo and Crispiniano executed an Extra-Judicial Settlement of
Estate of deceased Severo Basbas, stating among others that the only heirs
of Severo Basbas are Felomino Basbas (their father; Severo's grandson
through Nicolas, allegedly) and Melencio Casubha. Consequently, the OCT
was cancelled and a TCT was issued in the names of therein defendants
Crispiniano Basbas and respondent Ricardo Basbas. Petitioners, as heirs also,
then brought the matter to the Barangay but no settlement was reached.
Hence, an action was filed before the MTC. Petitioners filed an Action for
Annulment of Title, Reconveyance with Damages against Crispiniano and
Ricardo.
Crispiniano and Ricardo denied petitioners ownership over Lot No. 39
and contended that upon Severos death, he was survived by two heirs,
Valentin (grandfather of petitioners) and Nicolas Basbas (Nicolas) (paternal
grandfather of Crispiniano and Ricardo) who evenly divided Severos estate.
The trial court ruled that the petitioners succeeded in proving their
filiation, while the Crispiniano and Ricardo did not. The appellate court ruled
that said declaration should have been done in a separate proceeding.
Issue: 1. Whether or not the trial court is correct in making a declaration of
heirship in the civil action.
2. Whether or not the Extrajudicial Settlement is valid.
SC: Yes.
Valentins long-possessed status as a legitimate child and thus, heir of
Severo, need no longer be the subject of a special proceeding for declaration
of heirship as envisioned by the Court of Appeals. There is no need to redeclare his statusas an heir of Severo.

And, contraposed to the fact that Valentins status as a legitimate child

of Severo is already established, Nicolas status as a purported heir of Severo
can no longer be established, Nicolas right thereto expiring upon his death.
Glaringly, there is no pretension from respondents end that Nicolas
was born of a valid marriage, only that he is Severos son. Nonetheless, even
if respondents were minded to establish the status of Nicolas, whether he is
a legitimate or an illegitimate child of Severo, such can no longer be
done.
Article 165, in relation to Articles 173 and 175, of the Family Code and Article
285 of the Civil Code state:
Art. 165. Children conceived and born outside a valid marriage are
illegitimate, unless otherwise provided in this Code.
Chapter 3. Illegitimate Children
Art. 173. The action to claim legitimacy may be brought by the child during
his or her lifetime and shall be transmitted to the heirs should the child die
during minority or in a state of insanity. In these cases, the heirs shall have a
period of five years within which to institute the action.
Art. 175. Illegitimate children may establish their illegitimate filiation in the
same way and on the same evidence as legitimate children. The action must
be brought within the same period specified in Article 173, except when the
action is based on the second paragraph of Article 172, in which case the
action may be brought during the lifetime of the alleged parent.
CHAPTER 4
ILLEGITIMATE CHILDREN
SECTION 1. - Recognition of Natural Children
Art. 285. The action for the recognition of natural children may be brought
only during the lifetime of the presumed parents, except in the following
cases:
(1) If the father or mother died during the minority of the child, in which case
the latter may file the action beforethe expiration of four years from the
attainment of his majority;
(2) If after the death of the fatheror of the mother a document should appear
of which nothing had been heard and in which either or both parents
recognize the child.

In this case, the action must be commenced within four years from the
finding of the document.
Thus, there is no need for a separate proceeding for a declaration of the
heirs of Severo in order to resolve petitioners Action for Annulment of Title
and Reconveyance of the subject property. Prescinding from the foregoing, a
closer scrutiny of the documents presented in evidence by Crispiniano and
Ricardo before the trial court, betray the fraudulence of their claim.
2. No.
The Court emphasized again that the indefeasibility of a Torrens Title is
not absolute. Where it was obtained through fraud, the person concerned
shall hold the property in trust for the lawful owner (Article 1456, New Civil
Code). Also, Valentins rights to the succession vested from the moment of
death of the decedent Severo. In turn, petitioners, as Heirs of Valentin, who
is an uncontested heir of decedent Severo, rights to the succession vested
from the moment of Valentins death. As such, they own Lot No. 39,
undisputedly titled in Severos name and forming part of Severos estate,
and are entitled to the titling thereof in their names.
The evidence presented by Crispiniano and Ricardo highlight the
fraudulence of their claim:
1. Title to Lot No. 39 is not in their names, neither is it titled in the name of
their predecessors-in-interest, Nicolas and Felomino Basbas;
2. Crispiniano and Ricardo are not the only heirs of Severo, if they are even
heirs to begin with.
Thus, the extrajudicial settlement exclusively adjucating unto
themselves is not valid. They cannot deprive the other heirs of the owner,
Severo.

Topic: Laches
Ponente: Estela Perlas-Bernabe
Spouses Francisco Sierra and Antonina Santos, et al. v. PAIC Savings
and Mortgage Bank
G.R. No. 197857, September 10, 2014
Facts:
On May 31, 1983, Goldstar Conglomerates, Inc. (GCI),
represented by Guillermo Zaldaga (Zaldaga), obtained from First Summa
Savings and Mortgage Bank (Summa Bank), now respondent Paic Savings
and Mortgage Bank, Inc. (PSMB), a loan in the amount of P1,500,000.00 as
evidenced by a Loan Agreement dated May 31, 1983. As security therefor,
GCI executed in favor of PSMB six (6) promissory notes in the aggregate
amount of P1,500,000.00 as well as a Deed of Real Estate Mortgage over a
parcel of land covered by Transfer Certificate of Title (TCT) No. 308475.
As additional security, petitioners Francisco Sierra, Rosario Sierra, and
Spouses Felix Gatlabayan and Salome Sierra mortgaged four(4) parcels of
land in Antipolo City, covered by TCT Nos. 308476, 308477, 308478, and
308479, and respectively registered in their names (subject properties).
Records show that after the signing of the mortgage deed, Zaldaga gave
petitioner Francisco Sierra four (4) managers checks with an aggregate
amount of P200,000.00, which werelater successfully encashed, as well as
several post-dated checks.
Eventually, GCI defaulted in the payment of its loan to PSMB, thereby
prompting the latter to extrajudicially foreclose the mortgage on the subject
properties in accordance with Act No. 3135,12 as amended, with due notice
to petitioners. In the process, PSMB emerged as the highest bidder in the
public auction sale.
Petitioners filed a complaint for the declaration of nullity of the real
estate mortgage and its extrajudicial foreclosure, and damages against PSMB
and Summa Bank before the RTC, docketed as Civil Case No. 91-2153.
In the said complaint, petitioners averred that under pressing need of

money, with very limited education and lacking proper instructions, they fell
prey to a group who misrepresented to have connections with Summa Bank
and, thus, could help them secure a loan. They were made to believe that
they applied for a loan, the proceeds of which would be released through
checks drawn against Summa Bank. Relying in good faith on the checks
issued to them, petitioners unsuspectingly signed a document denominated
as Deed of Real Estate Mortgage (subject deed), couched in highly technical
legal terms, which was not interpreted in a language/dialect known to them,
and which was not accompanied by the loan documents. However, when
they presented for payment the earliest-dated checks to the drawee bank,
the same were dishonored for the reason "Account Closed." Upon
confrontation, some members of the group assured petitioners that there
was only a misunderstanding and that their certificates of titles would be
returned. Subsequently, petitioners learned that: (a) the loan account
secured by the real estate mortgage was in the name of another person and
not in their names as they were made to understand; (b) despite lack of
special authority from them, foreclosure proceedings over the subject
properties were initiated by PSMB and not Summa Bank in whose favor the
mortgage was executed; (c) the period of redemption had already lapsed;
and (d) the ownership over the subject properties had already been
consolidated in the name of PSMB.
Petitioners likewise lamented that they were not furnished copies of
the loan and mortgage documents, or notified/apprised of the assignment to
PSMB, rendering them unable to comply with their obligations under the
subject deed. They further claimed that they were not furnished a copy of
the statement of account, which was bloated with unconscionable and
unlawful charges, assessments, and fees, nor a copy of the petition for
foreclosure prior to the precipitate extrajudicial foreclosure and auction sale
which failed to comply with the posting and notice requirements.
In light of the foregoing, petitioners prayed that the real estate
mortgage and the subsequent foreclosure proceedings, and all derivative
titles and rights arising therefrom be declared null and void ab initio, and
that the subject properties be reconveyed back to them, with further prayer
for compensatory and exemplary damages, and attorneys fees.
The RTC : (a) declared the subject deed and the extrajudicial
foreclosure proceedings null and void; (b) cancelled the certificates of title of
PSMB; and (c) directed the reinstatement of petitioners certificates of title.
The CA reversed and set aside the RTC Decision and dismissed
petitioners complaint for lack of merit. It held that petitioners were not able
to sufficiently prove their claim that they were uneducated and/or
unschooled, rejecting the self-serving and uncorroborated testimony of
petitioner Francisco Sierra on such claim. The CA likewise ruled that the
action to annul the subject deed had already prescribed, since the same was
brought more than four (4) years from the discovery of the mistake or fraud,
reckoned from the time the earliest checks issued to petitioners were
dishonored, or on January 9, 1984, this being the time the consideration or

price for the execution of the subject deed turned out to be false.
The CA further held that petitioners were barred by laches from
asserting any claim on the subject properties considering that despite receipt
of the letter dated June 11, 1984 informing them of the scheduled auction
sale, they failed to attend the sale or file an adverse claim, or to thereafter
redeem the subject properties.
Issue: Whether or not the complaint is barred by laches.
SC: Yes
As correctly observed by the CA, the testimony of petitioner Francisco
Sierra as to petitioners respective educational backgrounds remained
uncorroborated. The other petitioners-signatories to the deed never testified
that their educational background prevented them from knowingly executing
the subject deed as mere accommodation mortgagors. Petitioners claim of
lack of "proper instruction on the intricacies in securing [the] loan from the
bank" is further belied by the fact that petitioners Francisco and Rosario
Sierra had previously mortgaged two (2) of the subject properties twice to
the Rural Bank of Antipolo. Thus, there being valid consent on the part of
petitioners to act as accommodation mortgagors, no reversible error was
committed by the CA in setting aside the RTCs Decision declaring the real
estate mortgage as void for vices of consent and awarding damages to
petitioners.
Based on case law, a "mortgage action" refers to an action to enforce a
right necessarily arising from a mortgage. In the present case, petitioners are
not "enforcing" their rights under the mortgage but are, in fact, seeking to be
relieved therefrom. The complaint filed by petitioners is, therefore, not a
mortgage action as contemplated under Article 1142.
In any event, even assuming that petitioners have a valid cause of
action, the four-year prescriptive period on voidable contracts shall
apply. Since the complaint for annulment was anchored on a claim of
mistake, i.e., that petitioners are the borrowers under the loan secured by
the mortgage, the action should have been brought within four (4) years
from its discovery.
A perusal of the complaint, however, failed to disclose when petitioners
learned that they were not the borrowers under the loan secured by the
subject mortgage. Nonetheless, considering that petitioners admitted receipt
on June 19, 198462 of PSMBs letter dated June 11, 1984 informing them of
the scheduled foreclosure sale on June 27, 1984 due to GCIs breach of its
loan obligation secured by the subject properties, the discovery of the
averred mistake should appear to be reckoned from June 19, 1984,
and not from the dishonor of the checks on January 9, 1984 as ruled

by the CA.
As the records disclose, despite notice on June 19, 1984 of the
scheduled foreclosure sale, petitioners, for unexplained reasons, failed to
impugn the real estate mortgage and oppose the public auction sale for a
period of more than seven (7) years from said notice. As such,
petitioners' action is already barred by Laches, which, as case law holds,
operates not really to penalize neglect or sleeping on one's rights, but rather
to avoid recognizing a right when to do so would result in a clearly
inequitable situation.

Topic: Torts/unfair competition

Ponente: Estela Perlas-Bernabe
Roberto Co v. Keng Huan Jerry Yeung and Emma Yeung
G.R. No. 212705, September 10, 2014
Facts:
On July 27, 2000, Sps. Yeung filed a civil complaint for trademark
infringement and unfair competition before the RTC against Ling Na Lau, her
sister Pinky Lau (the Laus), and Co for allegedly conspiring in the sale of
counterfeit Greenstone products tothe public. In the complaint, Sps. Yeung
averred that on April 24, 2000, Emmas brother, Jose Ruivivar III (Ruivivar),
bought a bottle of Greenstone from Royal Chinese Drug Store (Royal) in
Binondo, Manila, owned by Ling Na Lau.However, when he used the product,

Ruivivar doubted its authenticity considering that it had a different smell,

and the heat it producedwas not as strong as the original Greenstone he
frequently used. Having been informed by Ruivivar of the same, Yeung,
together with his son, John Philip, went to Royal on May 4, 2000 to
investigate the matter, and, there, found seven (7) bottles of counterfeit
Greenstone on display for sale. He was then told by Pinky Lau (Pinky) the
stores proprietor thatthe items came from Co of Kiao An Chinese Drug
Store. According to Pinky, Co offered the products on April 28, 2000 as
"Tienchi Fong Sap Oil Greenstone" (Tienchi) which she eventually availed
from him. Upon Yeungs prodding, Pinky wrote a note stating these events.
In defense, Co denied having supplied counterfeit items to Royal and
maintained that the stocks of Greenstone came only from Taka Trading.
Meanwhile, the Laus denied selling Greenstone and claimed that the seven
(7) items of Tienchi were left by an unidentified male person at the counter
of their drug store and that when Yeung came and threatened to report the
matter to the authorities, the items were surrendered to him. As to Pinkys
note, it was claimed that she was merely forced by Yeung to sign the same.
The RTC ruled in favor of Sps. Yeung, and accordingly ordered Co and
the Laus to pay Sps. Yeung: (a) P300,000.00 as temperate damages; (b)
P200,000.00 as moral damages; (c) P100,000.00 as exemplary damages; (d)
P100,000.00 as attorneys fees; and (e) costs of suit.
The CA affirmed the RTC Decision, pointing out that in the matter of
credibility of witnesses, the findings of the trial court are given great weight
and the highest degree of respect.13 Accordingly, it sustained the RTCs
finding of unfair competition, considering that Sps. Yeungs evidence
preponderated over that of the Laus and Co which was observed to be
shiftyand contradictory. Resultantly, all awards of damages in favor of Sps.
Yeung were upheld.
The Laus and Co respectively moved for reconsideration but were,
however, denied in a Resolution15 dated May 29, 2014, hence, Co filed the
instant petition. On the other hand, records are bereft of any showing that
the Laus instituted any appeal before this Court.
Issue: Whether or not the CA correctly upheld Cos liability for unfair
competition.
SC: Yes
Unfair competition is defined as the passing off (or palming off) or
attempting to pass off upon the public of the goods or business of one
person as the goods or business of another with the end and probable effect

of deceiving the public. This takes place where the defendant gives his goods
the general appearance ofthe goods of his competitor with the intention of
deceiving the public that the goods are those of his competitor.
Here, it has been established that Coconspired with the Laus in the
sale/distribution of counterfeit Greenstone products to the public, which were
even packaged in bottles identical to that of the original, thereby giving rise
to the presumption of fraudulent intent.19 In light of the foregoing definition,
it is thus clear that Co, together with the Laus, committed unfair competition,
and should, consequently, beheld liable therefor. To this end, the Court finds
the award of P300,000.00 as temperate damages to be appropriate in
recognition of the pecuniary loss suffered by Sps. Yeung, albeit its actual
amount cannot, from the nature of the case, as it involves damage to
goodwill, be proved with certainty.20 The awards of moral and exemplary
damages, attorney's fees, and costs of suit are equally sustained for the
reasons already fully-explained by the courts a quo in their decisions.
Although liable for unfair competition, the Court deems it apt to clarify
that Co was properly exculpated from the charge of trademark infringement
considering that the registration of the trademark "Greenstone" essential
as it is in a trademark infringement case was not proven to have existed
during the time the acts complained of were committed, i.e., in May 2000. In
this relation, the distinctions between suits for trademark infringement and
unfair competition prove useful: (a) the former is the unauthorized use of a
trademark, whereas the latter is the passing off of one's goods as those of
another; (b) fraudulent intent is unnecessary in the former, while it is
essential in the latter; and (c) in the former, prior registration of the
trademark is a pre-requisite to the action, while it is not necessary in the
latter.

Topics:

Obligations and Contracts; Interest not in writing

Ponente: Mariano C. Del Castillo

Dela Paz v. L & J Development Company

G.R. No. 183360, September 08, 2014

Facts:
Petitioner lent P350,000.00 without any security to L&J, a
property developer. The loan, with no specified maturity date, carried a 6%
monthly interest, i.e., P21,000.00. From December 2000 to August 2003, L&J
paid petitioner a total of P576,000.007 representing interest charges. As L&J
failed to pay despite repeated demands, petitoner filed a Complaint for
Collection of Sum of Money with Damages against L&J and Atty. Salonga in
his personal capacity as President and General Manager. He alleged, among
others, that L&Js debt as of January 2005, inclusive of the monthly interest,
stood at P772,000.00; that the 6% monthly interest was upon Atty. Salongas
suggestion; and, that the latter tricked him into parting with his money
without the loan transaction being reduced into writing.
In their Answer, L&J and Atty. Salonga denied petitioners allegations.
While they acknowledged the loan as a corporate debt, they claimed that the
failure to pay the same was due to a fortuitous event, that is, the financial
difficulties brought about by the economic crisis. They further argued that
petitioner cannot enforce the 6% monthly interest for being unconscionable
and shocking to the morals. Hence, the payments already made should be
applied to the P350,000.00 principal loan.

Issues:

1) Whether or not the imposition of interest valid

2) Whether or not the principal loan deemed paid dependent on the

validity of the monthly interest
rate imposed

SC:
1)

No.

Under Article 1956 of the Civil Code, no interest shall be due unless it
has been expressly stipulated in writing. Jurisprudence on the matter also
holds that for interest to be due and payable, two conditions must concur: a)
express stipulation for the payment of interest; and b) the agreement to pay
interest is reduced in writing.
Here, it is undisputed that the parties did not put down in writing their

agreement. Thus, no interest is due. The collection of interest without any

stipulation in writing is prohibited by law.

2)

No.

It may be raised that L&J is estopped from questioning the interest rate
considering that it has been paying petitioner interest at such rate for more
than two and a half years. In fact, in its pleadings before the MeTC and the
RTC, L&J merely prayed for the reduction of interest from 6% monthly to 1%
monthly or 12% per annum. However, in Ching v. Nicdao, G.R. No.
141181, April 27, 200, the daily payments of the debtor to the lender were
considered as payment of the principal amount of the loan because Article
1956 was not complied with.
This was notwithstanding the debtors
admission that the payments made were for the interests due. The Court
categorically stated therein that [e]stoppel cannot give validity to an act
that is prohibited by law or one that is against public policy.

Topics:

Obligations and Contracts; Legal Interest

Ponente: Diosdado M. Peralta

Federal Builders, Inc. v. Foundation Specialists Inc., G.R. No. 194507

September 08, 2014

Facts:
Federal Builders, Inc. (FBI) entered into an agreement with
Foundation Specialists, Inc. (FSI) whereby the latter, as sub-contractor,
undertook to render construction services for the project for a total contract
price of P7,400,000.00.
FSI filed a complaint for Sum of Money against FBI before the RTC
seeking to collect the amount of P1,635,278.91, representing Billings No. 3
and 4, with accrued interest from August 1, 1991 plus moral and exemplary
damages with attorneys fees. FSI alleged that FBI refused to pay said
amount despite demand and its completion of ninety-seven percent (97%) of
the contracted works.
The RTC ruled in favor of FSI and ordered FBI to pay the sum of
P1,024,600.00 representing billings 3 and 4, less the amount of P33,354.40
plus 12% legal interest from August 30, 1991.
FBI opposed the
impositon of 12% annual interest rate on the amount of Billings 3 and 4.

Issue:
valid?

Whether or not the imposition of 12% interest rate per annum

SC: No.
The recent circular of the Monetary Board of the Bangko Sentral ng
Pilipinas (BSP-MB) No. 799 states that:
I. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts is breached, the contravenor can be held
liable for damages. The provisions under Title XVIII on "Damages" of the Civil
Code govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual
and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum

of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Furthermore, the interest
due shall itself earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.
This case does not involve an acquiescence to the temporary use of a
partys money but a performance of a particular service, specifically the
construction of the diaphragm wall, capping beam, and guide walls of the
Trafalgar Plaza.
A review of similar jurisprudence would tell us that this Court had
repeatedly recognized this distinction and awarded interest at a rate of 6%
on actual or compensatory damages arising from a breach not only of
construction contracts, such as the one subject of this case, but also of
contracts wherein one of the parties reneged on its obligation to perform
messengerial services, deliver certain quantities of molasses, undertake the
reforestation of a denuded forest land, as well as breaches of contracts of
carriage, and trucking agreements. The Court had explained therein that the
reason behind such is that said contracts do not partake of loans or
forbearance of money but are more in the nature of contracts of service.
Thus, in the absence of any stipulation as to interest in the agreement
between the parties herein, the matter of interest award arising from the
dispute in this case necessitates the imposition of interest at the rate of 6%,
instead of the 12% imposed by the courts below.

Topic:

Unfair Competition

Ponente: Diosdado M. Peralta

Willaware
Products
Corporation

Corporation

v.

Jesichris

Manufacturing

G.R. No. 195549, September 03, 2014

Facts:
Respondent has been manufacturing and distributing throughout
the Philippines plastic-made automotive parts. Petitioner, on the other hand,
is s engaged in the manufacture and distribution of kitchenware items made
of plastic and metal has its office near that of resondent. Respondent
discovered that petitioner had been manufacturing and distributing the same
automotive parts with exactly similar design, same material and colors but
was selling these products at a lower price as respondents plastic-made
automotive parts and to the same customers.
According to respondent, petitioner deliberately copied its products all
of which acts constitute unfair competition, is and are contrary to law,
morals, good customs and public policy and have caused respondent
damages in terms of lost and unrealized profits in the amount of TWO
MILLION PESOS.
Petitioner claims that there can be no unfair competition as the plasticmade automotive parts are mere reproductions of original parts and their
construction and composition merely conforms to the specifications of the
original parts of motor vehicles they intend to replace. Thus, respondent
cannot claim that it originated the use of plastic for these automotive
parts. Even assuming for the sake of argument that respondent indeed
originated the use of these plastic automotive parts, it still has no exclusive
right to use, manufacture and sell these as it has no patent over these
products. Furthermore, respondent is not the only exclusive manufacturer of
these plastic-made automotive parts as there are other establishments which
were already openly selling them to the public.

Issue:
Whether or not petitioner commited acts amounting to to unfair
competition under Article 28 of the Civil Code

SC:

Yes.
In order to qualify the competition as unfair, it must have two

characteristics: (1) it must involve an injury to a competitor or trade rival,

and (2) it must involve acts which are characterized as contrary to good
conscience, or shocking to judicial sensibilities, or otherwise unlawful; in
the language of our law, these include force, intimidation, deceit,
machination or any other unjust, oppressive or high-handed method. The
public injury or interest is a minor factor; the essence of the matter appears
to be a private wrong perpetrated by unconscionable means.9cralawred
Here, both characteristics are present.
First, both parties are competitors or trade rivals, both being engaged
in the manufacture of plastic-made automotive parts. Second, the acts of the
petitioner were clearly contrary to good conscience as petitioner admitted
having employed respondents former employees, deliberately copied
respondents products and even went to the extent of selling these products
to respondents customers.

Topic:

Malicious Prosecution

Ponente: Mariano C. Del Castillo

Corporation v. Cordero
G.R. No. 197336, September 03, 2014

Facts:
Meyr Enterprises Corporation claims to be the registered owner
of a parcel of land. It alleged that defendant constructed a dike in front of
his land. The dike disrupted the flow of the waves of the sea causing
damages to his land. The trees in the land were allegedly in danger of being
uprooted and the sand of disappearing further. It prays for actual damages,
moral damages, and exemplary damages.
Defendant averred that the construction of the dike began through the
authority of the Local Government of Guinsiliban, Camiguin pursuant to a
resolution of the Sangguniang Bayan. He added that the alleged interruption
of the waves is unfounded and a lie because the dike does not encroach on
the plaintiffs land and in no way will it interrupt the normal action of the
waves.
Cordero argued that Meyr has no personality to sue as the area in
controversy is a foreshore land, owned by the State and under no
circumstances will it suffer any damage or injury therefrom. The area is
covered under the COMMUNITY-BASED FOREST MANAGEMENT AGREEMENT
(CBFMA), between the Department of Environment and Natural Resources
and the Cantaan Centennial Multi-Purpose Cooperative (CCMPC). Defendantappellee stated that under the CBFMA Agreement the holder thereof has the
exclusive responsibility of protecting the area, thus, he concludes that only
CCMPC has the personality to sue in court.
Defendant alleged that the property caretaker of Meyr hired several
workers and clandestinely quarried the white sand and finger gravel along
the shore of their land. He postulated that plaintiff filed the baseless suit
against him because Meyr wanted to acquire his land.

Issue:
Whether or not petitioner was guilty of malice and bad faith in
instituting the case that would result in malicious prosecution

SC:

Yes.

It will suffice for this Court to rely on the judgment of the trial and
appellate courts; [p]revailing jurisprudence uniformly holds that findings of
facts of the trial court, particularly when affirmed by the Court of Appeals,
are binding upon this Court. Their singular judgment will not be disturbed.
Thus, both tribunals unanimously held that in the first instance, petitioner
had no probable cause to complain, since it had no personality to sue, given
that the affected portion is foreshore or public land; that petitioner did not
deny that it conducted quarrying of sand and gravel which could have
caused the erosion of its own beach; that it offered to buy respondents land;
that petitioner cannot deny and in fact constructively knew that respondent
was authorized by Resolution No. 38 to construct the dike; that a previous
case filed by petitioner against respondent, based on the same facts, was
dismissed; and that as a whole, petitioners baseless accusations were
particularly intended to vex and humiliate the respondent, who openly
objected to petitioners quarrying of sand and gravel precisely because it
caused the erosion of his beach as well. Although it may have been a bit
extreme for the CA to declare that petitioner had an axe to grind against
respondent, this characterization is merely semantic; there is no
capriciousness or arbitrariness in the description, because the circumstances
leading to the conclusion that petitioner is guilty of malicious prosecution are
already present, as far as the tribunals below are concerned. This conclusion
can no longer be questioned, given the limitations petitioner is confronted
with in a recourse of this nature.
With the foregoing view, there is no need to resolve the other issues
and arguments pointed out by the petitioner, which are correspondingly
discredited. Notably, the recovery of moral damages for malicious
prosecution is allowed under Article 2219 of the Civil Code, while attorneys
fees and expenses of litigation may be adjudged in malicious prosecution
cases pursuant to Article 2208 of the same Code.

Topics:

Contracts; Fraud

Ponente: Diosdado M. Peralta

ECE Realty and Development, Inc. v. Mandap

G.R. No. 196182, September 1, 2014

Facts:
Petitioner is a corporation engaged in the building and
development of condominium units. Sometime in 1995, it started the
construction of a condominium project called Central Park Condominium
Building located in Pasay City. However, printed advertisements were made
indicating therein that the said project was to be built in Makati City. In
December 1995, respondent, agreed to buy a unit from the above project by
paying a reservation fee and, thereafter, downpayment and monthly
installments. Respondent and the representatives of petitioner executed a
Contract to Sell. In the said Contract, it was indicated that the condominium
project is located in Pasay City.
More than two years after the execution of the Contract to Sell,
respondent demanded the return of the payments she made, on the ground
that she subsequently discovered that the condominium project was being
built in Pasay City and not in Makati City as indicated in its printed
advertisements.

Issue:
Whether or not petitioner was guilty of fraud as a ground to
nullify its contract with respondent.

SC:

No.

Article 1338 of the Civil Code provides that "[t]here is fraud when
through insidious words or machinations of one of the contracting parties,
the other is induced to enter into a contract which, without them, he would
not have agreed to."
In addition, under Article 1390 of the same Code, a contract is voidable
or annullable "where the consent is vitiated by mistake, violence,
intimidation, undue influence or fraud."
Also, Article 1344 of the same Codeprovides that "[i]n order that fraud
may make a contract voidable, it should be serious and should not have
been employed by both contracting parties." Jurisprudence has shown that in
order to constitute fraud that provides basis to annul contracts, it must fulfill
two conditions.

First, the fraud must be dolo causante or it must be fraud in

obtaining the consent of the party. This is referred to as causal fraud. The
deceit must be serious. The fraud is serious when it is sufficient to impress,
or to lead an ordinarily prudent person into error; that which cannot deceive
a prudent person cannot be a ground for nullity. The circumstances of each
case should be considered, taking into account the personal conditions of the
victim.

Second, the fraud must be proven by clear and convincing

evidence and not merely by a preponderance thereof.
In the present case, this Court finds that petitioner is guilty of false
representation of a fact. This is evidenced by its printed advertisements
indicating that its subject condominium project is located in Makati City
when, in fact, it is in Pasay City. The Court agrees with the Housing and
Land Use Arbiter, the HLURB Board ofCommissioners, and the Office
of the President, in condemning petitioner's deplorable act of
making misrepresentations in its advertisementsand in issuing a
stern warning that a repetition of this act shall bedealt with more
severely.

However, insofar as the present case is concerned, the Court

agrees with the Housing and Land Use Arbiter, the HLURB Board of
Commissioners,
and
the
Office
of
the
President,
that
the
misrepresentation made by petitioner in its advertisements does
not constitute causal fraud which would have been a valid basis in
annulling the Contract to Sell between petitioner and respondent.
Indeed, evidence shows that respondent proceeded to sign the
Contract to Sell despite information contained therein that the condominium
is located in Pasay City. This only means that she still agreed to buy the
subject property regardless of the fact that it is located in a place different

from what she was originally informed. If she had a problem with the
property's location, she should not havesigned the Contract to Sell and,
instead, immediately raised this issue with petitioner. But she did not. As
correctly observed by the Office of the President, it took respondent more
than two years from the execution of the Contract to Sell to demand the
return of the amount she paid on the ground that she was misled into
believing that the subject property islocated in Makati City. In the meantime,
she continued to make payments.

In any case, even assuming that petitioners misrepresentation

consists of fraud which could bea ground for annulling their Contract to Sell,
respondent's act of affixing her signatureto the said Contract, after having
acquired knowledge of the property's actual location, can be construed as an
implied ratification thereof.
Ratification of a voidable contract is defined under Article 1393 of
the Civil Code as follows:
Art. 1393. Ratification may be effected expressly or tacitly.1wphi1 It is
understood that there is a tacit ratification if, with knowledge of the reason
which renders the contract voidable and such reason having ceased, the
person who has a right to invoke it should execute an act which necessarily
implies an intention to waive his right.
Implied ratification may take diverse forms, such as by silence or
acquiescence; by acts showing approval or adoption of the contract; or by
acceptance and retention of benefits flowing therefrom.23
Under Article 1392 of the Civil Code, "ratification extinguishes the
action to annul a voidable contract." In addition, Article 1396 of the same
Code provides that "[r]atification cleanses the contract from all its defects
from the moment it was constituted."

Topic:

Exemplary Damages

Ponente: Antonio T. Carpio

People v. Fieldad, G.R. No. 196005

October 01, 2014

Facts:
Jail Officers were inside the nipa hut searching area near the
main gate of the district jail. Accused Chan, an inmate, shoot JO2 Gamboa
with a short firearm. Meanwhile, Fieldad and Cornista grappled with JO1
Bacolor for the possession of an armalite. Cornista struck JO1 Bacolor at the
back of the head, which caused the latter to fall down. Fieldad, armed with
JO2 Gamboas gun, shot JO1 Bacolor twice. Florante Leal (Leal) took the
armalite from JO1 Bacolor and shot at JO2 Niturada.
Once outside the jail compound, Fieldad, Leal, Cornista, and Pimentel
boarded a parked Tamaraw jeep without the owners knowledge and consent.
They picked up Federico Delim and Chan along the way. Before they reached
Asingan, Pangasinan, the group alighted from the Tamaraw jeep and
transferred to a Mazda pick-up truck. When they reached San Miguel, Tarlac,
the Mazda pick-up truck turned turtle. The group abandoned the vehicle and
ran towards a cane field. Police authorities surrounded the cane field and
arrested appellants and their companions.
Appellants Charlie Fieldad, Ryan Cornista and Edgar Pimentel were
charged in conspiracy with others for the murder of two jail guards and for
carnapping.

Issue:

SC:

Whether or not there can be a claim for exemplary damages

Yes.

Consistent with prevailing jurisprudence, the trial court correctly

ordered appellant to pay to the heirs of each deceased the amounts of
P75,000.00 as civil indemnity and P50,000.00 as moral damages; however,
the amount of exemplary damages must be increased to P30,000.00.41
Exemplary damages are recoverable due to the presence of the qualifying
aggravating circumstance of treachery in the commission of the crimes.

Topics: Remedy for fraudulently acquired declaration of presumptive

death; Declaration of absence or presumptive death
Ponente: Marvic Mario Victor F. Leonen
Celerina Santos v. Ricardo Santos
G.R No. 187061, October 8, 2014
Facts: In 2007, Ricardo Santos filed a petition in the RTC to declare his wife
Celerina Santos absent or presumptively dead for the purpose of remarriage.
He alleged that after they got married in 1980, they moved to Tarlac City.
Afterwards, Celerina allegedly went to work in Hong Kong as a domestic
helper through an employment agency in Manila. Since then, she was never
heard of for almost 12 years until the date of the petition. He likewise
claimed that he exerted efforts to locate Celerina but to no avail. Hence, he
believed that she is already dead. The RTC granted the petition and Ricardo
remarried in 2008.
Also in 2008, Celerina filed a petition for annulment of judgment before
the CA on the grounds of extrinsic fraud and lack of jurisdiction. She argued
that she was deprived of her day in court since Ricardo misrepresented that
she was a resident of Tarlac City when she never resided therein. Instead, her
true residence was in Quezon City. She claimed that the allegations of
Ricardo were all untrue. She also contended that the court did not acquire
jurisdiction over Ricardo's petition because it had never been published in a
newspaper. She added that the Office of the Solicitor General and the
Provincial Prosecutor's Office were not furnished copies of Ricardo's petition.
The CA dismissed Celerinas petition for annulment of judgment for
being a wrong mode of remedy. Accordingly, the proper remedy was to file a
sworn statement before the civil registry, declaring her reappearance in
accordance with Article 42 of the Family Code.
Issue: Whether or not the dismissal of Celerinas petition is proper.
SC:

No.

If the judicial declaration of presumptive death was obtained

through extrinsic fraud, what is the proper remedy? The remedy is an
action to annul the judgment. It is the remedy when the RTCs judgment,
order, or resolution has become final, and the remedies of new trial, appeal,
petition for relief (or other appropriate remedies) are no longer available
through no fault of the petitioner. An affidavit of reappearance is not the
proper remedy when the person declared presumptively dead has never
been absent.

What are the grounds for annulment of judgment? The grounds are
extrinsic fraud and lack of jurisdiction.
What is extrinsic fraud? It is extrinsic or collateral when a litigant commits
acts outside of the trial which prevents a party from having a real contest, or
from presenting all of his case, such that there is no fair submission of the
controversy. In contrast, it is intrinsic when the fraudulent acts pertain to an
issue involved in the original action or where the acts constituting the fraud
were or could have been litigated. The contentions of Celerina in her petition
are allegations of extrinsic fraud.
What is the importance of choosing the proper remedy? The choice of
remedy is important because remedies carry with them certain admissions,
presumptions, and conditions. It is also important for purposes of
determining the status of the second marriage and the liabilities of the
spouse who, in bad faith, claimed that the other spouse was absent.
Under the Family Code what constitutes a justification for a second
marriage during the subsistence of another marriage? It is the proof of
absence of a spouse for four consecutive years, coupled with a well-founded
belief by the present spouse that the absent spouse is already dead.
What is the effect of reappearance? Under Article 42 of the Family Code,
the second marriage is in danger of being automatically terminated by the
presumptively dead spouse when he or she reappears, unless there is a
judgment annulling the previous marriage or declaring it void ab initio.
What is the effect of the filing of an affidavit of reappearance? It is
an admission on the part of the first spouse that his or her marriage to the
present spouse was terminated when he or she was declared absent or
presumptively dead.
What are the conditions before reappearance can terminate the
subsequent marriage? The conditions under Article 42 of the Family Code
are: (1) the non-existence of a judgment annulling the previous marriage or
declaring it void ab initio; (2) recording in the civil registry of the residence of
the parties to the subsequent marriage of the sworn statement of fact and
circumstances of reappearance; (3) due notice to the spouses of the
subsequent marriage of the fact of reappearance; and (4) the fact of
reappearance must either be undisputed or judicially determined.
The existence of these conditions means that reappearance does not always
immediately cause the subsequent marriage's termination. Reappearance of
the absent or presumptively dead spouse will cause the termination of the
subsequent marriage only when all the conditions enumerated in the Family

Code are present. Consequently, if the conditions are not met, the
subsequent marriage may still subsist.
Disputable presumption: When subsequent marriages are contracted
after a judicial declaration of presumptive death, a presumption arises that
the first spouse is already dead and that the second marriage is legal. This
presumption should prevail over the continuance of the marital relations with
the first spouse. The burden of proof to show that the first marriage was
not properly dissolved rests on the person assailing the validity of the second
marriage.
Prior Termination: Since the second marriage was contracted because of a
presumption that the former spouse is dead, such presumption continues
inspite of the spouse's physical reappearance, and by fiction of law, he or
she must still be regarded as legally an absentee until the subsequent
marriage is terminated as provided by law.
General Rule: A second marriage is bigamous while the first subsists.
Exception: A bigamous subsequent marriage may be considered valid when
the following are present: (1) The prior spouse had been absent for four
consecutive years; (2) The spouse present has a well-founded belief that the
absent spouse was already dead; (3) There must be a summary proceeding
for the declaration of presumptive death of the absent spouse; and (4) There
is a court declaration of presumptive death of the absent spouse.
Exception to the exception: A subsequent marriage contracted in bad
faith, even if it was contracted after a court declaration of presumptive
death, lacks the requirement of a well-founded belief that the spouse is
already dead. The first marriage will not be considered as validly terminated.
Marriages contracted prior to the valid termination of a subsisting marriage
are generally considered bigamous and void. Only a subsequent marriage
contracted in good faith is protected by law.
Therefore, the party who contracted the subsequent marriage in bad faith is
also not immune from an action to declare his subsequent marriage void for
being bigamous. The prohibition against marriage during the subsistence of
another marriage still applies.
Aside from reappearance, what are the other remedies of a person
declared as presumptively dead to terminate the subsequent
marriage? A subsequent marriage may also be terminated by filing an
action in court to prove the reappearance of the absentee and obtain a
declaration of dissolution or termination of the subsequent marriage.
Celerina contends that reappearance is not a sufficient remedy

because it will only terminate the subsequent marriage but not

nullify the effects of the declaration of her presumptive death and
the subsequent marriage. Is she correct? YES. Since an undisturbed
subsequent marriage under Article 42 of the Family Code is valid until
terminated, the children of such marriage shall be considered legitimate,
and the property relations of the spouse[s] in such marriage will be the same
as in valid marriages. If it is terminated by mere reappearance, the children
of the subsequent marriage conceived before the termination shall still be
considered legitimate. Moreover, a judgment declaring presumptive death is
a defense against prosecution for bigamy.
Can Celerina file a Petition for Declaration of Absolute Nullity of the
Subsequent Marriage? NO. A Petition for Declaration of Absolute Nullity of
Void Marriages may be filed solely by the husband or wife. This means that
even if Celerina is a real party in interest who stands to be benefited or
injured by the outcome of an action to nullify the second marriage, this
remedy is not available to her.
Topics: Obligations and Contracts; Annulment of sale and revocation
of title
Ponente: Estela M. Perlas-Bernabe
Eliza Zuniga- Santos v. Maria Divinagracia Santos- Gran, et. al
G.R. No. 197380, October 8, 2014
Facts: On January 9, 2006, Eliza Zuiga-Santos (petitioner) filed a
Complaint, later to be amended, for annulment of sale and revocation of title
respondents Maria Divina Gracia Santos-Gran (Gran) and the Register of
Deeds of Marikina City. Petitioner claimed that she was the registered owner
of three parcels of land. Allegedly, these properties were transferred to Gran
by petitioners second husband through a Deed of Sale, which could not be
located. Such transfer was discovered by petitioner in November 2005.
Petitioner then prays that Gran return to her the subject properties.
Gran filed a Motion to Dismiss, contending, inter alia, that the action
filed by petitioner had prescribed since an action upon a written contract
must be brought within ten years from the time the cause of action accrues,
or in this case, from the time of registration of the questioned documents
before the Registry of Deeds.
The RTC dismissed the Complaint which was sustained by the CA.
Issue: Whether or not the dismissal of the Complaint is proper.
SC: Yes. Petitioners cause of action had already prescribed.

It is evident that petitioner ultimately seeks for the reconveyance to

her of the subject properties through the nullification of their supposed sale
to Gran.
What is an action for reconveyance? It is one that seeks to transfer
property, wrongfully registered by another, to its rightful and legal owner.
Implied Trust: Having alleged the commission of fraud by Gran in the
transfer and registration of the subject properties in her name, there was, in
effect, an implied trust created by operation of law pursuant to Article 1456
of the Civil Code which provides: If property is acquired through mistake or
fraud, the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property comes.
Prescriptive Period:
(1) If there is an actual need to reconvey the property as when the
plaintiff is not in possession, the action for reconveyance based on implied
trust prescribes in ten (10) years, the reference point being the date of
registration of the deed or the issuance of the title.
(2) If the real owner of the property remains in possession of the
property, the prescriptive period to recover title and possession of the
property does not run against him and in such case, the action for
reconveyance would be in the nature of a suit for quieting of title which is
imprescriptible.
In this case, Gran was in possession of the subject properties, there
being an admission by the petitioner that the one property was being used
by Grans mother-in-law. Since the new titles to the subject properties in the
name of Gran were issued by the Registry of Deeds of Marikina on July 27,
1992, January 29, 1976, and November 26, 1975, respectively, the filing of
the petitioners complaint before the RTC on January 9, 2006 was beyond the
ten-year prescriptive period, warranting the Amended Complaints dismissal.

Topics: Donation; Conveyance; Unjust enrichment

Ponente: Bienvenido L. Reyes
Esperanza Carinan v. Sps. Gavino Cueto and Carmelita Cueto
G.R. No. 198636, October 8, 2014
Facts: Spouses Jose and Esperanza Carinan acquired from another person
the rights over a parcel of land which was owned by the GSIS. After the death
of Jose, the spouses Gavino and Carmelita Cueto (respondents) provided
financial assistance to Esperanza in order to pay the remaining purchase
price and to prevent the foreclosure of the property. They also paid for other
necessary expenses. Allegedly, Esperanza and her son Jazer undertook to
execute a Deed of Absolute Sale in favor of the respondents once the title
over the subject property was transferred to their names. Subsequently, the
certificate of title already under the name of Esperanza was surrendered to
the respondents. Despite demand, Esperanza and Jazer failed to comply with
their obligation. Hence, the respondents filed with the RTC a complaint for
specific performance with damages.
Esperanza and Jazer argued that there was neither a written or verbal
agreement for the transfer of the said property to the respondents names,
nor a promise for the repayment of the amounts that were paid by the
respondents. Esperanza believed that the payment made by the respondents
was a donation. Also, to require her to execute a deed of sale for the

propertys full conveyance would totally disregard the payments that she
personally made for the purchase.
Issue: Whether or not the contention of Esperanza is meritorious.
SC: No.
No donation: Between Esperanza and the respondents, there was a clear
intention for a return of the amounts which the respondents spent for the
acquisition, transfer and renovation of the subject property. Esperanzas
claim that the expenses and payments in her behalf were purely gratuitous
remained unsupported by records. She should have submitted in court a
copy of their written contract evincing such donation.
What is a donation? A donation is a simple act of liberality where a person
gives freely of a thing or right in favor of another, who accepts it (Article 725,
New Civil Code, as amended).
Unjust enrichment: Esperanzas refusal to pay back would result in unjust
enrichment, to the clear disadvantage of the respondents. The main
objective of the principle against unjust enrichment is to prevent one from
enriching himself at the expense of another without just cause or
consideration. While Esperanza claims that Gavinos generosity was the
consideration for the respondents payment of her obligations, this was not
sufficiently established.
Requisite for a valid donation of sum of money: Article 748 of the New
Civil Code, which applies to donations of money, provides that:
(1) The donation of a movable may be made orally or in writing.
(2) An oral donation requires the simultaneous delivery of the thing or
of the document representing the right donated.
(3) If the value of the personal property donated exceeds five thousand
pesos, the donation and the acceptance shall be made in writing.
Otherwise, the donation shall be
void.
Are the respondents entitled to a full conveyance of the subject
property? No. To impose the property's transfer to the respondents' names
would totally disregard Esperanza's interest and the payments which she
made for the property's purchase. Thus, the principal amount to be returned
to the respondents shall only pertain to the amounts that they actually paid
or spent.

Topic: Liability of a Surety

Ponente: Estela M. Perlas-Bernabe
Centennial Guarantee Assurance Corporation v. Universal Motors
Corporation, Rodrigo T. Janeo, Jr. Gerarfo Gelle, et al.
G.R. No. 189358, October 8, 2014
Facts: Nissan Specialist Sales Corporation (NSSC) and Reynaldo Orimaco
filed a Complaint for Breach of Contract with Damages and Prayer for
Preliminary Injunction and Temporary Restraining Order against the
respondents. The RTC issued a TRO upon the posting by NSSC and Orimaco
of a _1,000,000.00 injunction bond issued by their surety, CGAC. The TRO
was converted to a writ of preliminary injunction.
Respondents assailed before the CA the issuance of the said injunctive
writ. The CA dissolved the injunctive writ since it found out that NSSC and
Orimaco had no legal right thereto. Hence, respondents filed before the RTC
an application for damages against the injunction bond issued by CGAC in
the amount of _1,000,000.00.

The RTC dismissed the complaint for breach of contract with damages
for lack of merit. It also ruled that respondents were entitled to recover
damages against the injunction bond following the CAs decision. The RTC
then granted the Execution Pending Appeal of its Decision. Thus, CGAC
assailed the propriety of enforcing the decision against one which is not the
losing party in the case but a mere bondsman whose liability is limited to the
surety bond it issued.
Issue: Whether or not it is proper to execute the judgment against CGAC
which is a mere surety.
SC: Yes.
As the surety of NSSC, CGAC is considered by law as being the same
party as the debtor in relation to whatever is adjudged touching the
obligation of the latter, and their liabilities are interwoven as to be
inseparable. Verily, in a contract of suretyship, one lends his credit by joining
in the principal debtors obligation so as to render himself directly and
primarily responsible with him, and without reference to the solvency of the
principal. Thus, execution pending appeal against NSSC means that the
same course of action is warranted against its surety, CGAC. The same
reason stands for CGACs other principal, Orimaco, who was determined to
have permanently left the country with his family to evade execution of any
judgment against him.
*Further, Section 4(b), Rule 58 of the Rules of Court provides that the
injunction bond is answerable for all damages that may be occasioned by the
improper issuance of a writ of preliminary injunction.

Topics: Ejectment case; Co-ownership

Ponente: Lucas P. Bersamin
Fe U. Quijano v. Atty. Daril Almante
G.R. No. 164277, October 8, 2014
Facts: Fe (petitioner), Eliseo, Jose and Gloria inherited from their late father
a parcel of land. In 1990, prior to any partition among the heirs, Eliseo sold a
portion of his share to Atty. Daryll Amante (respondent). In 1991, Eliseo sold
again a portion of his share to respondent. It was stated in the Deed of
Absolute Sale that the sale was with the approval of Eliseos siblings. In
1992, the siblings executed a deed of extrajudicial partition to divide their
fathers estate among themselves. The partition resulted in the portions
earlier sold by Eliseo to the respondent being adjudicated to the petitioner
instead of Eliseo. Petitioner then demanded that respondent should vacate
the portion that he is occupying but to no avail. Hence, petitioner filed

against respondent a complaint for ejectment and damages in the MTCC.

Petitioner alleged that she was the registered owner of the parcel of
land, a portion of which was being occupied by the respondent, through the
mere tolerance of Eliseo when the inherited property was still undivided and
co-owned by them; and that the respondent's occupation had become illegal
following
his
refusal
to
vacate
despite
repeated
demands.
Respondent denied the allegations of petitioner and he asserted that he was
in fact the owner and lawful possessor of the property, having bought it from
Eliseo, which was approved by the latters siblings.
The MTCC ruled in favor of the petitioner. On appeal, the RTC reversed
the judgment of the MTCC, and dismissed the complaint, holding that the
summary proceeding for ejectment was not proper because the serious
question of ownership of the disputed property was involved. The CA
affirmed the RTC ruling and dismissed the case for ejectment, but on the
ground that the respondent was either a co-owner or an assignee holding the
right of possession over the disputed property.
Issue: Whether or not the CA properly ruled on the issue of ownership for
the sole purpose of determining who between the parties had the better
right to possess the disputed property.
SC: Yes, considering that the parties are both claiming ownership of the
disputed property.
What is an ejectment case? It can either be for forcible entry or unlawful
detainer. It is a summary proceeding designed to provide expeditious means
to protect the actual possession or the right to possession of the property
involved. The sole question for resolution in the case is the physical or
material possession (possession de facto) of the property in question, and
neither a claim of juridical possession (possession de jure) nor an averment
of ownership by the defendant can outrightly deprive the trial court from
taking due cognizance of the case. Hence, even if the question of ownership
is raised in the pleadings, like here, the court may pass upon the issue but
only to determine the question of possession especially if the question of
ownership is inseparably linked with the question of possession. The
adjudication of ownership in that instance is merely provisional, and will not
bar or prejudice an action between the same parties involving the title to the
property.
Nature of a co-ownership: In a co-ownership, the undivided thing or right
belong to different persons, with each of them holding the property pro
indiviso and exercising their rights over the whole property. Each co-owner
may use and enjoy the property with no other limitation than that he shall

not injure the interests of his co-owners. The underlying rationale is that until
a division is actually made, the respective share of each cannot be
determined, and every co-owner exercises, together with his co-participants,
joint ownership of the pro indiviso property, in addition to his use and
enjoyment of it.
Co-heirs right of ownership: Even if an heir's right in the estate of the
decedent has not yet been fully settled and partitioned and is thus merely
inchoate, Article 493 of the Civil Code gives the heir the right to exercise acts
of ownership. Accordingly, when Eliseo sold the disputed property to the
respondent in 1990 and 1991, he was only a co-owner along with his
siblings, and could sell only that portion that would be allotted to him upon
the termination of the co-ownership. The sale did not vest ownership of the
disputed property in the respondent but transferred only the seller's pro
indiviso share to him, consequently making him, as the buyer, a co-owner of
the disputed property until it is partitioned.
Right of successor-in-interest or assignee: As Eliseo's successor-ininterest or assignee, the respondent was vested with the right under Article
497 of the Civil Code to take part in the partition of the estate and to
challenge the partition undertaken without his consent.
Article 497 states: The creditors or assignees of the co-owners may take
part in the division of the thing owned in common and object to its being
effected without their concurrence. But they cannot impugn any partition
already executed, unless there has been fraud, or in case it was made
notwithstanding a formal opposition presented to prevent it, without
prejudice to the right of the debtor or assignor to maintain its validity.
Is respondent bound by the extrajudicial partition of the co-heirs?
Yes. Notwithstanding having knowledge of Eliseo's co-ownership with his coheirs, and of their oral agreement of partition, the respondent still did not
exercise his right under Article 497. Having been silent despite his ample
opportunity to participate in or to object to the partition of the estate, the
respondent was bound by whatever was ultimately agreed upon by the
Quijanos.
What is an unlawful detainer? It involves the defendant's withholding of
the possession of the property to which the plaintiff is entitled, after the
expiration or termination of the former's right to hold possession under the
contract, whether express or implied. A requisite for a valid cause of action of
unlawful detainer is that the possession was originally lawful, but turned
unlawful only upon the expiration of the right to possess.
Is there an unlawful detainer or forcible entry in this case? None.
Considering that the allegation of the petitioner's tolerance of the

respondent's possession of the disputed property was not established since

she failed to adduce supporting evidence, the possession could very well be
deemed illegal from the beginning. In that case, her action for unlawful
detainer has to fail. Even so, the Court would not be justified to treat this
ejectment suit as one for forcible entry because the complaint contained no
allegation that his entry in the property had been by force, intimidation,
threats, strategy or stealth.
NOTE: Where the plaintiff does not prove her alleged tolerance of the
defendant's occupation, the possession is deemed illegal from the beginning.
Hence, the action for unlawful detainer is an improper remedy. But the action
cannot be considered as one for forcible entry without any allegation in the
complaint that the entry of the defendant was by means of force,
intimidation, threats, strategy or stealth.

Topics: Moral and Exemplary Damages; Obligations and Contracts

Ponente: Justice Lucas P. Bersamin

BPI Express Credit Card Corp. v. Ma. Antonia R. Armovit
G.R. No. 163654, October 8, 2014
Facts: Ma. Antonia Armovit was issued by BPI Express Credit Card
Corporation (petitioner) a BPI Express Credit Card. On November 21, 1992,
she treated her friends to lunch at a restaurant. She paid using her BPI credit
card but the waiter soon returned to inform her that her credit card had been
cancelled upon verification with BPI Express Credit and would not be
honored. Since she had no enough cash on hand, her guests had to share in
the bill to her extreme embarrassment. She learned that her credit card had
been summarily cancelled for failure to pay her outstanding obligations of
which she denied. She then demanded compensation for the shame,
embarrassment and humiliation she had suffered.
Petitioner claimed that it made a demand to Armovit to settle her
unpaid obligations but she did not comply, causing it to temporarily suspend
her credit card on March 31, 1992. It further claimed that she had been
notified of the suspension and cautioned to refrain from using the credit card
to avoid inconvenience or embarrassment; and that while the obligation was
settled by April 1992, she failed to submit the required application form in
order to reactivate her credit card privileges.
On March 12, 1993, Armovit received a telegraphic message from
petitioner apologizing for its error of inadvertently including her credit card in
a Caution List sent to its affiliated merchants. As a result, Armovit sued the
petitioner for moral and exemplary damages in the RTC.
Issue: Whether or not Armovit is entitled to moral and exemplary damages.
SC: Yes.
Nature of a credit card issuer-credit card holder relation: The
relationship between the credit card issuer and the credit card holder is a
contractual one that is governed by the terms and conditions found in the
card membership agreement. Such terms and conditions constitute the law
between the parties. In case of their breach, moral damages may be
recovered where the defendant is shown to have acted fraudulently or in bad
faith.
What is the nature of a credit card contract? It is considered as a
contract of adhesion because its terms and conditions are solely prepared by
the credit card issuer. Consequently, the terms and conditions have to be
construed against the petitioner as the party who drafted the contract
especially so that a confusion arose as to its proper interpretation.

What is malice or bad faith? It implies a conscious and intentional design

to do a wrongful act for a dishonest purpose or moral obliquity. However, a
conscious or intentional design need not always be present because
negligence may occasionally be so gross as to amount to malice or bad faith.
Hence, bad faith in the context of Article 2220 of the Civil Code includes
gross negligence.
Is petitioner guilty of malice or bad faith? Yes. A review of the terms
and conditions of the contract between the petitioner and its card holders,
did not reveal that Armovit needed to submit her new application as the
antecedent condition for her credit card to be taken out of the list of
suspended cards. Instead, the only condition for the reinstatement of her
credit card was the payment of her outstanding obligation. Petitioners
negligence was even confirmed by the telegraphic message it had addressed
and sent to Armovit apologizing for the inconvenience caused in
inadvertently including her credit card in the caution list. Indeed, petitioner
did not observe the prudence expected of banks whose business was imbued
with public interest.
Armovit is entitled to damages: The award of P100,000.00 as moral
damages was fair and reasonable under the circumstances. Similarly, the
grant of exemplary damages was warranted under Article 2232 of the New
Civil Code because the petitioner acted in a reckless and oppressive manner.
Finally, with Armovit having been forced to litigate in order to protect her
rights and interests, she was entitled to recover attorney's fees and
expenses of litigation.

Topics: Annulment of Contract of Sale and Tax Declaration;

Reconveyance of Possession with Damages; Ownership over a
property
Ponente: JOSE PEREZ
Extraordinary Development Corporation vs. Herminia F. Samson-Bico
and Ely B. Flestado
G.R. No. 191090, October 13, 2014
FACTS: Apolonio Ballesteros and Maria Membrebe were married, and they
begot two children Juan Ballesteros married to Leonarda Tambongco; and
Irenea Ballesteros married to Santiago Samson. Juan and Leonarda begot six
children, namely, Leonardo T. Ballesteros, Marcelina T. Ballesteros-Abad,
Lydia T. Ballesteros-De Lara, Cresencia T. Ballesteros-Lirio, Lourdes T.
Ballesteros-Tan, and Juan T. Ballesteros, Jr. Irenea and Santiago begot two
children, namely, Herminia B. Samson-Bico and Merlita Samson Flestado,
who married Ely D. Flestado.
Apolonio during his lifetime owned a parcel of land (29, 748 square
meters), covered by Tax Declaration. Said land was inherited by Juan and
Irenea when their parents died. The Heirs of Juan and Irenea inherited and
become co-owners of the property when Juan and Irenea died.
The Heirs of Juan, without the consent of Heirs of Irenea sold the
property to Extraordinary Development Corporation (EDC); thus the Heirs of
Irenea informed EDC of the existence of co-ownership over the property. EDC
replied that they should establish their claim.EDC was able to register the
Deed of sale and transfer the tax declaration over the property in its name.
Heirs of Irenea then filed a Complaint for Annulment of Contract and
Tax Declarationveya, and Reconveyance of Possession with Damages with
the RTC. EDC alleged that it was a buyer in good faith and for value; Heirs of
Juan, on the other hand, alleged that Heirs of Irenea knew about the sale,
that they even received their share of the downpayment.
RTC ruled in favor of the Heirs of Irenea, pronouncing (1) that the Deed
of Absolute Sale and he Tax Declaration is null and void to the extent of onehalf of the property sold; (2) the tax declaration in the name of EDC is
declared null and void, and the tax declaration be reinstated in the name of
the Heirs of Apolonio and Maria; (3) EDC ordered to vacate or reconvey
ownership and possession of the subject land or reinstate the lawful
ownership of one-half of the same; (4) Heirs of Juan was ordered to pay

moral, exemplary damages, and attorneys fees to Heirs of Irenea. It

reasoned that both the Heirs of Juan and Irenea are co-owners of the land,
and that the Heirs of Juan did not have the right to sell one-half of the share
of Heirs od Irenea. EDC appealed to the CA which affirmed the decision with
modifications; it affirmed RTCs decision but it ordered that the tax
declaration in the name of EDC be cancelled and to issue new one in the
names of co-owners EDC (one-half) and heirs of Irenea (one-half);and to
delete the award of damages.EDCs invocation of it being a buyer in good
faith was not considered by the appellate court because the subject property
is an unregistered land and 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.
ISSUE: Whether or not the Heirs of Irenea has the right to recover the
disputed parcel of land.
SC: Yes.
Article 1458 of the Civil Code provides that the principal obligation
of a seller is to transfer the ownership of the thing sold. Also, Article 1459
of the Civil Code, further provides that the thing must be licit and the
vendor must have a right to transfer the ownership thereof at the time it is
delivered.
The Deed of Sale executed by Ballesteros in favor of EDC over the
parcel of landwhich they do not exclusively own but is admittedly co-owned
by them together with the Heirs of Irenea, was valid only to the extent of the
formers undivided one-half share thereof, as they had no title or interest to
transfer the other one-half portion which pertains to the latter without the
their consent. It is an established principle that no one can give what
one does not have nemo dat quod non habet. Accordingly, one can
sell only what one owns or is authorized to sell, and the buyer can
acquire no more than what the seller can transfer legally. Thus,
since appellant EDCs rights over the subject property originated
from sellers-appellants Ballesteros, said corporation merely stepped
into the shoes of its sellers and cannot have a better right than
what its sellers have.
Heirs of Irenea was able to establish co-ownership rights over the
subject property.
Article 493. Each co-owner shall have the full ownership of his part of the
fruits and benefits pertaining thereto, and he may therefore alienate, assign
or mortgage it, and even substitute another person in its enjoyment, except
when personal rights are involved. But the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion
which may be allotted to him in the division upon the termination of the coownership; thus the provision recognizes the absolute right of a co-owner to
freely dispose of his pro indiviso share as well as the fruits and other benefits
arising from that share, independently of the other co-owners.

Jurisprudence provides that the purported transfer of a definite portion

of a co-owned lot by metes and bounds does not per se render the sale a
nullity provided that the object of said sale did not even exceed the ideal
shares held by the seller in the co-ownership, since one has the absolute
right to sell part of her undivided interest in the co-owned propertyin
accordance with the well-settled doctrine that a co-owner has full ownership
of his pro-indiviso share and has the right to alienate, assign or mortgage it,
and substitute another person in its enjoyment. Stated otherwise, a co-owner
cannot rightfully dispose of a particular portion of a co-owned property prior
to partition among all the co-owners.However, this should not signify that the
vendee does not acquire anything at all in case a physically segregated area
of the co-owned lot is in fact sold to him. Since the co-owner/vendors
undivided interest could properly be the object of the contract of sale
between the parties, what the vendee obtains by virtue of such a sale are
the same rights as the vendor had as co-owner, in an ideal share equivalent
to the consideration given under their transaction. In other words, the
vendee steps into the shoes of the vendor as co-owner and acquires a
proportionate abstract share in the property held in common.

Topic: Exoneration of Civil Liability in BP 22 cases in relation to

claiming Civil Liability in Estafa cases
Ponente: ESTELA PERLAS-BERNABE
Leonora B. Rimando vs. Sps. Winston and Elenita Aldaba and People
of the Philippines
G.R. No. 203583, October 13, 2014
FACTS:
Leonora Rimando was charged with estafa through the use of
false manifestations and fraudulent representations before the RTC.
According to the Prosecution, Rimando enticed Sps. Aldaba to invest in her
business under the assurance that it is stable and that their money would
earn 8% monthly interest.Taking into consideration their long friendship, Sps.
Aldaba gave Rimando a check as investment in her business. Rimando gave
Sps. Aldaba three (3) postdatedchecks, and made them sign an investment
contract with Multitel International Holding Corporation. Upon maturity of the
checks, Sps. Aldaba attempted to encash them but were dishonored for
being drawn against insufficient funds. Sps. Aldaba then demanded from
Rimando to make good the said checks, but to no avail. Thus, they filed a
criminal complaint for estafa against Rimando. Rimando denied the
allegations in the Information. Meanwhile, Sps. Aldaba also filed a criminal
case for violation of Batas Pambansa Bilang (BP) 22before the MeTC.
MeTC acquitted Rimando in the BP 22 cases on the ground of
reasonable doubt, declaring that the act or omission from which liability may

arise does not exist; while the RTC also acquitted Rimando of estafa but
found her civilly liable to Sps. Aldaba, finding the absence of deceit but ruled
that as accommodation party to one of the checks she issued to Sps. Aldaba
on behalf of Multitel. Rimando appealed to CA, contending that her acquittal
and exoneration from civil liability in the BP 22 cases should bar Sps. Aldaba
from claiming civil liability from her in the estafa case. CA affirmed the RTC
Ruling, holding that a prosecution for violation of BP 22 is distinct, separate,
and independent from a prosecution for estafa, albeit they may both involve
the same parties and transaction. As such, Rimandos acquittal and
subsequent exoneration from civil liability in the BP 22 cases does not
automatically absolve her from civil liability in the estafa case.
ISSUE: Wherther or not Rimando can still be held civilly liable in the estafa
case despite her acquittal and exoneration from civil liability in the BP 22
cases.
SC: Yes.
The extinction of the penal action does not carry with it the
extinction of the civil liability where: (a) the acquittal is based on
reasonable doubt as only preponderance of evidence is required; (b) the
court declares that the liability of the accused is only civil; and (c) the civil
liability of the accused does not arise from or is not based upon the crime of
which the accused is acquitted. However, the civil action based on delict may
be deemed extinguished if there is finding on the final judgment in the
criminal action that the act or omission from which the civil liability may
arise did not exist or where the accused did not commit the acts or omission
imputed to him. Thus, Rimandos acquittal in the estafa case does not
necessarily absolve her from any civil liability to Sps. Aldaba.
In this case, Rimandos civil liability did not arise from any purported
act constituting the crime of estafa as the RTC clearly found that Rimando
never employed any deceit on Sps. Aldaba to induce them to invest money
in Multitel. Rather, her civil liability was correctly traced from being an
accommodation party to one of the checks she issued to Sps. Aldaba on
behalf of Multitel. In lending her name to Multitel, she, in effect, acted as a
surety to the latter, and assuch, she may be held directly liable for the value
of the issued check. Verily, Rimandos civil liability to Sps. Aldaba does not
arise from or is not based upon the crime she is charged with, and hence, the
CA correctly upheld the same despite her acquittal in the estafa case. In this
relation, the CA is also correct in holding that Rimandos acquittal and
subsequent exoneration in the BP 22 cases had no effect in the estafa case,
even if both cases were founded on the same factual circumstances.
A BP 22 case and an estafa case may be rooted from an identical set
of facts, they nevertheless present different causes of action, which, under
the law, are considered "separate, distinct, and independent" from each

other. Therefore, both cases can proceed to their final adjudication both as
to their criminal and civil aspects subject to the prohibition on double
recovery. A ruling in a BP 22 case concerning the criminal and civil liabilities
of the accused cannot be given any bearing whatsoever in the criminal and
civil aspects of a related estafa case, as in this instance.

Topic: Unjust Enrichment

Ponente: MARVIC MARIO VICTOR LEONEN
Carlos A. Loria vs. Ludolfo P. Muoz, Jr.
G.R. No. 187240, October 15, 2014
FACTS:
Ludolfo P. Muoz, Jr. was said to have been engaged in
construction under the name, "Ludolfo P. Muoz, Jr. Construction." Carlos
Loria went to Muoz to invite the latter to advance P2,000,000.00 for a
subcontract of a P50,000,000.00 river-dredging project. Loria represented
that he would make arrangements such that Elizaldy Co, owner of Sunwest
Construction and Development Corporation, would turn out to be the lowest
bidder for the project. After the award to Sunwest, Sunwest would
subcontract 20% or P10,000,000.00 worth of the project to Muoz. Muoz
accepted Lorias proposal.

Muoz requested Allied Bank to release P3,000,000.00 from his joint

account withhis business partner. Later, P1,800,000.00 of the P3,000,000.00
was returned to Muoz.
The river-dredging project was awarded to the lowest bidder, Sunwest
Construction and Development Corporation. Sunwest allegedly finished
dredging project without subcontracting Muoz, thus, Muoz demanded Loria
to return his P2,000,000.00. Loria, however, did not return the money.
Muoz first charged Loria and Elizaldy Co with estafa but was
dismissed. Muoz then filed the complaint for sum of money.
The court ruled in favor of Muoz. It was established that Loria
received P2,000,000.00 from Muoz for a subcontract of the river-dredging
project and since no part of the project was subcontracted to Muoz, Loria
must return the P2,000,000.00 he received, or he would be "unduly enriching
himself at the expense of Muoz." Loria appealed to CA, which sustained the
trial courts factual findings considering that Muoz did not benefit from
paying Loria P2,000,000.00, the appellate court ruled that Loria must return
the money to Muoz under the principle of unjust enrichment. Loria filed a
petition for review on certiorari with the SC arguing that the principle of
unjust enrichment does not apply as Muoz paid Loria P2,000,000.00 for a
subcontract of a government project, thus the agreement was void for being
contrary to law, specifically, the Anti-Graft and Corrupt Practices Act, the
Revised Penal Code, and Section 6 of Presidential Decree No. 1594.
ISSUE: Whether or not Loria is liable for P2,000,000.00 to Muoz
SC: Yes. Loria must return Munozs P2,000,000.00 under the principle of
unjust enrichment.
Article 22 of the Civil Codeof the Philippines, "every person who
through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just
or legal ground, shall return the same to him." There is unjust enrichment
"when a person unjustly retains a benefit to the loss of another, or when a
person retains money orproperty of another against the fundamental
principles of justice, equity and good conscience."
The principle of unjust enrichment has two conditions. First, a person
must have been benefited without a real or valid basis or justification.
Second, the benefit was derived at another persons expense or damage.
In this case, Loria received P2,000,000.00 from Muoz for a
subcontract of a government projectto dredge the Masarawag and San
Francisco Rivers in Guinobatan, Albay. However, contrary to the parties
agreement, Muoz was not subcontracted for the project. Nevertheless, Loria
retained the P2,000,000.00. Thus, Loria was unjustly enriched. He retained
Muozs money without valid basis or justification. Under Article 22 of the
Civil Code of the Philippines, Loria must return the P2,000,000.00 to Muoz.
Section 6 of the Presidential Decree No. 1594 does not prevent Muoz

from recovering his money. Under Section 6 of the Presidential Decree No.
1594 a contractor shall not subcontract a part or interest in a government
infrastructure project without the approval of the relevant department
secretary. Thus, a subcontract is void only if not approved by the department
secretary. In this case, it is premature to rule on the legality of the parties
agreement precisely because the subcontract did not push through. No
actual agreement was proven in evidence. The Secretary of Public Works
and Highways could have approved the subcontract, which is allowed under
Section 6 of the Presidential Decree No. 1594. Even assuming that there was
a subcontracting arrangement between Sunwest Construction and
Development Corporation and Muoz, this court has allowed recovery under
a void subcontract as an exception to the in pari delicto doctrine.
In the case of Gonzalo v. Tarnate, Jr. Generally, parties to an
illegal contract may not recover what they gave under the
contract. Doctrine of in pari delicto provides that, "no action arises,
in equity or at law, from an illegal contract. No suit can be maintained
for its specific performance, or to recover the property agreed to be sold or
delivered, or the money agreed to be paid, or damages for its violation, but
"the application of the doctrine of in pari delicto is not always
rigid." An exception to the doctrine is "when its application
contravenes well-established public policy." And the court ruled that
"the prevention of unjust enrichment is a recognized public policy of
the State." It is well to note that Article 22 "is part of the chapter of the Civil
Code on Human Relations, the provisions of which were formulated as basic
principles to be observed for the rightful relationship between human beings
and for the stability of the social order; designed to indicate certain norms
that spring from the fountain of good conscience; guides for human conduct
that should run as golden threads through society to the end that law may
approach its supreme ideal which is the sway and dominance of justice."

Topic: Partition of Estate prior/after a Deed of Sale of a Land

Property
Ponente: BIENVENIDO REYES
Sps. Dominador Marcos, et al. vs. Heirs of Isidro Bangi, et al.
G.R. No. 185745, October 15, 2014

FACTS: The heirs of Isidro Bangi and Genoveva Diccion (respondents)

alleged that their parents, Isidro and Genoveva, bought the one-third portion
of a parcel of land from Eusebio Bangi evidenced by a Deed of Absolute Sale.
The land was registered in the name of Alipio Bangi Eusebios father. After
the sale, the respondents claimed that their parents took possession of the
property until they passed away, then they took possession of the same.
They further alleged that they learned that the title to the subject property,
including the portion sold to Isidro and Genoveva, was transferred to herein
petitioner Dominador, Primo Alap , Ceasarias husband, Jose, and Emilio
through a Deed of Absolute Sale dated August 10, 1995, supposedly
executed by Alipio with the consent of his wife Ramona Diccion. Respondents
claimed that the said deed of absolute sale is a forgery since Alipio died in
1918 while Ramona passed away on June 13, 1957.
By virtue of the alleged Deed of Absolute Sale dated August 10, 1995 a
new title was issued. On November 21, 1995, Primo, Jose and Emilio
executed another deed of absolute sale over the same property in favor of
herein petitioners, consequently another title was issued in the names of the
latter. The respondents claimed that the Deed of Absolute Sale dated
November 21, 1995 was likewise a forgery since Primo could not have signed
the same on the said date since he died on January 29, 1972.
Respondents filed a case for the nullification of the Deeds of Absolute
Sale. Petitioners averred that the subject property was originally owned by
Alipio; that after his death, his children Eusebio, Espedita and Jose Bangi
inherited the same; that Espedita and Jose Bangi executed a deed of
extrajudicial partition with quitclaim wherein they waived their rights over
the subject property in favor of Eusebios children Ceasaria, Zenaida, Pacita
and herein petitioner Gloria;that their father Eusebio could not have validly
sold the one-third portion of the subject property to Isidro and Genoveva
sincce Eusebio supposedly acquired the parcel of land by virtue of a donation
propter nuptias from his father Alipio in 1928.
Respondents and Ceasaria and the spouses Emilio and Zenaida
entered into a compromise agreement.
ISSUE: Whether or not the Deed of Absolute Sale over the one-third portion
of the subject property executed by Eusebio in favor of the spouses Isidro
and Genoveva is valid.
SC: Yes.
The appellate court upheld the validity of the sale finding that after the
death of Alipio in 1918, an oral partition was had between Eusebio and his
siblings Espedita and Jose Bangi; that at the time of the said sale on
November 5, 1943 to the spouses Isidro and Genoveva, Eusebio was already
the owner of the subject property; while petitioners maintain that the said
sale of the one-third portion of the subject property was not valid,
insinuating that the subject property, at the time of the sale, was still owned

in common by the heirs of Alipio; that Eusebio could not validly sell the onethird portion of the subject property as there was no partition yet among the
heirs of Alipio.
In resolving the controversy it should be determined whether the
heirs of Alipio had already effected a partition of his estate prior to
the sale of the one-third portion of the subject property to the
spouses Isidro and Genoveva on November 5, 1943.
Partition is the separation, division and assignment of a thing
held in common among those to whom it may belong. Every act
which is intended to put an end to indivision among co-heirs and
legatees or devisees is deemed to be a partition. Partition may be
inferred from circumstances sufficiently strong to support the
presumption. Thus, after a long possession in severalty, a deed of partition
may be presumed.
In the case of Hernandez v. Andal, the Court ruled that whether the
partition be parol or by agreement to partition when parties went into
possession, exercised acts of ownership, or otherwise partly performed the
partition agreement, that equity will confirm such partition and in a proper
case decree title in accordance with the possession in severalty. Thus, parol
partition may also be sustained on the ground that the parties
thereto have acquiesced in and ratified the partition by taking
possession in severalty, exercising acts of ownership with respect
thereto, or otherwise recognizing the existence of the partition.
The evidence presented by the parties show that, after the death of
Alipio, his heirs Eusebio, Espedita and Jose Bangi had orally partitioned
his estate, including the subject property, which was assigned to Eusebio.
The absence of a written memorandum of the partition among Alipio Bangis
heirs cannot detract from appellees cause. It has been ruled that oral
partition is effective when the parties have consummated it by the taking of
possession in severalty and the exercise of ownership of the respective
portions set off to each. Here, it is obvious that Eusebio took possession of
his share and exercised ownership over it. Thus, the Deed of Absolute Sale
over the one-third portion of the subject property executed by Eusebio in
favor of the spouses Isidro and Genoveva is valid.

Topics:
Rescission
(Insurance
Compensatory Interest

contract);

Monetary

and

Ponente: MARIANO DEL CASTILLO

Sun Life of Canada (Philippines), Inc. vs. Sandra Tan Kit a and The
Estate of the Deceased Norberto Tan Kit. G.R. No. 183272, October
15, 2014
FACTS:
Norberto Tan Kit had a life insurance policy with Php 300,000.00
face value. The policy was granted by Sun Life of Canada (Philippines), Inc.
on October 28, 1999. His wife, Sandra Tan Kit was named beneficiary. On
February 19, 2001, or within the two-year contestability period, Norberto
died of disseminated gastric carcinoma.
Sandra Tan Kit then filed a claim under the subject policy. Sun Life
denied the claim on account of Norbertos failure to fully and faithfully
disclose in his insurance application certain material and relevant
information about his health and smoking history. Petitioner said that
Nobertos application would not have approved if the information given is
correct. Believing that the policy is null and void, petitioner opined that its
liability is limited to the refund of all the premiums paid. A check
for P13,080.93 was issued in favor of Sandra representing the premium
refund.
Sandra refused to accept the check and insisted on the payment of the
insurance proceeds.
Sun life then filed a Complaint for Rescission of Insurance Contract. The
court ruled among others, that Sun Life did not comply with the requirements
for rescission of insurance contract. It ordered Sun Life to pay Sandra
Php300,000.00 representing the face value of the insurance policy with
interest at six percent (6%) per annum from October 4, 2002 until fully paid.
Sun Life appealed to CA, which reversed RTCs ruling, reasoning that
Norberto is guilty of concealment which misled petitioner in forming its
estimates of the risks of the insurance policy. This gave petitioner the right to
rescind the insurance contract which it properly exercised in this case. CA
ordered Sun Life to reimburse the sum of Php13,080.93 representing the
premium paid by the insured with interest at the rate of 12% per annum from
the time of the death of the insured until fully paid.
ISSUE: Whether or not Sun Life is liable to pay interest on the premium to be
refunded to respondents.
SC: Yes.
There are two kinds of interest monetary and compensatory.

"Monetary interest refers to the compensation set by the parties for the
use or forbearance of money." No such interest shall be due unless it has
been expressly stipulated in writing. "On the other hand, compensatory
interest refers to the penalty or indemnity for damages imposed by law or
by the courts" as mentioned in Articles 2209 and 2212.
As a form of damages, compensatory interest is due only if the
obligor is proven to have failed to comply with his obligation.
In this case, it is undisputed that simultaneous to its giving of notice to
respondents that it was rescinding the policy due to concealment, petitioner
tendered the refund of premium by attaching to the said notice a check
representing the amount of refund. However, respondents refused to accept
the same since they were seeking for the release of the proceeds of the
policy. Because of this discord, petitioner filed for judicial rescission of the
contract. Petitioner, after receiving an adverse judgment from the RTC,
appealed to the CA. And as may be recalled, the appellate court found
Norberto guilty of concealment and thus upheld the rescission of the
insurance contract and consequently decreed the obligation of petitioner to
return to respondents the premium paid by Norberto. Moreover, the Court
found that petitioner did not incur delay or unjustifiably deny the claim. Thus,
Sun Life properly complied with its obligation under the law and contract. It
should not be made liable to pay compensatory interest.
Therefore, Sun Life of Canada (Philippines), Inc. is ordered to reimburse
to respondents Sandra Tan Kit and the Estate of the Deceased Norberto Tan
Kit the sum of Php13,080.93 representing the premium paid by the insured
within fifteen (15) days from date of finality of this Decision. If the amount is
not reimbursed within said period, the same shall earn interest of 6% per
annum until fully paid.

Topic: Cause of Action for Quieting of Title

Ponente: MARIANO DEL CASTILLO
Residents of Lower Atab & Teachers' Village, Sto. Tomas Proper
Barangay, Baguio City, Represented By Beatrice T. Pulas, Cristina A.
Lapp Ao. Michael Madiguid, Florencio Mabudyang And Fernando
Dosalin vs. Sta. Monica Industrial & Development Corporation
G.R. No.198878, October 15, 2014.
FACTS:
Residents of Lower Atab & Teachers Village, Sto. Tomas Proper
Barangay, Baguio City (Residents) filed a civil case for quieting of title with
damages against respondent Sta. Monica Industrial and Development
Corporation (Sta. Monica) with the RTC of Baguio City. Petitioners alleged that
they are successors and transferees-in-interest of Torres, the supposed owner
of an unregistered parcel of land in Baguio City which Torres possessed and
declared for tax purposes in 1918; that Residents are in possession of the
subject property in the concept of owner, declared their respective lots and
homes for tax purposes, and paid the real estate taxes thereon; that in May
2000, Sta.Monica began to erect a fence on the subject property, claiming
that it is the owner of a large portion thereof by virtue of a Transfer
Certificate of Title which is null and void, as it was derived from a void
Original Certificate of title which was declared void pursuant to Presidential
Decree No. 1271 (PD 1271) and in the decided case of Republic v.
Marcos; and the Transfer Certificate Title is a cloud upon their title and
interests and should therefore be cancelled.
On the other hand, Sta. Monica claimed that Residents have no cause
of action; that the Transfer Certificate Title is a valid and subsisting title; that
the case for quieting of title constitutes a collateral attack upon the title; and
that Residents have no title to the subject property and are mere illegal
occupants thereof.
Residents acknowledged that while they declared their respective lots
for tax purposes, they applied for the purchase of the same through
Townsite Sales applications with the Department of Environment and
Natural Resources (DENR).

The RTC ruled in favor of Sta. Monica. It held that the quieting of title
case constituted a collateral attack upon Sta. Monicas title which became
indefeasible after one year from the entry of the decree of registration
thereof. A direct proceeding should have been filed by the State to annul it
and to secure reversion of the land; petitioners have no standing to do so
through a quieting of title case. An appeal was made to CA, which affirmed
RTCs decision.
ISSUE: Whether or not Residents have cause of action for quieting of title of
Sta. Monica.
SC: No.
An action to quiet title will prosper, if the following indispensable
requisites are present:

the plaintiff or complainant has a legal or an equitable title to or

interest in the real property subject of the action; and

the deed, claim, encumbrance, or proceeding claimed to be casting

cloud on his title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or legal
efficacy.

"Legal title denotes registered ownership, while equitable title means

beneficial ownership."
Beneficial ownership has been defined as ownership recognized by
law and capable of being enforced in the courts at the suit of the beneficial
owner. Blacks Law Dictionary indicates that the term is used in two senses:
first, to indicate the interest of a beneficiary in trust property (also called
"equitable ownership"); and second, to refer to the power of a corporate
shareholder to buy or sell the shares, though the shareholder is not
registered in the corporations books as the owner. It is distinguished from
naked ownership, which is the enjoyment of all the benefits and privileges
of ownership, as against possession of the bare title to property.
Residents do not have legal or equitable title to the subject property.
Evidently, there are no certificates of title in their respective names. They
acknowledged that they applied for the purchase of the property from the
government, through townsite sales applications coursed through the DENR.
Thus, they admitted that they are not the owners of the subject property; the
same constitutes state or government land which they would like to acquire
by purchase. It would have been different if they were directly claiming the
property as their own as a result of acquisitive prescription, which would then
give them the requisite equitable title. By stating that they were in the
process of applying to purchase the subject property from the government,
they admitted that they had no such equitable title, at the very least, which
should allow them to prosecute a case for quieting of title.
Therefore, Residents recognize that legal and equitable title to

the subject property lies in the State. Thus, as to them, quieting of title
is not an available remedy.
Lands within the Baguio Townsite Reservation are public land. Laws
and decrees such as PD 1271 were passed recognizing ownership acquired
by individuals over portions of the Baguio Townsite Reservation, but
evidently, those who do not fall within the coverage of said laws and decrees
the Residents included cannot claim ownership over property falling
within the said reservation. This explains why they have pending
applications to purchase the portions of the subject property which they
occupy; they have no legal or equitable claim to the same, unless ownership
by acquisitive prescription is specifically authorized with respect to such
lands, in which case they may prove their adverse possession, if so.

Topic: Property Relations

Ponente: DIOSDADO PERALTA
Barrido vs. Nonato
G.R. No. 176492, October 20, 2014.
FACTS:
Leonardo V. Nonato and Marietta N. Barrido were married. They
were able to acquire a property consisting of a house and lot. On March 15,
1996, their marriage was declared void on the ground of psychological
incapacity. Nonato then asked Barrido for partition, but the latter refused.
On January 29, 2003, Nonato filed a Complaint for partition before the
Municipal Trial Court in Cities. Barrido claimed, by way of affirmative defense,
that the subject property had already been sold to their children, Joseph
Raymund and Joseph Leo. She also moved for the dismissal of the complaint
because the MTCC lacked jurisdiction since the case for partition is an action
incapable of pecuniary estimation.
MTCC applied Article 129 of the Family Code. It ordered that the
conjugal property of the former Spouses, a house and lot, which was their
conjugal dwelling, be adjudicated to defendant Marietta the spouse with

whom the majority of the common children choose to remain. Leonardo

appealed before the RTC, which reversed the ruling of the MTCC, and ordered
(1) to equitably partition the house and lot; (2) to reimburse Joseph Raymund
and Joseph Leo Nonato of the amount advanced by them in payment of the
debts and obligation of the Property; and (3) to deliver the presumptive
legitimes of Joseph Raymund and Joseph Leo Nonato pursuant to Article 51 of
the Family Code. Upon appeal, CA affirmed the RTC Decision. CA held that
since the propertys assessed value was only P8,080.00, it clearly fell within
the MTCCs jurisdiction. Also, although the RTC erred in relying on Article 129
of the Family Code, instead of Article 147, the dispositive portion of its
decision still correctly ordered the equitable partition of the property.
ISSUE: Whether or not conjugal partnership regime governed the property
relations of the former Spouses.
SC: Yes.
Nonato and Barridos marriage had been declared void for
psychological incapacity under Article 36 of the Family Code. Conjugal
partnership regime governed their property relations during their
marriage. Although Article 129 provides for the procedure in case of
dissolution of the conjugal partnership regime, Article 147 specifically
covers the effects of void marriages on the spouses property
relations. Article 147. When a man and a woman who are capacitated to
marry each other, live exclusively with each other as husband and wife
without the benefit of marriage or under a void marriage, their wages and
salaries shall be owned by them in equal shares and the property acquired
by both of them through their work or industry shall be governed by the
rules on co-ownership.
In the absence of proof to the contrary, properties acquired while they
lived together shall be presumed to have been obtained by their joint efforts,
work or industry, and shall be owned by them in equal shares. For purposes
of this Article, a party who did not participate in the acquisition by the other
party of any property shall be deemed to have contributed jointly in the
acquisition thereof if the former's efforts consisted in the care and
maintenance of the family and of the household.
Neither party can encumber or dispose by acts inter vivos of his or her
share in the property acquired during cohabitation and owned in common,
without the consent of the other, until after the termination of their
cohabitation.
When only one of the parties to a void marriage is in good faith, the
share of the party in bad faith in the co-ownership shall be forfeited in favor
of their common children. In case of default of or waiver by any or all of the
common children or their descendants, each vacant share shall belong to the
respective surviving descendants. In the absence of descendants, such share

shall belong to the innocent party. In all cases, the forfeiture shall take place
upon termination of the cohabitation.
This kind of co-ownership applies when a man and a woman, suffering
no illegal impediment to marry each other, exclusively live together as
husband and wife under a void marriage or without the benefit of marriage.
For Article 147 to operate the man and the woman:

must be capacitated to marry each other;

live exclusively with each other as husband and wife; and

their union is without the benefit of marriage or their marriage is void.

In this case, all these elements are present. The term "capacitated"
provision pertains to the legal capacity of a party to contract marriage.
Any impediment to marry has not been shown to have existed on the part of
either Nonato or Barrido. They lived exclusively with each other as husband
and wife. However, their marriage was found to be void under Article 36 of
the Family Code on the ground of psychological incapacity.
Under this property regime, property acquired by both spouses
through their work and industry shall be governed by the rules on equal
co-ownership. Any property acquired during the union is prima
facie presumed to have been obtained through their joint efforts. A
party who did not participate in the acquisition of the property shall be
considered as having contributed to the same jointly if said party's efforts
consisted in the care and maintenance of the family household. Efforts in
the care and maintenance of the family and household are regarded as
contributions to the acquisition of common property by one who has no
salary or income or work or industry. Here, the former spouses both agree
that they acquired the subject property during the subsistence of their
marriage. Thus, it shall be presumed to have been obtained by their joint
efforts, work or industry, and shall be jointly owned by them in equal shares.
The claim that the ownership over the property in question is already
vested on children, by virtue of a Deed of Sale could not be given credence.
The title to the property was still being registered in the names of the former
spouses. It must be noted that without the notarial seal, a document remains
to be private and cannot be converted into a public document, making it
inadmissible in evidence unless properly authenticated. Unfortunately,
Barrido failed to prove its due execution and authenticity. Thus, the subject
property remains to be owned in common by Nonato and Barrido, which
should be divided in accordance with the rules on co-ownership.

Topic: Civil Law Damages. Affreightment.

Ponente: REYES, J.
LOADSTAR SHIPPING COMPANY, INCORPORATED AND LOADSTAR
INTERNATIONAL
SHIPPING
COMPANY,
INCORPORATED, Petitioners, v. MALAYAN
INSURANCE
COMPANY,
INCORPORATED, Respondent.
G.R. No. 185565, November 26, 2014
Facts:

Loadstar International Shipping, Inc. (Loadstar Shipping) and Philippine

Associated Smelting and Refining Corporation (PASAR) entered into a
Contract of Affreightment for domestic bulk transport of the latters copper
concentrates for a period of one year from November 1, 1998 to October 31,
1999 and was extended up to the end of October 2000. On September 10,
2000, 5,065.47 wet metric tons (WMT) of copper concentrates were loaded in
Cargo Hold Nos. 1 and 2 of MV Bobcat, a marine vessel owned by Loadstar
International Shipping Co., Inc. (Loadstar International) and operated by
Loadstar Shipping under a charter party agreement. The shipper and
consignee under the Bill of Lading are Philex Mining Corporation (Philex) and
PASAR, respectively. The cargo was insured with Malayan Insurance
Company, Inc. (Malayan) under Open Policy. P & I Association is the third
party liability insurer of Loadstar Shipping.
MV Bobcat sailed from Poro Point, San Fernando, La Union bound for Isabel,
Leyte. On September 12, 2000, while in the vicinity of Cresta de Gallo, the
vessels chief officer on routine inspection found a crack on starboard side of
the main deck which caused seawater to enter and wet the cargo inside
Cargo Hold No. 2 forward/aft. Hence, the same was contaminated by
seawater. Consequently, PASAR rejected 750 MT of the 2,300 MT cargo
discharged from Cargo Hold No. 2.
On January 23, 2001, PASAR signed a subrogation receipt in favor of
Malayan. To recover the amount paid and in the exercise of its right of
subrogation, Malayan demanded reimbursement from Loadstar Shipping,
which refused to comply. Consequently, on September 19, 2001, Malayan
instituted with the RTC a complaint for damages and includedLoadstar
International as party defendant. Loadstars defense is force majeure or
heavy weather.On March 31, 2004, the RTC rendered a judgment dismissing
the complaint as well as the counterclaim. The RTC was convinced that the
vessel was seaworthy at the time of loading and that the damage was
attributable to the perils of the sea (natural disaster) and not due to the fault
or negligence of Loadstar Shipping. On appeal, the CA reversed the decision
of the RTC.
Issue:
Whether or not Loadstar is liable for damages.
Held:
No. It is not disputed that the copper concentrates carried by M/V Bobcat
from Poro Point, La Union to Isabel, Leyte were indeed contaminated with
seawater. The issue lies on whether such contamination resulted to damage,
and the costs thereof, if any, incurred by the insured PASAR. The petitioners
argued that the copper concentrates, despite being dampened with
seawater, is neither subject to penalty nor rejection. Under the Philex Mining
Corporation (Philex)-PASAR Purchase Contract Agreement, there is no
rejection clause. Instead, there is a pre-agreed formula for the imposition of

penalty in case other elements exceeding the provided minimum level would
be found on the concentrates. Since the chlorine content on the copper
concentrates is still below the minimum level provided under the PhilexPASAR purchase contract, no penalty may be imposed against the
petitioners. The contract between PASAR and the petitioners is a contract of
carriage of goods and not a contract of sale. Therefore, the petitioners and
PASAR are bound by the laws on transportation of goods and their contract of
affreightment.
From the provisions of Article 365 of the Code of Commerce, it can be
adduced that, if the goods are delivered but arrived at the destination in
damaged condition, the remedies to be pursued by the consignee depend on
the extent of damage on the goods. If the goods are rendered useless for
sale, consumption or for the intended purpose, the consignee may reject the
goods and demand the payment of such goods at their market price on that
day pursuant to Article 365. In case the damaged portion of the goods can
be segregated from those delivered in good condition, the consignee may
reject those in damaged condition and accept merely those which are in
good condition. But if the consignee is able to prove that it is impossible to
use those goods which were delivered in good condition without the others,
then the entire shipment may be rejected. To reiterate, under Article 365,
the nature of damage must be such that the goods are rendered useless for
sale, consumption or intended purpose for the consignee to be able to validly
reject them. If the effect of damage on the goods consisted merely of
diminution in value, the carrier is bound to pay only the difference between
its price on that day and its depreciated value as provided under Article 364.
Malayan, as the insurer of PASAR, neither stated nor proved that the goods
are rendered useless or unfit for the purpose intended by PASAR due to
contamination with seawater. Hence, there is no basis for the goods
rejection under Article 365 of the Code of Commerce.

Topic: Civil Law Co-ownership; Attorneys Fees

Ponente: PEREZ, J
VICENTE TORRES, JR., CARLOS VELEZ, AND THE HEIRS OF MARIANO
VELEZ, NAMELY: ANITA CHIONG VELEZ, ROBERT OSCAR CHIONG
VELEZ,
SARAH
JEAN
CHIONG
VELEZ
AND
TED
CHIONG
VELEZ,Petitioners, vs.
LORENZO
LAPINID
AND
JESUS
VELEZ, Respondents.
G.R. No. 187987. November 26, 2014
Facts:
Vicente V. Torres, Jr., Mariano Velez, Carlos Velez and Jesus Velez, are coowners of several parcels of land including the disputed Lot. No. 4389located
at Cogon, Carcar, Cebu. Sometime in 1993, Jesus filed an action for partition
of the parcels of land against the petitioners and other co-owners. A
judgment was rendered based on a compromise agreement signed by the
parties wherein they agreed that Jesus, Mariano and Vicente were jointly
authorized to sell the said properties and receive the proceeds thereof and
distribute them to all the co-owners. However, the agreement was later
amended to exclude Jesus as an authorized seller. Pursuant totheir mandate,
the petitioners inspected the property and discovered that Lapinid was
occupying a specific portion of the 3000 square meters of Lot No. 4389 by
virtue of a deed of sale executed by Jesus in favor of Lapinid. It was pointed
out by petitioner that as a consequence of what they discovered, a forcible
entry case was filed against Lapinid. The petitioners filed a Complaint before
RTC Cebu City for the nullification of the sale of real property by respondent
Jesus Velez (Jesus) in favor of Lapinid; the recovery of possession and
ownership of the property; and the payment of damages.
The Trial Court dismissed the complaint. The Court of Appeals affirmed the
decision of the trial court. It validated the sale and ruled that the
compromise agreement did not affect the validity of the sale previously
executed by Jesus and Lapinid.
Issue:
1. Whether Jesus, as a co-owner, can validly sell a portion of the property
heco-owns in favor of another person.
2. Whether award of attorneys fees may be awarded.
Held:
Yes. Admittedly, Jesus sold an area ofland to Lapinid on 9 November 1997. A
co-owner has an absolute ownership of his undivided and proindiviso share in
the co-owned property. He has the right to alienate, assign and mortgage it,
even to the extent of substituting a third person in its enjoyment provided
that no personal rightswill be affected. The Civil Code provides:

Art. 493. Each co-owner shall have the full ownership of his part and of
the fruits and benefits pertaining thereto, and he may therefore alienate,
assign or mortgage it, and even substitute another person in its enjoyment,
except when personal rights are involved.
In this case, Jesus can validly alienate his co-owned property in favor of
Lapinid, free from any opposition from the co-owners. Lapinid, as a
transferee, validly obtained the same rights of Jesus from the date of the
execution of a valid sale. Absent any proof that the sale was not perfected,
the validity of sale subsists. In essence, Lapinid steps into the shoes of Jesus
as co-owner of an ideal and proportionate share in the property held in
common.
2. No. Pursuant to Article 2208 of the New Civil Code, attorneys fees and
expenses of litigation, in the absence of stipulation, are awarded only in the
following instances:
x xxx
1. When exemplary damages are awarded;
2. When the defendants act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interests;
3. In criminal cases of malicious prosecution against the plaintiff;
4. In case of a clearly unfounded civil action or proceeding against the
plaintiff;
5. Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiffs plainly valid and demandable claim;
6. In actions for legal support;
7. In actions for the recovery of wages of household helpers, laborers and
skilled workers;
8. In actions for indemnity under workmen's compensation and employer's
liability laws;
9. In a separate civil action to recover civil liability arising from a cnme;
10. When at least double judicial costs arc awarded;
11. In any other case where the court deems it just and equitable that
attorney's fees and expenses oflitigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be
reasonable.
Petitioners cite Jesus' act of selling a definite portion to Lapinid as the reason
which forced them to litigate and file their complaint. However, though the
Court may not fault the complainants when they filed a complaint based on
their perceived cause of action, they should have also considered thoroughly
that it is well within the rights of a co-owner to validly sell his ideal share
pursuant to law and jurisprudence.

Topic: Remedial Law (SpecPro) & Civil Law (Succession)

Appointment of Regular Administrator
Ponente: PEREZ, J
MARCELO INVESTMENT AND MANAGEMENT CORPORATION, AND THE
HEIRS OF EDWARD T. MARCELO, NAMELY, KATHERINE J. MARCELO,
ANNA MELINDA J. MARCELO REVILLA, AND JOHN STEVEN J.
MARCELO, Petitioners, v. JOSE T. MARCELO, JR., Respondent.
G.R. No. 209651, November 26, 2014
Facts:
On 24 August 1987, decedent Jose, Sr. died intestate. He was survived by his
four compulsory heirs: (1) Edward, (2) George, (3) Helen and (4) respondent
Jose, Jr. Marcelo Investment and Management Corporation (MIMCO) filed a
Petition for the issuance of Letters of Administration of the estate of Jose, Sr.
before the RTC, Branch 76, Quezon City. At first, Helen, along with her
brother, Jose, Jr. separately opposed MIMCOs petition; the two prayed for
their respective appointment as administrator. Edward opposed Helens and
Jose, Jr.s respective petitions for issuance of Letters of Administration in their
favor and Edward himself prayed for his appointment as regular
administrator. Ultimately, MIMCO, George and Edward banded together: (1)
opposed Helens and Jose, Jr.s petitions, and (2) prayed for Edwards
appointment
as
regular
administrator
of
Jose,
Sr.s
estate.
On 21 September 1989, pending issuance of letters of administration, the
RTC appointed Helen and Jose, Jr. as special administrator. The RTC then
appointed Edward as regular administrator of Jose, Sr.s estate. Jose Jr.
opposed and questioned Edwards appointment, Jose, Jr. The decision of the
RTC was upheld by the CA and the Supreme Court. Thereafter, Jose, Jr.
persistently opposed Edwards actions as administrator and his inventory of
Jose, Sr.s estate.
On 3 July 2009, Edward died. Jose, Jr. moved to revive the intestate
proceedings involving his fathers estate, and moved for his appointment as
new regular administrator thereof. MIMCO and heirs of Edward, joined by

George, opposed Jose, Jr.s motion and nominated Atty. Henry Reyes as
regular administrator in Edwards stead. The RTC appointed Jose, Jr. as
regular administrator of Jose, Sr.s estate.The Court of Appeals affirmed Jose,
Jr.s appointment as new regular administrator. Hence, this appeal
by certiorari.
Issue:
Was the appointment of Jose, Jr. the new regular administrator as proper?
Held:
No. The appointment of a regular administrator is still necessary, butthe
appointment of Jose, Jr. as new regular administrator of Jose, Sr.s estate is
improper. The appointment of a regular administrator is still necessary at
the liquidation, partition and distribution stage of the intestate proceedings
involving Jose, Sr.s estate. It is this [c]ourts observation that the continuous
internal wranglings between the heirs would achieve nothing. It would not be
amiss to state that the animosity among the interested, Edward and Jose, Jr.
have considerably increased since the filing of their respective petitions, but
the [c]ourt on the basis of their qualifications will have to decide whom to
appoint as regular administrator. There is no argument that both Edward and
Jose, Jr. are willing to serve as regular administrator but undoubtedly, Edward
appears to be more responsible and competent that his younger brother,
Jose, Jr. This is bolstered by the fact that the family corporations and his own
personal corporation are presently of sound financial condition. Jurisprudence
has long held that the selection of an administrator lies in the sound
discretion of the trial court. The determination of a persons suitability for the
office of judicial administrator rests, to a great extent, in the sound judgment
of the court exercising the power of appointment and said judgment is not to
be interfered with on appeal unless the said court is clearly in error.

Topic: Civil Law - Torts and Damages - Art. 2180 (Employers shall be
liable for the damages caused by their employees)
Ponente: Reyes, J.
DAVAO HOLIDAY TRANSPORT SERVICES CORPORATION, Petitioner,
vs. SPOUSES EULOGIO and CARMELITA EMPHASIS, Respondents.
G.R. No. 211424. November 26, 2014
Facts:
The petitioner was the owner and operator of Holiday Tax.i No. 177 bearing
Plate No. LVX-171, which figured in an accident on October 18, 2003, at
around 12:45 p.m., that caused the death of a 12-year-old boy, Christian
Emphasis (Christian). The taxicab was then being driven by Orlando Tungal
(Tungal) along Airport Road in Davao City when it bumped Christian, who was
then riding a bicycle. On October 23, 2003, an information for reckless
imprudence resulting in homicide was filed against Tungal; while, on March 1,
2004, the parents of Christian, the spouses Emphasis, filed a separate action
for damages and attorneys fees arising from the vehicular accident against
both petitioner and Tungal. Upon the parties agreement, the two cases were
jointly tried by the Regional Trial Court (RTC) of Davao City, Branch 12.
The RTC rendered its Judgment/Decision. In the criminal case, Tungal was
found guilty beyond reasonable doubt of the crime of reckless imprudence
resulting in homicide; then in the civil case, the petitioner and Tungal were
ordered to pay the spouses Emphasis, jointly and severally. The petitioner
appealed the disposition of the civil case to the CA but the CA rendered its
Decision affirming the RTCs ruling that the petitioner was liable for damages.

Petitioners motion for reconsideration was also denied by the CA. Hence,
this petition for review.
Issue:
Is petitioner liable as the employer of Tungal?
Ruling:
Yes. Article 2180 of the New Civil Code provides that an obligation for
damages is demandable not only for ones own acts or omissions, but also
for those of persons for whom he is responsible. Employers, in particular,
shall be liable for the damages caused by their employees acting within the
scope of their assigned tasks. The responsibility of employers shall only
cease upon proof that they observed all the diligence of the good father of a
family to prevent damage.
The petitioner failed to observe all the diligence of the good father of a
family to prevent damage. Specifically, Holiday did not present documentary
proof of Tungals qualification, experience and service records. Even the
result of the actual driving tests was not presented to be examined by the
court a quo. The claim of trainings and constant monitoring of all their
drivers including Tungal are unsubstantiated. In addition, Holiday presented
no record of Tungal attending those trainings. There was also no record of
their so-called constant monitoring of their drivers. They claimed having
installed radios on every cab they operate for the purpose of reminding their
drivers to drive safely but, no recordings were ever made to prove such call
every now and then. Holiday also failed to establish that they also monitor
speed of its taxi during its daily trips, considering that it is engaged in
transportation business, particularly delivering people to and from places.

Topic: Civil Law - Torts and Damages - Temperate damages

Ponenete: SERENO, CJ
SEVEN BROTHERS SHIPPING CORPORATION, Petitioner, vs. DMCCONSTRUCTION RESOURCES, INC., Respondent.
G.R. No. 193914. November 26, 2014
Facts:
On 23 February 1996, the cargo ship M/V "Diamond Rabbit" (the Vessel)
owned and operated by defendant Seven Brothers Shipping Corporation
(Seven Brothers),was at the PICOP Pier in Mangagoy, Bislig, Surigao del Sur
to dock there. According to the record, the weather that day was windy with
a wind force of 10 to 20 knots, and the sea condition was rough, with waves
6 to 8 feet high.
According to the report of the Master, it heaved its anchor and left the
causeway in order to dock at the PICOP Pier. A lifeboat pulled the vessel
towards the Pier with a heaving line attached to the vessels astern mooring
rope, when suddenly, the heaving line broke loose, causing the astern
mooring rope to drift freely. The mooring rope got entangled in the vessels
propeller, thereby choking and disabling it, and preventing the further use of
its main engine for maneuvering. In order to stop the vessel from further
drifting and swinging, its Master dropped her starboard anchor. To help
secure the vessel, its forward mooring rope was sent ashoreand secured at

the mooring fender. However, because of the strong winds and rough seas,
the vessels anchor and the mooring rope could not hold the vessel. Under
the influence of the wind and current, the dead weight of the vessel caused it
to swung from side to side until the fender, where the mooring rope was
attached, collapsed. The uncontrollable and unmaneuverable vessel drifted
and dragged its anchor until it hit several structures at the Pier, including the
coal conveyor facility owned by DMC Construction Equipment Resources, Inc.
(DMC).
The RTC awarded respondent actual damages in the amount
of P3,523,175.92 plus legal interest of 6%. The appeal was also affirmed by
the CA AFFIRMED with modification stating that Seven Brothers Shipping
Corporation is found liable to DMC Construction Equipment Resources, Inc.
for nominal damages in the amount of 3,523,175.92. The appellate court
modified the nature of damages awarded (from actual to nominal), on the
premise that actual damages had not been proved. Respondent merely relied
on estimates to prove the cost of replacing the structures destroyed by the
vessel, as no actual receipt was presented. Hence, the instant Petition.
Issue:
Was the award of damages correct?
Ruling:
No. We rule that temperate, and not nominal, damages should be awarded to
respondent in the amount ofP3,523,175.92. Temperate or moderate
damages may be recovered when the court finds that some pecuniary loss
has been suffered but its amount cannot, from the nature of the case, be
provided with certainty. Jurisprudence has consistently held that "[t]o justify
an award of actual damages x x x credence can be given only to claims
which are duly supported by receipts."

Topic: Civil Law - Sales - Deed of Sale having an alleged forged

signature
Ponente: VILLARAMA; JR., J.
HEIRS OF SPOUSES ANGEL LIWAGON AND FRANCISCA DUMALAGAN,
namely: NARCISA LIWAGON-LAGANG, represented by her Heir
VICTOR LIWAGON LAGANG, LEONCIO LIWAGON, represented by his
Heir GERONIMA VDA. LIWAGON, and JOSEFINA LIWAGON-ESCAUSO
represented by their Attorney-in-Fact and for herself, JOSEFINA
LIWAGON-ESCAUSO, Petitioners, vs. HEIRS OF SPOUSES DEMETRIO
LIWAGON AND REGINA LIWAGON, namely: RODRIGO LIWAGON,
MINENCIA LIWAGONOMITTER, JOSEFINA LIWAGON-NUEVO, TERESITO
LIWAGON and DANILO LIWAGON, Respondents.
G.R. No. 193117. November 26, 2014
Facts:
Petitioners and respondents in the case at bar are all children and
grandchildren of the late spouses Angel and Francisca Liwagon. On June 4,
1957, Angel was provisionally awarded the following parcel of land through
the Board of Liquidators of the Y. Furukawa Plantation. Together with his
children, he cultivated and introduced improvements on the land. Later, his
children got married and lived their own lives except for his son Demetrio.

Upon their fathers demise, the [petitioners] demanded of their brother

Demetrio for the partition of the subject landholding. Demetrio pleaded to
defer the partition for economic reasons, to which the [petitioners]
acquiesced by permitting the spouses Demetrio and Regina, and their
children, to continuously occupy the land in litigation. When Demetrio died,
followed shortly by Regina, [petitioner] Josefina signified her demand for
partition to one of Demetrios sons named Rodrigo. Rodrigo ignored the
demand, however, contending that they now owned the property as
inheritance from their parents, who had earlier lawfully acquired the land by
purchase from their grandfather, as evidenced by a Deed of Sale dated 24
July 1972. As heirs of Angel and Francisca, the [petitioners] presently brought
the instant case for annulment of the sale, partition, accounting and
damages against the defendants-heirs of Spouses Demetrio and Regina.
Issue:
Was the deed of sale between Angel and Rodrigos parents valid?
Ruling:
Yes. Both the trial and appellate courts correctly ruled in favor of the due
execution of the subject Deed of Sale which was duly acknowledged and
recorded by Atty. Alfredo Abayon in his notarial registry. It is a rule in our
jurisdiction that the act of notarization by a notary public converts a private
document into a public document, making it admissible in evidence without
further proof of its authenticity. By law, a notarial document is entitled to full
faith and credit upon its face. It enjoys the presumption of regularity and is a
prima facie evidence of the facts stated therein which may only be
overcome by evidence that is clear, convincing and more than merely
preponderant.
In the case at bar, aside from the sole testimony of petitioner Josefina that
the signature appearing in the assailed Deed of Sale is not that of her father,
no clear, positive and convincing evidence was shown to corroborate such
claim. Also, the contention of petitioners must fail that a "visual
comparison" of Angels signatures in the purported Deed of Sale and in his
Application with the Bureau of Lands and Affidavit would reveal "that the
signature in the Deed of Sale was not genuine." Not only did petitioners fail
to present clear, positive and convincing evidence to overcome the
presumption of regularity in favor of the assailed document, they merely
stated these two sentences in this petition for review to support their claim
of forgery via a visual comparison of two signatures. Lastly, as to petitioners
making an issue of the circumstance that their brother Demetrio never
disclosed to them the existence of the purported Deed of Sale, such
"unexplained delay in disclosing the alleged deed of sale" is not sufficient
basis to declare that the sale was fictitious and hence not valid.

Topic: Civil Law - Land, Titles and Deeds - Registration of Lands

Ponente: REYES, J.
REMMAN ENTERPRISES, INC., Petitioner, vs. REPUBLIC OF THE
PHILIPPINES, Respondent.
G.R. No. 188494. November 26, 2014
Facts:
Petitioner, through its authorized representative Ronnie P. Inocencio
(Inocencio), filed with the RTC on June 4, 1998 an application for registration
of the subject properties situated in Barangay Napindan, Taguig, Metro
Manila, with an area of 27,477 square meters, 23,179 sq m and 45,636 sq m.
The State, through the Office of the Solicitor General, interposed its
opposition to the application. During the initial hearing of the case on May 4,
1999, the petitioner presented and marked documentary evidence to prove
its compliance with jurisdictional requirements. Inocencio, testified that the
subject properties were purchased on August 28, 1989 by the petitioner from

sellers Magdalena Samonte, Jaime Aldana and Virgilio Navarro. The

properties were declared for taxation purposes on August 9, 1989. After the
sale, the petitioner occupied the properties and planted thereon crops like
rice, corn and vegetables. Witness Cenon Serquia (Serquia) supported the
application for registration by claiming that he had been the caretaker of the
subject properties since 1957, long before the lots were purchased by the
petitioner. Serquia alleged that no person other than the applicant and its
predecessors-in-interest had claimed ownership or rights over the subject
properties.
On November 27, 2001, the RTC granted the petitioners application.
Dissatisfied, the State appealed to the CA by alleging substantive and
procedural defects in the petitioners application. It argued that the identity
of the subject properties was not sufficiently established. The State further
claimed that the character and length of possession required by law in land
registration cases were not satisfied by the petitioner. Finding merit in the
appeal, the CA reversed the RTC decision. The dispositive portion of the CA
Decision.
Issue:
Must the application of the petitioners be granted?
Ruling:
No. The burden of proof in overcoming the presumption of State ownership of
the lands of the public domain is on the person applying for registration, who
must prove that the properties subject of the application are alienable and
disposable. Even the notations on the survey plans submitted by the
petitioner cannot be admitted as evidence of the subject properties
alienability and disposability. Such notations do not constitute
incontrovertible evidence to overcome the presumption that the subject
properties remain part of the inalienable public domain.
Given the foregoing, the dismissal of the petitioner's application for
registration was proper. Under pertinent laws and jurisprudence, the
petitioner had to sufficiently establish that: first, the subject properties form
part of the disposable and alienable lands of the public domain; second, the
applicant and his predecessors-in-interest have been in open, continuous,
exclusive, and notorious possession anq occupation of the same; and third,
the possession is under a bona fide claim of ownership since June 12, 1945
or earlier.

Topic: Article 1956 of the New Civil Code (monetary interest)

VELASCO, JR., J.:
Sps. Tagumpay N. Albos and Aida C. Albos vs. Sps. Nestor M.
Embisan, et al.
G.R. No. 210831
November 26, 2014
Facts:
On October 17, 1984, petitioners entered into an agreement, denominated
as "Loan with Real Estate Mortgage, " with respondent spouses Nestor and

IluminadaEmbisan (spouses Embisan) in the amount of P84,000.00 payable

within 90 days with a monthly interest rate of 5%. To secure the
indebtedness, petitioners mortgaged to the spouses Embisan a parcel of land
in Project 3, Quezon City, measuring around 207.6 square meters and
registered under their name, as evidenced by Transfer Certificate Title No.
257697
May 17, 1986 came and went but the obligation remained unpaid. Thus,
when the petitioners requested a third extension, as will later be alleged by
the respondent spouses, anadditional eight (8) months was granted on the
condition that the monthly 5% interest from then on, i.e. June 1986 onwards,
will be compounded. This stipulation, however, was not reduced in writing.
Due to petitioners failure to settle their indebtedness, respondent spouses
proceeded to extra-judicially foreclose the mortgaged property on October
12, 1987. At the auction sale conducted by the respondent sheriff,
respondent spouses emerged as the highest bidders at P330,000.00 and
were later issued a Sheriffs Certificate of Sale.
The property was never redeemed, and so the respondent spouses executed
an Affidavit of Consolidation over the property on November 23, 1988. The
affidavit was subsequently registered with the Registry of Deeds of Quezon
City, consolidating ownership to the spouses Embisan
On August 14, 1989, herein petitioners filed a complaint for the annulment of
the Loan with Real Estate Mortgage, Certificate of Sale, Affidavit of
Consolidation, Deed of Final Sale, and Contract of Lease before the Regional
Trial Court of Quezon City (RTC)
Issue:
The petitioners raises that there is no documentary proof to show that the
petitioners agreed in writing to the imposition of the 5% compounded
monthly interest, contrary to article 1956 of the civil code.
Held:
The petition is meritorious.
The compounding of interest should be in writing
For academic purposes, We first determine whether or not the stipulation
compounding the interest charged should specifically be indicated in a
written agreement.
We rule in the affirmative.
Article 1956 of the New Civil Code, which refers to monetary interest,
provides:

Article 1956.No interest shall be due unless it has been expressly stipulated
in writing.
As mandated by the foregoing provision, payment of monetary interest shall
be due only if: (1) there was an express stipulation for the payment of
interest; and (2) the agreement for such payment was reduced in writing.
Thus, We have held that collection of interest without any stipulation thereof
in writing is prohibited by law.
Nevertheless, even if there was suchan agreement that interest will be
compounded, We agree with the petitioners that the 5% monthly rate, be it
simple or compounded, written or verbal, is void for being too exorbitant,
thus running afoul of Article 1306 of the New Civil Code, which provides:
Article 1306. The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they
are not contrary tolaw, morals, good customs, public order, or public policy.
(emphasis added)
As case law instructs, the imposition of an unconscionable rate of interest on
a money debt, even if knowingly and voluntarily assumed, is immoral and
unjust. It is tantamount to a repugnant spoliation and an iniquitous
deprivation of property, repulsive to the common sense of man. It has no
support in law, in principles of justice, or in the human conscience nor is
there any reason whatsoever which may justify such imposition as righteous
and as one that may be sustained within the sphere of public or private
morals

Topic: Article 1191 of the Civil Code

LEONARDO-DE CASTRO, J.:

Metropolitan Bank and Trust Company vs. Wilfred N. Chiok/Bank of

the Philippine Islands vs. Wilfred N. Chiok/Global Business Bank, Inc.
vs. Wilfred N. Chiok
G.R. Nos. 172652/175302/175394
November 26, 2014
Facts:
The three consolidated petitions herein all assail the Decision of the Court of
Appeals in CA-G.R. CV No. 77508 dated May 5, 2006, and the Resolution in
the same case dated November 6, 2006.
Respondent Wilfred N. Chiok (Chiok) had been engaged in dollar trading for
several years. He usually buys dollars from Gonzalo B. Nuguid (Nuguid) at
the exchange rate prevailing on the date of the sale. Chiok pays Nuguid
either in cash or managers check, to be picked up by the latter or deposited
in the latters bank account. Nuguid delivers the dollars either on the same
day or on a later date as may be agreed upon between them, up to a week
later. Chiok and Nuguid had been dealing in this manner for about six to
eight years, with their transactions running into millions of pesos. For this
purpose, Chiok maintained accounts with petitioners Metropolitan Bank and
Trust Company (Metrobank) and Global Business Bank, Inc. (Global Bank),
the latter being then referred to as the Asian Banking Corporation (Asian
Bank). Chiok likewise entered into a Bills Purchase Line Agreement (BPLA)
with Asian Bank. Under the BPLA, checks drawn in favor of, or negotiated to,
Chiok may be purchased by Asian Bank. Upon such purchase, Chiok receives
a discounted cash equivalent of the amount of the check earlier than the
normal clearing period.
Nuguid was supposed to deliver US$1,022,288.50,4 the dollar equivalent of
the three checks as agreed upon, in the afternoon of the same day. Nuguid,
however, failed to do so, prompting Chiok to request that payment on the
three checks be stopped. Chiok was allegedly advised to secure a court order
within the 24-hour clearing period. On the following day, July 6, 1995, Chiok
filed a Complaint for damages with application for ex parte restraining order
and/or preliminary injunction with the Regional Trial Court (RTC) of Quezon
City against the spouses Gonzalo and MarinellaNuguid, and the depositary
banks, Asian Bank and Metrobank, represented by their respective
managers, Julius de la Fuente and Alice Rivera.
In their own Answer, the spouses Nuguid claimed that Gonzalo Nuguid had
delivered much more dollars than what was required for the three checks at
the time of payment. By way of special affirmative defense, the spouses
Nuguid also claims that since the subject checks had already been paid to
him, Chiok is no longer entitled to an injunction (to hold the payment of the
subject checks), and Civil Case No. Q-95-24299 has already become moot.

The RTC held that Nuguid failed to prove the delivery of dollars to Chiok.
Issue:
Whether or not the honorable court of appeals erred in ruling that "it is
legally possible for a purchaser of a managers check or cashiers check to
stop payment thereon through a court order on the ground of the payees
alleged breach of contractual obligation amounting to an absence of
consideration therefor.
Held:
The SC disagree with the above ruling.
The right of rescission under Article 1191 of the Civil Code can only be
exercised in accordance with the principle of relativity of contracts under
Article 1131 of the same code, which provides:
Art. 1311. Contracts take effect only between the parties, their assigns and
heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by
provision of law. x xx.
In several cases, this Court has ruled that under the civil law principle of
relativity of contracts under Article 1131, contracts can only bind the parties
who entered into it, and it cannot favor or prejudice a third person, even if he
is aware of such contract and has acted with knowledge thereof. Metrobank
and Global Bank are not parties to the contract to buy foreign currency
between Chiok and Nuguid. Therefore, they are not bound by such contract
and cannot be prejudiced by the failure of Nuguid to comply with the terms
thereof.
Neither could Chiok be validly granted a writ of injunction against Metrobank
and Global Bank to enjoin said banks from honoring the subject managers
and cashiers checks. It is elementary that "(a)n injunction should never
issue when an action for damages would adequately compensate the injuries
caused. The very foundation of the jurisdiction to issue the writ of injunction
rests in the fact that the damages caused are irreparable and that damages
would not adequately compensate." Chiok could have and should have
proceeded directly against Nuguid to claim damages for breach of contract
and to have the very account where he deposited the subject checks
garnished under Section 7(d) and Section 8, Rule 57 of the Rules of Court.
Instead, Chiok filed an action to enjoin Metrobank and Global Bank from
complying with their primary obligation under checks in which they are liable
as both drawer and drawee.

Topic: Collection of sum of money

LEONARDO-DE CASTRO, J.:
Solidbank Corporation vs. Goyu& Sons, Inc., et al., Rizal Banking
Corporation
G.R. No. 142983
November 26, 2014
Facts:
On April 27, 1992, fire gutted one of the buildings of GOYU. GOYU filed a
claim for indemnity with MICO, which was, however, denied by the latter on
the ground that the insurance policies were the subject of writs of
attachment issued by various courts or otherwise claimed by other creditors
of GOYU. Respondent-Intervenor Rizal Commercial Banking Corporation
(RCBC), one of GOYUs creditors, also filed with MICO a claim for the
proceeds of GOYUs insurance policies, including fire insurance policy
numbers F-114-07402 and F-114-07525. RCBC claims that the insurance
policies in question were purchased by GOYU pursuant to the terms and
conditions of the mortgage executed by GOYU to ensure the payment of its
obligations with RCBC. MICO likewise denied RCBCs claims on the same
ground.
On April 6, 1993, GOYU filed against MICO, RCBC, and two RCBC officers a
complaint for specific performance and damages in the RTC of Manila. The
complaint was docketed as Civil Case No. 93-65442 and raffled to Branch 3of
said court. The complaint prayed, among other things, that MICO be ordered
topay GOYU the total amount of P74,040,518.50 representing ten insurance
policies it secured from MICO including fire insurance policy numbers F-11407402 and F-114-07525.
In the meantime, SOLIDBANK filed an action for collection of sum of money
with prayer for a writof preliminary attachment, also with the RTC of Manila,
which was docketed as Civil Case No. 92-62749, and raffled to Branch 14 of
said court, against GOYU, the INDIVIDUAL GUARANTORS with their spouses,
and MICO.
Issue:

Whether or not the honorable court of appeals departed from accepted and
usual course of judicial proceeding in allowing RCBC to intervene in the
appealed case and in admitting RCBCS intervention despite the fact that
RCBC is not a party to civil case no. 92-62749 (the collection case) and
should have remanded RCBCS claim to the court below for reception of its
evidence.
Held:
We disagree with the postulations of SOLIDBANK. This Court cannot pass
upon the conflicting rights of SOLIDBANK and RCBC with respect to the
insurance proceeds as this is not a review of the Decision in the merits of
either CA-G.R. CV No. 46162 (appeal of Civil Case No. 93-65442) or CA-G.R.
CV No. 51894 (appeal of Civil Case No. 92-62749), but is a review of merely
an interlocutory order in the latter case. The trial courts disallowance of
RCBCs intervention in the trial on the merits in Civil Case No. 92-62749 is of
no moment. The issue in the case at bar is the propriety of the
implementation of the writ of execution and notice of garnishment in Civil
Case No. 92-62749 by SOLIDBANKs withdrawal from the amount deposited
pursuant to a court order in Civil Case No. 93-65442. RCBCs right to
intervene in CA-G.R. CV No. 51894 (the appeal of Civil Case No. 92-62749)
stems from its right as a party, and now a judgment creditor, in Civil Case
No. 93-65442, the case where the funds executed on was in custodia legis.
Accordingly, neither this Court, nor the lower court (in SOLIDBANKs
proposed remanding of the case), should receive new evidence on the
conflicting rights of SOLIDBANK and RCBC with respect to the insurance
proceeds.

Topic: Absolute Sale v. Equitable Mortgage

Ponente: Velasco, Jr., J.
Sps. Felipe Solitarios and Julia Torda v. Sps. Gaston and Lilia Jaque,
G.R. No. 199852, November 12, 2014
Facts: The subject property is a parcel of agricultural land designated as Lot
4089, consisting of 40,608 square meters, and located in Calbayog, Samar. It
was originally registered in the name of petitioner Felipe Solitarios under
Original Certificate of Title No. 1249, and, thereafter, in the name of the
respondents, spouses Gaston and Lilia Jaque, under Transfer Certificate of
Title No. 745.
In a Complaint for Ownership and Recovery of Possession with the RTC of
Calbayog City, the respondents spouses Jaque alleged that they purchased
Lot 4089 from the petitioners, spouses Solitarios in stages. They initially
bought one-half of Lot No. 4089 for P7,000.00. This sale is allegedly

evidenced by a notarized Deed of Sale dated May 8, 1981. Two months later,
the spouses Solitarios supposedly mortgaged the remaining half of Lot 4089
to the Jaques via a Real Estate Mortgage (REM) dated July 15, 1981, to
secure a loan amounting to P3,000.00.
After almost two (2) years, the spouses Solitarios finally agreed to sell the
mortgaged half. However, instead of executing a separate deed of sale for
the second half, they executed a Deed of Sale dated April 26, 1983 for the
whole lot to save on taxes, by making it appear that the consideration for the
sale of the entire lot was only P12,000.00 when the Jaques actually
paid P19,000.00 in cash and condoned the spouses Solitarios P3,000.00
loan.
On the basis of this second notarized deed, the Jaques had OCT No. 1249
cancelled and registered Lot 4089 in their name under Transfer Certificate of
Title (TCT) No. 745.
In spite of the sale, the Jaques, supposedly out of pity for the spouses
Solitarios, allowed the latter to retain possession of Lot 4089, subject only to
the condition that the spouses Solitarios will regularly deliver a portion of the
propertys produce. In an alleged breach of their agreement, however, the
spouses Solitarios stopped delivering any produce sometime in 2000. Worse,
the spouses Solitarios even claimed ownership over Lot 4089. Thus, the
Jaques filed the adverted complaint with the RTC.
For their part, the spouses Solitarios denied selling Lot 4089 and explained
that they merely mortgaged the same to the Jaques after the latter helped
them redeem the land from the Philippine National Bank (PNB).
During the course of the trial, and in compliance with the February 7, 2001
Order of the RTC, the spouses Solitarios deposited with the court a quo the
Jaques purported share in the produce of Lot 4089 for the years 2001-2003,
which amounted to 16,635.60
RTC rendered a Decision upholding the validity of the deeds of sale in
question and TCT No. 745, rejecting the allegations of forgery and fraud.
However, in the same breath, the RTC declared that what the parties entered
into was actually an equitable mortgage as defined under Article 1602 in
relation to Article 1604 of the New Civil Code, and not a sale. Consequently,
the RTC ordered, among others, the reformation of the Deeds of Sale dated
May 9, 1981 and April 26, 1983, and the cancellation of TCT No. 745 in the
name of the Jaques.
On appeal, the CA reversed and set aside the RTC Decision, rejecting the trial
courts holding that the contract between the parties constituted an
equitable mortgage.

Issue: Whether the parties effectively entered into a contract of absolute

sale or an equitable mortgage of Lot 4089.
SC: The transaction is an equitable mortgage.
The Court is not precluded from looking into the real intentions of the parties
in order to resolve the present controversy. For that reason, the Court takes
guidance from Article 1370 of the Civil Code, which instructs that "if the
words [of a contract appear to be contrary to the evident intention
of the parties, the latter shall prevail over the former." Indeed, it is
firmly settled that clarity of contract terms and the name given to it does not
bar courts from determining the true intent of the parties.
There is no single conclusive test to determine whether a deed of sale,
absolute on its face, is really a simple loan accommodation secured by a
mortgage. However, Article 1602 in relation to Article 1604 of the Civil
Code enumerates several instances when a contract, purporting to be,
and in fact styled as, an absolute sale, is presumed to be an
equitable mortgage, thus:
Art. 1602. 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 unusually
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.
In any of the foregoing cases, any money, fruits, or other benefit to be
received by the vendee as rent or otherwise shall be considered as
interest which shall be subject to the usury laws. Art. 1604. The
provisions of Article 1602 shall also apply to a contract purporting to be an
absolute sale.
As evident from Article 1602 itself, the presence of any of the circumstances
set forth therein suffices for a contract to be deemed an equitable mortgage.
No concurrence or an overwhelming number is needed.

With the foregoing in mind, the court declared that the transaction
between the parties of the present case is actually one of equitable
mortgage pursuant to the foregoing provisions of the Civil Code. It
has never denied by respondents that the petitioners, the spouses Solitarios,
have remained in possession of the subject property and exercised acts of
ownership over the said lot even after the purported absolute sale of Lot
4089. This fact is immediately apparent from the testimonies of the parties
and the evidence extant on record, showing that the real intention of the
parties was for the transaction to secure the payment of a debt.
Verily, the fact that the parties agreed on payment terms is inconsistent with
the claim of the Jaques that when the spouses Solitarios executed the
questioned deeds of sale they had no other intention but to transfer
ownership over the subject property.
Thus, there is ground to presume that the transaction between the parties
was an equitable mortgage and not a sale. There is nothing in the records
sufficient enough to overturn this presumption.

Topic: Contracts
Ponente: Del Castillo, J.
Owen Prosper A. Mackay v. Sps. Dana Caswell and Cerelina Caswell,
G.R. No. 183872, November 17, 2014
Facts: Caswells asked the sole distributor of electricity in the area, Zambales
II Electric Cooperative, how much its service for the installation would be.
Engr. Pulangco quoted an estimate of P456,000.00.
However, the Caswells hired Owen who offered to do the job for only
P250,000.00. With the help of Cesar Badua and Albert Galeng, Owen claimed

that the installation was completed and ready for power service connection
as of August 1998. By then, the Caswells had paid him P227,000.00.
At Cerelina Caswells request, Zameco II inspected the installation work and
tested the distribution transformers. The inspection showed defects. Because
of the deficiencies and other incomplete requirements, Zameco II refused to
provide energization to the Caswell home. The Caswells thus looked for
Owen but he could not be found. Hence, they were constrained to ask
Zameco II to correct all the problems it found. After the single phase
distribution system was completed in accordance with the standard
specifications of Zameco II in January 1999, only then did the Caswells finally
have electricity.
Caswells executed a Joint Affidavit to charge Owen and his group of swindling
them of P227,000.00. The Caswells alleged that Owen and his group
misrepresented themselves to be people from the NAPOCOR. By reason of
the misrepresentation, the Caswells suffered damage as the electrical
installations made were replete with deficiencies such that no electricity can
properly flow to their house. This led to the filing of an Estafa case under
Article 315 paragraph 2(a) of the Revised Penal Code against
Owen. However, on ground of reasonable doubt, Owen was acquitted.
Still unpaid for the remaining P23,000.00 for his installation work, Owen in
turn filed a Complaint for Collection of Sum of Money with Damages against
the Caswells.
Issue: Whether CA correctly ruled that Caswells effort to communicate with
Owen effectively served as a demand to rectify the latters work.
SC: Yes.
Under Article 1715 of the Civil Code, if the work of a contractor has
defects which destroy or lessen its value or fitness for its ordinary
or stipulated use, he may be required to remove the defect or
execute another work. If he fails to do so, he shall be liable for the
expenses by the employer for the correction of the work. The
demand required of the employer under the subject provision need
not be in a particular form. In the case at bar, we agree with the CA that
Owen was given the opportunity to rectify his work. Subsequent to Zameco
IIs disapproval to supply the Caswells electricity for several reasons, the
Court gives credence to the latters claim that they looked for Owen to
demand a rectification of the work, but Owen and his group were nowhere to
be found. Had Owen really been readily available to the Caswells to correct
any deficiency in the work, the latter would not have entertained the thought
that they were deceived and would not have been constrained to undergo
the rigors of filing a criminal complaint and testifying therein. Without doubt,

the Caswells exercised due diligence when they demanded from Owen the
proper rectification of his work. As correctly held by the CA, the Caswells
substantially complied with the requirement of Article 1715 of the Civil
Code,viz:
To Our mind, however, the effort to communicate with [Owen]
effectively served as [the Caswells] request for the former to
rectify the flaws in the contracted work. In fact, [the Caswells]
act of demanding that [Owen] secure the permit and to subject
the transformer to testing can already be construed as a
substantial compliance with Article 1715. It must be emphasized
that it was [Owens] refusal to secure the necessary permits and
to comply with the requirements of Zameco [II] as well as his
refusal to communicate with [the Caswells] that impelled the
latter to file a case for estafa against him. Had he been willing to
make good his obligation, then it would not have been necessary
for [the Caswells] to file the said criminal case. Instead of
complying with his end of the bargain, [Owen] opted to file a
case for collection of sum of money with damages. Thus, any
effort to require [Owen] either to rectify his flawed work or to
remove the same would have been futile since [Owens] act of
demanding payment through the said complaint showed his
belief that his work in the house was done.
Furthermore, to require the Caswells to file an action for specific
performance, as opined by the RTC, not only deprives them of hiring
someone else to rectify the work, but also defeats the very purpose of the
contracted work, i.e., to immediately have electricity in their home. In this
situation, time is of the essence.

Topic: Petition to Recall and Cancel Certificate of Land Ownership

Awards

Ponente: Brion, J.
Danilo Almero, et al. v. Heirs of Miguel Pacquing, as represented by
Linda Pacquing Fadrilan, G.R. No. 199008, November 19, 2014
Facts: Miguel Pacquing acquired agricultural lands with a total area of
23.6272 hectares in Cuambogan, Tagum City through Homestead Patent No.
V-33775. These lands were registered on January 6, 1955 with the Register of
Deeds under Original Certificate of Title No. (P-2590) P-653.
The Municipal Agrarian Reform Officer (MARO) sent Miguels representative a
Notice of Coverage placing the Pacquing Estate under the Comprehensive
Agrarian Reform Program (CARP). Miguel failed to reply to the notice and,
instead filed a Voluntary Offer to Sell (VOS) with the Department of Agrarian
Reform (DAR). Miguel, however, died during the pendency of the VOS
proceedings. Miguels wife, Salome, had died five years earlier.
In January 1992, respondent Linda Pacquing-Fadrilan, sole heir of the spouses
Pacquing, executed an affidavit adjudicating to herself ownership of the
property. She filed an application for retention with the DAR Regional Director
who denied Lindas application. The order denying Lindas application for
retention later became final and executory.
Certain individuals, including the present petitioners who were earlier
identified as farmer-beneficiaries of the subject land, were issued CLOAs over
their respective cultivated portions of the property.
Linda filed with the Office of the Provincial Adjudicator in Tagum City a
petition to cancel the petitioners CLOAs. The Provincial Adjudicator later
dismissed the petition due to Lindas failure to file her position paper. She
appealed the dismissal with the DARAB.
It appears that, in the meantime, Transfer Certificates of Title (TCTs) covering
portions of the property were issued to Napoleon Villa Sr., et al. who had
been contracted by Linda, under an agricultural leasehold agreement, to
cultivate the lands.
DARAB nullified the TCTs issued to Napoleon Villa Sr. et. al. and reinstated
Lindas title to the property. At the same time, the DARAB ordered the
generation and issuance of titles to the petitioners and other farmerbeneficiaries of the subject land. In a subsequent resolution, DARAB
validated the TCTs issued to the following individuals: Danilo Almero, Celia
Bulaso, Ludy Ramada, Isidro Lazarte, Cepriano Lazarte, Thelma Emorque,
Domingo Juanico, Candido Labeste and Renato Benimate.

Root of the present petition: Petition to Recall and Cancel the petitioners
CLOAs
Linda again sought to recall and cancel the petitioners CLOAs by filing a
petition with the DAR, which the latter endorsed to the DAR Regional Office.
Linda argued that the DARAB erred in distributing portions of the land to the
petitioners because the entire property was supposed to be exempt from
CARP coverage. The petitioners opposed Lindas petition.
DAR Regional Director ruled that the Pacquing Estate was subject to CARP
and that the CLOAs issued to the petitioners were valid. Linda filed an appeal
to the DAR Secretary.
Former DAR Secretary Nasser C. Pangandaman denied Lindas appeal. Linda
appealed the DAR Secretarys order to the OP. The OP, through Executive
Secretary Paquito N. Ochoa Jr., reversed the DAR Secretarys August 18, 2009
Order and recalled and cancelled the petitioners CLOAs.
The petitioners moved to reconsider the decision, but the OP denied their
motion.
With no appeal or petition for review filed with the Court of Appeals within
the fifteen (15) - day appeal period, the DAR Bureau of Agrarian Legal
Assistance issued on August 22, 2011 a Certificate of Finality declaring as
final and executory the OPs February 16, 2011 decision and July 19, 2011
resolution. The petitioners, however, contest the finality of the OPs decision
and allege that their counsel only received a certified copy of the OPs
resolution denying their motion for reconsideration on September 29, 2011.
Issue: Whether who will issue a certificate of finality of the decision when
the decision of the administrative agency is reverse on appeal by the Office
of the President. Whether lands under the homestead grant are exempt from
agrarian reform coverage under section 6 of r.a. 6657, even if the heir of the
patentee is not cultivating the land, but and had even offered the same
under the voluntary offer to sell scheme. Whether, in carp coverage, deposit
of land owners compensation with land bank of the Philippines is enough to
transfer title to the state, even if the owner does not accept the same
SC: The SC found merit in the petition.
Under Rule 43 of the Rules of Court, an appeal from the awards,
judgments, final orders or resolutions of or authorized by any quasijudicial agency such as the Office of the President, in the exercise of
its quasi-judicial functions shall be filed to the CA within a period of
fifteen (15) days from notice of, publication or denial of a motion for

new trial or reconsideration. The appeal may involve questions of

fact, of law, or mixed questions of fact and law.
In the present petition, the petitioners raised valid questions of law that
warranted the direct recourse to this Court. Basically, they question the OPs
application of the law and jurisprudence on the issue of whether the
Pacquing Estate should be exempt from CARP coverage. In this case, no
further examination of the truth or falsity of the facts is required. Our review
of the case is limited to the determination of whether the OP has correctly
applied the law and jurisprudence based on the facts on record.
R.A. No. 6657 or the Comprehensive Agrarian Reform Law (CARL) of
1988 covers all public and private agricultural lands as provided in
Proclamation No. 131 and E.O. No. 229, including other lands of the public
domain suitable for agriculture. Section 4 of R.A. 6657, as
amended, specifically lists the lands covered by the CARP, which include:
(a) All alienable and disposable lands of the public domain
devoted to or suitable for agriculture. No reclassification of forest
or mineral lands to agricultural lands shall be undertaken after
the approval of this Act until Congress, taking into account
ecological, developmental and equity considerations, shall have
determined by law, the specific limits of the public domain;
(b) All lands of the public domain in excess to the specific limits
as determined by Congress in the preceding paragraph;
(c) All other lands owned by the Government devoted to or
suitable for agriculture; and
(d) All private lands devoted to or suitable for agriculture
regardless of the agricultural products raised or that can be
raised thereon.
And Section 10 of R.A. 6657, as amended, expressly provides for the lands
exempted or excluded from the CARP, namely:
(a) Lands actually, directly and exclusively used for parks,
wildlife, forest reserves, reforestation, fish sanctuaries and
breeding grounds, watersheds and mangroves shall be exempt
from the coverage of this Act
(b) Private lands actually, directly and exclusively used for prawn
farms and fishponds shall be exempt from the coverage of this
Act: Provided, that said prawn farms and fishponds have not
been distributed and Certificate of Land Ownership (CLOA) issued
under the Agrarian Reform Program; and
xxxx
(c) Lands actually, directly and exclusively used and found to be
necessary for national defense, school sites and campuses,
including experimental farms stations operated by public or
private schools for educational purposes, seeds and seedlings
research and pilot production centers, church sites and

covenants appurtenant thereto, mosque sites and Islamic

centers appurtenant thereto, communal burial grounds and
cemeteries, penal colonies and penal farms actually worked by
the inmates, government and private research and quarantine
centers and all lands with eighteen percent (18%) slope and
over, except those already developed, shall be exempt from the
coverage of this Act.
The subject land, being agricultural in nature, is clearly not exempt from
CARP coverage.
But Linda argues that the subject land is exempt from CARP primarily
because it was acquired by her father via a homestead patent. She claims
that the rights of homestead grantees have been held superior to those of
agrarian reform tenants and, thus, her right to the subject land must be
upheld.
As early as the case of Patricio v. Bayug, it has been held that the more
paramount and superior policy consideration is to uphold the right of the
homesteader and his heirs to own and cultivate personally the land acquired
from the State without being encumbered by tenancy relations.
Just right after the promulgation of Republic Act No. 6657, otherwise known
as the Comprehensive Agrarian Reform Law (CARL), the doctrine enunciated
in Patricio was applied in Alita v. Court of Appeals where it was held that
Presidential Decree No. 27 cannot be invoked to defeat the very purpose of
the enactment of the Public Land Act or Commonwealth Act No. 141. It was
further pointed out that even the Philippine Constitution respects the
superiority of the homesteaders rights over the rights of the tenants
guaranteed by the Agrarian Reform statute."
The right of homestead grantees to retain or keep their homestead is,
however, not absolutely guaranteed by law.
Thus, in order for the homestead grantees or their direct compulsory heirs to
retain or keep their homestead, the following conditions must first be
satisfied: (a) they must still be the owners of the original homestead at the
time of the CARL's effectivity, and (b) they must continue to cultivate the
homestead land.
In this case, Linda, as the direct compulsory heir of the original homestead
grantee, is no longer cultivating the subject homestead land. The OP
misinterpreted our ruling in Paris v. Alfeche when it held that Linda's mere
expression of her desire to continue or to start anew with the cultivation of
the land would suffice to exempt the subject homestead land from the CARL.

Topic: Doctrine on innocent purchaser or mortgagee for value

Ponente: Leonen, J.
Heirs of Gregorio Lopez, represented by Rogelia Lopez, et al. v.
Development Bank of the Philippines, G.R. No. 193551, November
19, 2014
Facts: Gregoria Lopez owned a 2,734-square-meter property in Bustos,
Bulacan. She was survived by her three sons: Teodoro Lopez, Francisco
Lopez, and Carlos Lopez. Tax Declaration No. 613 was issued under the
names of Teodoro, Francisco, and Carlos.
Teodoro, Francisco, and Carlos died. Only Teodoro was survived by children:
Gregorio, Enrique, Simplicio, and Severino.
Petitioners in this case are Simplicio substituted by his daughter Eliza Lopez,
and the heirs of Gregorio and Severino. Enrique is deceased.
Petitioners discovered that Enrique executed an affidavit of self-adjudication
declaring himself to be Gregoria Lopezs only surviving heir, thereby
adjudicating upon himself the land in Bulacan. He sold the property to
Marietta Yabut.
Petitioners demanded from Marietta the nullification of Enriques affidavit of
self-adjudication and the deed of absolute sale. They also sought to redeem

Enriques one-fourth share. Marietta, who was already in possession of the

property, refused.
Marietta obtained a loan from DBP and mortgaged the property to DBP as
security. At the time of the loan, the property was covered by Tax Declaration
No. 18727, with the agreement that the land shall be brought under the
Torrens system. An original certificate of title was issued in Mariettas name.
Marietta and DBP executed a supplemental document placing the subject
property within the coverage of the mortgage. The mortgage was annotated
to the title.
Sometime between 1993 and 1994, petitioners filed a complaint and an
amended complaint with the Regional Trial Court for the annulment of
document, recovery of possession, and reconveyance of the property. They
prayed that judgment be rendered, ordering the annulment of Enriques
affidavit of self-adjudication, the deed of sale executed by Enrique and
Marietta, and the deed of real estate mortgage executed by Marietta in favor
of DBP. Petitioners also prayed for the reconveyance of their three-fourth
share in the property, their exercise of their right of redemption of Enriques
one-fourth share, as well as attorneys fees and costs of suit.
Petitioners caused the annotation of a notice of lis pendens at the back of
the original certificate of title. The annotation was inscribed on June 27,
1994.
Marietta failed to pay her loan to DBP. DBP instituted foreclosure
proceedings on the land. It was awarded the sale of the property as the
highest bidder. The Certificate of Sale was registered with the Register of
Deeds . . . on 11 September 1996. Marietta failed to redeem the property.
The title to the property was consolidated in favor of DBP.
RTC ruled in favor of petitioners and found that the affidavit of selfadjudication and the deed of absolute sale did not validly transfer to Marietta
the title to the property. Enrique could not transfer three-fourths of the
property since this portion belonged to his co-heirs. It also found that
Marietta was not an innocent purchaser for value because when the deed of
absolute sale was executed, the property was only covered by a tax
declaration in the name of the heirs of Gregoria Lopez.
Hence, the issuance of the original certificate of title would not protect
Marietta. Title is not vested through a certificate. At best, Mariettas
ownership over the subject property would cover only Enriques share.
RTC also found that DBP was not a mortgagee in good faith because at the
time of the execution of the mortgage contract, a certificate of title was yet
to be issued in favor of Marietta. Mariettas title at that time was still based

on a tax declaration. Based on jurisprudence, a tax declaration is not a

conclusive proof of ownership. The DBP should have exerted due diligence in
ascertaining Mariettas title to the property.
Nullification of Enriques affidavit of self-adjudication, the sale of the threefourth portion of the subject property in favor of Marietta, the reconveyance
of the three-fourth share of the property in favor of petitioners, the
nullification of the real estate mortgage executed in favor of DBP, and the
surrender of possession of the property to petitioners were ordered. The trial
court also ordered DBP to pay attorneys fees.
DBP, substituted by Philippine Investment Two (PI Two), appealed to the
Court of Appeals.
The Court of Appeals reversed the decision of the Regional Trial Court and
held that DBP was a mortgagee in good faith
Issue: Whether the property was validly transferred to Marietta and,
eventually, to DBP.
SC: No.
The SC consistently upheld the principle that no one can give what one
does not have. A seller can only sell what he or she owns, or that which he
or she does not own but has authority to transfer, and a buyer can only
acquire what the seller can legally transfer.
This principle is incorporated in our Civil Code. It provides that in a contract
of sale, the seller binds himself to transfer the ownership of the thing sold,
thus:
Art. 1458. By the contract of sale, one of the contracting parties
obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in
money or its equivalent.
The seller cannot perform this obligation if he or she does not have a right to
convey ownership of the thing. Hence, Article 1459 of the Civil Code
provides:
Art. 1459. The thing must be licit and the vendor must have a right
to transfer the ownership thereof at the time it is delivered.
Title or rights to a deceased persons property are immediately passed to his
or her heirs upon death. The heirs rights become vested without need for
them to be declared heirs. Before the property is partitioned, the heirs are
co-owners of the property.

In this case, the rights to Gregoria Lopezs property were automatically

passed to her sons Teodoro, Francisco, and Carlos when she died in
1922. Since only Teodoro was survived by children, the rights to the property
ultimately passed to them when Gregoria Lopezs sons died. The children
entitled to the property were Gregorio, Simplicio, Severino, and Enrique.
Gregorio, Simplicio, Severino, and Enrique became co-owners of the
property, with each of them entitled to an undivided portion of only a quarter
of the property. Upon their deaths, their children became the co-owners of
the property, who were entitled to their respective shares, such that the
heirs of Gregorio became entitled to Gregorios one-fourth share, and
Simplicios and Severinos respective heirs became entitled to their
corresponding one-fourth shares in the property.
The heirs cannot alienate the shares that do not belong to them.
Article 493 of the Civil Code provides:
Art. 493. Each co-owner shall have the full ownership of his part and
of the fruits and benefits pertaining thereto, and he may therefore
alienate, assign or mortgage it, and even substitute another person
in its enjoyment, except when personal rights are involved. But the
effect of the alienation or the mortgage, with respect to the coowners, shall be limited to the portion which may be allotted to him
in the division upon the termination of the co-ownership.
Since Enriques right to the property was limited to his one-fourth share, he
had no right to sell the undivided portions that belonged to his siblings or
their respective heirs. Any sale by one heir of the rest of the property will
not affect the rights of the other heirs who did not consent to the sale. Such
sale is void with respect to the shares of the other heirs.
Regardless of their agreement, Enrique could only convey to Marietta his
undivided one-fourth share of the property, and Marietta could only acquire
that share. This is because Marietta obtained her rights from Enrique who, in
the first place, had no title or interest over the rest of the property that he
could convey.
This is despite Enriques execution of the affidavit of self-adjudication
wherein he declared himself to be the only surviving heir of Gregoria Lopez.
The affidavit of self-adjudication is invalid for the simple reason that it was
false. At the time of its execution, Enriques siblings were still alive and
entitled to the three-fourth undivided share of the property. The affidavit of
self-adjudication did not have the effect of vesting upon Enrique ownership
or
rights
to
the
property.
The issuance of the original certificate of title in favor of Marietta does not

cure Enriques lack of title or authority to convey his co-owners portions of

the property. Issuance of a certificate of title is not a grant of title over
petitioners undivided portions of the property. The physical certificate of title
does not vest in a person ownership or right over a property. It is merely an
evidence of such ownership or right.
Marietta could acquire valid title over the whole property if she were an
innocent purchaser for value. An innocent purchaser for value purchases a
property without any notice of defect or irregularity as to the right or interest
of the seller. He or she is without notice that another person holds claim to
the property being purchased.
As a rule, an ordinary buyer may rely on the certificate of title issued in the
name of the seller. He or she need not look beyond what appears on the
face of the certificate of title. However, the ordinary buyer will not be
considered an innocent purchaser for value if there is anything on the
certificate of title that arouses suspicion, and the buyer failed to inquire or
take steps to ensure that there is no cloud on the title, right, or ownership of
the property being sold.
Marietta cannot claim the protection accorded by law to innocent purchasers
for value because the circumstances do not make this available to her.
In this case, there was no certificate of title to rely on when she purchased
the property from Enrique. At the time of the sale, the property was still
unregistered. What was available was only a tax declaration issued under
the name of Heirs of Lopez.
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. It does not apply when the
land
is
not
yet
registered
with
the
Registry
of
Deeds.
At the very least, the unregistered status of the property should have
prompted Marietta to inquire further as to Enriques right over the property.
She did not. Hence, she was not an innocent purchaser for value. She
acquired no title over petitioners portions of the property.
On the Validity of the mortgage
One of the requisites of a valid mortgage contract is ownership of the
property being mortgaged. Article 2085 of the Civil Code enumerates the
requisites of a mortgage contract:
Art. 2085. The following requisites are essential to the contracts of
pledge
and
mortgage:

(1) That they be constituted to secure the fulfilment of a principal

obligation;
(2) That the pledgor or mortgagor be the absolute owner of the
thing
pledged
or
mortgaged;
(3) That the persons constituting the pledge or mortgage have the
free disposal of their property, and in the absence thereof, that they
be
legally
authorized
for
the
purpose.
Third persons who are not parties to the principal obligation may secure the
latter by pledging or mortgaging their own property.
Applying this provision and having established that Marietta acquired no
valid title or ownership from Enrique over the undivided portions of the
property, this court finds that no valid mortgage was executed over the same
property in favor of DBP. Without a valid mortgage, there was also no valid
foreclosure sale and no transfer of ownership of petitioners undivided
portions to DBP.
In other words, DBP acquired no right over the undivided portions since its
predecessor-in-interest was not the owner and held no authority to convey
the property.
As in sales, an exception to this rule is if the mortgagee is a mortgagee in
good faith. This exception was explained in Torbela v. Rosario:
Under this doctrine, even if the mortgagor is not the owner of the mortgaged
property, the mortgage contract and any foreclosure sale arising therefrom
are given effect by reason of public policy. This principle is based on the rule
that all persons dealing with property covered by a Torrens Certificate of
Title, as buyers or mortgagees, are not required to go beyond what appears
on the face of the title. This is the same rule that underlies the principle of
"innocent purchasers for value." The prevailing jurisprudence is that a
mortgagee has a right to rely in good faith on the certificate of title
of the mortgagor to the property given as security and in the
absence of any sign that might arouse suspicion, has no obligation
to undertake further investigation. Hence, even if the mortgagor is
not the rightful owner of, or does not have a valid title to, the
mortgaged property, the mortgagee in good faith is, nonetheless,
entitled to protection.
DBP claims that it is covered by this exception. DBP is mistaken. The
exception applies when, at the time of the mortgage, the mortgagor has
already obtained a certificate of title under his or her name. It does not apply
when, as in this case, the mortgagor had yet to register the property under
her name.
The facts show that DBP disregarded circumstances that should have

aroused suspicion. For instance, at the time of the mortgage with DBP,
Marietta only had a tax declaration under her name to show that she was the
owner of the property. A tax declaration, by itself, neither proves ownership
of property nor grants title. Yet, DBP agreed to accept the property as
security even though Mariettas claim was supported only by the tax
declaration, and a certificate of title was yet to be issued under her name.
Granting that Marietta was in possession of the property, DBP should have
inquired further as to Mariettas rights over the property since no certificate
of title was issued to her. DBP took the risks attendant to the absence of a
certificate of title. It should bear the burden of checking the ownership as
well as the validity of the deed of sale. This is despite the eventual issuance
of a certificate of title in favor of Marietta.
The rule on innocent purchasers or mortgagees for value is
applied more strictly when the purchaser or the mortgagee is a
bank. Banks are expected to exercise higher degree of diligence in
their dealings, including those involving lands. Banks may not rely
simply on the face of the certificate of title.

Topic: Co-ownership
Ponente: Leonen, J.
Juan P. Cabrera v. Henry Ysaac, G.R. No. 166790, November 19, 2014
Facts: The heirs of Luis and Matilde Ysaac co-owned a 5,517-square-meter
parcel of land located in Sabang, Naga City, covered by OCT No. 506. One of
the co-owners is respondent, Henry Ysaac.
Henry Ysaac leased out portions of the property to several lessees. Juan
Cabrera, one of the lessees, leased a 95-square-meter portion of the land
beginning in 1986.
Henry Ysaac needed money and offered to sell the 95-square-meter piece of
land to Juan Cabrera. He told Henry Ysaac that the land was too small for his
needs because there was no parking space for his vehicle.
In order to address Juan Cabreras concerns, Henry Ysaac expanded his offer
to include the two adjoining lands that Henry Ysaac was then leasing to the
Borbe family and the Espiritu family. Those three parcels of land have a
combined area of 439-square-meters. However, Henry Ysaac warned Juan
Cabrera that the sale for those two parcels could only proceed if the two
families agree to it.
Juan Cabrera accepted the new offer. Henry Ysaac and Juan Cabrera settled
on the price of P250.00 per square meter, but Juan Cabrera stated that he
could only pay in full after his retirement on June 15, 1992. Henry Ysaac
agreed but demanded for an initial payment of P1,500.00, which Juan
Cabrera paid.
According to Juan Cabrera, Henry Ysaac informed him that the Borbe family
and the Espiritu family were no longer interested in purchasing the
properties they were leasing. Since Mamerta Espiritu initially considered
purchasing the property and had made an initial deposit for it, Juan Cabrera
agreed to reimburse this earlier payment and paid the amount

of P6,100.00. Henry Ysaac issued a receipt for this amount. P3,100.00 of the
amount paid was reimbursed to Mamerta Espiritu and, in turn, she gave Juan
Cabrera the receipts issued to her by Henry Ysaac.
On June 15, 1992, Juan Cabrera tried to pay the balance of the purchase
price to Henry Ysaac. However, at that time, Henry Ysaac was in the United
States. The only person in Henry Ysaacs residence was his wife. The wife
refused to accept Juan Cabreras payment.
Juan Cabrera alleged that Henry Ysaac approached him, requesting to reduce
the area of the land subject of their transaction. Part of the 439-square-meter
land was going to be made into a barangay walkway, and another part was
being occupied by a family that was difficult to eject. Juan Cabrera agreed to
the proposal. The land was surveyed again. According to Juan Cabrera, Henry
Ysaac agreed to shoulder the costs of the resurvey, which Juan Cabrera
advanced in the amount of P3,000.00.
The resurvey shows that the area now covered by the transaction was 321
square meters. Juan Cabrera intended to show the sketch plan and pay the
amount due for the payment of the lot. However, on that day, Henry Ysaac
was in Manila. Once more, Henry Ysaacs wife refused to receive the
payment because of lack of authority from her husband.
On September 21, 1994, Henry Ysaacs counsel, Atty. Luis Ruben General,
wrote a letter addressed to Atty. Leoncio Clemente, Juan Cabreras counsel
informing Atty. Clemente that his client is formally rescinding the contract of
sale because Juan Cabrera failed to pay the balance of the purchase price of
the land between May 1990 and May 1992. The letter also stated that Juan
Cabreras initial payment of P1,500.00 and the subsequent payment
of P6,100.00 were going to be applied as payment for overdue rent of the
parcel of land Juan Cabrera was leasing from Henry Ysaac. The letter also
denied the allegation of Juan Cabrera that Henry Ysaac agreed to shoulder
the costs of the resurveying of the property. Juan Cabrera, together with his
uncle, Delfin Cabrera, went to Henry Ysaacs house on September 16, 1995
to settle the matter. Henry Ysaac told Juan Cabrera that he could no longer
sell the property because the new administrator of the property was his
brother, Franklin Ysaac.
Due to Juan Cabreras inability to enforce the contract of sale between him
and Henry Ysaac, he decided to file a civil case for specific performance on
September 20, 1995. Juan Cabrera prayed for the execution of a formal deed
of sale and for the transfer of the title of the property in his name. He
tendered the sum of P69,650.00 to the clerk of court as payment of the
remaining balance of the original sale price. On September 22, 1995, a
notice of lis pendens was annotated on OCT No. 560.

The Regional Trial Court dismissed Juan Cabreras complaint and Henry
Ysaacs counterclaim. Juan Cabrera appealed the Regional Trial Courts
decision.
The Court of Appeals agreed with the Regional Trial Court that there was a
perfected contract of sale between Juan Cabrera and Henry Ysaac. According
to the Court of Appeals, even if the subject of the sale is part of Henry
Ysaacs undivided property, a co-owner may sell a definite portion of the
property. It also ruled that the contract of sale between Juan Cabrera and
Henry Ysaac was not validly rescinded. For the rescission to be valid under
Article 1592 of the Civil Code, it should have been done through a judicial or
notarial act and not merely through a letter.
Issue: Whether there was a valid contract of sale between petitioner and
respondent.
SC: No.
Unless all the co-owners have agreed to partition their property, none of
them may sell a definite portion of the land. The co-owner may only sell his
or her proportionate interest in the co-ownership. A contract of sale which
purports to sell a specific or definite portion of unpartitioned land is null and
void ab initio.
The SC found that there was no contract of sale. It was null ab initio.
As defined by the Civil Code, "a contract is a meeting of minds between
two persons whereby one binds himself, with respect to the other,
to give something or to render some service." For there to be a valid
contract, there must be consent of the contracting parties, an object certain
which is the subject matter of the contract, and cause of the obligation which
is established. Sale is a special contract. The seller obligates himself to
deliver a determinate thing and to transfer its ownership to the buyer. In
turn, the buyer pays for a price certain in money or its equivalent. A
"contract of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price." The
seller and buyer must agree as to the certain thing that will be subject of the
sale as well as the price in which the thing will be sold. The thing to be sold is
the object of the contract, while the price is the cause or consideration.
The object of a valid sales contract must be owned by the seller. If the seller
is not the owner, the seller must be authorized by the owner to sell the
object.
Specific rules attach when the seller co-owns the object of the contract. Sale
of a portion of the property is considered an alteration of the thing

owned in common. Under the Civil Code, such disposition requires

the unanimous consent of the other co-owners. However, the rules
also allow a co-owner to alienate his or her part in the coownership.
These two rules are reconciled through jurisprudence.
If the alienation precedes the partition, the co-owner cannot sell a
definite portion of the land without consent from his or her coowners. He or she could only sell the undivided interest of the coowned property. As summarized in Lopez v. Ilustre, "if he is the owner of
an undivided half of a tract of land, he has a right to sell and convey an
undivided half, but he has no right to divide the lot into two parts, and
convey the whole of one part by metes and bounds."
The undivided interest of a co-owner is also referred to as the "ideal or
abstract quota" or "proportionate share." On the other hand, the
definite portion of the land refers to specific metes and bounds of a coowned property.
Prior to partition, a sale of a definite portion of common property requires the
consent of all co-owners because it operates to partition the land with
respect to the co-owner selling his or her share. The co-owner or seller is
already marking which portion should redound to his or her autonomous
ownership upon future partition.
The object of the sales contract between petitioner and respondent
was a definite portion of a co-owned parcel of land. At the time of the
alleged sale between petitioner and respondent, the entire property was still
held in common.
The rules allow respondent to sell his undivided interest in the co-ownership.
However, this was not the object of the sale between him and petitioner. The
object of the sale was a definite portion. Even if it was respondent who was
benefiting from the fruits of the lease contract to petitioner, respondent has
"no right to sell or alienate a concrete, specific or determinate part of the
thing owned in common, because his right over the thing is represented by
quota or ideal portion without any physical adjudication."
There was no showing that respondent was authorized by his co-owners to
sell the portion of land occupied by Juan Cabrera, the Espiritu family, or the
Borbe family. Without the consent of his co-owners, respondent could not sell
a definite portion of the co-owned property.
Respondent had no right to define a 95-square-meter parcel of land, a 439square-meter parcel of land, or a 321-square-meter parcel of land for

purposes of selling to petitioner. The determination of those metes and

bounds are not binding to the co-ownership and, hence, cannot be
subject to sale, unless consented to by all the co-owners.
The ruling in Pamplona does not apply to petitioner. There was no evidence
adduced during the trial that respondents co-owners acquiesced or tolerated
the sale to petitioner. The co-owners tolerated petitioners possession of a
portion of their land because petitioner was a lessee over a 95-square-meter
portion of the property, not the buyer of the 321-squaremeter portion.
There was also no evidence of consent to sell from the co-owners. When
petitioner approached respondent in 1995 to enforce the contract of sale,
respondent referred him to Franklin Ysaac, the administrator over the entire
property. Respondents act suggests the absence of consent from the coowners. Petitioner did not show that he sought Franklin Ysaacs consent as
administrator and the consent of the other co-owners. Without the consent of
the co-owners, no partial partition operated in favor of the sale to petitioner.
At best, the agreement between petitioner and respondent is a contract to
sell, not a contract of sale. A contract to sell is a promise to sell an object,
subject to suspensive conditions. Without the fulfillment of these suspensive
conditions, the sale does not operate to determine the obligation of the seller
to deliver the object.
A co-owner could enter into a contract to sell a definite portion of the
property. However, such contract is still subject to the suspensive condition
of the partition of the property, and that the other co-owners agree that the
part subject of the contract to sell vests in favor of the co-owners buyer.
Hence, the co-owners consent is an important factor for the sale to ripen.
A non-existent contract cannot be a source of obligations, and it
cannot be enforced by the courts
The absence of a contract of sale means that there is no source of
obligations for respondent, as seller, or petitioner, as buyer. Rescission is
impossible because there is no contract to rescind. The rule in Article
1592 that requires a judicial or notarial act to formalize rescission of a
contract of sale of an immovable property does not apply. This court
does not need to rule whether a letter is a valid method of rescinding a sales
contract over an immovable property because the question is moot and
academic.
For the sale of immovable property, the following provision governs its
rescission:
Article 1592. In the sale of immovable property, even though it
may have been stipulated that upon failure to pay the price at

the time agreed upon the rescission of the contract shall of right
take place, the vendee may pay, even after the expiration of the
period, as long as no demand for rescissionof the contract has
been made upon him either judicially or by notarial act. After the
demand, the court may not grant him a new term.
This provision contemplates (1) a contract of sale of an immovable property
and (2) a stipulation in the contract that failure to pay the price at the time
agreed upon will cause the rescission of the contract. The vendee or the
buyer can still pay even after the time agreed upon, if the agreement
between the parties has these requisites. This right of the vendee to pay
ceases when the vendor or the seller demands the rescission of the contract
judicially or extra judicially. In case of an extra judicial demand to rescind the
contract, it should be notarized.
Hence, this provision does not apply if it is not a contract of sale of
an immovable property and merely a contract to sell an immovable
property. A contract to sell is "where the ownership or title is retained by
the seller and is not to pass until the full payment of the price, such payment
being a positive suspensive condition and failure of which is not a breach,
casual or serious, but simply an event that prevented the obligation of the
vendor to convey title from acquiring binding force."

Topic: Rescission of Contracts

Ponente: Velasco Jr., J.
BPI v. Vicente Victor C. Sanchez, G.R. No. 179518, November 11,
2014
Facts: Vicente Victor C. Sanchez, Kenneth Nereo Sanchez and Imelda C. Vda.
De Sanchez owned a parcel of land located at No. 10 Panay Avenue, Quezon

City consisting of 900 square meters. The property was registered under TCT
No. 156254 of the Registry of Deeds of Quezon City.
On October 10, 1988, Jesus V. Garcia, doing business under the name Trans
American Sales and Exposition, Inc. (TSEI), wrote a letter to Vicente offering
to buy the Subject Property for P1,800,000 which is good only for 7 days.
Sometime in the third week of October 1988, Felisa Yap (Yap), the widow of
Kenneth Nereo Sanchez, and Garcia had a meeting at the Quezon City Sports
Club wherein the parties agreed to the sale of the subject property.
Yap turned over to Garcia the original owners copy of TCT 156254, the copy
of the filed Application for Restitution of Title to the property, and copies of
all receipts for the payment of real estate taxes on the property, while Garcia
paid Yap P50,000 as earnest money.
Afterwards, Yap required the occupants of the subject property to vacate the
same. Immediately after it was vacated, Garcia, without Yaps knowledge
and consent, took possession of the lot and installed his own caretaker
thereon with strict instructions not to allow anyone to enter the property. Yap
later learned that Garcia had also demolished the house on the property and
advertised the construction and sale of TransAmerican Townhouse V
thereon. The foregoing developments notwithstanding and despite numerous
demands, Garcia failed to pay the balance of the purchase price as agreed
upon.
Then, on December 5, 1988, Yap was informed that the checks representing
the purchase price of the subject property were ready but that Vicente must
pick up his checks personally. On December 8, 1988, Vicente came to Manila
from Laguna and proceeded to Garcias office to get the checks. However,
out of the six (6) checks that were presented to them, four (4) of them were
post-dated, further delaying their overdue payment. In order to properly
document such check payments, the parties executed an Agreement.
Subsequently, the first four (4) checks were deposited with no issue.
However, the last two (2) checks, amounting to P400,000 each, were
dishonored for the reason of DAIF or drawn against insufficient funds.
Yap and Vicente discovered that Garcia posted an advertisement in the
classified ads of the Manila Bulletin offering to sell units at the TransAmerican
Townhouse V situated at the subject property.
Atty. Yap wrote the HLURB informing the latter of the existing public
advertisement of TSEI offering for sale townhouses illegally constructed on
the subject property and urging the HLURB to cancel any existing permit or
license to sell the said townhouse units or to deny any application therefor.

HLURB issued a Cease and Desist Order (CDO) enjoining TSEI and Garcia
from further developing and selling the townhouses. To which the latter
complied.
Far East Bank and Trust Company (FEBTC) entered into a Loan Agreement
with TSEI secured by a Real Estate Mortgage over TCT 156254. FEBTC later
merged with the Bank of the Philippine Islands (BPI) with the latter as the
surviving bank. Garcia purportedly explained to FEBTC that the parties were
still in the process of transferring the title. Afterwards, Garcia submitted a
copy of TCT 383697 in TSEIs name. Upon default, FEBTC (now BPI)
foreclosed the subject lot and had the Foreclosure Certificate of Sale
annotated on TCT 383697.
RTC declared that the Sanchezes have the right to rescind the Agreement
they entered into with Garcia and TSEI under proviso no. 6 of the
Agreement. In fact, the RTC enunciated that because the Agreement is in
the nature of a contract to sell, the ownership over the subject property
remained with the Sanchezes as the suspensive conditionthat the check
payments shall be honoredwas not complied with. Thus, the RTC concluded
that there was not even any need for rescission in this case. Moreover, the
RTC found that TSEI and Garcia were builders in bad faith as the Sanchezes
never consented to the construction of the townhouses. Furthermore, the
presentation by Garcia and TSEI to the intervenors of TCT 383697 in TSEIs
name sufficiently shows their bad faith. Anent the rights of intervenors, the
RTC found the Sanchezes to have a better right over the subject property
considering that the transactions between Garcia/TSEI and the intervenors
suffered from several irregularities, which they, the intervenors, in bad faith,
ignored.
CA ordered the cancellation of TCT 383697 in TSEIs name and the
reinstatement of TCT 156254 in the names of the Sanchezes. However, the
appellate court found the Sanchezes equally in bad faith with TSEI and
Garcia, and gave the Sanchezes the option either to appropriate the
townhouses by paying for them or to oblige TSEI and Garcia to pay the price
of the land, unless the subject lots value is considerably more than that of
the structures built thereon in which case TSEI and Garcia would have to pay
the Sanchezes reasonable rent for the use of the subject property.
Issue: Whether the Garcia, TSEI, BPI, and the intervenors acted in bad faith
SC: Yes.
The Court agrees with both the RTC and the CA that Garcia and/or TSEI are
builders in bad faith. They knew for a fact that the property still belonged to
the Sanchezes and yet proceeded to build the townhouses not just without
the authority of the landowners, but also against their will.

Even as the intervenors have been found to be in bad faith, BPI, the
successor of FEBTC, cannot be considered a mortgagee in good faith,
considering the glaring anomalies in the loan transaction between TSEI and
FEBTC.
The general rule that a mortgagee need not look beyond the title does not
apply to banks and other financial institutions as greater care and due
diligence are required of them, and FEBTC should have exercised the
appropriate due diligence review and made the requisite inquiries about the
subject property which was offered to secure the loan applied for by
Garcia/TSEI under a real estate mortgage. FEBTC (now BPI) was negligent
and cannot be considered as a mortgagee in good faith.
Article 1191 of the Civil Code states that rescission is available to a party in a
reciprocal obligation where one party fails to comply therewith:
Article 1191. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not
comply
with
what
is
incumbent
upon
him.
The injured party may choose between the fulfillment and the
rescission of the obligation, with the payment of damages in
either case. He may also seek rescission, even after he has
chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be
just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third
persons who have acquired the thing, in accordance with Articles
1385 and 1388 and the Mortgage Law.
Article 1385 of the Civil Code does provide that rescission shall not take
place if the subject matter of the prior agreement is already in the hands of a
third party who did not act in bad faith, to wit:
Article 1385. Rescission creates the obligation to return the
things which were the object of the contract, together with their
fruits, and the price with its interest; consequently, it can be
carried out only when he who demands rescission can return
whatever
he
may
be
obliged
to
restore.
Neither shall rescission take place when the things which
are the object of the contract are legally in the
possession of third persons who did not act in bad faith.

In this case, indemnity for damages may be demanded from the

person causing the loss.
In the extant case, the failure of TSEI to pay the consideration for the sale of
the subject property entitled the Sanchezes to rescind the Agreement. And in
view of the finding that the intervenors acted in bad faith in purchasing the
property, the subsequent transfer in their favor did not and cannot bar
rescission.

Topic: Nature of a Compromise Agreement

Ponente: Leonen, J.

Metro Manila Shopping Mecca Corp. v. Toledo G.R. 190818 November 10,
2014

Facts:
A Manifestation and Motion was filed by petitioners seeking the
approval of the terms and conditions of the parties Universal Compromise
Agreement (UCA) in lieu of the Courts decision which denied petitioners claim for
tax refund/credit of their local business taxes paid to respondent City of Manila.
Respondent however, submitted that the UCA had no effect on the decision since
the taxes subject of tax refund/credit were not included in the agreement.

Issue:

Whether or not the UCA was valid

SC: Yes. A compromise agreement is a contract whereby the parties, by making

reciprocal concessions, avoid a litigation or put an end to one already commenced.
When given judicial approval, a compromise agreement becomes more than a
contract binding upon the parties. Having been sanctioned by the court, it is
entered as a determination of a controversy and has the force and effect of a
judgment. It is immediately executory and not appealable, except for vices of
consent or forgery. The nonfulfillment of its terms and conditions justifies the
issuance of a writ of execution; in such an instance, execution becomes a ministerial
duty of the court.

Topic: Secondary evidence to Prove Existence of a Contract

Ponente: Velasco Jr., J.

MCMP Construction
November 10, 2014

Corp.

v.

Monark

Equipment

Corp.

G.R.

201001

Facts:
MCMP Construction Corporation (MCMP) leased heavy equipment from
Monark Equipment Corporation (Monark) for various periods, the lease covered by a
Rental Equipment Contract (Contract). Thus, Monark delivered five (5) pieces of
heavy equipment to the project site of MCMP. Upon demand of Monark, MCMP failed
to pay the rental fees. Thus, Monark filed a suit for a Sum of Money.

During trial, Monark's copy of the contract had been lost and that diligent
efforts to recover the copy proved futile. Thus, Monark presented its Account
Manager to testify on the photocopy of the contract. However, MCMP objected to
the presentation of secondary evidence to prove the contents of the Contract
arguing that there were no diligent efforts to search for the original copy. Notably,
MCMP did not present its copy of the Contract notwithstanding the directive of the
trial court to produce the same.

Issue:

Whether or not the secondary evidence should be disallowed

SC: No. Before a party is allowed to adduce secondary evidence to prove the
contents of the original, the offeror must prove the following: (1) the existence or
due execution of the original; (2) the loss and destruction of the original or the
reason for its non-production in court; and (3) on the part of the offeror, the absence
of bad faith to which the unavailability of the original can be attributed. The correct
order of proof is as follows: existence, execution, loss, and contents.

In the instant case, the above requisites are present. MCMP, to note,
contends that the Contract presented by Monark is not the contract that they
entered into. Yet, it has failed to present a copy of the Contract even despite the
request of the trial court for it to produce its copy of the Contract. Normal business
practice dictates that MCMP should have asked for and retained a copy of their
agreement. Thus, MCMP's failure to present the same and even explain its failure,

not only justifies the presentation by Monark of secondary evidence in accordance

with Section 6 of Rule 130 of the Rules of Court, but it also gives rise to the
disputable presumption adverse to MCMP under Section 3 (e) of Rule 131 of the
Rules of Court that "evidence willfully suppressed would be adverse if produced."

Topic: Breach of contract

Ponente: Perlas-Bernabe, First Division

S.V. More Pharma Corporation And Alberto A. Santillana v. Drugmakers

Labo Ra Tories, Inc. And Eliezer Del Mundo, G.R. No. 204699, 12 November
2014

Facts: Del Mundo Groups are the owners of the 50% stocks of of E.A. Northam
Pharma Corporation (E.A. Northam). The remaining 50% shares are owned by
Santillana Group.
Del Mundo Group agreed to cede all its rights and interests in EA Northam in favour
of Santillana Group provided that pharmaceutical products shall remain jointly
owned by Eliezer/Drugmakers and Alberto and that Alberto remains its chief
executive officer with majority ownership and control thereof.

E.A. Northam entered into a Deed of Sale/Assignment with S.V. More, whereby
E.A. Northam agreed to convey, transfer, and assign all its rights over 28
pharmaceutical products in favor of S.V. More which shall then have the right to
have them sold, distributed, and marketed in the latters name, subject to the
condition that such pharmaceutical products will be exclusively manufactured by
Drugmakers based on their existing Contract Manufacturing Agreement.

A month prior to the expiration of the CMA, Drugmakers proposed a new

manufacturing agreement which S.V. More found unacceptable. Hence,S.V. More
entered into a Contract to Manufacture Pharmaceutical Products (CMPP) with Hizon
Laboratories, Inc. (Hizon Laboratories), and, thereafter, caused the latter to
manufacture some of the pharmaceutical products covered by the Deed of
Sale/Assignment.

Drugmakers and Eliezer filed a Complaint for Breach of Contract, Damages,

and Injunction with Prayer for the Issuance of a Writ of Preliminary Injunction and/or
Temporary Restraining Order against S.V. More and Alberto (petitioners), and Hizon
Laboratories, and its President, Rafael H. Hizon, Jr..

In their defense, petitioners denied any liability, alleging, among others, that
the Deed of Sale/Assignment failed to state the true intention of the parties as a
result of the surreptitious insertions by Atty. Carag of certain provisions which were
never agreed upon by the parties. Further, petitioners maintained that they did not
violate the stipulation in the Deed of Sale/Assignment regarding the continuous
manufacture of the subject pharmaceutical products by Drugmakers.

The RTC ruled in favor of respondents, and accordingly ordered petitioners,

Hizon Laboratories and Rafael, to jointly and severally pay Drugmakers.

On appeal, the CA affirmed the decisions of the RTC, with modifications.

Issue: Whether or not the CA correctly affirmed petitioners liability for breach of
contract

SC: Yes, the CA correctly affirmed the liabilities for breach of contract.

The existence of contractual breach in this case revolves around the

exclusive status of Drugmakers as the manufacturer of the subject pharmaceutical
products which was stipulated and, hence, recognized under the following
contracts: (a) the CMA dated October 30, 1992 between Drugmakers, as
manufacturer, and S.V.More, as the holder of the CPR covering the pharmaceutical
products; (b) the Agreement dated May 31, 1993 covering the change in ownership
inE.A. Northam, or the distributor of the pharmaceutical products manufactured by
Drugmakers and covered by S.V. Mores CPR; and (c) the Deed of Sale/Assignment
of even date between E.A. Northam and S.V. More, whereby the formers
distributorship rights were transferred to the latter.

These provisions notwithstanding, records disclose that petitioner S.V More,

through the CMPP and absent the prior written consent of respondent Drugmakers,
as represented by its President, respondent Eliezer, contracted the services of Hizon
Laboratories to manufacture some of the pharmaceutical products covered by the

said contracts. Thus, since the CMPP with Hizon Laboratories was executed on
October 23, 1993,54 or seven (7) days prior to the expiration of the CMA on October
30, 1993, it is clear that S.V. More, as well as its President, petitioner Alberto, who
authorized the foregoing, breached the obligation to recognize Drugmakers as
exclusive manufacturer, thereby causing prejudice to the latter.

While the CA correctly affirmed the existence of the aforementioned breach,

the Court, however, observes that the appellate courts award of actual damages
(due to loss of profits) in the amount of P6,000,000.00 was erroneous due to
improper factual basis.

Records reveal that in their attempt to prove their claim for loss of profits
corresponding to the aforesaid amount, respondents based their computation
thereof on a Sales Projection Form55 for the period November 1993 to February
1995.56 However, it is readily observable that the breach occurred only for a period
of seven (7) days, or from October 23, 1993 until October 30, 1993 that is, the date
when the CMA expired. Notably, the CMA from which stems S.V. Mores obligation
to recognize Drugmakerss status as the exclusive manufacturer of the subject
pharmaceutical products and which was only carried over in the other two (2)
above-discussed contracts was never renewed by the parties,57 nor contained an
automatic renewal clause, rendering the breach and its concomitant effect, i.e., loss
of profits on the part of Drugmakers, only extant for the limited period of, as
mentioned, seven (7) days.

Aside from the lack of substantiation as regards the length of time for which
supposed profits were lost, it is also evident that only six (6) of the 28
pharmaceutical products58 were caused by petitionersto be manufactured by Hizon
Laboratories.

Since the sales projection on which the CA based its award for actual
damages was derived from figures representing the "alleged unregistered or
fabricated sales invoices" of E.A. Northam from 1990 to 1993 and the "desired
profit" of 15-20%, it would therefore be a legal mishap to sustain that award. As
case law holds, the amount of loss warranting the grant of actual or compensatory
damages must be proved with a reasonable degree of certainty, based on
competent proof and the best evidence obtainable by the injured party.61 The CAs
finding on respondents supposed loss of profits in the amount of P6,000,000.00

based on the erroneous sales projection hardly meets this requirement. Accordingly,
it must be set aside.

Nevertheless, considering that respondents palpably suffered some form of

pecuniary loss resulting from petitioners breach of contract, the Court deems it
proper to, instead, award in their favor the sum of P100,000.00 in the form of
temperate damages. This course of action is hinged on Article 2224 of the Civil
Code which states that "temperate or moderate damages, which are more than
nominal but less than compensatory damages, may be recovered when the court
finds that some pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be proved with certainty," as in this case.

As a final matter, the Court resolves that the CA did not gravely abuse its
discretion in awarding respondents' attorney's fees, it appearing that the latter were
compelled to litigate in order to protect their rights and interests in this case, hence,
justifying the same.

Article 19 New Civil Code

Section 63 of the Land Registration Act
Ponente: J. LEONARDO-DE CASTRO
FLORENCIO A. SALADAGA v. ATTY. ARTURO B. ASTORGA., A.C. No.
4697/ A.C. No. 4728, November 25, 2014
Facts:
Herein complainant and respondent entered into a "Deed of Sale
with Right to Repurchase" on December 2, 1981 involving a parcel of coconut
land for P15,000.00. Under the said deed, respondent represented that he
has "the perfect right to dispose as owner in fee simple" the subject property
and that the said property is "free from all liens and encumbrances." The
deed also provided that respondent, as vendor a retro, had two years within
which to repurchase the property, and if not repurchased within the said
period, "the parties shall renew the instrument/agreement."
Respondent failed to exercise his right of repurchase within the period
provided in the deed, and no renewal of the contract was made even after
complainant sent respondent a final demand dated May 10, 1984 for the
latter to repurchase the property. Complainant remained in peaceful
possession of the property until December 1989 when he received letters
from the Rural Bank of Albuera (Leyte), Inc. (RBAI) informing him that the
property was mortgaged by respondent to RBAI, that the bank had
subsequently foreclosed on the property, and that complainant should
therefore vacate the property.
Complainant was alarmed and made an investigation. He found out
that TCT No. T-662 was already cancelled by TCT No. T-3211 in the name of
Philippine National Bank (PNB) as early as November 17, 1972 after
foreclosure proceedings; that TCT No. T-3211 was cancelled by TCT No. T7235 in the names of respondent and his wife on January 4, 1982 pursuant to
a deed of sale dated March 27,1979 between PNB and respondent; and
respondent mortgaged the subject property to RBAI on March 14, 1984, RBAI
foreclosed on the property, and subsequently obtained TCT No. TP-10635 on

March 27, 1991. Complainant was subsequently dispossessed of the property

by RBAI.
Aggrieved, complainant instituted a criminal complaint for estafa and
the instant administrative cases against respondent. In both complaints,
complainant sought the disbarment of respondent.
The administrative cases were referred to the Integrated Bar of the
Philippines (IBP) for investigation, report and recommendation.
In his Consolidated Answer filed before the IBP, respondent denied that
his agreement with complainant was a pacto de retro sale. He claimed that it
was an equitable mortgage and that, if only complainant rendered an
accounting of his benefits from the produce of the land, the total amount
would have exceeded P15,000.00.
The IBP Board of Governors adopted and approved the Investigating
Commissioners Report and Recommendation with modification as follows:
respondent is (1) suspended from the practice of law for two years, with
warning that a similar misdeed in the future shall be dealt with more
severity, and (2) ordered to return the sum of P15,000.00 received in
consideration of the pacto de retro sale, with legal interest.
Issues:
1. Whether respondent violated the laws and the fundamental
tenet of human relations as embodied in Article 19 of the Civil Code.
2. Whether respondents actuations show disregard for Section 63 of
the Land Registration Act.
SC:
1.
Respondent transgressed the laws and the fundamental tenet of
human relations as embodied in Article 19 of the Civil Code:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
Respondent, as owner of the property, had the right to mortgage it to
complainant but, as a lawyer, he should have seen to it that his agreement
with complainant is embodied in an instrument that clearly expresses the
intent of the contracting parties. A lawyer who drafts a contract must see to
it that the agreement faithfully and clearly reflects the intention of the
contracting parties. Otherwise, the respective rights and obligations of the
contracting parties will be uncertain, which opens the door to legal disputes
between the said parties. Indeed, the uncertainty caused by respondents
poor formulation of the "Deed of Sale with Right to Repurchase" was a
significant factor in the legal controversy between respondent and
complainant. Such poor formulation reflects at the very least negatively on
the legal competence of respondent.
2.
Under Section 63 of the Land Registration Act, the law in effect at the
time the PNB acquired the subject property and obtained TCT No. T-3211 in
its name in 1972, where a decree in favor of a purchaser who acquires
mortgaged property in foreclosure proceedings becomes final, such

purchaser becomes entitled to the issuance of a new certificate of title in his

name and a memorandum thereof shall be "indorsed upon the mortgagors
original certificate." TCT No. T-662, which respondent gave complainant
when they entered into the "Deed of Sale with Right to Repurchase" dated
December 2, 1981, does not bear such memorandum but only a
memorandum on the mortgage of the property to PNB in 1963 and the
subsequent amendment of the mortgage.

Topic: Attorneys Fees

Ponente: J. DIOSDADO M. PERALTA
LAND BANK OF THE PHILIPPINES v. JAIME K. IBARRA, ANTONIO K.
IBARRA, JR., LUZ IBARRA VDA. DE JIMENEZ, LEANDRO K IBARRA, and
CYNTHIA IBARRA-GUERRERO., G.R. No. 182472, November 24, 2014
Facts:
Herein respondents are the registered owners of a parcel of
agricultural land. Pursuant to the governments Land Reform Program, the
Department of Agrarian Reform (DAR) acquired 6.0191 hectares of said
property and placed it under the coverage of Presidential Decree (PD) No. 27.
On March 1, 2001, respondents filed a Complaint for the Determination
of Just Compensation. Thereafter, on October 15, 2003, they filed with the
RTC an Omnibus Motion for the Issuance of an Order Authorizing Plaintiffs to
Withdraw Amount Deposited in their Name and Amount to be Withdrawn
Must be Fixed in Accordance with Section 18 of Republic Act (RA) No. 6657.
The RTC rendered a Decision modifying the computation of the
respondent DAR, as approved by respondent Land Bank of the Philippines
(LBP) pursuant to RA no. 6657.
Petitioner filed a Petition for Review with the Court of Appeals (CA)
alleging that it is the value of the land at the time of the taking, or on
October 21, 1972, the effectivity date of PD No. 27, and not at the time of
the rendition of judgment which should be taken into consideration in
computing the just compensation for expropriation proceedings.

The CA, however, ruled that the seizure of landholdings in

expropriation proceedings under PD No. 27 did not take place on the date of
effectivity of PD No. 27, but will actually take effect on the payment of just
compensation. Although the expropriation proceeding was initiated under PD
No. 27, the agrarian reform process was still incomplete considering that the
just compensation to be paid to respondents has yet to be settled. Taking
into account the passage of RA No. 6657 before the completion of the
agrarian reform process, the CA, therefore, held that the just compensation
should be determined in accordance with said law, and not with PD No. 27
and EO No. 228. Hence, the formula should necessarily be as follows: Land
Value = (Capitalized Net Income x 0.6) + (Comparable Sales x 0.3) + (Market
Value per Tax Declaration x 0.1).
Hence this petition.
Issue:

Whether attorneys fees should be awarded.

SC:
The deletion of the award of attorneys fees in favor of respondents is
correct for it is a settled rule that attorneys fees and litigation expenses
cannot automatically be recovered as part of damages in light of the policy
that the right to litigate should bear no premium. An adverse decision does
not ipso facto justify an award of attorneys fees to the winning
party. Counsels fees are awarded only in those cases enumerated in Article
2208 of the Civil Code, which must always be reasonable.
(1) When exemplary damages are awarded;
(2) When the defendants act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiffs plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmens compensation and employers
liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorneys fees and expenses of litigation should be recovered.
In all cases, the attorneys fees and expenses of litigation must be
reasonable.

Topic: Award of Actual Damages in relation to the valid exercise of

Management Prerogative and Principle of Equity and Substantial
Justice
Ponente: C.J. SERENO
ABOSTA SHIP MANAGEMENT AND/OR ARTEMIO CORBILLA v. WILHILM
M. HILARIO., G.R. No. 195792, November 24, 2014
Facts:
An employment contract was executed by petitioner, on behalf of
its foreign principal Panstar Shipping Co., Ltd., and respondent. In this
contract, the latter was hired as a bosun (boatswain) of the foreign vessel
for a period of nine months, with a monthly salary of USD566. The contract
was duly approved by the Philippine Overseas Employment Agency (POEA)
on 25 October 2002. The respondent was not deployed since Panstar chose
to
employ
another
seafarer.
Eventually, respondent filed a Complaint with the POEA against
petitioner for violation of Section 2(r), Rule I, Part VI of the 2002 POEA Rules
by failing to deploy respondent within the prescribed period without any valid
reason. Respondent likewise filed a Complaint with the Labor Arbiter based

on the same ground and sought actual, moral and exemplary damages and
attorney's
fees.
The Labor Arbiter ordered petitioner to pay respondent his salary for
nine months in the amount of USD 10,071. The NLRC held that respondent's
non-deployment was due to a valid exercise of the foreign principal's
management prerogative, which should be given due respect. Thus, the
NLRC dismissed the Complaint, but ordered petitioner "to comply with our
directive to deploy respondent as soon as possible or face the inevitable
consequences." The CA reversed the decision of the NLRC. The CA likewise
denied the Motion for Reconsideration filed by petitioner. Hence, this petition.
Issue: Whether the award of actual damages is proper.
SC:

YES.
The contract was already perfected on the date of its execution, which
occurred when petitioner and respondent agreed on the object and the
cause, as well as on the rest of the terms and conditions therein. Naturally,
contemporaneous with the perfection of the employment contract was the
birth of certain rights and obligations, a breach of which may give rise to a
cause of action against the erring party. Also, the POEA Standard Contract
must be recognized and respected. Thus, neither the manning agent nor the
employer can simply prevent a seafarer from being deployed without a valid
reason.
True, the promotion and choice of personnel is an exercise of
management prerogative. In fact, this Court has upheld management
prerogatives, so long as they are exercised in good faith for the
advancement of the employer's interest, and not for the purpose of defeating
or circumventing the rights of the employees under special laws or under
valid agreements. However, there are limitations on the exercise of
management prerogatives, such as existing laws and the principle of equity
and
substantial
justice.
Under the principle of equity and substantial justice, change of mind
was not a valid reason for the non-deployment of respondent. He lost the
opportunity to apply for other positions in other agencies when he signed the
contract of employment with petitioner. Simply put, that contract was
binding on the parties and may not later be disowned simply because of a
change of mind of either one of them.

Topic:
Three kinds of real actions affecting title to or possession
of real property, or interest therein
Ponente: J. LUCAS P. BERSAMIN
PENTA PACIFIC REALTY CORPORATION v. LEY CONSTRUCTION AND
DEVELOPMENT CORPORATION., G.R. No. 161589,
November 24,
2014
Facts: The petitioner owned the 25th floor of the Pacific Star Building
located in Makati City with an area of 1,068.67 square meters. The
respondent leased 444.03 square meters of the premises (subject property).
Respondent expressed the intention to purchase the entire 1,068.67 square
meters, including the subject property. The parties executed a contract to
sell, denominated as a reservation agreement.

In the letter dated February 4, 1999, the petitioners counsel informed the
respondent of the cancellation of the reservation agreement and the
forfeiture of the respondents payments; and demanded that respondent pay
the rentals of P9,782,226.50 and vacate the subject property.
The petitioner filed the complaint for ejectment in the MeTC following
the respondents failure to comply with the demands to pay and vacate.
Issue: Whether the complaint was for unlawful detainer, or accion publiciana,
or accion reivindicatoria.
Issue:

Whether the MeTC has jurisdiction.

SC: The case is unlawful detainer.

1. Kinds of Possessory Actions
There are three kinds of real actions affecting title to or possession of
real property, or interest therein, namely: accion de reivindicacion, accion
publiciana and accion interdictal. The first seeks the recovery of ownership
as well as possession of realty. The second proposes to recover the right to
possess and is a plenary action in an ordinary civil proceeding. The third
refers to the recovery of physical or actual possession only (through a special
civil action either for forcible entry or unlawful detainer).
If the dispossession is not alleged to take place by any of the means
provided by Section 1, Rule 70, Rules of Court, or, if the dispossession
allegedly took place by any of such means but the action is not brought
within one year from deprivation of possession, the action is properly a
plenary action of accion publiciana or accion de reivindicacion. The
explanation is simply that the disturbance of the peace and quiet of the local
community due to the dispossession did not materialize; hence, the
possessor thus deprived has no need for the summary proceeding of accion
interdictal under Rule 70.
The Municipal Trial Court (MTC) has exclusive original jurisdiction over
accion interdictal. Until April 15, 1994, the MTC had no original jurisdiction
over the other possessory actions. By such date, its jurisdiction was
expanded to vest it with exclusive original jurisdiction over the other
possessory actions ofaccion publiciana and accion de reivindicacion where
the assessed value of the realty involved did not exceed P20,000.00, or, if
the realty involved was in Metro Manila, such value did not
exceed P50,000.00. The expansion of jurisdiction was by virtue of the
amendment by Section 1 of Republic Act No. 7691 to make Section 19 of
Batas Pambansa Blg. 129.
Section 3 of Republic Act No. 7691 similarly revised Section 33 of Batas
Pambansa Blg. 129 (the provision defining the exclusive original jurisdiction
of the MTC over civil actions).
As can be seen, the amendments have made the assessed value of the
property whose possession or ownership is in issue, or the assessed value of
the adjacent lots if the disputed land is not declared for taxation purposes
determinative of jurisdiction. The allegation of the assessed value of the

realty must be found in the complaint, if the action (other than forcible entry
or unlawful detainer) involves title to or possession of the realty, including
quieting of title of the realty. If the assessed value is not found in the
complaint, the action should be dismissed for lack of jurisdiction because the
trial court is not thereby afforded the means of determining from the
allegations of the basic pleading whether jurisdiction over the subject matter
of the action pertains to it or to another court. Courts cannot take judicial
notice of the assessed or market value of the realty.

Topic: Contract of Sale

Ponente: Diosdado Peralta
Iglesia Filipina Independiente v. Heirs of Bernardino Taeza
G.R. No. 179597, December 3, 2014

Facts: The plaintiff-appellee Iglesia Filipina Independiente, a duly registered

religious corporation, was the owner of a parcel of land described as Lot
3653, containing an area of 31,038 square meters, situated at Ruyu,
Tuguegarao, Cagayan, and covered by Original Certificate of Title No. P-8698.
The said lot is subdivided as follows: Lot Nos. 3653-A, 3653-B, 3653-C, and
3653-D. Between 1973 and 1974, the plaintiff-appellee, through its then
Supreme Bishop Rev. Macario Ga, sold Lot 3653-D, with an area of 15,000
square meters, to one Bienvenido de Guzman. On February 5, 1976, Lot Nos.
3653-A and 3653-B, with a total area of 10,000 square meters, were likewise
sold by Rev. Macario Ga, in his capacity as the Supreme Bishop of the
plaintiff-appellee, to the defendant Bernardino Taeza, for the amount of
P100,000.00, through installment, with mortgage to secure the payment of
the balance. Subsequently, the defendant allegedly completed the
payments.
In 1977, a complaint for the annulment of the February 5, 1976 Deed
of Sale with Mortgage was filed by the Parish Council of Tuguegarao,
Cagayan, represented by Froilan Calagui and Dante Santos, the President
and the Secretary, respectively, of the Laymen's Committee, with the then
Court of First Instance of Tuguegarao, Cagayan, against their Supreme Bishop
Macario Ga and the defendant Bernardino Taeza. The said complaint was,
however, subsequently dismissed on the ground that the plaintiffs therein
lacked the personality to file the case.
Issue: Whether or not then Supreme Bishop Rev. Ga is authorized to enter
into a contract of sale in behalf of petitioner.
SC: No.
This case clearly falls under the category of unenforceable contracts
mentioned in Article 1403, paragraph (1) of the Civil Code, which
provides, thus:
Art. 1403. The following contracts are unenforceable, unless they are
ratified:
(1) Those entered into in the name of another person by one
who has been given no authority or legal representation, or who
has acted beyond his powers;
In a case, the Court explained that unenforceable contracts are those
which cannot be enforced by a proper action in court, unless they are
ratified, because either they are entered into without or in excess of
authority or they do not comply with the statute of frauds or both of the
contracting parties do not possess the required legal capacity.

In the present case, however, respondents' predecessor-in-interest,

Bernardino Taeza, had already obtained a transfer certificate of title in his
name over the property in question. Since the person supposedly
transferring ownership was not authorized to do so, the property
had evidently been acquired by mistake.
The only signatory to the Compromise Agreement is Right Rev. Ernesto
M. Tamayo, Bishop of the Diocesan Church of Tuguegarao, purportedly
authorized by the Supreme Bishop, Most Reverend Ephraim S. Fajutagana,
via a Special Power of Attorney dated as far back as September 27, 2011.
This would give rise to the same question of whether the Supreme Bishop is
indeed authorized to enter into a contract of sale in behalf of petitioner. The
Court stated in its Decision dated February 3, 2014, that any sale of real
property requires not just the consent of the Supreme Bishop but
also the concurrence of the laymen's committee, the parish priest,
and the Diocesan Bishop, as sanctioned by the Supreme Council.
The Compromise Agreement, which stipulates that the subject property
would be sold to a third party and the proceeds therefrom divided between
herein parties, again raises the issue of the authority of the person acting in
behalf of petitioner.

Topic: Suretyship
Ponente: Jose Mendoza

Office of the Ombudsman v. Mallari

G.R. No. 183161, December 03, 2014

Facts: On October 24, 1997, ECOBEL Land, Inc., represented by its

Chairman, Josephine Edralin Boright, applied for a medium term financial
facility loan with the Government Service Insurance System Finance Group
for the construction of a 26-storey twin tower condominium building, ECOBEL
Tower, along Taft Avenue in Ermita, Manila. The loan application was denied.
Subsequently, ECOBEL applied for a two-year surety bond with GSIS to
guarantee payment of a Ten Million US Dollar loan with the Philippine
Veterans Bank acting as the obligee. Meanwhile, Alex M. Valencerina, then
Vice-President for Marketing and Support Services, submitted the ECOBEL
bond application through his Memorandum, dated January 27, 1998, for the
evaluation and endorsement of the GSIS Investment Committee (INCOM).
Almost a year from the issuance of the ECOBEL bond, Valencerina received
from Boright the premium payment for the bond in the amount of
P12,731,520.00, in FEBTC check, post-dated February 26, 1999 as a one-year
premium for the period, March 11, 1998 to March 11, 1999.
Thereafter, Transfer Certificate of Title No. 66289 covering the land
located in Lipa City, Batangas, consisting of 205,520 square meters,
submitted as collateral, turned out to be not genuine or spurious. The said
land, with an appraised value of P202,437,200.00, was the major collateral
for the issuance of the ECOBEL bond. The land was titled in the name of
Vicente Yupangco who did not appear to hold any interest in ECOBEL, either
as officer or stockholder. Thus, on February 12, 1999, the ECOBEL bond was
cancelled by GSIS, through Atty. Saludares of the Underwriting Department II.
On the same day, Valencerina informed Boright that the bond was invalid
and unenforceable and that the FEBTC check, postdated February 26, 1999,
was disregarded by GSIS.
On February 19, 1999, despite the notice of the bond cancellation,
ECOBEL was granted a loan by Bear and Stearns International Ltd. in the face
amount of US$10,000,000.00 using the ECOBEL bond. The amount actually
drawn and received by ECOBEL was US$9,307,000.00. After the drawdown,
Campaa at the LRO received the surety bond premium check payments,
dated April 1, 1999 and April 15, 1999, in the total amount of

US$200,629.00. The said checks were remitted to GSIS Manila on May 10,
1999.
On March 7, 2000, a Notice of Default on Payment was issued against
ECOBEL which placed GSIS under threat of a suit. GSIS was furnished with a
copy of the said notice and was similarly advised on March 9, 2000. In a
Certification, dated March 20, 2000,24 PVB stated that it did not accept the
proposal for it to be named obligee in the ECOBEL bond, as there was no
contract or agreement executed between ECOBEL and PVB.
Issue: Whether or not there was a perfected suretyship.
SC: Yes.
A contract of suretyship is an agreement whereby a party, called the
surety, guarantees the performance by another party, called the principal or
obligor, of an obligation or undertaking in favor of another party, called the
obligee. Although the contract of a surety is secondary only to a valid
principal obligation, the surety becomes liable for the debt or duty of another
although it possesses no direct or personal interest over the obligations nor
does it receive any benefit therefrom. The contract of suretyship is further
elucidated, in this wise: The surety's obligation is not an original and direct
one for the performance of his own act, but merely accessory or collateral to
the obligation contracted by the principal. Nevertheless, although the
contract of a surety is in essence secondary only to a valid principal
obligation, his liability to the creditor or promisee of the principal is said to be
direct, primary and absolute; in other words, he is directly and equally bound
with the principal. Thus, suretyship arises upon the solidary binding of a
person deemed the surety with the principal debtor for the purpose of
fulfilling an obligation. A surety is considered in law as being the same party
as the debtor in relation to whatever is adjudged touching the obligation of
the latter, and their liabilities are interwoven as to be inseparable.
The quantum of evidence necessary to find an individual
administratively liable is substantial evidence, the Court assesses the liability
of Mallari in this administrative case.
It must be recalled that it was Mallari who presented to the INCOM a
proposal to consider the grant of a guaranty payment bond to ECOBEL. He
hastily approved and signed ECOBELs bond application without complying
with the instruction of the INCOM to look into the viability of the project of
ECOBEL; without the required counter-bond and sufficient collateral; without
the prior approval of the GSIS Board of Trustees; without payment by ECOBEL
of the corresponding premium; and without the mandatory Loan Agreement
between ECOBEL and PVB.
During the INCOM meeting on March 10, 1998 when the ECOBEL bond
application was approved, Mallari made representation and conclusion,

without sufficient basis, that dollar funding was assured as the target
clientele involved the Fil-Am markets in the U.S. and Europe. Only a day after
its approval, or on March 11, 1998, he immediately signed and issued the
ECOBEL bond without giving ample time and opportunity for undertaking
work to be done such as inspection, survey and assessment of properties
offered as collateral.
Moreover, Mallari gave his strong recommendation to the INCOM,
without basis, that the bond was fully secured by collaterals. All these acts
amply demonstrated Mallaris flagrant willful disregard of the basic principles
of suretyship, the GSIS rules and regulations on bond underwriting, and his
gross negligence in the performance of his official functions as SVP, GIG.
Indeed, they sufficed to uphold his liability for grave misconduct.
It was already said in the questioned decision, as soon as the bond
is in the hands of the Obligor, he can represent and negotiate with
any prospective Obligee; and when accepted by the Obligee, the
suretyship contract becomes valid and binding as between the Surety and
Obligor, even if the premium is unpaid.

Torts and Damages

Ponente: Martin Villarama, Jr.
Cagayan II Electric Cooperative, Inc. v. Rapanan
G.R. No. 199886, December 03, 2014

Facts: On October 31, 1998, around 9:00 p.m., a motorcycle with three
passengers figured in a mishap along the National Highway of Maddalero,
Buguey, Cagayan. It was driven by its owner Camilo Tangonan who died from
the accident, while his companions Rapanan and one Erwin Coloma suffered
injuries. On March 29, 2000, Rapanan and Camilos common law wife,
respondent Mary Gine Tangonan, filed before the Regional Trial Court of
Aparri, Cagayan a complaint for damages against petitioner. They alleged
that while the victims were traversing the national highway, they were struck
and electrocuted by a live tension wire from one of the electric posts owned
by petitioner. They contended that the mishap was due to petitioners
negligence when it failed to fix and change said live tension wire despite
being immediately informed by residents in the area that it might pose an
immediate danger to persons, animals and vehicles passing along the
national highway.
Issue: Whether or not damages should be awarded in favor of Camilos
heirs.
SC: No.
Article 2176 of the Civil Code provides that whoever by act or
omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no
pre-existing contractual relation between the parties, is a quasi-delict.
Under this provision, the elements necessary to establish a quasi-delict case
are: (1) damages to the plaintiff; (2) negligence, by act or omission,

of the defendant or by some person for whose acts the defendant

must respond, was guilty; and (3) the connection of cause and effect
between such negligence and the damages.
The presence of the first element is undisputed because the
unfortunate incident brought about the death of Camilo and physical injuries
to Rapanan. This Court, however, finds that the second and third
elements are lacking thus precluding the award of damages in favor of
respondents.
There is no negligence on the part of petitioner that was allegedly the
proximate cause of Camilos death and Rapanans injuries. From the
testimonies of petitioners employees and the excerpt from the police
blotter, this Court can reasonably conclude that, at the time of that fatal
mishap, said wires were quietly sitting on the shoulder of the road, far
enough from the concrete portion so as not to pose any threat to passing
motor vehicles and even pedestrians.
When the plaintiffs own
negligence was the immediate and proximate cause of his injury, he
cannot recover damages.
Topic: Ejectment Suit
Ponente: Jose Mendoza
Mangaser, v. Ugay
G.R. No. 204926, December 03, 2014

Facts: Petitioner was the registered owner and possessor of a parcel of land
situated in Santiago Sur, Caba, La Union, with an area of 10,632 square
meters and covered by OCT No. RP-174 (FP-13787) and Tax Declaration No.
014-00707. On October 31, 2006, petitioner, discovered that respondent
stealthy intruded and occupied a portion of his property by constructing a
residential house. He referred the matter to the Office of Lupong
Tagapamayapa for conciliation, but no settlement was reached, hence, a
certification to file action was issued by the Lupon. Demand letters were sent
to respondent but he still refused to vacate the premises, thus, he was
constrained to seek judicial remedy. Petitioner filed a complaint for Forcible
Entry with Damages.
Issue: Whether the action for forcible entry shall prosper.
SC: Yes.
For a forcible entry suit to prosper, the plaintiffs must allege and prove:
(a) that they have prior physical possession of the property; (b) that they
were deprived of possession either by force, intimidation, threat, strategy or

stealth; and, (c) that the action was filed within one (1) year from the time
the owners or legal possessors learned of their deprivation of the physical
possession of the property.
General Rule: The word "possession" in forcible entry suits indeed refers to
nothing more than prior physical possession or possession de facto, not
possession de jure or legal possession in the sense contemplated in civil law.
Title is not the issue, and the absence of it "is not a ground for the courts to
withhold relief from the parties in an ejectment case."
Exception: The Court, however, has consistently ruled in a number of cases
that while prior physical possession is an indispensable requirement in
forcible entry cases, the dearth of merit in respondent's position is evident
from the principle that possession can be acquired not only by material
occupation, but also by the fact that a thing is subject to the action of one's
will or by the proper acts and legal formalities established for acquiring such
right.
Jurisprudence also stresses this doctrine. Possession can be acquired
by juridical acts. These are acts to which the law gives the force of acts of
possession. Examples of these are donations, succession, execution and
registration of public instruments, inscription of possessory information titles
and the like. The reason for this exceptional rule is that possession in the
eyes of the law does not mean that a man has to have his feet on
every square meter of ground before it can be said that he is in
possession. It is sufficient that petitioner was able to subject the property to
the action of his will. Here, respondent failed to show that he falls under any
of these circumstances. He could not even say that the subject property was
leased to him except that he promised that he would vacate it if petitioner
would be able to show the boundaries of the titled lot.
In the case at bench, the Court finds that petitioner acquired
possession of the subject property by juridical act, specifically, through the
issuance of a free patent under Commonwealth Act No. 141 and its
subsequent registration with the Register of Deeds on March 18, 1987.
First, the juridical act from which the right of ownership of petitioner
arise would be the registration of the free patent and the issuance of OCT No.
RP-174(13789). Apparently, the Torrens title suggests ownership over
the land. Second, respondent also asserts ownership over the land based on
his prior, actual, continuous, public, notorious, exclusive and peaceful
possession in the concept of an owner of the property in dispute. Because
there are conflicting claims of ownership, then it is proper to provisionally
determine the issue of ownership to settle the issue of possession de facto.
The Court cannot agree with the CA that petitioner's OCT No. RP174(13789) and his tax declarations should absolutely be disregarded. The
issuance of an original certificate of title to the petitioner evidences

ownership and from it, a right to the possession of the property flows. Wellentrenched is the rule that a person who has a Torrens title over the property
is entitled to the possession thereof.
Moreover, his claim of possession is coupled with tax declarations.
While tax declarations are not conclusive proof of possession of a
parcel of land, they are good indicia of possession in the concept of
an owner, for no one in his right mind would be paying taxes for a
property that is not in his actual or constructive possession. Together
with the Torrens title, the tax declarations dated 1995 onwards presented by
petitioner strengthens his claim of possession over the land before his
dispossession on October 31, 2006 by respondent.

Topic: Moral damages

Ponente: Marvic Mario Victor Leonen
People v. Casio, G.R. No. 211465
December 03, 2014
Facts: The International Justice Mission (IJM), a non-governmental
organization, coordinated with the police in order to entrap persons engaged
in human trafficking in Cebu City. Chief PSI George Ylanan, SPO1 Felomino
Mendaros, SPO1 Fe Altubar, PO1 Albert Luardo, and PO1 Roy Carlo Veloso
composed the team of police operatives. PO1 Luardo and PO1 Veloso were
designated as decoys, pretending to be tour guides looking for girls to
entertain their guests. IJM provided them with marked money, which was
recorded in the police blotter. The team went to Queensland Motel and
rented Rooms 24 and 25. These rooms were adjacent to each other. Room 24
was designated for the transaction while Room 25 was for the rest of the
police team. PO1 Luardo and PO1 Veloso proceeded to D. Jakosalem Street in

Barangay Kamagayan, Cebu Citys red light district. Accused Shirley Casio
noticed them and called their attention.
PO1 Veloso and PO1 Luardo convinced accused to come with them to
Queensland Motel. Upon proceeding to Room 24, PO1 Veloso handed the
marked money to accused. As accused counted the money, PO1 Veloso gave
PSI Ylanan a missed call. This was their pre-arranged signal. The rest of the
team proceeded to Room 24, arrested accused, and informed her of her
constitutional rights. The police confiscated the marked money from
accused. Meanwhile, AAA and BBB were brought to Room 25 and placed in
the custody of the representatives from the IJM and the DSWD.
Issue: Whether or not the award of moral damages is proper.
SC: Yes.
Article 2219 of the Civil Code, states that Moral damages may be
recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries; (2) Quasi-delicts
causing physical injuries; (3) Seduction, abduction, rape, or other
lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary
detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of
defamation; (8) Malicious prosecution; (9) Acts mentioned in Article 309; (10)
Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
The criminal case of Trafficking in Persons as a Prostitute is an
analogous case to the crimes of seduction, abduction, rape, or other
lascivious acts. In fact, it is worse. Regardless of the willingness of AAA and
BBB, therefore, to be trafficked, the Court affirmed the text and spirit of our
laws. Minors should spend their adolescence moulding their character in
environments free of the vilest motives and the worse of other human
beings. The evidence and the law compel us to affirm the conviction of
accused in this case.
Topic: Negotiated Contracts
Ponente: Jose Mendoza
Rivera v. People
G.R. No. 156577/G.R. NO. 156587/G.R. NO. 156749, December 03,
2014
Facts: On February 3, 1988, the Memorandum of Agreement entered into by
the Department of Health, the Department of Public Works and Highways,
Department of Interior and Local Government, and the Development
Coordinating Council for Leyte and Samar, for the construction of riverine

boats to be used as floating clinics was executed and signed. The

construction of seven units of these floating clinics was proposed for the
delivery of health care services to the remote barangays in Samar and Leyte.
Subsequently, on December 8, 1988, the DOH Region VIII entered into a
negotiated contract with PAL Boat Industry, managed by Engineer Norberto
Palanas, with a contract price of P700,000.00.
P.D. No. 1594 and its implementing rules are clear to the effect that
infrastructure projects are awarded in the order of priority as follows: First, by
public bidding and second by a negotiated contract. Resort to negotiated
contract, however, is permitted only after a failure of public bidding.
This controversy was generated by an anonymous letter from a
concerned citizen sent to the Office of the Ombudsman, dated June 16, 1990,
stating that there were small white boats for the DOH in a small shipyard
within their neighborhood. It further stated that the boats were built many
months ago but they had been left rotting on land, not on water. Appearing
like dead ducks, they are leaning on their sides.
On February 12, 1993, an order of arrest was issued against all the
accused. On separate dates, they posted bail for their temporary liberty.
Thereafter, on March 10, 1993, they filed a motion for reinvestigation which
was granted by the Sandiganbayan on April 2, 1993. On November 14, 1993,
the OSP handed down the order maintaining its earlier findings. Thereafter,
the Sandiganbayan resumed the criminal proceedings and scheduled the
arraignment of the accused. Upon their arraignment, the accused pleaded
Not Guilty to the offense charged.
Issue: Whether or not there is a valid reason to resort to a negotiated
contract.
SC: None.
The IRR of P.D. No. 1594 enumerates the instances when a negotiated
contract may be entered into:
In times of emergencies arising from natural calamities where
immediate action is necessary to prevent imminent loss of life and/or
property; and Failure to award the contract after competitive bidding for valid
cause or causes.
In these cases, bidding may be undertaken through sealed canvass of
at least three (3) contractors. Authority to negotiate contracts for projects
under these exceptional cases shall be subject to prior approval by heads of
agencies within their limits of approving authority.
Montero espouses that there was a failure of bidding, thus,
necessitating a negotiated contract. As correctly found by the

Sandiganbayan, however, there was no failure of bidding. Rather, there

was an aborted bidding. As admitted by Montero, they never conducted the
public bidding. So there can never be a failure of bidding when there is no
public bidding to begin with.
A competitive public bidding aims to protect public interest by giving it
the best possible advantages thru open competition. It is precisely the
mechanism that enables the government agency to avoid or preclude
anomalies in the execution of public contracts. The manifest reluctance of
the petitioner to hold a public bidding and award the contract to the winning
bidder smacks of favoritism and partiality toward PAL Boat.
In this case, Perez knew that PAL Boat had only a capital of P50,000.00
with a liability of P114,000.00. In his defense, he claimed that during their
ocular inspection of the construction site, PAL Boat had a 1,200 square meter
land which was sufficient to consider it as financially capable of undertaking
the project. This excuse is not acceptable. P.D. No. 1594 provides that:
Section 3. Prequalification of Prospective Contractors.
xxxx
(c) Financial Requirements. The net worth and liquid assets of the
prospective contractor must meet the requirements, to be established in
accordance with the rules and regulations to be promulgated pursuant to
Section 12 of this Decree, to enable him to satisfactorily execute the subject
project. x x x x
Liquid assets of a prospective contractor are specifically required so
that the contractor can easily comply with the project, despite some delay in
the progress payments. In this case, the alleged 1,200-square meter lot of
PAL Boat was an unliquidated asset and should not have been considered in
determining its financial capability. As found by the Sandiganbayan, PAL Boat
did not have the working capital to augment whatever routinary delay that
may occur in the release of funds.

Topic: Purchaser in Good Faith

Ponente: Marvic Leonen

Leong v. See
G.R. No. 194077, December 3, 2014
Facts: Florentino and Carmelita owned a parcel of land in which Elena
Leong, Florentinos sister-in-law stays rental-free. When Florentino and
Carmelita immigrated to the US in which their marriage was eventually
dissolved, there was a provision in their marriage settlement stating that
Florentino shall convey and quitclaim all of his right, title and interest in and
to the subject land to Carmelita.
Thereafter, Carmelita sold the land to Edna. In lieu of Florentino's
signature of conformity in the deed of absolute sale, Carmelita presented to
Edna and her father, witness Ernesto See, a waiver of interest notarized on
March 11, 1996 in Illinois. In this waiver, Florentino reiterated his quitclaim
over his right, title, and interest to the land. Consequently, the land was
transferred to Edna's name. Also, Carmelita assured Edna that her nephews
and nieces would move out of the property; however, such was unheeded.
Thus, Edna filed a complaint for recovery of possession against Elena
and the other relatives of the Leong ex-spouses.
Issue: Whether or not purchase of the land was done in good faith.
SC: Yes.
An innocent purchaser for value refers to someone who buys the
property of another without notice that some other person has a right to or
interest in it, and who pays a full and fair price at the time of the purchase or
before receiving any notice of another persons claim. One claiming to be
an innocent purchaser for value has the burden of proving such status.
The protection of innocent purchasers in good faith for value grounds
on the social interest embedded in the legal concept granting indefeasibility
of titles. Between the third party and the owner, the latter would be more
familiar with the history and status of the titled property. Consequently, an
owner would incur less costs to discover alleged invalidities relating to the
property compared to a third party. Such costs are, thus, better borne by the
owner to mitigate costs for the economy, lessen delays in transactions, and
achieve a less optimal welfare level for the entire society.
Respondent exerted due diligence when she ascertained the
authenticity of the documents attached to the deed of sale such as the
marital settlement agreement with Florentinos waiver of interest over the
property. She did not rely solely on the title. She even went to the Registry
of Deeds to verify the authenticity of the title. These further inquiries were
considered by the lower courts in finding respondent to be an innocent
purchaser in good faith and for value.
As noted by the lower court:
By her overt acts, Edna See with her father verified the authenticity of
Carmelitas land title at the Registry of Deeds of Manila. There was no
annotation on the same thus deemed a clean title. Also, she relied on the

duly executed and notarized Certificate of Authority issued by the State of

Illinois and Certificate of Authentication issued by the Consul of the Republic
of the Philippines for Illinois in support to the Waiver of Interest incorporated
in the Deed of Absolute Sale presented to her by Carmelita. Examination of
the assailed Certificate of Authority shows that it is valid and regular on its
face; it contains a notarial seal.
The assailed Certificate of Authority is a notarized document and
therefore, presumed to be valid and duly executed. Thus, Edna Sees
reliance on the notarial acknowledgment found in the duly notarized
Certificate of Authority presented by Carmelita is sufficient evidence of good
faith.

Topic: Forcible entry

Ponente: Estela Perlas-Bernabe
JAVIER v. LUMONTAD
G.R. No. 203760, December 3, 2014
Facts: Petitioner Homer Javier alleged that he is one of the sons of the late
Vicente T. Javier (Vicente), who was the owner of the subject property. Since
his birth, petitioners family has lived in the residential house erected
thereon. Upon Vicentes death, petitioner, together with his mother,
continued their possession over the same.
Subsequently,
respondent
Susan Lumontad gained entry into the subject land and started to build a two
(2)-storey building on a certain portion thereof, despite petitioners vigorous
objections and protests.
Barangay conciliation failed, so a case for forcible entry was filed.
Respondent admitted that during Vicentes lifetime, he indeed was the
owner and in physical possession of the subject land. Nevertheless, she
claimed to be the owner of the portion where the subject building was being
constructed, as evidenced by a tax declaration in her name. Hence, she took
possession of the said portion not as an illegal entrant but as its owner.
Issue: Whether or not there was forcible entry.
SC: There was none.
Petitioner failed to justify his right to the de facto possession
(physical or material possession) of the disputed premises.
The tax declaration, or the supposed document from which petitioner
hinges his right to the de facto possession of the subject land, that petitioner
presented, only covers his house and not the entire land itself. Nothing
appears on record to show that he has the right to the de facto
possession of the portion which, on the contrary, appears to be consistent
with the claim of ownership of respondent in view of her tax declaration
covering the same property as registered in her name.
Thus, with no evidence in support of petitioners stance, and the
counter-evidence showing respondents right to the de facto possession of
the portion in question as its ostensible owner, the forcible complaint must
necessarily fail.

Topic: Civil Liability

Ponente: Estela Perlas-Bernabe
Daluraya v. Oliva
G.R. No. 210148, December 8, 2014
Facts: Sometime in the afternoon of January 3, 2006, Marina Oliva was
crossing the street when a Nissan Vanette, bearing plate number UPN-172
and traversing EDSA near the Quezon Avenue flyover in Quezon City, ran her
over. While Marina Oliva was rushed to the hospital to receive medical
attention, she eventually died, prompting her daughter, herein respondent
Marla Oliva (Marla), to file a criminal case for Reckless Imprudence Resulting
in Homicide against Daluraya, the purported driver of the vehicle.
In the proceedings, after the prosecution rested its case, Daluraya filed
an Urgent Motion to Dismiss (demurrer) asserting, inter alia, that he was not
positively identified by any of the prosecution witnesses as the driver of the
vehicle that hit the victim, and that there was no clear and competent
evidence of how the incident transpired.
The MeTC granted the demurrer. On reconsideration, the same was
denied, clarifying that the grant of Dalurayas demurrer had the effect of an
acquittal and that reconsideration of its Order granting Dalurayas demurrer
would violate the latters right against double jeopardy.16 With respect to the
civil aspect of the case, the MeTC likewise denied the same, holding that no
civil liability can be awarded absent any evidence proving that Daluraya was
the person responsible for Marina Olivas demise.
Upon appeal to the Regional Trial Court, said court declared that the
act from which the criminal responsibility may spring did not at all exist.
When the case was further elevated, the CA held that the MeTCs Order
showed that Dalurayas acquittal was based on the fact that the prosecution
failed to prove his guilt beyond reasonable doubt. As such, Daluraya was not
exonerated from civil liability.
Issue: Whether or not Daluraya can be held civilly liable for Marina Olivas
death despite his acquittal on the ground of insufficiency of evidence.
SC: No.
Every person criminally liable for a felony is also civilly liable. The
acquittal of an accused of the crime charged, however, does not necessarily
extinguish his civil liability.
There are two kinds of acquittal recognized by our law and their
concomitant effects on the civil liability of the accused:
1. An acquittal on the ground that the accused is not the author of the act or
omission complained of.
This instance closes the door to civil liability, for a person who has

been found to be not the perpetrator of any act or omission cannot and can
never be held liable for such act or omission. There being no delict, civil
liability ex delicto is out of the question, and the civil action, if any, which
may be instituted must be based on grounds other than the delict
complained of.
2. An acquittal based on reasonable doubt on the guilt of the accused.
In this case, even if the guilt of the accused has not been satisfactorily
established, he is not exempt from civil liability which may be proved by
preponderance of evidence only.
The acquittal of the accused does not automatically preclude a
judgment against him on the civil aspect of the case. The extinction of the
penal action does not carry with it the extinction of the civil liability where:
(a) the acquittal is based on reasonable doubt as only preponderance of
evidence is required;
(b) the court declares that the liability of the accused is only civil; and
(c) the civil liability of the accused does not arise from or is not based upon
the crime of which the accused is acquitted.
However, the civil action based on delict may be deemed extinguished
if there is a finding on the final judgment in the criminal action that the act or
omission from which the civil liability may arise did not exist or where the
accused did not commit the acts or omission imputed to him.
Thus, if demurrer is granted and the accused is acquitted by the court,
the accused has the right to adduce evidence on the civil aspect of the case
unless the court also declares that the act or omission from which the civil
liability may arise did not exist. This is because when the accused files a
demurrer to evidence, he has not yet adduced evidence both on the criminal
and civil aspects of the case. The only evidence on record is the evidence for
the prosecution. What the trial court should do is issue an order or partial
judgment granting the demurrer to evidence and acquitting the accused, and
set the case for continuation of trial for the accused to adduce evidence on
the civil aspect of the case and for the private complainant to adduce
evidence by way of rebuttal. Thereafter, the court shall render judgment on
the civil aspect of the case.
In case of an acquittal, the Rules of Court requires that the judgment
state whether the evidence of the prosecution absolutely failed to prove the
guilt of the accused or merely failed to prove his guilt beyond reasonable
doubt. In either case, the judgment shall determine if the act or omission
from which the civil liability might arise did not exist.
A punctilious examination of the MeTCs Order, which the RTC
sustained, showed that Dalurayas acquittal was based on the conclusion
that the act or omission from which the civil liability may arise did
not exist, given that the prosecution was not able to establish that
he was the author of the crime imputed against him. Such conclusion
is clear and categorical when the MeTC declared that the testimonies of the
prosecution witnesses are wanting in material details and they did not

sufficiently establish that the accused precisely committed the crime

charged against him. Furthermore, when Marla sought reconsideration of
the MeTCs Order acquitting Daluraya, said court reiterated and firmly
clarified that the prosecution was not able to establish that the accused was
the driver of the Nissan Vanette which bumped Marina Oliva and that there
is no competent evidence on hand which proves that the accused was the
person responsible for the death of Marina Oliva.
Clearly, therefore, Dalurayas acquittal was based on the fact that the
act or omission from which the civil liability may arise did not exist
in view of the failure of the prosecution to sufficiently establish that
he was the author of the crime ascribed against him.
Consequently,his civil liability should be deemed as non-existent by
the nature of such acquittal.
Topic: Torrens title; Levy; Damages
Ponente: Jose Mendoza
Spouses Suntay v. Keyser Mercantile, Inc.
G.R. No. 208462, December 10, 2014
Facts: On October 20, 1989, Eugenia Gocolay, chairperson and president of
respondent Keyser Mercantile, Inc. (Keyser), entered into a contract to sell
with Bayfront Development Corporation (Bayfront) for the purchase on
installment basis of a condominium unit in Bayfront Tower Condominium
located at A. Mabini Street, Malate, Manila. The subject of the sale was Unit G
of the said condominium project consisting of 163.59 square meters with the
privilege to use two (2) parking slots covered by Condominium Certificate of
Title (CCT) No. 15802. This Contract to Sell was not registered with the
Register of Deeds of Manila. Thus, the subject unit remained in the name of
Bayfront with a clean title.
On July 7, 1990, petitioner spouses Carlos and Rosario Suntay (Spouses
Suntay) also purchased several condominium units on the 4th floor of
Bayfront Tower Condominium through another contract to sell. Despite
payment of the full purchase price, however, Bayfront failed to deliver the
condominium units. When Bayfront failed to reimburse the full purchase
price, Spouses Suntay filed an action against it before the Housing and Land
Use Regulatory Board (HLURB) for violation of Presidential Decree (P.D.) No.
957 and P.D. No. 1344, rescission of contract, sum of money, and damages.
In its decision, dated April 23 1994, the HLURB rescinded the Contract
to Sell between Bayfront and Spouses Suntay and ordered Bayfront to pay
Spouses Suntay the purchase price with interest. Consequently, the HLURB
issued a writ of execution.
Upon the application of Spouses Suntay, the Sheriffs of the Regional

Trial Court (RTC) of Manila levied Bayfronts titled properties, including the
subject condominium Unit G and the two parking slots. Considering that CCT
No. 15802 was still registered under Bayfront with a clean title, the sheriffs
deemed it proper to be levied. The levy on execution in favor of Spouses
Suntay was duly recorded in the Register of Deeds of Manila on January 18,
1995.
The auction sale was conducted on February 23, 1995, and Spouses
Suntay were the highest bidder. Consequently, on March 1, 1995, the
Certificate of Sale6 in favor of Spouses Suntay was issued. This was duly
annotated at the back of CCT No. 15802 on April 7, 1995.
Meanwhile, the Deed of Absolute Sale between Bayfront and Keyser
involving the subject property was finally executed on November 9, 1995.
The latter allegedly paid the full purchase price sometime in 1991. When
Keyser was about to register the said deed of absolute sale in February 1996,
it discovered the Notice of Levy and the Certificate of Sale annotated at the
back of CCT No. 15802 in favor of Spouses Suntay. Nevertheless, on March
12, 1996, the Register of Deeds cancelled the title of Bayfront and issued
CCT No. 264748 in the name of Keyser but carried over the annotation of the
Suntays.9
Subsequently, the sheriffs Final Deed of Sale10 was executed on April
16, 1996 in favor of the Suntays upon the expiration of the one (1) year
period of redemption from the earlier auction sale. CCT No. 26474 of Keyser
was cancelled and, thereafter, CCT No. 34250-A11 was issued in the name of
Spouses Suntay.
Keyser then filed a complaint for annulment of auction sale and
cancellation of notice of levy before the HLURB, docketed as HLURB Case No.
REM 032196-9152. In its decision, dated November 18, 1996, the HLURB
ruled in favor of Keyser. Spouses Suntay appealed the decision to the Office
of the President and later to the CA but both affirmed the HLURB judgment.
On appeal before the Supreme Court, however, the HLURB decision
was set aside. In its September 23, 2005 Decision, the Court ruled that the
HLURB had no jurisdiction over controversies between condominium unit
owners and the issue of ownership, possession or interest in the disputed
condominium units could not be adjudicated by the HLURB due to its limited
jurisdiction under P.D. No. 957 and P.D. No. 1344.
Later, Keyser filed before the RTC of Manila a new complaint for
annulment of auction sale, writ of execution, declaration of nullity of title,
and reconveyance of property with damages against Spouses Suntay.
The RTC ruled in favor of Keyser. It explained, amomg others, that
when Spouses Suntay registered the Certificate of Sale, the condominium
unit was already registered in the name of Keyser.
Spouses Suntay elevated the decision to the CA. The CA denied the
appeal as it found that Spouses Suntay did not acquire the subject property
because at the time it was levied, Bayfront had already sold the
condominium unit to Keyser. Considering that the judgment debtor had no
interest in the property, Spouses Suntay, as purchasers at the auction sale,

also acquired no interest.

Hence, this petition.
Issues: 1. Whether the levy or the sale should be respected.
2. Whether or not damages should be awarded.
Spouses Suntay properly relied on the Certificate of Title of Bayfront
SC: The levy.
First, the Court applied the Torrens System of Land Registration. The
main purpose of the Torrens system is to avoid possible conflicts of title to
real estate and to facilitate transactions relative thereto by giving the public
the right to rely upon the face of a Torrens certificate of title and to dispense
with the need of inquiring further, except when the party concerned has
actual knowledge of facts and circumstances that should impel a reasonably
cautious man to make such further inquiry. Every person dealing with a
registered land may safely rely on the correctness of the certificate
of title issued therefor and the law will in no way oblige him to go
beyond the certificate to determine the condition of the property.
Hence, any buyer or mortgagee of realty covered by a Torrens
certificate of title, in the absence of any suspicion, is not obligated to look
beyond the certificate to investigate the title of the seller appearing on the
face of the certificate. And, he is charged with notice only of such burdens
and claims as are annotated on the title.
In the case at bench, the subject property was registered land under
the Torrens System covered by CCT No. 15802 with Bayfront as the
registered owner. At the time that the Notice of Levy was annotated on
January 18, 1995, the title had no previous encumbrances and liens.
Evidently, it was a clean title. The Certificate of Sale, pursuant to an auction
sale, was also annotated on April 7, 1995, with Bayfront still as the registered
owner.
It was only on March 12, 1996, almost a year later, that Keyser was
able to register its Deed of Absolute Sale with Bayfront. Prior to such date,
Spouses Suntay appropriately relied on the Torrens title of Bayfront to
enforce the latters judgment debt.
When the notice of levy and certificate of sale were annotated on the
title, the subject property was unoccupied and no circumstance existed that
might suggest to Spouses Suntay that it was owned by another individual.
Absent any peculiar circumstance, Spouses Suntay could not be
required to disregard the clean title of Bayfront and invest their
time, effort and resources to scrutinize every square feet of the
subject property. This Court is convinced that Spouses Suntay properly
relied on the genuineness and legitimacy of Bayfronts Torrens certificate of
title when they had their liens annotated thereon.
However, levy on execution is superior to the subsequent
registration of the deed of absolute sale.

The CA stated in its decision that when the subject property was levied
and subjected to an execution sale, Bayfront had already sold it to Keyser. As
such, Spouses Suntay no longer acquired the right over the subject
property from Bayfront because the latter, as judgment debtor, had
nothing more to pass. Earlier, the RTC held that at the time Spouses
Suntay were to register the auction sale, the subject property was already
registered in Keysers name and, thus, they were fully aware of the
earlier sale. It was too late for Spouses Suntay to deny their knowledge of
Keysers title. The RTC also found the auction sale questionable due to the
lack of posting and publication of notice.
The Court disagreed with the lower courts. They had completely
overlooked the significance of a levy on execution. The doctrine is wellsettled that a levy on execution duly registered takes preference
over a prior unregistered sale. Even if the prior sale was subsequently
registered before the sale in execution but after the levy was duly made, the
validity of the execution sale should be maintained because it retroacts to
the date of the levy. Otherwise, the preference created by the levy would be
meaningless and illusory.
In this case, the contract to sell between Keyser and Bayfront was
executed on October 20, 1989, but the deed of absolute sale was only made
on November 9, 1995 and registered on March 12, 1996. The Notice of Levy
in favor of Spouses Suntay was registered on January 18, 1995, while the
Certificate of Sale on April 7, 1995, both dates clearly ahead of Keysers
registration of its Deed of Absolute Sale. Evidently, applying the doctrine
of primus tempore, potior jure (first in time, stronger in right),
Spouses Suntay have a better right than Keyser.
The preference created by the levy on attachment is not diminished
even by the subsequent registration of the prior sale. This is so because an
attachment is a proceeding in rem. It is against the particular property,
enforceable against the whole world. The attaching creditor acquires a
specific lien on the attached property which nothing can subsequently
destroy except the very dissolution of the attachment or levy itself. Such a
proceeding, in effect, means that the property attached is an indebted thing
and a virtual condemnation of it to pay the owners debt. The lien
continues until the debt is paid, or sale is had under execution
issued on the judgment, or until the judgment is satisfied, or the
attachment discharged or vacated in some manner provided by law.
2. No.
There was no award of actual, moral and exemplary damages.
The filing alone of a civil action should not be a ground for an award of
moral damages in the same way that a clearly unfounded civil action is not
among the grounds for moral damages. Spouses Suntay failed to show a
compelling reason to warrant the award of moral damages aside from their
bare allegations.

As to the award of exemplary damages, Article 2229 of the New Civil

Code provides that exemplary damages may be imposed by way of example
or correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages. The claimant, however, must first
establish his right to moral, temperate, liquidated or compensatory
damages. In this case, because Spouses Suntay failed to prove their
entitlement to moral or compensatory damages, there could be no award of
exemplary damages.
Spouses Suntay are not entitled to attorneys fees either. The settled
rule is that no premium should be placed on the right to litigate and that not
every winning party is entitled to an automatic grant of attorneys fees.

Topic: Support; Conflict of Laws

Ponente: Diosdado Peralta
Del Socorro v. Van Wilsem,
G.R. No. 193707, December 10, 2014
Facts: Petitioner Norma A. Del Socorro and respondent Ernst Johan Brinkman
Van Wilsem contracted marriage in Holland on September 25, 1990. On
January 19, 1994, they were blessed with a son named Roderigo Norjo Van

Wilsem, who at the time of the filing of the instant petition was sixteen (16)
years of age.
Their marriage bond ended on July 19, 1995 by virtue of a Divorce
Decree issued by the appropriate Court of Holland. At that time, their son
was only eighteen (18) months old. Thereafter, petitioner and her son came
home to the Philippines.
According to petitioner, respondent made a promise to provide
monthly support to their son in the amount of Two Hundred Fifty (250)
Guildene (which is equivalent to Php17,500.00 more or less). However, since
the arrival of petitioner and her son in the Philippines, respondent never
gave support to the son.
Not long thereafter, respondent came to the Philippines and remarried
in Pinamungahan, Cebu, and since then, have been residing thereat. To
date, all the parties, including their son, Roderigo, are presently living in
Cebu City.
In 2009, petitioner, through her counsel, sent a letter demanding for
support from respondent. However, respondent refused to receive the letter.
Because of this, petitioner filed a complaint-affidavit with the Provincial
Prosecutor of Cebu City against respondent for violation of Section 5,
paragraph E(2) of R.A. No. 9262 for the latters unjust refusal to support his
minor child with petitioner.
Subsequently, in the proceedings, respondent filed a Motion to Dismiss
on the ground of: (1) lack of jurisdiction over the offense charged; and (2)
prescription of the crime charged.20
The RTC-Cebu dismissed the criminal case on the ground that the facts
charged in the information do not constitute an offense with respect to the
respondent who is an alien.
Issue: Whether or not a foreign national has an obligation to support his
minor child under Philippine law.
SC: Yes.
To determine whether or not a person is criminally liable under R.A. No.
9262, it is imperative that the legal obligation to support exists.
Preliminarily, petitioner cannot rely on Article 195 of the New Civil
Code in demanding support from respondent, who is a foreign citizen, since
Article 1535 of the New Civil Code stresses the principle of nationality. In
other words, insofar as Philippine laws are concerned, specifically the
provisions of the Family Code on support, the same only applies to Filipino
citizens. By analogy, the same principle applies to foreigners such that they
are governed by their national law with respect to family rights and duties.
The obligation to give support to a child is a matter that falls under
family rights and duties. Since the respondent is a citizen of Holland or the
Netherlands, he is subject to the laws of his country, not to Philippine
law, as to whether he is obliged to give support to his child, as well
as the consequences of his failure to do so.
As
such,
the

respondent is not obliged to support petitioners son under Article 195 of

the Family Code as a consequence of the Divorce Covenant obtained in
Holland.
This does not, however, mean that respondent is not obliged to
support petitioners son altogether.
In international law, the party who wants to have a foreign law applied
to a dispute or case has the burden of proving the foreign law. In the present
case, respondent hastily concludes that being a national of the Netherlands,
he is governed by such laws on the matter of provision of and capacity to
support. While respondent pleaded the laws of the Netherlands in
advancing his position that he is not obliged to support his son, he
never proved the same.
Hence, in view of respondents failure to prove the national law of the
Netherlands in his favor, the doctrine of processual presumption shall
govern. Under this doctrine, if the foreign law involved is not properly
pleaded and proved, our courts will presume that the foreign law is the same
as our local or domestic or internal law. Thus, since the law of the
Netherlands as regards the obligation to support has not been properly
pleaded and proved in the instant case, it is presumed to be the same with
Philippine law, which enforces the obligation of parents to support their
children and penalizing the non-compliance therewith.
Second, while a divorce obtained in a foreign land as well as its legal
effects may be recognized in the Philippines in view of the nationality
principle on the matter of status of persons, the Divorce Covenant presented
by respondent does not completely show that he is not liable to give support
to his son after the divorce decree was issued. Emphasis is placed on
petitioners allegation that under the second page of the aforesaid covenant,
respondents obligation to support his child is specifically stated, which was
not disputed by respondent.
Third, although the national law of respondent states that parents have
no obligation to support their children or that such obligation is not
punishable by law, said law would still not find applicability when the foreign
law, judgment or contract is contrary to a sound and established public
policy of the forum.
Fourth, prohibitive laws concerning persons, their acts or property, and
those which have for their object public order, public policy and good
customs shall not be rendered ineffective by laws or judgments promulgated,
or by determinations or conventions agreed upon in a foreign country.
The public policy sought to be protected in the instant case is the
principle imbedded in our jurisdiction proscribing the splitting up of a single
cause of action (Section 4, Rule 2 of the 1997 Rules of Civil Procedure).
Fifth, foreign law should not be applied when its application would work
undeniable injustice to the citizens or residents of the forum. To give justice
is the most important function of law; hence, a law, or judgment or contract
that is obviously unjust negates the fundamental principles of Conflict of
Laws.

Applying the foregoing, even if the laws of the Netherlands neither

enforce a parents obligation to support his child nor penalize the noncompliance therewith, such obligation is still duly enforceable in the
Philippines because it would be of great injustice to the child to be denied of
financial support when the latter is entitled thereto.
The Court emphasized, however, that as to petitioner herself,
respondent is no longer liable to support his former wife.

Topic: Reconstitution of Title

Ponente: Presbitero Velasco
Republic v. Heirs of Spouses Donato Sanchez and Juana Meneses,
G.R. No. 212388, December 10, 2014
Facts: Pursuant to Republic Act (RA) No. 26, respondents filed an amended
petition for reconstitution of Original Certificate of Title (OCT) No. 45361 that
covered Lot No. 854 of the Cadastral Survey of Dagupan. They alleged that
OCT No. 45361 was issued in the name of their predecessor-in-interest, the
spouses Sanchez, pursuant to Decree No. 41812 issued in relation to a
Decision dated March 12, 1930 of the then Court of First Instance (CFI) of
Pangasinan. Said lot was declared for taxation purposes in the name of the
spouses Sanchez and that when the latter died intestate, they executed a
Deed of Extrajudicial Partition. Said Deed, however, could not be registered
because the owners copy of OCT No. 45361 was missing. Lastly, they stated
that the Offices of the Register of Deeds (RD) of Lingayen and Dagupan,
Pangasinan issued a certification that the copies of Decree No. 41812 and
OCT No. 45361 could not be found among its records.
Initially, the petition was given due course. However, later on, it was
dismissed for lack of sufficient evidence, ruling that RA No. 26 only applies in
cases where the issuance of the OCT sought to be reconstituted has been
established, only that it was lost or destroyed. While acknowledging the
existence of Decree No. 418121 which was issued for the lot subject of the
case, the RTC nevertheless held that there is no established proof that OCT
No. 45361 was issued by virtue of said Decree.
On appeal, the Court of Appeals held that even though respondents
were unable to present the documents necessary for reconstitution of title as
enumerated under Section 2 of RA No. 26, particularly (a) to (e) thereof, the
documentary pieces of evidence presented by respondents fall under
paragraph (f) of said provision and are sufficient to warrant the reconstitution
of OCT No. 45361. In this regard, the CA emphasized that the certificates of
title which the RD manifested to have superseded OCT No. 45361 all bear
the notation to the effect that Lot No. 854 was originally registered on
January 29, 1931 as OCT No. 45361 pursuant to Decree No. 418121 issued in
G.L.R.O. Cadastral Record No. 920, the name of the registered owner of
which is not available. This, to the CA, substantially complies with the
requirement enunciated in jurisprudence that the documents must come
from official sources which recognize the ownership of the owner and his
predecessors-in-interest.
Issue: Whether or not reconstitution could validly be done.

SC: No.
Essentially, a petition for reconstitution of lost or destroyed OCT
requires, as a condition precedent, that an OCT has indeed been issued.
Assuming arguendo that respondents were able to sufficiently prove
the existence of OCT No. 45361 considering the totality of the evidence
presented, the Court found that reconstitution thereof is still not warranted,
applying Section 15 of RA No. 26. Said provision reads:
Section 15. If the court, after hearing, finds that the documents presented, as
supported by parole evidence or otherwise, are sufficient and proper to
warrant the reconstitution of the lost or destroyed certificate of title, and that
the petitioner is the registered owner of the property or has an interest
therein, that the said certificate of title was in force at the time it was lost or
destroyed, and that the description, area and boundaries of the property are
substantially the same as those contained in the lost or destroyed certificate
of title, an order of reconstitution shall be issued. x x x
As explicitly stated in the above-quoted provision, before a certificate
of title which has been lost or destroyed may be reconstituted, it must first
be proved by the claimants that said certificate of title was still in
force at the time it was lost or destroyed, among others. Here, the
mere existence of TCT No. 10202, later cancelled by TCT No. 44365, which, in
turn, was superseded by TCT No. 80792, which bear the notations:
originally registered on the 29th day of January, [1931] xxx as OCT No.
45361 pursuant to Decree No. 418121 issued in G.L.R.O. Cadastral Record
No. 920.
The name of the registered owner of OCT No. 45361 is not available as per
certification of the [RD of Lingayen], dated August 18, 1982, entries nos.
107415 and 107416, respectively.
clearly shows that the OCT which respondents seek to be reconstituted is no
longer in force, rendering the procedure, if granted, a mere superfluity.
Additionally, if indeed OCT No. 45361 was lost or destroyed, it is
necessary that the RD issue a certification that such was in force at the
time of its alleged loss or destruction. Definitely, the RD cannot issue such
certification because of the dearth of records in support of the alleged OCT
No. 45361 in its file. The presentation of alleged derivative titlesTCT No.
10202, TCT No. 44365 and TCT No. 80792will not suffice to replace this
certification because the titles do not authenticate the issuance of
OCT No. 45361 having been issued by the RD without any basis from
its official records. As a matter of fact, it is a wonder how the derivative
titles were issued when the existence of OCT No. 45361 could not be

established based on the RDs records. The RD failed to explain how it was
able to make an annotation of the original registration of the lot under OCT
No. 45361 when respondents are now asking for its reconstitution. It is also
highly suspicious why respondents are asking the reconstitution of OCT No.
45361 when, supposedly, it has already been cancelled and new titles have
already been issued based on transfers purportedly made by respondents.
Lastly, of what use is the reconstituted OCT No. 45361 when the lot has
already been transferred to other persons. It will practically be of no value or
worth to respondents.
If the respondents still insist on the reconstitution of OCT No. 45361,
the proper procedure is to file a petition for the cancellation and reissuance of Decree No. 418121 following the opinion of then LRA
Administrator Benedicto B. Ulep.
Again, Section 39 of PD 1529 states that: The original certificate of
title shall be a true copy of the decree of registration. This provision is
significant because it contemplates an OCT which is an exact replica of the
decree. If the old decree will not be canceled and no new decree
issued, the corresponding OCT issued today will bear the signature
of the present Administrator while the decree upon which it was
based shall bear the signature of the past Administrator. This is not
consistent with the clear intention of the law which states that the
OCT shall be true copy of the decree of registration . Ostensibly,
therefore, the cancellation of the old decree and the issuance of a new one is
necessary.
Concomitantly, will reconstitution of Decree lie then? Again, the
answer is no. There is no showing that the decree is lost. In fact, it can be
established that a decree, pursuant either to a cadastral proceeding or an
ordinary land registration case, has been issued. Under existing land
registration laws and jurisprudence, there is no such thing as
reconstitution of a decree. RA No. 26 cannot likewise be the basis
because the latter refers to an OCT and not a decree of registration.
Other implications:
1.
For as long as a decree has not yet been transcribed (entered in
registration book of the RD), the court which adjudicated and ordered for the
issuance of such decree continues to be clothed with jurisdiction. Since the
decree has not yet attained finality, it is still subject to cancellation. Upon
cancellation of such decree, the decree owner (adjudicatee or his heirs) may
then pray for the issuance of a new decree number and, consequently, pray
for the issuance of an original certificate of title based on the newly issued
decree of registration.
The issuance of a decree is a ministerial duty both of the judge and of
the Land Registration Commission; failure of the court or of the clerk to issue
the decree for the reason that no motion therefore has been filed can not
prejudice the owner, or the person in whom the land is ordered to be

registered.
2.
The heirs of the original adjudicate may file the petition in
representation of the decedent and the re-issued decree shall still be under
the name of the original adjudicate.
It is a well settled rule that succession operates upon the death of the
decedent. The heirs shall then succeed into the shoes of the decedent. The
heirs shall have the legal interest in the property, thus, they cannot be
prohibited from filing the necessary petition.
As the term connotes, a mere re-issuance of the decree means that the
new decree shall be issued which shall, in all respects, be the same as that of
the original decree. Nothing in the said decree shall be amended nor
modified; hence, it must be under the name of the original adjudicatee.
Therefore, the applicability of RA No. 26 hinges on the existence of
priorly issued OCT.

Topic: Accion Reivindicatoria

Ponente: Lucas P. BERSAMIN
MANALANG v. BACANI
G.R. No. 156995, January 12, 2015
Facts: Petitioners were the co-owners of Lot No 4236 with an area of 914
square meters of the Guagua Cadastre, and declared for taxation purposes in
the name of Tomasa B. Garcia. The land was covered by approved survey
plan Ap-03-004154. Adjacent to Lot 4236 was the respondents Lot No. 4235
covered by OCT No. N-216701. In 1997, the petitioners caused the relocation
and verification survey of Lot 4236 and the adjoining lots, and the result
showed that the respondents had encroached on Lot No. 4236 to the extent
of 405 square meters. A preliminary relocation survey conducted by the
Lands Management Section of the DENR confirmed the result on the
encroachment. When the respondents refused to vacate the encroached
portion and to surrender peaceful possession thereof despite demands, the
petitioners commenced this action for unlawful detainer on April 21, 1997 in
the MTC of Guagua.

Issue: Whether a boundary dispute must be resolved in the context of

accion reivindicatoria or an ejectment case.
SC: Accion reivindicatoria.
Accordingly, the pertinent allegations of the petitioners complaint
follow:chanroblesvirtuallawlibrary
2. Plaintiffs are co-owners of land known as Lot no. 4236 of the Guagua
cadastre. Plaintiffs inherited the said parcel of residential land from Tomasa
B. Garcia-Manalang who is the absolute owner of the said property and the
same is declared for taxation purposes in her name under Tax Declaration
No. 07014906, a copy of which is hereto attached as Annex A;
3. Lot No. 4236 is covered by an approved plan, Plan Ap-03-004154 (a copy
made Annex B) and it consists of 914 square meters;
4. Adjacent to plaintiffs [p]roperty is Lot No. 4235 of the Guagua Cadastre
and covered by approved plan As-03-00533 (copy made Annex C) which is
being claimed by defendants and is the subject matter of Cadastral Case No.
N-229 of the Regional Trial Court of Guagua, Branch 53 where a decision
(copy made Annex D) was rendered by said court on August 28, 1996
confirming the title over said lot in favor of defendant Bienvenido Bacani.
The said decision is now final and executory
5. On February 23, 1997, plaintiffs caused the relocation and verification
survey of cadastral Not No. 4236 of the Guagua Cadastre belonging to
plaintiff and the adjoining lots, particularly Lot No. 4235 being claimed by
defendants;
6. The relocation and verification survey conducted by Engr. Rufo R. Rivera, a
duly licensed Geodetic Engineer per plan (copy made Annex F) revealed
that defendants had encroached an area of 405 square meters of the parcel
of land belonging to plaintiffs. In fact, the whole or part of the houses of the
said defendants have been erected in said encroached portion;
7. Sometime in June of 1997, plaintiffs through plaintiff Concepcion Gonzales
lodged a complaint before the Barangay Council of San Juan, Guagua,
Pampanga against defendants regarding the encroached portion. A
preliminary relocation survey was conducted by the Lands Management
Sector of the DENR and it was found that indeed, defendants encroached
into the parcel of land belonging to plaintiffs. This finding was confirmed by
the approved plan Ap-03-004154;
8. Since defendants refused to vacate the premises and surrender the
peaceful possession thereof to plaintiff, the Barangay Captain of San Juan,
Guagua, Pampanga issued a certification to file action (copy made Annex
G) dated March 4, 1997 to enable the plaintiff to file the appropriate action
in court;
9. On March 10, 1997, plaintiffs sent a formal demand letter (copy made
Annex H) to defendants to vacate the premises and to pay reasonable
compensation for the use of the said encroached portion;

10. Despite receipt of said demand letter per registry return cards attached
to the letter, defendants failed and refused to vacate the encroached portion
and surrender the peaceful possession thereof to plaintiffs;
11. Plaintiffs are entitled to a reasonable compensation in the amount of P
3,000.00 from defendants for the illegal use and occupation of their property
by defendants;
12. By reason of the unjust refusal of defendants to vacate the premises and
pay reasonable compensation to plaintiffs, the latter were constrained to
engage the services of counsel for P30,00.00 plus P1,000.00 per appearance
and incur litigation expenses in the amount of P10,000.00.
Given the foregoing allegations, the case should be dismissed without
prejudice to the filing of a non-summary action like accion reivindicatoria. In
our view, the CA correctly held that a boundary dispute must be resolved in
the context of accion reivindicatoria, not an ejectment case. The boundary
dispute is not about possession, but encroachment, that is, whether
the property claimed by the defendant formed part of the plaintiffs
property. A boundary dispute cannot be settled summarily under
Rule 70 of the Rules of Court, the proceedings under which are
limited to unlawful detainer and forcible entry. In unlawful detainer,
the defendant unlawfully withholds the possession of the premises upon the
expiration or termination of his right to hold such possession under any
contract, express or implied. The defendants possession was lawful at the
beginning, becoming unlawful only because of the expiration or termination
of his right of possession. While in forcible entry, the possession of the
defendant is illegal from the very beginning, and the issue centers on which
between the plaintiff and the defendant had the prior possession de facto.

Topic: Differing interpretation of parties of their contract - effect;

Novation; Rescission v. Resolution
Ponente: Marvic Leonen
The Wellex Group, Inc. vs. U-Land Airlines, Co., Ltd.
G.R. No. 167519
January 14, 2015
Facts: Wellex is a corporation established under Philippine law and it
maintains airline operations in the Philippines. It owns shares of stock in

several corporations including Air Philippines International Corporation

(APIC), Philippine Estates Corporation (PEC), and Express Savings Bank (ESB).
Wellex alleges that it owns all shares of stock of Air Philippines Corporation
(APC).
U-Land Airlines Co. Ltd. (U-Land) "is a corporation duly organized and
existing under the laws of Taiwan, registered to do business . . . in the
Philippines." It is engaged in the business of air transportation in Taiwan and
in other Asian countries.
On May 16, 1998, Wellex and U-Land entered into a Memorandum of
Agreement12 (First Memorandum of Agreement) to expand their respective
airline operations in Asia.
The First Memorandum of Agreement stated that within 40 days from its
execution date, Wellex and U-Land would execute a share purchase
agreement covering U-Lands acquisition of the shares of stock of both APIC
(APIC shares) and PEC (PEC shares). In this share purchase agreement, ULand would purchase from Wellex its APIC shares and PEC shares.
Their execution of a joint development agreement was also conditioned on
the execution of a share purchase agreement.
In case of conflict between the provisions of the First Memorandum of
Agreement and the provisions of the share purchase agreement or its
implementing agreements, the terms of the First Memorandum of Agreement
would prevail, unless the parties specifically stated otherwise or the context
of any agreement between the parties would reveal a different intent.
Finally, Wellex and U-Land agreed that if they were unable to agree on the
terms of the share purchase agreement and the joint development
agreement within 40 days from signing, then the First Memorandum of
Agreement would cease to be effective.
A Second Memorandum of Agreement was entered into. It was not dated,
and no place was indicated as the place of signing. It was not notarized
either, and no other witnesses signed the document.
The 40-day period lapsed on June 25, 1998.45 Wellex and U-Land were not
able to enter into any share purchase agreement although drafts were
exchanged between the two.
Despite the absence of a share purchase agreement, U-Land remitted to
Wellex a total of US$7,499,945.00.
Despite certain transactions, Wellex and U-Land still failed to enter into the
share purchase agreement and the joint development agreement.
Later on, U-Land, through counsel, demanded the return of the
US$7,499,945.00. Counsel for U-Land claimed that "[Wellex] ha[d]
unjustifiably refused to enter into the. . . Share Purchase Agreement." As far
as U-Land was concerned, the First Memorandum of Agreement was no
longer in effect, pursuant to Section 9. As such, U-Land offered to return all
the stock certificates covering APIC shares and PEC shares as well as the
titles to real property given by Wellex as security for the amount remitted by
U-Land.

Wellex sent U-Land a letter, which refuted U-Lands claims. Counsel for
Wellex stated that the two parties carried out several negotiations that
included finalizing the terms of the share purchase agreement and the terms
of the joint development agreement. Wellex asserted that under the joint
development agreement, U-Land agreed to remit the sum of US$3 million by
May 22,1998 as initial funding for the development projects.
Consequently, U-Land filed a Complaint praying for rescission of the First
Memorandum of Agreement and damages against Wellex and for the
issuance of a Writ of Preliminary Attachment.
Wellex interposed that they are bound by their undertakings, and that the
second memorandum novated the first one.
The lower court granted the prayer for rescission.
Issues: 1. Whether or not the parties could viably still comply with their
obligations.
2. Whether or not the first contract was novated.
3. Whether or not the lower court erred in granting rescission.
1. No.
The requirement of a share purchase agreement in this case is that the
parties must agree as to the price of the shares within the period they
stipulated.
The parties here have differing interpretations of the terms of the
First Memorandum of Agreement.
The Civil Code provisions on the interpretation of contracts are controlling to
this case, particularly Article 1370, which reads:
ART. 1370. If the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulations
shall control.
If the words appear to be contrary to the evident intention of the parties, the
latter shall prevail over the former.
The use of the terms "at least 35% of the outstanding capital stock of APIC,
but in any case, not less than 1,050,000,000 shares" and "at least 35% of the
outstanding capital stock of PEC, but in any case, not less than 490,000,000
shares" means that the parties had yet to agree on the number of
shares of stock to be purchased.
The need to execute a share purchase agreement before payment of the
purchase price of the shares is further shown by the clause, "[w]ithout
prejudice to any subsequent agreement between the parties, the purchase
price for the APIC Shares to be reflected in the [share purchase agreement]
shall be... P0.30 per share and that for the PEC Shares at... P0.65 per
share."161 This phrase clearly shows that the final price of the shares of
stock was to be reflected in the share purchase agreement. There being no
share purchase agreement executed, respondent U-Land was under

no obligation to begin payment or remittance of the purchase price

of the shares of stock.
Petitioner Wellex argues that the use of "upon" in Section 2162 of the First
Memorandum of Agreement means that respondent U-Land must pay the
purchase price of the shares of stock in its entirety when they are
transferred. This argument has no merit.
Article 1373 of the Civil Code provides:
ART. 1373. If some stipulation of any contract should admit of
several meanings, it shall be understood as bearing that import
which is most adequate to render it effectual.
It is necessary for the parties to first agree on the final purchase price and
the number of shares of stock to be purchased before respondent U-Land is
obligated to pay or remit the entirety of the purchase price. Thus, petitioner
Wellexs argument cannot be sustained since the parties to the First
Memorandum of Agreement were clearly unable to agree on all the terms
concerning the share purchase agreement. It would be absurd for petitioner
Wellex to expect payment when respondent U-Land did not yet agree to the
final amount to be paid for the totality of an indeterminate number of shares
of stock.
The third paragraph of Section 2163 provides that the "transfer of the
Subject Shares" shall take place upon the fulfillment of certain conditions,
such as full payment of the purchase price "as reflected in the [share
purchase agreement]." The transfer of the shares of stock is different from
the execution of the share purchase agreement. The transfer of the shares of
stock requires full payment of the final purchase price. However, that final
purchase price must be reflected in the share purchase agreement. The
execution of the share purchase agreement will require the existence of a
final agreement.
Therefore, the understanding of the parties captured in the First
Memorandum of Agreement was to continue their negotiation to
determine the price and number of the shares to be purchased. Had it been
otherwise, the specific number or percentage of shares and its price should
already have been provided clearly and unambiguously. Thus, they agreed to
a 40-day period of negotiation.
The First Memorandum of Agreement was, thus, an agreement to enter into a
share purchase agreement. The share purchase agreement should have been
executed by the parties within 40 days from May 16, 1998, the date of the
signing of the First Memorandum of Agreement.
When the 40-day period provided for in Section 9 lapsed, the efficacy of the
First Memorandum of Agreement ceased. The parties were "released from

their respective undertakings." Thus, from June 25, 1998, the date when the
40-day period lapsed, the parties were no longer obliged to negotiate with
each other in order to enter into a share purchase agreement.
However, Section 9 provides for another period within which the parties
could still be required to negotiate. The clause "or such period as the parties
shall mutually agree" means that the parties should agree on a period within
which to continue negotiations for the execution of an agreement. This
means that after the 40-day period, the parties were still allowed to
negotiate, provided that they could mutually agree on a new period of
negotiation.
Based on the records and the findings of the lower courts, the parties were
never able to arrive at a specific period within which they would bind
themselves to enter into an agreement. There being no other period
specified, the parties were no longer under any obligation to
negotiate and enter into a share purchase agreement. Section 9
clearly freed them from this undertaking.
Applying Article 1185 of the Civil Code, the parties are obligated to return to
each other all they have received. It is the non-occurrence or non-execution
of the share purchase agreement that would give rise to the obligation to
both parties to free each other from their respective undertakings. This
includes returning to each other all that they received in pursuit of entering
into the share purchase agreement.
2. None.
There was no express or implied novation of the First Memorandum of
Agreement.
Novation extinguishes an obligation between two parties when there is a
substitution of objects or debtors or when there is subrogation of the creditor.
It occurs only when the new contract declares so "in unequivocal terms" or
that "the old and the new obligations be on every point incompatible with
each other."
For novation to take place, the following requisites must concur:
1) There must be a previous valid obligation.
2) The parties concerned must agree to a new contract.
3) The old contract must be extinguished.
4) There must be a valid new contract.
Novation may also be express or implied.
Express - when the new obligation declares in unequivocal terms that the
old obligation is extinguished.

Implied - when the new obligation is incompatible with the old one on every
point.
The test of incompatibility is whether the two obligations can stand
together, each one with its own independent existence.
Because novation requires that it be clear and unequivocal, it is
never presumed; never favored.
After the 40-day period, the parties did not enter into any
subsequent written agreement that was couched in unequivocal
terms.
Given these circumstances, there was no express novation.
There was also no implied novation of the original obligation.
There was no incompatibility between the original terms of the First
Memorandum of Agreement and the remittances made by
respondent U-Land for the shares of stock. These remittances were
actually made with the view that both parties would subsequently enter into
a share purchase agreement. It is clear that there was no subsequent
agreement inconsistent with the provisions of the First Memorandum of
Agreement.
There being no novation of the First Memorandum of Agreement,
respondent U-Land is entitled to the return of the amount it
remitted to petitioner Wellex. Petitioner Wellex is likewise entitled
to the return of the certificates of shares of stock and titles of land
it delivered to respondent U-Land. This is simply an enforcement of
Section 9 of the First Memorandum of Agreement. Pursuant to Section 9, only
the execution of a final share purchase agreement within either of the
periods contemplated by this stipulation will justify the parties retention of
what they received or would receive from each other.
3. No.
Respondent U-Land is praying for rescission or resolution under Article 1191,
and not rescission under Article 1381.
Article 1191 of the Civil Code provides:
ART. 1191. The power to rescind obligations is implied in reciprocal ones, in
case one of the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of
the obligation, with the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, if the latter should
become impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.

This is understood to be without prejudice to the rights of third persons who

have acquired the thing, in accordance with articles 1385 and 1388 and the
Mortgage Law.
Articles 1380 and 1381, on the other hand, provide an enumeration of
rescissible contracts: ART. 1380. Contracts validly agreed upon may be
rescinded in the cases established by law. ART. 1381. The following contracts
are rescissible:
(1) Those which are entered into by guardians whenever the wards whom
they represent suffer lesion by more than one-fourth of the value of the
things which are the object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the
lesion stated in the preceding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any
other manner collect the claims due them;
(4) Those which refer to things under litigation if they have been entered into
by the defendant without the knowledge and approval of the litigants or of
competent judicial authority;
(5) All other contracts specially declared by law to be subject to rescission.
Article 1383 expressly provides for the subsidiary nature of rescission:
ART. 1383. The action for rescission is subsidiary; it cannot be instituted
except when the party suffering damage has no other legal means to obtain
reparation for the same.
Rescission itself, however, is defined by Article 1385:
ART. 1385. Rescission creates the obligation to return the things which were
the object of the contract, together with their fruits, and the price with its
interest; consequently, it can be carried out only when he who demands
rescission can return whatever he may be obliged to restore. Neither shall
rescission take place when the things which are the object of the contract are
legally in the possession of third persons who did not act in bad faith.
In this case, indemnity for damages may be demanded from the person
causing the loss. Jurisprudence categorically stated that Article 1385 is
applicable to Article 1191:
At this juncture, it is noteworthy to point out that rescission does not merely
terminate the contract and release the parties from further obligations to

each other, but abrogates the contract from its inception and restores the
parties to their original positions as if no contract has been made.
Consequently, mutual restitution, which entails the return of the benefits that
each party may have received as a result of the contract, is thus required. To
be sure, it has been settled that the effects of rescission as provided for in
Article 1385 of the Code are equally applicable to cases under Article 1191,
to wit:
xxxx
Mutual restitution is required in cases involving rescission under Article 1191.
This means bringing the parties back to their original status prior to the
inception of the contract. Article 1385 of the Civil Code provides, thus:
ART. 1385. Rescission creates the obligation to return the things which were
the object of the contract, together with their fruits, and the price with its
interest; consequently, it can be carried out only when he who demands
rescission can return whatever he may be obligated to restore. Neither shall
rescission take place when the things which are the object of the contract are
legally in the possession of third persons who did not act in bad faith.
In this case, indemnity for damages may be demanded from the person
causing the loss.
Rescission, as defined by Article 1385, mandates that the parties must return
to each other everything that they may have received as a result of the
contract. This pertains to rescission or resolution under Article 1191, as well
as the provisions governing all forms of rescissible contracts.
For Article 1191 to be applicable, however, there must be reciprocal
prestations as distinguished from mutual obligations between or among the
parties. A prestation is the object of an obligation, and it is the conduct
required by the parties to do or not to do, or to give.177 Parties may be
mutually obligated to each other, but the prestations of these obligations are
not necessarily reciprocal. The reciprocal prestations must necessarily
emanate from the same cause that gave rise to the existence of the
contract. This distinction is best illustrated by an established authority in civil
law, the late Arturo Tolentino:
This article applies only to reciprocal obligations. It has no application to
every case where two persons are mutually debtor and creditor of each
other. There must be reciprocity between them. Both relations must arise
from the same cause, such that one obligation is correlative to the other.
Thus, a person may be the debtor of another by reason of an agency, and his
creditor by reason of a loan. They are mutually obligated, but the obligations
are not reciprocal. Reciprocity arises from identity of cause, and necessarily
the two obligations are created at the same time.178 (Citation omitted)

The failure of one of the parties to comply with its reciprocal prestation
allows the wronged party to seek the remedy of Article 1191. The wronged
party is entitled to rescission or resolution under Article 1191, and even the
payment of damages. It is a principal action precisely because it is a violation
of the original reciprocal prestation.
Article 1381 and Article 1383, on the other hand, pertain to rescission where
creditors or even third persons not privy to the contract can file an action
due to lesion or damage as a result of the contract.
Decisional law elaborated on the confusion between "rescission" or
resolution under Article 1191 and rescission under Article 1381:
On the other hand, Article 1191 of the New Civil Code refers to rescission
applicable to reciprocal obligations. Reciprocal obligations are 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. Rescission of reciprocal obligations under Article 1191 of the New Civil
Code should be distinguished from rescission of contracts under Article 1383.
Although both presuppose contracts validly entered into and subsisting and
both require mutual restitution when proper, they are not entirely identical.
While Article 1191 uses the term "rescission," the original term which was
used in the old Civil Code, from which the article was based, was
"resolution." Resolution is a principal action which is based on breach of a
party, while rescission under Article 1383 is a subsidiary action limited to
cases of rescissionfor lesion under Article 1381 of the New Civil Code, which
expressly enumerates the following rescissible contracts:
1. Those which are entered into by guardians whenever the wards whom
they represent suffer lesion by more than one fourth of the value of the
things which are the object thereof;
2. Those agreed upon in representation of absentees, if the latter suffer the
lesion stated in the preceding number;
3. Those undertaken in fraud of creditors when the latter cannot in any
manner collect the claims due them;
4. Those which refer to things under litigation if they have been entered into
by the defendant without the knowledge and approval of the litigants or of
competent judicial authority; [and]
5. All other contracts specially declared by law to be subject to rescission.183
(Citations omitted)

When a party seeks the relief of rescission as provided in Article 1381, there
is no need for reciprocal prestations to exist between or among the parties.
All that is required is that the contract should be among those enumerated in
Article 1381 for the contract to be considered rescissible. Unlike Article 1191,
rescission under Article 1381 must be a subsidiary action because of Article
1383.
Contrary to petitioner Wellexs argument, this is not rescission
under Article 1381 of the Civil Code. This case does not involve
prejudicial transactions affecting guardians, absentees, or fraud of
creditors. Article 1381(3) pertains in particular to a series of
fraudulent actions on the part of the debtor who is in the process of
transferring or alienating property that can be used to satisfy the
obligation of the debtor to the creditor. There is no allegation of
fraud for purposes of evading obligations to other creditors. The
actions of the parties involving the terms of the First Memorandum
of Agreement do not fall under any of the enumerated contracts
that may be subject of rescission.
Further, respondent U-Land is pursuing rescission or resolution under Article
1191, which is a principal action.
Rescission or resolution under Article 1191 is a principal action that is
immediately available to the party at the time that the reciprocal prestation
was breached. Article 1383 mandating that rescission be deemed a
subsidiary action cannot be applicable to rescission or resolution under
Article 1191. Thus, respondent U-Land correctly sought the principal relief of
rescission or resolution under Article 1191.
The obligations of the parties gave rise to reciprocal prestations, which arose
from the same cause: the desire of both parties to enter into a share
purchase agreement that would allow both parties to expand their respective
airline operations in the Philippines and other neighboring countries.
Topic: Extrajudicial Foreclosure
Ponente: Jose P. PEREZ
BANK OF THE PHILIPPINE ISLANDS v. SPOUSES CASTRO
G.R. No. 195272, January 14, 2015
Facts: The Complaint has its origins from the two loans contracted by
Spouses David M. Castro and Consuelo B. Castro from Prudential Bank in the
amounts of P100,000.00 and P55,000.00 in July and August 1987. The first
loans maturity date was on 18 January 1988 while the second loan had a
maturity date of 23 February 1988. The P100,000.00 loan was secured by a
Real Estate Mortgage over petitioners' property located in Quezon City and

covered by Transfer Certificate of Title No. 364277 while the P55,000.00 loan
was secured by another REM over two parcels of land located in Alaminos,
Laguna covered by TCT Nos. T-2225 and T-2226, registered in the name of
Davids mother, Guellerma Malabanan. The loans remained unpaid as of 30
April 1996 and the balances ballooned to P290,205.05 on the P100,000.00
loan and P96,870.20 on the P55,000.00 loan. Prudential Bank filed two
separate petitions for foreclosure of the mortgage. In their first petition,
Prudential Bank admitted that through inadvertence, the photocopies of the
first two pages of the REM covering the properties in Laguna were mixed and
attached to the photocopies of the last two pages of the REM covering the
Quezon City property. Thus, in the Notice of Sheriffs Sale, the name
Guellerma Malabanan rep. by her AIF David M. Castro appeared as
mortgagor while the amount of mortgaged indebtedness is P96,870.20. The
real property described therein however is the Quezon City property. On 26
August 1996, the Quezon City property was sold at a public auction in favor
of Prudential Bank whose winning bid was P396,000.00. In their Complaint,
Spouses Castro alleged that the extrajudicial foreclosure and sale of the
Quezon City property is null and void for lack of notice and publication of the
extrajudicial foreclosure sale.
The trial court ruled in favor of Prudential Bank and dismissed the complaint.
The Court of Appeals reversed the ruling of the trial court. Prudential Bank
filed a motion for reconsideration.
Issue: Whether or not the errors in the Notice of Sheriffs Sale would
invalidate the notice and render the sale and the certificate of such sale void.
SC: Yes, however, oreclosure proceedings have in their favor the
presumption of regularity and the party who seeks to challenge the
proceedings has the burden of evidence to rebut the same. In this
case, respondent failed to prove that Prudential Bank has not complied with
the notice requirement of the law.
Sections 2, 3, and 4 of Act No. 3135 laid down the procedure regarding
foreclosure sale:
Sec. 2. Said sale cannot be made legally outside of the province in which the
property sold is situated; and in case the place within said province in which
the sale is to be made is subject to stipulation, such sale shall be made in
said place or in the municipal building of the municipality in which the
property or part thereof is situated.
Sec. 3. Notice shall be given 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, such notice shall also be published once a week for at least
three consecutive weeks in a newspaper of general circulation in the
municipality or city.
Sec. 4. The sale shall be made at public auction, between the hours of nine in
the morning and four in the afternoon; and shall be under the direction of the

sheriff of the province, the justice or auxiliary justice of the peace of the
municipality in which such sale has to be made, or a notary public of said
municipality, who shall be entitled to collect a fee of five pesos each day of
actual work performed, in addition to his expenses.
The notice rule was complied with when the Notice of Sheriffs Sale was
published in Philippine Recorder, a national newspaper of general circulation
once a week for three consecutive weeks or on 29 July, 5 and 12 August
1996.
As a matter of fact, the foreclosure procedure undertaken by
Prudential Bank was supported by the following documents: Affidavit of
Publication, Notice of Sheriffs Sale, Sheriffs Certificate of Sale, Affidavit of
Posting, and Minutes of the Auction Sale. Indubitably, these documents
evidenced the regular and lawful conduct of the foreclosure proceedings. For
failure to overcome the burden of showing that the foreclosure
proceedings is tainted with irregularity, the Certificate of Sale
should be upheld.

Topic: Quieting of title

Ponente: Teresita J. LEONARDO-DE CASTRO

SYJUCO v. REPUBLIC
G.R. No. 148748, January 14, 2015
Facts: Petitioners Imelda, Leonardo, Fidelino, Azucena, Anita, and Sisa, all
surnamed Syjuco are the registered co-owners of the subject land, located in
the then Barrio of Balintawak, Municipality of Caloocan, Province of Rizal,
under TCT No. T-1085304 issued by the Register of Deeds of Caloocan City
on March 26, 1984. Petitioners have been in open, continuous, and
uninterrupted possession of the subject land, by themselves or through their
predecessors-in-interest, since 1926. Petitioners traced back their title over
the subject land to TCT No. 10301 issued on February 26, 1926 to Monica
Jacinto Galauran. Thereafter, TCT No. 10301 was replaced by TCT No. 8685
under the names of Avelina Baello, Felisa Baello, Dolores Baello, Eduardo
Mesina, and Fausto Galauran. TCT No. 8685 was then replaced by TCT No.
12370 under the names of the brothers Martin V. Syjuco and Manuel V.
Syjuco pursuant to a Deed of Sale of Real Estate5 dated February 7, 1949
executed by Avelina Baello, et al. in favor of the siblings Martin and Manuel.
TCT No. 12370 was, in turn, replaced by TCT No. 4856 issued on July 1, 1964
in Martins name alone in accordance with a Partition Agreement7 executed
by the brothers on June 16, 1964. Upon Martins death, petitioners inherited
the subject land, and following the extrajudicial partition they executed on
June 27, 1976, they registered said land in their names, as co-owners, under
TCT No. T-108530 issued on March 26, 1984.
Petitioners and their
predecessors-in-interest have been paying the real property taxes over the
subject land since 1949.
Sometime in 1994, however, petitioners learned that a broker named
Exequiel Fajardo, through a Letter, offered for sale the subject land along
with the improvements thereon to a certain Luis Ong. They also learned that
the land they own was also subject of a TCT owned by a certain Felisa
Bonifacio.
To protect their rights and interest over the subject land, petitioners lodged a
Petition, praying for the declaration of nullity and cancellation of respondent
Bonifacios TCT No. over the subject land in view of petitioners subsisting
TCT No. T-108530 over the very same property. In an Order, the RTC deemed
the case as a special civil action for quieting of title and not an ordinary civil
action for recovery of ownership of land.
In this petition, respondents assert that the action for quieting of title is a
prohibited collateral attack.
Issue: 1. Whether or not the contention of the respondents is tenable.
2. Whether or not the action for quieting of title is already barred by
prescription.
SC: 1. No.
Section 48 of Presidential Decree No. 152944 states:

Sec. 48. Certificate not subject to collateral attack. - A certificate of title shall
not be subject to collateral attack. It cannot be altered, modified, or canceled
except in a direct proceeding in accordance with law.
To determine whether an attack on a certificate of title is direct or indirect,
the relevance of the object of the action instituted and the relief sought
therein must be examined. The rule was explained in jurisprudence as
follows:
When is an action an attack on a title? It is when the object of the action
or proceeding is to nullify the title, and thus challenge the judgment
pursuant to which the title was decreed. The attack is direct when the object
of an action or proceeding is to annul or set aside such judgment, or enjoin
its enforcement. On the other hand, the attack is indirect or collateral when,
in an action to obtain a different relief, an attack on the judgment is
nevertheless made as an incident thereof.
The instituted action in this case is clearly a direct attack on a certificate of
title to real property. In their complaint for quieting of title, petitioners
specifically pray for the declaration of nullity and/or cancellation of
respondents TCT Nos. 265778 and 285313 over the subject land. The relief
sought by petitioners is certainly feasible since the objective of an action to
quiet title, as provided under Article 476 of the Civil Code of the Philippines,
is precisely to quiet, remove, invalidate, annul, and/or nullify" a cloud on title
to real property or any interest therein by reason of any instrument, record,
claim, encumbrance or proceeding which is apparently valid or effective but
is in truth and in fact invalid, ineffective, voidable, or unenforceable, and
may be prejudicial to said title."
2. No.
The Court also finds bereft of merit the contentions that petitioners action to
quiet title had already prescribed and/or that the titles of respondents over
the subject land have already become incontrovertible and indefeasible
based on Section 32 of Presidential Decree No. 1529. Section 32 of
Presidential Decree No. 1529 states:
Section 32. Review of decree of registration; Innocent purchaser for value.The decree of registration shall not be reopened or revised by reason of
absence, minority, or other disability of any person adversely affected
thereby, nor by any proceeding in any court for reversing judgments,
subject, however, to the right of any person, including the government and
the branches thereof, deprived of land or of any estate or interest therein by
such adjudication or confirmation of title obtained by actual fraud, to file in
the proper Court of First Instance a petition for reopening and review of the
decree of registration not later than one year from and after the date of the
entry of such decree of registration, but in no case shall such petition be

entertained by the court where an innocent purchaser for value has acquired
the land or an interest therein, whose rights may be prejudiced. Whenever
the phrase "innocent purchaser for value" or an equivalent phrase occurs in
this Decree, it shall be deemed to include an innocent lessee, mortgagee, or
other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and
the certificate of title issued shall become incontrovertible. Any person
aggrieved by such decree of registration in any case may pursue his remedy
by action for damages against the applicant or any other persons responsible
for the fraud. (Emphases added.)
The above-quoted rule has well-settled exceptions.
It is an established doctrine in land ownership disputes that the filing of an
action to quiet title is imprescriptible if the disputed real property is in
the possession of the plaintiff. One who is in actual possession of a piece
of land claiming to be owner thereof may wait until his possession is
disturbed or his title is attacked before taking steps to vindicate his right, the
reason for the rule being that his undisturbed possession gives him a
continuing right to seek the aid of a court of equity to ascertain and
determine the nature of the adverse claim of a third party and its effect on
his own title, which right can be claimed only by one who is in possession.
In this case, petitioners have duly established during the trial that they
and/or their predecessors-in-interest have been in uninterrupted possession
of the subject land since 1926 and that it was only in 1994 when they found
out that respondent Bonifacio was able to register the said property in her
name in another title. It was also only in 1995 when petitioners learned that
respondent Bonifacio was able to sell and transfer her title over the subject
land in favor of respondent VSD Realty.
Moreover, the rule on the incontrovertibility or indefeasibility of title
has no application in this case given the fact that the contending
parties claim ownership over the subject land based on their
respective certificates of title thereon which originated from
different sources. Certainly, there cannot be two or even several
certificates of title on the same parcel of real property because "a land
registration court has no jurisdiction to order the registration of land already
decreed in the name of another in an earlier land registration case" and "a
second decree for the same land would be null and void, since the principle
behind original registration is to register a parcel of land only once." The
indefeasibility of a title under the Torrens system could be claimed
only if a previous valid title to the same parcel of land does not
exist. Where the issuance of the title was attended by fraud, the same
cannot vest in the titled owner any valid legal title to the land covered by it;

and the person in whose name the title was issued cannot transmit the
same, for he has no true title thereto. This ruling is a mere affirmation of the
recognized principle that a certificate is not conclusive evidence of title if it is
shown that the same land had already been registered and that an earlier
certificate for the same land is in existence.

Topic: Reconstitution of Property

Ponente: Diosdado M. PERALTA
UNGAY MALOBAGO MINES, INC. v. REPUBLIC
G.R. No. 187892, January 14, 2015
Facts: Ungay Malobago Mines, Inc. filed with the RTC of Legaspi City, a
verified petition seeking the reconstitution of OCT No. 4784 of the Cadastral
Survey of Albay, pursuant to the provisions of RA 26 and PD No. 1529. In its
petition, petitioner alleged: that it is the registered owner of a mining patent
covered by OCT No. 4784 which was issued by then President Diosdado
Macapagal on July 20, 1962 and entered in the Registry of Deeds of the
Province of Albay on September 4, 1962; that sometime in April 2004, it
requested for a certified true copy of OCT No. VH-4784 from the Register of
Deeds of Albay, but despite a diligent search, the said copy could not be
located by the said office leading one to believe that the same was
permanently lost or destroyed; that the property was free from all liens and
encumbrances of any kind whatsoever and there existed no deeds or
instruments affecting the same which had been presented for or pending
registration with the Register of Deeds of Albay; and that the owner's
duplicate of OCT No. VH-4784 which would serve as a basis for the
reconstitution, was attached thereto. During the initial hearing, petitioner,
through counsel, showed compliance with the jurisdictional requirements.
Trial thereafter ensued. The Republic opposed the petition. The RTC rendered
its decision dismissing the petition. Petitioner filed its appeal with the CA. In
so ruling, the CA found that since petitioner is not the registered owner of
the land covered by OCT No. VH-4784. Petitioner filed a motion for
reconsideration, which the CA denied.
Issue: Who may petition for reconstitution in this case?
SC: The Torrens 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. When the Torrens Certificate of Title

has been lost or destroyed, RA No. 26 provides for a special procedure for the
reconstitution of such title. Sections 5 and 10 of RA No. 26 state: Section 5.
Petitions for reconstitution from sources enumerated in sections 2(a), 2(b),
3(a), 3(b), and/or 4(a) of this Act may be filed with the register of deeds
concerned by the registered owner, his assigns, or other person having an
interest in the property. The petition shall be accompanied with the
necessary sources for reconstitution and with an affidavit of the registered
owner stating, among other things, that no deed or other instrument
affecting the property had been presented for registration, or, if there be
any, the nature thereof, the date of its presentation, as well as the names of
the parties, and whatever the registration of such deed or instrument is still
pending accomplishment. If the reconstitution is to be made from any of the
sources enumerated in section 2(b) or 3(b), the affidavit should further state
that the owner's duplicate has been lost or destroyed and the circumstances
under which it was lost or destroyed. Thereupon, the register of deeds shall,
no valid reason to the contrary existing, reconstitute the certificate of title as
provided in this Act.
Section 10. Nothing hereinbefore provided shall prevent any registered
owner or person in interest from filing the petition mentioned in section five
of this Act directly with the proper Court of First Instance, based on sources
enumerated in sections 2(a), 2(b), 3(a), 3(b), and/or 4(a) of this Act:
Provided, however, That the court shall cause a notice of the petition, before
hearing and granting the same, to be published in the manner stated in
section nine hereof: And provided, further, That certificates of title
reconstituted pursuant to this section shall not be subject to the
encumbrance referred to in section seven of this Act. Thus, the persons who
can file the petition for reconstitution of a lost certificate are the registered
owner, his assigns or persons in interest in the property.
In this case, petitioner admitted that it was not the owner of the
land on which the mining patent was issued as the same was owned
and registered in the name of Rapu Rapu Minerals Inc.

Topic: Breach of Agreement/Trust

Ponente: ANTONIO T. CARPIO
HONRADO v. GMA NETWORK FILMS, INC.
G.R. No. 204702, January 14, 2015
Facts: On 11 December 1998, GMA Network Films, Inc. entered into a TV
Rights Agreement with petitioner under which petitioner, as licensor of 36
films, granted to GMA Films, for a fee of P60.75 million, the exclusive right to
telecast the 36 films for a period of three years. The parties also agreed to
submit the films for review by the Movie and Television Review and
Classification Board and stipulated on the remedies in the event that MTRCB
bans the telecasting of any of the films. Two of the films covered by the
Agreement were Evangeline Katorse and Bubot for which GMA Films paid
P1.5 million each. In 2003, GMA Films sued petitioner in the Regional Trial
Court of Quezon City to collect P1.6 million representing the fee it paid for
Evangeline Katorse (P1.5 million) and a portion of the fee it paid for Bubot
(P350,000). GMA Films alleged that it rejected Evangeline Katorse because
its running time was too short for telecast and petitioner only remitted
P900,000 to the owner of Bubot, keeping for himself the balance of
P350,000. GMA Films prayed for the return of such amount on the theory that
an implied trust arose between the parties as petitioner fraudulently kept it
for himself. Petitioner denied liability, counter-alleging that after GMA Films
rejected Evangeline Katorse, he replaced it with another film, Winasak na
Pangarap, which GMA Films accepted. Regarding the fee GMA Films paid for
Bubot, petitioner alleged that he had settled his obligation. Alternatively,
petitioner alleged that GMA Films, being a stranger to the contracts he
entered into with the owners of the films in question, has no personality to

question his compliance with the terms of such contracts. The trial court
dismissed GMA Films complaint and, finding merit in petitioners
counterclaim. GMA Films appealed to the CA. The CA granted GMA Films
appeal. Hence, this petition. Petitioner prays for the reinstatement of the trial
courts ruling while GMA Films attacks the petition for lack of merit.
Issue: Whether there is a valid reason for breach of the Agreement and
breach of trust.
SC: None.
The parties do not quarrel on the meaning of Paragraph 4 of the Agreement.
Under this stipulation, what triggers the rejection and replacement of any
film listed in the Agreement is the disapproval of its telecasting by MTRCB.
Nor is there any dispute that GMA Films rejected Evangeline Katorse not
because it was disapproved by MTRCB but because the films total running
time was too short for telecast (undertime). Instead of rejecting GMA Films
demand for falling outside of the terms of Paragraph 4, petitioner voluntarily
acceded to it and replaced such film with Winasak na Pangarap. What is
disputed is whether GMA Films accepted the replacement film offered by
petitioner. In terms devoid of any ambiguity, Paragraph 4 of the Agreement
requires the intervention of MTRCB, the state censor, before GMA Films can
reject a film and require its replacement. Specifically, Paragraph 4 requires
that MTRCB, after reviewing a film listed in the Agreement, disapprove or Xrate it for telecasting. GMA Films does not allege, and we find no proof on
record indicating, that MTRCB reviewed Winasak na Pangarap and X-rated it.
In doing so, GMA Network went beyond its assigned role under the
Agreement of screening films to test their broadcast quality and assumed the
function of MTRCB to evaluate the films for the propriety of their content.
Also, the Agreement is a licensing contract, the essence of which is the
transfer by the licensor (petitioner) to the licensee (GMA Films), for a fee, of
the exclusive right to telecast the films listed in the Agreement. Stipulations
for payment of commission to the licensor is incongruous to the nature of
such contracts unless the licensor merely acted as agent of the film owners.
Nowhere in the Agreement, however, did the parties stipulate that petitioner
signed the contract in such capacity. Nor did the parties stipulate that the
fees paid by GMA Films for the films listed in the Agreement will be turned
over by petitioner to the film owners. Being a stranger to such arrangements,
GMA Films is no more entitled to complain of any breach by petitioner of his
contracts with the film owners than the film owners are for any breach by
GMA Films of its Agreement with petitioner.

Topic: Alienable and Disposable character of the property

Ponente: ANTONIO T. CARPIO
REPUBLIC v. SPS. CASTUERA
G.R. No. 203384, January 14, 2015
Facts: Andres Valiente owned a 3,135-square meter land in Barangay
Siminublan, San Narciso, Zambales. In 1978, he sold the property to
respondents. On 21 May 2003, the Spouses Castuera filed with the RTC an
application for original registration of title over the property. The RTC granted
the application for original registration of title over the property. Petitioner
appealed the RTC Decision to the Court of Appeals. The Court of Appeals
affirmed the RTC Decision. Petitioner filed a motion for reconsideration. In its
14 August 2012 Resolution, the Court of Appeals denied the motion. Hence,
the present petition.
Issue: Whether the advance plan and the CENRO certification are sufficient
proofs of the alienable and disposable character of the property.
SC: No.
The advance plan and the CENRO certification are insufficient proofs of the
alienable and disposable character of the property. The Spouses Castuera, as

applicants for registration of title, must present a certified true copy of the
Department of Environment and Natural Resources Secretarys declaration or
classification of the land as alienable and disposable.
Jurisprudence provides that it is not enough for the PENRO or CENRO to
certify that a land is alienable and disposable. The applicant for land
registration must prove that the DENR Secretary had approved the land
classification and released the land of the public domain as alienable and
disposable, and that the land subject of the application for registration falls
within the approved area per verification through survey by the PENRO or
CENRO. In addition, the applicant must present a copy of the original
classification of the land into alienable and disposable, as declared by the
DENR Secretary, or as proclaimed by the President. Such copy of the DENR
Secretarys declaration or the Presidents proclamation must be certified as a
true copy by the legal custodian of such official record. These facts must be
established to prove that the land is alienable and disposable.
decision

Topic: Conflict of Laws - Forum non Conveniens v. Choice of Law

Ponente: Marvic Mario Victor Leonen
Demetria De Guzman, et al. vs. Filinvest Development Corporation
G.R. No. 191710
January 14, 2015
Facts: Petitioners Demetria de Guzman, Lolita A. de Guzman, Esther G.
Milan, Banaag A. de Guzman, Amor G. Apolo, Herminio A. de Guzman, Leonor
G. Vivencio, Norma A. de Guzman and Josefina G. Hernandez (petitioners)4
were co-owners in fee simple of a parcel of land measuring 15,063 square
meters and situated in Barrio Bulao, Cainta, Rizal, which was later subdivided
among them and for which individual titles were issued. The property is
enclosed and surrounded by other real properties belonging to various
owners. One of its adjoining properties is Filinvest Home Subdivision Phase
IV-A, a subdivision owned and developed by respondent Filinvest
Development Corporation (respondent) which, coming from petitioners'
property, has a potential direct access to Marcos highway either by foot or
vehicle. As such, petitioners filed on August 17, 1988 a Complaint for

Easement of Right of Way against respondent before the Regional Trial Court
(RTC) of Antipolo.
Unwilling to grant petitioners a right of way within its subdivision, respondent
alleged in its Answer that petitioners have an access to Sumulong Highway
through another property adjoining the latter's property. In fact, the distance
from petitioners' property to Sumulong Highway using the said other
property is only 1,500 meters or shorter as compared to the 2,500-meter
distance between petitioners' property and Marcos Highway using
respondent's subdivision.6
On April 30, 1993, the RTC rendered a Decision granting petitioners the right
of way across respondent's subdivision., ratiocinating as follows:
The Court holds that a right of way as prayed in the complaint can be
granted.
The adverted route by [respondent] is unfeasible and unavailing. The route,
aside from being hilly, has to traverse raw lands [denominated] 3043-A
which belong to different owners with no designated road lot thus the
impossibility of free access thereon. Aside from that fact it is not passable by
vehicular means.
Whereas if [petitioners] would pass through the [respondent's] road lot
particularly Lot 15 access to the Marcos Highway is readily available to
[petitioners'] property. Only a fence [separates] the Filinvest Subdivision and
the [petitioners'] property [which] could be removed x x x anytime.
While in the survey of the property of the [petitioners] it is shown that the
distance from the subject lot to the Marcos Highway is approximately 2,350
meters and the distance from Sumulong Highway to the subject lot is 1,400
meters, such short distance could not be used as absolute basis to deny the
[petitioners] the relief prayed for.
As held in Bacolod-Murcia Milling Co. vs. Capitol Subd., Inc., L-25887, July 26,
1966 and by express provision of [A]rticles 649 and 650 of the Civil Code, a
compulsory right of way cannot be obtained unless four requisites are first
shown to exist, namely: (1) that it is surrounded by other immovables and
has no adequate outlet to a public highway; (2) that there is payment of
proper indemnity; (3) that the isolation is not due to the dominant estate's
own acts; and (4) that the right of way claimed is at the point least
prejudicial to the servient estate and in so far as consistent with this rule
where the distance from the dominant estate to a public highway may be the
shortest.
The foregoing requirements are present in this case.

As already stated even if it appears that the distance from the subject
property to Sumulong Highway is the shortest route, yet it is prejudicial to
the [petitioners].
The road in said route is undeveloped, owned by several owners, a raw lot,
hilly, while if it would be [respondent's] property which would be the
[servient] estate it only takes the removal of the fence in order that
[petitioners] could have access to the public highway.
As to the indemnity, the RTC said:
Lastly, as a requirement for the granting of the easement indemnity is
hereby placed at P400,000.00 considering x x x the benefits derived by the
dominant estate and the type of the road therein which is concrete.
Upon respondent's appeal, the CA, in its February 13, 1996 Decision,
affirmed petitioners' entitlement to legal easement of right of way. However,
it set aside the P400,000.00 indemnity fixed by the RTC considering that the
exact area of the right of way, as well as its value per square meter, had not
yet been determined. The CA thus remanded the case to the RTC for the
determination thereof and the corresponding amount of indemnity.
During the remand for the fair market value, the RTC ruled that only Road Lot
15 was covered. Upon appeal, the CA declared that not only Road Lot 15 is
covered; Road Lots 3, 10, 6, 4, 2, and 1 are likewise covered. The price was
also modified.
Hence, this Petition.
Issues: 1. What is the extent of the right of way granted to petitioners under
the April 30, 1993 RTC Decision as affirmed by the CA in its February
13, 1996 Decision?
2. Assuming that the subject right of way pertains to the road network
in respondent's subdivision, is the CA correct in its assessment of
indemnity?
SC: 1. The right of way granted to petitioners covers the network of
roads within respondent's subdivision and not merely Road Lot 15.
To the Court's mind, the cause of confusion as regards the extent of the right
of way granted to petitioners is the absence in the said RTC Decision of any
categorical statement with respect thereto. Be that as it may, it is not
difficult to conclude therefrom that what was intended to serve as
petitioners' right of way consisted of the road network within respondent's
subdivision and not merely of Road Lot 15. As may be recalled, the RTC then
in resolving the complaint for easement of right of way was confronted with
the contentious issue as to which between the two routes from petitioners'
property, i.e., the one passing through respondent's subdivision leading to
Marcos Highway or the one passing through another property leading to

Sumulong Highway, is the more adequate and less prejudicial route pursuant
to the requirement of the law. Thus, when it made the following comparison
and eventually concluded that the route passing through respondent's
subdivision is the more adequate and the less prejudicial way, what it
obviously had it mind was the road network in respondent's subdivision since
the measurement thereof in meters corresponds with that mentioned by the
RTC.
On the other hand, the portion of the RTC Decision relied upon by petitioners
can in no way be taken to mean that Road Lot 15 alone comprises the right
of way granted. By its context, it was only intended to support the RTC's
conclusion that the route within respondent's subdivision is the less
prejudicial between the two considered routes because it would only take the
removal of the fence therein for petitioners to have access to respondent's
network of roads which, in turn, would make Marcos Highway accessible to
them.
Also, the fact that the CA in its February 13, 1996 Decision observed that the
RTC failed to provide in its April 30, 1993 Decision the exact measurement of
the right of way does not negate the conclusion that the said right of way
refers to respondent's network of roads. It must be remembered that the RTC
Decision merely mentioned the distance between Marcos Highway and
petitioners' property passing through respondent's subdivision as 2,350
meters. There was no mention with respect to the width of the affected roads
which is needed in order to come up with the total area in square meters.
This is why the CA also directed the determination of the exact measurement
of the right of way when it remanded the case to the RTC. During trial,
evidence was received that the roads have a width of 10 meters. Multiplying
these factors, i.e., length of 2,350 meters x width of 10 meters, the total area
of the roads affected is 23,500 square meters.
Moreover, petitioners already admitted (judicial admission) during the
remand proceedings that that the right of way granted to them affects
several road lots within respondent's subdivision. As borne out by the
records, respondent formally offered as part of its exhibits a scale map of its
subdivision for the purpose of proving the identity of the road lots affected
by the right of way. In their Comment on the Formal Offer of Exhibits,
petitioners did not proffer any objection to the said exhibit, but merely
averred that they find irrelevant respondent's submission of the fair market
value of the said roads and that the same were also being used in common
by the subdivision dwellers.
Besides and logically speaking, if petitioners would indemnify respondent
only for Road Lot 15, it follows then that said particular road lot should be the
only road lot for which they shall be allowed access. They cannot be allowed
access to the other road lots leading to and from the highway as they are not
willing to pay indemnity for it. In such a case, the purpose of the right of way,

that is, for petitioners to have access to the highway, would thus be
defeated.
2. In the case of a legal easement, Article 649 of the Civil Code prescribes
the parameters by which the proper indemnity may be fixed. Since the
intention of petitioners is to establish a permanent passage, the second
paragraph of Article 649 of the Civil Code particularly applies:
Art. 649 xxx
Should this easement be
continuous for all the
permanent passage, the
occupied and the amount

established in such a manner that its use may be

needs of the dominant estate, establishing a
indemnity shall consist of the value of the land
of the damage caused to the servient estate. xxx

On that basis, the appellate court erred in arbitrarily awarding

indemnity for the use of the road lot.
The Civil Code categorically provides for the measure by which the proper
indemnity may be computed: value of the land occupied plus the amount of
the damage caused to the servient estate. Settled is the rule in statutory
construction that 'when the law is clear, the function of the courts is simple
application.' Thus, to award indemnity using factors different from [those]
given by the law is a complete disregard of these clear statutory provisions
and is evidently arbitrary.
The Civil Code has clearly laid down the parameters and we cannot depart
from them. Verba legis non est recedendum.
It is the needs of the dominant estate which ultimately determines
the width of the passage.
The Court, however, deems it necessary to modify the width of the easement
which would serve as basis in fixing the value of the land as part of the
proper indemnity.
Article 651 of the Civil Code provides:
Art. 651. The width of the easement of right of way shall be that which is
sufficient for the needs of the dominant estate, and may accordingly be
changed from time to time.
According to Senator Arturo M. Tolentino, a noted civilist, it is the needs of
the dominant tenement which determine the width of the passage.
As mentioned, the right of way constituting the easement in this case
consists of existing and developed network of roads. This means that in their
construction, the needs of the dominant estate were not taken into
consideration precisely because they were constructed prior to the grant of

the right of way. During the remand proceedings, it was established that the
width of the affected roads is 10 meters. Multiplied by the distance of 2,350
meters, the total area to be indemnified is 23,500 square meters and at a
price of P1,620.00 per square meter, petitioners must pay respondent the
whopping amount of P38,070,000.00 for the value of the land. Under the
circumstances, the Court finds it rather iniquitous to compute the
proper indemnity based on the 10-meter width of the existing
roads. To stress, it is the needs of the dominant estate which determines the
width of the passage. And per their complaint, petitioners were simply
asking for adequate vehicular and other similar access to the
highway. To the Court's mind, the 10-meter width of the affected
road lots is unnecessary and inordinate for the intended use of the
easement. At most, a 3-meter wide right of way can already
sufficiently meet petitioners' need for vehicular access. It would
thus be unfair to assess indemnity based on the 10-meter road
width when a three-meter width can already sufficiently answer the
needs of the dominant estate. Therefore bearing in mind Article 651, the
Court finds proper a road width of 3 meters in computing the proper
indemnity. Thus, multiplying the road length of 2,350 meters by a road width
of 3 meters, the total area to be indemnified is 7,050 square meters. At a
value of P1,620.00 per square meter, the total value of the land to form part
of the indemnity amounts to P11,421,000.00. It must be made clear,
however, that despite their payment of the value of the land on the basis of
a three-meter road width or basically for a one-way traffic road only,
petitioners must be allowed to use the roads within respondent's subdivision
based on the existing traffic patterns so as not to disrupt the traffic flow
therein.
In addition, petitioners must bear as part of damages the costs for
the removal of the fence in Road Lot 15. Also, the Court takes judicial
notice that subdivision residents are paying monthly dues for purposes of
road maintenance, security, garbage collection, use and maintenance of
other subdivision facilities, etc. In view of the fact that the road lots affected
would be used by the dominant estate in common with the subdivision
residents, the Court deems reasonable to require petitioners to pay the
homeowner's association in respondent's subdivision, by way of monthly
dues, an amount equivalent to half of the rate of the monthly dues that the
subdivision residents are being assessed. This shall serve as petitioners'
share in the maintenance of the affected road lots.
In easement of right of way, there is no alienation of the land occupied.
Petitioners argue that it is unfair to require them to pay the value of the
affected road lots since the same is tantamount to buying the property
without them being issued titles and not having the right to exercise
dominion over it.

The argument is untenable. Payment of the value of the land for

permanent use of the easement does not mean an alienation of the
land occupied. In fact under the law and unlike in purchase of a property,
should the right of way no longer be necessary because the owner of the
dominant estate has joined it to another abutting on a public highway, and
the servient estate demands that the easement be extinguished, the value of
the property received by the servient estate by way of indemnity shall be
returned in full to the dominant estate. This only reinforces the concept that
the payment of indemnity is merely for the use of the right of way and not
for its alienation.

Topic: Conflict of Laws - Forum non Conveniens v. Choice of Law

Ponente: Marvic Mario Victor Leonen
Saudi Arabian Airlines (Saudia) and Brenda J. Betia vs. Ma. Jopette
M. Rebesencio Montassah B. Sacar-Adiong, et al.
G.R. No. 198587
January 14, 2015
Facts: Petitioner Saudi Arabian Airlines (Saudia) is a foreign corporation
established and existing under the laws of Jeddah, Kingdom of Saudi Arabia.
Respondents (complainants before the Labor Arbiter) were recruited and
hired by Saudia as Temporary Flight Attendants with the accreditation and
approval of the Philippine Overseas Employment Administration.
Respondents continued their employment with Saudia until they were
separated from service on various dates in 2006.
Respondents contended that the termination of their employment was illegal.
They alleged that the termination was made solely because they were
pregnant.
As respondents alleged, they had informed Saudia of their respective
pregnancies and had gone through the necessary procedures to process their
maternity leaves. Initially, Saudia had given its approval but later on
informed respondents that its management in Jeddah, Saudi Arabia had
disapproved their maternity leaves. In addition, it required respondents to
file their resignation letters.
Respondents were told that if they did not resign, Saudia would terminate
them all the same. The threat of termination entailed the loss of benefits,
such as separation pay and ticket discount entitlements.
Saudia anchored its disapproval of respondents' maternity leaves and
demand for their resignation on its "Unified Employment Contract for Female
Cabin Attendants" (Unified Contract).17 Under the Unified Contract, the
employment of a Flight Attendant who becomes pregnant is rendered void.

In their Comment on the present Petition, respondents emphasized that the

Unified Contract took effect on September 23, 2006 (the first day of
Ramadan), well after they had filed and had their maternity leaves
approved.
Rather than comply and tender resignation letters, respondents filed
separate appeal letters that were all rejected.
Despite these initial rejections, respondents each received calls on the
morning of November 6, 2006 from Saudia's office secretary informing them
that their maternity leaves had been approved. Saudia, however, was quick
to renege on its approval. On the evening of November 6, 2006, respondents
again received calls informing them that it had received notification from
Jeddah, Saudi Arabia that their maternity leaves had been disapproved.
Faced with the dilemma of resigning or totally losing their benefits,
respondents executed handwritten resignation letters. In Montassah's and
Rouen Ruth's cases, their resignations were executed on Saudia's blank
letterheads that Saudia had provided. These letterheads already had the
word "RESIGNATION" typed on the subject portions of their headings when
these were handed to respondents.
On November 8, 2007, respondents filed a Complaint against Saudia and its
officers for illegal dismissal and for underpayment of salary, overtime pay,
premium pay for holiday, rest day, premium, service incentive leave pay,
13th month pay, separation pay, night shift differentials, medical expense
reimbursements, retirement benefits, illegal deduction, lay-over expense and
allowances, moral and exemplary damages, and attorney's fees.
Saudia assailed the jurisdiction of the Labor Arbiter. It claimed, among
others, that all the determining points of contact referred to foreign law and
insisted that the Complaint ought to be dismissed on the ground of forum
non conveniens.
The Labor Arbiter dismissed the complaint, but this was reversed by the
National Labor Relations Commission.
Hence, this Appeal was filed.
Issue: Whether or not Philippine courts may try this case.
SC: Yes.
Saudia asserts that Philippine courts and/or tribunals are not in a position to
make an intelligent decision as to the law and the facts. This is because
respondents' Cabin Attendant contracts require the application of the laws of
Saudi Arabia, rather than those of the Philippines. It claims that the difficulty
of ascertaining foreign law calls into operation the principle of forum non
conveniens, thereby rendering improper the exercise of jurisdiction by
Philippine tribunals.
Concept--

A choice of law governing the validity of contracts or the interpretation of its

provisions dees not necessarily imply forum non conveniens. Choice of law
and forum non conveniens are entirely different matters.
Choice of law provisions are an offshoot of the fundamental principle of
autonomy of contracts. Article 1306 of the Civil Code firmly ensconces this:
Article 1306. The contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs, public order, or public policy.
In contrast, forum non conveniens is a device akin to the rule against forum
shopping. It is designed to frustrate illicit means for securing advantages and
vexing litigants that would otherwise be possible if the venue of litigation (or
dispute resolution) were left entirely to the whim of either party.
Contractual choice of law provisions factor into transnational
litigation and dispute resolution in one of or in a combination of
four ways:
(1) procedures for settling disputes, e.g., arbitration;
(2) forum, i.e., venue;
(3) governing law; and (
4) basis for interpretation.
Forum non conveniens relates to, but is not subsumed by, the
second of these.
Likewise, contractual choice of law is not determinative of
jurisdiction. Stipulating on the laws of a given jurisdiction as the governing
law of a contract does not preclude the exercise of jurisdiction by tribunals
elsewhere. The reverse is equally true: The assumption of jurisdiction by
tribunals does not ipso facto mean that it cannot apply and rule on the basis
of the parties' stipulation. In Hasegawa v. Kitamura (G.R. No.
149177, November 23, 2007):
Analytically, jurisdiction and choice of law are two distinct concepts.
Jurisdiction considers whether it is fair to cause a defendant to travel to this
state; choice of law asks the further question whether the application of a
substantive law V'hich will determine the merits of the case is fair to both
parties. The power to exercise jurisdiction does not automatically give a state
constitutional authority to apply forum law. While jurisdiction and the choice
of the lex fori will often, coincide, the "minimum contacts" for one do not
always provide the necessary "significant contacts" for the other. The
question of whether the law of a state can be applied to a transaction is
different from the question of whether the courts of that state have
jurisdiction to enter a judgment.
As various dealings, commercial or otherwise, are facilitated by the
progressive ease of communication and travel, persons from various

jurisdictions find themselves transacting with each other. Contracts involving

foreign elements are, however, nothing new. Conflict of laws situations
precipitated by disputes and litigation anchored on these contracts are not
totally novel.
There is no statutorily established mode of settling conflict of laws situations
on matters pertaining to substantive content of contracts. It has been noted
that three (3) modes have emerged:
(1) lex loci contractus or the law of the place of the making;
(2) lex loci solutionis or the law of the place of performance; and
(3) lex loci intentionis or the law intended by the parties.
Given Saudia's assertions, of particular relevance to resolving the present
dispute is lex loci intentionis.
As mentioned, contractual choice of laws factors into transnational litigation
in any or a combination of four (4) ways. Moreover, forum non conveniens
relates to one of these: choosing between multiple possible fora.
Nevertheless, the possibility of parallel litigation in multiple fora along with
the host of difficulties it poses is not unique to transnational litigation. It is
a difficulty that similarly arises in disputes well within the bounds of a singe
jurisdiction.
When parallel litigation arises strictly within the context of a single
jurisdiction, such rules as those on forum shopping, litis pendentia, and res
judicata come into operation. Thus, in the Philippines, the 1997 Rules on Civil
Procedure provide for willful and deliberate forum shopping as a ground not
only for summary dismissal with prejudice but also for citing parties and
counsels in direct contempt, as well as for the imposition of administrative
sanctions.60 Likewise, the same rules expressly provide that a party may
seek the dismissal of a Complaint or another pleading asserting a claim on
the ground "[t]hat there is another action pending between the same parties
for the same cause," i.e., litis pendentia, or "[t]hat the cause of action is
barred by a prior judgment," i.e., res judicata.
Forum non conveniens, like the rules of forum shopping, litis pendentia, and
res judicata, is a means of addressing the problem of parallel litigation. While
the rules of forum shopping, litis pendentia, and res judicata are designed to
address the problem of parallel litigation within a single jurisdiction, forum
non conveniens is a means devised to address parallel litigation arising in
multiple jurisdictions.
Forum non conveniens literally translates to "the forum is
inconvenient." It is a concept in private international law and was
devised to combat the "less than honorable" reasons and excuses

that litigants use to secure procedural advantages, annoy and

harass defendants, avoid overcrowded dockets, and select a
"friendlier" venue. Thus, the doctrine of forum non conveniens
addresses the same rationale that the rule against forum shopping
does, albeit on a multijurisdictional scale.
Forum non conveniens, like res judicata, is a concept originating in common
law. However, unlike the rule on res judicata, as well as those on litis
pendentia and forum shopping, forum non conveniens finds no
textual anchor, whether in statute or in procedural rules, in our civil
law system. Nevertheless, jurisprudence has applied forum non
conveniens as basis for a court to decline its exercise of jurisdiction.
Forum non conveniens is soundly applied not only to address parallel
litigation and undermine a litigant's capacity to vex and secure undue
advantages by engaging in forum shopping on an international scale. It is
also grounded on principles of comity and judicial efficiency.
Consistent with the principle of comity, a tribunal's desistance in
exercising jurisdiction on account of forum non conveniens is a deferential
gesture to the tribunals of another sovereign. It is a measure that prevents
the former's having to interfere in affairs which are better and more
competently addressed by the latter. Further, forum non conveniens entails a
recognition not only that tribunals elsewhere are better suited to rule on and
resolve a controversy, but also, that these tribunals are better positioned to
enforce judgments and, ultimately, to dispense justice. Forum non
conveniens prevents the embarrassment of an awkward situation where a
tribunal is rendered incompetent in the face of the greater capability both
analytical and practical of a tribunal in another jurisdiction.
The wisdom of avoiding conflicting and unenforceable judgments is as much
a matter of efficiency and economy as it is a matter of international courtesy.
A court would effectively be neutering itself if it insists on adjudicating a
controversy when it knows full well that it is in no position to enforce its
judgment. Doing so is not only an exercise in futility; it is an act of frivolity. It
clogs the dockets of a.tribunal and leaves it to waste its efforts on affairs,
which, given transnational exigencies, will be reduced to mere academic, if
not trivial, exercises.
Accordingly, under the doctrine of forum non conveniens, "a court, in
conflicts of law cases, may refuse impositions on its jurisdiction where it is
not the most 'convenient' or available forum and the parties are not
precluded from seeking remedies elsewhere."Jurisprudence recognizes
the following situations as among those that may warrant a court's
desistance from exercising jurisdiction:
1)

The belief that the matter can be better tried and decided
elsewhere, either because the main aspects of the case transpired
in a foreign jurisdiction or the material witnesses have their
residence there;
2)
The belief that the non-resident plaintiff sought the forum[,] a
practice known as forum shopping[,] merely to secure procedural
advantages or to convey or harass the defendant;
3)
The unwillingness to extend local judicial facilities to non residents
or aliens when the docket may already be overcrowded;
4)
The inadequacy of the local judicial machinery for effectuating the
right sought to be maintained; and
5)
The difficulty of ascertaining foreign law.69
A Philippine court may properly assume jurisdiction over a case if it chooses
to do so to the extent:
(1) that the Philippine Court is one to which the parties may
conveniently resort to;
(2) that the Philippine Court is in a position to make an intelligent
decision as to the law and the facts; and
(3) that the Philippine Court has or is likely to have power to
enforce its decision."
The use of the word "may" (i.e., "may refuse impositions on its jurisdiction")
in the decisions shows that the matter of jurisdiction rests on the sound
discretion of a court. Neither the mere invocation of forum non conveniens
nor the averment of foreign elements operates to automatically divest a
court of jurisdiction. Rather, a court should renounce jurisdiction only "after
'vital facts are established, to determine whether special circumstances'
require the court's desistance." As the propriety of applying forum non
conveniens is contingent on a factual determination, it is, therefore, a matter
of defense.
The second sentence of Rule 9, Section 1 of the 1997 Rules of Civil Procedure
is exclusive in its recital of the grounds for dismissal that are exempt from
the omnibus motion rule: (1) lack of jurisdiction over the subject matter; (2)
litis pendentia; (3) res judicata; and (4) prescription. Moreover, dismissal on
account offorum non conveniens is a fundamentally discretionary matter. It
is, therefore, not a matter for a defendant to foist upon the court at his or her
own convenience; rather, it must be pleaded at the earliest possible
opportunity.

On the matter of pleading forum non conveniens, we state the rule,

thus: Forum non conveniens must not only be clearly pleaded as a
ground for dismissal; it must be pleaded as such at the earliest
possible opportunity. Otherwise, it shall be deemed waived.
This court notes that in Hasegawa, this court stated that forum non
conveniens is not a ground for a motion to dismiss. The factual ambience of
this case however does not squarely raise the viability of this doctrine. Until
the opportunity comes to review the use of motions to dismiss for parallel
litigation, Hasegawa remains existing doctrine.
Application in this case-Forum non conveniens finds no application and does not operate to
divest Philippine tribunals of jurisdiction and to require the
application of foreign law.
Saudia invokes forum non conveniens to supposedly effectuate the
stipulations of the Cabin Attendant contracts that require the application of
the laws of Saudi Arabia.
Forum non conveniens relates to forum, not to the choice of
governing law. That forum non conveniens may ultimately result in the
application of foreign law is merely an incident of its application. In this strict
sense, forum non conveniens is not applicable. It is not the primarily pivotal
consideration in this case.
In any case, even a further consideration of the applicability of forum non
conveniens on the incidental matter of the law governing respondents'
relation with Saudia leads to the conclusion that it is improper for Philippine
tribunals to divest themselves of jurisdiction.
Any evaluation of the propriety of contracting parties' choice of a forum
and'its incidents must grapple with two (2) considerations: first, the
availability and adequacy of recourse to a foreign tribunal; and
second, the question of where, as between the forum court and a
foreign court, the balance of interests inhering in a dispute weighs
more heavily.
Two (2) factors weigh into a court's appraisal of the balance of interests
inhering in a dispute: first, the vinculum which the parties and their relation
have to a given jurisdiction; and second, the public interest that must
animate a tribunal, in its capacity as an agent of the sovereign, in choosing
to assume or decline jurisdiction. The first is more concerned with the
parties, their personal circumstances, and private interests; the second
concerns itself with the state and the greater social order.

Vinculum: a court must look into the preponderance of linkages which the
parties and their transaction may have to either jurisdiction. In this respect,
factors, such as the parties' respective nationalities and places of
negotiation, execution, performance, engagement or deployment, come into
play.
Public interest: a court proceeds with a consciousness that it is an organ of
the state. It must, thus, determine if the interests of the sovereign (which
acts through it) are outweighed by those of the alternative jurisdiction. In this
respect, the court delves into a consideration of public policy. Should it find
that public interest weighs more heavily in favor of its assumption of
jurisdiction, it should proceed in adjudicating the dispute, any doubt or
.contrary view arising from the preponderance of linkages notwithstanding.
Our law on contracts recognizes the validity of contractual choice of law
provisions. Where such provisions exist, Philippine tribunals, acting as the
forum court, generally defer to the parties' articulated choice. This is
consistent with the fundamental principle of autonomy of contracts (Article
1306 of the Civil Code)
Nevertheless, such respect must not be so permissive as to lose sight of
considerations of law, morals, good customs, public order, or public policy
that underlie the contract central to the controversy.
Article II, Section 14 of the 1987 Constitution provides that "[t]he State ...
shall ensure the fundamental equality before the law of women and men."
Contrasted with Article II, Section 1 of the 1987 Constitution's statement that
"[n]o person shall ... be denied the equal protection of the laws," Article II,
Section 14 exhorts the State to "ensure." This does not only mean that the
Philippines shall not countenance nor lend legal recognition and approbation
to measures that discriminate on the basis of one's being male or female. It
imposes an obligation to actively engage in securing the fundamental
equality of men and women.
The Convention on the Elimination of all Forms of Discrimination against
Women (CEDAW), signed and ratified by the Philippines on July 15, 1980, and
on August 5, 1981, respectively,81 is part of the law of the land. In view of
the widespread signing and ratification of, as well as adherence (in practice)
to it by states, it may even be said that many provisions of the CEDAW may
have become customary international law. The CEDAW gives effect to the
Constitution's policy statement in Article II, Section 14. Article I of the CEDAW
defines "discrimination against women".
Here, Saudia's policy excludes from and restricts employment on the basis of
no other consideration but sex.

The Court does not lose sight of the reality that pregnancy does
present physical limitations that may render difficult the
performance of functions associated with being a flight attendant.
Nevertheless, it would be the height of iniquity to view pregnancy
as a disability so permanent and immutable that, it must entail the
termination of one's employment. It is clear to us that any
individual, regardless of gender, may be subject to exigencies that
limit the performance of functions. However, we fail to appreciate
how pregnancy could be such an impairing occurrence that it leaves
no other recourse but the complete termination of the means
through which a woman earns a living.
Apart from the constitutional policy on the fundamental equality before the
law of men and women, it is settled that contracts relating to labor and
employment are impressed with public interest. Article 1700 of the Civil Code
provides that "[t]he relation between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts
must yield to the common good."
Contrary to Manila Hotel Ruling (G. R. No. 120077, October 13, 2000), the
case does not entail a preponderance of linkages that favor a foreign
jurisdiction.
First, there is no basis for concluding that the case can be more
conveniently tried elsewhere. As established earlier, Saudia is doing business
in the Philippines. For their part, all four (4) respondents are Filipino citizens
maintaining residence in the Philippines and, apart from their previous
employment with Saudia, have no other connection to the Kingdom of Saudi
Arabia. It would even be to respondents' inconvenience if this case were to
be tried elsewhere.
Second, the records are bereft of any indication that respondents filed their
Complaint in an effort to engage in forum shopping or to vex and
inconvenience Saudia.
Third, there is no indication of "unwillingness to extend local judicial
facilities to non-residents or aliens."93 That Saudia has managed to bring the
present controversy all the way to this court proves this.
Fourth, it cannot be said that the local judicial machinery is inadequate for
effectuating the right sought to be maintained. Summons was properly
served on Saudia and jurisdiction over its person was validly acquired.
Lastly, there is not even room for considering foreign law. Philippine law
properly governs the present dispute.

As the question of applicable law has been settled, the supposed difficulty of
ascertaining foreign law (which requires the application of forum non
conveniens) provides no insurmountable inconvenience or special
circumstance that will justify depriving Philippine tribunals of jurisdiction.
All told, the considerations for assumption of jurisdiction by Philippine
tribunals have been satisfied.
First, all the parties are based in the Philippines and all the material
incidents transpired in this jurisdiction. Thus, the parties may conveniently
seek relief from Philippine tribunals.
Second, Philippine tribunals are in a position to make an intelligent decision
as to the law and the facts.
Third, Philippine tribunals are in a position to enforce their decisions. There
is no compelling basis for ceding jurisdiction to a foreign tribunal. Quite the
contrary, the immense public policy considerations attendant to this case
behoove Philippine tribunals to not shy away from their duty to rule on the
case.

Topics: (1) Agency distinguished from Tenancy

(2) Civil law lease distinguished from Agricultural lease
Ponente: Justice Lucas P. Bersamin
Manuel Jusayan, et al., v. Jorge Sombilla., G.R. No. 163928, January
21, 2015
Facts: Wilson Jesena owned four parcels of land. On June 20, 1970, he
entered into an agreement with Jorge Sombilla wherein Wilson designated
Jorge as his agent to supervise the tilling and farming of his riceland in crop
year 1970-1971. On August 20, 1971, before the expiration of the
agreement, Wilson sold the four parcels of land to Timoteo Jusayan. Jorge
and Timoteo verbally agreed that Jorge would retain possession of the
parcels of land and would deliver 110 cavans of palay annually to Timoteo
without need for accounting of the cultivation expenses provided that Jorge
would pay the irrigation fees. In 1984, Timoteo sent several letters to Jorge
terminating his administration and demanding the return of the possession of
the parcels of land. Jorge refused to comply. Hence, Timoteo filed on June 30,
1986 a complaint for recovery of possession and accounting against Jorge in
the RTC.
Issue: Whether the relationship between the parties herein is that of agency
or tenancy.
SC: The relationship of the parties is that of an agricultural
leasehold or tenancy.
The nature of an Agency: In agency, the agent binds himself to render
some service or to do something in representation or on behalf of the
principal, with the consent or authority of the latter. The basis of the civil law
relationship of agency is representation. Whether or not an agency has been
created is determined by the fact that one is representing and acting for

another. The law does not presume agency; hence, proving its existence,
nature and extent is incumbent upon the person alleging it.
Elements of Agency: (a) the relationship is established by the parties
consent, express or implied; (b) the object is the execution of a juridical act
in relation to a third person; (c) the agent acts as representative and not for
himself; and (d) the agent acts within the scope of his authority.
Circumstances showing that the relationship herein is one of
agricultural leasehold: The agreement between Timoteo and Jorge left all
matters of agricultural production to the sole discretion of Jorge and
practically divested Timoteo of the right to exercise his authority over the
acts to be performed by Jorge. Timoteos interest was limited to the delivery
of the 110 cavans of palay annually without any concern about how the
cultivation could be improved in order to yield more produce. Further, Jorge
presented handwritten receipts indicating that the sacks of palay delivered to
and received by one Corazon Jusayan represented payment of rental. In this
regard, rental was the legal term for the consideration of the lease.
Consequently, the receipts substantially proved that the contractual
relationship between Jorge and Timoteo was a lease.
Distinction between a civil law lease and an agricultural lease: In the
civil law lease, one of the parties binds himself to give to another the
enjoyment or use of a thing for a price certain, and for a period that may be
definite or indefinite. Whereas, in the agricultural lease, also termed as a
leasehold tenancy, the physical possession of the land devoted to agriculture
is given by its owner or legal possessor (landholder) to another (tenant) for
the purpose of production through labor of the latter and of the members of
his immediate farm household, in consideration of which the latter agrees to
share the harvest with the landholder, or to pay a price certain or
ascertainable, either in produce or in money, or in both.
Specifically, in Gabriel v. Pangilinan [No. L-27797, August 26, 1974], the
Supreme Court differentiated between a leasehold tenancy and a civil law
lease in the following manner, namely: (1) the subject matter of a leasehold
tenancy is limited to agricultural land, but that of a civil law lease may be
rural or urban property; (2) as to attention and cultivation, the law requires
the leasehold tenant to personally attend to and cultivate the agricultural
land; the civil law lessee need not personally cultivate or work the thing
leased; (3) as to purpose, the landholding in leasehold tenancy is devoted to
agriculture; in civil law lease, the purpose may be for any other lawful
pursuits; and(4) as to the law that governs, the civil law lease is governed by
the Civil Code, but the leasehold tenancy is governed by special laws.
NOTE: The sharing of the harvest in proportion to the respective
contributions of the landholder and tenant, otherwise called share tenancy,

was abolished on August 8, 1963 under Republic Act No. 3844. To date, the
only permissible system of agricultural tenancy is leasehold tenancy, a
relationship wherein a fixed consideration is paid instead of proportionately
sharing the harvest as in share tenancy.
Elements of agricultural tenancy: (1) the object of the contract or the
relationship is an agricultural land that is leased or rented for the purpose of
agricultural production; (2) the size of the landholding is such that it is
susceptible of personal cultivation by a single person with the assistance of
the members of his immediate farm household; (3) the tenant-lessee must
actually and personally till, cultivate or operate the land, solely or with the
aid of labor from his immediate farm household; and (4) the landlord-lessor,
who is either the lawful owner or the legal possessor of the land, leases the
same to the tenant-lessee for a price certain or ascertainable either in an
amount of money or produce.
Thus, in this case, since it was proven that Jorge personally cultivated the
land with the assistance of his family, the relationship herein is one of
agricultural leasehold.
Tenants security of tenure: Section 7 of Republic Act No. 3844 provides
that once there is an agricultural tenancy, the agricultural tenants right to
security of tenure is recognized and protected. The landowner cannot eject
the agricultural tenant from the land unless authorized by the proper court
for causes provided by law.
Grounds for the valid dispossession of the tenant: The grounds, none
of which exist in this controversy, are provided for under Section 36 of
Republic Act No. 3844, as amended by Republic Act No. 6389, to wit:
(1) The landholding is declared by the department head upon
recommendation of the National Planning Commission to be suited for
residential, commercial, industrial or some other urban purposes: Provided,
That the agricultural lessee shall be entitled to disturbance compensation
equivalent to five times the average of the gross harvests on his landholding
during the last five preceding calendar years;
(2) The agricultural lessee failed to substantially comply with any of the
terms and conditions of the contract or any of the provisions of this Code
unless his failure is caused by fortuitous event or force majeure;
(3) The agricultural lessee planted crops or used the landholding for a
purpose other than what had been previously agreed upon;
(4) The agricultural lessee failed to adopt proven farm practices as
determined under paragraph 3 of Section twenty-nine;

(5) The land or other substantial permanent improvement thereon is

substantially damaged or destroyed or has unreasonably deteriorated
through the fault or negligence of the agricultural lessee;
(6) The agricultural lessee does not pay the lease rental when it falls due:
Provided, That if the non-payment of the rental shall be due to crop failure to
the extent of seventy-five per centum as a result of a fortuitous event, the
non-payment shall not be a ground for dispossession, although the obligation
to pay the rental due that particular crop is not thereby extinguished; or
(7) The lessee employed a sub-lessee on his landholding in violation of the
terms of paragraph 2 of Section twenty-seven.

Topic: Joint and Several Liability

Ponente: Justice Estela M. Perlas-Bernabe
Ruks Konsult and Construction v. Adworld Sign and Advertising
Corporation and Transworld Media Ads, Inc., G.R. No. 204866,
January 21, 2015
Facts: Adworld Sign and Advertising Corporation and Transworld Media Ads,
Inc. owned billboard structures which were adjacent to each other.
Transworlds billboard was used by Comark International Corporation. This
billboard was built by Ruks Konsult and Construction in favor of Transworld.
One day, due to extraordinarily strong winds, the billboard of Adworld was
misaligned and its foundation was impaired when the billboard of Transworld
collapsed and crashed against it. Consequently, Adworld demanded from
Transworld and Comark the payment for the repairs of its billboard as well as
loss of rental income. Transworld admitted the damage caused by its
billboard but refused to pay the said amounts. Hence, Adworld filed a
complaint for damages against Transworld and Comark.

Transworld filed a Third-Party Complaint against Ruks, alleging therein that

the structure constructed by Ruks had a weak and poor foundation not suited
for billboards, thus, prone to collapse, and as such, Ruks should ultimately be
held liable for the damages caused to Adworlds billboard structure.
The RTC declared Ruks jointly and severally liable with Transworld for
damages sustained by Adworld, and this was affirmed by the CA.
Issue: Whether or not Ruks is jointly and severally liable with Transworld for
damages sustained by Adworld.
SC: Yes.
NOTE: G.R.: Factual findings of the RTC, when affirmed by the CA, are
entitled to great weight by the Supreme Court and are deemed final and
conclusive when supported by the evidence on record.
Some exceptions: When it is established that the trial court ignored,
overlooked, misconstrued, or misinterpreted cogent facts and circumstances
that, if considered, would change the outcome of the case.
Thus, since the RTC and the CA uniformly concluded that both Transworld
and Ruks committed acts resulting in the collapse of the formers billboard,
which in turn, caused damage to the adjacent billboard of Adworld, the
Supreme Court upheld such conclusion.
Negligence, defined: It is the omission to do something which a reasonable
man, guided by those considerations which ordinarily regulate the conduct of
human affairs, would do, or the doing of something which a prudent and
reasonable man would not do. It is the failure to observe for the protection of
the interest of another person that degree of care, precaution, and vigilance
which the circumstances justly demand, whereby such other person suffers
injury.
Circumstances showing the acts of negligence herein: Transworlds
initial construction of its billboards lower structure without the proper
foundation, and that of Rukss finishing its upper structure and just merely
assuming that Transworld would reinforce the weak foundation are the two
successive acts which were the direct and proximate cause of the damages
sustained by Adworld. Both Transworld and Ruks were fully aware that the
foundation for the formers billboard was weak; yet, neither of them took any
positive step to reinforce the same.
Who are joint tortfeasors? They are those who command, instigate,
promote, encourage, advise, countenance, cooperate in, aid or abet the
commission of a tort, or approve of it after it is done, if done for their benefit.

They are also referred to as those who act together in committing wrong or
whose acts, if independent of each other, unite in causing a single injury.
Liability of joint tortfeasors: Under Article 2194 of the Civil Code, joint
tortfeasors are solidarily liable for the resulting damage. In other words, joint
tortfeasors are each liable as principals, to the same extent and in the same
manner as if they had performed the wrongful act themselves.
In People v. Velasco [G.R. No. 195668, June 25, 2014], the Supreme Court
enunciated: Where several causes producing an injury are
concurrent and each is an efficient cause without which the injury
would not have happened, the injury may be attributed to all or any
of the causes and recovery may be had against any or all of the
responsible persons although under the circumstances of the case, it may
appear that one of them was more culpable, and that the duty owed by them
to the injured person was not same. No actors negligence ceases to be a
proximate cause merely because it does not exceed the negligence of other
actors. Each wrongdoer is responsible for the entire result and is liable as
though his acts were the sole cause of the injury.
There is no contribution between joint tortfeasors whose liability is solidary
since both of them are liable for the total damage. Where the concurrent
or successive negligent acts or omissions of two or more persons,
although acting independently, are in combination the direct and
proximate cause of a single injury to a third person, it is impossible
to determine in what proportion each contributed to the injury and
either of them is responsible for the whole injury.

Topic: Damages
Ponente: Justice Estela M. Perlas-Bernabe
People of the Philippines v. Arnel Balute, G.R. No. 212932, January
21, 2015
Facts: One evening, SPO1 Raymundo Manaois was on board his owner-type
jeepney with his wife Cristita and daughter Blesilda. While the vehicle was on
a stop position at a lighted area due to heavy traffic, two male persons, later
on identified as Arnel Balute and a certain Leo Blaster, suddenly appeared on
either side of the jeepney, with Balute poking a gun at the side of SPO1

Manaois and saying putangina, ilabas mo! Thereafter, Balute grabbed

SPO1 Manaoiss mobile phone from the latters chest pocket and shot him at
the left side of his torso. SPO1 Manaois reacted by drawing his own firearm
and alighting from his vehicle, but he was unable to fire at the assailants as
he fell to the ground. He was taken to the hospital where he died.
Consequently, an Information was filed before the RTC charging Balute of the
crime of Robbery with Homicide.
The RTC found Balute guilty beyond reasonable doubt of the crime of
Robbery with Homicide and accordingly, sentenced him to suffer the penalty
of reclusion perpetua as well as ordered him to pay the heirs of SPO1
Manaois the amounts of P50,000.00 as civil indemnity, P6,000.00 as
compensatory damages for the value of the stolen mobile phone, and
P50,000.00 as moral damages, with interest at the rate of six percent (6%)
per annum from the filing of the Information.
On appeal, the CA affirmed Balutes conviction but modified the award of
damages, to wit: (a) the civil indemnity was increased to P75,000.00 in view
of existing jurisprudence; (b) the P6,000.00 compensatory damages,
representing the value of the mobile phone, was deleted in the absence of
competent proof of its value, and in lieu thereof, actual damages in the
aggregate amount of P140,413.53 representing SPO1 Manaoiss hospital and
funeral expenses was awarded to his heirs; and (c) all the monetary awards
for damages are with interest at the rate of six percent (6%) p.a. from the
date of finality of the CA Decision until fully paid.
Issue: Whether or not the amount of damages awarded by the CA is proper.
SC: YES.
However, the Supreme Court adjusted the award of moral damages from
P50,000.00 to P75,000.00 in order to conform with prevailing jurisprudence.
Further, the Court also awarded exemplary damages in the amount of
P30,000.00 in favor of the heirs of SPO1 Manaois due to the highly
reprehensible and/or outrageous conduct of Balute in committing the
aforesaid crime.
Thus, Balute was ordered to pay the heirs of SPO1 Raymundo B. Manaois the
amounts of P75,000.00 as civil indemnity, P140,413.53 as actual damages,
and P75,000.00 as moral damages, and P30,000.00 as exemplary damages,
all with legal interest at the rate of six percent(6%) per annum from the
finality of judgment until full payment.

NOTE: Clearly, as a general rule, exemplary damages are only imposed in

criminal offenses when the crime was committed with one or more
aggravating circumstances, be they generic or qualifying. However, there
have been instances wherein exemplary damages were awarded despite the
lack of an aggravating circumstance. This led the Court to clarify this
confusion in People v. Dalisay, where it categorically stated that exemplary
damages may be awarded, not only in the presence of an
aggravating circumstance, but also where the circumstances of the
case show the highly reprehensible or outrageous conduct of the
offender x x x. [People v. Combate, G.R. No. 189301, December 15, 2010.]

Topic: Award of damages in Rape

Ponente: Justice Jose P. Perez
People of the Philippines v. Michael Joson, G.R. No. 206393, January
21, 2015

Facts: AAA lives with her brother Michael Joson and his common-law partner.
At around 1:00 in the morning of May 14, 2009, and while Michaels wife was
away, AAA was awakened by him undressing her. AAA tried to struggle but
Michael was tightly holding her arms. After undressing her, Michael kissed
and mounted her. He was able to insert his penis into her vagina. AAA felt
pain in her genitalia. Thereafter, Michael went back to sleep leaving AAA
crying. Later in the morning, Michael left AAA with a letter apologizing for
what happened and begging her not to tell on his wife.
After the incident was reported, Michael was charged with the crime of rape
under Article 266-A of the RPC in relation to RA 7610.
The trial court found Michael guilty beyond reasonable doubt of the crime of
rape and meted out the penalty of reclusion perpetua. He was also ordered
to indemnify the victim by way of moral damages in the amount of
Php50,000.00, civil indemnity ex-delicto in the amount of Php50,000.00 and
exemplary damages in the amount of Php25,000.00. This judgment was
affirmed by the appellate court.
Issue: Whether or not the amount of damages awarded to the victim is
proper.
SC: NO.
In People v. Gambao [G.R No. 172707, 1 October 2013], the Court increased
the amounts of indemnity and damage where the penalty for the crime
committed is death but which cannot be imposed because of Republic Act
No. 9346, as follow:
1. P100,000.00 as civil indemnity;
2. P100,000.00 as moral damages which the victim is assumed to have
suffered and thus needs no proof; and
3. P100,000.00 as exemplary damages to set an example for the public
good.
All damages awarded shall earn legal interest at the rate of 6% per annum
from the date of finality of judgment until fully paid.

Topic: Registration of Title over a parcel of land: requisites

Ponente: Justice Diosdado M. Peralta

Republic of the Philippines v. Cecilia Grace L. Roasa, married to Greg

Ambrose Roasa, as herein represented by her Attorneys-in-Fact,
Bernardo M. Nicolas, Jr. and Alvin B. Acayen, G.R. No. 176022,
February 2, 2015
Facts: Cecilia L. Roasa filed an application for registration of title over a
parcel of land and was represented by her attorneys-in-fact, Bernardo M.
Nicolas, Jr. and Alvin B. Acayen. It was alleged that she is the owner in fee
simple of the subject lot, having acquired the same by purchase as
evidenced by a Deed of Absolute Sale ; that the said property is an
agricultural land planted with corn, palay, bananas, coconut and coffee by
respondent's
predecessors-in-interest;
that
respondent
and
her
predecessors-in-interest had been in OCEN possession and occupation of the
land under bona fide claim of ownership since the 1930's and that they have
declared the land for taxation purposes. The application, likewise, stated the
names and addresses of the adjoining owners.
Subsequently, the OSG opposed the application contending that the
muniments of title, such as tax declarations and tax payment receipts, did
not constitute competent and sufficient evidence of a bona fide acquisition of
the land applied for nor of the alleged OCEN possession by respondent and
her predecessors-in-interest as owners for the period required by law. The
OSG also argued that the subject lot is a portion of the public domain
belonging to the Republic of the Philippines which is not subject to private
appropriation.
The instant petition is anchored on the sole ground, to wit: Failure to
comply with the required 30 year adverse possession since the subject land
was declared alienable and disposable land of the public domain only on
March 15, 1982 per CENRO Certification, and the application was filed only
on December 12, 2000. Any period of possession prior to the date when the
subject land was classified as alienable and disposable is inconsequential
and should be excluded from the computation of the 30- year period of
possession. Petitioner argues that respondent's possession of the disputed
parcel of land, prior to its re-classification as alienable and disposable,
cannot be credited as part of the required period of possession because the
same cannot be considered adverse.
Issue: Should the application for registration of title be granted?
SC: Yes.
An applicant for original registration of title based on a claim of
exclusive and continuous possession or occupation must show the existence
of the following:

1. Open, continuous, exclusive and notorious possession, by

themselves or through their predecessors-in-interest, of land;
2. The land possessed or occupied must have been declared alienable
and disposable agricultural land of public domain;
3. The possession or occupation was under a bona fide claim of
ownership;
4. Possession dates back to June 12, 1945 or earlier.
In the case of Republic v. Naguit [409 Phil. 405], the more reasonable
interpretation of Section 14(1 )of P.D. No. 1529 is that it merely requires the
property sought to be registered as already alienable and disposable at the
time the application for registration of title is filed.
In the resolution of the MR of the case of Heirs of Malabanan, it was
held that the law imposes no requirement that land should have been
declared alienable and disposable agricultural land as early as June 12, 1945.
Therefore, what is important in computing the period of possession is that
the land has already been declared alienable and disposable at the time of
the application for registration. Upon satisfaction of this requirement, the
computation of the period may include the period of adverse possession
prior to the declaration that land is alienable and disposable.
Roasas right to the original registration of title over the subject
property is, therefore, dependent on the existence of (a) a declaration that
the land is alienable and disposable at the time of the application for
registration and (b) open and continuous possession in the concept of an
owner through itself or through its predecessors-in-interest since June 12,
1945 or earlier.
In the present case, there is no dispute that the subject lot has been
declared alienable and disposable on March 15, 1982. This is more than
eighteen (18) years before Roasa's application for registration, which was
filed on December 15, 2000. Moreover, the unchallenged testimonies of two
of Roasa's witnesses established that the latter and her predecessors-ininterest had been in adverse, open, continuous, and notorious possession in
the concept of an owner even before June 12, 1945.

Topic: Rescission of Contract of Sale; Agency

Ponente: Mendoza, J.
Spouses Salvador v. Spouses Rabaja, G.R. No. 199990, February 04,
2015
Facts: This case stemmed from a dispute involving the sellers, petitioner
spouses Rolando and Herminia Salvador; the sellers agent, Rosario
Gonzales; and the buyers, respondent Spouses Rogelio and Elizabeth Rabaja,
over a parcel of land registered in the names of Spouses Salvador. From 1994
until 2002, Spouses Rabaja were leasing an apartment in the subject lot.
They learned that Spouses Salvador were looking for a buyer of the subject
property. Petitioner Herminia Salvador personally introduced Gonzales to
them as the administrator of the said property. Spouses Salvador even
handed to Gonzales the owners duplicate certificate of title over the subject
property. Spouses Rabaja made an initial payment of P48,000.00 to Gonzales
in the presence of Herminia. Gonzales then presented the Special Power of
Attorney executed by Rolando Salvador. The parties executed the Contract to
Sell which stipulated that for a consideration of P5,000,000.00, Spouses
Salvador sold, transferred and conveyed in favor of Spouses Rabaja the
subject property. Spouses Rabaja made several payments totalling
P950,000.00, which were received by Gonzales pursuant to the SPA provided
earlier as evidenced by the check vouchers signed by Gonzales and the
improvised receipts signed by Herminia. However, Spouses Salvador
complained to Spouses Rabaja that they did not receive any payment from
Gonzales. This prompted Spouses Rabaja to suspend further payment of the
purchase price; and as a consequence, they received a notice to vacate the
subject property from Spouses Salvador for non-payment of rentals.
Thereafter, Spouses Salvador instituted an action for ejectment against
Spouses Rabaja. In turn, Spouses Rabaja filed an action for rescission of
contract against Spouses Salvador and Gonzales, the subject matter of the
present petition.
The RTC held that the contract, although denominated as contract to
sell, was actually a contract of sale because Spouses Salvador, as vendors,
did not reserve their title to the property until the vendees had fully paid the
purchase price. Since the contract entered into was a reciprocal contract, it
could be validly rescinded by Spouses Rabaja, and in the process, they could
recover the amount of P950,000.00 jointly and severally from Spouses
Salvador and Gonzales. The RTC stated that Gonzales was undoubtedly the
attorney-in-fact of Spouses Salvador absent any taint of irregularity. Spouses
Rabaja could not be faulted in dealing with Gonzales who was duly equipped
with the SPA from Spouses Salvador. On appeal, the CA affirmed the recission
of the contract but held that the Gonzales was not solidarily liable with
Spouses Salvador for he did not exceed the limits of his authority as an
agent. Hence, this petition.

Issue: Whether or not the contract entered into between the buyers and the
sellers with their agent was a contract of sale, not a contract to sell, which
can be validly rescinded.
SC: Yes. The Court agrees with the courts below in finding that the contract
entered into by the parties was essentially a contract of sale which could be
validly rescinded. According to Article 1990 of the New Civil Code, insofar as
third persons are concerned, an act is deemed to have been performed
within the scope of the agent's authority, if such act is within the terms of
the power of attorney, as written. In this case, Spouses Rabaja did not
recklessly enter into a contract to sell with Gonzales. They required her
presentation of the power of attorney before they transacted with her
principal. And when Gonzales presented the SPA to Spouses Rabaja, the
latter had no reason not to rely on it.
The law mandates an agent to act within the scope of his authority
which what appears in the written terms of the power of attorney granted
upon him. The Court holds that, indeed, Gonzales acted within the scope of
her authority. The SPA precisely stated that she could administer the
property, negotiate the sale and collect any document and all payments
related to the subject property. As the agent acted within the scope of his
authority, the principal must comply with all the obligations. As correctly held
by the CA, considering that it was not shown that Gonzales exceeded her
authority or that she expressly bound herself to be liable, then she could not
be considered personally and solidarily liable with the principal, Spouses
Salvador.
Perhaps the most significant point which defeats the petition would be
the fact that it was Herminia herself who personally introduced Gonzalez to
Spouses Rabaja as the administrator of the subject property. By their own
ostensible acts, Spouses Salvador made third persons believe that Gonzales
was duly authorized to administer, negotiate and sell the subject property.
This fact was even affirmed by Spouses Salvador themselves in their petition
where they stated that they had authorized Gonzales to look for a buyer of
their property. It is already too late in the day for Spouses Salvador to retract
the representation to unjustifiably escape their principal obligation.
Considering that there was a valid SPA, then Spouses Rabaja properly made
payments to Gonzales, as agent of Spouses Salvador; and it was as if they
paid to Spouses Salvador. It is of no moment, insofar as Spouses Rabaja are
concerned, whether or not the payments were actually remitted to Spouses
Salvador. Any internal matter, arrangement, grievance or strife between the
principal and the agent is theirs alone and should not affect third persons. If
Spouses Salvador did not receive the payments or they wish to specifically
revoke the SPA, then their recourse is to institute a separate action against

Gonzales. Such action, however, is not any more covered by the present
proceeding.

Topic: Administrative decisions are entitled to great weight and

respect; Property of public dominion is not subject to any
encumbrance, levy on execution or auction sale.
Ponente: Perata, J.
General Mariano Alvarez Services Cooperative, Inc. (GEMASCO) v.
National Housing Authority (NHA), G.R. No. 175417, 09 February
2015
Facts: On May 9, 1979, the Director of the Bureau of Public Works (BPW)
turned over to the National Housing Authority (NHA) a completed water
works system in San Gabriel, Carmona, Cavite (now General Mariano Alvarez,
Cavite). The NHA must, thereafter, turn over the same water works system to
a cooperative water company. Accordingly, in a Memorandum of Agreement
dated July 17, 1979, the NHA turned over the water works system to San
Gabriel Water Services Cooperative (SAGAWESECO), now GEMASCO.
In 1983, GEMASCO experienced internal problems. Two (2) Boards of
Directors, the Gabumpa group and the Catangay group, were simultaneously
administering its affairs. On September 18, 1986, as the management of the
water system was characterized with instability and continued conflict, the
NHA temporarily intervened and took over through its Interim Water Services
Management. On March 16,1988, the Gabumpa group again took over the
management.
On January 10, 1992, the NHA entered into a Deed of Transfer and
Acceptance with GMAWD and transferred to the latter the operations and
management of the water system in General Mariano Alvarez, Cavite from
GEMASCO, which comprised of six (6) artesian deep wells with pumping
facilities, five (5) water tanks, pipe mainline and distribution system. On
February 17, 1992, GEMASCO filed a Complaint for Damages with Prayer for
Preliminary Injunction and TRO against the NHA, GMAWD, and the Local
Water Utility Administration before the Quezon City RTC, assailing the Deed
of Transfer and Acceptance executed between the NHA and GMAWD.
On June 15, 1999, the RTC rendered a Decision upholding the validity
of the contested Deed of Transfer and Acceptance. GEMASCO thus brought
the case to the CA, which was docketed as CA-G.R. CV No. 64237. Thereafter,
the CA dismissed GEMASCOs appeal and affirmed the RTC Decision. A
subsequent motion for reconsideration having been denied, GEMASCO filed
the instant petition before the Court, which was docketed as G.R. No.
175417.
In G.R. No. 175417, GEMASCO attacks the validity of the Deed of
Transfer and Acceptance entered into by the NHA and GMAWD. In G.R. No.
198923, on the other hand, GMAWD contends that the CA erred in affirming

the issuance of the LAs August 17, 2007 Writ of Execution as well as its
Notice of Sale/Levy on Execution despite the pendency of G.R. No. 175417
before the Court. It argues that said issuances will cause it great injustice
because the same are against properties the right of ownership over which
has been consistently upheld in its favor. Since the issues are substantially
interrelated, the Court shall make a joint discussion.
Issues:
1 Whether the Deed of Transfer and Acceptance entered into by the NHA
and GMAWD is valid.
2 Whether the water works system is subject to encumbrance, levy on
execution or auction sale.
SC:
1 Yes.
Well-entrenched is the rule in our jurisprudence that administrative
decisions are entitled to great weight and respect and will not be interfered
with by the courts. Courts will not interfere in matters which are addressed to
the sound discretion of the government agency entrusted with regulation of
activities coming under its special and technical training and knowledge, for
the exercise of administrative discretion is a policy decision and a matter
that is best discharged by the concerned government agency and not by the
courts.
More so where, as in the present case, the prime consideration is the
interest of the public at large on the issue of basic water need. Certainly, the
Deed of Transfer and Acceptance entered into by the NHA and GMAWD was
the result of a valid exercise of the NHAs management prerogative.
2 No.
It is interesting to note that the water works system in General Mariano
Alvarez, Cavite, including the three (3) water tanks subject of the assailed
Writ of Execution in G.R. No. 198923, is devoted to public use and thus,
property of public dominion, which GMAWD has the right to operate,
maintain, and manage. Properties of public dominion, being for public use,
are not subject to levy, encumbrance or disposition through public or private
sale. Any encumbrance, levy on execution or auction sale of any property of
public dominion is void for being contrary to public policy. Otherwise,
essential public services would stop if properties of public dominion would be
subject to encumbrances, foreclosures and auction sale. Since it is GEMASCO
which is liable for the payment of the separation pay and backwages to its
illegally dismissed employees, any contemplated sale must be confined only

to those properties absolutely owned by it and the subject water tanks must
corollarily be excluded from the same.

Topic: Art. 171, Family Code legitimation of a child; civil status of a

child
Ponente: Reyes, J.:
BBB v. AAA, G.R. No. 193225, 09 February 2015
Facts: Both [BBB] and [AAA] allege that they first met in 1991 but started to
date seriously only in 1996. [AAA] was then a medical student and was
raising her first child borne from a previous relationship, a boy named [CCC],
with the help of her parents.
During the relationship with [BBB], [AAA] bore two more children
namely, [DDD] (born on December 11, 1997) and [EEE] (born on October 19,
2000).
To legalize their relationship, [BBB] and [AAA] married in civil rights on
October 10, 2002 and thereafter, the birth certificates of the children,
including [CCCs], was amended to change their civil status to legitimated by
virtue of the said marriage.
The relationship, both admit, was far from ideal and has had its share
of happy moments and heated arguments. The two however have
contradicting statements as to the cause of their present situation.
[BBB] alleges that [AAAs] irrational jealousy has caused their frequent
arguments. According to [BBB], [AAA] has been suspicious of [BBB] and his
relationship with his female co-workers, which [BBB] alleges, contrary to
[AAAs] suspicion, are purely professional. According to [BBB], because of
their repeated fights, he was forced to leave the family home to prevent the
brewing animosity between him and his wife. Soon after [BBB] left, [AAA]
herself decided to leave the family home and brought the children with her,
which made it difficult for [BBB] to see their kids regularly. This has also
caused the family expense to double, making it even more difficult for [BBB]
to fulfill his financial obligations.
[AAA], on the other hand, alleges that their heated arguments were
often due to [BBBs] incessant womanizing. When confronted about it, [BBB],
instead of denying the same, would even curse [AAA].
The breaking point for [AAA] came when, [BBBs] alleged mistress, a
woman by the name of [FFF], insulted and humiliated [AAA] in public, in the
presence of [BBB] himself, who, according to [AAA], did nothing to stop the
same. Extremely hurt, [AAA] decided to leave the conjugal home with the
children and lived temporarily at a friends house. She however went back to
the conjugal home with [DDD] and [EEE] after some time, leaving her son
[CCC] at her friends house.

What made matters worse, according to [AAA], was the apparent

biases of [BBB] in favor of [DDD] and [EEE]. That despite his promise to treat
[CCC] as his own, [BBB] would still treat the latter differently from the two
kids, putting [CCC] at a disadvantage. [AAA], cites as example the instances
when, [BBB] would buy food and toys for [DDD] and [EEE] only, buying
nothing for [CCC].
While living separately from [BBB], [AAA] discovered that [BBB] was
not paying the rentals due on the condominium unit they were occupying,
forcing [AAA] to move out. [AAA] was likewise compelled to find work to
support the family, after [BBB] has started to be remiss in his financial
obligations to the family. According to [AAA], the amounts given by [BBB]
were not sufficient to cover the family expenses, forcing her to request for
loans from friends.
[AAA] likewise feels threatened after discovering [that BBB] was
stalking her and/or their children. [AAA] alleges that she found out that [BBB]
has sought the help of one [GGG], a friend of [BBB] who lives within the
same compound where [AAA] lives, to go through the guards logbook to
monitor their every move, i.e., who visits them, what time [AAA] leaves and
returns back home, etc.
Citing the foregoing as constituting economic and psychological abuse,
[AAA] filed an application for the issuance of a Temporary Protection Order
with a request to make the same permanent after due hearing, before the
Regional Trial Court of Pasig City.
Finding good ground in [AAAs] application, the court a quo issued a
Temporary Protection Order (TPO). The TPO was thereafter, made permanent
by virtue of a Decision of the RTC dated August [14, 2007], the dispositive
portion of which orders:
a. Prohibiting [BBB], directly and indirectly, from stalking, harassing,
annoying, or otherwise verbally abusing [AAA], directly or indirectly, to
refrain from insulting her, cursing her and shouting invectives at her;
b. Prohibiting [BBB] from committing or threatening to commit any act
that may cause mental and emotional anguish to [AAA], i.e. publicly
displaying her extramarital relations with his mistress [FFF] and anyone else
for that matter;
c. Prohibiting [BBB] from exposing the minor children to immoral and
illicit environment, specifically prohibiting him to allow her (sic) mistress[FFF]
and anyone else to be with them in instances where he would be allowed by
this Court to see their children;
d. Allowing [BBB] ALONE to see and visit his children once a month (for
a total of 12 visits per year) at the latters residence for a maximum period of

2 years each visit, subject to further orders from this Court. For this purpose,
[BBBs every visit] shall be accompanied by the Court Sheriff, who shall
coordinate with [AAA] as to the availability of time and date of children for
such visit, at the expense of [BBB]. For every visit, the Court Sheriff is
directed to submit his report within 5 days from the date [BBB] visited the
children;
e. Directing [BBB] to allow [AAA] to continue to have lawful use and
possession of the motor vehicle more particularly described as follows: One
(1) Hyundai Starex Van; 1997 Model; Plate Number: WJP 902; Chassis
Number:; Serial Number KMJWH7HPXU158443
f. Granting [AAA] permanent sole custody over their common children
until further orders from this Court;
g. Ordering [BBB] to provide support in the amount of Php 62,918.97
per month (not Php 81,650.00 being prayed by [AAA]) to [AAA] as monthly
support, inclusive of educational expenses, groceries, medicines, medical
bills, and insurance premiums, starting from the month of January 2007 to be
given within the first five (5) days of the month through the Court Sheriff,
who shall coordinate with [AAA] in receiving such support;
h. Requiring [BBB] to stay away from the offended party and any
designated family or household member at a distance of 100 meters;
i. Requiring [BBB] to stay away from the residence, school, place of
employment or any specified place frequented regularly by the offended
party and children and any designated family or household member;
j. Ordering [BBB] to post bond of Php 300,000.00 to keep peace
pursuant to Section 23 of RA 9262 with the undertaking that [BBB] will not
commit the violence sought to be prevented and that in case such violence is
committed[,] he will pay the amount determined by the Court in its
judgment;
k. Ordering [BBB] to pay the sum of Php 100,000.00 (not Php
200,000.00 being prayed by [AAA]) representing both reasonable attorneys
fees and cost of litigation, including cost of suit.
The CA affirmed the decision of the RTC, but ordering the remand of
the case for the latter to determine in the proper proceedings who shall be
awarded custody of the children.
Issue: Whether CCC is a legitimate child of BBB.
SC: Yes.
The deletion from the PPO of the directive of the RTC and the CA
relative to the award of support is not warranted. While CCC is not BBBs
biological son, he was legitimated under the latters name. Like DDD and
EEE, CCC is entitled to receive support from BBB.

BBB claims that DDD and EEE are now under his sole care and custody,
which allegedly renders moot the provision in the PPO relative to support.
BBB points out that CCC is not his biological son. Impliedly then, BBB justifies
why CCC is not entitled to receive support from him. This Court is not
persuaded.
Article 177 of the Family Code provides that "only children conceived
and born outside of wedlock of parents who, at the time of the conception of
the former, were not disqualified by any impediment to marry each other
may be legitimated." Article 178 states that "legitimation shall take place by
a subsequent valid marriage between parents."
In the case at bar, the parties do not dispute the fact that BBB is not
CCCs biological father. Such being the case, it was improper to have CCC
legitimated after the celebration of BBB and AAAs marriage. Clearly then,
the legal process of legitimation was trifled with. BBB voluntarily but falsely
acknowledged CCC as his son. Article 1431 of the New Civil Code pertinently
provides:
Art. 1431. Through estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved as
against the person relying thereon.
At least for the purpose of resolving the instant petition, the principle
of estoppel finds application and it now bars BBB from making an assertion
contrary to his previous representations. He should not be allowed to evade
a responsibility arising from his own misrepresentations. He is bound by the
effects of the legitimation process. CCC remains to be BBBs son, and
pursuant to Article 179 of the Family Code, the former is entitled to the same
rights as those of a legitimate child, including the receipt of his fathers
support.
Notwithstanding the above, there is no absolute preclusion for BBB
from raising before the proper court the issue of CCCs status and filiation.
However, BBB cannot do the same in the instant petition before this Court
now. In Tison v. CA, the Court held that "the civil status of a child cannot be
attacked collaterally." The childs legitimacy "cannot be contested by way of
defense or as a collateral issue in another action for a different purpose." The
instant petition sprang out of AAAs application for a PPO before the RTC.
Hence, BBBs claim that CCC is not his biological son is a collateral issue,
which this Court has no authority to resolve now.
All told, the Court finds no merit in BBBs petition, but there exists a
necessity to remand the case for the RTC to resolve matters relative to who
shall be granted custody over the three children, how the spouses shall

exercise visitation rights, and the amount and manner of providing financial
support.
The RTC and the CA found substantial evidence and did not commit
reversible errors when they issued the PPO against BBB. Events, which took
place after the issuance of the PPO, do not erase the fact that psychological,
emotional and economic abuses were committed by BBB against AAA.
Hence, BBBs claim that he now has actual sole care of DDD and EEE does
not necessarily call for this Courts revocation of the PPO and the award to
him of custody over the children.
This Court, thus, affirms the CAs order to remand the case for the RTC
to resolve the question of custody. Since the children are now all older than
seven years of age, they can choose for themselves whom they want to stay
with. If all the three children would manifest to the RTC their choice to stay
with AAA, then the PPO issued by RTC shall continue to be executed in its
entirety. However, if any of the three children would choose to be under
BBBs care, necessarily, the PPO issued against BBB relative to them is to be
modified. The PPO, in its entirety, would remain effective only as to AAA and
any of the children who opt to stay with her. Consequently, the RTC may
accordingly alter the manner and amount of financial support BBB should
give depending on who shall finally be awarded custody over the children.
Pursuant to Articles 201 and 202 of the Family Code, BBBs resources and
means and the necessities of AAA and the children are the essential factors
in determining the amount of support, and the same can be reduced or
increased proportionately. The RTC is reminded to be circumspect in
resolving the matter of support, which is a mutual responsibility of the
spouses. The parties do not dispute that AAA is now employed as well, thus,
the RTC should consider the same with the end in mind of promoting the best
interests of the children.
A final note on the effectivity and violation of a PPO
The Court reminds the parties that the application for the issuance of a
PPO is not a process to be trifled with. It is only granted after notice and
hearing. Once issued, violation of its provisions shall be punishable with a
fine ranging from Five Thousand Pesos (5,000.00) to Fifty Thousand Pesos
(P50,000.00) and/or imprisonment of six (6) months.
Section 16 of R.A. No. 9262, on the other hand, provides that "a PPO
shall be effective until revoked by a court upon application of the person in
whose favor the order was issued." Pending the resolution of the instant
petition, BBB claims that he and AAA had executed a MOA, upon which basis
a judgment by compromise is sought to be rendered. Atty. Uyboco, on her
part, pointed out AAAs vacillation anent the MOAs execution. With the
foregoing circumstances, the parties, wittingly or unwittingly, have imposed

upon this Court the undue burden of speculating whether or not AAAs halfhearted acquiescence to the MOA is tantamount to an application for the
revocation of the PPO. The Court, however, refuses to indulge the whims of
either parties. The questions raised in the instant petition for the Court to
dispose of revolve around the propriety of the PPOs issuance. The Court
resolves that principal query in the affirmative. The PPO thus stands unless
AAA, categorically and without any equivocation, files an application for its
revocation.

Topic: Easement of Right of Way

Ponente: Leonen, Second Division
Alicia B. Reyes Vs. Spouses Francisco S. Valentin And Anatalia
Ramos, G.R. No. 194488
February 11, 2015
Facts: Alicia B. Reyes, through Dolores B. Cinco, filed a Complaint before the
Regional Trial Court for easement of right of way against respondents,
Spouses Francisco S. Valentin and Anatalia Ramos.
The petitioner alleged that she was the registered owner of a 450square-meter parcel of land in Barangay Malibong Bata, Pandi, Bulacan,
designated as Lot No. 3-B-12 and covered by TCT No. T-343642-(M). The
property used to be a portion of Lot No. 3-B and was surrounded by estates
belonging to other persons. Petitioner also alleged that respondents 1,500square-meter property surrounded her property, and that it was the only
adequate outlet from her property to the highway. The easement sought was
the vacant portion near the boundary of respondents other lot. Respondents
lot was given to Dominador Ramos (Dominador) who allegedly was
respondents predecessor-in-interest. Dominador was also her mothers
brother and caretaker of properties.
Only 500 square meters were given to Dominador, but, instead of
limiting the conveyance to himself to 500 square meters of the property, he
conveyed the whole 1,500 square meters, including that which was supposed
to be the access to the barangay road. Petitioners mother was unable to
recover the land because the Registry of Deeds was razed with fire.
In their Answer, respondents contended that the isolation of
petitioners property was due to her mothers own act of subdividing the
property among her children without regard to the pendency of an agrarian
case between her and her tenants. The property chosen by petitioner as
easement was also the most burdensome for respondents. Respondents
pointed to an open space that connected petitioners property to another
public road.
The trial court dismissed the complaint for easement of right of way.
On appeal, the CA affirmed the decision of the RTC, in toto.
Issue: Whether or not the petitioner has the compulsory easement of right
of way over respondents property
SC: An easement of right of way is a real right. When an easement of right of
way is granted to another person, the rights of the propertys owner are
limited. An owner may not exercise some of his or her property rights for the
benefit of the person who was granted the easement of right of way. Hence,

the burden of proof to show the existence of the above conditions is imposed
on the person who seeks the easement of right of way.
We agree with the Regional Trial Courts and the Court of Appeals
findings that petitioner failed to establish that there was no adequate outlet
to the public highway and that the proposed easement was the least
prejudicial to respondents estate.
There is an adequate exit to a public highway.
Based on the Ocular Inspection Report, petitioners property had
another outlet to the highway. In between her property and the highway or
road, however, is an irrigation canal, which can be traversed by constructing
a bridge, similar to what was done by the owners of the nearby properties.
There is, therefore, no need to utilize respondents property to serve
petitioners needs. Another adequate exit exists. Petitioner can use this
outlet to access the public roads.
The outlet referred to in the Ocular Inspection Report may be longer
and more inconvenient to petitioner because she will have to traverse other
properties and construct a bridge over the irrigation canal before she can
reach the road. However, these reasons will not justify the imposition of an
easement on respondents property because her convenience is not the
gauge in determining whether to impose an easement of right of way over
anothers property. Petitioner also failed to satisfy the requirement of "least
prejudicial to the servient estate."
The Regional Trial Court and the Court of Appeals also considered the
aspect of necessity for an easement in determining petitioners rights.
The trial court found that there is still no necessity for an easement of
right of way because petitioners property is among the lots that are
presently being tenanted by Dominador and Filomena Ramos children.74
Petitioner is yet to use her property. The Complaint for easement was found
to have been filed merely "for future purposes." Thus, according to the Court
of Appeals, "admittedly, there is no immediate and imperative need for the
construction of a right of way as the dominant estate and its surrounding
properties remain as agricultural lands under tenancy."
The aspect of necessity may not be specifically included in the
requisites for the grant of compulsory easement under the Civil Code.
However, this goes into the question of "least prejudice." An easement of
right of way imposes a burden on a property and limits the property owners
use of that property. The limitation imposed on a property owners rights is
aggravated by an apparent lack of necessity for which his or her property will
be burdened.

The decision of the CA was affirmed.

Topic: Civil Case; Property; rental fees and expropriation indemnity

Ponente: Perez, J
National Power Corporation v. Lucman M. Ibrahim et al, G.R. No.
175863, February 18, 2015
Facts: With an agreement basically out of reach, Mangondato filed a
complaint for reconveyance against petitioner before the Regional Trial Court
(RTC) of Marawi City in July 1992. In his complaint, Mangondato asked for,
among others, the recovery of the subject land and the payment by
petitioner of a monthly rental from 1978 until the return of such land.
Mangondatos complaint was docketed as Civil Case No. 605-92.
For its part, petitioner filed an expropriation complaint before the RTC on 27
July 1992. Petitioners complaint was docketed as Civil Case No. 610-92.
Later, Civil Case No. 605-92 and Civil Case No. 610-92 were consolidated
before Branch 8 of the Marawi City RTC.
On 21 August 1992, Branch 8 of the Marawi City RTC rendered a Decision in
Civil Case No. 605-92 and Civil Case No. 610-92. The decision upheld
petitioners right to expropriate the subject land: it denied Mangondatos
claim for reconveyance and decreed the subject land condemned in favor of
the petitioner. Disagreeing with the amount of just compensation that it was
adjudged to pay under the said decision, petitioner filed an appeal with the
Court of Appeals. This appeal was docketed in the Court of Appeals as CAG.R. CV No. 39353. During the pendency of CA-G.R. CV No. 39353, or on 29
March 1993, herein respondents the Ibrahims and Maruhoms filed before the
RTC of Marawi City a complaint against Mangondato and petitioner. This
complaint was docketed as Civil Case No. 967-93 and was raffled to
Branch 10 of the Marawi City RTC.
In their complaint, the Ibrahims and Maruhoms disputed Mangondatos
ownership of the lands covered by TCT No. 378-A, including the subject land.
The Ibrahims and Maruhoms asseverate that they are the real owners of the

lands covered by TCT No. 378-A; they being the lawful heirs of the late Datu
Magayo-ong Maruhom, who was the original proprietor of the said lands. The
Ibrahims and Maruhoms submit that since they are the real owners of the
lands covered by TCT No. 378-A, they should be the ones entitled to any
rental fees or expropriation indemnity that may be found due for the subject
land.
On 21 December 1993, the Court of Appeals rendered a Decision in CA-G.R.
CV No. 39353 denying the appeal of petitioner and affirming in toto the 21
August 1992 Decision in Civil Case No. 605-92 and Civil Case No. 610-92.
Undeterred, petitioner next filed a petition for review on certiorari with this
Court that was docketed herein as G.R. No. 113194.alawred
On 11 March 1996, the court rendered a Decision in G.R. No. 113194 wherein
it upheld the Court of Appeals denial of petitioners appeal. In the same
decision, it likewise sustained the appellate courts affirmance of the decision
in Civil Case No. 605-92 and Civil Case No. 610-92 subject only to a reduction
of the rate of interest on the monthly rental fees from 12% to 6% per annum.
Consistent with the foregoing findings, Branch 10 of the Marawi City RTC thus
required payment of all the rental fees and expropriation indemnity due for
the subject land, as previously adjudged in Civil Case No. 605-92 and Civil
Case No. 610-92, to the Ibrahims and Maruhoms.
Issue: whether it is correct, in view of the facts and circumstances in this
case, to hold petitioner liable in favor of the Ibrahims and Maruhoms for the
rental fees and expropriation indemnity adjudged due for the subject land.
SC: No.
Petitioner is correct. No bad faith may be taken against it in paying
Mangondato the rental fees and expropriation indemnity due the subject
land. In Lopez, et al. v. Pan American World Airways, a 1966 landmark tort
case,
we
defined
the
concept
of
bad
faith
as:
a breach of a known duty through some motive of interest or ill will.
Just months after the promulgation of Lopez, however, came the case of Air
France v. Carrascoso, et al., In Air France, we expounded on Lopezs
definition
by
describing
bad
faith
as:
y

xxx a state of mind affirmatively operating with furtive design or with some
motive of self-interest or will or for ulterior purpose.
Air Frances articulation of the meaning of bad faith was, in turn, echoed in a
number subsequent cases, one of which, is the 2009 case of Balbuena, et al.
v. Sabay, et al
Verily, the clear denominator in all of the foregoing judicial pronouncements
is that the essence of bad faith consists in the deliberate commission of
a wrong. Indeed, the concept has often been equated with malicious or
fraudulent motives, yet distinguished from the mere unintentional wrongs
resulting from mere simple negligence or oversight.
A finding of bad faith, thus, usually assumes the presence of two (2)
elements: first, that the actor knew or should have known that a particular
course of action is wrong or illegal, and second, that despite such actual or
imputable knowledge, the actor, voluntarily, consciously and out of his own
free will, proceeds with such course of action. Only with the concurrence of
these two elements can we begin to consider that the wrong committed had
been done deliberately and, thus, in bad faith.
Thus, Without the existence of bad faith, the ruling of the RTC and of the
Court of Appeals apropos petitioners remaining liability to the Ibrahims and
Maruhoms becomes devoid of legal basis. In fact, petitioners previous
payment to Mangondato of the rental fees and expropriation indemnity due
the subject land pursuant to the final judgment in Civil Case No. 605-92 and
Civil Case No. 610-92 may be considered to have extinguished the formers
obligation regardless of who between Mangondato, on one hand, and
the Ibrahims and Maruhoms, on the other, turns out to be the real
owner of the subject land. Either way, petitioner cannot be made liable to
the Ibrahims and Maruhoms:
First. If Mangondato is the real owner of the subject land, then the obligation
by petitioner to pay for the rental fees and expropriation indemnity due the
subject land is already deemed extinguished by the latters previous
payment under the final judgment in Civil Case No. 605-92 and Civil Case No.
610-92. This would be a simple case of an obligation being extinguished
through payment by the debtor to its creditor. Under this scenario, the
Ibrahims and Maruhoms would not even be entitled to receive anything from
anyone for the subject land. Hence, petitioner cannot be held liable to the
Ibrahims
and
Maruhoms.
Second. We, however, can reach the same conclusion even if the Ibrahims
and Maruhoms turn out to be the real owners of the subject land.

Should the Ibrahims and Maruhoms turn out to be the real owners of the
subject land, petitioners previous payment to Mangondato pursuant to Civil
Case No. 605-92 and Civil Case No. 610-92given the absence of bad faith
on petitioners part as previously discussedmay nonetheless be considered
as akin to a payment made in good faith to a person in possession
of credit per Article 1242 of the Civil Code that, just the same,
extinguishes its obligation to pay for the rental fees and expropriation
indemnity due for the subject land.

Topic: Civil Case; Loan; Surety

Ponente: Reyes, J
Yulim International Company LTD, v. International Exchange Bank,
G.R. No. 203133, February 18, 2015
Facts: On June 2, 2000, iBank, a commercial bank, granted Yulim, a
domestic partnership, a credit facility in the form of an Omnibus Loan Line
for P5,000,000.00, as evidenced by a Credit Agreement which was secured
by a Chattel Mortgage over Yulims inventories in its merchandise warehouse
at 106 4thStreet, 9th Avenue, Caloocan City. As further guarantee, the
partners, namely, James, Jonathan and Almerick, executed a Continuing
Surety Agreement in favor of iBank. On April 5, 2002, iBank sent demand
letters to Yulim, through its President, James, and through Almerick, but
without success. iBank then filed a Complaint for Sum of Money with
Replevin against Yulim and its sureties. On August 8, 2002, the Court granted
the application for a writ of replevin. Pursuant to the Sheriffs Certificate of
Sale dated November 7, 2002, the items seized from Yulims warehouse were
worth only P140,000.00, not P500,000.00 as the petitioners have insisted.
On October 2, 2002, the petitioners moved to dismiss the complaint insisting
that their loan had been fully paid after they assigned to iBank their
Condominium Unit No. 141, with parking space, at 20 Landsbergh Place in
Tomas Morato Avenue, Quezon City. They claimed that while the pre-selling
value of the condominium unit was P3.3 Million, its market value has since
risen to P5.5 Million. The RTC, however, did not entertain the motion to
dismiss for non-compliance with Rule 15 of the Rules of Court.
On May 16, 2006, the petitioners filed their Answer reiterating that they have
paid their loan by way of assignment of a condominium unit to iBank, as well
as insisting that iBanks penalties and charges were exorbitant, oppressive
and unconscionable.
After trial on the merits, the RTC rendered judgment on December 21,
2009, finding the individual defendants James Yu, Jonathan Yu and Almerick
Tieng Lim, not liable to the plaintiff, iBank. Both parties assailed the decision
of the RTC. The appellate court granted the appeal of iBank, and denied that
of the petitioners.

Issue: Whether or not the CA erred in ordering petitioners James, Jonathan

and Almerick jointly and severally liable with petitioner Yulim to pay iBank.
SC: No.
Firstly, the individual petitioners do not deny that they executed the
Continuing Surety Agreement, wherein they jointly and severally with the
PRINCIPAL Yulim, hereby unconditionally and irrevocably guarantee full and
complete payment when due, whether at stated maturity, by acceleration, or
otherwise, of any and all credit accommodations that have been granted to
Yulim by iBank, including interest, fees, penalty and other charges. Under
Article 2047 of the Civil Code, these words are said to describe a contract of
suretyship. In a contract of suretyship, one lends his credit by joining in the
principal debtors obligation so as to render himself directly and primarily
responsible with him without reference to the solvency of the
principal. According to the above Article, if a person binds himself solidarily
with the principal debtor, the provisions of Articles 1207 to 1222, or Section
4, Chapter 3, Title I, Book IV of the Civil Code on joint and solidary
obligations, shall be observed. Thus, where there is a concurrence of two or
more creditors or of two or more debtors in one and the same obligation,
Article 1207 provides that among them, [t]here is a solidary liability only
when the obligation expressly so states, or when the law or the nature of the
obligation requires solidarity.
A surety is considered in law as being the same party as the debtor in
relation to whatever is adjudged touching the obligation of the latter, and
their liabilities are interwoven as to be inseparable. And it is well settled
that when the obligor or obligors undertake to be jointly and severally
liable, it means that the obligation is solidary, as in this case.
Thereunder, in addition to binding themselves jointly and severally with
Yulim to unconditionally and irrevocably guarantee full and complete
payment of any and all credit accommodations that have been granted to
Yulim, the petitioners further warrant that their liability as sureties shall be
direct, immediate and not contingent upon the pursuit [by] the BANK of
whatever remedies it may have against the PRINCIPAL of other securities.
There can thus be no doubt that the individual petitioners have bound
themselves to be solidarily liable with Yulim for the payment of its loan with
iBank.

As regards the petitioners contention that iBank in its letter dated May 4,
2001 had accepted/approved the assignment of its condominium unit in
Tomas Morato Avenue as full and final payment of their various loan
obligations, the Court is far from persuaded. On the contrary, what the letter
accepted was only the collaterals provided for the loans, as well as the
consolidation of the petitioners various PNs under one PN for their
aggregate amount of P4,246,310.00. The letter goes on to spell out the
terms of the new PN, such as, that its expiry would be February 28, 2002 or a
term of 360 days, that interest would be due every 90 days, and that the
rate would be based on the 91-day Treasury Bill rate or other market
reference.
Nowhere can it be remotely construed that the letter even intimates an
understanding by iBank that the Deed of Assignment would serve to
extinguish the petitioners loan. Otherwise, there would have been no need
for iBank to mention therein the three collaterals or supports provided by
the petitioners, namely, the Deed of Assignment, the Chattel Mortgage and
the Continuing Surety Agreement executed by the individual petitioners. In
fact, Section 2.01 of the Deed of Assignment expressly acknowledges that it
is a mere interim security for the repayment of any loan granted and those
that may be granted in the future by the BANK to the ASSIGNOR and/or the
BORROWER, for compliance with the terms and conditions of the relevant
credit and/or loan documents thereof.The condominium unit, then, is a mere
temporary security, not a payment to settle their promissory notes.

Topic: Right to repurchase

Ponente: Perlas-Bernabe, J.
Spouses Rodolfo and Marcelina Guevarra v. The Commoner Lending
Corporation, Inc., G.R. No. 204672 February 18, 2015
Facts: On December 16, 1996, Sps. Guevarra obtained a P320,000.00 loan
from TCLC, which was secured by a real estate mortgage parcel of land
situated in Guimbal, Iloilo, emanating from a free patent granted to Sps.
Guevarra on February 25, 1986. Sps. Guevarra, however, defaulted in the
payment of their loan, prompting TCLC to extra-judicially foreclose the
mortgage on the subject property in accordance with Act No. 3135, as
amended. In the process, TCLC emerged as the highest bidder at the public
auction sale held on June 15, 2000 for the bid amount of P150,000.00, and
the certificate of sale was registered with the Registry of Deeds of Iloilo.
Eventually, Sps. Guevarra failed to redeem the subject property within the
one-year reglementary period, which led to the cancellation of OCT No. F31900 and the issuance of Transfer Certificate of Title No.T-16187 in the
name of TCLC. Thereafter, TCLC demanded that Sps. Guevarra vacate the
property, but to no avail. Sps. Guevarra filed before the RTC a petition for
redemption, maintaining that the redemption period did not expire on August
25, 2001, or one (1) year from the registration of the certificate of sale, but
will still expire five (5) years therefrom, or on August 25, 2006. RTC granted
TCLCs petition in Cadastral Case No. 118, resulting in the issuance of the
corresponding Writ of Possession andNotice to Vacate which were duly served
upon Sps. Guevarra. RTC recognized Sps. Guevarras right to repurchase the
subject property, pointing out that they were able to file their petition within
the five-year period provided under Section 119 of Commonwealth Act No.
141, otherwise known as the Public Land Act (Public Land Act). CA affirmed
the RTCs decision.
Issue: Whether the CA committed a reversible error in ruling that the
repurchase price for the subject property should be fixed by TCLC.
SC: NO.
In this case, the subject property was mortgaged to and foreclosed by TCLC,
which is a lending or credit institution, and not a rural bank; hence, the
redemption period is one (1) year from the registration of the certificate of
sale on August 25, 2000, or until August 25, 2001. Given that Sps. Guevarra

failed to redeem the subject property within the aforestated redemption

period, TCLC was entitled, as a matter of right, to consolidate its ownership
and to possess the same. Nonetheless, such right should not negate Sps.
Guevarras right to repurchase said property within five (5) years from the
expiration of the redemption period on August 25, 2001, or until August 25,
2006, in view of Section 119 of the Public Land Act as above-cited.
In this relation, it is apt to clarify that contrary to TCLCs claim, the tender of
the repurchase price is not necessary for the preservation of the right of
repurchase, because the filing of a judicial action for such purpose within the
five-year period under Section 119 of the Public Land Actis already
equivalent to a formal offer to redeem. On this premise, consignation of the
redemption price is equally unnecessary.
Thus, the RTC and CA both correctly ruled that Sps. Guevarras right to
repurchase the subject property had not yet expiredwhen Cadastral Case No.
122 was filed on September 8, 2005. That being said, the Court now
proceeds to determine the proper amount of the repurchase price.

Topic: Psychological Incapacity

Ponente: Mendoza, J.:
Robert F. Mallilin v. Luz G. Jamesolamin and the Republic of the
Philippines, G.R. No. 192718, February 18, 2015
Facts:
Robert and Luz were married on September 6, 1972. They begot three
(3) children. On March 16, 1994, Robert filed a complaint for declaration of
nullity of marriage before the RTC, Branch 23, Cagayan de Oro City (RTC-Br.
23). On March 7, 1996, RTC-Br. 23 denied the petition. Robert appealed this
judgment before the CA where it was docketed as CA-G.R. CV No. 54261. On
January 29, 1999, the CA reversed the RTC-Br. 23 decision "due to lack of
participation of the State as required under Article 48 of the Family Code."
The case was remanded to the RTC for further proceedings and its records
were thereafter transferred from RTC-Br. 23 to RTC-Br. 37, as the latter was
designated as Family Court pursuant to the Family Code Act of 1997.
In the complaint, Robert alleged that at the time of the celebration of their
marriage, Luz was suffering from psychological and mental incapacity and
unpreparedness to enter into such marital life and to comply with its
essential obligations and responsibilities. Such incapacity became even more
apparent during their marriage when Luz exhibited clear manifestation of
immaturity, irresponsibility, deficiency of independent rational judgment, and
inability to cope with the heavy and oftentimes demanding obligation of a
parent. Luz filed her Answer with Counterclaim contesting the complaint. She
averred that it was Robert who manifested psychological incapacity in their
marriage.
While the case was pending before the trial court, Robert filed a petition for
marriage annulment with the Metropolitan Tribunal of First Instance for the
Archdiocese of Manila (Metropolitan Tribunal) which handed down a decision
declaring their marriage invalid ab initio on the ground of grave lack of due
discretion on the part of both parties as contemplated by the second
paragraph of Canon1095. This decision was affirmed by the National
Appellate Matrimonial Tribunal (NAMT).
Prior to that, the RTC had rendered a decision declaring the marriage null and
void on the ground of psychological incapacity on the part of Luz as she
failed to comply with the essential marital obligations.

However, The State, represented by the Office of the Solicitor General (OSG),
interposed an appeal with the CA. The OSG argued that Robert failed to
make a case for declaration of nullity of his marriage with Luz. It pointed out
that the real cause of the marital discord was the sexual infidelity of Luz.
Such ground, the OSG contended, should not result in the nullification of the
marriage under the law, but merely constituted a ground for legal separation.
The CA, in its November 20, 2009 Decision, granted the petition and
reversed the RTC decision.
Issue: Whether the totality of the evidence adduced proves that Luz was
psychologically incapacitated to comply with the essential obligations of
marriage warranting the annulment of their marriage under Article 36 of the
Family Code.
SC: No.
In Republic v. Court of Appeals and Eduardo C. De Quintos, Jr. the Court
reiterated the well-settled guidelines in resolving petitions for declaration of
nullity of marriage, embodied in Republic v. Court of Appeals and Molina,
based on Article 36 of the Family Code. Thus:
(1) The burden of proof to show the nullity of the marriage belongs to
the plaintiff. Any doubt should be resolved in favor of the existence and
continuation of the marriage and against its dissolution and nullity.
(2) The root cause of the psychological incapacity must be (a)
medically or clinically identified, (b) alleged in the complaint, (c)
sufficiently proven by experts and (d) clearly explained in the decision.
Article 36 of the Family Code requires that the incapacity must be
psychological not physical, although its manifestations and/or
symptoms may be physical.
(3) The incapacity must be proven to be existing at "the time of the
celebration" of the marriage.
(4) Such incapacity must also be shown to be medically or clinically
permanent or incurable.
(5) Such illness must be grave enough to bring about the disability of
the party to assume the essential obligations of marriage. Thus, "mild
characteriological peculiarities, mood changes, occasional emotional
outbursts" cannot be accepted as root causes.
(6) The essential marital obligations must be those embraced by
Articles 68 up to 71 of the Family Code as regards the husband and

wife as well as Articles 220, 221 and 225 of the same Code in regard to
parents and their children. Such non-complied marital obligation(s)
must also be stated in the petition, proven by evidence and included in
the text of the decision.
(7) Interpretations given by the National Appellate Matrimonial Tribunal
of the Catholic Church in the Philippines, while not controlling or
decisive, should be given great respect by our courts.
(8) The trial court must order the prosecuting attorney or fiscal and the
Solicitor General to appear as counsel for the state.
With these pronouncements, the Court is of the considered view that
Roberts evidence failed to establish the psychological incapacity of Luz.
Roberts reliance on the NAMT decision is misplaced. The decision of the
NAMT was based on the second paragraph of Canon 1095 which refers to
those who suffer from a grave lack of discretion of judgment concerning
essential matrimonial rights and obligations to be mutually given and
accepted, a cause not of psychological nature under Article 36 of the Family
Code. A cause of psychological nature similar to Article 36 is covered by the
third paragraph of Canon 1095 of the Code of Canon Law (Santos v. Santos
19).

Topic: liquidated damages; contracts

Ponente: Sereno, C.J.
New World Developers and Management, Inc. v. AMA Computer
Learning Center, Inc., G.R. No. 187930, February 23, 2015
Facts:
AMA agreed to lease the commercial building of New World
covering the eight-year period from 15 June 1998 to 14 March 2006. The
monthly rental for the first year was set at P181,500, with an annual
escalation rate equivalent to 15% for the succeeding years. 5 It was also
provided that AMA may preterminate the contract by sending notice in
writing to New World at least six months before the intended date. 6 In case of
pretermination, AMA shall be liable for liquidated damages in an amount
equivalent to six months of the prevailing rent. In compliance with the
contract, AMA paid New World the amount of P450,000 as advance rental
and another P450,000 as security deposit.
After three years of the lease agreement, AMA requested the deferment of
the annual increase in the monthly rent by citing financial constraints
brought
about
by
a
decrease
in
its
enrollment.
On the evening of 6 July 2004, AMA removed all its office equipment and
furniture from the leased premises. The following day, New World received a
letter from AMA dated 6 July 200410 stating that the former had decided to
preterminate the contract effective immediately on the ground of business
losses due to a drastic decline in enrollment. AMA also demanded the refund
of
its
advance
rental
and
security
deposit.
New World replied in a letter dated 12 July 2004, to which was attached a
Statement of Account12indicating the following amounts to be paid by AMA:
1) unpaid two months rent in the amount of P466,620; 2) 3% monthly
interest for the unpaid rent in the amount of P67,426.59; 3) liquidated
damages equivalent to six months of the prevailing rent in the amount of
P1,399,860; and 4) damage to the leased premises amounting to P15,580.
The deduction of the advance rental and security deposit paid by AMA still
left an unpaid balance in the amount of P1,049,486.59.

On 27 October 2004, New World filed a complaint for a sum of money and
damages against AMA before the Regional Trial Court of Marikina City.

The RTC ordered AMA to pay New World P466,620 as unpaid rentals plus 3%
monthly penalty interest until payment; P499,860 as liquidated damages
equivalent to six months rent, with the advance rental and security deposit
paid by AMA to be deducted therefrom; P15,580 for the damage to the
leased premises; P100,000 as attorneys fees; and costs of the suit.
The RTC provided no bases for awarding P15,580 for the damage to the
leased premises and P100,000 for attorneys fees, while denying the prayer
for exemplary and moral damages.
The CA ordered AMA to pay New World P466,620 for unpaid rentals and
P33,240 for liquidated damages equivalent to four months rent, with the
advance rental and security deposit paid by AMA to be deducted therefrom.
The appellate court ruled that the RTC erred in imposing a 3% monthly
penalty interest on the unpaid rent, because there was no stipulation either
in the Contract of Lease or in the Addendum to the Contract of Lease
concerning the imposition of interest in the event of a delay in the payment
of the rent. Thus, the CA ruled that the rent in arrears should earn interest at
the rate of 6% per annum only, reckoned from the date of the extrajudicial
demand on 12 July 2004 until the finality of the Decision. Thereafter, interest
at the rate of 12% per annum shall be imposed until full payment.
The CA also ruled that the RTCs imposition of liquidated damages equivalent
to six months rent was iniquitous. While conceding that AMA was liable for
liquidated damages for preterminating the lease, the CA also recognized that
stipulated penalties may be equitably reduced by the courts based on its
sound discretion. Considering that the unexpired portion of the term of lease
was already less than two years, and that AMA had suffered business losses
rendering it incapable of paying for its expenses, the CA deemed that
liquidated damages equivalent to four months rent was reasonable.
The appellate court deleted the award for the damage to the leased
premises, because no proof other than the Statement of Account was
presented by New World. Furthermore, noting that the latter was already
entitled to liquidated damages, and that the trial court did not give any
justification for attorneys fees, the CA disallowed the award thereof.

Issues: Whether AMA is liable to pay six months worth of rent as liquidated
damages. Whether AMA remained liable for the rental arrears.
SC: Yes.
AMA is liable for six months worth of rent as liquidated damages.
Quite notable is the fact that AMA never denied its liability for the payment
of liquidated damages in view of its pretermination of the lease contract with
New World. What it claims, however, is that it is entitled to the reduction of
the amount due to the serious business losses it suffered as a result of a
drastic decrease in its enrollment.
This Court is, first and foremost, one of law. While we are also a court of
equity, we do not employ equitable principles when well-established
doctrines and positive provisions of the law clearly apply.
The law does not relieve a party from the consequences of a contract it
entered into with all the required formalities. Courts have no power to ease
the burden of obligations voluntarily assumed by parties, just because things
did not turn out as expected at the inception of the contract. It must also be
emphasized that AMA is an entity that has had significant business
experience, and is not a mere babe in the woods.
Articles 1159 and 1306 of the Civil Code state:
Art. 1159. Obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith.
Art. 1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy.
The fundamental rule is that a contract is the law between the parties.
Unless it has been shown that its provisions are wholly or in part contrary to
law, morals, good customs, public order, or public policy, the contract will be
strictly
enforced
by
the
courts.34cralawred
In rebuttal, AMA invokes Article 2227 of the Civil Code, to wit:
Art. 2227. Liquidated damages, whether intended as an indemnity or a
penalty, shall be equitably reduced if they are iniquitous or unconscionable.

It is quite easy to understand the reason why a lessor would impose

liquidated damages in the event of the pretermination of a lease contract.
Pretermination is effectively the breach of a contract, that was originally
intended to cover an agreed upon period of time. A definite period assures
the lessor a steady income for the duration. A pretermination would suddenly
cut short what would otherwise have been a longer profitable relationship.
Along the way, the lessor is bound to incur losses until it is able to find a new
lessee, and it is this loss of income that is sought to be compensated by the
payment of liquidated damages.
There might have been other ways to work around its difficult financial
situation and lessen the impact of the pretermination to both parties.
However, AMA opted to do the following:
1. It preterminated the lease without notifying New World at least six
months before the intended date.
2. It removed all its office equipment and left the premises in the middle
of the night.
3. Only after it had cleared the premises did it send New World a notice of
pretermination effective immediately.
4. It had the gall to demand a full refund of the advance rental and
security deposit, albeit without prejudice to their removal of the
improvements introduced in the premises.
We cannot understand the inability of AMA to be forthright with New World,
considering that the former had been transparent about its business losses in
its previous requests for the reduction of the monthly rental. The drastic
decrease in AMAs enrollment had been unfolding since 2002. Thus, it cannot
be said that the business losses had taken it by surprise. It is also highly
unlikely that the decision to preterminate the lease contract was made at the
last minute. The cancellation of classes, the transfer of students, and
administrative preparations for the closure of the computer learning center
and the removal of office equipment therefrom should take at least weeks, if
not months, of logistic planning. Had AMA come clean about the impending
pretermination, measures beneficial to both parties could have been arrived
at, and the instant cases would not have reached this Court. Instead, AMA
forced New World to share in the formers losses, causing the latter to
scramble for new lessees while the premises remained untenanted and
unproductive.

In the sphere of personal and contractual relations governed by laws, rules

and regulations created to promote justice and fairness, equity is deserved,
not demanded. The application of equity necessitates a balancing of the
equities involved in a case, for he who seeks equity must do equity, and he
who comes into equity must come with clean hands. Persons in dire straits
are never justified in trampling on other persons rights. Litigants shall be
denied relief if their conduct has been inequitable, unfair and dishonest as to
the controversy in issue. The actions of AMA smack of bad faith.
AMAs liability for the rental arrears has already been extinguished.
AMA assails the CA ruling mainly for the imposition of legal interest on the
rent in arrears. AMA argues that the advance rental has extinguished its
obligation as to the arrears. Thus, it says, there is no more basis for the
imposition of interest at the rate of 6% per annum from the date of
extrajudicial demand on 12 July 2004 until the finality of the Decision, plus
interest at the rate of 12% per annum from finality until full payment.
At this juncture, it is necessary to look into the contract to determine the
purpose of the advance rental and security deposit.
Based on Item No. 4, the security deposit was paid precisely to answer for
unpaid rentals that may be incurred by AMA while the contract was in force.
The security deposit was held in trust by New World, and whatever may have
been left of it after the termination of the lease shall be refunded to AMA.
Based on Item No. 3 in relation to Item No. 2, the parties divided the advance
rental of P450,000 by 12 months. They came up with P37,500, which they
intended to deduct from the monthly rental to be paid by AMA for the last
year of the lease term. Thus, unlike the security deposit, no part of the
advance rental was ever meant to be refunded to AMA. Instead, the parties
intended to apply the advance rental, on a staggered basis, to a portion of
the monthly rental in the last year of the lease term.
Considering the pretermination of the lease contract in the present case, this
intent of the parties as regards the advance rental failed to take effect. The
advance rental, however, retains its purpose of answering for the
outstanding
amounts
that
AMA
may
owe
New
World.

We now delve into the actual application of the security deposit and the
advance
rental.
At the time of the pretermination of the contract of lease, the monthly rent
stood at P233,310, inclusive of taxes; hence, the two-month rental arrears in
the amount of P466,620.
Applying the security deposit of P450,000 to the arrears will leave a balance
of P16,620 in New Worlds favor. Given that we have found AMA liable for
liquidated damages equivalent to six months rent in the amount of
P1,399,860 (monthly rent of P233,310 multiplied by 6 months), its total
liability to New World is P1,416,480.
The court then apply the advance rental of P450,000 to this amount to arrive
at a total extinguishment of the liability for the unpaid rentals and a partial
extinguishment of the liability for liquidated damages. This shall leave AMA
still liable to New World in the amount of P966,480 (P1,416,480 total liability
less P450,000 advance rental).

Topic: Donation
G.R. No. 197115, March 23, 2015
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE SECRETARY
OF AGRICULTURE, Petitioner, v. FEDERICO DACLAN, JOSEFINA
COLLADO AND HER HUSBAND FEDERICO DACLAN, TEODORO DACLAN
AND MINVILUZ DACLAN AS SURVIVING HEIRS OF DECEASED JOSE
DACLAN, Respondents.
DEL CASTILLO, J.
FACTS:
Sometime in May 1972, the Agoo Breeding Station (breeding station)
was established by the Department of Agriculture, through the Bureau of
Animal Industry (BAI), Region I, for the purpose of breeding cattle that would
be distributed to the intended beneficiaries pursuant to the livelihood
program of the national government. In support of the said project, plaintiffs
executed four (4) documents denominated as Deed of Donation in favor of

defendant Republic of the Philippines (Republic) donating to the latter four

(4) parcels of land.
These parcels of land are located at Barrio Nazareno, Agoo, La Union.
The donation was subject to the conditions that these parcels of land 1)
shall be used solely for the establishment of a breeding station, and
2) shall not be used for any other purpose, except with the previous
consent of the donors or their heirs.
In particular, the deeds of donation stipulated
That the land herein mentioned shall be used for the establishment of
a breeding station and shall not be used for any other purpose, except with
the previous consent of the DONOR or his heirs;
xxxx
That in case of non-use, abandonment or cessation of the activities of
the

BUREAU

OF

ANIMAL

INDUSTRY,

possession

or

ownership

shall

automatically revert to the DONOR and all permanent improvements

existing thereon shall become the property of the DONOR; x x x
Sometime in 1991, the powers and functions of certain government
agencies, including those of the Department of Agriculture (DA), were
devolved to the local government units pursuant to Republic Act No. 7160,
otherwise known as the Local Government Code. Thus, defendant Province
of La Union (Province) assumed the powers and functions of the DA, in the
operation of the breeding station.
Sometime after the donations were made, the La Union Medical Center
(LUMC) was constructed on a 1.5-hectare portion of the 13-hectare donated
property.
In a September 4, 2003 Letter to the Secretary of the Department of
Agriculture, the Daclans and other donors demanded the return of their

donated lands on the ground that the breeding station has ceased
operations and that the land has been abandoned.
Petitioners contention:
The Daclans in their Petition insist that the deeds of donation they
executed are personal and exclusively limited to the parties, the donor and
the donee. (They do) not extend to or inure to the benefit of their successors
and assigns; the rights and obligations of the parties to the donations are
not transmissible by their nature or stipulation.
Defendants contention:
For the Republic, the lone point of contention is that the CA could not
validly order the return to the Daclans of the donated 1.5-hectare portion
where the LUMC is situated because it has not been proved that such portion
formed part of lands originally donated by the Daclans.
ISSUE:
Whether or not there is a violation of the terms and conditions of the
deed of donations resulting to the return of the disputed lands to the
petitioners.
RULING:
The CA cannot validly order the return to the Daclans of the donated
1.5-hectare portion where the LUMC is situated, because such portion was
not donated by them. They admitted that the 1.5-hectare portion where the
LUMC is constructed does not form part of the lands they donated to the
government, but belonged to other donors who are not parties to the instant
case. As far as the Daclans are concerned, whatever they donated remains
part of the breeding station and so long as it remains so, no right of reversion
accrues to them. Only the original owner-donor of the 1.5-hectare portion
where the LUMC is constructed is entitled to its return.

The activities of the BAI did not cease even after it was dissolved after
the

government

adopted

the

policy

of

devolution

under

the

Local

Government Code of 1991; these activities were merely transferred to the

Province.
Devolution cannot have any effect on the donations made by the
Daclans to the Republic. As defined, devolution refers to the act by which
the national government confers power and authority upon the various local
government units to perform specific functions and responsibilities.

It

includes the transfer to local government units of the records, equipment,

and

other

assets

and

personnel

of

national

agencies

and

offices

corresponding to the devolved powers, functions and responsibilities.

** contacts
The deeds of donation did not specifically prohibit the subsequent
transfer of the donated lands by the donee Republic. The Daclans should
bear in mind that contracts take effect between the parties, their assigns
and heirs, except in cases where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by
provision of law. Thus, as a general rule, rights and obligations
derived from contract are transmissible.

Topic: Redemption and Period of Redemption;

Ownership (Redemption v. Repurchase)

Recovery

of

GE
Money
Bank,
Inc.
(formerly
Keppel
Philippines,
Inc.) vs.SpousesVictorino M. Dizon and Rosalina L. Dizon, G.R. No.
184301, March 23,2015

Ponente: Justice Diosdado Peralta

Facts:
On September 18, 1991, the spouses Victorino M. Dizon and Rosalina L.
Dizon (Spouses Dizon) obtained a loan in the amount of P100,000.00 from
Monte de Piedad and Savings Bank, the predecessor-in-interest of Keppel
Monte Bank, Inc., which is now known as GE Money Bank, Inc. (Bank). By way
of security for the loan, they executed a real estate mortgage over their two
(2) lots located at 856 Sisa Street, Sampaloc, Manila. The Spouses Dizon
defaulted in the payment of their loan obligation. As of March 26, 1993, the
Statement of Foreclosure issued by the Bank showed that their outstanding
liability was P143,049.54. On July 19, 1993 and August 4, 1993, they paid the
Bank P12,000.00 and P10,000.00, respectively. In a letter dated August 10,
1993, they also requested for the postponement of the foreclosure sale for at
least 60 days. On September 13, 1993, the mortgaged properties were extrajudicially foreclosed. The Bank was the highest bidder in the amount of
P181,956.72, which was the total obligation of the Spouses Dizon at the time
of the public auction. The Certificate of Sale was registered with the Register
of Deeds for Manila on October 18, 1993. Hence, the Spouses Dizon had one
(1) year therefrom, or until October 18, 1994, within which to redeem the
subject properties. Within the redemption period, the Spouses Dizon were
only able to pay the sum of P90,000.00,which, despite acceptance by the
Bank, was less than the total redemption price. The Bank then consolidated
its title over the subject property.
The Spouses Dizon manifested their desire to re-acquire the subject
property, but the Bank declined to entertain the same as they still failed to
tender the full amount of the redemption price. Later, on April 3, 1998, they
filed a case for Redemption and Recovery of Ownership, Title and Possession
of Real Properties.
Issues:
1 Can the respondents redeem the property even after the redemption
period?
2 Assuming that an extension would be granted to the respondents,
would the reacquisition of the property constitute of a redemption or a
repurchase?
Ruling:

No more. The right of redemption should be exercised within the

period required by law, which should be counted not from the date of
foreclosure sale but from the time the certificate of sale is registered
with the Register of Deeds. Fixing a definite term within which a
property should be redeemed is meant to avoid prolonged economic
uncertainty over the ownership of the thing sold. Redemption within
the period allowed by law is not a matter of intent but a question of
payment or valid tender of the full redemption price. It is irrelevant
whether the mortgagor is diligent in asserting his or her willingness to
pay. What counts is that the full amount of the redemption price must
be actually paid; otherwise, the offer to redeem will be ineffectual and
the purchaser may justly refuse acceptance of any sum that is less
than the entire amount.
To be valid and effective, the offer to redeem must be
accompanied by an actual tender of the redemption price. Redemption
price should either be fully offered in legal tender or validly consigned
in court. Only by such means can the auction winner be assured that
the offer to redeem is being made in good faith.

Repurchase. The Spouses Dizon claimed that they negotiated

with the Bank for the extension of the period to redeem and that the
latter granted the same. Aside from the Banks vehement denial of the
allegation, the Court cannot give credence to their assertions as they
failed to present any documentary evidence to prove the conferment
of the purported extension. Assuming, but without admitting, that an
additional period was granted to them, the extension would constitute
a mere offer on the part of the Bank to re-sell the subject property; it
does not constitute a binding contract. The right to redeem of the
Spouses Dizon already expired on October 18, 1994. Thereafter, their
offer should aptly be termed as a repurchase, not redemption. The
Bank is not bound by the bid price, at the very least, and has the
discretion to even set a higher price.
The right to redeem becomes functus officio on the date of its
expiry, and its exercise after the period is not really one of redemption
but a repurchase. Distinction must be made because redemption is by
force of law; the purchaser at public auction is bound to accept
redemption. Repurchase, however, of foreclosed property, after

redemption period, imposes no such obligation. After expiry, the

purchaser may or may not re-sell the property but no law will compel
him to do so. And, he is not bound by the bid price; it is entirely within
his discretion to set a higher price, for after all, the property already
belongs to him as owner.
Topic: Medical Malpractice
DRA.RUBY
CORTEJO, Respondent.
SAN
JUAN
DE
CORTEJO, Respondent.

SANGA-MIRANDA, Petitioner, v. NELSON

DIOS

HOSPITAL, Petitioner, v. NELSON

[G.R. No. 171228, March 11, 2015]BRION, J.:

FACTS:
Mrs. Jesusa Cortejo brought her 11-year old son, EdmerCortejo (Edmer), to
San Juan de Dios Hospital (SJDH) because of difficulty in breathing, chest
pain, stomach pain, and fever.
Mrs. Cortejowas thereafter assigned to Dr. Noel Casumpang (Dr.
Casumpang). He for the first time examined Edmer using only a stethoscope
confirming
the
initial
diagnosis
of
"Bronchopneumonia."
Mrs. Cortejo recalled entertaining doubts on the doctor's diagnosis. She
immediately advised Dr. Casumpang that Edmer had a high fever, and had
no colds or cough but Dr. Casumpang merely told her that her son's
"bloodpressure is just being active," and remarked that "that's the usual
bronchopneumonia,
no
colds,
no
phlegm."
Mrs. Cortejo again called Dr. Casumpang's attention and stated that Edmer
had a fever, throat irritation, as well as chest and stomach pain. Mrs. Cortejo
also alerted Dr. Casumpang about the traces of blood in Edmer's sputum. Dr.
Casumpang simply nodded, inquired if Edmer has an asthma, and reassured
Mrs.
Cortejo
that
Edmer's
illness
is
bronchopneumonia.
Edmer vomited "phlegm with blood streak". Dr. Miranda conducted a physical
check-up covering Edmer's head, eyes, nose, throat, lungs, skin and
abdomen; and found that Edmer had a low-grade non-continuing fever, and
rashes that were not typical of dengue fever.
Edmer once again vomited blood. Upon seeing Dr. Miranda, the respondent
showed her Edmer's blood specimen, and reported that Edmer had

complained of severe stomach pain and difficulty in moving his right leg.
Dr. Miranda then examined Edmer's "sputum with blood" and noted that he
was bleeding. Suspecting that he could be afflicted with dengue, she inserted
a plastic tube in his nose, drained the liquid from his stomach with ice cold
normal saline solution, and gave an instruction not to pull out the tube, or
give
the
patient
any
oral
medication.
Dr. Miranda thereafter conducted a tourniquet test, which turned out to be
negative. She likewise ordered the monitoring of the patient's blood pressure
and some blood tests. Edmer's blood pressure was later found to be normal.
Dr. Miranda called up Dr. Casumpang at his clinic and told him about Edmer's
condition.Upon being informed, Dr. Casumpangordered several procedures
done including: hematocrit, hemoglobin, blood typing, blood transfusion and
tourniquet
tests.
Dr. Miranda advised Edmer's parents that the blood test results showed that
Edmer was suffering from "Dengue Hemorrhagic Fever." One hour later, Dr.
Casumpang arrived at Edmer's room and he recommended his transfer to
the Intensive Care Unit (ICU), to which the respondent consented. Since the
ICU was then full, Dr. Casumpang suggested to the respondent that they hire
a private nurse. The respondent, however, insisted on transferring his son to
Makati
Medical
Center.
After the respondent had signed the waiver, Dr. Casumpang, for the last
time, checked Edmer'scondition, found that his blood pressure was stable,
and noted that he was "comfortable." The respondent requested for an
ambulance but he was informed that the driver was nowhere to be found.
This prompted him to hire a private ambulance.
Edmer, accompanied by his parents and by Dr. Casumpang, was transferred
to
Makati
Medical
Center.
Dr. Casumpang immediately gave the attending physician the patient's
clinical history and laboratory exam results. Upon examination, the attending
physician diagnosed "Dengue Fever Stage IV" that was already in its
irreversible
stage.
Edmer died in the morning of April 24, 1988. His Death Certificate indicated
the cause of death as "Hypovolemic Shock/hemorrhagic shock;" "Dengue
Hemorrhagic
Fever
Stage
IV."
Believing that Edmer's death was caused by the negligent and erroneous
diagnosis of his doctors, the respondent instituted an action for damages
against SJDH, and its attending physicians: Dr. Casumpang and Dr. Miranda.

ISSUES:
1 Whether or not the petitioning doctors had committed "inexcusable
lack of precaution" in diagnosing and in treating the patient;
2 Whether or not the petitioner hospital is solidarity liable with the
petitioning doctors;
3 Whether or not there is a causal connection between the petitioners'
negligent act/omission and the patient's resulting death; and
RULING:
The petition is partly meritorious.
Medical

Malpractice

Suit

as

Specialized

Area

of

Tort

Law

The claim for damages is based on the petitioning doctors' negligence in

diagnosing and treating the deceased Edmer, the child of the respondent. It
is a medical malpractice suit, an action available to victims to redress a
wrong committed by medical professionals who caused bodily harm to, or
the death of, a patient. As the term is used, the suit is brought whenever a
medical practitioner or health care provider fails to meet the standards
demanded by his profession, or deviates from this standard, and causes
injury
to
the
patient.
To successfully pursue a medical malpractice suit, the plaintiff must prove
that the doctor either failed to do what a reasonably prudent doctor would
have done, or did what a reasonably prudent doctor would not have done;
and the act or omission had caused injury to the patient.The patient's heir/s
bears
the
burden
of
proving
his/her
cause
of
action.
The

Elements

of

Medical

Malpractice

Suit

The elements of medical negligence are: (1) duty; (2) breach; (3) injury;
and
(4)
proximate
causation.
Duty refers to the standard of behavior that imposes restrictions on one's
conduct. It requires proof of professional relationship between the physician
and the patient. Without the professional relationship, a physician owes no
duty to the patient, and cannot therefore incur any liability.

A physician-patient relationship is created when a patient engages the

services of a physician, and the latter accepts or agrees to provide care to
the patient.The establishment of this relationship is consensual,and the
acceptance by the physician essential. The mere fact that an individual
approaches a physician and seeks diagnosis, advice or treatment does not
create
the
duty
of
care
unless
the
physician
agrees.
The consent needed to create the relationship does not always need to be
express. In the absence of an express agreement, a physician-patient
relationship may be implied from the physician's affirmative action to
diagnose and/or treat a patient, or in his participation in such diagnosis
and/or treatment. The usual illustration would be the case of a patient who
goes to a hospital or a clinic, and is examined and treated by the doctor.
In this case, we can infer, based on the established and customary practice
in the medical community that a patient-physician relationship exists.
Once a physician-patient relationship is established, the legal duty of care
follows. The doctor accordingly becomes duty-bound to use at least the same
standard of care that a reasonably competent doctor would use to treat a
medical
condition
under
similar
circumstances.
Breach of duty occurs when the doctor fails to comply with, or improperly
performs his duties under professional standards. This determination is both
factual
and
legal,
and
is
specific
to
each
individual
case.
If the patient, as a result of the breach of duty, is injured in body or in health,
actionable malpractice is committed, entitling the patient to damages.
To successfully claim damages, the patient must lastly prove the causal
relation between the negligence and the injury. This connection must be
direct, natural, and should be unbroken by any intervening efficient causes.
In other words, the negligence must be the proximate cause of the
injury. The injury or damage is proximately caused by the physician's
negligence when it appears, based on the evidence and the expert
testimony, that the negligence played an integral part in causing the injury
or damage, and that the injury or damage was either a direct result, or a
reasonably probable consequence of the physician's negligence.
a.

The

Relationship

Between

Dr.

Casumpang

and

Edmer

In the present case, the physician-patient relationship between Dr.

Casumpang and Edmer was created when the latter's parents sought the
medical services of Dr. Casumpang, and the latter knowingly accepted
Edmer as a patient. Dr. Casumpang's acceptance is implied from his
affirmative examination, diagnosis and treatment of Edmer. On the other
hand, Edmer's parents, on their son's behalf, manifested their consent by
availing of the benefits of their health care plan, and by accepting the
hospital's
assigned
doctor
without
objections.
b.

The

Relationship

Between

Dr.

Miranda

and

Edmer

With respect to Dr. Miranda, her professional relationship with Edmer arose
when she assumed the obligation to provide resident supervision over the
latter. As second year resident doctor tasked to do rounds and assist other
physicians, Dr. Miranda is deemed to have agreed to the creation of
physician-patient relationship with the hospital's patients when she
participated in the diagnosis and prescribed a course of treatment for Edmer.
The undisputed evidence shows that Dr. Miranda examined Edmer twice and
in both instances, she prescribed treatment and participated in the diagnosis
of Edmer's medical condition. Her affirmative acts amounted to her
acceptance of the physician-patient relationship, and incidentally, the legal
duty
of
care
that
went
with
it.
Standard

of

Care

and

Breach

of

Duty

A determination of whether or not the petitioning doctors met the required

standard of care involves a question of mixed fact and law; it is factual as
medical negligence cases are highly technical in nature, requiring the
presentation of expert witnesses to provide guidance to the court on matters
clearly falling within the domain of medical science, and legal, insofar as
the Court, after evaluating the expert testimonies, and guided by medical
literature, learned treatises, and its fund of common knowledge, ultimately
determines
whether
breach
of
duty
took
place.
Whether or not Dr. Casumpang and Dr. Miranda committed a breach of duty
is to be measured by the yardstick of professional standards observed by the
other members of the medical profession in good standing under similar

circumstances. It is in this aspect of medical malpractice that expert

testimony is essential to establish not only the professional standards
observed in the medical community, but also that the physician's conduct in
the treatment of care falls below such standard.
In the present case, expert testimony is crucial in determining first, the
standard medical examinations, tests, and procedures that the attending
physicians should have undertaken in the diagnosis and treatment of dengue
fever; and second, the dengue fever signs and symptoms that the attending
physicians
should
have
noticed
and
considered.
The Court finds that Dr. Casumpang, as Edmer's attending physician,
did not act according to these standards and, hence, was guilty of
breach of duty while Dr. Miranda is not liable.
Dr. Casumpang's Negligence
a. Negligence in the Diagnosis
First, the court does not decide the correctness of a doctor's
diagnosis, or the accuracy of the medical findings and
treatment. The courts duty in medical malpractice cases is to decide
-based on the evidence adduced and expert opinion presented - whether a
breach
of
duty
took
place.
Second,
a
wrong
diagnosis
is
not
by
itself
medical
malpractice. Physicians are generally not liable for damages resulting from
a bona fide error of judgment. Nonetheless, when the physician's erroneous
diagnosis was the result of negligent conduct, it becomes an evidence of
medical
malpractice.
Third, medicine is not an exact science; and doctors, or even specialists, are
not expected to give a 100% accurate diagnosis in treating patients who
come to their clinic for consultations. Error is possible as the exercise of
judgment is called for in considering and reading the exhibited symptoms,
the results of tests, and in arriving at definitive conclusions. But in doing all
these, the doctor must have acted according to acceptable medical practice
standards.
In the present case, evidence on record established that in confirming the
diagnosis of bronchopneumonia, Dr. Casumpang selectively appreciated
some and not all of the symptoms presented, and failed to promptly conduct
the appropriate tests to confirm his findings. In sum, Dr. Casumpang failed to

timely detect dengue fever, which failure, especially when reasonable

prudence would have shown that indications of dengue were evident and/or
foreseeable,
constitutes
negligence.
a.

Negligence

in

the

Treatment

and

Management

of

Dengue

Apart from failing to promptly detect dengue fever, Dr. Casumpang

also failed to
promptly undertake
the
proper
medical
management needed
for
this
disease.
Dr. Casumpang failed to measure up to these standards. The evidence
strongly suggests that he ordered a transfusion of platelet concentrate
instead of blood transfusion. The tourniquet test was only conducted after
Edmer's second episode of bleeding, and the medical management (as
reflected in the records) did not include antibiotic therapy and complete
physical
examination.
On the whole, after examining the totality of the adduced evidence, we find
that the lower courts correctly did not rely on Dr. Casumpang's claim that he
exercised prudence and due diligence in handling Edmer's case. Aside from
being self-serving, his claim is not supported by competent evidence. As the
lower courts did, we rely on the uncontroverted fact that he failed, as a
medical professional, to observe the most prudent medical procedure under
the
circumstances
in
diagnosing
and
treating
Edmer.
Dr.

Miranda

is

Not

Liable

for

Negligence

In considering the case of Dr. Miranda, the junior resident physician who was
on-duty at the time of Edmer's confinement, we see the need to draw
distinctions between the responsibilities and corresponding liability of Dr.
Casumpang, as the attending physician, and that of Dr. Miranda.
Resident applicants are generally doctors of medicine licensed to practice in
the Philippines and who would like to pursue a particular specialty.They are
usually the front line doctors responsible for the first contact with the
patient. During the scope of the residency program,resident physicians (or
"residents" function under the supervision of attending physicians or of the
hospital's teaching staff. Under this arrangement, residents operate merely
as subordinates who usually defer to the attending physician on the decision
to
be
made
and
on
the
action
to
be
taken.
The attending physician, on the other hand, is primarily responsible for
managing the resident's exercise of duties. While attending and resident
physicians share the collective responsibility to deliver safe and appropriate
care to the patients,it is the attending physician who assumes the principal
responsibility of patient care. Because he/she exercises a supervisory role

over the resident, and is ultimately responsible for the diagnosis and
treatment of the patient, the standards applicable to and the liability of the
resident for medical malpractice is theoretically less than that of the
attending physician. These relative burdens and distinctions, however, do not
translate to immunity from the legal duty of care for residents, or from the
responsibility
arising
from
their
own
negligent
act.
We find that Dr. Miranda was not independently negligent. Although
she had greater patient exposure, and was' subject to the same standard of
care applicable to attending physicians; a finding of negligence should also
depend on several competing factors, among them, her authority to make
her own diagnosis, the degree of supervision of the attending physician over
her, and the shared responsibility between her and the attending physicians.
In this case, before Dr. Miranda attended to Edmer, both Dr. Livelo and Dr.
Casumpang had diagnosed Edmer with bronchopneumonia.
Dr. Miranda likewise duly reported to Dr. Casumpang, who admitted receiving
updates regarding Edmer's condition.There is also evidence supporting Dr.
Miranda's claim that she extended diligent care to Edmer. In fact, when she
suspected - during Edmer's second episode of bleeding - that Edmer could be
suffering from dengue fever, she wasted no time in conducting the necessary
tests, and promptly notified Dr. Casumpang about the incident. Indubitably,
her medical assistance led to the finding of dengue fever.
Dr. Miranda was not entirely faultless. Nevertheless, her failure to
discern the import of Edmer'ssecond bleeding does not necessarily
amount to negligence as the respondent himself admitted that Dr.
Miranda failed to examine the blood specimen because he washed it away. In
addition, considering the diagnosis previously made by two doctors, and the
uncontroverted fact that the burden of final diagnosis pertains to the
attending physician (in this case, Dr. Casumpang), Dr. Miranda's error was
merely an honest mistake of judgment influenced in no small measure by her
status in the hospital hierarchy; hence, she should not be held liable for
medical
negligence.
The Causation Between Dr. Casumpang's Negligent Act/Omission,
and the Patient's Resulting Death was Adequately Proven
To reiterate, Dr. Casumpang failed to timely diagnose Edmer with dengue
fever despite the presence of its characteristic symptoms; and as a
consequence of the delayed diagnosis, he also failed to promptly manage
Edmer's illness. Had he immediately conducted confirmatory testsand
promptly administered the proper care and management needed for dengue

fever, the risk of complications or even death, could have been substantially
reduced.
Furthermore, medical literature on dengue shows that early diagnosis and
management of dengue is critical in reducing the risk of complications and
avoiding further spread of the virus.96 That Edmer later died of "Hypovolemic
Shock/hemorrhagic shock," "Dengue Hemorrhagic Fever Stage IV," a severe
and fatal form of dengue fever, established the causal link between Dr.
Casumpang's
negligence
and
the
injury.
The

respondent

Liability

successfully

proved
of

the

element

of

causation.
SJDH

The hospital's liability is on the basis of the doctrine of apparent authority or

agency
by
estoppel.
There is No Employer-Employee Relationship Between SJDH and the
Petitioning
Doctors
In determining whether an employer-employee relationship exists between
the parties, the following elements must be present: (1) selection and
engagement of services; (2) payment of wages; (3) the power to hire and
fire; and (4) the power to control not only the end to be achieved, but the
means
to
be
used
in
reaching
such
an
end.
Control, which is the most crucial among the elements, is not present in this
case.
No evidence exists showing that SJDH exercised any degree of control over
the means, methods of procedure and manner by which the petitioning
doctors conducted and performed their medical profession. SJDH did not
control their diagnosis and treatment. Likewise, no evidence was presented
to show that SJDH monitored, supervised, or directed the petitioning doctors
in the treatment and management of Edmer's case. The petitioning doctors
were not employees of SJDH, but were mere independent contractors.
SJDH is Solidarity Liable Based on The Principle of Agency or
Doctrine
of
Apparent
Authority
Despite the absence of employer-employee relationship between SJDH and
the
petitioning
doctors,
SJDH
is
not
free
from
liability.
As a rule, hospitals are not liable for the negligence of its independent
contractors. However, it may be found liable if the physician or independent
contractor acts as an ostensible agent of the hospital. This exception is also

known

as

the

"doctrine

of

apparent

authority."99

The US case of Gilbert v. Sycamore Municipal Hospital:under the doctrine of

apparent authority, a hospital can be held vicariously liable for the negligent
acts of a physician providing care at the hospital, regardless of whether the
physician is an independent contractor, unless the patient knows, or should
have known, that the physician is an independent contractor. The elements
of the action have been set out as follows:
For a hospital to be liable under the doctrine of apparent authority, a plaintiff
must show that: (1) the hospital, or its agent, acted in a manner that
would lead a reasonable person to conclude that the individual who
was alleged to be negligent was an employee or agent of the
hospital; (2) where the acts of the agent create the appearance of
authority, the plaintiff must also prove that the hospital had
knowledge of and acquiesced in them; and (3) the plaintiff acted in
reliance upon the conduct of the hospital or its agent, consistent
with ordinary care and prudence.
The doctrine was applied in Nogales v. Capitol Medical Center :a hospital can
be held vicariously liable for the negligent acts of a physician (or an
independent contractor) providing care at the hospital if the plaintiff can
prove
these
two
factors: first, the
hospital's
manifestations;
and second, the
patient's
reliance.
a.

Hospital's

manifestations

It involves an inquiry on whether the hospital acted in a manner that would

lead a reasonable person to conclude that the individual alleged to be
negligent was an employee or agent of the hospital. As pointed out
in Nogales, the hospital need not make express representations to the
patient that the physician or independent contractor is an employee of the
hospital;
representation
may
be
general
and
implied. 102
The court considered the act of the hospital of holding itself out as provider
of complete medical care, and considered the hospital to have impliedly
created
the
appearance
of
authority.
b.

Patient's

reliance

It involves an inquiry on whether the plaintiff acted in reliance on the

conduct of the hospital or its agent, consistent with ordinary care and
prudence.
In Pamperin, the court held that the important consideration in determining
the patient's reliance is:whether the plaintiff is seeking care from the
hospital itself or whether the plaintiff is looking to the hospital merely as a

place

for

his/her

personal

physician

to

provide

medical

care.105

Thus, this requirement is deemed satisfied if the plaintiff can prove that
he/she relied upon the hospital to provide care and treatment, rather than
upon a specific physician.
SJDH

Clothed

Dr.

CasumpangWith

Apparent

Authority

SJDH impliedly held out and clothed Dr. Casumpang with apparent
authority leading the respondent to believe that he is an employee or agent
of
the
hospital.
Based on the records, the respondent relied on SJDH rather than upon Dr.
Casumpang, to care and treat his son Edmer. His testimony during trial
showed that he and his wife did not know any doctors at SJDH;they also did
not know that Dr. Casumpang was an independent contractor. They
brought their son to SJDH for diagnosis because of their family doctor's
referral. The referral did not specifically point to Dr. Casumpang or even to
Dr.
Miranda,
but
to
SJDH.
Significantly, the respondent had relied on SJDH's representation of Dr.
Casumpang's authority. To recall, when Mrs. Cortejo presented her Fortune
Care card, she was initially referred to the Fortune Care coordinator, who was
then out of town. She was thereafter referred to Dr. Casumpang, who is also
accredited with Fortune Care. In both instances, SJDH through its agent failed
to advise Mrs. Cortejo that Dr. Casumpang is an independent contractor.
Mrs. Cortejo accepted Dr. Casumpang's services on the reasonable belief that
such were being provided by SJDH or its employees, agents, or servants. By
referring Dr. Casumpang to care and treat for Edmer, SJDH impliedly
held out Dr. Casumpang, not only as an accredited member of
Fortune Care, but also as a member of its medical staff. SJDH cannot
now disclaim liability since there is no showing that Mrs. Cortejo or the
respondent knew, or should have known, that Dr. Casumpang is only an
independent contractor of the hospital. In this case, estoppel has already set
in.
Mrs. Cortejo's use of health care plan (Fortune Care) did not affect SJDH's
liability. The only effect of the availment of her Fortune Care card benefits is
that her choice of physician is limited only to physicians who are accredited
with Fortune Care. Thus, her use of health care plan in this case only limited
the choice of doctors (or coverage of services, amount etc.) and not the
liability
of
doctors
or
the
hospital.

Topic: Solidary Liability

ESTANISLAO
and
AFRICA
SINAMBAN
CORPORATION,
G.R. No. 193890; March 1l, 2015
DECISION: REYES, J:

v.

CHINA

BANKING

FACTS:
On February 19, 1990, the spouses Danilo and Magdalena Manalastas
(spouses Manalastas) executed a Real Estate Mortgage (REM) in favor of
respondent China Banking Corporation (Chinabank) over two real estate
properties to secure a loan from Chinabank of 700,000.00 intended as
working capital in their rice milling business. During the next few years, they
executed several amendments to the mortgage contract progressively
increasing their credit line secured by the aforesaid mortgage. Thus, from 700,000.00 in 1990, their loan limit was increased to 2,450,000.00 on March
23, 1994. The spouses executed several promissory notes in favor of
Chinabank. In two of the PNs, petitioners Estanislao and Africa Sinamban
(spouses Sinamban) signed as co-makers. Later, a complaint for sum of
money was filed by Chinabank against spouses Manalastas and Sinamban
alleging they reneged on their loan obligations. Defendants were declared in
default and Chinabank presented evidence ex-parte. The RTC held the
defendants jointly and severally liable. Spouses Sinamban filed a motion of
reconsideration praying that they be released from the liability because they
only signed two promissory notes with s total of 1,625,000.00. So there is no
way that the said outstanding loan exceed[s] the acquisition cost of the
foreclosed real estate properties subject hereof in the amount of 4.6M, thus,
the deficiency 1,758,427.87 should justly be borne alone by the Spouses
Manalastas. The RTC granted such motion, however, the plaintiff moved for
reconsideration which was granted by the RTC. On appeal, the Court of
Appeals denied the same, hence, the present petition.

ISSUE:
Whether or not Sps. Sinamban should be held solidarily liable with Sps.
Manalastas.
RULING:
YES. The Supreme Court held that Sps. Sinamban as co-makers of the
promissory notes bound themselves with the maker jointly and severally,
rending themselves directly and primarily liable with the maker on the debt,
without reference to his solvency. But as the Court has noted, by deducting
the auction proceeds from the aggregate amount of the three loans due,
Chinabank in effect opted to apply the entire proceeds of the auction
simultaneously to all the three loans. This implies that each PN will assume
a pro rata portion of the resulting deficiency on the total indebtedness as
bears upon each PNs outstanding balance.
Since each loan, represented by each PN, was obtained under a single
credit line extended by Chinabank for the working capital requirements of
the spouses Manalastas rice milling business, which credit line was secured
also by a single REM over their properties, then each PN is simultaneously
covered by the same mortgage security, the foreclosure of which will also
benefit them proportionately. No PN enjoys any priority or preference in
payment over the others, with the only difference being that the spouses
Sinamban are solidarily liable for the deficiency on two of them.

Topic: Contracts
Ponente: Perlas-Bernabe
Fort Bonifacio Development Corporation v. Valentin L. Fong, G.R. No.
209370, March 25, 2015
Facts:On June 5, 2000, FBDC, a domestic corporation engaged in the real
estate development business, entered into a Trade Contract with MS Maxco
Company, Inc. (MS Maxco), then operating under the name L&M Maxco,
Specialist Engineering Construction, for the execution of the structural and
partial architectural works of one of its condominium projects in Taguig City,
the Bonifacio Ridge Condominium (Project). Records show that FBDC had the
right to withhold five percent (5%) of the contract price as retention money.
Under the Trade Contract, FBDC had the option to hire other
contractors to rectify any errors committed by MS Maxco by reason of its
negligence, act, omission, or default, as well as to deduct or set-off any
amount from the contract price in such cases.Hence, when MS Maxco
incurred delays and failed to comply with the terms of the Trade Contract,
FBDC took over and hired other contractors to complete the unfinished
construction. Unfortunately, corrective work had to likewise be done on the
numerous defects and irregularities caused by MS Maxco, which cost
P11,567,779.12. Pursuant to the Trade Contract, FBDC deducted the said
amount from MS Maxcos retention money.
Sometime in April 2005, FBDC received a letter dated April 18, 2005
from the counsel of Fong informing it that MS Maxco had already assigned its
receivables from FBDC to him (Fong) by virtue of a notarized Deed of
Assignment.

In its letter-reply dated October 11, 2005, FBDC acknowledged the five
percent (5%) retention money of MS Maxco, but asserted that the same was
not yet due and demandable and that it was already the subject of
garnishment by MS Maxcos other creditors.
Despite Fongs repeated requests, FBDC refused to deliver to Fong the
amount assigned by MS Maxco. Finally, in a letter dated January 31, 2006,
FBDC informed Fong that after the rectification of the defects in the Project,
as well as the garnishment made by MS Maxcos creditors, nothing was left
of its retention money with FBDC from which Fongs claims may be satisfied.
This prompted Fong, doing business under the name VF Industrial
Sales to file the instant civil case against MS Maxcoor FBDC for the payment
of
the
sum
of
P1,577,115.90.
Issue: Whether or not FBDC is bound by theDeed of Assignment between MS
Maxco and Fong, and even assuming that it was, whether or not FBDC was
liable to pay Fong the amount of 1,577,115.90, representing a portion of MS
Maxcos retention money.
Ruling: The petition is meritorious.
Obligations arising from contracts have the force of law between the
contracting parties and should be complied with in good faith. As such, the
stipulations in contracts are binding on them unless the contract is contrary
to law, morals, good customs, public order or public policy.
The same principle on obligatory force applies by extension to the
contracting partys assignees, in turn, by virtue of the principle of relativity of
contracts which is fleshed out in Article 1311 of the Civil Code, viz.:
Art. 1311. Contracts take effect only between the parties, their
assigns and heirs, except in case where the rights and obligations arising
from the contract are not transmissible by their nature, or by stipulation or
by provision of law. The heir is not liable beyond the value of the property he
received from the decedent.
Case law states that when a person assigns his credit to another
person, the latter is deemed subrogated to the rights as well as to the
obligations of the former. By virtue of the Deed of Assignment, the assignee
is deemed subrogated to the rights and obligations of the assignor and is
bound by exactly the same conditions as those which bound the assignor.
Accordingly, an assignee cannot acquire greater rights than those pertaining
to the assignor.
Applying the foregoing, the Court finds that MS Maxco, as the Trade
Contractor, cannot assign or transfer any of its rights, obligations, or

liabilities under the Trade Contract without the written consent of FBDC, the
Client, in view of Clause 19.0 on Assignment and Sub-letting of the Trade
Contract between FBDC and MS Maxco.
Fong, as mere assignee of MS Maxcos rights under the Trade Contract
it had previously entered with FBDC, i.e., the right to recover any credit
owing to any unutilized retention money, is equally bound by the foregoing
provision and hence, cannot validly enforce the same without FBDCs
consent.
Without any proof showing that FBDC had consented to the
assignment, Fong cannot validly demand from FBDC the delivery of the sum
of P1,577,115.90 that was supposedly assigned to him by MS Maxco as a
portion of its retention money with FBDC.

Topic: Pre-termination of Lease Contract under Art. 1267

Ponente: REYES, J.:
COMGLASCO CORPORATION/AGUILA GLASS, v. SANTOS CAR CHECK
CENTER CORPORATION, G.R. No. 202989, March 25, 2015
Facts:
Respondent Santos Car Check Center Corporation (Santos), owner of a
showroom, leased out the said space to petitioner Comglasco Corporation
(Comglasco), an entity engaged in the sale, replacement and repair of
automobile windshields, for a period of five years. One year after the
contract, Comglasco advised Santos that it was pre-terminating their lease
contract. Santos refused to accede to the pre-termination, reminding
Comglasco that their contract was for five years. Comglasco, however,
vacated the leased premises and stopped paying any further rentals.

A complaint for breach of contract was filed and Comglasco filed its Answer.
Santos moved for a judgment on the pleadings, which the RTC granted.
Comglasco appealed and insisted that under Article 1267 of the Civil Code it
is exempted from its obligation under the contract, because its business
economic setback is the cause contemplated in their lease which
authorized it to pre-terminate the same. Comglasco also maintained that the
RTC was wrong to rule that its answer to Santos complaint tendered no
issue, or admitted the material allegations therein; that the court should
have heard it out on the reason it invoked to justify its action to preterminate the parties lease; that therefore a summary judgment would have
been the proper recourse, after a hearing. Next, Comglasco insists that its
advance rentals and deposit totaling P309,000.00 should be deducted from
any sum awarded to Santos while it also insists that there is no factual and
legal basis for the award of damages.
Issue: Whether or not the contention of Comglasco is tenable
Ruling: No.
In Philippine National Construction Corporation v. CA12 (PNCC), which also
involves the termination of a lease of property by the lessee due to
financial, as well as technical, difficulties,the Court ruled that the obligation
to pay rentals or deliver the thing in a contract of lease falls within the
prestation to give; hence, it is not covered within the scope of Article 1266.
At any rate, the unforeseen event and causes mentioned by petitioner are
not the legal or physical impossibilities contemplated in said article. Besides,
petitioner failed to state specifically the circumstances brought about by the
abrupt change in the political climate in the country except the alleged
prevailing uncertainties in government policies on infrastructure projects.
The principle of rebus sic stantibus neither fits in with the facts of the case.
Under this theory, the parties stipulate in the light of certain prevailing
conditions, and once these conditions cease to exist, the contract also
ceases to exist. This theory is said to be the basis of Article 1267 of the Civil
Code, which provides: When the service has become so difficult as to be
manifestly beyond the contemplation of the parties, the obligor may also be
released therefrom, in whole or in part.
This article, which enunciates the doctrine of unforeseen events, is not,
however, an absolute application of the principle of rebus sic stantibus,
which would endanger the security of contractual relations. The parties to
the contract must be presumed to have assumed the risks of unfavorable

developments. It is therefore only in absolutely exceptional changes of

circumstances that equity demands assistance for the debtor.
In this case, petitioner wants this Court to believe that the abrupt change in
the political climate of the country after the EDSA Revolution and its poor
financial condition rendered the performance of the lease contract
impractical and inimical to the corporate survival of the petitioner. This
Court cannot subscribe to this argument.
As pointed out by private
respondents: Anent petitioners alleged poor financial condition, the same
will neither release petitioner from the binding effect of the contract of lease.
As held in Central Bank v. Court of Appeals, cited by private respondents,
mere pecuniary inability to fulfill an engagement does not discharge a
contractual obligation, nor does it constitute a defense to an action for
specific performance.
Relying on Article 1267 of the Civil Code to justify its decision to preterminate its lease with Santos, Comglasco invokes the 1997 Asian currency
crisis as causing it much difficulty in meeting its obligations. But in PNCC,15
the Court held that the payment of lease rentals does not involve a
prestation to do envisaged in Articles 1266 and 1267 which has been
rendered legally or physically impossible without the fault of the
obligor-lessor. Article 1267 speaks of a prestation involving service which
has been rendered so difficult by unforeseen subsequent events as to be
manifestly beyond the contemplation of the parties. To be sure, the Asian
currency crisis befell the region from July 1997 and for sometime thereafter,
but Comglasco cannot be permitted to blame its difficulties on the said
regional economic phenomenon because it entered into the subject lease
only on August 16, 2000, more than three years after it began, and by then
Comglasco had known what business risks it assumed when it opened a new
shop in Iloilo City.
As found by the CA, Comglascos Answer admitted the material allegations in
the complaint, to wit: a) that Santos holds absolute title to a showroom
space; b) that Comglasco leased the said showroom from Santos; c) that
after a little over a year, Comglasco pre-terminated the lease; d) that,
disregarding Santos rejection of the pre-termination of their lease,
Comglasco vacated the leased premises on January 15, 2002; e) that
Comglasco never denied the existence and validity of the parties lease
contract. Specifically, the CA noted that Paragraph 2 of the Answer admitted
the allegations in Paragraphs 2, 3 and 4 of the complaint that the lease was
for five years, starting on August 16, 2000 and to expire on August 15, 2005,

at a monthly rental of P60,000.00 on the first year, P66,000.00 on the second

year, and P72,600.00 on the third up to the fifth year.

Topic: Property registration under P.D. 1529

Ponente: Peralta, J.
Republic v. Lualhati, GR No. 183511, March 25, 2015
Facts: On August 12, 2004, respondent Emeteria G. Lualhati filed with the
RTC of Antipolo City an application for original registration covering Lots 1
and 2 situated in C-5 C-6 Pasong Palanas, Sitio Sapinit, San Juan, Antipolo,
Rizal, consisting of an area of 169,297 and 79,488 square meters,
respectively. Respondent essentially maintains that she, together with her

deceased husband, Andres Lualhati, and their four children have been in
possession of the subject lands in the concept of an owner since 1944.
In support of her application, respondent submitted both documentary
evidence such as the blueprint of the survey plan, tracing cloth plan,
certified true copy of the surveyors certificate, technical descriptions of the
lot, tax declarations, real property tax register and certifications from the
DENR and CENRO Antipolo City that no public land application/land patent
covering the subject lots is pending nor are the lots embraced by any
administrative title, and a letter from the Provincial Engineer that the
province has no projects which will be affected by the registration.
Respondent also presented several witnesses to prove her claim. The first of
which was respondent herself. She testified that she and her late husband
have been occupying the subject lots since 1944. The other witnesses
presented are: Juanito B. Allas (65 - year old son in law of the
respondent), Aurelio Garcia (compadre of the respindents husband), and
Remigio Leyble (close friend of the respondent). All of them testified that the
respondent and her family own the lots in question; that the family has been
planting crops on the said lots; that they know the adjoining owners of the
adjacent lot; and that they dont know of any person having interest adverse
to
that
of
the
respondents
family.
On October 4, 2005, the RTC granted respondents application finding that
she had been in open, public, continuous, exclusive, adverse, and notorious
possession and occupation of the lands for more than 50 years under a bona
fide claim of ownership even prior to June 12, 1945, as required under
Section 14 (1) of Presidential Decree (PD) No. 1529, otherwise known as
the Property
Registration
Decree.
The CA affirmed the ruling of the RTC.
Hence, this petition.

Issues:
1 Did the respondent fail to prove the alienable and disposable
character of the land applied for registration?
2 Did the respondent fail to prove possession over the property
applied for registration in the concept of an owner and within the
period required by law?

Ruling:
1 YES.
Section 14 (1) of PD 1529, otherwise known as the Property Registration
Decree provides that Those who by themselves or through their
predecessors-in-interest have been in open, continuous, exclusive and
notorious possession and occupation of alienable and disposable lands of the
public domain under a bona fide claim of ownership since June 12, 1945, or
earlier may file in the proper Court of First Instance an application for
registration of title to land, whether personally or through their duly
authorized representatives.
Pursuant to the abovementioned
registration of title must prove that:

provision,

applicants

for

(1) the subject land forms part of the disposable and alienable lands of
the public domain; and
(2) they, by themselves or through their predecessors-in-interest, have
been in open, continuous, exclusive, and notorious possession and
occupation of the same under a bona fide claim of ownership since
June 12, 1945, or earlier.
Under the Regalian Doctrine, all lands of the public domain belong to the
State, which is the source of any asserted right to any ownership of land. All
lands not appearing to be clearly within private ownership are presumed to
belong to the State. Accordingly, public lands not shown to have been
reclassified or released as alienable agricultural land, or alienated to a
private person by the State, remain part of the inalienable public domain.
The burden of proof in overcoming the presumption of State
ownership of the lands of the public domain is on the person
applying for registration, who must prove that the land subject of
the application is alienable or disposable. To overcome this
presumption, incontrovertible evidence must be presented to establish that
the land subject of the application is alienable or disposable.
Respondents reliance on the CENRO certifications is misplaced. In
the oft-cited Republic v. T.A.N. Properties, it has been held that it is not
enough for the CENRO or the PENRO to certify that a certain parcel of land is
alienable and disposable.
DENR Administrative Order (DAO) No. 2018 dated 30 May 1988,
delineated the functions and authorities of the offices within the

DENR. Under DAO No. 20, series of 1988, the CENRO issues certificates of
land classification status for areas below 50 hectares. The Provincial
Environment and Natural Resources Offices (PENRO) issues certificate of land
classification status for lands covering over 50 hectares. DAO No. 38, dated
19 April 1990, amended DAO No. 20, series of 1988. DAO No. 38, series of
1990 retained the authority of the CENRO to issue certificates of land
classification status for areas below 50 hectares, as well as the authority of
the PENRO to issue certificates of land classification status for lands covering
over 50 hectares. In this case, respondent applied for registration of
Lot 10705-B. The area covered by Lot 10705-B is over 50 hectares
(564,007 square meters). The CENRO certificate covered the entire
Lot 10705 with an area of 596,116 square meters which, as per DAO
No. 38, series of 1990, is beyond the authority of the CENRO to
certify as alienable and disposable.
Further, it is not enough for the PENRO or CENRO to certify that a
land is alienable and disposable. The applicant for land registration
must prove that the DENR Secretary had approved the land
classification and released the land of the public domain as
alienable and disposable, and that the land subject of the
application for registration falls within the approved area per
verification through survey by the PENRO or CENRO. In addition, the
applicant for land registration must present a copy of the original
classification approved by the DENR Secretary and certified as a
true copy by the legal custodian of the official records. These facts
must be established to prove that the land is alienable and
disposable. Respondent failed to do so because the certifications
presented by respondent do not, by themselves, prove that the land
is
alienable
and
disposable.
The CENRO is not the official repository or legal custodian of the
issuances of the DENR Secretary declaring public lands as alienable
and disposable. The CENRO should have attached an official
publication of the DENR Secretarys issuance declaring the land
alienable and disposable.
Thus, as it now stands, an application for original registration must
be accompanied by:
(1) CENRO or PENRO certification; and
(2) a copy of the original classification approved by the DENR Secretary
and certified as a true copy by the legal custodian of the official
records, in order to establish that the land is indeed alienable and
disposable.

Here, respondent failed to establish, by the required evidence, that

the land sought to be registered has been classified as alienable or
disposable land of the public domain.
2

YES

The testimonies of respondent and her close friend, Remigio Leyble, insofar
as they allege possession of the subject properties since 1944, fail to
convince. The tax declaration submitted by respondent dates back only to
the year 1947. In fact, as the records reveal, said tax declaration is the
oldest piece of documentary evidence submitted in support of the
application. Hence, at best, the same can only prove possession since 1947.
Other than the bare allegations of respondent and her witness, as well as the
1947 tax declaration, respondent did not present any other proof to
substantiate her claim of possession beginning in 1944. Neither did she
provide any explanation as to why, if she has truly been occupying the
properties as early as 1994, it was only in 1947 that she sought to declare
the
same
for
purposes
of
taxation.
In addition to this, the real property tax register presented by respondent
evidenced payment of realty taxes only from 1949 up to 1958. Consequently,
this Court cannot concede to respondents assertion that she had been
adversely possessing the properties beginning in 1944 up until the filing of
her complaint in 2004, or for a duration of sixty full years, when the evidence
presented depicts payment of taxes for only nine years. Payment of realty
taxes for a brief and fleeting period simply cannot be considered sufficient
proof of ownership. It is clear, therefore, that respondents assertion of
possession before 1945 will not suffice for applicants for registration must
present proof of specific acts of possession and ownership and cannot just
offer general statements which are mere conclusions of law rather than
factual
evidence
of
possession.
Furthermore, it bears stressing that tax declarations and receipts are not
conclusive evidence of ownership or of the right to possess land when not
supported by any other evidence. The disputed property may have been
declared for taxation purposes in the names of the applicants for
registration, or of their predecessors-in-interest, but it does not necessarily
prove ownership. They are merely indicia of a claim of ownership.
Moreover, as petitioner aptly points out, respondent failed to provide any
other proof of acts of dominion over the subject land other than the fact that
she, together with her husband and children, planted fruit-bearing trees and
constructed their home thereon considering the vastness of the same.
The

law

requires

open,

exclusive,

continuous

and

notorious

possession by petitioners and their predecessors-in-interest, under

a bona fide claim of ownership, since June 12, 1945 or earlier. Thus,
it is imperative for applicants for registration of property to prove,
by sufficient evidence, each requisite character and period of
possession and occupation for the failure to do so will necessarily
prevent the land from being considered ipso jure converted into
private property even upon the subsequent declaration of the same
as
alienable
and
disposable.
WHEREFORE, premises considered, the instant petition is GRANTED. The
Decision and Resolution dated March 31, 2008 and June 18, 2008,
respectively, of the Court Appeals which affirmed the Decision dated October
4, 2005 of the Regional Trial Court in LRC Case No. 04-3340 are REVERSED
and SET ASIDE.