April 2013 Philippine Supreme Court Decisions on Civil Law

Here are select April 2013 rulings of the Supreme Court of the Philippines on civil law:
Contract; Rescission; effect. Rescission entails a mutual restitution of benefits received.
An injured party who has chosen rescission is also entitled to the payment of
damages. Sandoval Shipyards, Inc. v. Philippine Merchant Marine Academy
(PMMA); G.R. No. 188633. April 10, 2013
Obligation; Extinguishment of obligations; consignation; when tender of payment not
necessary; judicial in character; difference between consignation and tender of
payment. Under Article 1256 of the Civil Code, the debtor shall be released from
responsibility by the consignation of the thing or sum due, without need of prior tender
of payment, when the creditor is absent or unknown, or when he is incapacitated to
receive the payment at the time it is due, or when two or more persons claim the same
right to collect, or when the title to the obligation has been lost.
Consignation is necessarily judicial. Article 1258 of the Civil Code specifically provides
that consignation shall be made by depositing the thing or things due at the disposal
of judicial authority. The said provision clearly precludes consignation in venues other
than the courts.
Elsewhere, what may be made is a valid tender of payment, but not consignation. The
two, however, are to be distinguished.
Tender of payment must be distinguished from consignation. 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. (8 Manresa 325).
Sps. Cacayorin v. Armed Forces and Police Mutual Benefit Association, Inc.; G.R. No.
171298. April 15, 2013
Property; Ejectment; only issue is who is entitled to physical possession; forcible entry;
prior physical possession is vital; judgment conclusive between the parties and their
successors-in-interest; effects if prevailing party is a usufructuary; usufruct; death of
usufructuary extinguishes usufruct. Ejectment cases forcible entry and unlawful
detainer are summary proceedings designed to provide expeditious means to protect
actual possession or the right to possession of the property involved. The only question
that the courts resolve in ejectment proceedings is: who is entitled to the physical
possession of the premises, that is, to the possession de facto and not to the
possession de jure. It does not even matter if a partys title to the property is
questionable. Thus, an ejectment case will not necessarily be decided in favor of one
who has presented proof of ownership of the subject property.

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Indeed, possession in ejectment cases means nothing more than actual physical
possession, not legal possession in the sense contemplated in civil law. In a forcible
entry case, prior physical possession is the primary consideration[.] A party who
can prove prior possession can recover such possession even against the owner
himself. Whatever may be the character of his possession, if he has in his favor prior
possession in time, he has the security that entitles him to remain on the property until a
person with a better right lawfully ejects him. [T]he party in peaceable, quiet
possession shall not be thrown out by a strong hand, violence, or terror.
The judgment in an ejectment case is conclusive between the parties and their
successors-in interest by title subsequent to the commencement of the action; hence, it
is enforceable by or against the heirs of the deceased. This judgment entitles the
winning party to: (a) the restitution of the premises, (b) the sum justly due as arrears of
rent or as reasonable compensation for the use and occupation of the premises, and (c)
attorneys fees and costs.
[T]he right to the usufruct is now rendered moot by the death of Wilfredo since death
extinguishes a usufruct under Article 603(1) of the Civil Code. This development
deprives the heirs of the usufructuary the right to retain or to reacquire possession of
the property even if the ejectment judgment directs its restitution.
Thus, what actually survives under the circumstances is the award of damages, by way
of compensation. Rivera-Calingasan v. Rivera; G.R. No. 171555. April 17, 2013
Property; Public property; public plaza forms part of the public dominion; cannot be the
object of appropriation, lease, any other contractual undertaking; void contracts. [Public
plaza is for] public use and thereby, forming part of the public dominion. Accordingly, it
cannot be the object of appropriation either by the State or by private persons. Nor can
it be the subject of lease or any other contractual undertaking. In Villanueva
v. Castaeda, Jr., citing Espiritu v. Municipal Council of Pozorrubio, the Court
pronounced that:
x x x Town plazas are properties of public dominion, to be devoted to public use and to
be made available to the public in general. They are outside the commerce of man and
cannot be disposed of or even leased by the municipality to private parties.
In this relation, Article 1409(1) of the Civil Code provides that a contract whose purpose
is contrary to law, morals, good customs, public order or public policy is considered void
and as such, creates no rights or obligations or any juridical relations. Land Bank of the
Philippines v. Cacayurin; G.R. No. 191667. April 17, 2013
Special Laws
Foreclosure of Mortgage pursuant to P.D. No. 385; when its purpose is served; when
hearing is necessary before issuance of writ of possession; foreclosure of mortgage
under Section 33, Rule 39 of the Rules on Civil Procedure; when issuance of writ of
possession is not ministerial. While the Supreme Court had already declared
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in Philippine National Bank v. Adil that once the property of a debtor is foreclosed and
sold to a GFI, it would be mandatory for the court to place the GFI in the possession
and control of the propertypursuant to Section 4 of P.D. No. 385 (Requiring
Government Financial Institutions to Foreclose Mandatorily All Loans with Arrearages,
Including Interest and Charges Amounting to at Least Twenty (20%) of the Total
Outstanding Obligation) this rule should not be construed as absolute or without
exception.
The evident purpose underlying P.D. 385 is sufficiently served by allowing foreclosure
proceedings initiated by GFIs to continue until a judgment therein becomes final and
executory, without a restraining order, temporary or permanent injunction against it
being issued. But if a parcel of land is occupied by a party other than the judgment
debtor, the proper procedure is for the court to order a hearing to determine the nature
of said adverse possession before it issues a writ of possession. This is because a third
party, who is not privy to the debtor, is protected by the law. Such third party may be
ejected from the premises only after he has been given an opportunity to be heard, to
comply with the time honored principle of due process.
In the same vein, under Section 33 of Rule 39 of the Rules on Civil Procedure, the
possession of a mortgaged property may be awarded to a purchaser in the extrajudicial
foreclosure, unless a third party is actually holding the property adversely vis--vis the
judgment debtor.
[T]he obligation of a court to issue a writ of possession in favor of the purchaser in an
extrajudicial foreclosure sale ceases to be ministerial, once it appears that there is a
third party who is in possession of the property and is claiming a right adverse to that of
the debtor/mortgagor. We explained in Philippine National Bank v. Austria that the
foregoing doctrinal pronouncements are not without support in substantive law, to wit:
x x x. Notably, the Civil Code protects the actual possessor of a property, to wit:
Art. 433. Actual possession under claim of ownership raises a disputable presumption of
ownership. The true owner must resort to judicial process for the recovery of the
property.
Under the aforequoted provision, one who claims to be the owner of a property
possessed by another must bring the appropriate judicial action for its physical recovery.
The term judicial process could mean no less than an ejectment suit or reivindicatory
action, in which the ownership claims of the contending parties may be properly heard
and adjudicated.
Royal Savings Bank v. Asia, et al.; G.R. No. 183658. April 10, 2013
Family Code; Declaration of Presumptive Death; judgment is immediately final and
executory; proper remedy is a special civil action for certiorari filed in the Court of
Appeals; decision of Court of Appeals reviewable by the Supreme Court via certiorari
under Rule 45. [It is improper to avail of] an ordinary appeal as a vehicle for questioning
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a trial courts decision in a summary proceeding for the declaration of presumptive

death under Article 41 of the Family Code.
As explained in Republic v. Tango, the remedy of a losing party in a summary
proceeding is not an ordinary appeal, but a petition for certiorari, to wit:
By express provision of law, the judgment of the court in a summary proceeding shall be
immediately final and executory. As a matter of course, it follows that no appeal can be
had of the trial courts judgment in a summary proceeding for the declaration of
presumptive death of an absent spouse under Article 41 of the Family Code. It goes
without saying, however, that an aggrieved party may file a petition for certiorari to
question abuse of discretion amounting to lack of jurisdiction. Such petition should be
filed in the Court of Appeals in accordance with the Doctrine of Hierarchy of Courts. To
be sure, even if the Courts original jurisdiction to issue a writ of certiorari is concurrent
with the RTCs and the Court of Appeals in certain cases, such concurrence does not
sanction an unrestricted freedom of choice of court forum. From the decision of the
Court of Appeals, the losing party may then file a petition for review on certiorariunder
Rule 45 of the Rules of Court with the Supreme Court. This is because the errors which
the court may commit in the exercise of jurisdiction are merely errors of judgment which
are the proper subject of an appeal.
When the OSG filed its notice of appeal under Rule 42, it availed itself of the wrong
remedy. As a result, the running of the period for filing of a Petition
for Certiorari continued to run and was not tolled. Upon lapse of that period, the
Decision of the RTC could no longer be questioned. Republic of the Philippines v.
Narceda; G.R. No. 182760. April 10, 2013
The Subdivision and Condominium Buyers Protective Decree; contract to sell; validity is
not affected by lack of certificate of registration of subdivision developer and failure to
register the contract before the Register of Deeds; Maceda Law. In Spouses Co Chien
v. Sta. Lucia Realty and Development Corporation, Inc. this Court has already ruled that
the lack of a certificate of registration and a license to sell on the part of a subdivision
developer does not result to the nullification or invalidation of the contract to sell it
entered into with a buyer. The contract to sell remains valid and subsisting. In said case,
the Court upheld the validity of the contract to sell notwithstanding violations by the
developer of the provisions of PD 957. We held that nothing in PD 957 provides for the
nullity of a contract validly entered into in cases of violation of any of its provisions such
as the lack of a license to sell.
Moreover, Flora claims that the contract she entered into with Moldex is void because of
the latters failure to register the contract to sell/document of conveyance with the
Register of Deeds, in violation of Section 1730 of PD 957. However, just like in Section
5 which did not penalize the lack of a license to sell with the nullification of the contract,
Section 17 similarly did not mention that the developers or Moldexs failure to register
the contract to sell or deed of conveyance with the Register of Deeds resulted to the
nullification or invalidity of the said contract or deed [T]hus, non-registration of an
instrument of conveyance will not affect the validity of a contract to sell. It will remain
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valid and effective between the parties thereto as under PD 1529 or The Property
Registration Decree, registration merely serves as a constructive notice to the whole
world to bind third parties.
Under the Maceda Law, the defaulting buyer who has paid at least two years of
installments has the right of either to avail of the grace period to pay or, the cash
surrender value of the payments made:
Section 3. In all transactions or contracts involving the sale or financing of real estate
on installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act Numbered
Thirty-eight Hundred Forty-four, as amended by Republic Act Numbered Sixty-three
Hundred Eighty-nine, where the buyer has paid at least two years of installments, the
buyer is entitled to the following rights in case he defaults in the payment of succeeding
installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace
period earned by him which is hereby fixed at the rate of one month grace period for
every one year of installment payments made: Provided, That this right shall be
exercised by the buyer only once in every five years of the life of the contract and its
extensions, if any.
(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender
value of the payments on the property equivalent to fifty per cent of the total payments
made, and, after five years of installments, an additional five per cent every year but not
to exceed ninety per cent of the total payments made: Provided, That the actual
cancellation of the contract shall take place after thirty days from receipt by the buyer of
the notice of cancellation or the demand for rescission of the contract by a notarial act
and upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the
computation of the total number of installment payments made.
Moldex Realty, Inc. v. Saberon; G.R. No. 176289. April 8, 2013

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