C IVIL L AW

The Law on Persons and Family Relations

Course Outline
I.

Preliminary Title; Human Relations; Personality; Domicile;

Art. 2 NCC; Art.5 Labor Code; Sec. 3(1) & 4, Ch. 2, Book VII,
Administrative Code of 1987; BSP Circular 799
Effects and application of law
Tanada vs Tuvera, 136 SCRA 27 (1985)
Article 2 of the NCC does not preclude the requirement of publication in
the Official Gazette even if the law itself provides for the date of its
effectivity.
Tanada vs Tuvera,146 SCRA 446 (1986)
If the law provides for its own effectivity date, then it takes effect on the
said date, subject to the requirement of publication. The clause unless
otherwise provided refers to the date of effectivity and not the to the
requirement of publication itself, which cannot in any event be omitted.
Basa vs M ercado, 61 Phil 632
To be a newspaper of general circulation, it is enough that it is published
for the dissemination of local news and general information, that it has
bona fide subscription list of paying subscribers, and that it is published
at regular intervals.
PASEI vs. Torres, G.R. NO. 101279,Aug. 06, 1992 212 SCRA 298
Although the questioned circulars are a valid exercise of the police power
as delegated to the executive branch of Government, they are legally
invalid, defective and unenforceable for lack of proper publication and
filing in the Office of the National Administrative Register as required in
Article 2 of the Civil Code, Article 5 of the Labor Code and Sections 3(1)
and 4, Chapter 2, Book VII of the Administrative Code of 1987
Rep. vs. Extelcom, G.R. NO. 147096,Jan. 15, 2002 373 SCRA 316
Thus, publication in the Official Gazette or a newspaper of general
circulation is a condition sine qua non before statutes, rules or
regulations can take effect. There is nothing in the Administrative Code
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of 1987 which implies that the filing of the rules with the UP Law Center
is the operative act that gives the rules force and effect.
Cojuangco, Jr. vs. Rep., G.R. NO. 180705, Nov. 27,2012 686 SCRA
472
In this case, while it incorporated the PCA-Cojuangco AG.R.eement by
reference, Section 1 of P.D. 755 did not in any way reproduce the exact
terms of the contract in the decree. Neither was acopy thereof attached to
the decree when published. We cannot, therefore, extend to the said
AG.R.eement the status of a law.
NMSM I vs. DND,G.R. NO. 187587,June 5, 2013 697 SCRA 359
The Court cannot rely on a handwritten note that was not part of
Proclamation No. 2476 as published. Without publication, the note never
had any legal force and effect.
Roy vs CA, G.R. NO 80718 Jan. 29, 1988
The term laws do not include decisions of the Supreme Court because
lawyers in the active practice must keep abreast of decisions, particularly
where issues have been clarified, consistently reiterated and published in
advanced reports and the SCRA.

Arts.3, 4, 5, 6, 7 NCC; Arts. 105, 256 Family Code; Vested Rights;

Substantive & Procedural Laws; Retroactive Application; Express
and Implied Repeal; Effect of declaration of Unconstitutionality
Marcella-Bobis vs Bobis, 336 SCRA 747 (2000)
The accused is prosecuted for the crime of bigamy for not obtaining a
judicial declaration of nullity of his first marriage before entering into
another marriage. Ignorance of the existence of article 40 of the Family
Code canno enve be successfully invoked as an excuse.
Bernabe v. Alejo G.R. NO. 140500, Jan. 21, 2002 374 SCRA 180
An illegitimate child filed an action for recognition pursuant to article
285 of the NCC during the effectivity of the Family Code. illegitimate
children who were still minors at the time the Family Code took effect
and whose putative parent died during their minority are thus given the
right to seek recognition (under Article 285 of the Civil Code) for a period
of up to four years from attaining majority age and this vested right was
not impaired or taken away by the passage of the Family Code.
Rep. v. M iller G.R. NO. 125932, Apr. 21, 1999 306 SCRA 183
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Whether or not, an alien, who is qualified to adopt at the time of filing

the petition, can be disqualified by the new provisions of the family code.
An alien qualified to adopt under the Child and Youth Welfare Code,
which was in force at the time of the filing of the petition, acquired a
vested right which could not be affected by the subsequent enactment of
a new law disqualifying him. Vested rights include not only legal or
equitable title to the enforcement of a demand, but also an exemption
from new obligations created after the right has vested.
Atienza vs. Brillantes, AM M TJ 92-706, M ar. 29,1995 243 SCRA 32
Article 40 is applicable to remarriages entered into after the effectivity of
the Family Code on August 3, 1988 regardless of the date of the first
marriage. The fact that procedural statutes may somehow affect the
litigants' rights may not preclude their retroactive application to pending
actions.
Ty v. Cam G.R. NO. 127406, Nov. 27, 2000
The two marriages involved in this case was entered during the effectivity
of the New Civil Code. The Family Code has retroactive effect unless there
be impairment of vested rights.
Compare the case of TY vs CA and Atienza vs Brillantes
Systems Factors Corp vs NLRC, 346 SCRA 149 (2000)
The retroactive application of procedural laws is not violative of any right
of a person who may feel that he is adversely affected. The reason is that
as a general rule, no vested right may attach nor arise from procedural
laws.
Agujetas vs CA, 261 SCRA 17 (1996)
Implied repeals are not to be favored because they rest only on the
presumption that because the old and the new laws are incompatible
with each other, there is an intention to repeal the old. There must be a
plain, unavoidable and irreconcilable repugnancy between the two.
Laguna Lake Development Authority vs CA, 251 SCRA 42 (1995)
When there is a conflict between a general law and a special statute, the
special statute should pre vail since it evinces the legislative intent more
clearly than the general statute. The special law is to be taken as an
exception to the general law in the absence of special circumstances
forcing a contrary conclusion.
De Agbayani vs PNB, 38 SCRA 429
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The Supreme Court declared the moratorium law unconstitutional but it

did not allow to toll the prescriptive period of the right to foreclose the
mortgage. The court adopted the view that before an act is declared
unconstitutional it is an operative fact which can be the source of rights
and duties.

Article 8. Stare Decisis; Case Law; See also Article 36, FC; article 9,
10, 11, 12 , 13, 14 NCC

Ting v. Velez-Ting, G.R. NO. 166562, M ar. 31, 2009 582 SCRA 694
The rule of stare decisis is not inflexible, whether it shall be followed or
departed from, is a question entirely within the discretion of the court,
which is again called upon to consider a question once decided. It is only
when a prior ruling of this Court is overruled, and a different view is
adopted, that the new doctrine may have to be applied prospectively in
favor of parties who have relied on the old doctrine and have acted in
good faith, in accordance therewith under the familiar rule of "lex
prospicit, non respicit

Floresca vs Philex Mining Corp.,G.R. 30642, April 30, 1985

The application or interpretation placed by the Supreme Court upon a
law is part of the law as of the date of its enactment since the courts
application or interpretation merely establishes the contemporaneous
legislative intent that the construed law purports to carry into effect.

Mendiola vs CA, 258 SCRA 492

Equity, which has been described as justice outside legality is applied
only in the absence of, and never against statutory law or judicial rules
of procedure.
Articles 15, 16, 17, 50, 51 (New Civil Code); Article 26, Family Code
DAVID A. NOVERAS vs. LETICIA T. NOVERAS, G.R. No. 188289,
August 20, 2014
David and Leticia are US citizens who own properties in the USA and in the
Philippines. Leticia obtained a decree of divorce from the Superior Court of
California in June 2005 wherein the court awarded all the properties in the USA to
Leticia. The trial court erred in recognizing the divorce decree The foreign
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judgment and its authenticity must be proven as facts under our rules on evidence,
together with the alien s applicable national law to show the effect of the judgment
on the alien himself or herself. The recognition may be made in an action instituted
specifically for the purpose or in another action where a party invokes the foreign
decree as an integral aspect of his claim or defense. With respect to their properties
in the Philippines, Leticia filed a petition for judicial separation of conjugal
properties. The Court ruled that 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.
NORMA A. DEL SOCORRO, for and in behalf of her minor child RODERIGO
NORJO VAN WILSEM, vs. ERNST JOHAN BRINKMAN VAN WILSEM, G.R. No.
193707 , December 10, 2014
A foreigner was sued for support. The Supreme Court ruled that Article 195 of the
New Civil Code cannot apply to him, since Article 15 of the New Civil Code stresses
the principle of nationality. Philippine laws, specifically the provisions of the Family
Code relating to support, only apply 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. Be that as it may, the accused, who is
residing in the Philippines, was held liable under under Section 5(e) and (i) of R.A.
No. 9
for unjustly refusing or failing to give support to petitioner s son on since
respondent is currently living in the Philippines, on the basis of the Territoriality
Principle in criminal law, in relation to Article 14 of the New Civil Code, applies to
the instant case, which provides that: "[p]enal laws and those of public security and
safety shall be obligatory upon all who live and sojourn in Philippine territory,
subject to the principle of public international law and to treaty stipulations."
NORMA A. DEL SOCORRO for and in behalf of her Minor Child RODERIGO
NORJO VAN WILSEM vs. ERNST JOHAN BRINKMAN VAN WILSEM, G.R. No.
193707, December 10, 2014

SAUDI ARABIAN AIRLINES (SAUDIA) AND BRENDA VS. MA. JOPETTE M.

REBESENCIO MONTASSAH B. SACAR-ADIONG ET. AL. G.R. NO. 198587. January
14, 2015
Under the doctrine of processual presumption, 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. Hence, pleading a foreign law without
proving the same will bar its application in the Philippines
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All told, the considerations for assumption of jurisdiction by Philippine tribunals as

outlined in Bank of America, NT&SA 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.

Van Dorn vs. Romillo G.R. NO.L-68470 October 8, 1985 139 SCRA
139
It is true that owing to the nationality principle embodied in Article 15 of
the Civil Code, only Philippine nationals are covered by the policy against
absolute divorces the same being considered contrary to our concept of
public policy and morality. Howe ver, aliens may obtain divor ces abroad,
which may be recognized in the Philippines, provided they are valid
according to their national law.
Pilapil vs. Ibay-Somera, G.R. NO. 80116 June 30, 1989 174 SCRA
652
Whether or not, the complainant, a foreigner, qualify as an offended
spouse having obtained a final divorce decree under his national law
prior to his filing the criminal complaint. The person who initiates the
adultery case must be an offended spouse, and by this is meant that he
is still married to the accused spouse, at the time of the filing of the
complaint.
Recio vs. Recio G.R. NO. 138322. October 2, 2001 366 SCRA 437
Whether or not the divorce must be proved before it is to be recognized
in the Philippines. Before a foreign divorce decree can be recognized by
our courts, the party pleading it must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing it. Presentation
solely of the divorce decree is insufficient.
Roehr v. Rodriguez,G.R. NO. 142820 ,Jun. 30, 2003 404 SCRA 495
As a general rule, divorce decrees obtained by foreigners in other
countries are recognizable in our jurisdiction, but the legal effects
thereof, e.g. on custody, care and support of the children, must still be
determined by our courts.
Morigo v. People, G.R. NO. 145226 , Feb. 6, 2004 422 SCRA 376
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The mere private act of signing a marriage contract bears no semblance

to a valid marriage and thus, needs no judicial declaration of nullity.
Such act alone, without more, cannot be deemed to constitute an
ostensibly valid marriage for which petitioner might be held liable for
bigamy unless he first secures a judicial declaration of nullity before he
contracts a subsequent marriage. (Pro hac vice case)
Rep. v. Orbecido, G.R. NO. 154380, Oct. 05, 2005 472 SCRA 114
Whether or not, a Filipino Spouse can remarry under ARTICLE 26 OF
THE FAMILY CODE where his,her spouse is later naturalized as a foreign
citizen and obtains a valid divorce decree capacitating him or her to
remarry. The reckoning point is not the citizenship of the parties at the
time of the celebration of the marriage, but their citizenship at the time a
valid divorce is obtained abroad by the alien spouse capacitating the
latter to remarry.
Corpuz v. Sto. Tomas, G.R.NO. 186571, Aug. 11, 2010 628 SCRA
266
In Gerberts case, since both the foreign divorce decree and the national
law of the alien, recognizing his or her capacity to obtain a divorce,
purport to be official acts of a sovereign authority, Section 24, Rule 132
of the Rules of Court comes into play. This Section requires proof, either
by (1) official publications or (2) copies attested by the officer having legal
custody of the documents. If the copies of official records are not kept in
the Philippines, these must be (a) accompanied by a certificate issued by
the proper diplomatic or consular officer in the Philippine foreign service
stationed in the foreign country in which the record is kept and (b)
authenticated by the seal of his office.
Human Relations; Abuse of Rights, Unjust Enrichment; M alicious
Prosecution; Independent Civil Action; Arts. 1724; 2142; 2154;
2164; 2176, NCC
SPOUSES ALEJANDRO MANZANILLA AND REMEDIOS VELASCO v WATERFIELDS
INDUSTRIES CORPORATION, represented by its President, ALIZA MA. G.R No.
177484, July 18, 2014. J. DEL CASTILLO
Waterfields Corp. and the spouses Manzanilla entered into a contract of lease. When
Waterfields breached the contract by failing to pay rent, the lessors brought an
ejectment suit. Waterfields claims that if it was ejected prior to the expiration of the
lease, it would be tantamount to unjust enrichment as Waterfields already
introduced substantial improvements on the property.
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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.
RAUL SESBRENO VS. COURT OF APPEALS, G.R. No. 160689 March 26, 2014, J.
BERSAMIN
This case concerns the claim for damages of petitioner Raul H. Sesbreo founded on abuse
of rights. Sesbreo accused the violation of contract (VOC) inspection team dispatched by
the Visayan Electric Company (VECO) to check his electric meter with conducting an
unreasonable search in his residential premises. It is worth noting that the VOC inspectors
decided to enter the main premises only after finding the meter of Sesbreo turned upside
down, hanging and its disc not rotating. Their doing so would enable them to determine the
unbilled electricity consumed by his household. The circumstances justified their decision,
and their inspection of the main premises was a continuation of the authorized entry.

Although the act is not illegal, liability for damages may arise should there be an
abuse of rights. The concept of abuse of rights prescribes that a person should not
use his right unjustly or in bad faith; otherwise, he may be liable to another who
suffers injury. There is an abuse of rights if when the act is performed without
prudence or in bad faith. In order that liability may attach under the concept of
abuse of rights, the following elements must be present, to wit: (a) the existence of a
legal right or duty, (b) which is exercised in bad faith, and (c) for the sole intent of
prejudicing or injuring another. There is no hard and fast rule that can be applied to
ascertain whether or not the principle of abuse of rights is to be invoked. The
resolution of the issue depends on the circumstances of each case.
However, Sesbreo did not persuasively demonstrate that there was an intervention
of malice or bad faith on the part of (VOC) inspection team during the inspection of
the main premises, or any excessiveness committed by them in the course of the
inspection. But Sesbreo did not. On the other hand, the CA correctly observed that
the inspection did not zero in on Sesbreo s residence because the other houses
within the area were similarly subjected to the routine inspection. The court
eliminated any notion of malice or bad faith.
WILLAWARE PRODUCTS CORPORATION vs. JESICHRIS MANUFACTURING
CORPORATION, G.R. No. 195549, September 3, 2014, J. Peralta
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The issue for resolution is: whether or not petitioner committed acts amounting to
unfair competition under Article 28 of the Civil Code.The instant case falls unde r
Article 28 of the Civil Code on human relations, and not unfair competition under
Republic Act No. 8293, as the present suit is a damage suit and the products are not
covered by patent registration. A fortiori, the existence of patent registration is
immaterial in the present case.
The concept of "unfair competition"under Article 28 is very much broader than that
covered by intellectual property laws. Under the present article, which follows the
extended concept of "unfair competition" in American jurisdictions, the term covers
even cases of discovery of trade secrets of a competitor, bribery of his employees,
misrepresentation of all kinds, interference with the fulfillment of a competitor s
contracts, or any malicious interference with the latter s business.

Article 28 of the Civil Code provides that unfair competition in agricultural,

commercial or industrial enterprises or in labor through the use of force,
intimidation, deceit, machination or any other unjust, oppressive or high-handed
method shall give rise to a right of action by the person who thereby suffers damage.
What is being sought to be prevented is not competition per se but the use of unjust,
oppressive or highhanded methods which may deprive others of a fair chance to
engage in business or to earn a living. Thus, when a manufacturer of plastic
kitchenware products employed the former employees of a neighboring partnership
engaged in the manufacture of plastic automotive parts; deliberately copied the
latter s products and even went to the extent of selling these products to the latter s
customers, there is unfair competition.

CARLOS A. LORIA vs. LUDOLFO P. MUOZ, G.R. No. 187240, October 15, 2014, J.
Leonen
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 person s expense or damage. )n this case, Loria received
P2,000,000.00 from Muoz for a subcontract of a government project to 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
Muoz s money without valid basis or justification. Under Article
of the Civil
Code of the Philippines, Loria must return the P2,000,000.00 to Muoz.
DOMINGO GONZALO VS.JOHN TARNATE JR., G.R. NO. 160600, JANUARY 15,
2014, J. Bersamin

Gonzalo, who was the sole contractor of the project in question, subcontracted the
implementation of the project to Tarnate in violation of the statutory prohibition.
Their subcontract was illegal because it did not bear the approval of the DPWH
Secretary. Necessarily, the deed of assignment was also illegal, because it sprung
from the subcontract. Thus, Tarnate and Gonzalo entered into an illegal contract.
While it is true that under Article 1412 (1) of the Civil Code, the guilty parties to an
illegal contract cannot recover from one another and are not entitled to an
affirmative relief because they are in pari delicto or in equal fault, the doctrine of in
pari delicto is not always rigid.
An accepted exception arises when its application contravenes well-established
public policy. In this jurisdiction, public policy has been defined as "that principle of
the law which holds that no subject or citizen can lawfully do that which has a
tendency to be injurious to the public or against the public good."
Under the principle of unjust enrichment exists then, Gonzalo would be unjustly
enriched at the expense of Tarnate, who provided the materials, if the latter was to
be barred from recovering because of the rigid application of the doctrine of in pari
delicto. The prevention of unjust enrichment called for the exception to apply in
Tarnate s favor.
Amonoy vs Gutierrez, 351 SCRA 731 (2001)

One who merely exercises ones rights does no actionable injury and
cannot be held liable for damages.
Albenson Enterprises Corp. vs CA,217 SCRA 18 (1993)
The elements of an abuse of right under article 19are the following: 1.
There is a legal right or duty; 2. Which is exercised in bad faith; 3. For
the sole intent of prejudicing or injuring another.
RCPI vs CA, 143 SCRA 657 (1986)
Dionela filed a complaint for damages against RCPI alleging that the
defamatory words on the telegram sent to him not only wounded his
feelings but also caused him undue embarrassment and affected his
business as well as because other people have come to know of said
defamatory words. There is a clear case of breach of contract by the
petitioner in adding extraneous and libelous matters in the message se nt
to Dionela.
Constantino vs M endez 209 SCRA 18 (1992)
Mere sexual intercourse is not by itself a basis for recovery. Damages
could only be awarded if sexual intercourse is not a product of
voluntariness and mutual desire.
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Gashme Shookat Baksh vs CA,219 SCRA115 (1993)

Where a mans promise to marry is in fact the proximate cause of the
acceptance of his love by a woman and his representation to fulfill that
promise thereafter becomes the proximate cause of the giving of herself
unto him a sexual congress, proof that he had, in reality, no intention of
marrying her and that the promise was only a subtle scheme or deceptive
device to entice or inveigle her to accept him and to obtain her consent to
the sexual act, could justify the award of damages pursuant to article 21
of the new civil code not because of such promise to marry but because
of the fraud and deceit behind it and the wilful injury to her honor and
reputation which followed thereafter.
Figueroa vs. Barranco, SBC Case NO. 519. July 31, 1997 2 76 5CRA
445 - His engaging in premarital sexual relations with complainant and
promises to marry suggests a doubtful moral character on his part but
the same does not constitute grossly immoral conduct.
University of the East vs Jader, G.R. NO. 132344, Feb. 7, 2000 325
SCRA 805
A law student was allowed to graduate by his school with a failing grade
but was later on prohibited by the said school to take the bar exams. The
negligent act of a professor who fails to observe the rules of the school,
for instance by not promptly submitting a student's grade, is not only
imputable to the professor but is an act of the school, being his
employer.

UP v. Philab, G.R. NO. 152411, Sept. 29, 2004 439 SCRA 467
Whether or not UP is liable to pay PHILAB considering that it is only a
donee of FEMF, FEMF being the one which funded the project, and
despite being a donee, unjust enrichment still applies to UP. In order
that accion in rem verso may prosper, the essential elements must be
present: (1) that the defendant has been enriched, (2) that the plaintiff
has suffered a loss, (3) that the enrichment of the defendant is without
just or legal ground, and (4) that the plaintiff has no other action
based on contract, quasi-contract, crime or quasi-delict.
Beumer vs. Amores, G.R. NO. 195670, Dec. 03, 2012 686 SCRA 770
An action for recovery of what has been paid without just cause has been
designated as an accion in rem verso. This provision does not apply if, as

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in this case, the action is proscribed by the Constitution or by the

application of the pari delicto doctrine.

Padalhin vs. Lavia, G.R. NO. 183026,Nov. 14, 2012 685 SCRA 549
Nestor himself admitted that he caused the taking of the pictures of
Lavina's residence without the latter's knowledge and consent. Nestor
violated the New Civil Code prescriptions concerning the privacy of one's
residence and he cannot hide behind the cloak of his supposed
benevolent intentions to justify the invasion.

Civil Personality; Birth; Death; Arts 37, 38, 39 40, 41, 42; 390, 391,
712, 777 NCC; Art. 41, 96 &124, 99 & 126, 142 FC

Geluz vs CA, July 20, 1961

It is unquestionable that the appellants act in provoking the abortion of
appellees wife, without medical necessity to warrant it, was a criminal
and morally reprehensible act, that cannot be to se verely condemned;
and the consent of the woman or that of her husband does not excuse it.
But the immorality or illegality of the act does not justify an award of
damage that, under the circumstances on record, have no factual or legal
basis.
Quimiguing vs ICAO, 34 SCRA 132 (1970
A conceived child, although as yet unborn, is given by law a provisional
personality of its own for all purposes favorable to it, as explicitly
provided under article 40 of the civil code.
Continental Steel v. M ontao, G.R. NO. 182836 , Oct.13, 2009 603
SCRA 621
Whether or not, a death of a fetus is considered a death of a dependent of
the parent. One need not acquire civil personality first before he/she
could die. Even a child inside the womb already has life. No less than
the Constitution recognizes the life of the unborn from conception, that
the State must protect equally with the life of the mother. If the unborn
already has life, then the cessation thereof even prior to the child being
delivered, qualifies as death.

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Domicile; Arts 50 & 51 NCC; Arts. 68 & 69, FC; Residence v.

Domicile; Annulment or Nullity of M arriages AM 02-11-10 SC;
Settlement of Estate
Marriage
Definition, M arriage as contract and social institution, Presumption
of M arriage, Proof of M arriage,Offer of M arriage

Tuazon vs CA, 256 SCRA 158

Our Family Law is based on the policy that marriage is not a mere
contract, but a social institution in which the State is vitally interested.
Perido vs Perido, 63 SCRA 97
It is the union (and inviolable social institution) of one man with one
woman for the reciprocal blessings of a domestic home life, and for the
birth, rearing, and education of children. In one case, the Supreme Court
ruled that marriage is also a new relation in the maintenance of which
the general public is interested.
People v. Casao, 220 SCRA 362
The offer of the accused to marry the victim establishes his guilt. As a
rule in rape cases, an offer of marriage is an admission of guilt
People vs. Borromeo,133 SCRA 106, 109 (1984)
Persons living together in apparent matrimony are presumed, in the
absence of any counter-presumption or evidence special to the case, to
be in fact married. The reason is that such is the common order of
society, and if the parties were not what they thus hold themselves out
as being, they would be living in the constant violation of decency and of
law.
People v. Ignacio, 81 SCAD 138 (1997)
Appellants own admission that she was married to the victim was a
confirmation of the semper praesumitur matrimonio and the presumption
that a man and a woman so deporting themselves as husband and wife
had verily acted into a lawful contract of marriage.

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Proof of M arriage; M arriage Certificate v. Presumption of M arriage;

Torrens Title Entry Single, Civil Status;
Villanueva vs. CA, 198 SCRA 472 (1991)
The best documentary evidence of a marriage is the marriage contract. A
marriage contract renders unnecessary the presumption that a man and
a woman deporting themselves as husband and wife have entered into a
lawful contract of marriage.
Balogbog vs. CA, 269 SCRA 259, 266 (1997)
Although a marriage contract is considered primary evidence of marriage,
the failure to present it is not, however, proof that no marriage took
place, as other evidence may be presented to prove marriage.
People vs. Borromeo, 133 SCRA 106, 110 (1984)
The mere fact that no record of the marriage exists in the registry of
marriage does not invalidate said marriage, as long as in the celebration
thereof, all requisites for its validity are present. The forwarding of a copy
of the marriage certificate to the registry is not one of said requisites.
Pugeda vs. Trias, 4 SCRA 849, 855 (1962)
The defendants questioned the marriage of plaintiff by presenting the
records of the municipality of Rosario, Cavite to show that there is no
record of the alleged marriage. The court admitted evidence consisting of
the testimonies of witnesses.
Trinidad vs. Court of Appeals, et. al., 289 SCRA 188 (1998)
The Supreme Court held that the following may be presented as proof of
marriage: (a) testimony of a witness to the matrimony; (b) the couples
public and open cohabitation as husband and wife after the alleged
wedlock; (c) the birth and baptismal certificate of children born during
such union; and (d) the mention of such nuptial in subsequent
documents.
Hernandez vs. CA, 320 SCRA 76.
The law favors the validity of marriage because the State is interested in
the preservation of the family and sanctity of the family is a matter of
constitutional concern. The burden of proof to show the nullity of the
marriage rests upon the party seeking its nullity
14

Aonuevo v. Estate of Jalandoni G.R. NO. 178221, Dec. 1, 2010 636

SCRA 420
The birth certificate of Sylvia was presented to prove the marriage
between Isabel and John despite the absence of the marriage certificate.
The court held that the birth certificate may serve as evidence to prove
the marriage between Isabel and John , as it contains the following
notable entries: (a) that Isabel and John Desantis were "married" and (b)
that Sylvia is their "legitimate" child.
Villatuya v. Tabalingcos, A.C. NO. 6622 676 SCRA 37
A lawyer was married three times, while the first marriage was still
subsisting, his marriage contracts as certified by the NSO was presented
in the disbarment proceeding to prove his subsequent marriages. For
purposes of disbarment proceeding, these marriage contracts bearing the
name of respondent are competent and convincing evidence proving that
he committed bigamy.
Compare the case of Aonuevo v. Estate of Jalandoni and Villatuya
v. Tabalingcos A.C. NO. 6622 676 SCRA 37
Cario v. Cario, G.R. NO. 132529 , Feb. 02, 2001 351 SCRA 127
Whether or not the certification by the registrar of the non-existence of
marriage license is enough to prove non-issuance thereof. The records
reveal that the marriage contract of petitioner and the deceased bears no
marriage license number and, as certified by the Local Civil Registrar of
San Juan, Metro Manila, their office has no record of such marriage
license.
Requirements of M arriage
Essential requisite
Legal Capacity and Consent
Formal Requisite
Marriage License ; Civil W edding v. Church W edding; Certificate of
Civil Registrar;
Alcantara v. Alcantara, G.R. NO. 167746 , Aug. 28,2007 531 SCRA
446
Whether or not, a marriage license issued by a municipality or city to a
non-resident invalidates the license. Issuance of a marriage license in a
15

city or municipality, not the residence of either of the contracting parties,

and issuance of a marriage license despite the absence of publication or
prior to the completion of the 10-day period for publication are
considered mere irregularities that do not affect the validity of the
marriage
Abbas v. Abbas, G.R. NO. 183896 , Jan. 30, 2013 689 SCRA 636
The Municipal Civil Registrar of Carmona, Cavite, where the marriage
license of Gloria and Syed was allegedly issued, issued a certification to
the effect that no such marriage license for Gloria and Syed was issued,
and that the serial number of the marriage license pertained to another
couple, Arlindo Getalado and Myra Mabilangan. The fact that the names
in said license do not correspond to those of Gloria and Syed does not
overturn the presumption that the registrar conducted a diligent search
of the records of her office.
Compare the case of Abbas v. Abbas and Alcantara v. Alcantara
Sy v. CA, G.R. NO. 127263 , Apr. 12, 2000 330 SCRA 550
In this case the marriage license was issued on September 17,1974,
almost one year after the ceremony took place on November 15, 1973.
The ineluctable conclusion is that the marriage was indeed contracted
without a marriage license.

Marriages Exempted from the License Requirement Art. 27 34 FC

Cruz v. Catandes, C.A., 39 O.G. NO. 18, p. 324
In a marriage in articulo mortis, while it is ad visable that a witness to the
marriage should sign the dying partys signature if the latter be
physically unable to do so, still if upon order of the solemnizing official,
another person should so sign, the marriage is still valid. The law as
much as possible intends to give legal effect to a marriage. As a matter of
fact, no particular form for a marriage celebration is prescribed.
Soriano v. Felix, L-9005, June 20, 1958
The affidavit is for the purpose of proving the basis for exemption from
the marriage license. Even if there is failure on the part of the
solemnizing officer to execute the necessary affidavit, such irregularity
will not invalidate the marriage for the affidavit is not being required of
the parties.
People v. Dumpo, 62 Phil. 246
16

No judicial notice can be taken of Mohammedan rites and customs for

marriage. They must be alleged and proved in court.
Borja-M anzano vs. Sanchez, 354 SCRA 1, 5 (2001)
The solemnizing officer must execute a sworn statement that he had
ascertained the qualifications of the parties and that he had found no
legal impediment to their marriage.
Nial vs. Bayadog 328 SCRA 122, M arch 14, 2000
In this case, at the time of Pepito and respondents marriage, it cannot be
said that they have lived with each other as husband and wife for at least
five years prior to their wedding day because their cohabitation is not
exclusive. The Court ruled that the cohabitation contemplated under said
provisions must be in the nature of a perfect union that is valid under
the law but rendered imperfect only by the absence of the marriage
contract and characterized by exclusivity meaning nothird party was
involved at anytime within the 5 years andcontinuity that is unbroken.

Marriage Ceremony
Morigo vs People, 422 SCRA 376 (2004)
Petitioner and Lucia Barrette merely signed the marriage contract on
their own. The mere act of signing a marriage contract by the contracting
parties without the presence of the solemnizing officer will not result to
marriage.
Infante vs Arenas, June 29, 1951
The failure of the solemnizing officer to ask the parties whether they take
each other as husband and wife cannot be regarded as a fatal omission if
the parties nonetheless signed the marriage contract in the presence of
the solemnizing officer. A declaration of word of mouth of what the
parties and already stated in writing would be a mere repetition, so that
its omission should not be regarded as fatal.
People v. Opea, L-34954, Feb. 20, 1981
If a man and a woman deport themselves as if they were husband and
wife, they are presumed to be validly and legally married to each other
and this presumption is not rebutted by a mere denial by the man (or
woman) of the fact of marriage.
17

Persons who may solemnize M arriages

Araes v. Occiano, A.M . 02-1390 , April 11, 2002 380 SCRA 402
The respondent Judge solemnized marriage without the requisite
marriage license. Where a judge solemnizes a marriage outside his
courts jurisdiction, there is a resultant irregularity in the formal
requisite laid down in article 3, which while it may not affect the validity
of marriage, may subject the officiating official to administrative liability.
OCA vs. J. Necessario et al, A.M . NO. 07-1691,April 2, 2013 695
SCRA
The court does not accept the arguments of the respondent judges that
the ascertainment of the validity of the marriage license is beyond the
scope of the duty of a solemnizing officer especially when there are
glaring pieces of evidence that point to the contrary. As correctly
observed by the OCA, the presumption of regularity accorded to a
marriage license disappears the moment the marriage documents do not
appear regular on its face.
Compare the ruling of the court in the case of Cario v. Cario and
OCA vs. J. Necessario et al as to the duty of the solemnizing officer
to examine the validity of marriage license.
Marriage in good faith
Effect of Absence of Essential and Formal requisite
Arts. 15-17,50-5, NCC; Art.26, FC; Divorce [Filipino; Foreigner;
Parenting; Children, Property Rights; Succession rights]; Declaratory
Relief; Rule 108;; Art. 412 NCC
SOLEDAD L. LAVADIA vs. HEIRS OF JUAN LUCES LUNA, represented by
GREGORIO Z. LUNA and EUGENIA ZABALLERO-LUNA, G.R. No. 171914, July 23,
2014, J. Lucas P. Bersamin
Divorce between Filipinos is void and ineffectual under the nationality rule adopted
by Philippine law. Hence, any settlement of property between the parties of the first
marriage involving Filipinos submitted as an incident of a divorce obtaine d in a
foreign country lacks competent judicial approval, and cannot be enforceable
against the assets of the husband who contracts a subsequent marriage.

18

Atty. Luna s subsequent marriage to Soledad was void for being bigamous, on the
ground that the marriage between Atty. Luna and Eugenia had not been dissolved
by the Divorce Decree rendered by the CFI of Sto. Domingo in the Dominican
Republic but had subsisted until the death of Atty. Luna
Given the subsistence of the first marriage between Atty. Luna and Eugenia, the
presumption that Atty. Luna acquired the properties out of his own personal funds
and effort remained. It should then be justly concluded that the properties in litis
legally pertained to their conjugal partnership of gains as of the time of his death.
Consequently, the sole ownership of the 25/100 pro indiviso share of Atty. Luna in
the condominium unit, and of the law books pertained to the respondents as the
lawful heirs of Atty. Luna.
EDELINA T. ANDO vs. DEPARTMENT OF FOREIGN AFFAIRS, G.R. No.
195432, August 27, 2014, CJ. Sereno
Petitioner questions the decision of the RTC, dismissing her petition for the
recognition of her second marriage as valid, for failing to comply with the
requirements set forth in Art. 13 of the Family Code that is obtaining a judicial
recognition of the foreign decree of absolute divorce in our country. The SC however
ruled that a divorce obtained abroad by an alien may be recognized in our
jurisdiction, provided the decree is valid according to the national law of the
foreigner. The presentation solely of the divorce decree is insufficient; both the
divorce decree and the governing personal law of the alien spouse who obtained the
divorce must be proven. Because our courts do not take judicial notice of foreign
laws and judgment, our law on evidence requires that both the divorce decree and
the national law of the alien must be alleged and proven and like any other fact.
Hence, instead of filing a petition for the recognition of her second marriage as valid,
petitioner should have filed a petition for the judicial recognition of her foreign
divorce from her first husband.
EDELINA T. ANDO v DEPARTMENT OF FOREIGN AFFAIRS, G.R No. 195432
August 27, 2014. J. SERENO
Edelina Tungol married a Japanese man, Yuichiro Kobayashi, in 2001. In 2004,
Kobayashi obtained a divorce valid under Japanese law. Believing the divorce
capacitated her to marry, Edelina married Masatomi Ando in 2005. When Edelina
applied for a renewal of her passport using Ando s last name, the DFA told her that
she needed to prove by a competent court decision that her second marriage to
Ando is valid until otherwise declared.
There appears to be insufficient proof or evidence presented on record of both the
national law of her first husband, Kobayashi, and of the validity of the divorce
decree under that national law. Hence, any declaration as to the validity of the
divorce can only be made upon her complete submission of evidence proving the
19

divorce decree and the national law of her alien spouse, in an action instituted in the
proper forum.
Rep. v. Orbecido, G.R. NO. 154380, Oct. 05, 2005 472 SCRA 114
Whether or not, a Filipino spouse of an alien, who is a Filipino at the
time of marriage, remarry after the latter acquires a foreign divorce that
allows her to remarry. The reckoning point is not the citizenship of the
parties at the time of the celebration of the marriage, but their
citizenship at the time a valid divorce is obtained abroad by the alien
spouse capacitating the latter to remarry.

Corpuz v. Sto. Tomas, G.R. NO. 186571, Aug. 11, 2010 628 SCRA
266
A judgment of divorce is a judicial decree, although a foreign one,
affecting a persons legal capacity and status that must be recorded. But
while the law requires the entry of the divorce decree in the civil registry,
the law and the submission of the decree by themselves do not ipso facto
authorize the decrees registration.
Classification of M arriages, Relationships. Parties In
NCC;FC;AM 02-11-10 SC

Interest;

Valid
Voidable
Void
Terminable
Others Classifications
Legal Separation
Separation in Fact
Common Law Relationship
Void M arriages vs Voidable M arriages
Suntay vs. Conjuangco-Suntay, 300 SCRA 760, 770 (1998)
The fundamental distinction between void and voidable marriages is that
a void marriage is deemed never to have taken place at all and cannot be
the source of rights. On the other hand, a voidable marriage, is
considered valid and produces all its civil effects, until it is set aside by
final judgment of a competent court in an action for annulment
20

Declaration of Nullity; NCC v. FC, AM 02-11-10 SC; Civil Code and

Muslim Code [PD 1083]
Proper party to petition for nullity of marriage; AM 02-11-10 SC
Ablaza v. Republic, G.R. NO. 158298 , Aug. 11, 2010 628 SCRA 27
Indeed, a brother like the petitioner, albeit not a compulsory heir under
the laws of succession, has the right to succeed to the estate of a
deceased brother under the conditions stated in Article 1001 and Article
1003 of the Civil Code Necessarily, therefore, the right of the petitioner to
bring the action hinges upon a prior determination of whether
Cresenciano had any descendants, ascendants, or children (legitimate or
illegitimate), and of whether the petitioner was the late Cresencianos
surviving heir. Such prior determination must be made by the trial court,
for the inquiry thereon involves questions of fact.
Juliano-Llave v. Republic, G.R. NO. 169766 , M ar. 30, 2011 646
SCRA 637
The marriage between the late Sen. Tamano and Zorayda was celebrated
in 1958, solemnized under civil and Muslim rites. The only law in force
governing marriage relationships between Muslims and non-Muslims
alike was the Civil Code of 1950, under the provisions of which only one
marriage can exist at any given time.
Procedure in declaration of nullity of marriage
Carlos v. Sandoval G.R. NO. 179922 , Dec. 16, 2008 574 SCRA 116
Whether a marriage may be declared void ab initio through a judgment
on the pleadings or a summary judgment and without the benefit of a
trial. The grounds for declaration of absolute nullity of marriage must be
proved. Neither judgment on the pleadings nor summary judgment is
allowed. So is confession of judgment disallowed.
Bolos v. Bolos, G.R. NO. 186400 , Oct. 20, 2010 634 SCRA 429
Whether or not A.M. NO. 02-11-10-SC RULE ON DECLARATION OF
ABSOLUTE NULLITY OF VOID MARRIAGES AND ANNULMENT OF
VOIDABLE MARRIAGES is applicable to marriages solemnized before
the effectivity of Family Code. NO. The Rule on Declaration of Absolute
Nullity of Void Marriages and Annulment of Voidable Marriages as
contained in A.M. NO. 02-11-10-SC which the Court promulgated on
March 15, 2003

21

Article 36, FC; AM 02-11-10 SC; See also Articles 48, 68-71, 220-221
& 225 FC
Psychological Incapacity Definition
Salita vs Hon. M agtolis ,June 13, 1994
The Committee did not give any examples of psychological incapacity for
fear that the giving of examples would limit the applicability of the
provision under the principle of ejusdem generis. Rather, the Committee
would like the judge to interpret the provision on a case-to-case basis,
guided by experience, the findings of experts and researchers in
psychological disciplines, and by decisions of church tribunals which,
although not binding on the civil courts, may be given persuasive effect
since the provision was taken from Canon Law.
Characteristics of Psychological Incapacity
Santos v. Court of Appeals, 240 SCRA 20 (1995)
The Supreme Court enumerated the three basic requirements of
psychological incapacity as a ground for declaration of nullity of the
marriage: (a) gravity; (b) juridical antecedence; and (c) incurability.
Guidelines in the interpretation and application of Article 36; AM
02-11-10 SC
VALERIO E. KALAW vs. MA. ELENA FERNANDEZ, G.R. No. 166357, January 14,
2015, J. Del Castillo
On reconsideration, the Supreme Court reversed its previous ruling and reinstated
the trial court s ruling granting the petition for nullity on the basis of Art. 36.
Psychological incapacity is the downright incapacity or inability to take cogniza nce
of and to assume the basic marital obligations. The burden of proving psychological
incapacity is on the plaintiff. The plaintiff must prove that the incapacitated party,
based on his or her actions or behavior, suffers a serious psychological disorder that
completely disables him or her from understanding and discharging the essential
obligations of the marital state. The psychological problem must be grave, must
have existed at the time of marriage, and must be incurable.
The courts are justified in declaring a marriage null and void under Article 36 o f the
Family Code regardless of whether it is the petitioner or the respondent who
imputes the psychological incapacity to the other as long as the imputation is fully
substantiated with proof. Indeed, psychological incapacity may exist in one party
alone or in both of them, and if psychological incapacity of either or both is
established, the marriage has to be deemed null and void.
22

ROBERT F. MALLILIN vs. LUZ G. JAMESOLAMIN AND THE REPUBLIC OF THE

PHILIPPINES, G.R. No. 192718, February 18, 2015, J. Mendoza
The alleged failure of Luz to assume her duties as a wife and as a mother, as well as
her emotional immaturity, irresponsibility and infidelity, cannot rise to the level of
psychological incapacity that justifies the nullification of the parties' marriage.
Psychological incapacity as required by Article 36 must be characterized by (a)
gravity, (b) juridical antecedence and (c) incurability. The 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. The decision of the NAMT, however, 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.

Republic of the Philippines vs. Court of Appeals and M olina, 268

SCRA 198, 212 (1997)
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.
Republic vs. Quintero-Hamano, 428 SCRA 735 (2004).
According to the appellate court, the requirements in Molina and Santos
do not apply here because the present case involves a mixed marriage,
the husband being a Japanese national. The court held that in proving
psychological incapacity, we find no distinction between an alien spouse
and a Filipino spouse.
Failure to comply with the Essential M arital Obligations
Chi M ing Tsoi vs CA, 266 SCRA 324 (1997)
In this case, there was no sexual contact between the parties since their
marriage on May 22, 1988 up to Mar. 15, 1989 or for almost a year. The
senseless and protracted refusal of one of the parties of sexual
cooperation for the procreation of children is equivalent to psychological
incapacity.

23

Marable v. M arable G.R. NO. 178741, Jan. 17, 2011 639 SCRA 557

The appellate court correctly ruled that the report of Dr. Tayag failed to
explain the root cause of petitioners alleged psychological incapacity.
The evaluation of Dr. Tayag merely made a general conclusion that
petitioner is suffering from an Anti-social Personality Disorder but there
was no factual basis stated for the finding that petitioner is a socially
deviant person, rebellious, impulsive, self-centered and deceitful.

Ochosa v. Alano, G.R. NO. 167459 , Jan. 26, 2011 640 SCRA 517
In this case the court proved that respondent was the sex partner of
many military officials. In view of the foregoing, the badges of Bona s
alleged psychological incapacity, i.e., her sexual infidelity and
abandonment, can only be convincingly traced to the period of time after
her marriage to Jose and not to the inception of the said marriage.
Yambao v. REP., G.R. NO. 184063 , Jan. 24, 2011 640 SCRA 355
Article 36 contemplates incapacity or inability to take cognizance of
and to assume basic marital obligations and not merely difficulty,
refusal, or neglect in the performance of marital obligations or ill will.
Rep. v. Galang G.R. NO. 168335 , Jun. 6, 2011 650 SCRA 524
In like manner, Juvys acts of falsifying the respondents signature to
encash a check, of stealing the respondents ATM, and of squandering a
huge portion of the P15,000.00 that the respondent entrusted to her,
while no doubt reprehensible, cannot automatically be equated with a
psychological disorder, especially when the evidence shows that these
were mere isolated incidents and not recurring acts.

Aurelio v. Aurelio, G.R. NO. 175367 , Jun. 6, 2011 650 SCRA 561
Whether or not a petition for nullity of marriage on the ground of
psychological incapacity may be dismiss for failure to comply with the
guidelines set forth in the Molina Ruling. Let it be remembered that each
case involving the application of Article 36 must be treated distinctly and
judged not on the basis of a priori assumptions, predilections or
generalizations but according to its own attendant facts.
Kalaw v. Fernandez, G.R. NO. 166357 , Sept 19, 2011 657 SCRA 822

24

He presented the testimonies of two supposed expert witnesses who

concluded that respondent is psychologically incapacitated, but the
conclusions of these witnesses were premised on the alleged acts or
behavior of respondent which had not been sufficiently proven. Sexual
infidelity per se is a G.R.ound for legal separation, but it does not
necessarily constitute psychological incapacity.
Toring v. Toring, G.R. NO. 165321 , Aug. 03, 2010 626 SCRA 389
We are in no way convinced that a mere narration of the statements of
Ricardo and Richardson, coupled with the results of the psychological
tests administered only on Ricardo, without more, already constitutes
sufficient basis for the conclusion that Teresita suffered from Narcissistic
Personality Disorder. This Court has long been negatively critical in
considering psychological evaluations, presented in evidence, derived
solely from one-sided sources, particularly from the spouse seeking the
nullity of the marriage.
Baccay v. Baccay, G.R. No 173138 , Dec, 1, 2010 636 SCRA 350
In this case, the totality of evidence presented by Noel was not sufficient
to sustain a finding that Maribel was psychologically incapacitated.
Noels evidence merely established that Maribel refused to have sexual
intercourse with him after their marriage, and that she left him after
their quarrel when he confronted her about her alleged miscarriage.

Agraviador v. Agraviador G.R.NO.170729 , Dec. 08, 2010 637 SCRA

519
In the present case, the petitioners testimony failed to establish that the
respondents condition is a manifestation of a disordered personality
rooted on some incapacitating or debilitating psychological condition that
makes her completely unable to discharge the essential marital
obligations. If at all, the petitioner merely showed that the respondent
had some personality defects that showed their manifestation during the
marriage; his testimony sorely lacked details necessary to establish that
the respondents defects existed at the inception of the marriage.

Mendoza v. Republic, G.R. NO. 157649,Nov 12, 2012 685 SCRA 16

Here, the experts testimony on Dominics psychological profile did not
identify, much less prove, the root cause of his psychological incapacity
because said expert did not examine Dominic in person before
completing her report but simply relied on other peoples recollection and
25

opinion for that purpose. Expert e vidence submitted here did not
establish the precise cause of the supposed psychological incapacity of
Dominic, much less show that the psychological incapacity existed at the
inception of the marriage.
Republic v. Encelan, G.R. NO. 170022 , Jan. 9, 2013 688 SCRA 215
In any event, sexual infidelity and abandonment of the conjugal dwelling,
even if true, do not necessarily constitute psychological incapacity; these
are simply grounds for legal separation. To constitute psychological
incapacity, it must be shown that the unfaithfulness and abandonment
are manifestations of a disordered personality that completely prevented
the erring spouse from discharging the essential marital obligations.
Evidentiary requirement
GLENN VIAS vs. MARY GRACE PAREL-VIAS, G.R. No. 208790, January 21,
2015, J. Reyes
The lack of personal examination or assessment by a psychologist or psychiatrist is
not necessarily fatal in a petition for the declaration of nullity of marriage. If the
totality of evidence presented is enough to sustain a finding of psychological
incapacity, then actual medical examination of the person concerned need not be
resorted to. In the case at bar, the assessment of the psychological incapacity of the
wife was based solely on the information provided by the husband whose bias in
favor of his cause cannot be doubted. While this circumstance alone does not
disqualify the psychologist for reasons of bias, her report, testimony and
conclusions deserve the application of a more rigid and stringent set of standards.
Hence, if the totality of the evidence presented provides inadequate basis to warrant
the conclusion that a psychological incapacity existed that prevented her from
complying with the essential obligations of marriage, the declaration of the nullity of
the marriage cannot be obtained. It has been settled that irreconcilable differences,
sexual infidelity or perversion, emotional immaturity and irresponsibility, and the
like, do not by themselves warrant a finding of psychological incapacity under
Article 36, as the same may only be due to a person s refusal or unwillingness to
assume the essential obligations of marriage and not due to some psychological
illness that is contemplated by said rule.

Marcos vs M arcos, 343 SCRA 755 (2000)

If the totality of evidence presented is enough to sustain a finding of
psychological incapacity, then actual medical examination of the person
concerned need not be resorted to.
Award of M oral Damages
26

Buenaventura vs CA, 454 SCRA 261 (2005)

By declaring the petitioner as psychologically incapacitated, the
possibility of awarding moral damages on the same set of facts was
negated.
The award of moral damages should be predicated, not on the mere act
of entering into the marriage, but on specific evidence that it was done
deliberately and with malice by a party who had knowledge of his or her
disability and yet willfully concealed the same.
Prescription
Nial v. Bayadog G.R. NO. 133778=, M ar. 14, 2000 328 SCRA 122
The action or defense for nullity is imprescriptible, unlike voidable
marriages where the action prescribes. Only the parties to a voidable
marriage can assail it but any proper interested party may attack a void
marriage.
Declaration of Nullity; Art.40; Prejudicial Question- Section 7, Rule
117, 2000 Rules of Criminal Procedure; Arts.35 (4) & 41, FC; Art.349
RPC; Civil & Criminal Bigamy; Art. 83, NCC
Judicial Declaration of nullity of marriages

Ablaza v. Republic, G.R. NO. 158298 , Aug. 11, 2010 628 SCRA 27
Other than for purposes of remarriage, no judicial action is necessary to
declare a marriage an absolute nullity. For other purposes, such as but
not limited to determination of heirship, legitimacy or illegitimacy of a
child, settlement of estate, dissolution of property regime, or a criminal
case for that matter, the court may pass upon the validity of marriage
even in a suit not directly instituted to question the same so long as it is
essential to the determination of the case.
Atienza vs. Brillantes, Jr., 243 SCRA 32,35 (1995)
Article 40 is applicable to remarriages entered into after the effectivity of
the Family Code on August 3, 1988 regardless of the date of the first
marriage.
Mercado vs. Tan, 337 SCRA 122 (2000)

27

A judicial declaration of nullity of a previous marriage is necessary before

a subsequent one can be legally contracted and that one who enters into
a subsequent marriage without first obtaining such judicial declaration
is guilty of bigamy.
Morigo v. People, G.R. NO. 145226, Feb. 06, 2004 422 SCRA 376
The existence and the validity of the first marriage being an essential
element of the crime of bigamy, it is but logical that a conviction for said
offense cannot be sustained where there is no first marriage to speak of.
Jarillo v.People, G.R. NO.164435 , Sept. 29, 2009 601 SCRA 236
Whether or not the declaration of the first marriage as void ab initio on
the ground of psychological incapacity is a defense for the crime of
bigamy. In this case, even if petitioner eventually obtained a declaration
that his first marriage was void ab initio, the point is, both the first and
the second marriage were subsisting before the first marriage was
annulled.
Tenebro v. CA, G.R. NO. 150758 , Feb. 18, 2004 423 SCRA 272
Whether or not, the nullity of the second marriage on the G.R.ound of PI
is a valid defense for the crime of bigamy. The declaration of the nullity of
the second marriage on the ground of psychological incapacity is not an
indicator that petitioners marriage to Ancajas lacks the essential
requisites for validity.
Antone v. Beronilla, G.R. NO.183824, Dec. 08, 2010 637 SCRA 615
To conclude, the issue on the declaration of nullity of the marriage
between petitioner and respondent only after the latter contracted the
subsequent marriage is, therefore, immaterial for the purpose of
establishing that the facts alleged in the information for Bigamy does not
constitute an offense. Following the same rationale, neither may such
defense be interposed by the respondent in his motion to quash by way
of exception to the established rule that facts contrary to the allegations
in the information are matters of defense which may be raised only
during the presentation of evidence.
Teves v. People, G.R. NO. 188775 , Aug 24, 2011 656 SCRA 307
The crime of bigamy was committed by petitioner on 10 December 2001
when he contracted a second marriage with Edita. The finality on 27
June 2006 of the judicial declaration of the nullity of his previous
marriage to Thelma cannot be made to retroact to the date of the
bigamous marriage.
28

Nollora v. People, G.R. NO.191425 , Sept. 7, 2011 657 SCRA 330

Indeed, Article 13(2) of the Code of Muslim Personal Laws states that
"[i]n case of a marriage between a Muslim and a non-Muslim, solemnized
not in accordance with Muslim law or this Code, the [Family Code of the
Philippines, or Executive Order NO. 209, in lieu of the Civil Code of the
Philippines] shall apply." Thus, regardless of his professed religion,
Nollora cannot claim exemption from liability for the crime of bigamy.
Villatuya v. Tabalingcos, A.C. NO. 6622 , July 10, 2012 676 SCRA 37
Respondent exhibited a deplorable lack of that deG.R.ee of morality
required of him as a member of the bar. He made a mockery of marriage,
a sacred institution demanding respect and dignity.

Subsequent Bigamous M arriage under art. 41

Arts. 41- 44, 49 FC; Art.83 (2) NCC;
Judicial Declaration of Presumptive Death
Armas v. Calisterio, G.R. NO.136467, Apr. 06, 2000 330 SCRA 201
Whether or not, the rule under the FC, that a judicial declaration of
presumptive death of the absent spouse is necessary before the present
spouse can remarry, has a retroactive effect. A judicial declaration of
absence of the absentee spouse is not necessary as long as the
prescribed period of absence is met. It is equally noteworthy that the
marriage in these exceptional cases are, by the explicit mandate of Article
83, to be deemed valid "until declared null and void by a competent
court."
Requisites for declaration of presumptive Death
Rep. v. Nolasco, G.R. NO. 94053 , M ar. 17, 1993 220 SCRA 20
In the case at bar, the Court considers that the investigation allegedly
conducted by respondent in his attempt to ascertain Janet Monica
Parker's whereabouts is too sketchy to form the basis of a reasonable or
well-founded belief that she was already dead. When he arrived in San
Jose, Antique after learning of Janet Monica's departure, instead of
seeking the help of local authorities or of the British Embassy, he
secured another seaman's contract and went to London, a vast city of
many millions of inhabitants, to look for her there.
Retroactive application of Art. 41
Valdez v. Republic, G.R. NO.180863 , Sept. 08, 2009 598 SCRA 646

29

Since death is presumed to have taken place by the seventh year of

absence, Sofio is to be presumed dead starting October 1982. To
retroactively apply the provisions of the Family Code requiring petitioner
to exhibit "well-founded belief" will, ultimately, result in the invalidation
of her second marriage, which was valid at the time it was celebrated.
Effects of Declaration of Presumptive Death
Effects of Recording of Affidavit of Reapperance
Procedural rules of declaration of Presumptive Death
The proper remedy for a judicial declaration of presumptive death obtained by
extrinsic fraud is an action to annul the judgment. An affidavit of reappearance is
not the proper remedy when the person declared presumptively dead has never
been absent. CELERINA J. SANTOS vs. RICARDO T. SANTOS, G.R. No. 187061,
October 08, 2014, J. Leonen

Rep. v. Tango, G.R. NO.161062 , Jul. 31, 2009 594 SCRA 560
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
Navarro v. Domogtoy, A.M . NO.M TJ-96-1088, Jul. 19, 1996 259
SCRA 129
Even if the spouse present has a well-founded belief that the absent
spouse was already dead, a summary proceeding for the declaration of
presumptive death is necessary in order to contract a subsequent
marriage, a mandatory requirement which has been precisely
incorporated into the Family Code to discourage subsequent marriages
where it is not proven that the previous marriage has been dissolved or a
missing spouse is factually or presumptively dead, in accordance with
pertinent provisions of law.
Rep. v. Bermudez-Lorino, G.R. NO. 160258 , Jan. 19, 2005 449
SCRA 57
Although the result of the Court of Appeals denial of the appeal would
apparently be the same, there is a big difference between having the
supposed appeal dismissed for lack of jurisdiction by virtue of the fact
that the RTC decision sought to be appealed is immediately final and
executory, and the denial of the appeal for lack of merit. In the former,
the supposed appellee can immediately ask for the issuance of an Entry
30

of Judgment in the RTC, whereas, in the latter, the appellant can still
raise the matter to this Court on petition for review and the RTC
judgment cannot be executed until this Court makes the final
pronouncement.
Rep. v. Granada, G.R. NO. 187512, June 13, 2012 672 SCRA 432
As a matter of course, it follows that no appeal can be had of the trial
court's 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.
Terminable M arriage; Art. 43 44 FC
Effects of termination of subsequent marriage
Effects of Bad Faith
Armas v. Calisterio, G.R. NO.136467, Apr. 06, 2000 330 SCRA 201
Bad faith imports a dishonest purpose or some moral obliquity and
conscious doing of wrong it partakes of the nature of fraud, a breach of a
known duty through some motive of interest or ill-will.
Voidable M arriages; Art. 45- 49 FC
Definition
Suntay vs. Cojuangco-Suntay, 300 SCRA 760, 771 (1998)
A voidable marriage is considered valid and produces all its civil effects
until it is set aside by final judgment of a competent court in an action
for annulment. The terms annul and null and void have different legal
connotations and implications. Annul means to reduce to nothing; to
nullify; to abolish; to do away with; whereas, null and void is something
that does not exist from the beginning.
Characteristics of Voidable M arriages
Proper party to file annulment of M arriage
G.R.ounds
Ratification and prescription
Procedural rules of annulment of marriage and declaration of nullity
31

Tuazon vs. Court of Appeals, 256 SCRA 158 (1996)

The prosecuting attorney or fiscal may oppose the application for legal
separation or annulment (or declaration of nullity of marriages) through
the presentation of his own e vidence, if in his opinion, the proof adduced
is dubious and fabricated.
Effects of judicial declaration of nullity of M arriage ; Art. 50-54
Title II. LEGAL SEPARATION (Articles 55-67)
Concept
Distinction of annulment and absolute divorce
Grounds
Ong v. Ong, G.R. NO. 153206 , Oct. 23, 2006 505 SCRA 76
Also without merit is the argument of William that since Lucita has
abandoned the family, a decree of legal separation should not be granted,
following Art. 56, par. (4) of the Family Code which provides that legal
separation shall be denied when both parties have given ground for legal
separation. The abandonment referred to by the Family Code is
abandonment without justifiable cause for more than one year.
De facto Separation vs. Legal Separation,Article 63
Manzano vs. Sanchez, A.M . NO.00-1329, M ar. 08, 2001 354 SCRA 1
The fact that Manzano and Payao had been living apart from their
respective spouses for a long time already is immaterial. Article 63(1) of
the Family Code allows spouses who have obtained a decree of legal
separation to live separately from each other, but in such a case the
marriage bonds are not severed.
SSS v. Aguas, G.R. NO. 165546 , Feb. 27, 2006 483 SCRA 383
On the claims of Rosanna, it bears stressing that for her to qualify as a
primary beneficiary, she must prove that she was "the legitimate spouse
dependent for support from the employee, whether one is actually
dependent for support upon the other is something that has to be shown;
it cannot be presumed from the fact of marriage alone. The obvious
conclusion then is that a wife who is already separated de facto from her
husband cannot be said to be "dependent for support" upon the
husband, absent any showing to the contrary.
Defenses in Legal Separation Art. 56- 57
32

Cooling off period; Art. 58 59

Pacete vs. Carriaga, Jr., G.R. NO. L-53880, M arch 17, 1994.
In this interim, the court should take steps toward getting the parties to
reconcile.
Somosa-Ramos vs. Vamenta, Jr., G.R. NO. L-34132, July 29,1972
During this period, the court where the action is pending shall remain
passive and is precluded from hearing the suit.
Rule of Procedure on Legal Separation (A.M . NO. 02-11-11 SC);
Rule on Provisional Orders (AM 02-11-12 SC);
Baez vs. Baez, G.R. NO. 132592 , Jan. 23, 2002 374 SCRA 340
The effects of legal separation, such as entitlement to live separately,
dissolution and liquidation of the absolute community or conjugal
partnership, and custody of the minor children, follow from the decree of
legal separation. They are not separate or distinct matters that may be
resolved by the court and become final prior to or apart from the decree
of legal separation.
Pacete vs. Carriaga, G.R. NO. 53880, M ar. 17, 1994 231 SCRA 321
Whether or not, the order declaring in default a respondent in a legal
separation case amounts to grave abuse of discretion. In case of nonappearance of the defendant, the court shall order the prosecuting
attorney to inquire whether or not a collusion between the parties exists.
If there is no collusion, the prosecuting attorney shall intervene for the
State in order to take care that the evidence for the plaintiff is not
fabricated.
Quiao vs. Quiao, G.R. NO.176556 , July 4, 2012 675 SCRA 642
When the trial court issued its order dated November 8, 2006, it held
that although the Decision dated October 10, 2005 has become final and
executory, it may still consider the Motion for Clarification because the
petitioner simply wanted to clarify the meaning of "net profit earned."

Title III. RIGHTS AND OBLIGATIONS BETWEEN HUSBAND & W IFE

(Arts 68-73)
Ilusorio v. Bildner, G.R. NO. 139789 , M ay 12, 200 332 SCRA 169
33

Marital rights including coverture and living in conjugal dwelling may not
be enforced by the extra-ordinary writ of habeas corpus. With his full
mental capacity coupled with the right of choice, Potenciano Ilusorio may
not be the subject of visitation rights against his free choice. Otherwise,
we will deprive him of his right to privacy.
Go vs. CA G.R. NO.114791, M ay 29, 1997 272 SCRA 752
Under Article 117 of the Civil Code (now Article 73 of the Family Code),
the wife may exercise any profession, occupation or engage in business
without the consent of the husband. In the instant case, we are
convinced that it was only petitioner Nancy Go who entered into the
contract with private respondent.
Family expenses and management of the household
TITLE IV. PROPERTY RELATIONS BET. HUSBAND & W IFE (Articles
74- 148)
CHAPTER 1. GENERAL PROVISIONS;
(Articles 74-81, FC; Art. 119, NCC)

Pre-nuptial

Agreement;

Concept
Property regime by default
Marriage settlement
Parties to M arriage settlement
Laws governing Property Relations
CHAPTER 2. DONATIONS BY REASON OF M ARRIAGE (Articles 82 87)
Donation Propter Nuptias
Serrano vs. Solomon, G.R. NO. L-12093, June 29, 1959
The following donations are not donations propter nuptias: (1) those made
in favor of the spouses after the celebration of marriage; (2) those
executed in favor of the future spouses but not in consideration of the
marriage; and (3) those Ggranted to persons other than the spouses even
though they may be founded on the marriage
Rules governing Donation propter nuptias
Heirs of Segunda M aningding vs. CA, 276 SCRA 601 (1997)

34

Even if the donation proper nuptias is void for failure to comply with
formal requisites, it could still constitute as legal basis for adverse
possession.
Valencia v. Locquiao, G.R. NO. 122134, Oct. 3, 200 412 SCRA 600
Under the Old Civil Code, donations propter nuptias must be made in a
public instrument in which the property donated must be specifically
described. However, Article 1330 of the same Code provides that
"acceptance is not necessary to the validity of such gifts". In
other words, the celebration of the marriage between the beneficiary
couple, in tandem with compliance with the prescribed form, was enough
to effectuate the donation propter nuptias under the Old Civil Code.
Donation between the parties
Donation of future properties
Revocation of Donation Propter Nuptias
Donation between Spouses
Agapay vs. Palang, G.R. NO. 116668 , Jul. 28, 1997 276 SCRA 340
Article 87 of the Family Code expressly provides that the prohibition
against donations between spouses now applies to donations between
persons living together as husband and wife without a valid marriage, for
otherwise, the condition of those who incurred guilt would turn out to be
better than those in legal union.
Arcaba vs. Batocael, G.R. NO.146683 , Nov.22, 2001 370 SCRA 414
Respondents having proven by a preponderance of evidence that Cirila
and Francisco lived together as husband and wife without a valid
marriage, the inescapable conclusion is that the donation made by
Francisco in favor of Cirila is void under Art. 87 of the Family Code.
CHAPTER 3. SYSTEM OF ABSOLUTE COMMUNITY (Articles 88-104);
R.A. 8369
Section 1. General Provisions (Articles 88-90)
Section 2. W hat constitutes Community Property (Articles 91-93)
Section 3. Charges Upon & Obligations of the Absolute Community
(Articles 94-95)

35

Section 4. Ownership, Administration, Enjoyment & Disposition of

the Community Property (Articles 96-98)
Section 5. Dissolution of Absolute Community Regime (Arts 99-101)
Section 6. Liquidation of the Absolute Community Assets &
Liabilities (Arts 102-104); Succession; Probate;
Sec. 3, Rule 87
Rules governing ACP
Commencement of the ACP
Prohibition on waiver of Rights, Interest, Shares and Effects
Abalos vs M acatangay Jr., 439 SCRA 649, 662-663 (2004).
Prior to the liquidation of the conjugal partnership, the interest of each
spouse in the conjugal assets is inchoate, a mere expectancy, which
constitutes neither a legal nor an equitable estate, and does not ripen
into title until it appears that there are assets in the community as a
result of the liquidation and settlement. The interest of each spouse is
limited to the net remainder or remanente liquido (haber ganancial)
resulting from the liquidation of the affairs of the partnership after its
dissolution.
CHAPTER 3. SYSTEM OF ABSOLUTE COMMUNITY (Articles 88-104);
R.A. 8369
Section 1. General Provisions (Articles 88-90)
Section 2. W hat constitutes Community Property (Articles 91-93)
Section 3. Charges Upon & Obligations of the Absolute Community
(Articles 94-95)
Section 4. Ownership, Administration, Enjoyment & Disposition of
the Community Property (Articles 96-98)
Section 5. Dissolution of Absolute Community Regime (Arts 99 -101)
Section 6. Liquidation of the Absolute Community Assets &
Liabilities (Arts 102-104); Succession; Probate;
Sec. 3, Rule 87

36

Concept
Homeowners Savings & Loan Bank vs. Dailo, 453 SCRA 283, 290
(2005)
The regime of conjugal partnership of gains is a special type of
partnership, where the husband and wife place in a common fund the
proceeds, products, fruits and income from their separate properties and
those acquired by either or both spouses through their efforts or by
chance.
Rules governing CPG
Commencement of CPG
Prohibition on waiver of Rights, Interest, Shares and Effects
Quiao vs. Quiao G.R. NO. 176556 , July 4, 2012 675 SCRA 642
In this provision, net profits "shall be the increase in value between the
market value of the community property at the time of the celebration of
the marriage and the market value at the time of its dissolution."

General Provisions
FRANCISCO LIM vs. EQUITABLE PCI BANK, now known as the BANCO DE ORO
UNIBANK INC., January 15, 2014, J. del Castillo
All property of the marriage is presumed to be conjugal, unless it is shown that it is
owned exclusively by the husband or the wife; that this presumption is not
overcome by the fact that the property is registered in the name of the husband or
the wife alone 2and that the consent of both spouses is required before a conjugal
property may be mortgaged. However, we find it iniquitous to apply the foregoing
presumption especially since the nature of the mortgaged property was never
raised as an issue before the RTC, the CA, and even before this Court. In fact,
petitioner never alleged in his Complaint that the said property was conjugal in
nature.
PHILIPPINE NATIONAL BANK v JOSE GARCIA and CHILDREN NORA GARCIA,
JOSE GARCIA, JR., BOBBY GARCIA and JIMMY GARCIA and HEIRS OF ROGELIO
GARCIA NAMELY: CELEDONIO GARCIA, DANILO GARCIA, ELSA GARCIA, FERMIN
GARCIA, HEHERSON GARCIA, GREGORIO GARCIA, IMELDA GARCIA and JANE
GARCIA, G.R No. 182839, June 2, 2014 J. BRION

37

Registration of a property alone in the name of one spo use does not destroy its
conjugal nature. What is material is the time when the property was acquired. The
registration of the property is not conclusive evidence of the exclusive ownership of
the husband or the wife. Although the property appears to be registered in the name
of the husband, it has the inherent character of conjugal property if it was acquired
for valuable consideration during marriage. In order to rebut the presumptive
conjugal nature of the property, the petitioner must present strong, clear and
convincing evidence of exclusive ownership of one of the spouses. The burden of
proving that the property belongs exclusively to the wife or to the husband rests
upon the party asserting it.
Dewara v. Lamela G.R. NO. 179010, Apr. 11, 2011 647 SCR A 483
All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the
husband or to the wife. Registration in the name of the husband or the
wife alone does not destroy this presumption.
De Leon v. De Leon G.R. NO. 185063 , Jul. 23, 2009 593 SCRA 768
In the case at bar, ownership over what was once a PHHC lot and
covered by the PHHC-Bonifacio Conditional Contract to Sell was only
transferred during the marriage of Bonifacio and Anita. Evidently, title to
the property in question only passed to Bonifacio after he had fully paid
the purchase price on June 22, 1970.
Section 2. Exclusive Property of Each Spouse (Articles 109-115)
Villegas v. Lingan G.R. NO. 153839 , Jun. 29, 2007 526 SCRA 63
Consequently, as correctly held by the CA, Marilou acquired ownership
of the subject property. All rights and title of the judgment obligor are
transferred upon the expiration of the right of redemption. And where the
redemption is made under a property regime governed by the conjugal
partnership of gains, Article 109 of the Family Code provides that
property acquired by right of redemption is the exclusive property of the
spouses redeeming the property.

Section 3. Conjugal Partnership Property (Articles 116-120); Article

160 NCC
Presumption in Favor of Conjugality
Tan vs. CA, 273 SCRA 229, 236 (1997)

38

For the presumption to apply, it is not e ven necessary to prove that the
property was acquired with funds of the partnership. In fact, e ven when
the manner in which the property was acquired does not appear, the
presumption applies and it will be considered conjugal property.
Imani v. MBTC, G.R. NO.187023,Nov. 17, 2010 635 SCRA 357
The party who invokes it must first prove that the property was acquired
during the marriage. Proof of acquisition during the coverture is a
condition sine qua non to the operation of the presumption in favor of
the conjugal partnership.
Pisuea vs. Heirs of Petra Unating, G.R. NO. 132803 , Aug. 31, 1999
313 SCRA 384
The words "married to" were merely descriptive of Petra Unating's status
at the time the lot was awarded and registered in her name. Since Petra
Unating did not leave any other property, will or debt upon her demise in
1948, the property in question was thus inherited by her children, Felix
and Catalina Villar; and her husband, Aquilino Villar.
Improvement on Separate Property
Determination of Ownership
Ferrer v. Ferrer, G.R. NO.166496 , Nov. 29, 2006 508 SCRA 570
The obligation to reimburse rests on the spouse upon whom ownership
of the entire property is vested. There is no obligation on the part of the
purchaser of the property, in case the property is sold by the ownerspouse.
Section 4.Charges Upon & Oblig.of the Conjugal Partnership (Articles
121-123)
Alipio vs. Court of Appeals, G.R. NO. 134100, Sept. 29, 2000.
A creditor cannot sue the surviving spouse of a decedent in an ordinary
proceeding for the collection of a sum of money chargeable against the
conjugal partnership and that the proper remedy is for him to file a claim
in the settlement of estate of the decedent.
Homeowners Savings & Loan Bank vs. Dailo, 453 SCRA 283 (2005)

39

The burden of proof that the debt was contracted for the benefit of the
conjugal partnership of gains lies with the creditor-party litigant claiming
as such.
Ayala Investment & Development Corp. vs. Court of Appeals, 286
SCRA 272 (1998)
Where the husband contracts obligations on behalf of the family
business, the law presumes, and rightly so, that such obligation will
redound to the benefit of the conjugal partnership.
Ching vs. CA, G.R. NO. 124642 , Feb. 23, 2004 423 SCRA 356

The barefaced fact that the shares of stocks were registered in the
corporate books of Citycorp Investment Philippines solely in the name of
the petitioner-husband does not constitute proof that the petitionerhusband, not the conjugal partnership, owned the same.
Carlos vs. Abelardo, G.R. NO. 146504 , Apr. 09, 2002 380 SCRA 361
On the same principle, acknowledgment of the loan made by the
defendant-wife binds the conjugal partnership since its proceeds
redounded to the benefit of the family. Hence, defendant-husband and
defendant-wife are jointly and severally liable in the payment of the loan.

SBTC v. M ar Tierra Corp., G.R. NO. 143382 , Nov. 29, 2006 508
SCRA 419
To hold the conjugal partnership liable for an obligation pertaining to the
husband alone defeats the objective of the Civil Code to protect the
solidarity and well being of the family as a unit. The underlying concern
of the law is the conservation of the conjugal partnership. Hence, it limits
the liability of the conjugal partnership only to debts and obligations
contracted by the husband for the benefit of the conjugal partnership.
Ros v. PNB Laoag Br., G.R. NO.170166, Apr. 06, 2011 647 SCRA 334
It is enough that the benefit to the family is apparent at the signing of
the contract. From the very nature of the contract of loan or services, the
family stands to benefit from the loan facility or services to be rendered
to the business or profession of the husband.

40

Pana v. Heirs of Jose Juanite G.R. NO. 164201,Dec. 10, 2012 687
SCRA 414
Contrary to Efrens contention, Article 121 above allows payment of the
criminal indemnities imposed on his wife, Melecia, out of the partnership
assets even before these are liquidated. Indeed, it states that such
indemnities "may be enforced against the partnership assets after the
responsibilities enumerated in the preceding article have been covered."
No prior liquidation of those assets is required.

Section 5. Administration of the Conjugal Partnership Property

(Articles 124-125)
Joint Administration of CPG
Disposition or Encumbrance of CPG
Rules under the Civil Code
SERCONSISION R. MENDOZA v AURORA MENDOZA FERMIN, G.R No. 177235,
July 7, 2014. J. Peralta
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 husband s consent. The disposal by the wife of their
conjugal property without the husband s consent is voidable under Article
,
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 Leonardo died. Auroraas one of the heirs and the duly
appointed administratrix of Leonardo s 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.
SOLEDAD L. LAVADIA v HEIRS OF JUAN LUCES LUNA, represented by
GREGORIO Z. LUNA and EUGENIA ZABALLERO-LUNA, G.R No. 171914, July 23,
2014. J. BERSAMIN
Due to the second marriage between Atty. Luna and the petitioner being void ab
initio by virtue of its being bigamous, the properties acquired during the bigamous
marriage were governed by the rules on co-ownership, conformably with Article
144 of the Civil Code.

41

In such a situation, whoever alleges co-ownership carried the burden of proof to

confirm such fact. To establish co-ownership, therefore, it became imperative for the
Lavadia to offer proof of her actual contributions in the acquisition of property. Her
mere allegation of co-ownership, without sufficient and competent evidence, would
warrant no relief in her favor.

Tinitigan vs. Tinitigan, Sr., NO. L- 45418, October 30, 1980, 100
SCRA 619.
A husband may sell property belonging to the conjugal partnership even
without the consent of the wife if the sale is necessary to answer for a big
conjugal liability which might endanger the familys economic standing.
This is one instance where the wifes consent is not required and,
impliedly, no judicial intervention is necessary.
Spouses Guiang vs. Court of Appeals, G.R. No. 125172. June 26,
1998,
Under the Civil Code, the encumbrance or alienation of a conjugal real
property by the husband absent the wifes consent, is voidable and not
void.
Roxas vs. CA G.R. NO. 92245, Jun. 26, 1991 198 SCRA 541
The joinder of the wife, although unnecessary for an oral lease of
conjugal realty which does not exceed one year in duration, is required in
a lease of conjugal realty for a period of more than one year, such a lease
being considered a conveyance and encumbrance within the provisions
of the Civil Code requiring the joinder of the wife in the instrument by
which real property is conveyed or encumbered
Guiang vs. CA, G.R. NO. 125172, Jun. 26, 1998 291 SCRA 372
The sale of a conjugal property requires the consent of both the husband
and the wife. The absence of the consent of one renders the sale null and
void, while the vitiation thereof makes it merely voidable. Only in the
latter case can ratification cure the defect.
Jader-M analo vs. Camaisa, G.R. NO. 147978, Jan. 23, 2002 374
SCRA 498
Respondent Norma Camaisa admittedly did not give her written consent
to the sale. Even G.R.anting that respondent Norma actively participated
in negotiating for the sale of the subject properties, which she denied,
her written consent to the sale is required by law for its validity.
42

Significantly, petitioner herself admits that Norma refused to sign the

contracts to sell.

Rules under the Family Code

Uy vs. CA, G.R. NO. 10955, Nov. 29, 2000 346 SCRA 246
In regular manner, the rules on summary judicial proceedings under the
Family Code govern the proceedings under Article 124 of the Family
Code. The situation contemplated is one where the spouse is absent, or
separated in fact or has abandoned the other or consent is withheld or
cannot be obtained. Such rules do not apply to cases where the non consenting spouse is incapacitated or incompetent to give consent. In
this case, the trial court found that the subject spouse "is an
incompetent" who was in comatose.
Ravina v. Villa Abrille G.R. NO. 160708, Oct. 16, 2009 604 SCRA
120
Just like the rule in absolute community of property, if the husband,
without knowledge and consent of the wife, sells conjugal property, such
sale is void. If the sale was with the knowledge but without the approval
of the wife, thereby resulting in a disagreement, such sale is annullable
at the instance of the wife who is given five (5) years from the date the
contract implementing the decision of the husband to institute the case.
De la Cruz v. Segovia, G.R. NO. 149801, Jun. 26, 2008 555 SCRA
453
While Florindas husband did not affix his signature to the above mentioned Agreement, we find no ground to disturb the uniform findings
of the trial court and appellate court that Renato, by his actuations,
agreed and gave his conformity to the Agreement. As found by the courts
below, Renatos consent to the Agreement was drawn from the fact that
he was present at the time it was signed by the sisters and their
witnesses; he had knowledge of the Agreement as it was presented to him
for his signature, although he did not sign the same because his wife
Florinda insisted that her signature already carried that of her husband;
Renato witnessed the fact that Leonila contributed her hard earned
savings in the amount of P36,000.00 to complete their share in the
purchase price of the properties in question in the total amount of
P180,000.00.
Section 6. Dissolution of the Conjugal Partnership Regime (Articles
126-128)

43

After the marriage of petitioner and respondent has been declared void, petitioner
filed a complaint for the partition of the house and lot obtained by them during their
marriage. The SC ruled that what governs them is Art. 147 of the Family Code. Under
this article, 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. In the case at bar since the former spouses both agreed that they acquired
the subject property during the subsistence of their marriage, it shall be presumed
to have been obtained by their joint efforts, work or industry, thus, the property is
jointly owned by them in equal shares. MARIETTA N. BARRIDO vs. LEONARDO V.
NONATO, G.R. No. 176492, October 20, 2014, J. Peralta

MBTC v. Pascual, G.R. NO. 163744, Feb. 29, 2008 547 SCRA 246
Termination of Conjugal Property Regime does not ipso facto End the
Nature of Conjugal Ownership. While the declared nullity of marriage of
Nicholson and Florencia severed their marital bond and dissolved the
conjugal partnership, the character of the properties acquired before
such declaration continues to subsist as conjugal properties until and
after the liquidation and partition of the partnership.
Dio v. Dio, G.R. NO. 178044, Jan. 19, 2011 640 SCRA 178
The trial court erred in ordering that a decree of absolute nullity of
marriage shall be issued only after liquidation, partition and distribution
of the parties properties under Article 147 of the Family Code. The ruling
has no basis because Section 19(1) of the Rule does not apply to cases
governed under Articles 147 and 148 of the Family Code.
Espinosa v. Omaa, AC. 9081, Oct 12, 2011 659 SCRA 1
Extrajudicial dissolution of the conjugal partnership without judicial
approval is void. The Court has also ruled that a notary public should
not facilitate the disintegration of a marriage and the family by
encouraging the separation of the spouses and extrajudicially dissolving
the conjugal partnership, which is exactly what Omaa did in this case.
The "Kasunduan Ng Paghihiwalay" has no legal effect and is against
public policy.

44

Section 7. Liquidation of the Conjugal Partnership Assets &

Liabilities (Articles 129-133);
Agtarap v. Agtarap, G.R. NO. 177099, Jun. 8, 2011 651 SCRA 455
We hold that the general rule does not apply to the instant case
considering that the parties are all heirs of Joaquin and that no rights of
third parties will be impaired by the resolution of the ownership issue.
More importantly, the determination of whether the subject properties
are conjugal is but collateral to the probate courts jurisdiction to settle
the estate of Joaquin.

Go v. Servacio, G.R. NO. 157537, Sept. 7, 2011 657 SCRA 10

There being no dispute that Protacio, Sr. and Marta were married prior to
the effectivity of the Family Code on August 3, 1988, their property
relation was properly characterized as one of conjugal partnership
governed by the Civil Code. Upon Martas death in 1987, the conjugal
partnership was dissolved, pursuant to Article 175 (1) of the Civil Code,
and an implied ordinary co-ownership ensued among Protacio, Sr. and
the other heirs of Marta with respect to her share in the assets of the
conjugal partnership pending a liquidation following its liquidation.

CHAPTER 5.SEPARATION OF PROP. OF THE SPOUSES &

ADM INISTRATION OF COMMON PROPERTY BY ONE SPOUSE
DURING THE M ARRIAGE (Arts 134-142)
CHAPTER 6. REGIME OF SEPARATION OF PROPERTY (Articles 143 146)
Grounds
Voluntary Separation of Property
Maquilan v. M aquilan, G.R. NO. 155409, Jun. 08, 2007 524 SCRA
166
Under Article 143 of the Family Code, separation of property may be
effected voluntarily or for sufficient cause, subject to judicial approval.
The questioned Compromise Agreement which was judicially approved is
exactly such a separation of property allowed under the law.
Effects of Decree Granting Separation of Property

45

CHAPTER 7. PROPERTY REGIMES OF UNIONS W ITHOUT MARRIAGE

(Articles 147-148)
Valdes vs. RTC Br. 102, QC G.R. NO. 122749, Jul. 31, 1996 260
SCRA 221
Whether or not, Articles 50, 51 and 52 in relation to Articles 102 and
129 of the Family Code govern the disposition of the family dwelling in
cases where a marriage is declared void ab initio, including a marriage
declared void by reason of the psychological incapacity of the spouses.
The rules set up to govern the liquidation of either the absolute
community or the conjugal partnership of gains, the property regimes
recognized for valid and voidable marriages (in the latter case until the
contract is annulled), are irrelevant to the liquidation of the co-ownership
that exists between common-law spouses.
Mallilin, Jr. vs. Castillo, G.R. NO. 136803, Jun. 16, 2000 333 SCRA
628
The Family Code, in addition to providing that a co-ownership exists
between a man and a woman who live together as husband and wife
without the benefit of marriage, likewise provides that, if the parties are
incapacitated to marry each other, properties acquired by them through
their joint contribution of money, property or industry shall be owned by
them in common in proportion to their contributions which, in the
absence of proof to the contrary, is presumed to be equal.
Dio v. Dio, G.R. NO. 178044,Jan. 19, 2011 640 SCRA 178
Petitioners marriage to respondent was declared void under Article 36 of
the Family Code and not under Article 40 or 45. Thus, what governs the
liquidation of properties owned in common by petitioner and respondent
are the rules on co-ownership. In Valdes, the Court ruled that the
property relations of parties in a void marriage during the period of
cohabitation is governed either by Article 147 or Article 148 of the Family
Code. The rules on co-ownership apply and the properties of the spouses
should be liquidated in accordance with the Civil Code provisions on coownership. Under Article 496 of the Civil Code, partition may be made by
aG.R.eement between the parties or by judicial proceedings. It is not
necessary to liquidate the properties of the spouses in the same
proceeding for declaration of nullity of marriage.
Lacbayan v. Samoy, G.R. NO. 165427, M ar. 21, 2011 645 SCRA 677
A careful perusal of the contents of the so-called Partition AG.R.eement
indicates that the document involves matters which nece ssitate prior
settlement of questions of law, basic of which is a determination as to
46

whether the parties have the right to freely divide among themselves the
subject properties. Moreover, to follow petitioners argument would be to
allow respondent not only to admit against his own interest but that of
his legal spouse as well, who may also be lawfully entitled co-ownership
over the said properties.
Cario v. Cario, G.R. NO. 132529, Feb. 02, 2001 351 SCRA 127
As to the property regime of petitioner Susan Nicdao and the deceased,
Article 147 of the Family Code governs. This article applies to unions of
parties who are legally capacitated and not barred by any impediment to
contract marriage, but whose marriage is nonetheless void for other
reasons, like the absence of a marriage license

San Luis v. San Luis G.R. NO. 133743, Feb. 06, 2007 514 SCRA 294
In the instant case, respondent would qualify as an interested person
who has a direct interest in the estate of Felicisimo by virtue of their
cohabitation, the existence of which was not denied by petitioners. If she
proves the validity of the divorce and Felicisimos capacity to remarry,
but fails to prove that her marriage with him was validly performed
under the laws of the U.S.A., then she may be conside red as a co-owner
under Article 144 76 of the Civil Code

TITLE V. THE FAM ILY HOME

CHAPTER 1. THE FAM ILY AS AN INSTITUTION (Articles 149-151)
Tuason vs. CA, 256 SCRA 158 (1996)
Our family law is based on the policy that marriage is not a mere
contract but a social institution in which the state is vitally interested.
Hontiveros vs. RTC Iloilo City, G.R. NO. 125465, Jun. 29, 1999 309
SCRA 340
Religious relationship and relationship by affinity are not given any legal
effect in this jurisdiction. Consequently, private respondent Ayson, who
is described in the complaint as the spouse of respondent Hontiveros,
and petitioner Maria Hontiveros, who is admittedly the spouse of
petitioner Augusto Hontiveros, are considered strangers to the
Hontiveros family, for purposes of Art. 151.
Gayon v. Gayon, 36 SCRA 104 (1970)

47

The enumeration of "brothers and sisters" as member of the same family

does not comprehend "sisters-in-law." In that case, then Chief Justice
Concepcion emphasized that "sisters-in-law" (hence, also "brother-inlaw") are not listed under Art. 217 of the New Civil Code as members of
the same family.

Magbaleta vs. Gonong, 76 SCRA 511

Efforts to compromis are not a jurisdictional prerequisite for the
maintenance of an action whenever a stranger to the family is a party
thereto, whether as necessary or indispensable one.
Tiggangay v. W acas, AM OCA 09-3243, April 1, 2013 694 SCRA 264
Indeed, "there is no affinity between the blood relatives of one spouse and
the blood relatives of the other. A husband is related by affinity to his
wifes brother, but not to the wife of his wifes brother. There is no affinity
between the husbands brother and the wifes sister; this is calle d
affinitas affinitatis."
CHAPTER 2. THE FAM ILY HOME (Arts 152-162)

Taneo, Jr. vs. CA, CA, 304 SCRA 308

Family home is a real right, which is gratuitous, inalienable and free
from attachment, constituted over the dwelling place and the land on
which it is situated, which confers upon a particular family the right to
enjoy such properties, which must remain with the person constituting it
and his heirs.
Taneo vs. Court of Appeals, G.R. NO. 108562, M ar. 09, 1999 304
SCRA 308
By the very definition of the law that the family home is the dwelling
house where a person and his family resides and the land on which it is
situated, it is understood that the house should be constructed on a
land not belonging to another.

Arriola v. Arriola, G.R. NO. 177703, Jan. 28, 2008 542 SCRA 666
Furthermore, Articles 152 and 153 specifically extend the scope of the
family home not just to the dwelling structure in which the family resides
48

but also to the lot on which it stands. Thus, applying these concepts, the
subject house as well as the specific portion of the subject land on which
it stands are deemed constituted as a family home by the deceased and
petitioner Vilma from the moment they began occupying the same as a
family residence 20 years back
Modequillo vs. Breva, G.R. No. 86355, M ay 31, 1990.
There is no need to constitute the same judicially or extrajudicially as
required in the Civil Code. If the family actually resides in the premises,
it is, therefore, a family home as contemplated by law
Patricio vs. Dario, G.R. NO. 170829, November 20, 2006.
Three requisites must concur before a minor beneficiary is entitled to the
benefits of Art. 159: (1) the relationship enumerated in Art. 154 of the
Family Code; (2) they live in the family home, and (3) they are dependent
for legal support upon the head of the family.
Cabang v. Basay, G.R. NO. 180587, M ar. 20, 2009 582 SCRA 172
The family home must be established on the properties of (a) the absolute
community, or (b) the conjugal partnership, or (c) the exclusive property
of either spouse with the consent of the other. It cannot be established
on property held in co-ownership with third persons. However, it can be
established partly on community property, or conjugal property and
partly on the exclusive property of either spouse with the consent of the
latter.
Olivia De M esa v. Acero, G.R. NO. 185064 Jan. 16, 2012 663 SCRA
40
The family homes exemption from execution must be set up and proved
to the Sheriff before the sale of the property at public auction. The
petitioners now are barred from raising the same. Failure to do so estop
them from later claiming the said exemption.
Manacop vs. CA, 277 SCRA 57 (1997)
Articles 152 and 153 of the Family Code do not have a retroactive effect
such that all existing family residences are deemed to have been
constituted as family homes at the time of their occupation prior to the
effectivity of the Family Code and are exempt from execution for the
payment of obligations incurred before the effectivity of the Family Code.

49

TITLE VI. PATERNITY & FILIATION

Chapter I Legitimate Children
Types of Filiation
Status of Children
Distinction between Paternity and Filiation
Laws governing Paternity and Filiation
Presumption of Legitimacy
How to impugn Childs Legitimacy

Benitez-Badua vs. CA G.R. NO. 105625, Jan. 24, 1994 229 SCRA 468
Article 170 of the Family Code is inapplicable to this case because this is
not an action to impugn the legitimacy of a child, but an action of the
private respondents to claim their inheritance as legal heirs of their
childless deceased aunt. They do not claim that petitioner Violeta
Cabatbat Lim is an illegitimate child of the deceased, but that she is not
the decedent's child at all.
Liyao vs. Tanhoti-Liyao,G.R. NO. 138961, M ar. 07, 2002 378 SCRA
563
The grounds for impugning the legitimacy of the child mentioned in
Article 255 of the Civil Code may only be invoked by the husband, or in
proper cases, his heirs under the conditions set forth under Article 262
of the Civil Code.
Labagla vs. Santiago, G.R. NO. 132305, Dec. 04, 2001 371 SCRA 360
A baptismal certificate, a private document, is not conclusive proof of
filiation. More so are the entries made in an income tax return, which
only shows that income tax has been paid and the amount thereof.
Macadangdang vs. Court of Appeals, 100 SCRA 73
In this case the husband and the wife continued to live in the same
province after their alleged separation, the Court did not discount the
possibility of physical access to each other considering their proximity to
50

each other and considering further that the wife still visited and
recuperated in her mothers house where her spouse resided with their
children.
Andal vs. M acaraig, 89 Phil 165
The court held that just because tuberculosis is advanced in a man does
not necessarily mean that he is incapable of sexual intercourse. There
are cases where persons suffering from tuberculosis can do the carnal
act even in the most crucial stage of health because then they seemed to
be more inclined to sexual intercourse.
Tison vs CA, 276 SCRA 582 (1997)
The issue of legitimacy cannot be attacked collaterally.
CHAPTER 2. PROOF OF FILIATION (Articles 172-174)
RODOLFO S. AGUILAR vs. EDNA G. SIASAT, G.R. No. 200169, January 28, 2015, J.
Del Castillo
The filiation of illegitimate children, like legitimate children, is established by (1) the
record of birth appearing in the civil register or a final judgment; or (2) an
admission of legitimate filiation in a public document or a private handwritten
instrument and signed by the parent concerned. In the absence thereof, filiation
shall be proved by (1) the open and continuous po ssession of the status of a
legitimate child; or (2) any other means allowed by the Rules of Court and special
laws. The due recognition of an illegitimate child in a record of birth, a will, a
statement before a court of record, or in any authentic writing is, in itself, a
consummated act of acknowledgment of the child, and no further court action is
required. In fact, any authentic writing is treated not just a ground for compulsory
recognition; it is in itself a voluntary recognition that does not require a separate
action for judicial approval.
It must be concluded that Rodolfo who was born during the marriage of Alfredo
Aguilar and Candelaria Siasat-Aguilar and before their respective deaths has
sufficiently proved that he is the legitimate issue of the Aguilar spouses. He
correctly argues, Alfredo Aguilar s SSS satisfies the requirement for proof of filiation
and relationship to the Aguilar spouses under Article 172 of the Family Code; by
itself, said document constitutes an admission of legitimate filiation in a public
document or a private handwritten instrument and signed by the parent
concerned.
51

Solinap vs. Locsin Jr. G.R. NO. 146737 , Dec. 10, 2001 371 SCRA
711
Whether or not the certificate of live birth (Exhibit D) as presented by the
respondent, including the photograph showing that he and his mother
attended the deceased funeral, is sufficient to proof filiation of the
petitioner to the deceased. A birth certificate offers only prima facie
evidence of filiation and may be refuted by contrary evidence.
Verceles v. Posada, G.R. NO.159785, Apr. 27, 2007 522 SCRA 518
The court held that the due recognition of an illegitimate child in a record
of birth, a will, a statement before a court of record, or in any authentic
writing is, in itself, a consummated act of acknowledgement of the child,
and no further court action is required
De Asis vs CA, 303 SCRA 176
Paternity or filiation, or the lack of it, is a relationship that must be
judicially established and it is for the court to declare its existence or
absence.
Lucas v. Lucas, G.R. NO. 190710, Jun. 6, 2011 650 SCRA 667
Although a paternity action is civil, not criminal, the constitutional
prohibition against unreasonable searches and seizures is still
applicable, and a proper showing of sufficient justification under the
particular factual circumstances of the case must be made before a court
may order a compulsory blood test.
Rodriguez vs. CA, G.R. NO. 85723, Jun. 19, 1995 245 SCRA 150
When a recognition has been made by one parent, the name of the other
parent may be revealed in an action by the child to compel such other
parent to recognize him also.
Heirs of Cabais vs. CA, G.R. NO. 106314-15,Oct. 08, 1999 316 SCRA
338
A baptismal certificate, a private document, which, being hearsay, is not
a conclusive proof of filiation.

Cenido vs. Apacionado, G.R .NO. 132474, Nov. 19, 1999 318 SCRA
688
Under the law, this statement must be made personally by the parent
himself or herself, not by any brother, sister or relative; after all, the
52

concept of recognition speaks of a voluntary declaration by the parent, or

if the parent refuses, by judicial authority, to establish the paternity or
maternity of children born outside wedlock.

Tayag v. Tayag-Gallor, G.R. NO. 174680, M ar. 24, 2008 549 SCRA 68
Petitioner, however, overlooks the fact that respondents successional
rights may be established not just by a judicial action to compel
recognition but also by proof that she had been voluntarily acknowledged
and recognized as an illegitimate child. Respondent in this case had not
been given the opportunity to present evidence to show whether she had
been voluntarily recognized and acknowledged by her deceased father
because of petitioners opposition to her petition and motion for hearing
on affirmative defenses.

Puno v. Puno Ent. Inc., G.R. NO. 177066, Sept. 11, 2009 599 SCRA
585
A certificate of live birth purportedly identifying the putative father is not
competent evidence of paternity when there is no showing that the
putative father had a hand in the preparation of the certificate. The local
civil registrar has no authority to record the paternity of an illegitimate
child on the information of a third person.

Gotardo v. Buling, G.R. NO. 165166, Aug. 15, 2012 678 SCRA 436
We have held that such other proof of one's filiation may be a "baptismal
certificate, a judicial admission, a family bible in which [his] name has
been entered, common reputation respecting his pediG.R.ee, admission
by silence, the testimonies of witnesses, and other kinds of proof
admissible under Rule 130 of the Rules of Court." In this case, the
respondent established a prima facie case that the petitioner is the
putative father of Gliffze through testimony that she had been sexually
involved only with one man, the petitioner, at the time of her conception.
Rodulfo corroborated her testimony that the petitioner and the
respondent had intimate relationship.

Lucas v. Lucas, G.R . NO. 190710, Jun. 6, 2011 650 SCRA 667
Although a paternity action is civil, not criminal, the constitutional
prohibition against unreasonable searches and seizures is still
53

applicable, and a proper showing of sufficient justification under the

particular factual circumstances of the case must be made before a court
may order a compulsory blood test.

CHAPTER 3. ILLEGITIM ATE CHILDREN (Articles 175-176)

Rights of Illegitimate Children
Tonog vs. CA, G.R. NO. 122906 , Feb. 07, 2002 376 SCRA 523
In the case at bar, bearing in mind that the welfare of the said minor as
the controlling factor, the appellate court did not err in allowing her
father to retain in the meantime parental custody over her. Meanwhile,
the child should not be wrenched from her familiar surroundings, and
thrust into a strange environment away from the people and places to
which she had apparently formed an attachment.

Guy v. CA, G.R. NO. 163707, Sept. 15, 2006 502 SCRA 151
It is clear therefore that the resolution of the issue of prescription
depends on the type of evidence to be adduced by private respondents in
proving their filiation. However, it would be impossible to determine the
same in this case as there has been no reception of evidence yet.

De La Cruz v. Gracia G.R. NO. 177728, Jul. 31, 2009 594 SCRA 648
Where the private handwritten instrument is the lone piece of evidence
submitted to prove filiation, there should be strict compliance with the
requirement that the same must be signed by the acknowledging parent.
Where the private handwritten instrument is accompanied by other
relevant and competent evidence, it suffices that the claim of filiation
therein be shown to have been made and handwritten by the
acknowledging parent as it is merely corroborative of such other
evidence.

Uy v. Chu, G.R. NO. 183965, Sept. 18, 2009 600 SCRA 806
It is settled, then, in law and jurisprudence, that the status and filiation
of a child cannot be compromised. Public policy demands that there be
no compromise on the status and filiation of a child. Paternity and
filiation or the lack of the same, is a relationship that must be judicially

54

established, and it is for the Court to declare its existence or absence. It

cannot be left to the will or aG.R.eement of the parties.

CHAPTER 4. LEGITIM ATED CHILDREN (Articles 177-182);

See RA 9858
Legitimation
Concept and Definition
Who can be Legitimated
Procedure and effects of Legitimation
Abadilla vs. Tabiliran, Jr. A.M NO. M TJ-92-716, Oct. 25, 1995 249
SCRA 447
Whether or not, a child born out of wedlock, by parents who have a legal
impediment to marry each other, can be legitimated. As a lawyer and a
judge, respondent ought to know that, despite his subsequent marriage
to Priscilla, these three children cannot be legitimated nor in any way be
considered legitimate since at the time they were born, there was an
existing valid marriage between respondent and his first wife, Teresita B.
Tabiliran.
TITLE VII. ADOPTION

Domestic Adoption Act of 1988 (RA 8552)

as amended by RA 9523 (M arch 2009)
A.M . NO. 02-6-02-SC - Re: Proposed Rule on Domestic Adoption
Inter country Adoption Act of 1995 (RA 8043)
Amended IRR on Inter-Country Adoption (January 8, 2004)
Definition and concept of Adoption
Domestic Adoption and Inter country Adoption
Law governing Domestic Adoption
Who are qualified to adopt and to be adopted
Effects of Adoption
Rescission of Adoption
55

Procedure under ICA and DAA

Republic vs. Vergara, G.R. NO. 95551, M ar. 20, 1997 270 SCRA 206
The law here does not provide for an alien who is married to a former
Filipino citizen seeking to adopt jointly with his or her spouse a relative
by consanguinity, as an exception to the general rule that aliens may not
adopt.
Rosalina Dye cannot, on her own, adopt her brother and sister for the
law mandates joint adoption by husband and wife, subject to exceptions.

Republic vs. M iller, G.R. NO.125932, Apr. 21, 1999 306 5CRA 183
An alien qualified to adopt under the Child and Youth Welfare Code,
which was in force at the time of the filing of the petition, acquired a
vested right which could not be affected by the subsequent enactment of
a new law disqualifying him.
Republic vs. Toledano, G.R. NO.94147, Jun. 08, 1994 233 SCRA 9
The Family Code reiterated the rule by requiring that husband and wife
"must" jointly adopt, except in the cases mentioned before. Under the
said new law, joint adoption by husband and wife is mandatory

Cang vs. CA, G.R. NO.105308, Sept. 25, 1998 296 SCRA 128
Physical estrangement alone, without financial and moral desertion, is
not tantamount to abandonment. While admittedly, petitioner was
physically absent as he was then in the United States, he was not remiss
in his natural and legal obligations of love, care and support for his
children.
In re: Adoption of M ichelle & M ichael Lim G.R. NO.168992-93, M ay
21, 2009 588 SCRA 98
The filing of a case for dissolution of the marriage between petitioner and
Olario is of no moment. It is not equivalent to a decree of dissolution of
marriage. Until and unless there is a judicial decree for the dissolution of
the marriage between petitioner and Olario, the marriage still subsists.
That being the case, joint adoption by the husband and the wife is
required.

56

Republic vs. CA & Bobiles, G.R. NO.92326, Jan. 24, 199 2 205 SCRA
356
Under the Child and Youth Welfare Code, private respondent had the
right to file a petition for adoption by herself, without joining her
husband therein. When Mrs. Bobiles filed her petition, she was
exercising her explicit and unconditional right under said law.
Lahom vs. Sibulo, G.R. NO. 143989, July 14, 2003
R.A. NO. 8552 has unqualifiedly withdrawn from an adopter a
consequential right to rescind the adoption decree even in cases where
the adoption might clearly turn out to be undesirable.
TITLE VIII. SUPPORT
Concept of Support
G.R.ounds for Action for Support
Right to support
Order of liability for support
Contractual support vs Legal Support
Mangonon v. CA, G.R. NO. 125041 , June.30, 2006 494 SCRA 1
The grandparents are liable to support their grandchildren if the parent
cannot give support or sufficient support.
Lim v. Lim, G.R. NO. 163209, Oct. 30, 2009 604 SCRA 691
The inability of the parents to sufficiently provide for their children shifts
a portion of their obligation to the ascendants in the nearest degree, both
in the paternal (petitioners) and maternal lines, following the ordering in
Article 199.
Gan vs. Reyes, G.R. NO.145527, M ay.28, 2002 382 SCRA 357
A judgment ordering for support is immediately executory despite
pendency of appeal.
De Asis vs. CA, G.R. NO.127578, Feb. 15, 1999 303 SCRA 176
Whether or not, a renunciation of the existence of filiation of the child
and the putative father, made by the mother, is valid. It is true that in
order to claim support, filiation and,or paternity must first be shown
between the claimant and the parent, however, paternity and filiation or
the lack of the same is a relationship that must be judicially established
and it is for the court to declare its existence or absence.

57

TITLE IX. PARENTAL AUTHORITY

CHAPTER 1. GENERAL PROVISIONS (Articles 209-215)
Concept
Effects of Parental Authority
Santos Sr. v. CA, G.R. NO. 113054, M ar. 16, 1995 242 SCRA 407
When a parent entrusts the custody of a minor to another, such as a
friend or godfather, even in a document, what is given is merely
temporary custody and it does not constitute a renunciation of parental
authority. Even if a definite renunciation is manifest, the law still
disallows the same.
Parents who exercises Parental Authority
Joint Parental Authority
Rule in case of Separation of Parents
Perez v. CA, G.R. NO. 118870, M ar. 29, 1996 255 SCRA 661
Only the most compelling of reasons shall justify the court's awarding
the custody of such a child to someone other than his mother, such as
her unfitness to exercise sole parental authority. In the past the following
grounds have been considered ample justification to deprive a mother of
custody and parental authority: neglect, abandonment, unemployment
and immorality, habitual drunkenness, drug addiction, maltreatment of
the child, insanity and being sick with a communicable disease.

Laxamana v. Laxamana, G.R. NO. 144763, Sept. 3, 2002 388 SCRA

296
It is clear that every child [has] rights which are not and should not be
dependent solely on the wishes, much less the whims and caprices, of
his parents. His welfare should not be subject to the parents' say-so or
mutual agreement alone. Where, as in this case, the parents are already
separated in fact, the courts must step in to determine in whose custody
the child can better be assured the rights granted to him by law. The
need, therefore, to present evidence regarding this matter, becomes
imperative.
Beckett v. Sarmiento, Jr. AM NO. RTJ-12-2326, Jan. 30, 2013 689
SCRA 494
In a very real sense, then, a judgment involving the custody of a minor
child cannot be accorded the force and effect of res judicata. Now to
58

another point. In disputes concerning post-separation custody over a

minor, the well-settled rule is that no child under seven (7) years of age
shall be separated from the mother, unless the court finds compelling
reasons to order otherwise.
CHAPTER 2. SUBSTITUTE & SPECIAL PARENTAL AUTHORITY (Arts
216-219)
Parental Preference Rule
Concept
Who may exercise Substitute Parental Authority
Liability of persons exercising special Parental Authority
St. M arys Academy v. Carpitanos, G.R. NO. 143363, Feb. 6, 2002
376 SCRA 473
The liability for the accident, whether caused by the negligence of the
minor driver or mechanical detachment of the steering wheel guide of the
jeep, must be pinned on the minors parents primarily. The negligence of
petitioner St. Marys Academy was only a remote cause of the accident.
CHAPTER 3. EFFECT OF PARENTAL AUTHORITY UPON THE
PERSONS OF THE CHILDREN
Right to Childs Custody
Sagala-Eslao vs. CA, 266 SCRA 317, 323 (1997).
It is a rule long accepted by the courts that the right of parents to the
custody of their minor children is one of the natural rights incident to
parenthood, a right supported by law and sound public policy.
Cang vs. CA, 296 SCRA 128 (1998).
Parental authority cannot be entrusted to a person simply because he
could give the child a larger measure of material comfort than his natural
parent.
Duty to Provide Support
BBB, vs. AAA, G.R. No. 193225, February 09, 2015, J. Reyes

59

It was improper for BBB, knowing that CCC was not his biological son, to have CCC
legitimated after the celebration of BBB and AAA s marriage. The legal process of
legitimation was trifled with when BBB voluntarily but falsely acknowledged CCC as
his son. The principle of estoppel under Article 1431 thus applies, 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 BBB s 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 father s support.
Duty of Representation

Obedencio vs. M urillo, A.M . NO. RTJ-03-1753. Feb. 5, 2004 422

SCRA 21
Licel was only 14 years old, definitely a minor, on May 22, 2001, when
she was presented before respondents sala to affirm the execution of her
affidavit of desistance. This being the case, said affidavit should have
been executed with the concurrence of her parents. Licel could not
validly give consent to an affidavit of desistance, for a minor is
incompetent to execute such an instrument.

Liability of Parents for damages caused by their minor children

CHAPTER 4. EFFECT OF PARENTAL AUTHORITY UPON THE
PROPERTY OF THE CHILDREN
(Articles 225-227)

Lindain v. CA, G.R. NO. 95305 , Aug. 20, 199 212 SCRA 725
Under the law, a parent, acting merely as the legal (as distinguished
from judicial) administrator of the property of his/her minor children,
does not have the power to dispose of, or alienate, the property of said
children without judicial approval.
Neri v. Heirs of Hadji Yusop, G.R. No 194366, Oct. 10, 2012 683
SCRA 253
Administration includes all acts for the preservation of the property and
the receipt of fruits according to the natural purpose of the thing. Any
act of disposition or alienation, or any reduction in the substance of the
patrimony of child, exceeds the limits of administration. Thus, a father or
60

mother, as the natural guardian of the minor under parental authority,

does not have the power to dispose or encumber the property of the latte r
CHAPTER 5. SUSPENSION
AUTHORITY (Arts 228-233)

OR

TERMINATION

OF

PARENTAL

G.R.ounds for termination and suspension of parental authority

Bondagjy vs. Bondagjy, G.R. NO. 140817, Dec. 07, 2001 371 SCRA
64
Indeed, what determines the fitness of any parent is the ability to see to
the physical, educational, social and moral welfare of the children, and
the ability to give them a healthy environment as well as physical and
financial support taking into consideration the respective resources and
social and moral situations of the parents.
Cang vs CA,296 SCRA 128
In reference to abandonment of a child by his parent, the act of
abandonment imports any conduct of the parent which evinces a settled
purpose to forego all parental duties and relinquish all parental claims to
the child. It means neglect or refusal to perform the natural and legal
obligations of care and support which parents owe their children.
Title X. EMANCIPATION AND AGE OF MAJORITY; See RA 6809;
2176 & 2180 NCC
Concept
Effects of Emancipation
Title XI SUMMARY JUDICIAL PROCEEDINGS IN THE FAM ILY LAW
Family Courts Act and SC AM Orders and Circulars
CHAPTER 1. SCOPE OF APPLICATION (Article 238)
CHAPTER 2. SEPARATION IN FACT BETWEEN HUSBAND AND W IFE
(Articles 239-248)
See RA 9262 (Anti Violence against W omen and Children [VAWC])
and Implementing Rules &
Regulations
CHAPTER 3. INCIDENTS
(Articles 249-252)

INVOLVING

PARENTAL

AUTHORITY

61

See RA 9262 (Anti Violence against W omen and Children [VAW C]) &
IRR
A.M . NO. 02-11-12-SC- Re: Proposed Rule on Provisional Orders
(M arch 4, 2003)
A.M . NO. 03-02-05-SC- Re: Proposed Rule on Guardianship of M inors
(April 1, 2003)
A.M . NO. 03-04-SC- Re: Proposed Rule on Custody of M inors and
Writ of
Habeas Corpus in Relation to Custody of M inors (April 30, 2003)
CHAPTER 4. OTHER MATTERS
PROCEEDINGS (Article 253)

SUBJECT

TO

SUMMARY

Uy (Jardeleza) vs. CA, G.R. NO. 109557, Nov. 29, 2000 346 SCRA
246
Rule 95 of the ROC, not the Rule on Summary Proceedings in the Family
Code, shall apply in a sale of a conjugal property where one spouse is is
an incompetent. A comatose spouse is incompetent.

Republic v. Tango, G.R. NO.161062, Jul. 31, 2009 594 SCRA 560
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.

Rep. v. Bermudez-Lorino G.R. NO. 160258 , Jan. 19, 2005 449 SCRA
5
In Summary Judicial Proceedings under the Family Code, there is no
reglementary period within which to perfect an appeal, precisely because
judgments rendered thereunder, by express provision of Section 247,
Family Code, supra, are "immediately final and executory". It was
erroneous, therefore, on the part of the RTC to give due course to the
Republics appeal and order the transmittal of the entire records of the
case to the Court of Appeals.

62

Title X. FUNERAL (Articles 305 -310, NCC)

The petitioner alleges that being a common law spouse who took care of the
deceased, she has the right to make funeral arrangements for the deceased. The
Supreme Court ruled that the duty and the right to make funeral arrangements are
confined within the family of the deceased particularly the spouse of the deceased to
the exclusion of a common law spouse. FE FLORO VALINO vs. ROSARIO D.
ADRIANO, FLORANTE D. ADRIANO, RUBEN D. ADRIANO, MARIA TERESA
ADRIANO ONGOCO, VICTORIA ADRIANO BAYONA, and LEAH ANTONETTE D.
ADRIANO, G.R. No. 182894, April 22, 2014, J. Mendoza

Title XII. CARE AND EDUCATION OF CHILDREN (Articles 356 363,

NCC)
PD 603 The Child and Youth W elfare Code
RA 9262 (Anti Violence against W omen and Children [VAW C]) and
IRR; RA 9523

Title XIII. USE OF SURNAMES (Articles 364-380, NCC)

RA 9255 An Act Allowing Illegitimate Children to Use the
Surname of their Father (Amending Art.
176 of the Family Code); IRR of 9255; Passport Law (RA 8239)
Title XIV. ABSENCE (Articles 381-396, NCC);
See Article 41 FC; Rules (Section 4) 73, 74,107, Revised Rules of
Court;
Arts.774 & 777; Art. 1456; Arts 22, 2142-2175; Wills & Succession

Chapter 1. Provisional M easures in Case of Absence

Chapter 2. Declaration of Absence
Chapter 3. Administration of the Property of the Absentee
Chapter 4. Presumption of Death
Chapter 5. Effect of Absence Upon the Contingent Rights of the
Absentee
TITLE XII FINAL PROVISIONS (Articles 254-257)
63

P ROP ERTY

Title I. CLASSIFICATION OF PROPERTY

PRELIM INARY PROVISIONS

Concept of Property
Classification of Property
Immovable vs M ovable Properties
Laurel vs. Abrogar,

G.R. NO. 155076,

Jan.

13,

2009

International telephone calls placed by Bay Super Orient Card holders,

the telecommunication services provided by PLDT and its business of
providing said services are not personal properties under Article 308 of
the Revised Penal Code. The construction by the respondents of Article
308 of the said Code to include, within its coverage, the aforesaid
international telephone calls, telecommunication services and business
is contrary to the letter and intent of the law.
The words "Personal property" under the Revised Penal Code must be
considered in tandem with the word "take" in the law. The statutory
definition of "taking" and movable property indicates that, clearly, not all
personal properties may be the proper subjects of theft. The general rule
is that, only movable properties which have physical or material
existence and susceptible of occupation by another are proper obje cts of
theft.
Kinds of Immovable Properties
Bicerra vs. Teneza, 6 SCRA 649, 651 (1962).
A house (or a building) is classified as immovable property by reason of
its adherence to the soil on which it is built. Thus, a building which is
merely superimposed on the soil is not a real property.
Punzalan, Jr. v. Vda. De Lacsamana, 121 SCRA 331 (1983)

64

A building treated separately from the land on which it stood is

immovable property and the mere fact that the parties to a contract seem
to have dealt with it separate and apart from the land on which it stood
in no wise changed its character as immovable property.
Tsai vs. CA, 366 SCRA 324
In the instant case, the parties: (1) executed a contract styled as Real
Estate Mortgage and Chattel Mortgage, instead of just Real Estate
Mortgage if indeed their intention is to treat all properties included
therein as immovable, and (2) attached to the said contract a separate
LIST OF MACHINERIES & EQUIPMENT. These facts, taken together,
evince the conclusion that the parties intention is to treat these units of
machinery as chattels.
Caltex Phils.,

Inc.,

vs.

CBAA, M ay

31,

1982

SC held that the said equipment and machinery, as appurtenances to

the gas station building or shed owned by Caltex (as to which it is
subject to realty tax) and which fixtures are necessary to the operation of
the gas station, for without them the gas station would be useless, and
which have been attached or affixed permanently to the gas station site
or embedded therein, are taxable improvements and machinery within
the meaning of the Assessment Law and the Real Property Tax Code.
MERALCO vs.

CBAA,

M ay

31,

1982

While the two storage tanks are not embedded in the land, they may,
nevertheless, be considered as improvements on the land, enhancing its
utility and rendering it useful to the oil industry. It is undeniable that the
two tanks have been installed with some deG.R.ee of permanence as
receptacles for the considerable quantities of oil needed by Meralco for its
operations.
Rights as property
MBTC v. Alejo, 364 SCRA 812, 819 (2001)
A real estate mortgage is a real right and a real property by itself.

Chapter 2 M ovable Property

Concept

65

Kinds of M ovable Property

Chapter 3 Property in Relation to the Person to whom it belongs
Public Dominion vs Private Ownership
Classification of Property depending on ownership
Constitutional basis of State Ownership Jura Regalia
Chavez v. Public Estates Authority , 415 SCRA 403 (2003)
Submerged lands are part of the States inalienable natural resources
and classified as property of public dominion.
Republic v.
144

Santos, G.R. NO. 180027,July

18, 2012 677 SCRA

Jura Regalia simply means that the State is the original proprietor of all
lands and, as such, is the general source of all private titles. Thus,
pursuant to this principle, all claims of private title to land, save those
acquired from native title, must be traced from some grant, whether
express or implied, from the State. Absent a clear showing that land had
been let into private ownership through the States imprimatur, such
land is presumed to belong to the State
Public ownership vs State Ownership
Public Service vs Public Use
Villarico v. Sarmiento, 442 SCRA 110, 115 2004
Public use means use which is not confined to privileged individuals,
but is open to the indefinite public.
Characteristics of Properties of Public Dominion
Menchavez vs Teves, Jr, 449 SCRA 380
Properties of public dominion may not be alienated but may be subject to
joint venture, or production-sharing agreements with private individuals
or corporations for their exploration, development and utilization.
Dacanay vs Asistio,Jr 208 SCRA 404

66

Properties of public dominion is outside the commerce of mend and it

cannot be alienated or leased or otherwise be the subject matter of
contracts.
Manila Lodge 761 vs CA, 73 SCRA 162
An intention to devote it to public use or to public service is sufficient
and it is not necessary that it must actually be used as such.
Republic vs CA, 132 SCRA 514
Properties of public dominion is not susceptible to private appropriation
and cannot be acquired by acquisitive prescription and thus they cannot
be registered under the Land Registration Law and be the subject of a
torrents title.
Manila International Airport Authority vs CA, 495 SCRA 591
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.
Tufexis v. Olaguera 32 Phil. 654.
The usufruct of the public market was not subject to attachment on
account of its being of a public character.
Kinds of Properties of Public Dominion
Santos vs M oreno, 21 SCRA 1141
Canals constructed by private persons within their private lands and
devoted exclusively for private use are of private ownership.
Almagro vs.

Kwan, G.R. NO. 175806, Oct.

20,

2010

To qualify as foreshore land, it must be shown that the land lies between
the high and low water marks and is alternately wet and dry according to
the flow of the tide. The land's proximity to the waters alone does not
automatically make it a foreshore land.
Binalay v. M analo, 195 SCRA 374, 384 (1991)

67

The buyer did not acquire private ownership of the bed of the eastern
branch of the Cagayan River even if it was included in the deeds of
absolute sale executed by the sellers since the sellers could not have
validly sold land that constituted property of public dominion.
Hilario vs City of M anila, G.R. No. L-19570, April 27, 1967
The phrase banks of a river is understood to be those lateral strips
orzones of its beds which are washed by the stream only during such
highfloods as do not cause inundations. In other words, the banks refer
to the lateral lines or strips reached by the waters when the river is at
high tide.
Manila International Airport Authority vs. CA, 495 SCRA 591
No one can dispute that properties of public dominion mentioned in
Article 420 of the Civil Code, like roads, canals, rivers, torrents, ports
and bridges constructed by the State, are owned by the State. The term
ports includes seaports and airports. The MIAA Airport Lands and
Buildings constitute a port constructed by the State.
Reclaimed Properties
Republic vs. Paraaque, G.R. NO. 191109,July 18, 2012
677 SCRA 246
The subject reclaimed lands are still part of the public domain,
owned by the State and, therefore, exempt from payment of real
estate taxes. Here, the subject lands are reclaimed lands,
specifically portions of the foreshore and offshore areas of Manila
Bay. As such, these lands remain public lands and form part of
the public domain.

Patrimonial Property of the State

Conversion of Property of Public Dominion to Patrimonial Property
Yu Chang v. Republic, G.R. NO. 171726. Feb. 23, 2011
The classification of land is descriptive of its legal nature or status and
does not have to be descriptive of what the land actually looks like. The
fact that the area within which the subject parcels of land are located is
being used for residential and commercial purposes does not serve to
convert the subject parcels of land into aG.R.icultural land. It is
68

fundamental that before any land may be declassified from the forest
G.R.oup and converted into alienable or disposable land for
aG.R.icultural or other purposes, there must be a positive act from the
government.
Laurel v. Garcia,187 SCRA 797
Any conveyance of a real property falling under the patrimonial property
of the State must be authorized and approved by a law enacted by the
Congress.
Property for public use of Provinces, Cities, and Municipalities
Patrimonial Property of Political Subdivision
Title II Ownership
Ownership in General
DEPARTMENT OF EDUCATION, represented by its REGIONAL DIRECTOR
TERESITA DOMALANTA vs. MARIANO TULIAO, G.R. No. 205664, June 9, 2014, J.
Mendoza
In actions for recovery of possession, the plaintiff must show proof to support his
claim of his right to possession of the property. The defendant in turn must show
proof to controvert the plaintiff s claim; otherwise the court will rule for the
plaintiff. Thus, when a landowner filed an action for recovery of possession against a
public school which built a gymnasium on a parcel of land which the owner allowed
the school to use as an access road for the schoolchildren, and the plaintiff showed
as evidence tax declarations and a certificate of title over the property, the lone
testimonial evidence the DepEd presented is not sufficient to controvert the
landowner s case. )n addition, the landowner s claim is not barred by laches when
the school s possession of the property is not adverse, and when the landowner
brought suit two years after he learned that the school is constructing a gymnasium
over the property.
HEIRS OF PACIANO YABAO, represented by REMEDIOS CHAN vs. PAZ LENTEJAS
VAN DER KOLK, G.R. No. 207266, June 25, 2014, J. Mendoza
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.

69

MIDWAY MARITIME AND TECHNOLOGICAL FOUNDATION, represented by its

Chairman/President PhD in Education DR. SABINO M. MANGLICMOT vs.
MARISSA E. CASTRO, ET AL., G.R. No. 189061, August 6, 2014, J. Reyes
The petitioner is a lessee of a parcel of land and disputes the title of the owners of
the building built on the land they are leasing. The Supreme Court ruled that it is
settled that "[o]nce 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.
SUBIC BAY LEGEND RESORTS AND CASINOS, INC VS. BERNARD C.
FERNANDEZ, G.R. No. 193426, Sept ember 29, 2014, J. Del Castillo
Though casino chips do not constitute legal tender, there is no law which prohibits
their use or trade outside of the casino which issues them. In any case, it is not
unusual nor is it unlikely that respondent could be paid by his Chinese client at
the former' s car shop with the casino chips in question; said transaction, if not
common, is nonetheless not unlawful. These chips are paid for anyway; petitioner
would not have parted with the same if their corresponding representative
equivalent - in legal tender, goodwill, or otherwise was not received by it in return
or exchange. Given this premise - that casino chips are considered to have been
exchanged with their corresponding representative value - it is with more reason
that this Court should require petitioner to prove convincingly and persuasively that
the chips it confiscated from Ludwin and Deoven were indeed stolen from it; if so,
any Tom, Dick or Harry in possession of genuine casino chips is presumed to have
paid for their representative value in exchange therefor. If petitioner cannot prove
its loss, then Article 559 cannot apply; the presumption that the chips were
exchanged for value remains..

ROLANDO S. ABADILLA, JR. vs. SPOUSES BONIFACIO P. OBRERO and

BERNABELA N. OBRERO, G.R. No. 199448, November 12, 2014, J. Reyes
The petitioner claims that they are the rightful owners of the disputed property.
Thus, an ejectment proceeding cannot be commenced against them. The Supreme
Court ruled that "ejectment proceedings are summary proceedings intended to
provide an expeditious means of protecting actual possession or right to possession
of property. Title is not involved. The sole issue to be resolved is who is entitled to
the physical or material possession of the premises or possession de facto." "Issues
as to the right of possession or ownership are not involved in the action; evidence

70

thereon is not admissible, except only for the purpose of determining the issue of
possession."
Concept of Ownership
Attributes of Ownership
Recovery of Property
Accion Reinvindicatoria; Ejectment
THE HEIRS OF EUGENIO LOPEZ, SR. NAMELY, OSCAR M. LOPEZ,
MANUEL M. LOPEZ AND PRESENTACION L. PSINAKIS, vs. THE
HONORABLE FRANCISCO QUERUBIN, IN HIS CAPACITY AS PRESIDING
JUDGE OF THE REGIONAL TRIAL COURT OF ANTIPOLO, BRANCH 74,
THE HEIRS OF ALFONSO SANDOVAL AND HIS WIFE ROSA RUIZ,
REPRESENTED BY THEIR ATTORNEY-IN-FACT, MRS. IMELDA RIVERA,
G.R. No. 155405/HEIRS OF EUGENIO LOPEZ, vs. ALFONSO SANDOVAL AND
ROMAN OZAETA, JR., G.R. No. 164092, MARCH 18, 2015, J. Leonardo-de
Castro
One who claims to be the owner of a property that is 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 reinvindicatory action in
which the ownership claims of the contending parties may be properly heard and
adjudicated.
Del Fierro v. Seguiran G.R. NO. 152141,Aug. 8, 2011 The first
requisite in an accion reinvindicatoria requires that the person who
claims that he has a better right to the property must first fix the identity
of the land he is claiming by describing the location, area and boundaries
thereof. Anent the second requisite, i.e., the claimant's title over the
disputed area, the rule is that a party can claim a right of ownership only
over the parcel of land that was the object of the deed.
Del
Rosario
NO. 170575,June

v. Roxas
8, 2011

Foundation,

G.R.

In forcible entry, the possession is illegal from the beginning and the only
issue is who has the prior possession de facto. In unlawful detainer,
possession was originally lawful but became unlawful by the expiration
or termination of the right to possess and the issue of rightful possession
is the one decisive, for in such action, the defendant is the party in

71

actual possession and the plaintiff's cause of action is the termination of

the defendant's right to continue in possession.
Jose v. Alfuerto, G.R. No 169380, Nov. 26, 2012
Acts merely tolerated are "those which by reason of neighborliness or
familiarity, the owner of 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.
Barrientos v.Rapal, G.R. NO. 169594,July

20,

2011

A person who occupies the land of another at the latter's tolerance or

permission, without any contract between them, is necessarily bound by
an implied promise that he will vacate the same upon demand, failing
which a summary action for ejectment is the proper remedy against
them.
Doctrine of Self Help
German M anagement & Services, Inc. v. CA. 177 SCRA 495 (1989)
The doctrine of self-help can only be exercised at the time of actual or
threatened dispossession, and not when possession has already been
lost.
Right to Enclose or Fence
Limitations on Ownership
Right to sub-surface and airspace
Republic of the Philippines v. Court of Appeals, 160 SCRA 228
Rights to the sub-surface or sub-soil are indivisible, and, consequently,
require a definitive and categorical classification.
National Power Corporation v. Ibrahim, 526 SCRA 149 (2007)
The landowners right extends to such height or depth where it is
possible for them to obtain some benefit or enjoyment, and it is
extinguished beyond such limit as there would be no more interest
protected by law. In this case, the landowners could have dug upon their
72

property motorized deep wells but were prevented from doing so by the
authorities precisely because of the construction and existence of the
tunnels underneath the surface of their property.

Right to Hidden Treasure

Palero-Tan v. Urdaneta AM NO. P --07--2399, Jun. 18, 2008 - When
a person who finds a thing that has been lost or mislaid by the owner
takes the thing into his hands, he acquires physical custody only and
does not become vested with legal possession. In assuming such
custody, the finder is charged with the obligation of restoring the thing to
its owner. It is thus respondents duty to report to his superior or his
officemates that he found something.
Right to Airspace
Chapter 2 Right of Accession
General Provision
Accession
VILLASI VS. GARCIA, G.R. No. 190106, January 15, 2014, J. Perez
While it is a hornbook doctrine that the accessory follows the principal, that is, the
ownership of the property gives the right by accession to everything which is
produced thereby, or which is incorporated or attached thereto, either naturally or
artificially, such rule is not without exception. In cases where there is a clear and
convincing evidence to prove that the principal and the accessory are not owned by
one and the same person or entity, the presumption shall not be applied and the
actual ownership shall be upheld. To set the record straight, while petitioner may
have proven his ownership of the land, as there can be no other piece of evidence
more worthy of credence than a Torrens certificate of title, he failed to present any
evidence to substantiate his claim of ownership or right to the possession of the
building.
The rule on accession is not an iron-clad dictum. On instances where this Court was
confronted with cases requiring judicial determination of the ownership of the
building separate from the lot, it never hesitated to disregard such rule. The case at
bar is of similar import. When there are factual and evidentiary evidence to prove
that the building and the lot on which it stands are owned by different persons, they
shall be treated separately. As such, the building or the lot, as the case may be, can
be made liable to answer for the obligation of its respective owner.
73

BANK OF THE PHILIPPINE ISLANDS vs. VICENTE VICTOR C. SANCHEZ ET AL.;

GENEROSO TULAGAN ET AL. vs. VICENTE VICTOR C. SANCHEZ ET AL.;
REYNALDO V. MANIWANG vs. VICENTE VICTOR C. SANCHEZ and FELISA
GARCIA YAP, G.R. No. 179518; G.R. No. 179835; G.R. No. 179954, November 19,
2014, J. Velasco Jr.
Article 453 of the Civil Code clearly reads that a landowner is considered in bad faith
if he does not oppose the unauthorized construction thereon despite knowledge of
the same. The fact that the Sanchezes did take action to oppose the construction on
their property by writing the HLURB and the City Building Official of Quezon City.
The Court agrees with both the RTC and the CA that Garcia and 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.
Prevailing jurisprudence reveals the following established rules:
1. Well settled is the rule that all persons dealing with property covered by a torrens
certificate of title are not required to go beyond what appears on the face of the title.
When there is nothing on the certificate of title to indicate any cloud or vice in the
ownership of the property, or any encumbrance thereon, the purchaser is 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.
2. This rule, however, admits of an exception as where the purchaser or mortgagee
has knowledge of a defect or lack of title in the vendor, or that he was aware
ofsufficient facts to induce a reasonably prudent man to inquire into the status of
the property in litigation.
3. Likewise, one who buys property withfull knowledge of the flaws and defects in
the title of the vendor is enough proof of his bad faith and estopped from claiming
that he acquired the property in good faith against the owners.

4. To prove good faith, the following conditions must be present: (a) the seller is the
registered owner of the land; (b) the owner is in possession thereof; and (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 titleof the seller or in his
capacity to convey title to the property. All these conditions must be present,
otherwise, the buyer is under obligation to exercise extra ordinary diligence by
scrutinizing the certificates of title and examining all factual circumstances to enable
him to ascertain the seller s title and capacity to transfer any interest in the
property.
74

Definition
Kinds of Accession
Right of Accession with respect to what is produced by property
Accession Discreta
Kinds of Fruits
Right of Accession with respect to immovable property
Accession Continua
Fundamental rules
Industrial Accession
Building, Planting, and Sowing (BPS)
Rules in BPS in the presence of good faith and bad faith
Concept of Good Faith
Rules governing BPS
Floreza v. Evangelista, 96 SCRA 130
The rule under article 448 of the NCC applies only when the builder,
planter or sower believes he had the right so to build, plant or sow
because he thinks he owns the land or believes himself to have a claim of
title.
Mercado v. CA, 162 SCRA 75, 85 1988
To be deemed a builder in good faith, it is essential that a person asserts
title to the land on which he builds, i.e., it is essential that he be a
possessor in concept of owner and that he be unaware that there exists
in his title or mode of acquisition any flaw which invalidates it.
Bulacanag v. Francisco, 122 SCRA 498, 502 (1983)
Article 448 applies only to a case where one builds on land in the belief
that he is the owner thereof and it does not apply where ones only
interest in the land is that of a lessee under a rental contract.
75

PNB vs De Jesus, 411 SCRA 557

The landowner cannot refuse to exercise either option and compel
instead the owner of the building or improvement to remove it from the
land.
Javier v. Concepcion, Jr 94 SCRA 212 (1979)
The value of the useful improvements consisting of various fruits,
bamboos, a house and camarin made of strong materials based on the
market value of the said improvements.
Nuguid v. CA, 452 SCRA 243, 252 (2005)
The right of retention is considered as one of the measures devised by
the law for the protection of builders in good faith. Its object is to
guarantee full and prompt reimbursement as it permits the actual
possessor to remain in possession while he has not been reimbursed (by
the person who defeated him in the case for possession of the property)
for those necessary expenses and useful improvements made by him on
the things possessed.
Ballatan v. Court of Appeals 304 SCRA 37 (1999)- In the event the
landowner elects to sell the land to the builder in good faith, the price
must be fixed at the prevailing market value at the time of payment. In
the event of the failure of the builder to pay the land, after the owner
thereof has chosen this alternative, the builders right of retention
provided in Article 546 is also lost.
Natural Accession
Kinds of Natural Accession
Alluvion
Rules governing Alluvion
Heirs of Emiliano Navarro v. IAC, 268 SCRA 74, 85 (1997)
Riparian owners are, strictly speaking, distinct from owners, the latter
being owners of lands bordering the shore of the sea or lakes or other
tidal waters.
Vda. de Nazareno v. CA, 257 SCRA 598 (1996)
76

Since the subject land was the direct result of the dumping of sawdust
by the Sun Valley Lumber Co., the accretion was man-made, hence, Art.
457 does not apply. Ergo, the subject land is part of the public domain.
Roxas v. Tuason, 9 Phil. 408.
The right of the owners of the bank adjacent to rivers to the accretion
which they receive by virtue of the action of the waters of the river is ipso
jure and there is no need of an action of the owner of the bank to possess
the new addition since it belongs to him by the very fact of the addition.
Cureg v. IAC, 177 SCRA 313 (1989)
The accretion to registered land does not preclude acquisition of the
additional area by another person through prescription.
Avulsion
Definition
Avulsion vs Alluvion
Rules Governing Avulsion
Change of course of River
Agne v. Director of Lands, 181 SCRA 793, 805 (1990)
There need be no act on their part to subject the old river bed to their
ownership, as it is subject thereto ipso jure from the moment the mode of
acquisition becomes evident, without need of any formal act of
acquisition. Such abandoned riverbed had fallen to the private ownership
of the owner of the land through which the new river bed passes even
without any formal act of his will and any unauthorized occupant thereof
will be considered as a trespasser.
Formation of Island
Right of Accession with respect to M ovable Property
Adjunction or Conjunction
Rules governing Adjunction or Conjunction
Presence and absence of badfaith
77

Commixtion or Confusion
Specification
Chapter 3 Quieting of Title
Action to Quiet Title
HEIRS OF PACIFICO POCIDO, ET AL. VS. ARSENIA AVILA AND EMELINDA CHUA G.R. No.
199146, March 19, 2014, J. Carpio

The DENR Decision was affirmed by the Office of the President which held that lands
within the Baguio Townsite Reservation belong to the public domain and are no
longer registrable under the Land Registration Act. The Office of the President
ordered the disposition of the disputed property in accordance with the applicable
rules of procedure for the disposition of alienable public lands within the Baguio
Townsite Reservation, particularly Chapter X of Commonwealth Act No. 141 on
Townsite Reservations and other applicable rules. Having established that the
disputed property is public land, the trial court was therefore correct in dismissing
the complaint to quiet title for lack of jurisdiction. The trial court had no jurisdiction
to determine who among the parties have better right over the disputed property
which is admittedly still part of the public domain.

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. The
first requisite was not complied with. Petitioners alleged open, continuous,
exclusive, and uninterrupted possession of the subject property is belied by the fact
that respondents, in 2005, entered into a Contract of Lease with the Avico Lending
Investor Co. over the subject lot without any objection from the petitioners.
Petitioners inability to offer evidence tending to prove that Bienvenido and
Escolastica Ibarra transferred the ownership over the property in favor of
petitioners is likewise fatal to the latter s claim.

JUANARIO G. CAMPIT v ISIDRA B. GRIP A, PEDRO BARDIAGA, and SEVERINO

BARDIAGA, represented by his son ROLANDO BARDIAGA, G.R No. 195443,
September 17, 2014. J. BRION

78

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, the Court treated Civil Case No.
18421 as an action to quiet title, the filing of which does not prescribe.
Requisites
HERMINIO M. DE GUZMAN, FOR HIMSELF AND AS ATTORNEY-IN-FACT OF:
NILO M. DE GUZMAN, ANGELINO DE GUZMAN, JOSEFINO M. DE GUZMAN,
ESTRELLA M. DE GUZMAN, TERESITA DE GUZMAN, ELSA MARGARITA M. DE
GUZMAN, EVELYN M. DE GUZMAN, MA. NIMIA M. DE GUZMAN, ANTOLIN M. DE
GUZMAN, AND FERDINAND M. DE GUZMAN vs. TABANGAO REALTY
INCORPORATED, G.R. No. 154262, February 11, 2015, J. Leonardo-De Castro
The petitioners allege that they are the owners of the disputed property. This
allegation is anchored on the assertion that at the time of the death of their parents,
the disputed property is still under the latter s name. The Supreme Court ruled that
for an action to quiet title to prosper, two indispensable requisites must concur: (1)
the plaintiff or complainant has a legal or equitable title or interest in the real
property subject of the action; and (2) the deed, claim, encumbrance, or proceeding
claimed to be casting a cloud on his title must be shown to be in fact invalid or
inoperative despite its prima facie appearance of validity or legal efficacy.
Petitioners Complaint in Civil Case No. TM-1118 failed to allege these two requisites
for an action to quiet title.
CLT REALTY DEVELOPMENT CORPORATION vs. PHIL-VILLE DEVELOPMENT
AND HOUSING CORPORATION, REPUBLIC OF THE PHILIPPINES (THROUGH
THE OFFICE OF THE SOLICITOR GENERAL) AND THE REGISTER OF DEEDS OF
METRO MANILA DISTRICT III, CALOOCAN, G.R. No. 160728, March 11, 2015, J.
Leonardo-De Castro
Thus, both requisites in order for an action for quieting of title to prosper have been
met in this case: (1) Phil-Ville had established its equitable title or interest in the 16
parcels of land subject of the action; and (2) TCT No. T-177013, found to overlap
titles to said properties of Phil-Ville, was previously declared invalid.
Chung Jr. vs. M ondragon, G.R. 179754,Nov.

21,

2012

The issues in a case for quieting of title are fairly simple; the plaintiff
need to prove only two things, namely: "(1) the plaintiff or complainant
has a legal or an equitable title to or interest in the real property subject
of the action; and (2) that the deed, claim, encumbrance or proceeding
claimed to be casting a cloud on his title must be shown to be in fact
79

invalid or inoperative despite its prima facie appearance of validity or

legal efficacy. Stated differently, the plaintiff must show that he has a
legal or at least an equitable title over the real property in dispute, and
that some deed or proceeding beclouds its validity or efficacy."
Bahais v.

Pascual, G.R. 169272,July

11,

2012

Under Articles 476 and 477 of the Civil Code, the two (2) indispensable
requisites in an action to quiet title are: (1) that the plaintiff or
complainant has a legal or an equitable title to or interest in the real
property subject of the action; and (2) that a deed, claim, encumbrance
or proceeding is claimed to be casting cloud on his title.
In this case, an action to quiet title is not the proper remedy because
petitioner no longer had any legal or equitable title to or interest in the
lots. The petitioners status as possessor and owner of the lots had be en
settled in the final and executory December 4, 1985 decision of the
Bureau of Lands that the DENR Secretary and the OP affirmed on
appeal. Thus, the petitioner is not entitled to the possession and
ownership of the lots.

Vda.de Aviles v. CA, 264 SCRA 473

An action for quieting of title may not be brought for the purpose of
settling a boundary dispute.

Title III- Co-ownership

Definition
Requisites
Nature of Co-ownership
LOURDES C. FERNANDEZ v NORMA VILLEGAS and any person acting in her
behalf including her family, G.R No. 200191, August 20, 2014. J. PERLASBERNABE
Article 487 of the Civil Code explicitly provides that any of the co -owners may bring
an action for ejectment, without the necessity of joining all the other co -owners as
co-plaintiffs because the suit is deemed to be instituted for the benefit of all. To
reiterate, both Lourdes and Cecilia are co-plaintiffs in the ejectment suit. Thus, they
share a commonality of interest and cause of action as against respondents. Hence,

80

the lone signature of Lourdes on the verification attached to the CA petition

constituted substantial compliance with the rules.
EXTRAORDINARY DEVELOPMENT CORPORATION vs. HERMINIA F. SAMSONBICO and ELY B. FLESTADO, G.R. No. 191090, October 13, 2014, J. Perez
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/vendor s 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.
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 vs. LORENZO LAPINID AND JESUS
VELEZ, G.R. No. 187987, November 26, 2014, J. Perez
Under Article 493 of the New Civil Code, a co-owner has an absolute ownership of
his undivided and pro-indiviso 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 rights will be affected. 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. Thus, from the perfection of contract on 9 November 1997, Lapinid
eventually became a co-owner of the property. Even assuming that the petitioners
are correct in their allegation that the disposition in favor of Lapinid before partition
was a concrete or definite portion, the validity of sale still prevails.
Alejandrino v. Court of Appeals, 295 SCRA 536, 548, Sept. 17, 1998
Each co-owner of property which is held pro indiviso exercises his rights
over the whole property and may use and enjoy the same with no other
limitation than that he shall not injure the interests of his co-owners.
Sources of Co-ownership
Rules Governing Co-ownership
81

A stipulation in a contract requiring a co-owner to secure an authority from his coowners for the alienation of his share, as seemingly indicated in this case, should be
considered mere surplusage and does not, in any way, affect the validity or the
enforceability of the contract. Pursuant to Article 493, a co-owner has the right to
alienate his proindiviso share in the co-owned property even without the consent of
his co-owners.
REYNALDO DELA ROSA, Namely: TEOFISTA DELA ROSA, JOSEPHINE SANTIAGO
AND JOSEPH DELA ROSA v MARIO A. BA TONGBACAL, IRENEO BATONGBACAL,
JOCELYN BA TONGBACAL, NESTOR BATONGBACAL AND LOURDES BA
TONGBACAL, G.R No. 179205, July 30, 2014 J. PEREZ
A contract of sale is a consensual contract, which becomes valid and binding upon
the meeting of minds of the parties on the price and the object of the sale. The mere
inadequacy of the price docs not affect its validity when both parties are in a
position to form an independent judgment concerning the transaction, unless fraud,
mistake or undue influence indicative of a defect in consent is present. A contract
may consequently be annulled on the ground of vitiated consent and not due to the
inadequacy of the price. In the case at bar, however, no evidence to prove fraud,
mistake or undue influence indicative of vitiated consent is attendant.
RAUL V. ARAMBULO AND TERESITA DELA CRUZ VS. GENARO NOLASCO AND JEREMY
SPENCER NOLASCO, G.R. No. 189420
March 26, 2014, J. Perez

The issue in this case is whether respondents, as coowners, can be compelled by

the court to give their consent to the sale of their shares in the coowned properties.
The ultimate authorities in civil law, recognized as such by the Court, agree that co
owners such as respondents have over their part, the right of full and absolute
ownership. Such right is the same as that of individual owners which is not
diminished by the fact that the entire property is coowned with others. That part
which ideally belongs to them, or their mental portion, may be disposed of as they
please, independent of the decision of their coowners. Therefore the respondents
cannot be ordered to sell their portion of the coowned properties.

De Guia v. CA, 413 SCRA 114, 124 (2003).

A co-owner of an undivided thing or right is an owner of the whole and
over the whole he exercises the right of dominion.
Bailon-Casilao v. CA, 160 SCRA 738, 745, April 15, 1988
The appropriate recourse of co-owners in cases where their consent were
not secured in a sale of the entire property as well as in a sale merely of
the undivided shares of some of the co-owners is an action for partition
under Rule 69 of the Revised Rules of Court.
82

Gapacan v. Omipet, 387 SCRA 383.

A state of co-ownership exists only because there is unity of the object or
property and plurality of subjects.

Extinguishment of Co-ownership
VILMA QUINTOS, represented by her Attorney-in-Fact FIDEL I. QUINTOS, JR.;
FLORENCIA I. DANCEL, represented by her Attorney-in-Fact FLOVY I. DANCEL;
and CATALINO L. IBARRA v PELAGIA I. NICOLAS, NOLI L. IBARRA, SANTIAGO L.
IBARRA, PEDRO L. IBARRA, DAVID L. IBARRA, GILBERTO L. IBARRA, HEIRS OF
AUGUSTO L. IBARRA, namely CONCHITA R., IBARRA, APOLONIO IBARRA, and
NARCISO IBARRA, and the spouses RECTO CANDELARIO and ROSEMARIE
CANDELARIO. G.R No. 210252, June 16, 2014. J. VELASCO, JR.
A partition case of a land co-owned by ten siblings was dismissed for the failure of
the parties and counsels to appear despite due notice under Rule 17, Section 3 of the
Rules of Court. Later, in a quieting of title case involving the same property, the
siblings demanded partition. The occupant of the lot claimed that the action for
partition is barred by res judicata.
It is indeed true that dismissal with prejudice under the above-cited rule amply
satisfies one of the elements of res judicata. However, dismissal with prejudice
under Rule 17, Sec. 3 of the Rules of Court cannot defeat the right of a co -owner to
ask for partition at any time, provided that there is no actual adjudication of
ownership of shares yet.
A perusal of Article 494 of the Civil Code shows that the law generally does not favor
the retention of co-ownership as a property relation, and is interested instead in
ascertaining the co-owners specific shares so as to prevent the allocation of
portions to remain perpetually in limbo. Thus, the law provides that each co-owner
may demand at any time the partition of the thing owned in common.
Between dismissal with prejudice under Rule 17, Sec. 3 and the right granted to co owners under Art. 494 of the Civil Code, the latter must prevail. To construe
otherwise would diminish the substantive right of a co-owner through the
promulgation of procedural rules. Such a construction is not sanctioned by the
principle, which is too well settled to require citation, that a substantive law cannot
be amended by a procedural rule. This is supported by Art. 496 of the New Civil
Code.
Thus SC held that Art. 494is an exception to Rule 17, Sec. 3 of the Rules of Court to
the effect that even if the order of dismissal for failure to prosecute is silent on
83

whether or not it is with prejudice, it shall be deemed to be without prejudice.

This is not to say, however, that the action for partition will never be barred by res
judicata. There can still be res judicata in partition cases concerning the same
parties and the same subject matter once the respective shares of the co-owners
have been determined with finality by a competent court with jurisdiction or if the
court determines that partition is improper for co-ownership does not or no longer
exists.
Adille v. Court of Appeals, 157 SCRA 455, Jan. 29, 1988.
The rule in this jurisdiction is that the redemption by one co-heir or coowner of the property in its totality does not vest in him ownership over it
since redemption is not a mode of terminating a co-ownership.

Sanchez v. Court of Appeals, 404 SCRA 541, 548, June 20, 2003
Co-ownership is a form of trust and every co-owner is a trustee for the
others, hence, the relationship of such co-owner to the other co-owners
is fiduciary in character and attribute.
Pangan v. Court of Appeals, 166 SCRA 375, 382, Oct. 17, 1988
If the co-owner actually holding the property asserts exclusive dominion
over it against the other co-owners, the corollary of the rule is that he
can acquire sole title to it after the lapse of the prescribed prescriptive
period.
Heirs of Flores Restar v. Heirs of Dolores R. Cichon 475 SCRA 731,
Nov. 22, 2005
While the action to demand partition of a co-owned property does not
prescribe, a co-owner may acquire ownership thereof by prescription
where there exists a clear repudiation of the co-ownership, and the coowners are apprised of the claim of adverse and exclusive ownership.
Delima v. Court of Appeals, 201 SCRA 641, Sept. 24, 1991
From the moment one of the co-owners claims that he is the absolute
and exclusive owner of the properties and denies the others any share
therein, the question involved is no longer one of partition but of
ownership
Maritegui v. Court of Appeals 205 SCRA 337,
84

When a co-owner or co-heir registered the properties in his name in

fraud of other co-owners or co-heirs, prescription can only be deemed to
have commenced from the time the latter discovered the formers act of
defraudation.
Lacbayan v.

Samoy, G.R. NO. 165427,

M ar.

21,

2011

The first phase of a partition and,or accounting suit is taken up with the
determination of whether or not a co-ownership in fact exists, and a
partition is proper (i.e., not otherwise legally proscribed) and may be
made by voluntary aG.R.eement of all the parties interested in the
property. This phase may end with a declaration that plaintiff is not
entitled to have a partition either because a co-ownership does not exist,
or partition is legally prohibited.
Cruz v.

Catapang G.R. 164110,

Feb.

12,

2008

Alterations include any act of strict dominion or ownership and any

encumbrance or disposition has been held implicitly to be an act of
alteration. The construction of a house on the co-owned property is an
act of dominion.
Santos
v.
Heirs
of
Lustre,
G.R.
NO. 151016, Aug.
06, 2008 - any adverse ruling in the earlier
case will not, in any way, prejudice the heirs who did not join, e ven if
such case was actually filed in behalf of all the co-owners. In fact, if an
action for recovery of property is dismissed, a subsequent action by a coheir who did not join the earlier case should not be barred by prior
judgment.
Title V Possession
SPOUSES REYNALDO AND HILLY G. SOMBILON v ATTY. REY FERDINAND
GARAY AND PHILIPPINE NATIONAL BANK, G.R No. 179914, June 16, 2014. DEL
CASTILLO
The spouses Sombilon executed a mortgage over their property to secure a loan
from PNB, who upon the Sombilons default, foreclosed the mortgage and acquired
the property. The spouses then approached their neighbor Atty. Garay if he could
advance the money needed to repurchase the lot. However, the spouses later found
out that PNB sold the lot to Atty. Garay. PNB applied for a writ of possession. The
Sombilons claim that PNB has no legal personality to apply for the writ since the lot
had already been sold to Atty. Garay, who is disqualified from purchasing the subject
property pursuant to paragraph 5, Article 1491 of the Civil Code.
85

The Court ruled that PNB has the right to the writ. The allegedly invalidity of the sale
between PNB and Atty. Garay is not a ground to oppose or defer the issuance of the
Writ of Possession as this does not affect PNB s right to possess the subject
property. As the registered owner, PNB is entitled to the possession of the subject
property as a matter of right.
NORMA V. JAVATE vs. SPOUSES RENATO J. TIOTUICO AND LERMA C. TIOTUICO,
G.R. No. 187606, March 09, 2015, J. Peralta
If the purchaser is a third party who acquired the property after the redemption
period, a hearing must be conducted to determine whether possession over the
subject property is still with the mortgagor or is already in the possession of a third
party holding the same adversely to the defaulting debtor or mortgagor. In the
instant case, while respondents' petition for the issuance of a writ of possession was
filed ex-parte, a hearing was, nonetheless, conducted when the RTC gave
petitioner her day in court by giving her the opportunity to file various pleadings to
oppose respondent's petition. Moreover, there is no dispute that petitioner
remained in possession of the subject property prior to the issuance of the
questioned writ of possession. It is, thus, clear that respondents' resort, as a
subsequent or third-party purchaser, the petition for the issuance of a writ of
possession is proper.
MARCELA M. DELA CRUZ VS. ANTONIO O. HERMANO, ET AL. G.R. No. 160914.
March 25, 2015, J. Sereno
To prove their claim of having a better right to possession, respondents submitted
their title thereto and the latest Tax Declaration prior to the initiation of the
ejectment suit. The CA erred in considering those documents sufficient to prove
respondents prior physical possession. Similarly, tax declarations and realty tax
payments are not conclusive proofs of possession. They are merely good indicia of
possession in the concept of owner based on the presumption that no one in one s
right mind would be paying taxes for a property that is not in one s actua l or
constructive possession.
The respondents have claimed from the inception of the controversy up to now that
they are using the property as their vacation house, this claim, however, is not
substantiated by any corroborative evidence. Their uncorroborated claim of that
fact, even if made under oath, is self-serving. . The respondents failed to discharge
their burden of proving the element of prior physical possession.
Concept of Possession
Elements of Possession
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Kinds of Possession
Possession in Good Faith and Bad Faith
PNB v. De Jesus, G.R. NO. 149295, September 23, 2003 - One is
considered in good faith if he is not aware that there exists in his title or
mode of acquisition any flaw which invalidates it.
Parilla v. Pilar, G.R. NO. 167680, Nov. 30, 2006 - One whose interest
is merely that of a holder, such as a mere tenant, agent or usufructuary,
is not qualified to become a possessor builder in good faith.
Abalos
v.
Heirs
of
Torio,
G.R.
NO. 175444,
Dec.
14,
2011 - Acts of possessory character
executed due to license or by mere tolerance of the owner are inadequate
for purposes of acquisitive prescription. Possession, to constitute the
foundation of a prescriptive right, must be en concepto de dueo, or, to
use the common law equivalent of the term, that possession should be
adverse, if not, such possessory acts, no matter how long, do not start
the running of the period of prescription.
Chapter 2 Acquisition of Possession
ANACLETO C. MANGASER, REPRESENTED BY HIS ATTORNEY-IN-FACT
EUSTAQUIO DUGENIAvs. DIONISIO UGAY, G.R. No. 204926, December 03, 2014,
J. Mendoza
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.
There is only one issue in ejectment proceedings: who is entitled to physical or
material possession of the premises, that is, to possession de facto, not possession
de Jure? Issues as to the right of possession or ownership are not involved in the
action; evidence thereon is not admissible, except only for the purpose of
determining the issue of possession.
As a 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."
87

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.

CARMENCITA SUAREZ VS. MR. AND MRS. FELIX E. EMBOY JR. AND MARILOU P. EMBOYDELANTAR G.R. No. 187944 March 12, 2014, J. Reyes

In a complaint for unlawful detainer, the following key jurisdictional facts must be
alleged and sufficiently established: (1) initially, possession of property by the
defendant was by contract with or by tolerance of the plaintiff;(2) eventually, such
possession became illegal upon notice by plaintiff to defendant of the termination of
the latter s right of possession;
thereafter, the defendant remained in possession
of the property and deprived the plaintiff of the enjoyment thereof; and (4) within
one year from the last demand on defendant to vacate the property, the plaintiff
instituted the complaint for ejectment.
In the case at bar, the first requisite mentioned above is markedly
absent. Carmencita failed to clearly allege and prove how and when the
respondents entered the subject lot and constructed a house upon it. Carmencita
was likewise conspicuously silent about the details on who specifically permitted
the respondents to occupy the lot, and how and when such tolerance came
about. Instead, Carmencita cavalierly formulated a legal conclusion, sans factual
substantiation, that a the respondents initial occupation of the subject lot was
lawful by virtue of tolerance by the registered owners, and (b) the respondents
became deforciants unlawfully withholding the subject lot s possession after
Carmencita, as purchaser and new registered owner, had demanded for the former
to vacate the property. It is worth noting that the absence of the first requisite
assumes even more importance in the light of the respondents claim that for
decades, they have been occupying the subject lot as owners thereof.
SPOUSES EDMUNDO DELA CRUZ AND AMELIA CONCIO-DELA CRUZ VS. SPOUSES
RUFINO R. CAPCO AND MARTY C. CAPCO G.R. No. 176055, March 17, 2014
"The only issue in an ejectment case is the physical possession of real property
possession de facto and not possession de jure." But "[w]here the parties to an
ejectment case raise the issue of ownership, the courts may pass upon that issue to
determine who between the parties has the better right to possess the property."
Here, both parties anchor their right to possess based on ownership, i.e., the spouses
Dela Cruz by their own ownership while the spouses Capco by the ownership of
Rufino as one of the heirs of the alleged true owner of the property. Thus, the MeTC
88

and the RTC correctly passed upon the issue of ownership in this case to determine
the issue of possession. However, it must be emphasized that "[t]he adjudication of
the issue of ownership is only provisional, and not a bar to an action between the
same parties involving title to the property."
BONIFACIO PIEDAD, MARIA PIEDAD represented by INSPIRACION DANAO
v SPOUSES VICTORIO GURIEZA and EMETERIA M. GURIEZA, G.R No.
207525, June 18, 2014. J. PERLAS-BERNABE
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. 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. In unlawful detainer actions, the Court shall solely resolve the issue
as to who between the parties has the better right of possession de facto over the
subject lot. Corollary thereto, issues pertaining to ownership are better threshed out
in another action instituted for such purpose.
FE U. QUIJANO v ATTY. DARYLL A. AMANTE, G.R No. 164277, October 8, 2014. J.
BERSAMIN
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 .

ROBERT AND NENITA DE LEON, vs. GILBERT AND ANALYN DELA LLANA, G.R.
No. 212277, February 11, 2015, J. Perlas-Bernabe
An unlawful detainer complaint was filed by Gilbert dela Llana against petitioner
Robert de Leon and Gil de Leon. Robert and Gil contend that the lease contract was
simulated. It is quite apparent that the MCTC-Nabunturan-Mawab actually intended
to mean that the undated lease contract subject of this case was absolutely
simulated. Its pronouncement that the parties did not intend to be bound by their
agreement is simply inconsistent with relative simulation.
Bunyi v.
Factor, G.R. NO.
591 SCRA 350

172547,

Jun.

30,

2009

89

For one to be considered in possession, one need not have actual or

physical occupation of every square inch of the property at all times.
Possession can be acquired not only by material occupation, but also by
the fact that a thing is subject to the action of ones will or by the proper
acts and legal formalities established for acquiring such right, possession
can be acquired by juridical acts.
People v.

Peaflorida, G.R. NO.

175604,

Apr.

10,

2008

Knowledge refers to a mental state of awareness of a fact. Since courts

cannot penetrate the mind of an accused and thereafter state its
perceptions with certainty, resort to other evidence is necessary. Animus
possidendi, as a state of mind, may be determined on a case-to-case
basis by taking into consideration the prior or contemporaneous acts of
the accused, as well as the surrounding circumstances.
Soledad v. People, G.R. NO.
184274,
Feb
23,
2011 - The
acquisition of possession involves two elements: the corpus or the
material holding of the thing, and the animus possidendi or the intent to
possess it. Animus possidendi is a state of mind, the presence or
determination of which is largely dependent on attendant e vents in each
case. It may be inferred from the prior or contemporaneous acts of the
accused, as well as the surrounding circumstances.
Chua--Bruce

v.

CA, G.R. NO.

109595,

Apr.

27,

2000

Juridical possession means a possession which gives the transferee a

right over the thing which the transferee may set up even against the
owner.In this case, petitioner was a cash custodian who was primarily
responsible for the cash-in-vault. Her possession of the cash belonging to
the bank is akin to that of a bank teller, both being mere bank employees
Effects of Possession
PAUL P. GABRIEL, JR, et al. vs. CARMELING CRISOLOGO, G.R. No. 204626,
June 9, 2014, J. Mendoza
When it is shown that the plaintiff in a case of accion publiciana had a valid title
issued in her name in 1967, within the period which the Supreme Court held that
titles issued over the same properties were valid; that she has been paying the
realty taxes on the said properties since l969; that she likewise appointed an
administrator of the disputed lands, and more importantly, there is no question that
she offered to sell to petitioners the portions of the subject properties occupied by

90

them, then she deserves to be respected and restored to her lawful possession as
provided in Article 539 of the New Civil Code.
SUBIC BAY LEGEND RESORTS AND CASINOS, INC. vs. BERNARD C. FERNANDEZ,
G.R. No. 193426, September 29, 2014, J. Del Castillo
Though casino chips do not constitute legal tender, there is no law which prohibits
their use or trade outside of the casino which issues them. In any case, it is not
unusual nor is it unlikely that respondent could be paid by his Chinese client at
the former's car shop with the casino chips in question; said transaction, if not
common, is nonetheless not unlawful. These chips are paid for anyway petitioner
would not have parted with the same if their corresponding representative
equivalent in legal tender, goodwill, or otherwise was not received by it in return
or exchange. Given this premise that casino chips are considered to have been
exchanged with their corresponding representative value it is with more reason
that the Court should require petitioner to prove convincingly and persuasively that
the chips it confiscated from the Fernandez brothers were indeed stolen from it; if
so, any Tom, Dick or Harry in possession of genuine casino chips is presumed to
have paid for their representative value in exchange therefor. If SBL cannot prove its
loss, then Art. 559 cannot apply; the presumption that the chips were exchanged for
value remains.
PENTA PACIFIC REALTY CORPORATION vs. LEY CONSTRUCTION AND
DEVELOPMENT CORPORATION, G.R. No. 161589, November 24, 2014, J.
Bersamin
Penta Pacific leased its properties to Ley Construction. Both parties then entered
into a contract to sell. Ley Construction failed to pay its amortizations prompting
Penta Pacific to file an action for ejectment.
The MeTC correctly exercised its authority in finding for the petitioner as the
plaintiff. In unlawful detainer, the possession was originally lawful but became
unlawful by the expiration or termination of the right to possess; hence, the issue of
rightful possession is decisive for, in the action, the defendant is in actual possession
and the plaintiffs cause of action is the termination of the defendant's r ight to
continue in possession.
A defendant's claim of possession de jure or his averment of ownership does not
render the ejectment suit either accion publiciana or accion reivindicatoria. The suit
remains an accion interdictal, a summary proceeding that can proceed
independently of any claim of ownership. Even when the question of possession
cannot be resolved without deciding the issue of ownership, the issue of ownership
is to be resolved only to determine the issue of possession.

91

HOMER C. JAVIER, represented by his mother and natural guardian, SUSAN G.

CANENCIA, vs. SUSAN LUMONTAD, G.R. No. 203760, December 3, 2014, J.
Perlas-Bernabe
In forcible entry, the complaint must necessarily allege that one in physical
possession of a land or building has been deprived of that possession by another
through force, intimidation, threat, strategy or stealth. It is not essential, however,
that the complaint should expressly employ the language of the law, but it would
suffice that facts are set up showing that dispossession took place under said
conditions.
EDCA Publ.
184 SCRA

V.
614

Santos, G.R. NO.

80298,

Apr.

26,

1990

Actual delivery of the books having been made, Cruz acquired ownership
over the books which he could then validly transfer to the private
respondents. The fact that he had not yet paid for them to EDCA was a
matter between him and EDCA and did not impair the title acquired by
the private respondents to the books.
BPI Family

v.

Franco, G.R. NO.

123498,

Nov.

23,

2007

Bad faith does not simply connote bad judgment or negligence; it imports
a dishonest purpose or some moral obliquity and conscious doing of
wrong; it partakes of the nature of fraud. We have held that it is a breach
of a known duty through some motive of interest or ill will.
Title VI Usufruct
Characteristics and Nature
Rights and Obligations of the Parties
Title VII. Easements or Servitude

Different kind of Easement

DEMETRIA DE GUZMAN, AS SUBSTITUTED BY HER HEIRS OLGA C.
BARBASO AND NOLI G. CEMENTTNA;* LOLITA A. DE GUZM AN; ESTHER
G.MILAN; BANAAG A. DE GUZMAN; AMOR G. APOLO, AS SUBSTITUTED
BY HIS HEIRS ALBERTO T. APOLO, MARK APOLO AND GEORGE
APOLO;* HERMINIO A. DE GUZM AN; LEONOR G. VTVENCIO; NORMA A.
DE
GUZMAN;
AND
JOSEFINA
G.
HERNANDEZ, vs. FBLINVEST
92

DEVELOPMENT CORPORATION,G.R. No. 191710, January 14, 2015, J. del

Castillo
Petitioners sought to establish a permanent easement upon the subservient estate.
Pursuant to the second paragraph of Article 649, the proper indemnity in this case
shall consist of the value of the land plus the damages caused to the servient estate.

ALICIA B. REYES vs. SPOUSES VALENTIN RAMOS, FRANCISCO S. AND ANATALIA,

G.R. No. 194488, February 11, 2015, J. Leonen
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 property s 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.
Here the 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.

Mere convenience for the dominant estate is not what is required by law as the basis
of setting up a compulsory easement. Even in the face of necessity, if it can be
satisfied without imposing the easement, the same should not be imposed.
Based on the Ocular )nspection Report, petitioner s 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 petitioner s
needs. Another adequate exit exists. Petitioner can use this outlet to access the
public roads.

Restrictive Covenant
Fajardo v. Freedom

to Build, G.R. NO.

134692, Aug. 1, 2000

While it may be correct to state that restrictive covenants on the use of

land or the location or character of buildings or other structures thereon
may broadly be said to create easements or rights, it can also be
contended that such covenants, being limitations on the manner in
93

which one may use his own property, do not result in true easements,
but a case of servitudes (burden), sometimes characterized to be negative
easements or reciprocal negative easements.
Abellana v. CA, G.R. NO.

97039, Apr.24, 1992

The use of a footpath or road may be apparent but it is not a continuous

easement because its use is at intervals and depends upon the acts of
man. It can be exercised only if a man passes or puts his feet over
somebody else's land.
v.
Obias, G.R. NO.
172077,
Oct.
09,
Bicol Agro--Ind
2009 - The easement of right of way the privilege of persons or a
particular class of persons to pass over anothers land, usually through
one particular path or linen is characterized as a discontinuous
easement because its use is in intervals and depends on the act of man.
Because of this character, an easement of a right of way may only be
acquired by virtue of a title.
Quintanilla v.

Abangan, G.R. NO. 160613, Feb.12, 2008

As between a right of way that would demolish a fence of strong

materials to provide ingress and egress to a public highway and another
right of way which although longer will only require a van or vehicle to
make a turn, the second alternative should be preferred. Mere
convenience for the dominant estate is not what is required by law as the
basis for setting up a compulsory easement.
Quimen v.

CA, G.R. NO.

112331,

M ay

29,

1996

As between a right of way that would demolish a store of strong

materials to provide egress to a public highway, and another right of way
which although longer will only require an avocado tree to be cut down,
the second alternative should be preferred.

Unisource v.

Chung, G.R. NO.

173252,

Jul.

17,

2009

Registration of the dominant estate under the Torrens system without

the annotation of the voluntary easement in its favor does not extinguish
the easement. On the contrary, it is the registration of the servient
estate as free, that is, without the annotation of the voluntary easement,
which extinguishes the easement.
Title VIII Nuisance
94

Classification of Nuisance
LINDA RANA vs. TERESITA LEE WONG, SPS. SHIRLEY LEE ONG and
RUBEN ANG ONG and SPS. ROSARIO and WILSON UY; SPS. ROSARIO and
WILSON UY; WILSON UY as attorney-in-fact of TERESITA LEE WONG, and
SPS. SHIRLEY LEE ONG and RUBEN ANG ONG vs. SPS. REYNALDO and
LINDA LANA, G.R. No. 192861; G.R. No. 192862, June 30, 2014, J. Perlas -Bernabe
It is a standing jurisprudential rule that unless a nuisance is a nuisance per se, it may
not be summarily abated. Aside from the remedy of summary abatement which
should be taken under the parameters stated in Articles 704 (for public nuisances)
and 706 (for private nuisances) of the Civil Code, a private person whose property
right was invaded or unreasonably interfered with by the act, omission,
establishment, business or condition of the property of another may file a civil
action to recover personal damages. Abatement may be judicially sought through a
civil action therefor if the pertinent requirements under the Civil Code for summary
abatement, or the requisite that the nuisance is a nuisance per se, do not concur. To
note, the remedies of abatement and damages are cumulative; hence, both may be
demanded.
LINDA RANA v TERESITA WONG, G.R No. 192861, June 30, 2014. J. PERLASBERNABE
The spouses Wong and the spouses Rana are neighbors who live across a road from
each other. The Ranas elevated and cemented the road without consultation from
the spouses Wong. Wong et al availed of the remedy of judicial abatement and
damages against Spouses Rana, claiming that the elevated and cemented portion are
nuisances that curtailed their use and enjoyment of their properties.

With respect to the elevated and cemented subject portion, the Court finds that 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, it cannot be summarily abated. The
demolition order secured by Wong was thus unwarranted, entitling the spouses
Rana to nominal and temperate damages.
CRISOSTOMO B. AQUINO v MUNICIPALITY OF MALAY, AKLAN, represented by
HON. MAYOR JOHN P. YAP, SANGGUNIANG BA YAN OF MALAY, AKLAN,
represented by HON. EZEL FLORES, DANTE PASUGUIRON, ROWEN AGUIRRE,
WILBEC GELITO, JUPITER GALLENERO, OFFICE OF THE MUNICIPAL ENGINEER,
95

OFFICE OF THE MUNICIPAL TREASURER, BORACAY PNP CHIEF, BORACAY

FOUNDATION, INC., represented by NENETTE GRAF, MUNICIPAL AUXILIARY
POLICE, and JOHN and JANE DOES. G.R No. 211356, September 29, 2014. J.
VELASCO
Article 9 of the Civil Code defines nuisance as any act, omission, establishment,
business, condition or property, or anything else that (1) injures or endangers the
health or safety of others; (2) annoys or offends the senses; (3) shocks, defies or
disregards decency or morality; (4) obstructs or interferes with the free passage of
any public highway or street, or any body of water; or (5) hinders or impairs the use
of property.
Challenging the validity of the public respondents actuations, petitioner posits that
the hotel cannot summarily be abated because it is not a nuisance per se, given the
hundred million peso-worth of capital infused in the venture. Petitioner also argues
that respondents should have first secured a court order before proceeding with the
demolition.
SC said that the property involved cannot be classified as a nuisance per se, but not
for the reason he so offers. Property valuation, after all, is not the litmus test for
such a determination. More controlling is the property s nature and conditions,
which should be evaluated to see if it qualifies as a nuisance as defined under the
law.
Nuisances are of two kinds: nuisance per se and nuisance per accidens. The first is
recognized as a nuisance under any and all circumstances, because it constitutes a
direct menace to public health or safety, and, for that reason, may be abated
summarily under the undefined law of necessity. The second is 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. cralawlawlibrary
In the case at bar, the hotel, in itself, cannot be considered as a nuisance per se since
this type of nuisance is generally defined as an act, occupation, or structure, which
is a nuisance at all times and under any circumstances, regardless of location or
surrounding. Here, it is merely the hotel s particular incidentits locationand not
its inherent qualities that rendered it a nuisance. Otherwise stated, had it not been
constructed in the no build zone, Boracay West Cove could have secured the
necessary permits without issue. As such, petitioner is correct that the hotel is not a
nuisance per se, but, it is still a nuisance per accidens.
Remedies
Telmo v.

Bustamante, G.R. NO.

182567,

Jul.

13,

2009
96

A nuisance per se is that which affects the immediate safety of persons

and property and may be summarily abated under the undefined law of
necessity. Evidently, the concrete posts summarily removed by petitioner
did not at all pose a hazard to the safety of persons and properties,
which would have necessitated immediate and summary abatement.
Gancayco v.

Quezon

City, G.R. NO. 177807,Oct

11,

2011

The wing walls do not per se immediately and adversely affect the safety
of persons and property. The fact that an ordinance may declare a
structure illegal does not necessarily make that structure a nuisance.
Perez v.
M adrona G.R. NO. 184478,
M ar.
21,
2012 Respondents fence 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 secure the property of respondents and prevent intruders
from entering it.
Donation
CHARLES BUMAGAT, JULIAN BACUDIO, ROSARIO PADRE, SPOUSES ROGELIO
and ZOSIMA PADRE, and FELIPE DOMINCIL v REGALADO ARRIBAY, G.R No.
194818, June 9, 2014. J. DEL CASTILLO
Under Article 749 and 709 of the Civil Code, it may be inferred that as between the
parties to a donation of an immovable property, all that is required is for said
donation to be contained in a public document. Registration is not necessary for it to
be considered valid and effective. However, in order to bind third persons, the
donation must be registered in the Registry of Land Titles and Deeds. Although the
non-registration of a deed of donation shall not affect its validity, the necessity of
registration comes into play when the rights of third persons are affected, as in the
case at bar.
In this case, the donation executed by Gonzales in favor of his grandchildren,
although in writing and duly notarized, has not been registered in accordance with
law. Hence, while the deed of donation is valid between the donor and the donees,
such deed, however, did not bind the tenants-farmers who were not parties to the
donation. Non-registration of a deed of donation does not bind other parties
ignorant of a previous transaction. It is of no moment that the right of the tenantfarmers in this case was created by virtue of a decree or law. They are still
considered "third persons" contemplated in our laws on registration, for the fact
remains that these tenant-farmers had no actual knowledge of the deed of donation.
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE SECRETARY OF
AGRICULTURE vs. FEDERICO DACLAN, JOSEFINA COLLADO, AND HER HUSBAND
FEDERICO DACLAN AND MINVILUZ DACLAN, AS SURVIVING HEIRS OF

97

DECEASED JOSE DACLAN, G.R. No. 197115 (consolidated), March 23, 2015, J.
Del Castillo
The Daclans lament the supposed failure of the Province to provide agricultural
extension and on-site research services and facilities as required under the )RR of
the LGC of 1991, which failure they believe, constituted a violation of the stipulation
contained in the deeds of donation to develop and improve the livestock industry of
the country. Yet this cannot be made a ground for the reversion of the donated
lands; on the contrary, to allow such an argument would condone undue
interference by private individuals in the operations of government. The deeds of
donation merely stipulated that the donated lands shall be used for the
establishment of a breeding station and shall not be used for any other purpose, and
that in case of non-use, abandonment or cessation of the activities of the BAI,
possession or ownership shall automatically revert to the Daclans. It was never
stipulated that they may interfere in the management and operation of the breeding
station. Even then, they could not directly participate in the operations of the
breeding station.
Nature of Donations
Classification of Donations
Persons who may giver or receive a Donation
Formalities of Donation
ESPERANZA C. CARINAN vs. SPOUSES GAVINO CUETO and CARMELITA CUETO, G.R. No.
198636, October 8, 2014, J. Reyes

In order to sufficiently substantiate her claim that the money paid by the
respondents was actually a donation, petitioner should have also submitted in court
a copy of their written contract evincing such agreement. As earlier ruled by the
Court, a donation must comply with the mandatory formal requirements set forth by
law for its validity. When the subject of donation is purchase money, Article 748 of
the NCC is applicable. Accordingly, the donation of money as well as its acceptance
should be in writing. Otherwise, the donation is invalid for non-compliance with the
formal requisites prescribed by law.
Effects and limitation of Donation

Republic v. Guzman, G.R. No. 132964, February 18, 2000

The donation is null and void when (a) the deed of donation fails to show
the acceptance, or (b) where the formal notice of the acceptance made in
98

a separate instrument is either not given to the donor or else noted in the
deed of donation, and in the separate acceptance.
Villanueva vs. Spouses Branoco, G.R. No. 172804, January 24, 2011
When the donor used the words that the gift "does not pass title during
my lifetime; but when I die, she shall be the true owner of the two
aforementioned parcels"] the donor meant nothing else than that she
reserved of herself the possession and usufruct of said two parcels of
land until her death, at which time the donee would be able to dispose of
them freely.
Central Philippines University vs. CA, G.R. No. 112127 July 17,
1995
If there was no fulfillment or compliance with the condition, the donation
may now be revoked and all rights which the donee may have acquired under it
shall be deemed lost and extinguished.

Insular

Life

v.

Ebrado, G.R. NO.

44059,

Oct.

28,

1977

In essence, a life insurance policy is no different from a civil donation

insofar as the beneficiary is concerned. Both are founded upon the same
consideration: liberality. A beneficiary is like a donee, because from the
premiums of the policy which the insured pays out of liberality, the
beneficiary will receive the proceeds or profits of said insurance.
Zamboanga

v.

Plagata, G.R. NO. 148433,

Sept.

30,

2008

Since Article 1306 of said Code authorizes the parties to a contract to

establish such stipulations, . . . not contrary to law, . . . public order or
public policy, we are of the opinion that, at the very least, that
stipulation of the parties providing for automatic revocation of the deed
of donation, without prior judicial action for that purpose, is valid
subject to the determination of the propriety of the rescission sought.
Where such propriety is sustained, the decision of the court will be
merely declaratory of the revocation, but it is not in itself the revocatory
act.
Quijada vs.

CA, G.R. NO.

126444,

Dec.

4,

1998.

Since no period was imposed by the donor on when must the donee
comply with the condition, the latter remains the owner so long as he
has tried to comply with the condition within a reasonable period. Only
then - when the non-fulfillment of the resolutory condition was brought
99

to the donor's knowledge - that ownership of the donated property

reverted to the donor as provided in the automatic reversion clause of the
deed of donation.

PRESCR IP TION
METROPOLITAN FABRICS INC. ET AL. VS. PROSPERITY CREDIT RESOURCES
ENC. ET AL. G.R. No. 154390 March 17, 2014, J. Bersamin
With the contract being voidable, petitioners action to annul the real estate
mortgage already prescribed. Article 1390, in relation to Article 1391 of the Civil
Code, provides that if the consent of the contracting parties was obtained through
fraud, the contract is considered voidable and may be annulled within four years
from the time of the discovery of the fraud. The discovery of fraud is reckoned from
the time the document was registered in the Register of Deeds in view of the rule
that registration was notice to the whole world. Thus, because the mortgage
involving the seven lots was registered on September 5, 1984, they had until
September 5, 1988 within which to assail the validity of the mortgage. But their
complaint was instituted in the RTC only on October 10, 1991.Hence, the action,
being by then already prescribed, should be dismissed.
RURAL BANK OF CABADBARAN, INC v JORGITA A. MELECIO-YAP, LILIA
MELECIO PACIFICO (deceased, substituted by her only child ERILL* ISAAC M.
PACIFICO, JR.), REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMAGIL, G.R No. 178451, July 30, 2014. J. PERLAS-BERNABE
In this case, the complaint for nullification of the SPA was filed before the RTC on
April 17,1996, or barely three years from the discovery of the averred forgery in
1993, which is within the four-year prescriptive period provided under Article 1146
of the Civil Code to institute an action upon the injury to their rights over the subject
properties. A delay within the prescriptive period is sanctioned by law and is not
considered to be a delay that would bar relief. Laches applies only in the absence of
a statutory prescriptive period.
SPOUSES FRANCISCO SIERRA (substituted by DONATO, TERESITA, TEODORA,
LORENZA, LUCINA, IMELDA, VILMA, and MILAGROS SIERRA) and ANTONINA
SANTOS, SPOUSES ROSARIO SIERRA and EUSEBIO CALUMA LEYVA, and
SPOUSES SALOME SIERRA and FELIX GATLABAYAN (substituted by BUENA
VENTURA, ELPIDIO, PAULINO, CATALINA, GREGORIO, and EDGARDO
GATLABAYAN, LORETO REILLO, FERMINA PEREGRINA, and NIDA HASHIMOTO)
vs. PAIC SAVINGS AND MORTGAGE BANK, INC., G.R. No. 197857, September 10,
2014, J. Perlas- Bernabe

100

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. As mortgagors
desiring to attack a mortgage as invalid, petitioners should act with reasonable
promptness, else its unreasonable delay may amount to ratification. Verily, to allow
petitioners to assert their right to the subject properties now after their unjustified
failure to act within a reasonable time would be grossly unfair to PSMB, and
perforce should not be sanctioned. 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.
INTELLECTUAL PROPERTY
SHANG PROPERTIES REALTY CORPORATION (formerly THE SHANG GRAND
TOWER CORPORATION) and SHANG PROPERTIES, INC. (formerly EDSA
PROPERTIES HOLDINGS, INC.), v ST. FRANCIS DEVELOPMENT CORPORATION,
G.R No. 190706, July 21, 2014. J. PERLAS-BERNABE

St. Francis Development Corporation SFDC uses the mark ST. FRANC)S to
identify numerous development projects at Ortigas Center. When Shang Properties
Realty (SPR) used the marks The St. Francis Towers and The St. Francis ShangriLa Place, SFDC filed a complaint for intellectual property violation for unfair
competition and damages.
For unfair competition to be established, there must be a showing that SPR
employed means to induce the public towards a false belief that it was offering
SFDC s goods/services. Here, this was not proven.

On the contrary, the Court upheld SPR s use of the St. Francis mark since the use
was meant not to ride on SFDC s goodwill, but merely to identify, or at least
associate, their real estate project/s with its geographical location. In the real estate
business, here can be no description of its geographical origin as precise and
accurate as that of the name of the place where they are situated.
ILLAWARE PRODUCTS CORPORATION V JESICHRIS MANUFACTURING
CORPORATION, G.R No. 195549, September 3, 2014. J. PERALTA
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

101

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.
It is evident that petitioner Willaware is engaged in unfair competition as shown by
his act of suddenly shifting his business from manufacturing kitchenware to plasticmade automotive parts; his luring the employees of the respondent to transfer to his
employ and trying to discover the trade secrets of the respondent.
ABS-CBN CORPORATION, vs. FELIPE GOZON, GILBERTO R. DUAVIT, JR.,
MARISSA L. FLORES, JESSICA A. SOHO, GRACE DELA PEA-REYES, JOHN OLIVER
T. MANALASTAS, JOHN DOES AND JANE DOES, G.R. No. 195956, March 11, 2015,
J. Leonen
Several employees of GMA-7 were charged with copyright infringement. ABS-CBN
claims that news footage is subject to copyright and prohibited use of copyrighted
material is punishable under the Intellectual Property Code. It argues that the new
footage is not a "newsworthy event" but "merely an account of the arrival of Angelo
dela Cruz in the Philippines the latter being the newsworthy event".

The Supreme Court held that the news footage is copyrightable. he news footage is
copyrightable.

The Intellectual Property Code is clear about the rights afforded to authors of
various kinds of work. Under the Code, "works are protected by the sole fact of their
creation, irrespective of their mode or form of expression, as well as of their content,
quality and purpose." These include "[audio-visual works and cinematographic
works and works produced by a process analogous to cinematography or any
process for making audiovisual recordings."
It is true that under Section 175 of the Intellectual Property Code, "news of the day
and other miscellaneous facts having the character of mere items of press
information" are considered unprotected subject matter. However, the Code does
not state that expression of the news of the day, particularly when it underwent a
creative process, is not entitled to protection.
GMA-7's rebroadcast of ABS-CBN's news footage without the latter's consent is not
an issue. The mere act of rebroadcasting without authority from the owner of the
broadcast gives rise to the probability that a crime was committed under the
Intellectual Property Code.
Respondents cannot invoke the defense of good faith to argue that no probable
cause exists.Infringement under the Intellectual Property Code is malum prohibitum.
The Intellectual Property Code is a special law.
TAIWAN KOLIN CORPORATION, LTD VS. KOLIN ELECTRONICS CO., INC G.R. No.
209843. March 25, 2015, J. Velasco Jr.
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The issue to be resolved in the case at bar is whether or not petitioner is entitled to
its trademark registration of KOL)N over its specific goods of television sets and
DVD players. Petitioner postulates, in the main, that its goods are not closely related
to those of Kolin Electronics. On the other hand, respondent hinges its case on the
CA s findings that its and petitioner s products are closely-related. Thus, granting
petitioner s application for trademark registration, according to respondent, would
cause confusion as to the public.
The Supreme Court held that identical marks may be registered for products for the
same classification. Mere uniformity in categorization, by itself, does not
automatically preclude the registration of what appears to be an identical mark, if
that be the case. In fact, SC, in a long line of cases, has held that such circumstance
does not necessarily result in any trademark infringement. It is hornbook doctrine
that emphasis should be on the similarity of the products involved and not on the
arbitrary classification or general description of their properties or characteristics.
The mere fact that one person has adopted and used a trademark on his goods
would not prevent the adoption and use of the same trademark by others on
unrelated articles of a different kind.
It is erroneous to conclude that all electronic products are related and that the
coverage of one electronic product necessarily precludes the registration of a
similar mark over another. In this digital age wherein electronic products have not
only diversified by leaps and bounds, and are geared towards interoperability, it is
difficult to assert readily, as respondent simplistically did, that all devices that
require plugging into sockets are necessarily related goods. In addition, Supreme
court rule that there is no confusing similarity between the marks, given that the
products covered by the trademark, i.e., jeans, were, at that time, considered pricey,
typically purchased by intelligent buyers familiar with the products and are more
circumspect, and, therefore, would not easily be deceived.Hence, petitioner's
trademark registration not only covers unrelated good, but is also incapable of
deceiving the ordinary intelligent buyer.
OBLIGA TIONS

I. DEFINITION
MAKATI STOCK EXCHANGE vs. CAMPOS, G.R. NO. 138814, April 16,
2009
Respondent used the terms "right and obligation" in his Petition from
which he concluded that that such Petition sufficiently states a cause of
action. Right and obligation are legal terms with specific legal meaning;
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A right is a claim or title to an interest in anything whatsoever that is

enforceable by law, while an obligation is defined in the Civil Code as a
juridical necessity to give, to do or not to do and in the words of Arias
Ramos "An obligation is a juridical relation whereby a person (called the
creditor) may demand from another (called the debtor) the observance of
a determinative conduct (the giving, doing or not doing), and in case of
breach, may demand satisfaction from the assets of the latter."
II. ELEMENTS OF AN OBLIGATION
DEGAOS vs. PEOPLE OF THE PHILIPPINES, G.R. NO. 162826,
October 14, 2013

Degaos claims that his partial payments to the complainants novated

his contract with them from agency to loan, thereby converting his
liability from criminal to civil. The incompatibility in novation must take
place in any of the essential elements of the obligation, such as its object,
cause or principal conditions thereof; otherwise, the change would be
merely modificatory in nature and insufficient to extinguish the original
obligation.
ASUNCION vs. CA, G.R. NO. 109125, December 2, 1994
An obligation is a juridical necessity to give, to do or not to do (Art. 1156,
Civil Code) and is constituted upon the concurrence of the essential
elements thereof, viz: (a) The vinculum juris or juridical tie which is the
efficient cause established by the various sources of obligations (law,
contracts, quasi-contracts, delicts and quasi-delicts); (b) the object which
is the prestation or conduct; required to be observed (to give, to do or not
to do); and (c) the subject-persons who, viewed from the demandability of
the obligation, are the active (obligee) and the passive (obligor) subjects.
III. DIFFERENT KINDS OF PRESTATIONS
SSS vs M OONWALK DEVELOPMENT & HOUSING CORPORATION,
G.R. NO. 73345. April 7, 1993.

For failure to pay on time the amortization, SSS imposed the 12%
penalty contained in the penal clause of the contract entered into
between the parties. Inpositive obligations, (to give and to do), the
penalty is demandable when the debtor is in mora; hence, the necessity
of demand by the debtor unless the same is excused.

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ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION vs.

PHILIPPINE COMMERCIAL INTERNATIONAL BANK, G.R. NO. 153827
April 25, 2006

The [petitioner] may have experienced financial difficulties because of the

"1997 economic crisis" that ensued in Asia, however, the same does not
constitute a valid justification for the [petitioner] to renege on its
obligations to the [respondent], and [petitioner] cannot even find solace
in Articles 1266 and 1267 of the New Civil Code, since it is applicable
only to obligations "to do," and not obligations "to give." An obligation "to
do" includes all kinds of work or service; while an obligation "to give" is a
prestation which consists in the delivery of a movable or an immovable
thing in order to create a real right, or for the use of the recipient, or for
its simple possession, or in order to return it to its owner.
IV. CLASSIFICATION OF OBLIGATIONS
AS TO BASIS AND ENFORCEABILITY
1.NATURAL OBLIGATIONS
ANSAY vs. BOARD OF DIRECTORS, G.R. NO. L -13667, April 29, 1960

Appellants filed against appellees in the CFI a complaint praying for a

20% Christmas bonus, contending that there exists a cause of action in
their complaint because their claim rests on moral grounds or what in
brief is defined by law as a natural obligation.
Article 1423 of the New Civil Code classifies obligations into civil or
natural, "Civil obligations are a right of action to compel their
performance, while Natural obligations, not being based on positive law
but on equity and natural law, do not grant a right of action to enforce
their performance, but after voluntary fulfillment by the obligor, they
authorize the retention of what has been delivered or rendered by reason
thereof".
DBP vs. CONFESSOR, G.R. NO. L-48889 May 11, 1989

Appellee refuses to pay his obligation despite his execution of a new

promissory note in consideration of a previous promissory note which
remained unpaid even after the lapse of 10 years on the ground of
prescription. When a debt is already barred by prescription, it cannot be
enforced by the creditor but a new contract recognizing and assuming
the prescribed debt with full knowledge of the prescription would be valid
and enforceable and he thereby waives the benefit of prescription.
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2. CIVIL OBLIGATIONS
ANSAY vs. NDC, G.R. NO. L-13667, April 29, 1960

Appellants contend that there exists a cause of action in their complaint

because their claim rests on moral grounds or what in brief is defined by
law as a natural obligation. Article 1423 of the New Civil Code classifies
obligations into civil or natural. "Civil obligations are a right of action to
compel their performance. Natural obligations, not be ing based on
positive law but on equity and natural law, do not grant a right of action
to enforce their performance, but after voluntary fulfillment by the
obligor, they authorize the retention of what has been delivered or
rendered by reason thereof".
V. SOURCES OF OBLIGATIONS
ABS-CBN vs. OFFICE OF THE OM BUDSMAN, G.R. NO. 133347
April 23, 2010

Petitioner asserts that a criminal complaint may continue and be

prosecuted as an independent civil action. 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) xxx xxx xxx. e) quasi-delicts.
1. OBLIGATIONS ARISING FROM LAW
SALEN vs. BALCE, G.R. NO. L-14414, April 27, 1960

Delfin, the father, was held jointly and severally liable with his minor son
Dante arising from the criminal act committed by the latter. The civil
liability which the law imposes upon the father and, in case of his death
or incapacity, the mother, for any damages that may be caused by the
minor children who live with them, is a necessary consequence of the
parental authority they exercise over them which imposes upon the
parents the "duty of supporting them, keeping them in their company,
educating them in proportion to their means", while, on the other hand,
gives them the "right to correct and punish them in moderation" .
2. OBLIGATIONS ARISING FROM CONTRACTS
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METROPOLITAN BANK AND TRUST COMPANY vs. ANA GRACE ROSALES AND
YO YUK TO, G.R. No. 183204, January 13, 2014 J. del Castillo
Petitioner bank uses as basis for its refusal The (old Out clause found in the
agreement it entered into with respondents. The Supreme Court held that the (old
Out clause applies only if there is a valid and existing obligation arising from any of
the sources of obligation enumerated in Article 115779of the Civil Code, to wit: law,
contracts, quasi-contracts, delict, and quasi-delict. No such ground exists in this
case, hence the bank is guilty of breach of contract when it unjustifiably refused to
release respondents deposit despite demand.
SALUDAGA vs. FEU, G.R. NO. 179337 April 30, 2008

Saludaga, a sophomore law student of respondent FEU filed a case for

damages against it after he was shot by one of the security guards on
duty at the school premises. When an academic institution accepts
students for enrollment, there is a established contract between them,
resulting in bilateral obligations which both parties are bound to comply
with but which FEU failed to perform when it did not provide a safe and
secure environment to its students.

MERALCO vs RAMOY, G.R. NO. 158911, M arch 4, 2008

The respondents' cause of action against MERALCO is anchored on culpa

contractual or breach of contract for the latter's discontinuance of its
service to respondents. In culpa contractual the me re proof of the
existence of the contract and the failure of its compliance justify, prima
facie, a corresponding right of relief from law, recognizing the obligatory
force of contracts, the law will not permit a party to be set free from
liability for any kind of misperformance of the contractual undertaking or
a contravention of the tenor thereof.
3. OBLIGATIONS ARISING FROM QUASI CONTRACT
CRUZ vs.TUASON, G.R. NO. L-23749 April 29, 1977

Cruz alleged that Tuason had been enriched at the expense of Cruz by
virtue of an agreement made by Cruz and the Deudors in the clearing,
improving, subdividing and selling the large tract of land for the reasons
that said improvements are being used and enjoyed by Tuason. A
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presumed quasi-contract cannot emerge as against one party when the

subject matter thereof is already covered by an existing contract with
another party.
A. NEGOTIORUM GESTIO
ADILLE vs. CA, G.R. NO. L-44546 January 29, 1988

Petitioner claims exclusive ownership on a land after exercising his right

of repurchase to the prejudice of the co owners. The redemption by one
co-heir or co-owner of the property in its totality does not vest in him
ownership over it but the petitioner, in taking over the property, did so
either on behalf of his co-heirs, in which event, he had constituted
himself a negotiorum gestor under Article 2144 of the Civil Code, or for
his exclusive benefit, in which case, he is guilty of fraud, and must act as
trustee, the private respondents being the beneficiaries, under the Article
1456.

B. SOLUTIO INDEBITI
ANDRES vs. M ANUFACTURERS HANOVER & TRUST CORPORATION,
G.R. NO. 82670 September 15, 1989

Petitioner refuses to return the second remittance to the respondent

bank when the respondent bank mistakenly remitted a certain amount
for a specific transaction twice on behalf of the buyer on the premise that
the buyer still owes the petitioner money. For quasi-contract of solutio
indebiti to apply the following requisites must concur: "(1) that he who
paid was not under obligation to do so; and, (2) that payment was made
by reason of an essential mistake of fact", hence petitioner must return
to the bank the amount which was mistakenly remitted for it is the buyer
not the respondent bank who has the obligation to the petitioner and not
the bank.
PUYAT & SONS, INC. vs. CITY OF MANILA, G.R. NO. L -17447, April
30, 1963

The City Treasurer of Manila refused to refund the retail dealer's tax
erroneously paid by the petitioner on it's belief that it was not exempted
from such, on the ground that the tax was voluntarily paid and not
under protest which was a condition sine qua non in order that a legal
basis may arise. Voluntariness is incompatible with mistake being a
108

case of solutio indebiti, protest is not required as a condition sine qua

non for its application.
4. OBLIGATIONS ARISING FROM DELICT
CINCO vs. CANONOY, G.R. NO. L-33171, May 31, 1979

Respondent Judge acted with grave abuse of discretion when he upheld

the Decision of the Lower court suspending the civil action based on a
quasi-delict until after the criminal case is finally terminated. When the
civil action is based on an obligation not arising from the act or omission
complained of as a felony, such civil action may proceed independently of
the criminal proceedings and regardless of the result of the latter.
5. OBLIGATIONS ARISING FROM QUASI DELICT
NAPOCOR vs. CA, G.R. NO. 124378, M arch 8, 2005

The negligence of NPC as a result of its inability to maintain the level of

water in its dams has been satisfactorily and extensively established. 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 and it is not necessary that such damages have been
foreseen or could have reasonably been foreseen by the defendant.

NAPOCOR vs. THE HONORABLE COURT OF APPEALS, G.R. NO.

124378. M arch 8, 2005

NPC as a result of its inability to maintain the level of water in its dam
brought damages to defendants but asserts that the damages, if any,
were due to the heavy rains and should be regarded as a fortuitous
event.
Negligence or imprudence is human factor which makes the
whole occurrence humanized, as it were, and removed from the rules
applicable to acts of God
JIMENEZ vs. CITY OF M ANILA, G.R. NO. 71049, M ay 29, 1987

Respondent alleged that it is the Asiatic Integrated Corporation that is

managing the public market. Hence, it cannot be liable for the injuries
sustained by the petitioner when he fell into an open drainage hole. The
109

City of Manila is likewise liable for damages under Article 2189 of the
Civil Code, respondent City having retained control and supervision over
the Sta. Ana Public Market and as tort-feasor under Article 2176 of the
Civil Code on quasi-delicts Respondent City of Manila and Asiatic
Integrated Corporation being joint tort-feasors are solidarily liable under
Article 2194 of the Civil Code.
JIMENEZ vs. CITY OF M ANILA, G.R. NO. 71049, M ay 29, 1987

Petitioner fell into the open drainage holes, causing him physical
injuries, in a public market being managed by Asiatic Integrated
Corporation but such public market is still under the control and
supervision of the City of Manila. As a defense against liability on the
basis of a quasi-delict, one must have exercised the diligence of a good
father of a family. (Art. 1173 of the Civil Code).
VI. NATURE AND EFFECTS OF OBLIGATION
A. OBLIGATION TO GIVE A DETERM INATE THING vs A GENERIC
THING
SANCHEZ vs. RIGOS, G.R. NO. L-25494 June 14, 1972

In his complaint, plaintiff alleges that, by virtue of the option under

consideration, "defendant agreed and committed to sell" and "the plaintiff
agreed and committed to buy" the land described in the option, hence,
plaintiff maintains that the promise contained in the contract is
"reciprocally demandable. "A promise to buy and sell a determinate thing
for a price certain is reciprocally demandable and an accepted unilateral
promise to buy or to sell a determinate thing for a price certain is binding
upon the promissor if the promise is supported by a consideration
distinct from the price.
GAISANO CAGAYAN, INC. vs INSURANCE COMPANY OF NORTH
AMERICA, G.R. NO. 147839, June 8, 2006
Petitioners argument is that it is not liable for the unpaid accounts
because the fire is a fortuitous event. If the obligation is generic in the
sense that the object thereof is designated merely by its class or genus
without any particular designation or physical segregation from all others
of the same class, the loss or destruction of anything of the same kind
even without the debtors fault and before he has incurred in delay will
not have the effect of extinguishing the obligation, based on the principle
110

that the genus of a thing can never perish, (Genus nunquan perit) and
an obligation to pay money is generic; therefore, it is not excused by
fortuitous loss of any specific property of the debtor.
GAISANO CAGAYAN, INC. vs INSURANCE COMPANY OF NORTH
AMERICA, G. R. NO. 147839, June 8, 2006
Petitioners argument is that it is not liable for the unpaid accounts
because the fire is a fortuitous event. The rule that an obligor should be
held exempt from liability when the loss occurs thru a fortuitous event
only holds true when the obligation consists in the delivery of a
determinate thing and there is no stipulation holding him liable even in
case of fortuitous event and it does not apply when the obligation is
pecuniary in nature.
B. FAILURE OF PERFORMANCE
ART 1170
ARRIETA vs. NARIC, G.R. NO. L-15645, January 31, 1964

It is clear upon the records that the sole and principal reason for the
cancellation of the allocation of rice contracted by the appellee herein in
Burma, was the failure of the letter of credit to be opened by NARIC
within the contemplated period which resulted in the consequent
damage. Every debtor who fails in performance of his obligations due to
fraud, negligence, or delay is bound to indemnify for the losses and
damages caused thereby.
TELEFAST vs. CASTRO, G.R. NO. 73867, February 29, 1988

Petitioner and private respondent entered into a contract whereby, for a

fee, petitioner undertook to send said private respondent's message
overseas by telegram but which petitioner did not do, despite
performance by said private respondent of her obligation by paying the
required charges. 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.
C. DELAY
1. M ORA SOLVENDI
ART 11
111

SANTOS VENTURA HOCORMA FOUNDATION, INC., vs. SANTOS, G.R.

NO. 153004, November 5, 2004

When respondents wrote a demand letter to petitioner, the obligation was

already due and demandable, and when the petitioner failed to pay its
due obligation after the demand was made, it incurred delay. Delay as
used in this article is synonymous to default or mora solvendi which
means delay in the fulfillment of obligations with respect to time and in
order for the debtor 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.
2. M ORA ACCIPIENDI

MANUEL vs. CA, G.R. NO. 95469

July 25, 1991

Petitioner contends that private respondents are in mora accipiendi. The

failure of the owners to collect or their refusal to accept the rentals are
not valid defenses, since consignation under such circumstances, is
necessary, and by this we mean one that is effected in full compliance
with the specific requirements of the law therefor.
3. COMPENSATIO MORAE
CORTES vs. CA, G.R. NO. 126083, July 12, 2006
Cortes admission agreed that the Corporations full payment of the sum
would depend upon his delivery of the TCTs of the three lots.
Considering that their obligation was reciprocal, performance thereof
must be simultaneous and the mutual inaction of Cortes and the
Corporation therefore gave rise to a compensation morae or default on
the part of both parties because neither has completed their part in their
reciprocal obligation.

UNLAD RESOURCES DEVELOPMENT CORPORATION vs. DRAGON,

G.R. NO. 149338, July 28, 2008

112

Petitioners contend that they have fully complied with their obligation
under the Memorandum of Agreement but due to respondents failure to
increase the capital stock of the corporation to an amount that will
accommodate their undertaking, it had become impossible for them to
perform their end of the Agreement. In reciprocal obligations, failure of
the other party to perform the obligation renders the other party to
demand fulfillment of the obligation or asked for the rescission of the
contract, but not simply not performing their part of the Agreement.
D. NEGLIGENCE
1. DEGREE OF DILIGENCE
SICAM vs. JORGE, G.R. NO. 159617, August 8, 2007

Sicam exempts himself from liability on the ground that the robbery of
his pawnshop is a fortuitous event which is by definition is an
extraordinary event not foreseeable or avoidable. In order for a fortuitous
event to exempt one from liability, it is necessary that one has committed
no negligence or misconduct that may have occasioned the loss and
robbery per se, just like carnapping, is not a fortuitous event for it does
not foreclose the possibility of negligence on the part of herein
petitioners.
MERALCO vs. RAM OY, G.R. NO. 158911, M arch 4, 2008

The respondents' cause of action against MERALCO is anchored on culpa

contractual or breach of contract for the latter's discontinuance of its
service to respondents. Article 1173 also provides that the fault or
negligence of the obligor consists in the omission of that diligence which
is required by the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place, hence, as a
public utility, MERALCO has the obligation to discharge its functions
with utmost care and diligence.

MINDANAO TERM INAL AND BROKERAGE SERVICE, INC. vs.

PHOENIX ASSURANCE COMPANY OF NEW YORK,MCGEE & CO.,
INC., G.R. NO. 162467, M ay 8, 2009

113

Mindanao Terminal was required to observe ordinary diligence only in

loading and stowing the cargoes of Del Monte Produce aboard M,V
Mistrau since there is nothing in the contract which requires a higher
degree of diligence. If the law or contract does not state the degree of
diligence which is to be observed in the performance of an obligation
then that which is expected of a good father of a family or ordinary
diligence shall be required.
2. FORTUITOUS EVENT
COMGLASCO CORPORATION/AGUILA GLASS vs. SANTOS CAR CHECK CENTER
CORPORATION, G.R. No. 202989, March 25, 2015, J. Reyes
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. 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.
Relying on Article 1267 of the Civil Code to justify its decision to pre-terminate
its lease with respondent, petitioner invokes the 1997 Asian currency crisis as
causing it much difficulty in meeting its obligations. In Philippine National
Construction Corporation v. CA, the Court held that the payment of lease rentals
does not involve a prestation to do envisaged in Articles
and
which has
been rendered legally or physically impossible without the fault of the obligorlessor. 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 petitioner cannot b e
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 petitioner had known what business risks it
assumed when it opened a new shop in Iloilo City.

NAKPIL & SONS v. CA, G.R. NO. L-47851 April 15, 1988

114

There was an earthquake which caused the building heavy damage but
the other nearby structures had less damages as compared to the said
building, the architects, engineers and contractors are claiming
fortuitous event as a defense. To be exempt from liability due to an act of
God, the ff must occur:
1) cause of breach must be independent of the will of the debtor
2) event must be unforeseeable or unavoidable
3) event must be such that it would render it impossible for the debtor to
fulfill the obligation
4) debtor must be free from any participation or agG.R.avation of the
industry to the creditor.
3. EXTRAORDINARY INFLATION
ALMEDA vs. BATHALA MARKETING,G.R.NO.150806, January 28,
2008
The lower court denied petitioners right to pass on to respondent the
burden of paying the VAT and their right to collect the demanded
increase in rental, there being no extraordinary inflation or devaluation
as provided for in the seventh clause of the contract. Extraordinary
inflation exists when there is a decrease or increase in the purchasing
power of the Philippine currency which is unusual or beyond the
common fluctuation in the value of said currency, and such increase or
decrease could not have been reasonably foreseen or was manifestly
beyond the contemplation of the parties at the time of the establishment
of the obligation.

4. BREACH FOR RESCISSION

UNIVERSAL FOOD CORPORATION vs. THE COURT OF APPEALS,
G.R. NO. L-29155
M ay 13, 1970
Respondent patentee was dismissed as the permanent chief chemist of
the corporation without any fault or negligence on his part after the
execution of the Bill of Assignment, prompting him to rescind the
contract. The general rule is that rescission of a contract will not be
permitted for a slight or casual breach, but only for such substantial and
fundamental breach as would defeat the very object of the parties in
making the agreement.
VII. KINDS OF CIVIL OBLIGATIONS
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A. PURE OBLIGATIONS
ART 1179
HONGKONG AND SHANGHAI BANKING CORP. vs. BROQUEZA, G.R.
NO. 178610 November 17, 2010
Respondents executed undated promissory notes. They were not able to
pay the monthly amortizations of their respective loans, which were
suppose to be paid through salary deduction, to the petitioner because of
their dismissal. Loans secured by their future retirement benefits to
which they are no longer entitled are reduced to unsecured and pure civil
obligations and the absence of a period within which to pay the
obligation, the fulfillment of which is demandable at once.
PAY vs. PALANCA, G.R. NO. L-29900June 28, 1974

Oppositor-appellee alleged that the rights of the petitioner-creditor had

already prescribed when the action based on a dated promissory note
was filed 15 years after. The wordings of the promissory note being "upon
demand," the obligation was immediately due and had prescribed upon
the lapse of ten years from the date on the promissory note.
B. CONDITIONAL OBLIGATIONS
SUSPENSIVE CONDITION
183 SCRA 171
Art. 1181
JAVIER vs. CA, G.R. No. L-48194 M arch 15, 1990
When a contract is subject to a suspensive condition, its birth and
effectivity can take place only if and when the event which constitutes
the condition happens or is fulfilled, and if the suspensive condition does
not take place, the parties would stand as if the conditional obligation
had never existed.
HEIRS OF PAULINO ATIENZA vs. ESPIDOL, G.R. NO. 180665
First, since Espidol failed to pay the installment on a day certain fixed in
their agreement, the Atienzas can afterwards validly cancel and ignore
the contract to sell because their obligation to sell under it did not
arise. Since the suspensive condition did not arise, the parties stood as
if the conditional obligation had never existed.
Second, it was not a pure suspensive condition in the sense that the
Atienzas made no undertaking while the installments were not yet
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due. Mr. Justice Edgardo L. Paras gave a fitting example of suspensive

condition: Ill buy your land for P1,000.00 if you pass the last bar
examinations. This he said was suspensive for the bar examinations
results will be awaited. Meantime the buyer is placed under no
immediate obligation to the person who took the examinations.
Here, however, although the Atienzas had no obligation as yet to turn
over title pending the occurrence of the suspensive condition, it was
implicit that they were under immediate obligation not to sell the land to
another in the meantime. When Espidol failed to pay within the period
provided in their agreement, the Atienzas were relieved of any obligation
to hold the property in reserve for him.

REYES vs. TUPARAN, G.R. NO. 188064, June 1, 2011

The petitioner was rescinding the subject Deed of Conditional Sale
pursuant to Article 1191 of the Civil Code because of the respondents
failure,refusal to pay the balance of the total purchase price of the
petitioners properties within the stipulated period. The full payment of
the purchase price is the positive suspensive condition, the failure of
which is not a breach of contract, but simply an event that pre vented the
obligation of the vendor to convey title from acquiring binding force.
SPS. SANTOS vs. CA, G.R. NO. 120820, August 1, 2000

In view of our finding in the present case that the aG.R.eement between
the parties is a contract to sell, it follows that the appellate court erred
when it decreed that a judicial rescission of said aG.R.eement was
necessary. In a contract to sell, the payment of the purchase price is a
positive suspensive condition and failure to pay the price agreed upon is
not a mere breach, casual or serious, but a situation that prevents the
obligation of the vendor to convey title from acquiring an obligatory force.

CONDITION PRECEDENT
PARKS vs. PROVINCE OF TARLAC, G.R. NO. L -24190, July 13, 1926

Appellant contends that a condition precedent having been imposed in

the donation and the same not having been complied with, the donation
never became effective. The characteristic of a condition precedent is
that the acquisition of the right is not effected while said condition is not
complied with or is not deemed complied with, consequently, when a
117

condition is imposed, the compliance of which cannot be effected except

when the right is deemed acquired, such condition cannot be a condition
precedent but a condition subsequent.

RESOLUTORY CONDITION
ART 1181
CENTRAL PHILIPPINE UNIVERSITY vs. CA, G.R. NO. 112230. July
17, 1995

Petitioner failed to comply to build a school on the donated land given by

the private respondent, which prompted the private respondent to
rescind the donation. On conditional obligations, the acquisition of rights
as well the extinguishment or loss of those already acquired shall depend
upon the happening of the event which constitutes the condition, thus,
when a person donates land to another on the condition that the latter
would build upon the land a school is such a resolutory one and if there
was no fulfillment with the condition such as what obtains in the instant
case, the donation may be revoked & all rights which the donee may
have acquired shall be deemed lost & extinguished.
C. OBLIGATIONS W ITH A PERIOD
ROWENA R. SALONTE 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, G.R. No. 207348, August 19, 2014, J. Velasco, Jr.,
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. In the instant case, a plain
reading of the Contract of Reclamation reveals that the six (6)-year period provided
for project completion, or termination of the contract was a mere estimate and
cannot be considered a period or a "day certain" in the context of Art. 1193. To be
clear, par. 15 of the Contract of Reclamation states: "the project is estimated to be
completed in six (6) years." The lapse of six (6) years from the perfection of the
contract did not, 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.

118

RADIOWEALTH FINANCE COMPANY vs. Spouses DEL ROSARIO, G.R.

NO. 138739. July 6, 2000

Petitioner claimed that respondents are liable for the whole amount of
their debt and the interest thereon, after they defaulted on the monthly
installments, due to acceleration clause therein. Respondents, on the
other hand, countered that the installments were not yet due and
demandable, evidenced by the blank space left for the date on which the
installments should have commenced and theorized that fulfillment of
the obligation is dependent on the sole will of the debtor, hence proper
court should first fix a period for payment. The act of leaving blank the
due date of the first installment did not necessarily mean that the
debtors were allowed to pay as and when they could, since the presence
of an acceleration clause and a late payment penalty, showed the
intention of the parties that the installments should be paid at a definite
date, this is an obligation with a period.
LIM vs.PEOPLE OF THE PHILIPPINES, G.R. NO. L -34338 November
21, 1984

Petitioner seeks the reversal of the decision of the lower court which
convicted her of the crime of Estafa when she failed to give the proceeds
of the sale of the tobacco in accordance with their agreement which says
that ''...payment should be given as soon as the tobaccos are sold...'' and
contended that the court should first fix the period. It is clear in the
aG.R.eement, that the obligation was immediately demandable as soon
as the tobacco was disposed of hence, Article 1197 of the New Civil Code,
which provides that the courts may fix the duration of the obligation if it
does not fix a period, does not apply.
ART 1197
ARANETA, INC., vs.PHILIPPINE SUGAR ESTATES, G.R. NO. L-22558
May 31, 1967
Araneta, who was not able to comply with his obligation to create side
streets on the sides of the land which were sold to the PSE due to the
presence of squatters, questions the decision of the lower court ordering
him to comply with his obligation within 2 years from the finality of the
decision. It must be recalled that Article 1197 of the Civil Code involves a
two-step process, the Court must first determine that "the obligation
does not fix a period", or from the nature and the circumstances it can be
inferred that a period was intended, because courts can not fix a period
merely because in its opinion it is or should be reasonable and the
119

complaint not having sought that the court should set a period, but must
set the time that the parties are shown to have intended.
4. OBLIGATIONS W ITH A PENAL CLAUSE
SSS vs. MOONWALK DEVELOPMENT & HOUSING CORPORATION,
G.R. NO. 73345, April 7, 1993.
Is the penalty demandable even after the extinguishment of the principal
obligation? For all purposes the principal obligation of defendantappellee was deemed extinguished as well as the accessory obligation of
real estate mortgage, the penal clause which is also an accessory
obligation must also be deemed extinguished, it would be otherwise, if
the demand for the payment of the penalty was made prior to the
extinguishment of the obligation because by then the debtor would be in
mora and therefore liable for the penalty.
THE BACHRACH M OTOR CO., INC., vs. ESPIRITU, G.R. NO. L -28497
November 6, 1928

Defendant alleged that the decision of the lower court to pay 25 percent
of the amount of the trucks in addition to the amount of the trucks plus
12 per cent per annum is unconscionable and exceeds the rate fixed by
law. The penalty agreed upon does not include the interest, and which
may be demanded separetely and the penalty is not to be added to the
interest for the determination of whether the interest exceeds the rate
fixed by the law, since said rate was fixed only for the interest.
ROBES-FRANCISCO REALTY & DEVELOPMENT CORPORATION vs.
CFI, G.R. NO. L-41093, October 30, 1978

Petitioner corporation questions the award for nominal damages and

attorney's fee since the contract agreed upon indicated an interest at 4%
per annum of the total amount to be paid which should be considered as
penalty clause for failure to comply with the obligation hence, the vendee
cannot recover more than what is agreed upon. 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 and nominal damages are not intended for indemnification of
loss suffered but for the vindication or recognition of a right violated or
invaded.
5. RECIPROCAL OBLIGATION
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GOLDEN VALLEY EXPLORATION, INC. vs. PINKIAN MINING COMPANY and COPPER
VALLEY, INC., G.R. No. 190080, June 11, 2014, J. Perlas-Bernabe

)n reciprocal obligations, either party may rescind the contract upon the other s
substantial breach of the obligation/s he had assumed thereunder. The basis
therefor is Article 1191 of the Civil Code. PMC rescinded the operating agreement
with GVEI due to failure of the latter to advance payment for actual cost. The court
ruled that in reciprocal obligations, either party may rescind the contract upon the
other s substantial breach of the obligation/s he had assumed thereunder.
SWIRE REALTY DEVELOPMENT CORPORATION vs. JAYNE YU, G.R. No.
207133, March 09, 2015, J. Peralta
The right of rescission of a party to an obligation under Article 1191 of the Civil
Code is predicated on a breach of faith by the other party who violates the
reciprocity between them. The breach contemplated in the said provision is the
obligor s failure to comply with an existing obligation. When the obligor cannot
comply with what is incumbent upon it, the obligee may seek rescission and, in the
absence of any just cause for the court to determine the period of compliance, the
court shall decree the rescission. Thus, the delay in the completion of the project as
well as of the delay in the delivery of the unit are breaches of statutory and
contractual obligations which entitle respondent to rescind the contract, demand a
refund and payment of damages.
AGCAOILI vs. GSIS, G.R. NO. L-30056, August 30, 1988

GSIS sold a house to Agcaoili, and required him to immediately occupy it

under pain of cancellation of the sale, but Agcaoili found out that the
house was uninhabitable hence payment was suspended which
prompted GSIS to cancel the sale. It is axiomatic that "(i)n 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."
UNLAD RESOURCES DEVELOPMENT CORPORATION vs. DRAGON,
G.R. NO. 149338, July 28, 2008

Petitioners contend that they have fully complied with their obligation
under the Memorandum of Agreement but due to respondents failure to
increase the capital stock of the corporation to an amount that will
accommodate their undertaking, it had become impossible for them to
perform their end of the Agreement. In reciprocal obligations, failure of
the other party to perform the obligation renders the other party to
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demand fulfillment of the obligation or asked for the rescission of the

contract, but not simply not performing their part of the Agreement.
AGCAOILI vs. GSIS, G.R. NO. L-30056, August 30, 1988

GSIS sold a house to Agcaoili, and required him to immediately occupy it

under pain of cancellation of the sale, but Agcaoili found out that the
house was uninhabitable hence payment was suspended which
prompted GSIS to cancel the sale. It is axiomatic that "(i)n 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."
VIII. JOINT AND SOLIDARY OBLIGATIONS
SOLIDARY OBLIGATION
SPOUSES RODOLFO BEROT AND LILIA BEROT vs.FELIPE C. SIAPNO, G.R. No.
188944, July 9, 2014, CJ. Sereno
As previous ruled by the Court, The well entrenched rule is that solidary
obligations cannot be inferred lightly. They 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. 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.
OLONGAPO CITY vs. SUBIC WATER AND SEWERAGE CO., INC., G.R. No.
171626, August 6, 2014, J. Brion
Solidary liability must be expressly stated. In the present case, the joint and several
liability of Subic Water and OCWD was nowhere clear in the agreement. The
agreement simply and plainly stated that Olongapo City and OCWD were only
requesting Subic Water to be a co-maker, in view of its assumption of OCWD s water
operations. Under these circumstances, Olongapo City cannot proceed after Subic
Water for OCWD s unpaid obligations. The law explicitly states that solidary liability
is not presumed and must be expressly provided for. Not being a surety, Subic
Water is not an insurer of OCWD s obligations under the compromise agreement.
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ESTANISLAO AND AFRICA SINAMBAN VS. CHINA BANKING CORPORATION G.R.

No. 193890. March 11, 2015, J. REYES
A co-maker of a promissory note who binds himself with the maker jointly and
severally renders himself directly and primarily liable with the maker on the debt,
without reference to his solvency.
INIMACO vs. NLRC, G.R. NO. 101723, M ay 11, 2000

The absence of the word "solidary" in the dispositive portion of the

Decision, renders the liability joint. Well-entrenched is the rule that
solidary obligation cannot lightly be inferred, and there is a solidary
liability only when the obligation expressly so states, when the law so
provides or when the nature of the obligation so requires.

PNB vs. INDEPENDENT PLANTERS ASSOCIATION, INC., G.R. NO.L 28046.

M ay 16, 1983

PNB assails the order of dismissal of the lower court dismissing its
complaint against several solidary debtors on the gr.ound that one of the
defendants died during the pendency of the case and therefore the
complaint, being a money claim based on contract, should be prosecuted
in the testate or intestate proceeding for the settlement of the estate of
the deceased. The choice is undoubtedly left to the solidary creditor to
determine against whom he will enforce collection and in case of the
death of one of the solidary debtors, the creditor may, if he so chooses,
proceed against the surviving solidary debtors without necessity of filing
a claim in the estate of the deceased debtors.
JOINT OBLIGATIONS
TOPIC: JOINT and SOLIDARY OBLIGATIONS
RONQUILLO vs.CA, G.R. NO. L-55138September 28, 1984

Respondent filed a modification of the order of the lower court in a

collection case praying for the "execution of the decision in its entirety
against all defendants, jointly and severally." In the absence of a finding
of facts that the defendants made themselves individually liable for the
debt incurred they are each liable only for one-fourth of said amount, the
obligation being described as "individually and jointly".
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JOINT and SOLIDARY OBLIGATIONS

SPOUSES CHIN KONG WONG CHOI AND ANA O. CHUA VS. UNITED COCONUT
PLANTERS BANK, G.R. No. 207747. March 11, 2015, J. Carpio
Spouses Choi entered into contract to sell with Primetown Property Group, Inc. a
domestic corporation engaged in the business of condominium construction and
real estate development. Primetown on the other hand assigned its receivables to
United Coconut Planters Bank. Despite full payment Primetown failed to deliver the
condominium unit. Spouses Choi sued UCPB and Primetown. UCPB was not
Primetown s successor-in-interest and was not jointly and severally liable with
Primetown for the latter s failure to deliver the condominium unit. The Supreme
Court held that considering that UCPB is a mere assignee of the rights and
receivables under the Agreement, UCPB did not assume the obligations and
liabilities of Primetown under its contract to sell with Spouses Choi.
CALANG vs. PEOPLE OF THE PHILIPPINES, G.R. NO. 190696
August 3, 2010

Philtranco Bus has been held solidarily liable with its bus driver, Calang,
when Calang accidentally collided with a jeepney killing a bystander and
two jeepney passengers while other passengers were seriously injured.
Since the cause of action against Calang was based on delict, Philtranco
cannot be held jointly and severally liable with Calang, based on quasidelict under Articles 2176 and 2180 of the Civil Code which pertain to
the vicarious liability of an employer for quasi-delicts that an employee
has committed.
IX. EXTINGUISHMENT OF OBLIGATIONS
MODES OF EXTINGUISHING OBLIGATIONS
SAURA IMPORT and EXPORT CO., INC. vs. DEVELOPMENT BANK OF
THE PHILIPPINES, G.R. NO. L-24968
April 27, 1972
RFC turned down the request of Saura, Inc. for an additional loan which
prompted Saura, Inc. to ask that the mortgage be cancelled, which was
done. The action thus taken by both parties was in the nature mutual
desistance what Manresa terms "mutuo disenso" which is a mode of
extinguishing obligations, a concept that derives from the principle that
since mutual aG.R.eement can create a contract, mutual disaG.R.eement
by the parties can cause its extinguishment.
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A. EXTINGUISHM ENT BY PAYMENT OR PERFORMANCE

RIVELISA REALTY, INC. VS. FIRST STA. CLARA BUILDERS CORPORATION G.R.
No. 189618, January 15, 2014, J. Perlas-Bernabe
First Sta. Clara is entitled to be compensated for the development works it had
accomplished on the project based on the principle of quantum meruit. Case law
instructs that under this principle, a contractor is allowed to recover the reasonable
value of the thing or services rendered despite the lack of a written contract, in
order to avoid unjust enrichment. Quantum meruit means that, in an action for work
and labor, payment shall be made in such amount as the plaintiff reasonably
deserves. The measure of recovery should relate to the reasonable value of the
services performed because the principle aims to prevent undue enrichment based
on the equitable postulate that it is unjust for a person to retain any benefit without
paying for it. In this case, it is undisputed that First Sta. Clara already performed
certain works on the project with an estimated value of P4,578, 152.10. Clearly, to
completely deny it payment for the same would result in Rivelisa Realty's unjust
enrichment at the former' s expense. Besides, as may be gleaned from the parties'
correspondence, Rivelisa Realty obligated itself to unconditionally reimburse First
Sta. Clara the amount of P3,000,000.00 (representing First Sta. Clara's valuation of
its accomplished works at P4,578,152.10, less the cash advances and
subcontractor's fees) after the JV A had already been terminated by them through
mutual assent. As such, Rivelisa Realty cannot unilaterally renege on its promise by
citing First Sta. Clara's non-fulfilment of the terms and conditions of the terminated
JVA. For all these reasons, the CA' s ruling must be upheld.
PHILIPPINE COMMERCIAL INTERNATIONAL BANK (now BDO UNIBANK, INC.),
vs. ARTURO P. FRANCO, substituted by his heirs, namely: MAURICIA P.
FRANCO, FLORIBEL P. FRANCO, AND ALEXANDER P. FRANC0,G.R. No. 180069,
March 5, 2014, J. Peralta
Payment: Although Article 1271 of the Civil Code provides for a legal presumption of
renunciation of action (in cases where a private document evidencing a credit was
voluntarily returned by the creditor to the debtor), this presumption is
merely prima facie and is not conclusive; the presumption loses efficacy when faced
with evidence to the contrary. The provision merely raises a presumption, not of
payment, but of the renunciation of the credit where more convincing evidence
would be required than what normally would be called for to prove payment.
NETLINK COMPUTER INCORPORATED vs. ERIC DELMO, G.R No. 160827, June
18, 2014, J. Bersamin
One who pleads payment has the burden of proving it. Even where the plaintiff must
allege non-payment, the general rule is that the burden rests on the defendant to
prove payment, rather than on the plaintiff to prove non-payment. When the
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creditor is in possession of the document of credit, he need not prove non-payment

for it is presumed. The creditor's possession of the evidence of debt is proof that the
debt has not been discharged by payment. In this case, respondent's possession of
the original copies of the subject Trust Indenture Certificate strongly supports his
claim that petitioner Bank's obligation to return the principal plus interest of the
money placement has not been extinguished.
As a 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. This notwithstanding, the practice of a company of paying its sales
agents in US dollars must be taken into consideration.
Thus, in the absence of a written agreement between the employer and the
employee that sales commissions shall be paid in a foreign currency, the latter has
the right to be paid in such foreign currency once the same has become an
established practice of the former. The rate of exchange at the time of payment, not
the rate of exchange at the time of the sales, controls.
With the payment of US dollar commissions having ripened into a company practice,
there is no way that the commissions due to Delmo were to be paid in US dollars or
their equivalent in Philippine currency determined at the time of the sales. To rule
otherwise would be to cause an unjust diminution of the commissions due and
owing to Delmo.
ELIZABETH DEL CARMEN vs. SPOUSES RESTITUTO SABORDO and MIMA
MAHILUM-SABORDO, G.R. No. 181723, August 11, 2014, J. Peralta
It is settled that 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. In the
instant case, the SC finds no cogent reason to depart from the findings of the CA and
the RTC that Del Carmen and her co-heirs failed to make a prior valid tender of
payment to Sabordo.

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

126

excuse petitioner and her co-heirs from tendering payment to respondents, as

directed by the court.
LEONARDO BOGNOT vs. RRI LENDING CORPORATION, REPRESENTED BY ITS
GENERAL MANAGER, DARIO J. BERNARDEZ, G.R. No. 180144, September 24,
2014, J. Brion
Novation: In order to give novation legal effect, the creditor should consent to the
substitution of a new debtor. Novation must be clearly and unequivocally shown,
and cannot be presumed.
RODRIGO RIVERA VS. SPOUSES SALVADOR C. CHUA AND VIOLETA S. CHUA/
SPOUSES SALVADOR C. CHUA AND VIOLETA S. CHUA VS. RODRIGO RIVERA, G.R.
Nos. 184458/184472. January 14, 2015, J. Perez
There are four instances when demand is not necessary to constitute the de btor in
default: (1) when there is an express stipulation to that effect; (2) where the law so
provides; (3) when the period is the controlling motive or the principal inducement
for the creation of the obligation; and (4) where demand would be useless. In the
first two paragraphs, it is not sufficient that the law or obligation fixes a date for
performance; it must further state expressly that after the period lapses, default will
commence. Based on a promissory note the parties evidently agreed that the
maturity of the obligation at a date certain, 31 December 1995. Until 31 December
1995, demand was not necessary before Rivera could be held liable for the principal
amount of P120,000.00. Thereafter, on 1 January 1996, upon default, Rivera became
liable to pay the Spouses Chua not only the principal obligation but also damages, in
the form of stipulated interest.
THE WELLEX GROUP INC. VS. U-LAND AIRLINES CO. LTD. G.R. No. 167519.
January 14, 2015, J. Leonen
Petitioner Wellex and respondent U-Land bound themselves to negotiate with each
other within a 40-day period to enter into a share purchase agreement. If no share
purchase agreement was entered into, both parties would be freed from their
respective undertakings. 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 agree ment. At
the lapse of the 40-day period, the parties failed to enter into a share purchase
agreement. This lapse is the first circumstance provided for in Article 1185 that
gives rise to the obligation. Applying Article 1185, the parties were then obligate d to
return to each other all that they had received in order to be freed from their
respective undertakings.

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NATIONAL POWER CORPORATION vs. LUCMAN M. IBRAHIM et al., G.R. No.

175863, February 18, 2015, J. Perez
Article 1242 of the Civil Code is an exception to the rule that a valid payment of an
obligation can only be made to the person to whom such obligation is rightfully
owed. )t contemplates a situation where a debtor pays a possessor of credit i.e.,
someone who is not the real creditor but appears, under the circumstances, to be
the real creditor. )n such scenario, the law considers the payment to the possessor
of credit as valid even as against the real creditor taking into account the good faith
of the debtor. (ence, NAPOCOR s payment to Mangondato of the fees and indemnity
due for the subject land as a consequence of the execution of Civil Case No. 605 -92
and Civil Case No. 610-92 could still validly extinguish its obligation to pay for the
same even as against the Ibrahims and Maruhoms.
AZCONA vs. JAMANDRE, G.R. NO. L-30597, SCRA, June 30, 1987

The rental stipulated therein was P7,200.00 but payment being

acknowledged in the receipt was P7,000.00 only, yet no mention was
made in the receipt of the discrepancy and, on the contrary, the payment
was acknowledged "as per contract". When the obligee accepts the
performance, knowing its incompleteness or irregularity, and without
expressing any protest or objection, the obligation is deemed fully
complied with.
J. M . Tuason & Co., Inc. vs. Javier, NO. L-28569, February 27, 1970

Apart from the initial installment of P396.12, paid upon the execution of
the contract, the defendant religiously satisfied the monthly installments
accruing thereafter, for a period of almost eight (8) years and although
the principal obligation under the contract was P3,691.20, the total
payments made by the defendant
including stipulated interest,
aggregated P4,134.08.
If the obligation has been substantially performed in good faith, the
obligor may recover as though there had been a strict and complete
fulfillment, less damages suffered by the obligee.
ART 1240
TO W HOM PAYMENT SHOULD BE MADE
SPOUSES M INIAN0 vs. CONCEPCION, G.R. 172825, October 11,
2012

128

Admittedly, payment of the remaining balance of P200,000.00 was not

made to the creditors themselves, but rather, it was allegedly made to a
certain Losloso who was the authorized agent of petitioners.
Respondents obligation consists of payment of a sum of money, and in
general, a payment in order to be effective to discharge an obligation,
must be made to the proper person, thus, payment must be made to the
obligee himself or to an agent having authority, express or implied, to
receive the particular payment. Payment made to one having apparent
authority to receive the money will, as a rule, be treated as though actual
authority had been given for its receipt. If payment is made to one who
by law is authorized to act for the creditor, it will work as a discharge.
ARANAS vs. TUTAAN, 127 SCRA 828
All dividends accruing to the said shares after the rendition of judgment
belonged to Aranas but UTEX paid the co-defendants despite its
knowledge and understanding of the final judgment. It is elementary
that payment made by a judgment debtor to a wrong party cannot
extinguish the obligation of such debtor to its creditor.
PAYMENT NOT IN PHIL CURRENCY
HYDRO RESOURCES vs. NATIONAL IRRIGATION ADM INISTRATION,
G.R. NO. 160215, November 10, 2004
The contract between NIA and Hydro is an internationally tendered
contract considering that it was funded by the International Bank for
Reconstruction and Development (IBRD). As a contract funded by an
international organization, particularly one recognized by the
Philippines,3 the contract is exempt from the provisions of R.A. No. 529,
as amended by. R.A. No. 4100 (Act To Assure Uniform Value to
Philippine Coin And Currency).
PONCE vs. THE HONORABLE COURT OF APPEALS, G.R. NO. L -49494
May 31, 1979

The promissory note in question provided on its face for payment of the
obligation in Philippine currency, but the aG.R.eement between the
parties originally involved a dollar transaction.
If there is any agreement to pay an obligation in a currency other than
Philippine legal tender, the same is null and void as contrary to public
policy, pursuant to Republic Act No. 529, and the most that could be
demanded is to pay said obligation in Philippine currency, hence, a
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creditor herein cannot oblige the debtor to pay him in dollars, even if the
loan were given in said currency.
KALALO vs. LUZ, G.R. NO. L-27782, July 31, 1970
Appellant claims that lower court erred in declaring and holding that the
balance owing from defendant-appellant to plaintiff-appellee on the IRRI
Project should be paid on the basis of the rate of exchange of the U.S.
dollar to the Philippine peso at the time of payment of judgment. Even if
the obligation assumed by the defendant was to pay the plaintiff a sum of
money expressed in American currency, the indemnity to be allowed
should be expressed in Philippine currency at the rate of exchange at the
time of judgment rather than at the rate of exchange prevailing on the
date of defendant's breach.
LEGAL TENDER
TIBAJIA vs. CA, G.R. NO. 100290, June 4, 1993

Checks representing deposit money do not have legal tender power and
their acceptance in the payment of debts, both public and private, is at
the option of the creditor.
ROMAN CATHOLIC vs. INTERMEDIATE APPELLATE COURT, G.R.
NO. 72110. November 16, 1990.
Since a negotiable instrument is only a substitute for money and not
money, the delivery of such an instrument does not, by itself, operate as
payment. A check, whether a managers check or ordinary check, is not
legal tender, and an offer of a check in payment of a debt is not a valid
tender of payment and may be refused receipt by the obligee or creditor.
PAPA vs. VALENCIA, G.R. NO. 105188, January 23, 1998
Petitioner received the payment partly in cash and partly in check but
was not able to encash the check, and now questions the said payment
after 10 years. Respondents, on the other hand, want the petitioner to
deliver to them the owners duplicate of the title and the peaceful
possession and enjoyment of the lot in question.
The geneal rule is delivery of a check produces the effect of payment only
when it is cashed, pursuant to Art. 1249 of the Civil Code. The rule does
not apply, however, if
the debtor is prejudiced by the creditors
unreasonable delay in the presentment of the check. Acceptance of a
check implies an undertaking of due diligence in presenting it for
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payment, and if he from whom it is received sustains loss by want of

such diligence, it will be held to operate as actual payment of the debt or
obligation for which it was given.
B. CONSIGNATION
ART 1257
SOCO vs. M ILITANTE, G.R. NO. L-58961 June 28, 1983
Defendant authorized the Commercial Bank and Trust Company to issue
checks to the plaintiff for the payment of rentals, but the plaintiff refused
to accept them. In view of such refusal, defendant instructed said bank
to make consignation with the Clerk of Court of the City Court, but the
bank did not send notice to Soco that the checks will be deposited in
consignation with the Clerk of Court.
The purpose of the notice, which is essential to the validity of the
consignation, is in order to give the creditor an opportunity to reconsider
his unjustified refusal and to accept payment thereby avoiding
consignation and the subsequent litigation, hence, failure to give such
notice renders the consignation void.
DALTON vs. FG.R. and DEVELOPMENT CORP, G.R. NO. 172577
January 19, 2011
The withdrawal by the creditor of the amounts consigned was subject to
the express reservation of assailing the validity of the consignation. In
such case, the creditor is not deemed to have waived the claims he
reserved against his debtor. When the amount consigned does not cover
the entire obligation, the creditor may accept it, reserving his right to the
balance.
ART 1258
SOCO vs. M ILITANTE, G.R. NO. L-58961 June 28, 1983
If the creditor to whom tender of payment has been made refuses without
just cause to accept it, the debtor shall be released from responsibility by
consignation which is the act of depositing the thing due with the court
or judicial authorities but it generally requires a prior tender of payment.
ART 1259
SOCO vs. M ILITANTE, G.R. NO. L-58961 June 28, 1983

131

Defendant contended that payments of rental thru checks were made to

the plaintiff but the latter refused to accept them, hence defendant
authorized the bank to make consignation with the Clerk of Court. In
order to be valid, the tender of payment must be made in lawful
currency, but payment in check by the debtor may be acceptable as
valid, if no prompt objection to said payment is made.
SOCO vs. M ILITANTE, G.R. NO. L-58961 June 28, 1983
The decision subject of the present petition for review holds the view that
there was substantial compliance with the requisites of consignation and
so ruled in favor of private respondent. Substantial compliance is not
enough and the essential requisites of a valid consignation, under
Articles 1256 to 1261 of the New Civil Code must be complied with fully
and strictly in accordance with the law and must be accorded a
mandatory construction.
Immaculata vs. Navarro, G.R. NO.L-42230, April 15, 1988
Respondents alleged that the offer to redeem was not sincere, because
there was no consignation. The right to redeem is a RIGHT, not an
obligation, therefore, there is no consignation required to preserve the
right to redeem.
TENDER OF PAYMENT
SPOUSES CACAYORIN vs. ARMED FORCES AND POLICE MUTUAL
BENEFIT ASSOCIATION, INC., G.R. NO.171298, April 15, 2013

Petitioner alleged that the lack of prior tender of payment to their

consignation case is because they were at a loss as to which between the
two the Rural Bank or AFPMBAI was entitled to such a tender of
payment. Article 1256 authorizes consignation alone, without need of
prior tender of payment, where the ground for consignation is that the
creditor is unknown, or does not appear at the place of payment; or is
incapacitated to receive the payment at the time it is due; or when,
without just cause, he refuses to give a receipt; or when two or more
persons claim the same right to collect; or when the title of the obligation
has been lost.
SPOUSES TEOFILO vs. REYES, G.R. NO. 150913, February 20, 2003
Petitioners failed to (a) offer a valid and unconditional tender of payment;
(b) notify respondents of the intention to deposit the amount with the
court; and (c) show the acceptance by the creditor of the amount
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deposited as full settlement of the obligation, or in the alternative, a

declaration by the court of the validity of the consignation.
In order that consignation may be effective the debtor must show that (a)
there was a debt due; (b) the consignation of the obligation had been
made because the creditor to whom a valid tender of payment was made
refused to accept it; (c) previous notice of the consignation had been
given to the person interested in the performance of the obligation; (d)
the amount due was placed at the disposal of the court; and, (e) after the
consignation had been made the person interested was notified thereof.

SPOUSES CACAYORIN vs. ARMED FORCES AND POLICE MUTUAL

BENEFIT ASSOCIATION, INC., G.R. NO.171298 : April 15, 20 13

Petitioner alleged that the lack of prior tender of payment to their

consignation case was because they were at a loss as to which between
the two the Rural Bank or AFPMBAI was entitled to such a tender of
payment.
Article 1256 authorizes consignation alone, without need of prior tender
of payment, where the ground for consignation is that the creditor is
unknown, or does not appear at the place of payment; or is incapacitated
to receive the payment at the time it is due; or when, without just cause ,
he refuses to give a receipt; or when two or more persons claim the same
right to collect; or when the title of the obligation has been lost.
C. DACION EN PAGO
CALTEX (PHILIPPINES), INC., vs. CA, G.R. NO. 72703, November 13,
1992

Dation in payment does not necessarily mean total extinguishment of the

obligation but only up to the value of the thing given and the obligation is
totally extinguished only when the parties, by aG.R.eement, express or
implied, or by their silence, consider the thing as equivalent to the
obligation.
PNB vs. PINEDA, G.R. NO. L-46658 M ay 13, 1991
Dation in payment is the delivery and transmission of ownership of a
thing by the debtor to the creditor as an accepted equivalent of the
performance of the obligation. The repossession of the machinery and
equipment in question was merely to secure the payment of TCC's loan
133

obligation and not for the purpose of transferring ownership thereof to

PNB in satisfaction of said loan.

FILINVEST vs PHILIPPINE ACETYLENE, G.R. NO. L -50449 January

30, 1982
In the absence of clear consent of appellee to the proferred special mode
of payment, there can be no transfer of ownership from appellant to
appellee by mere delivery to and acceptance by him of the vehicle and
should not be construed as actual payment or more specifically, dacion
en pago.
CITIZENS SURETY vs. COURT OF APPEALS, G.R. NO. L -48958 June
28, 1988
In opposing the money claim, Respondent alleged that the surety bonds
and the indemnity agreements had been extinguished by the execution of
the deed of assignment, because this amounted to dation in payment
whereby the former is considered to have alienated his property in favor
of the latter in satisfaction of a monetary debt (Artide 1245).
The
transaction could not be dation in payment because the deed of
assignment was executed on December 4, 1959, the obligation of the
assignor to refund the assignee had not yet arisen, hence, there was no
obligation yet on the part of the petitioner.
D. COMPENSATION
FIRST UNITED CONSTRUCTIONS CORPORATION AND BLUE STAR
CONSTRUCTION CORPORATION vs. BAHANIHAN AUTOMOTIVE CORPORATION,
G.R. No. 164985, January 15, 2014, J. Bersamin
A debt is liquidated when its existence and amount are determined. Accordingly, an
unliquidated claim set up as a counterclaim by a defendant can be set off against the
plaintiff s claim from the moment it is liquidated by judgment. Article 9 of the
Civil Code provides that when all the requisites mentioned in Article 1279 of the
Civil Code are present, compensation takes effect by operation of law, and
extinguishes both debts to the concurrent amount. With petitioners expenses for
the repair of the dump truck being already established and determined with
certainty by the lower courts, it follows that legal compensation could take place
because all the requirements were present. The legal interest rate to be imposed
from February 11, 1993,the time of the extrajudicial demand by respondent, should
be 6% per annum in the absence of any stipulation in writing in accorda nce with
Article 2209 of the Civil Code.

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UNION BANK OF THE PHILIPPINES VS. DEVELOPMENT BANK OF THE

PHILIPPINES, G.R. No.191555, January 20, 2014, J. Perlas-Bernabe
Compensation is defined as a mode of extinguishing obligations whereby two
persons in their capacity as principals are mutual debtors and creditors of each
other with respect to equally liquidated and demandable obligations to which no
retention or controversy has been timely commenced and communicated by third
parties
In this case, Union Bank filed a motion to seek affirmation that legal compensation
had taken place in order to effectively offset (a) its own obligation to return the
funds it previously received from DBP as directed under the September 6, 2005 Writ
of Execution with b DBP s assumed obligations under the Assumption Agreement.
However, legal compensation could not have taken place between these debts for
the apparent reason that requisites 3 and 4 under Article 1279 of the Civil Code are
not present. Since DBP s assumed obligations to Union Bank for remittance of the
lease payments are in the Court s words in its Decision dated January ,
in
G.R. No. 155838 " contingent on the prior payment thereof by [FW] to DBP," it
cannot be said that both debts are due (requisite 3 of Article 1279 of the Civil Code).
Also, in the same ruling, the Court observed that any deficiency that DBP had to
make up (by December 29, 1998 as per the Assumption Agreement) for the full
satisfaction of the assumed obligations " cannot be determined until after the
satisfaction of Foodmasters obligation to DBP." )n this regard, it cannot be
concluded that the same debt had already been liquidated, and thereby became
demandable (requisite 4 of Article 1279 of the Civil Code).
In fine, since requisites 3 and 4 of Article 1279 of the Civil Code have not concurred
in this case, no legal compensation could have taken place between the above -stated
debts pursuant to Article 1290 of the Civil Code. Perforce, the petition must be
denied, and the denial of Union Bank s motion to affirm legal compensation
sustained.
CESAR V. AREZA and LOLITA B. AREZA V EXPRESS SAVINGS BANK, INC. and
MICHAEL POTENCIANO. G.R No. 176697, September 10, 2014. J. Perez
Under Art. 1278 of the New Civil Code, compensation shall take place when two
persons, in their own right, are creditors and debtors of each other.

The relationship of the depositors and the Bank or similar institution is that of
creditor-debtor. Article 1980 of the New Civil Code provides that fixed, savings and
current deposits of money in banks and similar institutions shall be governed by the
provisions concerning simple loans. The bank is the debtor and the depositor is the
creditor. The depositor lends the bank money and the bank agrees to pay the
depositor on demand. The savings deposit agreement between the bank and the
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depositor is the contract that determines the rights and obligations of the parties.
Petitioners are not liable for the deposit of the altered checks. The Bank, as the
depositary and collecting bank ultimately bears the loss. Thus, there being no
indebtedness to the Bank on the part of petitioners, legal compensation cannot take
place.Under Art. 1278 of the New Civil Code, compensation shall take place when
two persons, in their own right, are creditors and debtors of each other.
FEDERAL BUILDERS, INC. vs.FOUNDATION SPECIALISTS, INC., G.R. No. 194507,
September 8, 2014, J. Peralta

In the landmark case of Eastern Shipping Lines, Inc. v. Court of Appeals, as regards
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:
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 12% 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. )n line with the recent circular of the Monetary Board of the
Bangko Sentral ng Pilipinas No. 799 (July 1, 2013), the Court has modified the
guidelines in Nacar v. Gallery Frames, wherein the interest due shall itself earn
legal interest from the time it is judicially demanded and 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
9 of the Civil Code. This case, however, does not involve acquiescence to
the temporary use of a party s money but a performance of a particular service,
specifically the construction of the diaphragm wall, capping beam, and guide walls
of the Trafalgar Plaza. 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 would actually fall under the second paragraph of the above quoted guidelines in the landmark case of Eastern Shipping Lines, which
necessitates the imposition of interest at the rate of 6%, instead of the 12% imposed
by the courts below. As to the rate of interest due thereon, however, the Court notes
that the same should be reduced to 6% per annum considering the fact that the
obligation involved herein does not partake of a loan or forbearance of money.
SOLINAP vs. DEL ROSARIO, G.R. No. L-50638 July 25, 1983
For compensation to take place, it is required that the amount involved
be certain and liquidated. Compensation cannot take place where one's
claim against the other is still the subject of court litigation.
ART 1980
BPI vs CA, G.R. NO. 136202, January 25, 2007
136

Petitioner, as a collecting agent, debited Salazar's account. The account

was different from the original account to which the proceeds of the
check were credited but both accounts belonged to Salazar. The debited
account was the account of the sole proprietorship she owns. The other
account was her personal account.
A bank generally has a right of set-off over the deposits therein for the
payment of any withdrawals on the part of a depositor, because fixed,
savings, and current deposits of money in banks and similar institutions
are governed by the provisions concerning simple loan, hence, the
relationship between banks and depositors is that of creditor and debtor.
Legal compensation under Article 1278 of the Civil Code may take place
when all the requisites mentioned in Article 1279 are present.
GAN TION vs. HON. COURT OF APPEALS, G.R. NO. L -22490, M ay 21,
1969

The award for attorney's fees is made in favor of the litigant, not of his
counsel, hence, it is the litigant, not his counsel, who is the judgment
creditor and who may enforce the judgment by execution, such credit,
therefore, may properly be the subject of legal compensation.
ART 1278
PNB vs VDA. DE ONG ACERO, G.R. NO. L-69255, February 27, 1987

PNB's main thesis is that when it opened a savings account for ISABELA,
it (PNB) became indebted to ISABELA, so that when ISABELA itself
subsequently came to be indebted to it on account of ISABELA's breach
of the terms of the Credit Agreement, ISABELA and PNB became at the
same time creditors and debtors of each other, thus compensation
automatically took place between them, in accordance with Article 1278
of the Civil Code.
Compensation shall take when two persons, in their own right, are
creditors and debtors of each other and that compensation may transpire
by operation of law, as when all the requisites therefor, set out in Article
1279, are present. Nonetheless these legal provisions can not apply if it
has not proven by competent evidence that PNB is a creditor of ISABELA.
FRANCIA vs. IAC, G.R. NO. L-67649 June 28, 1988

137

Francia contends that his tax delinquency has been extinguished by legal
compensation and claims that the government owed him when a portion
of his land was expropriated, hence, his tax obligation had been set-off
by operation of law.
The general rule based on grounds of public policy is well-settled that no
set-off admissible against demands for taxes levied for general or local
governmental purposes because taxes are not in the nature of contracts
between the party and party but grow out of duty to, and are the positive
acts of the government to the making and enforcing of which, the
personal consent of individual taxpayers is not required.
SYCIP vs. HONORABLE COURT OF APPEALS, G.R. NO. L -38711,
January 31, 1985

Petitioner contends that respondent Court of Appeals erred in not

applying the provisions on compensation or setting-off debts despite
evidence showing that Lapuz, an agent of Albert Smith and/or Dr.
Dwight Dill, owed him. Compensation takes place only when two persons
in their own right are creditors and debtors of each other, and that each
one of the obligors is bound principally and is at the same time a
principal creditor of the other.
MINDANAO PORTLAND CEMENT CORPORATION vs. CA, G.R. NO. L62169, February 28, 1983
It is clear from the record that both corporations, petitioner Mindanao
Portland Cement Corporation (appellant) and respondent Pacweld Steel
Corporation (appellee), were creditors and debtors of each other, their
debts to each other consisting in final and executory judgments of the
Court of First Instance in two (2) separate cases, ordering the payment to
each other of the sum of P10,000.00 by way of attorney's fees. The two
(2) obligations, therefore, respectively offset each other, compensation
having taken effect by operation of law and extinguished both debts to
the concurrent amount of P10,000.00, pursuant to the provisions of
Arts. 1278, 1279 and 1290 of the Civil Code, since all the requisites
provided in Art. 1279 of the said Code for automatic compensation "even
though the creditors and debtors are not aware of the compensation"
were duly present.
THE INTERNATIONAL CORPORATE BANK INC. vs. IAC, G.R. NO. L69560 June 30, 1988
Petitioner contended that, after extrajudicially foreclosing the mortgage,
private respondent still owes the former an amount, by way of deficiency.
138

Petitioner also claimed that it has the right to apply or set off private
respondent's money market claim despite the fact that the validity of the
extrajudicial foreclosure sale and petitioner's claim for deficiency are still
in question.
Article 1279 of the Civil Code requires among others, that in order that
legal compensation shall take place, "the two debts be due" and "they be
liquidated and demandable", because compensation is not proper where
the claim of the person asserting the set-off against the other is not clear
nor liquidated.
MONDRAGON vs. SOLA, JR., G.R. NO. 174882 January 21, 2013

Respondent reneged on his promise to pay petitioner. Petitioner

thereafter withheld the payment of respondent's service fees and applied
the same as partial payments of the debt by way of compensation.
Compensation is a mode of extinguishing to the concurrent amount the
obligations of persons who in their own right and as principals are
reciprocally debtors and creditors of each other. Legal compensation
takes place by operation of law when all the requisites are present, as
opposed to conventional compensation which takes place when the
parties aG.R.ee to compensate their mutual obligations even in the
absence of some requisites.
MONTEMAYOR vs. M ILLORA, G.R. NO. 168251.

July 27, 2011

Jesus contends that offsetting cannot be made because the judgment of

the RTC failed to specify the amount of attorneys fees and maintains
that for offsetting to apply, the two debts must be liquidated or
ascertainable and the trial court merely awarded to Vicente attorneys
fees based on quantum meruit without specifying the exact amount
thereof. A debt is considered liquidated, not only when it is expressed
already in definite figures which do not require verification, but also
when the determination of the exact amount depends only on a simple
arithmetical operation.
E. NOVATION
ARCO PULP AND PAPER CO., INC. and CANDIDA A. SANTOS vs. DAN T. LIM,
doing business under the name and style of QUALITY PAPERS & PLASTIC
PRODUCTS ENTERPRISES, G.R. No. 206806, June 25, 2014, J. Leonen
Arco Pulp and Paper had an alternative obligation whereby it would either pay Dan
T. Lim the value of the raw materials or deliver to him their finished products of
139

equivalent value. When petitioner Arco Pulp and Paper tendered a check to Lim in
partial payment for the scrap papers, they exercised their option to pay the price.
This choice was also shown by the terms of the memorandum of agreement which
declared in clear terms that the delivery of petitioner Arco Pulp and Paper s finished
products would be to a third person, thereby extinguishing the option to deliver the
finished products of equivalent value to respondent. The trial court erroneously
ruled that the execution of the memorandum of agreement constituted a novation of
the contract between the parties. Novation extinguishes an obligation between two
parties when there is a substitution of objects or debtors or when there is
subrogation of the creditor. The consent of the creditor must be secured for the
novation to be valid. 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, respondent must have first agreed to the substitution of Eric Sy as his
new debtor.
THE WELLEX GROUP, INC. vs. U-LAND AIRLINES, CO., LTD., G.R. No. 167519.
January 14, 2015, J. Leonen
Because novation requires that it be clear and unequivocal, it is never presumed.
The parties did not enter into any subsequent written agreement that was couched
in unequivocal terms. The transaction of the First Memorandum of Agreement
involved large amounts of money from both parties. Any subsequent agreement
would be expected to be clearly agreed upon with their counsels assistance and in
writing, as well. Thus 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 ma de 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.
FORT BONIFACIO DEVELOPMENT CORPORATION vs. VALENTIN L. FONG., G.R.
No. 209370, March 25, 2015, J. Perlas-Bernabe
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. The general rule is that an assignee of a non negotiable chose in action acquires no greater right than what was possessed by his
assignor and simply stands into the shoes of the latter.55 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.

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BANK OF THE PHILIPPINE ISLANDS VS. AMADOR DOMINGO (DECEASED)

SUBSTITUTED BY HIS CHILDREN, JOANN MOYA, ET AL. G.R. No. 169407. March
25, 2015, J. Leonardo-De Castro
The acceptance by a creditor of payments from a third person, who has assumed the
obligation, will result merely to the addition of debtors and not novation. The
creditor may therefore enforce the obligation against both debtors. As the Court
pronounced in Magdalena Estates, )nc. v. Rodriguez,
[t]he mere fact that the
creditor receives a guaranty or accepts payments from a third person who has
agreed to assume the obligation, when there is no agreement that the first debtor
shall be released from responsibility, does not constitute a novation, and the
creditor can still enforce the obligation against the original debtor. A stranger to a
contract may agree to assume an obligation; and while this may have the effect of
adding to the number of persons liable, it does not necessarily imply the
extinguishment of the liability of the first debtor. Neither would the fact alone that
the creditor receives guaranty or accepts payments from a third person who has
agreed to assume the obligation, constitute an extinctive novation absent an
agreement that the first debtor shall be released from responsibility.
Absent proof that BPI gave its clear and unmistakable consent to release the
spouses Domingo from the obligation to pay the car loan, Carmelita is simply
considered an additional debtor. Consequently, BPI can still enforce the obligation
against the spouses Domingo even 30 months after it had started accepting
payments from Carmelita.
LBP vs. ONG, , G.R. NO. 190755, November 24, 2010
Land Bank faults the CA for finding that novation given that substitution
of debtors was made without its consent, thus, it was not bound to
recognize the substitution under the rules on novation. 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.
BOYSAW vs. INTERPHIL PROMOTIONS, G.R. NO. L -22590, M arch 20,
1987
The assignment and transfer, first to Araneta, and subsequently, to
appellant Yulo, Jr., of the managerial rights over Boysaw is without the
knowledge or consent of Interphil. The consent of the creditor to the
change of debtors, whether in expromision or delegacion is an,
indispensable requirement , since substitution of one debtor for another
may delay or prevent the fulfillment of the obligation by reason of the

141

inability or insolvency of the new debtor, hence, the creditor should agree
to accept the substitution in order that it may be binding on him.
CALIFORNIA BUS LINES, INC. vs. STATE INVESTMENT HOUSE, INC.,
G.R. NO. 147950. December 11, 2003

There was no change in the object of the prior obligations in the

restructuring agreement since it merely provided for a new schedule of
payments and additional security giving Delta authority to take over the
management and operations of CBLI in case CBLI fails to pay
installments equivalent to 60 days. With respect to obligations to pay a
sum of money, this Court has consistently applied the well-settled rule
that the obligation is not novated by an instrument that expressly
recognizes the old, changes only the terms of payment, and adds other
obligations not incompatible with the old ones, or where the new contract
merely supplements the old one.
AJAX MARKETING vs. HON. COURT OF APPEALS, G.R. NO. 118585
September 14, 1995
In their interrelated first and second assignment of errors, petitioners
argue that a novation occurred when their three (3) loans, which are all
secured by the same real estate property were consolidated into a single
loan of P1 million under Promissory Note, thereby extinguishing their
monetary obligations and releasing the mortgaged property from liability.
The well settled rule is that novation is never presumed and it will not be
allowed unless it is clearly shown by express agreement, or by acts of
equal import, thus, to effect an objective novation it is imperative that
the new obligation expressly declare that the old obligation is thereby
extinguished, or that the new obligation be on every point incompatible
with the new one.
F. RESCISSION
SANGGUNIANG PANLUNGSOD NG BAGUIO CITY VS. JADEWELL PARKING SYSTEMS
CORPORATION
G.R.
NOS.
160025/163052/164107/165564/172215/172216/173043/174879/, April 23,
2014, J. SERENO

Rescission under Article 1191 takes place through either of two modes: (1) through
an extrajudicial declaration of rescission; or (2) upon the grant of a judicial decree of
rescission.
Extrajudicial declaration of rescission is recognized as a power which does not
require judicial intervention. If the rescission is not opposed, extrajudicial
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declaration of rescission produces legal effect such that the injured party is already
relieved from performing the undertaking. However, the power of declaring
extrajudicial rescission conferred upon the injured party is regulated by the Civil
Code. If the extrajudicial rescission is impugned by the other party, it shall be
subject to a judicial determination where court action must be taken, and the
function of the court is to declare the rescission as having been properly or
improperly made, or to give a period within which the debtor must perform the
obligation alleged to be breached. A unilateral cancellation of a contract may be
questioned in courts by the affected party to determine whether or not cancellation
is warranted. Thus, in an extrajudicial decree of rescission, revocation canno t be
completely exercised solely on a party s own judgment that the other has committed
a breach of the obligation but always subject to the right of the other party to
judicially impugn such decision.
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 J. LEONARDO-DE CASTRO
The injured party may choose between the fulfilment and the rescission of the
obligation, with the payment of damages in either case. He may also seek rescission,
even after he has chosen fulfilment, 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.
The cause of action supplied by the above article, however, is clearly predicated
upon the reciprocity of the obligations of the injured party and the guilty party.
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. When Nuguid failed to deliver the agreed
amount to Chiok, the latter had a cause of action against Nuguid to ask for the
rescission of their contract. On the other hand, Chiok did not have a cause of action
against Metrobank and Global Bank that would allow him to rescind the contracts of
sale of the manager s or cashier s checks, which would have resulted in the crediting
of the amounts thereof back to his accounts.
THE WELLEX GROUP, INC. vs. U-LAND AIRLINES, CO., LTD., G.R. No. 167519.
January 14, 2015, J. Leonen

143

Wellex and U-Land bound themselves to negotiate with each other within a 40-day
period to enter into a share purchase agreement. If no share purchase agreement
was entered into, both parties would be freed from their respective undertakings.
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. 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. 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.
SWIRE REALTY DEVELOPMENT CORPORATION VS. JAYNE YU. G.R. No. 207133.
March 9, 2015, J. PERALTA
Based on the ocular inspection conducted on the subject condominium project and
subject unit shows that the amenities under the approved plan have not yet been
provided as of May 3, 2002, and that the subject unit has not been delivered to
respondent as of August 28, 2002, which is beyond the period of development of
December 1999 under the license to sell. Incontrovertibly, petitioner had incurred
delay in the performance of its obligation amounting to breach of contract as it
failed to finish and deliver the unit to respondent within the stipulated period. The
delay in the completion of the project as well as of the delay in the delivery of the
unit are breaches of statutory and contractual obligations which entitle respondent
to rescind the contract under Article 1191, demand a refund and payment of
damages.
UNIVERSAL FOOD CORPORATION vs. CA, G.R. NO. L -29155, M ay 13,
1970
Respondent patentee was dismissed as the permanent chief chemist of
the corporation without any fault or negligence on his part after the
execution of the Bill of Assignment, prompting him to rescind the
contract. The general rule is that rescission of a contract will not be
permitted for a slight or casual breach, but only for such substantial and
fundamental breach as would defeat the very object of the parties in
making the agreement.
ART 1191
DEL CASTILLO Vda. DE M ISTICA vs. SPOUSES NAGUIAT, G.R. NO.
137909, December 11, 2003
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In the present case, the failure of respondents to pay the balance of the
purchase price within ten years from the execution of the Deed did not
amount to a substantial breach. Under Article 1191 of the Civil Code,
the right to rescind an obligation is predicated on the violation of the
reciprocity between parties, brought about by a breach of faith by one of
them however, rescission is allowed only where the breach is substantial
and fundamental to the fulfillment of the obligation.
PALAY vs. CLAVE , G.R. NO. L-56076 September 21, 1983

The contract agreed upon by the parties provided for automatic

extrajudicial rescission upon default in payment without need of notice
and with forfeiture of all installments paid. Upon default of the
respondent, petitioner rescinded the contract. Responde nt questioned
the validity of the rescission. The judicial action for the rescission of a
contract is not necessary where the contract provides that it may be
revoked and cancelled for violation of any of its terms and conditions,
however there should be at least a written notice sent to the defaulter
informing him of the rescission.
ART 1169,1191
RODRIGO RIVERA vs. SPOUSES SALVADOR CHUA AND VIOLETA S. CHUA, G.R.
No. 184458 (consolidated), January 14, 2015, J. Perez
There are four instances when demand is not necessary to constitute the debtor in
default: (1) when there is an express stipulation to that effect; (2) where the law so
provides; (3) when the period is the controlling motive or the principal inducement
for the creation of the obligation; and (4) where demand would be useless. In the
first two paragraphs, it is not sufficient that the law or obligation fixes a date for
performance; it must further state expressly that after the period lapses, default will
commence.
Corollary thereto, Art. 2209 solidifies the consequence of payment of interest as an
indemnity for damages when the obligor incurs in delay.
Art. 2209 is specifically applicable in this instance where: (1) the obligation is for a
sum of money; (2) the debtor, Rivera, incurred in delay when he failed to pay on or
before 31 December 1995; and (3) the Promissory Note provides for an indemnity
for damages upon default of Rivera which is the payment of a 5% monthly interest
from the date of default.

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SOLAR HARVEST, INC., vs DAVAO CORRUGATED

CORPORATION, G.R. NO. 176868.
July 26, 2010

CARTON

The CA added that even assuming that the agreement was for
respondent to deliver the boxes, respondent would not be liable for
breach of contract as petitioner had not yet demanded from it the
delivery of the boxes. Without a previous demand for the fulfillment of
the obligation, petitioner would not have a cause of action for rescission
against respondent as the latter would not yet be considered in breach of
its contractual obligation, since the right to rescind a contract arises
once the other party defaults in the performance of his obligation.
OSMEA III vs SSS, September 13, 2007

The Letter-Agreement, the SPA, the SSC resolutions assailed in this

recourse, and the Invitation to Bid sent out to implement said
resolutions, all have a common subject: the Shares the 187.84 Million
EPCIB common shares, which, as a necessary consequence of the BDOEPCIB merger which saw EPCIB being absorbed by the surviving BDO,
have been transferred to BDO and converted into BDO common shares
under the exchange ratio set forth in the BDO-EPCIB Plan of Merger. As
thus converted, the subject Shares are no longer equity security
issuances of the now defunct EPCIB, but those of BDO-EPCI, which,
needless to stress, is a totally separate and distinct entity from what
used to be EPCIB.
Under the law on obligations and contracts, the obligation to give a
determinate thing is extinguished if the object is lost without the fault of
the debtor, and per Art. 1192 (2) of the Civil Code, a thing is considered
lost when it perishes or disappears in such a way that it cannot be
recovered.
VILLAMAR vs. M ANGAOIL, G.R. NO. 188661 : April 11, 2012

Petitioner alleged that the absence of stipulations in the aG.R.eement

and absolute deed of sale entered into by Petitioner and Respondent
expressly indicating the consequences of the former's failure to deliver
the physical possession of the subject property and the certificate of title
covering the same, the Respondent is not entitled to demand for the
rescission of their contract pursuant to Article 1191 of the NCC.
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",
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this remains true notwithstanding the absence of express stipulations in

the agreement indicating the consequences of breaches which the parties
may commit.
AYSON-SIM ON vs. ADAM OS, G.R. NO. L-39378, August 28, 1984
Defendants contend (1) that the fulfillment and the rescission of the
obligation in reciprocal ones are alternative remedies, and plaintiff
having chosen fulfillment in the Civil Case, she cannot now seek
rescission; and (2) that even if plaintiff could seek rescission the action to
rescind the obligation has prescribed. The rule that the injured party
can only choose between fulfillment and rescission of the obligation, and
cannot have both, applies when the obligation is possible of fulfillment, if
the fulfillment has become impossible, Article 1191 (3) allows the injured
party to seek rescission even after he has chosen fulfillment.
ART 1234
ANGELES, ET AL vs. CALASANZ, G.R. NO. L-42283, M arch 18, 1985

The breach of the contract adverted to by the defendants-appellants is so

slight and casual when we consider that apart from the initial
downpayment of P392.00 the plaintiffs-appellees had already paid the
monthly installments for a period of almost nine (9) years. If the
obligation has been substantially performed in good faith, the obligor
may recover as though there had been a strict and complete fulfillment,
less damages suffered by the obligee.
UP vs. DE LOS ANGELES, G.R. NO. L-28602, September 29,

In the first place, UP and ALUMCO had expressly stipulated in the

"Acknowledgment of Debt and Proposed Manner of Payments" that, upon
default by the debtor ALUMCO, the creditor (UP) has "the right and the
power to consider, the Logging Agreement dated as rescinded without the
necessity of any judicial suit."
The party who deems the contract violated may consider it resolved or
rescinded, and act accordingly, without previous court action, but it
proceeds at its own risk, for it is only the final judgment of the
corresponding court that will conclusively and finally settle whether the
action taken was or was not correct in law.
G. RESTITUTION

147

UNIVERSAL FOOD CORPORATION vs. THE COURT OF APPEALS,

MAGDALO V. FRANCISCO, SR., and VICTORIANO N. FRANCISCO,
G.R. NO. L-29155, M ay 13, 1970

Petitioner contends that the Court of Appeals erred in ordering the

corporation to return to the respondents the trademark and formula for
Mafran sauce. Rescission creates the obligation to return the things
which were the object of the contract.
C O N T R A C T S
SM LAND, INC. VS . BASES CONVERSION AND DEVELOPMENT AUTHORITY
AND ARNEL PACIANO D. CASANOVA, ESQ., IN HIS OFFICIAL CAPACITY AS
PRESIDENT AND CEO OF BCDA, G.R. No. 203655, August 13, 2014, J. Velasco
Jr.
BCDA and SML) have agreed to subject SML) s Original Proposal to Competitive
Challenge. This agreement is the law between the contracting parties with which
they are required to comply in good faith. Verily, it is BCDA s subsequent unilateral
cancellation of this perfected contract which this Court deemed to have been tainted
with grave abuse of discretion. BCDA could not validly renege on its obligation to
subject the unsolicited proposal to a competitive challenge in view of this perfected
contract, and especially so after BCDA gave its assurance that it would respect the
rights that accrued in SML) s favor arising from the same.
GIDWANI VS. PEOPLE, G.R. No. 195064, January 15, 2014, J. Sereno

Considering that there was a lawful Order from the SEC, the contract is deemed
suspended. When a contract is suspended, it temporarily ceases to be operative; and
it again becomes operative when a condition occurs or a situation arises
warranting the termination of the suspension of the contract.
AVELINA ABARIENTOS REBUSQUILLO [substituted by her heirs, except
Emelinda R. Gualvez] and SALVADOR A. OROSCO v SPS. DOMINGO and
EMELINDA REBUSQUILLO GUALVEZ and the CITY ASSESSOR OF LEGAZPI CITY,
G.R No. 204029, June 4, 2014. J. VELASCO, JR.

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

148

absolutely simulated or fictitious contract is void, and the parties may recover from
each other what they may have given under the contract.
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 wherein
they admitted that the purpose of the Deed of Absolute Sale was simply to facilitate
the titling of the subject property. considering that the Deed of Absolute Sale has
been shown to be void for being absolutely simulated, petitioners are not precluded
from presenting evidence to modify, explain or add to the terms of the written
agreement as an exception to the parol evidence rule.
I. A. DEFINITION
SPOUSES BALILA vs. IAC, G.R. NO. L-68477 October 29, 1987

A contract is a meeting of minds between two persons whereby one binds

himself with respect to the other to give something or render some
service, the Central Bank of the Philippines in the exercise of its
Administrative power did not create any contractual obligations.
B. CONTRACTS AS A SOURCE OF OBLIGATIONS
BATCHELDER vs. THE CENTRAL BANK OF THE PHILIPPINES, G.R.
NO. L-25071, July 29, 1972

Obligations arise from 1) law; 2) contracts; 3) quasi-contracts; 4) acts or

omissions punished by law and 5) quasi -delicts, the circular issued by
the Central Bank has the force and effect of the law. Obligations arising
from law, howe ver, is never presumed.
II. ESSENTIAL ELEMENTS OF A CONTRACT
SPOUSES TONGSON
vs. EMERGENCY PAWNSHOP BULA, G.R.
167874.
January 15, 2010

A valid contract requires the concurrence of the following essential

elements: (1) consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price; (2) determinate subject matter; and
(3) price certain in money or its equivalent.
In the present case, there is no question that the subject matter of the
sale is the 364-square meter Davao lot owned by the Spouses Tongson
and the selling price agreed upon by the parties is P3,000,000, but the
149

existence of the remaining element, which is consent of the contracting

parties, to sell the property, claiming that their consent was vitiated by
fraud, renders the contract of sale void.
A. CONSENT
SPOUSES VICTOR AND EDNA BINUA vs. LUCIA P. ONG, G.R. No. 207176, June 18,
2014, J. Reyes
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.
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.
Based on the petitioners own allegations, what the respondent did was merely
inform them of petitioner Edna s conviction in the criminal cases for estafa. )t 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.
SC affirmed the finding of the CA that if the judgment of conviction is the only basis
of the [petitioners] in saying that their consents were vitiated, such will not suffice
to nullify the real estate mortgages and the subsequent foreclosure of the mortgaged
properties. No proof was adduced to show that [the respondent] used [force],
duress, or threat to make [petitioner] Victor execute the real estate mortgages.
Also, the threat to prosecute for estafa not being an unjust act, but rather a valid and
legal act to enforce a claim, cannot at all be considered as intimidation.

ECE REALTY AND DEVELOPMENT INC. vs.RACHEL G. MANDAP, G.R. No. 196182,
September 1, 2014, J. Peralta
Article 1338 of the Civil Code provides that "[t]here is fraud when through insidious
words or machinationsof one of the contracting parties, the other is induced to enter
into a contract which, without them, he would not have agreed to."
150

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."
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.
While the SC found that petitioner is guilty of false representation of a fact, it held
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.
Thus, absent, as here, of (sic) any controverting evidence, it is reasonable to
presume that Mandap knew the contents of the Contract to Sell which was executed
with legal formalities
The rule that one who signs a contract is presumed to know its contentshas been
applied even to contract of illiterate persons on the ground that if such persons are
unable to read, they are negligent if they fail to have the contract read to them. If a
person cannot read the instrument, it is as much his duty to procure some reliable
persons to read and explain it tohim, before he signs it, as it would be to read it
before he signed it if he were able to do so and his failure to obtain a reading and
explanation of it is such gross negligence as will estop him from avoiding it on the
ground that he was ignorant of its contents.
)n any case, even assuming that petitioner s 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.
SPOUSES FRANCISCO SIERRA (substituted by DONATO, TERESITA, TEODORA,
LORENZA, LUCINA, IMELDA, VILMA, and MILAGROS SIERRA) and ANTONINA
151

SANTOS, SPOUSES ROSARIO SIERRA and EUSEBIO CALUMA LEYVA, and

SPOUSES SALOME SIERRA and FELIX GATLABAYAN (substituted by BUENA
VENTURA, ELPIDIO, PAULINO, CATALINA, GREGORIO, and EDGARDO
GATLABAYAN, LORETO REILLO, FERMINA PEREGRINA, and NIDA HASHIMOTO)
vs.PAIC SAVINGS AND MORTGAGE BANK, INC., G.R. No. 197857, September 10,
2014, J. Perlas-Bernabe
One who alleges any defect or the lack of a valid consent contract must establish the
same by full, clear, and convincing evidence, not merely by preponderance of
evidence. The rule is that he who alleges mistake affecting a transaction must
substantiate his allegation, since it is presumed that a person takes ordinary care of
his concerns and that private transactions have been fair and regular. Where
mistake or error is alleged by parties who claim to have not had the benefit of a
good education, as in this case, they must establish that their personal
circumstances prevented them from giving their free, voluntary, and spontaneous
consent to a contract.
AVELINA ABARIENTOS REBUSQUILLO [substituted by her heirs, except
Emelinda R. Gualvez] and SALVADOR A. OROSCO, vs. SPS. DOMINGO and
EMELINDA REBUSQUILLO GUALVEZ and the CITY ASSESSOR OF LEGAZPI CITY,
G.R. No. 204029, June 4, 2014, J. Velasco, Jr.
The Deed of Absolute Sale executed by Avelina in favor of respondents was correctly
nullified and voided by the RTC. Avelina was not in the right position to sell and
transfer the absolute ownership of the subject property to respondents. As she was
not the sole heir of Eulalio and her Affidavit of Self-Adjudication is void, the subject
property is still subject to partition. Avelina, in fine, did not have the absolute
ownership of the subject property but only an aliquot portion. 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.
SPOUSES VICTOR and EUNA BINUA v LUCIA P. ONG, G.R. No. 207176,
June 18, 2014. J. REYES
Edna Binua was convicted by the RTC of Estafa. For fear of conviction, Edna
executed several real estate mortgages over her husband s properties to be able to
pay her creditor, Lucia Ong. Subsequently, the whole scenario was novated into
purely civil in nature. When Edna failed to settle her obligation, Ong foreclosed on
the mortgages. Edna now claims that the real estate mortgages were voidable under
Articles 1335 and1390 of the Civil Code as they were executed under duress and
intimidation in the form of the estafa conviction.

152

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 one s
claim through competent authority, if the claim is just or legal, does not vitiate
consent."
)n this case, Ong merely informed the spouses of Edna s conviction in the criminal
cases for estafa. )t might have evoked a sense of fear or dread on Edna s part, but
certainly there is nothing unjust, unlawful or evil in Ong s act. The judgment of
conviction was a result of a valid judicial process and will not suffice to nullify the
real estate mortgages and the subsequent foreclosure of the mortgaged properties.
No proof was adduced to show that Ong used [force], duress, or threat to make Edna
execute the real estate mortgages.
MARIANO C. MENDOZA and ELVIRA LIM v SPOUSES LEONORA J. GOMEZ and
GABRIEL V. GOMEZ, G.R No. 160110, June 18, 2014. J. PEREZ
Article 2211 of the Civil Code provides that in crimes and quasi-delicts, interest as
part of the damage, may, in a proper case, be adjudicated in the discretion of the
court. Generally, interest is allowed as a matter of right for failure to pay liquidated
claims when due. For unliquidated claims, however, Article 2213 of the Civil Code
provides that interest cannot be recovered upon unliquidated claims or damages,
except when the demand can be established with reasonable certainty. In this case,
the Court allowed the award of interest on the actual and compensatory damages
based on justice, and because these damages could be measured against a
reasonably certain standard.
SPOUSES EDUARDO and LYDIA SILOS v PHILIPPINE NATIONAL BANK, G.R No.
181045, July 2, 2014. J. DEL CASTILLO
From 1987 to 1998, the spouses Silos executed promissory notes in favor of PNB, as
well as real estate mortgages to secure the loan. The loan contracts contained an
escalation clause: 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 and 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.
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The Court held that the escalation clause in the loan contract was null and void for
being violative of mutuality of contracts. Any modification in the contract, such as
the interest rates, 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 agreements, the
rate of interest is a principal condition, if not the most important component. Thus,
any modification thereof must be mutually agreed upon; otherwise, it has no
binding effect.
LAND BANK vs. HEIRS OF SPOUSES SORIANO, G.R. NO. 178312.
January 30, 2012

Pending resolution of the case, both parties freely and voluntarily entered
into an agreement for the purpose of finally settling their dispute in this
case. As a contract, a compromise is perfected by mutual consent,
however, a judicial compromise, while immediately binding between the
parties upon its execution, is not executory until it is approved by the
court and reduced to a judgment.
LAGUNZAD vs. VDA. DE GONZALES, G.R. NO. L -32066 August 6,
1979
Petitioner takes the position that he was pressured into signing the
Agreement because of private respondent's demand, for payment for the
"exploitation" of the life story of Moises Padilla, otherwise, she would "call
a press conference declaring the whole picture as a fake, fraud and a
hoax and would denounce the whole thing in the press, radio, television
and that they were going to Court to stop the picture." It is necessary to
distinguish between real duress and the motive which is present when
one gives his consent reluctantly because a contract is valid e ven though
one of the parties entered into it against his own wish and desires, or
even against his better judgment.

VELASCO vs. HONORABLE COURT OF APPEALS, G.R. NO. L-31018

June 29, 1973
The material averments of petitioners' complaint disclose lack of
complete "agreement in regard to the manner of payment" of the lot in
question. A definite agreement on the manner of payment of the
purchase price is an essential element in the formation of a binding and
enforceable contract of sale.

154

PALATTAO vs. CA, G.R. NO. 131726, M ay 7, 2002

Appellant made a qualified acceptance of appellees letter-offer of a parcel
of land but appellee made a new proposal to pay the amount in staggered
amounts within two years in quarterly amortizations. To convert the
offer into a contract, the acceptance must be absolute and must not
qualify the terms of the offer, for a qualified acceptance constitutes a
counter-offer and is a rejection of the original offer and such acceptance
is not sufficient to generate consent.
B. CAUSE OF CONTRACTS
ART 1354
LAW vs. OLYMPIC SAWMILL CO., G.R. NO. L-30771, M ay 28, 1984

The defendants admitted the principal obligation but claimed that the
additional amount constituted usurious interest. Under Article 1354 of
the Civil Code, the agreement of the parties relative to the additional
amount is presumed to exist and is lawful, unless the debtor proves the
contrary. Since no evidentiary hearing had been held, the defendants
therefore had not proven that the obligation was illegal.
C. CONSIDERATION
ART. 1354
PENTACAPITAL INVESTMENT CORPORATION vs. M AHINAY, G.R.
NO. 171736, July 5, 2010

As proof of lack of consideration, respondent (a) denied under oath that

he owed petitioner a single centavo, (b) represented that he did not apply
for a loan and (c) said that when he signed the promissory notes, they
were all blank forms thus rendering the notes ineffective.
It is presumed that consideration exists and is lawful unless the debtor
proves the contrary and the presumption that a contract has sufficient
consideration cannot be overthrown by the bare, uncorroborated and
self-serving assertion of respondent that it has no consideration.
HEIRS OF URETA, SR. vs. HEIRS OF LIBERATO URETA, G.R. NO.
165748.
September 14, 2011

155

Although the contract states that the purchase price of 2,000.00 was
paid by Policronio to Alfonso for the subject properties, it has been
proven that no such payment was made. It is well-settled that where a
deed of sale states that the purchase price has been paid but in fact has
never been paid, the deed of sale is null and void for lack of
consideration.
III. FORM ALITIES
ART 1724
DUE OBSERVANCE OF PRESCRIBED FORMALITIES
WELDON CONSTRUCTION CORPORATION vs. COURT OF APPEALS,
G.R. NO. L-35721 October 12, 1987

There was no written agreement on the additional price to be paid for

said "extra works," hence, private respondent claims that the contractor
aG.R.eed to make the additions without additional cost.
In the absence of a written authority by the owner for the changes in the
plans and specifications of the building and of a written agreement
between the parties on the additional price to be paid to the contractor,
as required by Article 1724, the claim for the cost of additional works
must be denied.
LAO SOK vs. SABAYSABAY, G.R. NO. L-61898 August 9, 1985

Petitioner Lao Sok promised to give his employees their separation pay,
as soon as he receives the insurance proceeds for his burned building,
but contends that the contract was orally made hence unenforceable
since it does not comply with the Statute of Frauds. Contracts in
whatever form they may have been entered into are binding on the
parties unless form is essential for the validity and enforceability of that
particular contract.
ART 1356
GALLARDO vs.HONORABLE INTERMEDIATE APPELLATE COURT,
G.R. NO. L-67742 October 29, 1987

156

The issue here is whether or not the unnotarized deed of sale can be
considered as a valid instrument for effecting the alienation by way of
sale of a parcel of land registerd under the Torrens System.
The general rule enunciated in said Art. 1356 is that contracts are
obligatory, in whatever form they may have been entered, provided all the
essential requisites for their validity are present, except when the law so
requires requiring a contract to be in some form for validity or
enforceability.
IV. STAGES , PERFECTION
Bugatti v. Court of Appeals, G.R. No. 138113. October 17, 2000
A contract undergoes three distinct stages preparation or negotiation,
its perfection, and finally, its consummation. Negotiation begins from
the time the prospective contracting parties manifest their interest in the
contract and ends at the moment of agreement of the parties. The
perfection or birth of the contract takes place when the parties agree
upon the essential elements of the contract. The last stage is the
consummation of the contract wherein the parties fulfill or perform the
terms agreed upon in the contract, culminating in the extinguishment
thereof.
ART 1315 , 1319
TONG BROTHERS CO., vs. IAC, G.R. NO. 73918 December 21, 1987

From the exchange of telegrams between the two parties, there was not
yet a meeting of the minds as to the cause of the contract. The cause of a
contract has been defined "as the essential reason which moves the
contracting parties to enter into it (8 Manresa, 5th Edition, p. 450). In
other words, the cause is the immediate, direct and proximate reason
which justifies the creation of an obligation thru the will of the
contracting parties (3 Castan, 4th Edition, p. 347)." (General Enterprises,
Inc. v. Lianga Bay Logging Co., Inc., 11 SCRA 733, 739). For the private
respondent, the cause of the contract was the repair of its vessel
Zamboanga-J while for the petitioner the cause would be its commitment
to repair the vessel and make it seaworthy. The telegrams dated January
17, January 20, and January 28, 1975 sent by the petitioner to the
private respondent, however, indicate that the former had not accepted
the repair of Zamboanga-J, the reason being that the extent of the repair
to be made necessitated a major expense so that the petitioner insisted
on the presence of the private respondent for evaluation before it
accepted the repair of the wooden vessel. That the petitioner had not yet
consented to the contract is e vident when on January 28, 1975, it sent a
157

telegram stating: "... NO AGREEMENT AS TO THE EX TENT OF REPAIRS

AND PAYMENT WILL UNDOCK VESSEL." The fact that the private
respondent who received this telegram ignored it, confirms that there
was no perfected contract to repair Zamboanga-J.
SANCHEZ vs. RIGOS, G.R. NO. L-25494 June 14, 1972
Since there may be no valid contract without a cause or consideration,
the promisor is not bound by his promise and may, accordingly,
withdraw it, and pending notice of its withdrawal, his accepted promise
partakes, however, of the nature of an offer to sell which, if accepted,
results in a perfected contract of sale.
V. INTERPRETATION OF CONTRACTS
CITIZENS SURETY and INSURANCE COMPANY, INC., vs.
COURT OF APPEALS, G.R. NO. L-48958 June 28, 1988
It is a basic and fundamental rule in the interpretation of contract that if
the terms thereof are clear and leave no doubt as to the intention of the
contracting parties, then the literal meaning of the stipulations shall
control but when the words appear contrary to the evident intention of
the parties, the latter shall prevail over the former and in order to judge
the intention of the parties, their contemporaneous and subsequent acts
shall be principally considered.
ART 1375 , 1377
LIM YHI LUYA vs. COURT OF APPEALS, G.R. NO. L -40258 September
11, 1980

Words which may have different significations shall be understood in

that which is most in keeping with the nature and object of the contract
and in the interpretation of obscure words or stipulations in a contract
shall not favor the party who caused the obscurity.
VI. DEFECTIVE CONTRACTS
A. VOID CONTRACTS
ART 1411, 1420
BRIONES vs. CAMMAYO, ET AL., G.R. NO. L-23559, October 4, 1971

Stipulations authorizing the imposition of iniquitous or unconscionable

interest are contrary to morals, if not against the law for these contracts
are inexistent and void from the beginning.
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ASIAN CATHAY FINANCE AND LEASING CORPORATION vs.

SPOUSES G.R.AVADOR et al, G.R. NO. 186550, July 5, 2010
A contract of adhesion may be struck down as void and unenforceable
for being subversive to public policy, when the weaker party is completely
deprived of the opportunity to bargain on equal footing.
TIU vs. PLATINUM PLANS PHIL., INC., G.R. NO. 163512 February 28,
2007
Respondent contends that the inclusion of the two-year non-involvement
clause in petitioners contract of employment was reasonable and needed
since her job gave her access to the companys confidential marketing
strategies. A non-involvement clause is not necessarily void for being in
restraint of trade as long as there are reasonable limitations as to time,
trade, and place.
CARIO vs. COURT OF APPEALS, G.R. NO. L -47661, July 31, 1987
Contracts of sale are void and produce no effect whatsoever where the
price, which appears therein as paid, has in fact never been paid by the
vendee to the vendor.
TOPIC: SIM ULATED CONTRACTS
URETA vs. URETA, G.R. No. 165748, September 14, 2011 -Lacking in
an absolutely simulated contract is consent which is essential to a valid
and enforceable contract. Thus, where a person, in order to place his
property beyond the reach of his creditors, simulates a transfer of it to
another, he does not really intend to divest himself of his title and control
of the property; hence, the deed of transfer is but a sham. Similarly, in
this case, Alfonso simulated a transfer to Policronio purely for taxation
purposes, without intending to transfer ownership over the subject
lands.
RUBIAS vs. BATILLER, G.R. NO. L-35702 M ay 29, 1973
The lower court held that the purchase by a lawyer of the property in
litigation from his client is categorically prohibited by Article 1491,
paragraph (5) of the Philippine Civil Code, and that consequently,
plaintiff's purchase of the property in litigation from his client was void
and could produce no legal effect, by virtue of Article 1409, paragraph (7)
of our Civil Code. Contracts "expressly prohibited or declared void by
159

law' are "inexistent and that "(T)hese contracts cannot be ratified, neither
can the right to set up the defense of illegality be waived."

ART 1410
TONGOY vs. THE HONORABLE COURT OF APPEALS, G.R. NO. L 45645 June 28, 1983
The issue in this case is whether or not the rights of herein respondents
over subject properties, which were the subjects of simulated or fictitious
transactions, have already prescribed. A void or inexistent contract is one
which has no force and effect from the very beginning, as if it had never
been entered into, and which cannot be validated either by time or by
ratification.
LITA ENTERPRISES, INC.,vs. IAC, G.R. NO. L -64693 April 27, 1984
Unquestionably, the parties herein operated under an arrangement,
commonly known as the "kabit system", whereby a person who has been
granted a certificate of convenience allows another person who owns
motors vehicles to operate under such franchise for a fee, and the
petitioner prays that private respondents be declared liable to petitioner
for whatever amount the latter has paid. It is a fundamental principle of
in pari delicto that the court will not aid either party to enforce an illegal
contract, but will leave them both where it finds them.
ARSENAL vs. IAC, G.R. NO. L-66696 July 14, 1986
Petitioner questions the validity of the sale between the respondent and
Suralta but the lower court held that the benefit of said prohibition in the
Public Land Act against the disposal of any land granted to a citizen
under that law does not inure to any third party. The right to set up the
nullity of a void or non-existent contract is not limited to the parties as in
the case of annulable or voidable contracts. The right to set up the
nullity of a void or non-existent contract is extended to third persons
who are directly affected by the contract.
MANOTOK REALTY, INC., vs. THE HON. COURT OF APPEALS, G.R.
NO. L-45038 April 30, 1987
Don Legarda sold the paraphernal property of Dona Clara to the
respondent. It was sold three months after he was appointed as
administrator of the estate of Dona Clara Tambunting. The sale between
Don Vicente Legarda and the private respondent is void ab initio, the
former being neither an owner nor administrator of the subject property,
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and the sale cannot be the subject of the ratification by the probate
court.
PORTUGAL vs. IAC, G.R. NO. 73564 March 25, 1988
Respondent, through fraudulent means was able to transfer the lot from
his parents to himself without consideration or cause through a
purported deed of The IAC held that the action had already prescribed
because an action to annul a contract based on fraud prescribes in four
years. The SC, however, held that the alleged contract of sale is vitiated
by the total absence of a valid cause or consideration which is an
indispensable requisite for the existence of a valid contract. Thus, Article
1410 of the Civil Code provides that '(T)he action or defense for the
declaration of the inexistence of a contract does not prescribe.

PHILIPPINE BANKING CORPORATION vs. LUI SHE, G.R. NO. L 17587, September 12, 1967
The illicit purpose becomes the illegal causa rendering the contracts void.
TEJA M ARKETING vs. IAC, G.R. NO. L-65510 M arch 9, 1987

The parties operated under an arrangement, commonly known as the

"kabit system" whereby a person who has been granted a certificate of
public convenience allows another person who owns motor vehicles to
operate under such franchise for a fee.
Although not outrightly
penalized as a criminal offense, the kabit system is invariably recognized
as being contrary to public policy and, therefore, void and in existent and
it is a fundamental principle that the court will not aid either party to
enforce an illegal contract, but will leave both where it finds then.
B. VOIDABLE CONTRACTS
ART 1327
FRANCISCO vs. HERRERA, G.R. NO. 139982, November 21, 2002

The vendor Eligio, Sr. entered into an agreement with petitioner, but that
the formers capacity to consent was vitiated by senile dementia. Insane
or demented persons cannot give consent to a contract, but if an insane
or demented person does enter into a contract, the legal effect is that the
contract is voidable or annullable.
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CORONEL vs. CONSTANTINO, G.R. NO. 121069, February 7, 2003

Applying Articles 1317 and 1403 of the Civil Code, the Court of Appeals
ruled that through their inaction and silence, the three sons of Emilia are
considered to have ratified the aforesaid sale of the subject property by
their mother. Ratification means that one under no disability voluntarily
adopts and gives sanction to some unauthorized act or defective
proceeding, which without his sanction would not be binding on him ,
hence, an alleged silence and inaction may not be interpreted as an act
of ratification on their part.
C. UNENFORCEABLE CONTRACTS
IGLESIA FILIPINA INDEPENDIENTE vs. HEIRS of BERNARDINO TAEZA, G.R. No.
179597, February 3, 2014, J. Peralta
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. This case clearly falls under
the category of unenforceable contracts mentioned in Article 1403, paragraph (1) of
the Civil Code, which provides, thus: (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.
YUVIENCO vs. DACUYCUY, G.R. NO. L-55048 M ay 27, 1981

Respondent judge assumed that as long as the requirements of

perfection of a contract are present in a contract which involves payment
in installments, the Statute of Frauds would no longer apply as long as
the total price or consideration is mentioned in some note or
memorandum and there is no need of any indication of the manner in
which such total price is to be paid. In any sale of real property on
installments, the Statute of Frauds read together with the perfection
requirements of Article 1475 of the Civil Code must be understood and
applied in the sense that the idea of payment on installments must be in
the requisite of a note or memorandum therein contemplated.

162

BISAYA LAND TRANSPORTATION CO., INC., vs. SANCHEZ, G.R. NO.

74623 August 31, 1987

In the case at bar, it is undisputed that Atty. Adolfo Amor was entrusted,
as receiver, with the administration of BISTRANCO and it business, but
the act of entering into a contract is one which requires the authorization
of the court which appointed him receiver. The questioned contracts can
rightfully be classified as unenforceable for having been entered into by
one who had acted beyond his powers, due to Receiver Amor's failure to
secure the court's approval of said Contracts.
STATUTE OF FRAUDS
AINZA vs. SPOUSES PADUA, G.R. NO. 165420, June 30, 2005

The contract of sale between Eugenia and Concepcion was evidenced by

a receipt signed by Eugenia. The verbal contract of sale between did not
violate the provisions of the Statute of Frauds because when a verbal
contract has been completed, executed or partially consummated, its
enforceability will not be barred by the Statute of Frauds, which applies
only to an executory agreement, thus, where one party has performed his
obligation, oral evidence will be admitted to prove the agreement.
ORDUA vs. FUENTEBELLA, G.R. NO. 176841, June 29, 2010

Gabriel Sr., during his lifetime, sold the subject property to Antonita, the
purchase price payable on installment basis, thus, Gabriel Sr. appeared
to have been a recipient of some partial payments but after his death, his
son questions the verbal sale contract between Gabriel Sr. and Antonita,
and alleged that the contract is unenforceable for non-compliance with
the Statute of Frauds. The Statute of Frauds, in context, provides that a
contract for the sale of real property or of an interest therein shall be
unenforceable unless the sale or some note or memorandum thereof is in
writing and subscribed by the party or his agent. Where the verbal
contract of sale, howe ver, has been partially executed through the partial
payments made by one party duly received by the vendor, as in the
present case, the contract is taken out of the scope of the Statute.
HERNANDEZ vs. COURT OF APPEALS, G.R. NO. L -41132 April 27,
1988

163

Both courts were of the view essentially that the evidence did not bear
out the claim of fraud; that under the Statute of Frauds, the parties'
covenant as to their properties' metes and bounds was unenforceable
since it was not reduced to writing. Not every agreement "affecting land"
must be put in writing to attain enforceability, under the Statute of
Frauds, Article 1403(2) (e) of the Civil Code, such formality is only
required of contracts involving leases for longer than one year, or for the
sale of real property or of an interest therein.
D. RESCISSIBLE CONTRACTS
CABALIW vs. SADORRA, G.R. NO. L-25650 June 11, 1975

The conveyances made by Sadorra in favor of his son-in-law were

fraudulent since about seven months after a judgment was rendered
against him in and without paying any part of that judgment, Sadorra
sold the only two parcels of land belonging to the conjugal partnership to
his son-in-law. Contracts by virtue of which the debtor alienates
property by gratuitous title or alienations by onerous title when made by
persons against whom some judgment has been rendered in any
instance or some writ of attachment has been issued, are presumed to be
made in fraud of creditors, and the decision or attachment need not refer
to the property alienated and need not have been obtained by the party
seeking rescission.
AIR FRANCE vs. HONORABLE COURT OF APPEALS, G.R. NO. 10 4234
June 30, 1995

Petitioner moved for the issuance of an alias writ of execution on the

ground of unsatisfied judgment against respondents and It likewise
moved to declare the sale to a third party of a parcel of land in the name
of the private respondent as one in fraud of creditors which was granted
by the lower court. Rescissible contracts, not being void, they remain
legally effective until set aside in a rescissory action and may convey title,
and an action for rescission may not be raised or set up in a summary
proceeding through a motion, but in an independent civil action and only
after a full-blown trial.
VII. EFFECT OF CONTRACTS
DOCTRINES , PRINCIPLES
1. CONSENSUALITY OF CONTRACTS
ART 1306 , 1336 , 1337
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REPUBLIC OF THE PHILIPPINES vs. PLDT G.R. NO. L-18841

January 27, 1969
,
The Republic commenced suit against the PLDT commanding the PLDT
to execute a contract with it for the use of the facilities of latter's
telephone system throughout the Philippines. Parties can not be coerce d
to enter into a contract where no agreement is had between them as to
the principal terms and conditions of the contract since freedom to
stipulate such terms and conditions is of the essence of our contractual
system, and by express provision of the statute, a contract may be
annulled if tainted by violence, intimidation, or undue influence (Articles
1306, 1336, 1337).
2. AUTONOM Y OF CONTRACTS
ART 1306
WILLIAM GOLANGCO CONSTRUCTION CORPORATION vs.
PHILIPPINE COMMERCIAL INTERNATIONAL BANK, G.R. NO. 142830
March 24, 2006
The provision in the construction contract providing for defects liability
period was not shown as contrary to law, morals, good customs, pubic
order or public policy, and by the nature of the obligation in such
contract, the provision limiting liability for defects and fixing specific
guaranty periods was not only fair and equitable but was also necessary.
TIU vs. PLATINUM PLANS PHIL., INC., G.R. NO. 163512 February 28,
2007

Respondent contends that the inclusion of the two-year non-involvement

clause in petitioners contract of employment was reasonable and needed
since her job gave her access to the companys confidential marketing
strategies. A non-involvement clause is not necessarily void for being in
restraint of trade as long as there are reasonable limitations as to time,
trade, and place.
LEAL vs.IAC, G.R. NO. L-65425 November 5, 1987

It is admitted by both parties that the phrase "they shall not sell to
others these three lots but only to the seller Vicente Santiago or to his
heirs or successors" is an express prohibition against the sale of the lots
described in the "Compraventa" to third persons or strangers to the
165

contract. 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.
DEL CASTILLO Vda. DE M ISTICA vs. SPOUSES NAGUIAT, G.R. NO.
137909. December 11, 2003
In the Kasulatan, it was stipulated that payment could be made even
after ten years from the execution of the Contract, provided the vendee
paid percent interest. The stipulations of the contract constitute the law
between the parties; thus, courts have no alternative but to enforce them
as aG.R.eed upon and written.
MARIMPERIO vs. COURT OF APPEALS, G.R. NO. L -40234 December
14, 1987
A contract is the law between the contracting parties, and when there is
nothing in it which is contrary to law, morals, good customs, public
policy or public order, the validity of the contract must be sustained.
ART 1159
OCCENA vs. HON. JABSON, G.R. NO. L-44349, October 29, 1976
Respondent's complaint seeks that the court "render judgment modifying
the terms and Conditions of the Contract by fixing the proper shares that
should pertain to the herein parties out of the gross proceeds from the
sales of subdivided lots of subject subdivision", citing ART 1267 of the
New Civil Code. The cited article does not grant the courts this authority
to remake, modify or revise the contract between the parties as
contractually stipulated with the force of law between the parties, so as
to substitute its own terms for those covenanted by the parties
themselves.
CABAHUG vs NAPOCOR, G.R. NO. 186069, January 30, 2013

Disregarding the stipulations in the contract allowing additional

compensation for easement fee, the CA ruled that Cabahug's attempt to
collect further sums by way of additional easement fee and,or just
compensation is violative of said contract. It is settled that a contract
constitutes the law between the parties who are bound by its stipulations
which, when couched in clear and plain language, should be applied
according to their literal tenor and the courts cannot supply material
stipulations, which contradict the intent of the parties.
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3. M UTUALITY OF CONTRACTS
BANCO FILIPINO SAVINGS vs. NAVARRO, G.R. NO. L -46591, July 28,
1987
Escalation clauses to be valid should specifically provide: (1) that there
can be an increase in interest if increased by law or by the Monetary
Board; and (2) in order for such stipulation to be valid, it must include a
provision for reduction of the stipulated interest "in the event that the
applicable maximum rate of interest is reduced by law or by the
Monetary Board" in order to be valid which is known as deescalation
clause.
SPOUSES FLORENDO vs. COURT OF APPEALS, G.R. NO. 101771
December 17, 1996
In order that obligations arising from contracts may have the force of law
between the parties, there must be mutuality between the parties based
on their essential equality, hence, a contract containing a condition
which makes its fulfillment dependent exclusively upon the uncontrolled
will of one of the contracting parties, is void.
ART 1308
PHILIPPINE NATIONAL BANK vs. SPOUSES AGUSTIN, G.R. NO.
164549
September 18, 2009

The spouses Rocamora posit that their loan would not have bloated to
more than double the original amount if PNB had not increased the
interest rates and had it immediately foreclosed the mortgages. Any
increase in the rate of interest made pursuant to an escalation clause
must not be left solely to the will of one of the parties, but must be the
result of a mutual agreement between the parties, hence, a de-escalation
clause that would authorize a reduction in the interest rates
corresponding to downward changes made by law or by the Monetary
Board must be included, otherwise, the change carries no binding effect.
4. RELATIVITY , PRIVITY OF CONTRACTS
DKC HOLDINGS CORPORATION vs. COURT OF APPEALS, G.R. NO.
118248
April 5, 2000

Being an heir there is privity of interest between the heir and the
deceased, hence, heirs are bound by contracts entered into by their
167

predecessors-in-interest except when the rights and obligations arising

therefrom are not transmissible by (1) their nature, (2) stipulation or (3)
provision of law.
METROPOLITAN BANK vs. REYNADO, G.R. NO. 164538, August 9,
2010

Respondents are not parties to the agreement, nor assigns or heirs of

either of the parties but who rely on the debt settlement agreement
petitioner and Universal to preclude prosecution of the offense of estafa
or prevent the incipience of any liability that may arise from the criminal
offense. The civil law principle of relativity of contracts provides that
"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."
PRUDENTIAL BANK AND TRUST COMPANY vs. ABASOLO, G.R. NO.
186738, September 27, 2010
Contracts take effect only between the parties, their assigns and heirs,
and if a contract should contain some stipulation in favor of a third
person, the contracting parties must have clearly and deliberately
conferred a favor upon the third person.
VIII. KINDS OF CONTRACTS
A. INNOM INATE CONTRACTS
ART 1307
CORPUS vs. COURT OF APPEALS, G.R. NO. L -40424 June 30, 1980

There was no express contract between the parties for the payment of
attorney's fees, but the respondent rendered legal services to petitioner.
The payment of attorney's fees to respondent may be justified by virtue of
the innominate contract of facio ut des (I do and you give which is based
on the principle that "no one shall unjustly enrich himself at the expense
of another" and under Article 1307 such contracts shall be regulated by
the stipulations of the parties, by the general provisions or principles of
obligations and contracts, by the rules governing the most analogous
nominate contracts, and by the customs of the people.
B. DIVISIBLE CONTRACTS
BRIONES vs. CAMMAYO, ET AL., G.R. NO. L-23559, October 4, 1971

168

According to the appellants, a usurious loan is void due to illegality of

cause or object, the rule of pari delicto applies, so that neither party can
bring action against each other. A contract of loan with usurious
interest consists of two stipulations which are divisible in the sense that
the former can still stand without the latter, the principal and the
accessory stipulations; the principal one is to pay the debt; the accessory
stipulation is to pay interest thereon, and in case of a divisible contract,
if the illegal terms can be separated from the legal ones, the latter may be
enforced."
C. CONTRACT OF ADHESION
ART 1750
ONG YIU vs. HONORABLE COURT OF APPEALS, G.R. NO. L-40597
June 29, 1979

Petitioner contends that respondent Court committed grave error when it

limited PAL's carriage liability to the amount of P100.00 as stipulated at
the back of the ticket and argues that he had not actually entered into a
contract with PAL limiting the latter's liability for loss or delay of the
baggage of its passengers. While it may be true that petitioner had not
signed the plane ticket he is nevertheless bound by the provisions thereof
it being a contract of "adhesion", wherein one party imposes a ready
made form of contract on the other and the one who adheres to the
contract is in reality free to reject it entirely, but if he adheres, he gives
his consent.
ART 1326
C & C COMMERCIAL CORPORATION vs. M ENOR, G.R. NO. L-28360
January 27, 1983
Advertisements for bidders are simply invitations to make proposals, and
the advertiser is not bound to accept the highest or lowest bidder, unless
the contrary appears.
ART 1332
TANG vs. COURT OF APPEALS, G.R. NO. L-48563 M ay 25, 1979

It is the position of the petitioner that because Lee See Guat was illiterate
and spoke only Chinese, she could not be held guilty of concealment of
her health history because the applications for insurance were in English
and the insurer has not proved that the terms thereof had been fully
explained to her. The obligation to show that the terms of the contract
had been fully explained to the party who is unable to read or
169

understand the language of the contract, when fraud or mistake is

alleged, devolves on the party seeking to enforce it.
BUENAVENTURA ANGELES, ET AL. vs. URSULA TORRES CALASANZ,
ET AL., G.R. NO. L-42283
March 18, 1985
The plaintiffs-appellees, eager to acquire a lot upon which they could
build a home, affixed their signatures and assented to the terms and
conditions of the contract and they had no opportunity to question nor
change any of the terms of the agreement since it was offered to them on
a "take it or leave it" basis. Such contracts are called contracts of
adhesion, because the only participation of the party is the signing of his
signature or his "adhesion" thereto hence must be construed against the
party causing it.

IX.

STIPULATION POR AUTRUI

BONIFACIO BROS., INC., ET AL., vs. M ORA, ET AL., G.R. NO. L 20853
M ay 29, 1967

The appellants seek to recover the insurance proceeds, relying upon the
insurance contract executed by and between the State Bonding &
Insurance Company, Inc. and Mora. Contracts take effect only between
the parties thereto, except where the contract contains some
stipulations, known as stipulations por atrui, in favor of a third person,
who is allowed to avail himself of a benefit granted to him by the terms of
the contract, provided that the contracting parties have clearly and
deliberately conferred a favor upon such person, however such third
person not a party to the contract has no action zagainst the parties
thereto, and cannot generally demand the enforcement of the same, if he
did not communicate his acceptance thereto to the obligor before the
revocation.
FLORENTINO vs. ENCARNACION, SR., G.R. NO. L -27696 September
30, 1977
To constitute a valid stipulation pour autrui it must be the purpose and
intent of the stipulating parties to benefit the third. It is not sufficient
that the third person may be incidentally benefited by the stipulation.
G.R. NO. 120554 September 21, 1999
SO PING BUN vs. COURT OF APPEALS
170

Petitioner prevailed upon DCCSI to lease the warehouse to his enterprise

at the expense of respondent corporation. Although petitioner took
interest in the property of respondent corporation and benefited from it,
nothing on record imputes deliberate wrongful motives or malice on him.
Any third person who induces another to violate his contract shall be
liable for damages to the other contracting party, lack of malice, however,
precludes damages.

171

CIVIL LAW
PART II
SAL ES
I. DEFINITION AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE
A. DEFINITION

ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125

2, 1994

December

A contract of sale is perfected when a person, called the seller, obligates

himself, for a price certain, to deliver and to transfer ownership of a thing or
right to another, called the buyer, over which the latter agrees.

B. CONTRACT OF OPTION NOT A CONTRACT OF SALE

ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125
2, 1994

December

Both the trial court and CA found that defendants' offer to sell was never
accepted by the plaintiffs for the reason that the parties did not agree upon the
terms and conditions of the proposed sale, hence, there was no contract of sale
at all. An accepted unilateral promise which specifies the thing to be sold and
the price to be paid, when coupled with a valuable consideration distinct and
separate from the price, is what may properly be termed a perfected contract of
option and not perfected contract of sale.
C. CONTRACT OF CONDITIONAL SALE
OLIVAREZ REALTY CORPORATION and DR. PABLO R. OLIVAREZ v BENJAMIN
CASTILLO, G.R No. 196251, July 9, 2014. J. LEONEN
In both contracts to sell and contracts of conditional sale, 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 buyer s full payment of the pur chase 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
1

prospective buyer is not automatic. The prospective seller must convey title to the property
through a deed of conditional sale.
In this case, Castillo reserved his title to the property and undertook to execute a deed of
absolute sale upon Olivarez Realty Corporation s full payment of the purchase price. Since
Castillo still has to execute a deed of absolute sale to Olivarez RealtyCorporation upon full
payment of the purchase price, the transfer of title is not automatic. The contract in this
case is a contract to sell.
Since Olivarez Realty Corporation illegally withheld payments of the purchase price,
Castillo is entitled to cancel his contract with petitioner corporation. However, we properly
characterize the parties contract as a contract to sell, not a contract of conditional sale.

In both contracts to sell and contracts of conditional sale, 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 buyer s 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. 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 [seller s] 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 Corporation s 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.

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. J.
BRION
The court s 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. (owever, where the basis of the third person s possession is a
conditional contract of sale, such possessor may still be ousted by the ex parte issuance of a
writ of possession. The possession contemplated in Rule 39 Section 33 must be adverse in
that she must prove a right independent of and even superior to that of 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 fulfilment of a positive suspensive condition
which is normally the payment of the purchase price in the manner agreed upon.
SPOUSES JOSE C. ROQUE AND BEATRICE DELA CRUZ ROQUE, ET AL vs. MA. PAMELA
AGUADO, ET AL., G.R. No. 193787, April 7, 2014, J. Perlas- Bernabe
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. In a contract to sell, there being no previous sale of
the property, a third person buying such property despite the fulfilment 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 -seller s title per se, but the
latter, of course, may be sued for damages by the intending buyer .
SPOUSES JOSE C. ROQUE AND BEATRIZ DELA CRUZ ROQUE ET AL. VS. MA. PAMELA P.
AGUADO, ET AL. G.R. No. 193787April 7, 2014, J. Perlas-Bernabe
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 cas e. 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 fulfilment 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 Spouses Roque have not paid the final installment of the
purchase price. As such, the condition which would have triggered the parties obligation to
3

enter into and thereby perfect a contract of sale in order to effectively transfer the
ownership of the subject portion from the sellers to the buyers (Spouses 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 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
fulfilment 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-seller s title per se, but the latter, of course, may be sued for damages by the
intending buyer.
ART 1458
TAN vs BENOLIRAO, G.R. NO. 153820. October 16, 2009
The Deed of Conditional Sale, as termed by the parties, states that "in case,
BUYER has complied with the terms and conditions of this contract, then the
SELLERS shall execute and deliver to the BUYER the appropriate Deed of
Absolute Sale". The very essence of a contract of sale is the transfer of
ownership in exchange for a price paid or promised, but where the seller
promises to execute a deed of absolute sale upon the completion by the buyer
of the payment of the price, the contract is only a contract to sell, even if it is
denominated as a Deed of Conditional Sale.
D. CONTRACT TO SELL
JUAN P. CABRERA vs. HENRY YSAAC, G.R. No. 166790, November 19, 2014, J. Leonen
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.
At best, the agreement between Juan and Henry 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. 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-owner s buyer. Hence, the co-owners consent is an important factor for the sale to
ripen.

PADILLA vs. SPOUSES PAREDES, G.R. NO. 124874, M arch 17, 2000
Under the parties contract, the property will be transferred to petitioner only
upon the latter's "complete compliance of his obligation provided in the
contract" but because of petitioners failure to fully pay the purchase price, the
obligation of private respondents to convey title to the property did not arise.
Petitioner's reliance on Article 1592 of the Civil Code is misplaced because
what this provision contemplates is an absolute sale and not a contract to sell
as in the present case.
ART 1478

CRISTOBAL vs. SALVADOR, SR., G.R. NO. 139365, September 11, 2008
The Seller executed three separate contracts on the same property with three
different parties, wherein only the first two contracts contained a stipulation
that "if the Vendee fails to pay the Vendor the sums stated within the period
stipulated and after the grace period for each payment, this contract shall
automatically be null and void and of no effect without the necessity of any
demand, and the Vendor shall have the full and exclusive right to sell to any
person. The first two contracts were both mere contracts to sell and did not
transfer ownership to either of the buyers for failure to comply with the
condition of full payment of the purchase price, hence, vendor can still validly
convey the subject property to another buyer.
E. ELEMENTS OF A VALID CONTRACT OF SALE
PEALOSA vs. SANTOS, G.R. NO. 133749, August 23, 2001
Respondent insist that the second deed is a complete nullity because a) the
consideration stated in the deed was not paid; b)seller was not present when
the deed was notarized; c) seller did not surrender a copy of the title; d)real
estate taxes were not paid. The elements of a valid contract of sale are: (1)
consent or meeting of the minds; (2) determinate subject matter; and (3) price
certain in money or its equivalent which are present in the second Deed of Sale
hence there is already a perfected contract of sale.
5

ART 1475
HEIRS OF JUAN SAN ANDRES vs. RODRIGUEZ, G.R. NO. 135634 M ay 31,
2000
Respondent alleged that there was no contract of sale to speak of, while
petitioner as proof of the sale presented a receipt stating that Andres received
from Rodriguez a sum representing an advance payment for a residential lot
with the agreed price of 15php per square meter and that the payment of the
full consideration after the survey shall be due and payable in 5 years from the
execution of the formal deed of sale. All of the essential elements of a contract
of sale are present, i.e., that there was a meeting of the minds between the
parties, by virtue of which the late Andres undertook to transfer ownership of
and to deliver a determinate thing for a price certain in money.
II. PARTIES TO A CONTRACT OF SALE
A. SELLER
SKUNAC CORPORATION and ALFONSO F. ENRIQUEZ vs. ROBERTO S. SYLIANTENG and
CAESAR S. SYLIANTENG, G.R. No. 205879, April 23, 2014, J. Peralta
Indeed, not being an heir of Luis, Romeo never acquired 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.
ART 1459
HEIRS OF ARTURO
November 27, 2008

REYES

vs

SOCCO-BELTRAN,

G.R.

176474

It was unmistakably stated in the Contract to Sell and made clear to both
parties thereto that the vendor was not yet the owner of the subject property
and was merely expecting to inherit the same. The law specifically requires
that the vendor must have ownership of the property at the time of delivery
hence, there was no valid sale from which ownership of the subject property
could have been transferred.
DACLAG vs. M ACAHILIG et al., G.R. NO. 159578, February 18, 2009

Petitioners contend that the 10-year period for reconveyance is applicable if the
action is based on an implied or a constructive trust. However, since
respondents' action for reconveyance was based on fraud, the action must be
filed within four years from the discovery of the fraud. Respondent's action for
reconveyance was not e ven subject to prescription, since the deed of sale that
was executed in favor of petitioners was null and void because the selle r was
not the owner of the land, nor has the authority when she sold it to petitioners,
hence, being an absolute nullity, the deed is subject to attack anytime because
an action to declare the inexistence of a void contract does not prescribe.
ART 1505
NOOL vs. COURT OF APPEALS, G.R. NO. 116635 July 24, 1997
Petitioners contend that they could repurchase the property that they "sold" to
private respondents when they allowed the respondent to redeem the properties
for them from DBP but DBP certified that the mortgagors' right of redemption
was not exercised within the period. Article 1505 of the Civil Code provides that
"where goods are sold by a person who is not the owner thereof, and who does
not sell them under authority or with consent of the owner, the buyer acquires
no better title to the goods than the seller had, unless the owner of the goods is
by his conduct precluded from denying the seller's authority to sell.", hence,
petitioners "sold" nothing, it follows that they can also "repurchase" nothing.
B. BUYER
ART 1491
DAROY vs. ATTY. ABECIA, A.C. NO. 3046, October 26, 1998
The prohibition in Art. 1491 does not apply to the sale of a parcel of land,
acquired by a client to satisfy a judgment in his favor to his counsel as long as
the property was not the subject of the litigation.
ARCENIO vs. JUDGE PAGOROGON, A.M . NO. M TJ-89-270 July 5, 1993
OFFICE OF THE COURT ADM INISTRATOR vs. JUDGE PAGOROGON, A.M .
NO. M TJ-92-637 July 5, 1993
The respondent judge engaged the services of a mechanic to tow the jeep in
custodia legis and to place the jeep in good running condition, spending in the
process her own money and also registered the same in her brother's name.
The act of respondent judge is not unlike the prohibited acquisition by
purchase described in Article 1491 of the New Civil code and is in fact, even
worse when she did not acquire the said vehicle from it's owner but instead
whimsically spent for its repairs and automatically appropriated the jeep for
her own use and benefit.
7

VALENCIA vs. ATTY. CABANTING, A.M . Nos. 1302, 1391 and 1543 April
26, 1991
Paulino alleged that the trial court failed to provide a workable solution
concerning his house and while the petition for certiorari was pending the trial
court issued an order of execution stating that "the decision in this case has
already become final and executory". While it is true that Atty. Cabanting
purchased the lot after finality of judgment, there was still a pending certiorari
proceeding, and a thing is said to be in litigation not on ly if there is some
contest or litigation over it in court, but also from the moment that it becomes
subject to the judicial action of the judge.
FABILLO vs. THE HONORABLE INTERMEDIATE APPELLATE COURT, G.R.
NO. L-68838 M arch 11, 1991
After the court declared with finality that the petitioners are the lawful owners,
they refused to comply when the respondent lawyer proceeded to implement
the contract of services between him and the petitioners by taking possession
and exercising rights of ownership over 40% of said properties which are the
subject of litigation. A contract between a lawyer and his client stipulating a
contingent fee is not covered by said prohibition under Article 1491 (5) of the
Civil Code because the payment of said fee is not made during the pendency of
the litigation but only after judgment has been rendered in the case handled by
the lawyer.
MANANQUIL vs. ATTY. VILLEGAS, A.M . NO. 2430 August 30, 1990
Complainant alleges that for over a period of 20 years, respondent counsel
allowed lease contracts to be executed between his client and a partnership of
which respondent is one of the partners, covering parcels of land of the estate,
but respondent claims that he is only acting as an agent. Even if the
respondent signed merely as an agent, the lease contracts are covered by the
prohibition against any acquisition or lease by a lawyer of properties involved
in litigation in which he takes part.
BAUTISTA vs. ATTY. GONZALES, A.M . NO. 1625 February 12, 1990
The Solicitor General found that respondent counsel transferred to himself
one-half of the properties of his clients during the pendency of the case where
the properties were involved. Persons mentioned in Art. 1491 of the Civil Code
are prohibited from purchasing the property mentioned therein because of the

existing fiduciary relationship with such property and rights, as well as with
the client.
ART 1492
IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORY
OF GUAM OF ATTY. LEON G. MAQUERA, B.M . NO. 793. July 30, 2004
Maquera was suspended from the practice of law in Guam for misconduct, as
he acquired his clients property by exercising the right of redemption
previously assigned to him by the client in payment of his legal services, then
sold it and as a consequence obtained an unreasonably high fee for handling
his clients case. The prohibition extends to sales in legal redemption and such
prohibition is founded on public policy because, by virtue of his office, an
attorney may easily take advantage of the credulity and ignorance of his client
and unduly enrich himself at the expense of his client.
ART 1493
PROVINCE OF CEBU vs. HEIRS OF RUFINA MORALES, G.R. NO. 170115,
FEBRUARY 19, 2008
The City of Cebu was no longer the owner of the lot when it ceded the same to
petitioner under the compromise agreement and at that time, the city merely
retained rights as an unpaid seller but had effectively transferred ownership of
the lot to Morales. A successor-in-interest could only acquire rights that its
predecessor had over the lo which include the right to seek rescission or
fulfillment of the terms of the contract and the right to damages in either case.
III. SUBJECT M ATTER
GENERAL MARIANO ALVAREZ SERVICES COOPERATIVE, INC. (GEMASCO), vs.
NATIONAL HOUSING AUTHORITY (NHA) AND GENERAL MARIANO ALVAREZ WATER
DISTRICT (GMAWD), G.R. No. 175417/ GENERAL MARIANO ALVAREZ WATER
DISTRICT (GMAWD), Petitioner, v. AMINA CATANGAY, ELESITA MIRANDA, ROSITA
RICARTE, ROSA FETIZANAN, ABSALON AGA, ELPIDIO SARMIENTO, FRANCISCO
RICARDE, ROMEO CATACUTAN, RASALIO LORENZO, ARTEMIO RAFAEL, MYRN CEA,
AND NORMA ESTIL; NATIONAL HOUSING AUTHORITY (NHA) AND GENERAL
MARIANO ALVAREZ SERVICES COOPERATIVE, INC., REPRESENTED BY ERNESTO
FLORES, G.R. No. 198923, February 09, 2015, J. Peralta
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
9

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 lent to it by the NHA must corollarily be excluded from the
same.
A. SALE OF AN EXPECTED THING
ART 1461
HEIRS OF AMPARO DEL ROSARIO vs. SANTOS, G.R. NO. L-46892
September 30, 1981
By the terms of the Deed of Sale itself, appellants declared themselves to be
owners of one-half (1,2) interest thereof and contend that the deed of
assignment of one-half (1,2) interest thereof executed by said Custodio in their
favor is strictly personal between them. Notwithstanding the lack of any title to
the said lot by appellants at the time of the execution of the deed of sale in
favor of appellee, the said sale may be valid as there can be a sale of an
expected thing.
B. SALE OF A MERE HOPE OR EXPECTANCY
JAVIER vs. COURT OF APPEALS, G.R. NO. L -48194 M arch 15, 1990
The efficacy of a deed of assignment is subject to the condition that the
application of private respondent for an additional area for forest concession be
approved by the Bureau of Forestry which was not obtained. The efficacy of
the sale of a mere hope or expectancy is deemed subject to the condition that
the thing will come into existence, which did not happen, hence the agreement
executed never became effective or enforceable.
C. BOUNDARIES OF THE SUBJECT MATTER
DEL PRADO vs SPOUSES CABALLERO, G.R. NO. 148225, M arch 3,2010
The parties agreed on the purchase price of P40,000.00 for a predetermined
area of 4,000 sq m, more or less, but when the OCT was issued, the area was
declared to be 14,475 sq m, with an excess of 10,475 sq m. Petititiomer,
however, claims that respondents are, therefore, duty-bound to deliver the
whole area within the boundaries stated, without any corresponding increase
in the price. Article 1542 is not hard and fast and admits of an exception and
the use of more or less or similar words in designating quantity covers only a
reasonable excess or deficiency, and clearly, the discrepancy of 10,475 sq m
cannot be considered a slight difference in quantity.
SEM IRA vs. COURT OF APPEALS, G.R. NO. 76031 M arch 2, 1994

10

Private respondent sold Lot 4221 to his nephew by means of a "Kasulatan ng

Bilihan ng Lupa" which incorporated both the area and the definite boundaries
of the lot, the former transferred not merely the 822.5 square meters stated in
their document of sale but the entire area circumscribed within its boundaries.
If besides mentioning the boundaries, which is indispensable in every
conveyance of real estate, its area or number should be designated in the
contract, the vendor shall be bound to deliver all that is included within said
boundaries, even when it exceeds the area or number specified in the contract;
and, should he not be able to do so, he shall suffer a reduction in the price, in
proportion to what is lacking in the area or number, unless the contract is
rescinded because the vendee does not accede to the failure to deliver what has
been stipulated.
IV. OBLIGATIONS OF A SELLER TO TRANSFER OWNERSHIP
ART 1462
DANGUILAN vs. IAC, G.R. NO. L-69970 November 28, 1988
Respondent admits that she did not take physical possession of property but
argues that symbolic delivery was effected through the notarized deed of sale.
The thing is considered to be delivered when it is placed "in the hands and
possession of the vendee," and in order that this symbolic delivery may produce
the effect of tradition, it is necessary that the vendor shall have had such
control over the thing sold at the moment of the sale, but if there is no
impediment to prevent the thing sold passing into the tenancy of the purchaser
by the sole will of the vendor, symbolic delivery through the execution of a
public instrument is sufficient.
ART 1495
CHUA vs COURT OF APPEALS, G.R. NO. 119255, April 9, 2003
Petitioner insists that he was ready to pay the balance of the purchase price
but withheld payment because he required that the property be registered first
in his name before he would turn over the check to the private respondent.
The obligation of the seller is to transfer to the buyer ownership of the thing
sold, but in the sale of a real property, the seller is not obligated to transfer in
the name of the buyer a new certificate of title, but rather to transfer ownership
of the real property, because as between the seller and buyer, ownership is
transferred not by the issuance of a new certificate of title in the name of the
buyer but by the execution of the instrument of sale in a public docume nt.
ART 1496
VISAYAN SAWM ILL COMPANY, INC., vs. COURT OF APPEALS, G.R. NO.
83851. M arch 3, 1993.

11

The seller gave access to the buyer to enter his premises, manifesting no
objection thereto but even sending people to start digging up the scrap iron.
The seller has placed the goods in the control and possession of the vendee and
such action or real delivery (traditio) transfered ownership.
ART 1497
MUNICIPALITY OF VICTORIAS vs. THE COURT OF APPEALS, G.R. NO. L 31189 M arch 31, 1987

Respondent discovered that a parcel of land she owns is being used by

Petitioner, Municipality of Victorias, as a cemetery for 29 years and when the
Mayor replied that Petitioner bought the land from her grandmother, she asked
to be shown the papers concerning the sale but petitioner refused to show the
same. Where there is no express provision that title shall not pass until
payment of the price, and the thing sold has been delivered, title passes from
the moment the thing sold is placed in the possession and control of the buyer.
DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010
Petitioner sold three parcels of land to respondent which were mortgaged to a
bank, hence petitioner and respondent executed a notarized deed of absolute
sale with assumption of mortgage, but petitioner some time thereafter paid the
mortgage and sold the properties to another person. Settled is the rule that the
seller is obliged to transfer title over the properties and deliver the same to the
buyer, and as a rule, the execution of a notarized deed of sale is equivalent to
the delivery of a thing sold.
ART 1523
PUROMINES, INC., vs. COURT OF APPEAL, G.R. NO. 91228. M arch 22,
1993.

Petitioner argues that the sales contract does not include the contract of
carriage which is a different contract entered into by the carrier with the cargo
owners.
As worded, the sales contract is comprehensive enough to include claims for
damages arising from carriage and delivery of the goods. As a general rule, the
seller has the obligation to transmit the goods to the buyer, and concomitant
thereto, the contracting of a carrier to deliver the same. Art. 1523 of the Civil
Code provides:
"Art. 1523. Where in pursuance of a contract of sale, the seller in authorized or
required to send the goods to the buyer, delivery of the goods to a carrier,
12

whether named by the buyer or not, for the purpose of transmission to the
buyer is deemed to be a delivery of the goods to the buyer, except in the cases
provided for in article 1503, first, second and third paragraphs, or unless a
contrary intent appear.
"Unless otherwise authorized by the buyer, the seller must take such contract
with the carrier on behalf of the buyer as may be reasonable, having regard to
the nature of the goods and the other circumstances of the case. If the seller
omit so to do, and the goods are lost or damaged in course of transit, the buyer
may decline to treat the delivery to the carrier as a delivery to himself,, or may
hold the seller responsible in damages."
xxx xxx xxx
The disputed sales contact provides for conditions relative to the delivery of
goods, such as date of shipment, demurrage, weight as determined by the bill
of lading at load port.

ART 1477
BOY vs. COURT OF APPEALS, G.R. NO. 125088, April 14, 2004
Petitioner sold the subject property to respondents as evidenced by a notarized
Deed of Absolute Sale, but contends that the respondents have no right to
material possession of the property since the respondents have not paid the
property in full. Unless there is a stipulation to the contrary, when the sale is
made through a public instrument, the execution thereof is equivalent to the
delivery of the thing which is the object of the contract.
V. PRICE
A. G.R.OSS INADEQUACY OF THE PRICE
ART 1470
SPOUSES BUENAVENTURA et al vs. COURT OF APPEALS, G.R. NO.
126376. November 20, 2003
Petitioners assert that their respondent siblings did not actually pay the prices
stated in the Deeds of Sale to their respondent father and assuming that there
is consideration, the same is grossly inadequate as to invalidate the Deeds of
Sale. If there is a meeting of the minds of the parties as to the price, the
contract of sale is valid and gross inadequacy of price does not affect a contract
of sale, except if there is a defect in the consent, or that the parties really
intended a donation or some other contract.
13

ART 1471
HO, JR. vs TENG GUI, G.R. NO. 130115, July 16, 2008
RTC considered that although the sales of the properties on the lot were
simulated, it can be assumed that the intention of Ho in such transaction was
to give and donate such properties to the respondent. The Court holds that the
reliance of the trial court on the provisions of Article 1471 of the Civil Code to
conclude that the simulated sales were a valid donation to the respondent is
misplaced because its finding was based on a mere assumption when the law
requires positive proof, which the respondent was unable to show.

B. FIXING OF THE PRICE

ART 1473
HYATT ELEVATORS
December 1, 2010

vs. CATHEDRAL HEIGHTS, G.R. NO. 173881

As revealed by the records, it was only Hyatt who determined the price, without
the acceptance or conformity of CHBCAI. The fixing of the price can never be
left to the decision of one of the contracting parties, but a price fixed by one of
the contracting parties, if accepted by the other, gives rise to a perfected sale.
C. W HEN AND W HERE TO PAY THE PRICE
CHUA vs. COURT OF APPEALS, G.R. NO. 119255, April 9, 2003
On the agreed date, Chua refused to pay the balance of the purchase price as
required by the contract to sell, the signed Deeds of Sale, and imposes another
condition. The vendee is bound to accept delivery and to pay the price of the
thing sold at the time and place stipulated in the contract.
D. INTEREST
ART 1589
FULE vs. COURT OF APPEALS, G.R. NO. 112212, M arch 2, 1998
While it is true that the amount of P40,000.00 forming part of the
consideration was still payable to petitioner, its nonpayment by Dr. Cruz is not
a sufficient cause to invalidate the contract or bar the transfer of ownership
and possession of the things exchanged considering the fact that their contract
is silent as to when it becomes due and demandable.
Neither may such failure to pay the balance of the purchase price result in the
14

payment of interest thereon. Article 1589 of the Civil Code prescribes the
payment of interest by the vendee "for the period between the delivery of the
thing and the payment of the price" in the following cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits or income;
(3) Should he be in default, from the time of judicial or extrajudicial demand for
the payment of the price.
E. SUSPENSION OF PAYMENT OF THE PRICE
ART 1590
CENTRAL BANK OF THE PHILIPPINES vs. SPOUSES ALFONSO, G.R. NO.
131074, M arch 27, 2000

Respondents aver that they are entitled to cancel the obligation altogether in
view of petitioner's failure to pay the purchase price when the same became
due, while Petitioner claims that the respondent failed to comply with their
contractual obligations hence it was entitled to withhold payment of the
purchase price. Should the vendee be disturbed in the possession or ownership
of the thing acquired, he may suspend the payment of the price until the
vendor has cause the disturbance or danger to cease. This is not, however, the
only justified cause for retention or withholding the payment of the agreed
price, but also, if the vendor fails to perform any essential obligation of the
contract.
ART 1592
SOLIVA vs. The INTESTATE ESTATE of M ARCELO M .VILLALBA, G.R. NO.
154017, December 8, 2003
While petitioner is now barred from recovering the subject property due to
laches, all is not lost for her since by respondent's own admission, a balance of
P1,250 of the total purchase price remains unpaid. 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 take place,
the vendee may pay, even after the expiration of the period, as long as no
demand for rescission of the contract has been made upon him either judicially
or extrajudicially or by a notarial act.
VI. FORM ATION OF A CONTRACT OF SALE
A. STAGES TO THE CONTRACT OF SALE
15

SWEDISH M ATCH
October 20, 2004

vs.

COURT

OF

APPEALS,

G.R.

NO.

128120

Petitioners stress that respondent Litonjua made it clear in his letters that the
quoted prices were merely tentative and still subject to further negotiations
between him and the seller, hence, there was no meeting of the minds on the
essential terms and conditions of the sale because SMAB did not accept
respondents offer that consideration would be paid in Philippine pesos. In
general, contracts undergo three distinct stages, to wit: (1) Negotiation - begins
from the time the prospective contracting parties manifest their interest in the
contract and ends at the moment of agreement of the parties; (2) Perfection or
birth of the contract takes place when the parties aG.R.ee upon the essential
elements of the contract; and (3) Consummation occurs when the parties fulfill
or perform the terms agreed upon in the contract, culminating in the
extinguishment thereof.
B. ACCEPTED UNILATERAL PROMISE
ART 1479 (Read together with ART 1324)
TUAZON vs. DEL ROSARIO-SUAREZ, G.R. NO. 168325, December 8, 2010

The lessor made an offer to sell to the lessee the property at a fixed price within
a certain period, but the lessee failed to accept the offer or to purchase on time,
hence, the lessor sold the said property to her daughter. An accepted
unilateral promise can only have a binding effect if supported by a
consideration separate and distinct from the purchase price. Hence, the option
can still be withdrawn, even if accepted, if the same is not supported by any
consideration.
ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125, December
2, 1994
Both the trial court and CA found that defendants' offer to sell was never
accepted by the plaintiffs for the reason that the parties did not agree upon the
terms and conditions of the proposed sale, hence, there was no contract of sale
at all.
When the sale is not absolute but conditional, such as in a "Contract to Sell"
where invariably the ownership of the thing sold is retained until the fulfillment
of a positive suspensive condition (normally, the full payment of the purchase
price), the breach of the condition will prevent the obligation to convey title
from acquiring an obligatory force.
16

An imperfect promise (policitacion) is merely an offer and is not considered

binding commitments, thus, at any time prior to the perfection of the contract,
either negotiating party may stop the negotiation, and the offer, at this stage,
may be withdrawn; the withdrawal is effective immediately after its
manifestation, such as by its mailing and not necessarily when the offeree
learns of the withdrawal.
SERRA vs. COURT OF APPEALS, G.R. NO. 103338, January 4, 1994

The court found the contract to be valid, but nonetheless ruled that the option
to buy is unenforceable because it lacked a consideration distinct from the
price and RCBC did not exercise its option within reasonable time. Article
1324 of the Civil Code provides that when an offeror has allowed the offeree a
certain period to accept, the offer maybe withdrawn at anytime before
acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised; on the other
hand, Article 1479 of the Code provides that an accepted unilateral promise to
buy and sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.

C. EARNEST M ONEY
In a potential sale transaction, the prior payment of earnest money even before the
property owner can agree to sell his property is irregular, and cannot be used to bind the
owner to the obligations of a seller under an otherwise perfected contract of sale; to cite a
well-worn clich, the carriage cannot be placed before the horse. Securitron s sending of
the February 4, 2005 letter to FORC which contains earnest money constitutes a mere
reiteration of its original offer which was already rejected previously. FORC can never be
made to push through a sale which they never agreed to in the first place. FIRST OPTIMA
REALTY CORPORATION vs. SECURITRON SECURITY SERVICES, INC., G.R. No. 199648,
January 28, 2015, J. Del Castillo

ART 1482
SPOUSES SERRANO vs. CAGUIAT, G.R. NO. 139173, February 28, 2007
The lower court ruled that the receipt stating that the respondent made a
partial payment and that the execution and final deed of sale would be signed
upon payment of the balance, is a Contract of Sale and considered the partial
payment as earnest money, which prompted the respondent to demand specific
performance and damages when the herein petitioners cancelled the
transaction. Whenever earnest money is given in a contract of sale, it shall be
17

considered as part of the price and proof of the perfection of the contract, but
the earnest money given in a contract to sell will form part of the consideration
only if the sale is consummated upon full payment of the purchase price.
SAN M IGUEL PROPERTIES PHILIPPINES, INC., vs. SPOUSES HUANG, G.R.
NO. 137290. July 31, 2000
The appellate court held that all the requisites of a perfected contract of sale
had been complied with upon acceptance of the petitioner of the earnest money
tendered by respondents. It is not the giving of earnest money, but the proof of
the concurrence of all the essential elements of the contract of sale which
establishes the existence of a perfected sale.
VII. TRANSFER OF OWNERSHIP
NFF INDUSTRIAL CORPORATION VS. G & L ASSOCIATED BROKERAGEAND/OR
GERARDO TRINIDAD, G.R. No. 178169, January 12, 2015, J. Peralta
Under the Civil Code, the vendor is bound to transfer the ownership of and deliver, as well
as warrant the thing which is the object of the sale. The ownership of thing sold is
considered acquired by the vendee once it is delivered to him. Thus, ownership does not
pass by mere stipulation but only by delivery. In the Law on Sales, delivery may be either
actual or constructive, but both forms of delivery contemplate "THE ABSOLUTE GIVING UP
OF THE CONTROL AND CUSTODY OF THE PROPERTY ON THE PART OF THE VENDOR,
AND THE ASSUMPTION OF THE SAME BY THE VENDEE."
NFF INDUSTRIAL CORPORATION VS. G & L ASSOCIATES BROKERAGE AND/OR
GERARDO TRINIDAD, G.R. No. 178169. January 12, 2015, J. Peralta
The seller has actually delivered the bulk bags to buyer-company, although the same was
not delivered to the person named in the Purchase Order but to the representative of the
general manager of buyer-company. By allowing seller s employee to pass through the
guard-on-duty, who allowed the entry of delivery into the buyer s premises which is the
designated delivery site, the buyer had effectively abandoned whatever infirmities may
have attended the delivery of the bulk bags. Therefore, there was a valid delivery on the
part of the seller which transferred ownership to the buyer and which would then give rise
to an obligation to pay on the part of the buyer for the value of the bulk bags.
A. DEED OF SALE
ART 1498

DAILISAN vs. COURT OF APPEALS, G.R. NO. 176448, July 28, 2008
18

Respondents question the notarized deed of absolute sale presented by the

petitioner and refused to partition the property purportedly co-owned by them.
Ownership of the thing sold is acquired only from the time of delivery thereof,
either actual or constructive, and when the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the
thing which is the object of the contract, if from the deed the contrary does not
appear or cannot be inferred.
LEONARDO vs MARAVILLA, G.R. NO. 143369, November 27, 2002
It is not disputed that petitioner neither had, nor demanded, material
possession of the disputed lot as well as the transfer of title to his name
notwithstanding the alleged execution of a deed of absolute sale and it was the
respondents who have been in control and possession thereof in the concept of
owners. The execution of the deed of sale is only a presumptive, not conclusive
delivery which can be rebutted by evidence to the contrary, as when there is
failure on the part of the vendee to take material possession of the land subject
of the sale in the concept of a purchaser-owner.
SPOUSES SABIO vs THE INTERNATIONAL CORPORATE BANK, INC. (now
UNION BANK OF THE PHILIPPINES) et al., G.R. NO. 132709,
September 4, 2001
Petitioners claims that, Ayala Corporation failed to "complete and perfect
ownership and title" to the subject property since it was never in actual
occupation, possession, control and enjoyment of said property due to the
presence of illegal occupants.
Notwithstanding the presence of illegal
occupants on the subject property, transfer of ownership by symbolic delivery
under Article 1498 can still be effected through the execution of the deed of
conveyance in a public document which is equivalent to the delivery of th e
property.

B. CONSTRUCTIVE DELIVERY
ART 1499
DY, JR. vs. COURT OF APPEALS, G.R. NO. 92989, July 8, 1991

There is constructive delivery already upon the execution of the public

instrument pursuant to Article 1498 and upon the consent or agreement of the
parties when the thing sold cannot be immediately transferred to the
possession of the vendee. (Art. 1499)
19

DIGNOS vs CA, G.R. NO. L-59266, February 29, 1988

Although denominated a "Deed of Conditional Sale," a sale is still absolute
where the contract is devoid of any proviso that title is reserved or the right to
unilaterally rescind is stipulated, e.g., until or unless the price is paid.
Ownership will then be transferred to the buyer upon actual or constructive
delivery (e.g., by the execution of a public document) of the property sold.

C. POSSESSOR IN GOOD FAITH

ORION SAVINGS BANK VS. SHIGEKANE SUZUKI, G.R. No. 205487, November 12,
2014, J. Brion
Petitioner delivered the properties to respondent upon the execution of the
notarized deed and handed over to respondent the keys to the properties,
hence respondent took actual possession and exercised control over the
property before he made the second sale. Should there be no inscription,
ownership shall pertain to the person who in good faith was first in possession.
The petitioner asserts that it has a better right of ownership over the disputed property in
the case at bar by virtue of a Dacion En Pago. The Supreme Court ruled that the most
prominent index of simulation is the complete absence of an attempt on the part of the
vendee to assert his rights of ownership over the property in question. After the sale, the
vendee should have entered the land and occupied the premises.
ART 1544
DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010

VIII. RISK OF LOSS

ART 1504 (2)
AEROSPACE CHEM ICAL INDUSTRIES, INC. vs. CA, G.R. NO. 108129
September 23, 1999
The petitioner contends that rental expenses of storing sulfuric acid should be
at private respondent's account, as a seller, until ownership is transferred. The
general rule that before delivery, the risk of loss is borne by the seller who is
still the owner, is not applicable in this case because petitioner had incurred
delay in the performance of its obligation.

20

IX. DOCUMENTS OF TITLE

A. TORRENS TITLE
VDA. DE MELENCION vs COURT OF APPEALS, G.R. NO. 148846,
September 25, 2007
The subject property was under the operation of the Torrens System even
before the respective conveyances to AZNAR and Go Kim Chuan were made.
AZNAR knew of this, and admits this as fact. Yet, despite this knowledge,
AZNAR registered the sale in its favor under Act 3344 on the contention that at
the time of sale, there was no title on file.
The fact that the certificate of title over the registered land is lost does not
convert it into unregistered land. After all, a certificate of title is merely an
evidence of ownership or title over the particular property described therein. T
Act 3344 provides for the system of recording of transactions or claims over
unregistered real estate without prejudice to a third party with a better
right. But if the land is registered under the Land Registration Act (and
therefore has a Torrens Title), and it is sold and the sale is registered not
under the Land Registration Act but under Act 3344, as amended, such sale is
not considered registered, as the term is used under Art. 1544 of the New
Civil Code.
Although it is obvious that Go Kim Chuan registered the sale in his favor under
Act 496 while AZNAR did not, SC did not make an outright award of the
subject property to the petitioners solely on that basis. For the law is
clear: mere registration of title is not enough. Good faith must accompany the
registration.
Thus, to be able to enjoy priority status, the second purchaser must be
in good faith, i.e., he must have no knowledge of the previous alienation of the
property by the vendor to another. Notably, what is important for this purpose
is not whether the second buyer is a buyer in good faith, but whether he
registers the second sale in good faith, meaning, he does so without knowledge
of any defect in the title over the property sold.

B. FIRST TO REGISTER IN GOOD FAITH

DAUZ vs. SPOUSES ELIGIO, G.R. NO. 152407, September 21, 2007

21

Respondents caused the registration of the sale of the land in the Registry of
the Deeds. Petitioners, on the other hand, failed to cause the registration of the
sale to them. Where both parties claim to have purchased the same property,
the one who registered the sale in his favor, in good faith, has a preferred right
over the other who has not registered his title, even if the latter is in actual
possession of the immovable property.
SPOUSES AVELINO vs. SPOUSES CELEDONIO, G.R. NO. 135900, August
17, 2007
Article 1544 of the Civil Code contemplates a case of double sales or multiple
sales by a single vendor. It cannot be invoked where the two different contracts
of sale are made by two different persons, one of them not being the owner of
the property sold.
Spouses ABRIGO vs. DE VERA, G.R. NO. 154409, June 21, 2004
Both petitioners Abrigo and respondent registered the sale of the property, but
petitioners registered their sale under Act 3344, while respondent registered
the transaction under the Torrens system.
Between two buyers of the same immovable property, the law gives ownership
priority to (1) the first registrant in good faith; (2) then, the first possessor in
good faith; and (3) finally, the buyer who in good faith presents the oldest title.
Since the property in dispute in the present case was already registered under
the Torrens system, petitioners registration of the sale under Act 3344 was not
effective for purposes of Article 1544 of the Civil Code.

SPOUSES OCCEA vs. M ORALES OBSIANA, G.R. NO. 156973, June 4,

2004
The general rule is that one who deals with property registered under the
Torrens system need not go beyond the same, but only has to rely on the title.
He is charged with notice only of such burdens and claims as are annotated on
the title.
However, this principle does not 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 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. One who falls
within the exception can neither be denominated an innocent purchaser for
22

value nor a purchaser in good faith.

ISABELA COLLEGES, INC. vs. THE HEIRS OF NIEVES TOLENTINORIVERA, G.R. NO. 132677, October 20, 2000
Cortez filed a complaint-in-intervention claiming ownership over two parcels of
land by virtue of a sale in 1988, alleging that the lots were included in the fourhectare land covered by a Torrens Title of petitioner Isabela Colleges.
Even assuming that Cortez was not guilty of bad faith when he bought the land
in question, the fact remains that the Isabela Colleges was first in possession.
Petitioner has been in possession of the land since 1949. Between petitioner
and Cortez, therefore, the former had a better right for the latter only bought
the property in 1988 when it was already purchased by and titled under the
name of petitioner.

BAYOCA et al vs. GAUDIOSO NOGALES, G.R. NO. 138201. September 12,

2000

First buyer registered the sale under Act 3344, while second buyer registered
the sale under PD 1529. The governing principle is prius tempore, potior jure
(first in time, stronger in right). Knowledge by the first buyer of the second sale
cannot defeat the first buyers rights except when the second buyer first
registers in good faith the second sale, conversely, knowledge gained by the
second buyer of the first sale defeats his rights even if he is first to register,
since such knowledge taints his registration with bad faith.
BARICUATRO, JR.,
February 9, 2000

vs.

COURT

OF

APPEALS,

G.R.

NO.

105902

Amores was in good faith when he bought the disputed lots. When he
registered his title, however, he already had knowledge of the previous sale of
the disputed lots to petitioner. Such knowledge tainted his registration with
bad faith, and to merit protection under article 1544, the second buyer must
act in good faith from the time of the sale until the registration of the same
X. REM EDIES OF AN UNPAID SELLER
ART 1484 , 1485
PCI LEASING AND FINANCE, INC. vs. GIRAFFE-X CREATIVE IMAGING,
INC., G.R. NO. 142618, July 12, 2007
23

Petitioner having recovered thru (replevin) the personal property sought to be

payable, leased on installments, still demanded the balance of the rent. In
choosing, through replevin, to deprive the respondent of possession of the
leased equipment, the petitioner waived its right to bring an action to recover
unpaid rentals on the said leased items.
ART 1486
BANK OF THE PHILIPPINE ISLANDS vs. VICENTE VICTOR C. SANCHEZ ET
AL./GENEROSO TULAGAN ET AL. vs. VICENTE VICTOR C. SANCHEZ ET AL./REYNALDO
V. MANIWANG vs. VICENTE VICTOR C. SANCHEZ and FELISA GARCIA YAP, G.R. No.
179518, G.R. No. 179835, G.R. No. 179954, November 19, 2014, J. Velasco Jr.
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. Contrary to the contention of BPI, although the case was originally an
action for rescission, it became a direct attack on the title, certainly there is no indication
that when the Sanchezes filed their complaint with the RTC they already knew of the
existence of TCT 383697.
PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION, vs. COURT OF
APPEALS, G.R. NO. 112733 October 24, 1997
When petitioner failed to abide by its obligation to pay the installments in
accordance with the contract to sell, and provision in the contract
automatically took effect, which provides that "(I)f the buyer fails to pay the
installments due at the expiration of the grace period, the seller may cancel the
contract and any and all sums of money paid under this contract shall be
considered and become rentals on the property. A stipulation that the
installments or rents paid shall not be returned to the vendee or lessee shall be
valid insofar as the same may not be unconscionable under the circumstances.
GIL vs. HON. COURT OF APPEALS, G.R. NO. 127206, September 12, 2003
The consignation by the vendee of the purchase price of the property is
sufficient to defeat the right of the petitioners to demand for a rescission of the
said deed of absolute sale.
IRINGAN vs. HON. COURT OF APPEALS, G.R. NO. 129107, September 26,
2001
24

Petitioner contends that no rescission was effected simply by virtue of the letter
sent by respondent stating that he considered the contract of sale rescinded.
Petitioner asserts that a judicial or notarial act is necessary before one party
can unilaterally effect a rescission.
Respondent, on the other hand, contends that the right to rescind is vested by
law on the obligee and since petitioner did not oppose the inten t to rescind the
contract, petitioner in effect agreed to it and had the legal effect of a mutually
agreed rescission.
Article 1592 of the Civil Code is the applicable provision regarding the sale of
an immovable property.
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 rescission of the
contract has been made upon him either judicially or by a notarial act. After the
demand, the court may not grant him a new term.
A judicial or notarial act is necessary before a valid rescission can take place,
whether or not automatic rescission has been stipulated. It is to be noted that
the law uses the phrase "even though" emphasizing that when no stipulation is
found on automatic rescission, the judicial or notarial requirement still applies.

XI. PERFORMANCE OF A CONTRACT

EASTERN ASSURANCE & SURETY CORPORATION vs. IAC, G.R. NO. L 69450, November 22, 1988
The ordinary meaning of execution is not limited to the signing or concluding of
a contract but includes as well the performance or implementation or
accomplishment of the terms and conditions of such contract.
XII. W ARRANTIES
A. EXPRESS WARRANTIES
ART 1502
INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE PHILIPPINES,
INC., vs. LPJ ENTERPRISES, INC., G.R. NO. 66140, January 21, 1993

25

Respondent alleges that it cannot be held liable for the 47,000 plastic bags
which were not used for packing cement as originally intended invoking it's
right of return. Article 1502 of the Civil Code, has no application at all to this
case, since the provision in the Uniform Sales Act and the Uniform Commercial
Code from which Article 1502 was taken, clearly requires an express written
agreement to make a sales contract either a "sale or return" or a "sale on
approval", which is absent in this case.
Parol or extrinsic testimony could not be admitted for the purpose of showing
that an invoice or bill of sale that was complete in every aspect and purporting
to embody a sale without condition or restriction constituted a contract of sale
or return. If the purchaser desired to incorporate a stipulation securing to him
the right of return, he should have done so at the time the contract was made.
On the other hand, the buyer cannot accept part and reject the rest of the
goods since this falls outside the normal intent of the parties in the "on
approval" situation.
B. IMPLIED WARRANTIES
ART 1628
LO vs. KJS ECO-FORMWORK SYSTEM PHIL., INC., G.R. NO. 149420
October 8, 2003
The vendor in good faith shall be responsible for the existence and legality of
the credit at the time of the sale, unless it should have been sold as doubtful;
but not for the solvency of the debtor, unless it has been so expressly
stipulated or unless the insolvency was prior to the sale and of common
knowledge.
ART 1546
ANG vs. COURT OF APPEALS, G.R. NO. 177874, September 29, 2008
The seller, in declaring that he owned and had clean title to the vehicle at the
time the Deed of Absolute Sale, is giving an implied warranty of title which
prescribes six months after the delivery of the vehicle.
ART 1547
PNB vs MEGA PRIME REALTY AND HOLDINGS CORPORATION, G.R. NO.
173454, October 6, 2008
MEGA PRIME REALTY AND HOLDINGS CORPORATION vs. PNB, G.R. NO.
173456, October 6, 2008
In a contract of sale, unless a contrary intention appears, there is an implied
warranty on the part of the seller that he has a right to sell the thing at the
26

time when the ownership is to pass, and that the buyer shall have a peaceful
possession of the thing and it shall be free from any hidden faults or defects, or
any charge or encumbrance not declared or known to the buyer.
ART 1548
ANG vs. COURT OF APPEALS, G.R. NO. 177874, September 29, 2008
The seller, in pledging that he will defend the same from all claims or any
claim whatsoe ver [and] will save the vendee from any suit by the government of
the Republic of the Philippines, is giving a warranty against e viction. A breach
of this warranty requires the concurrence of these four requisites:(1) The
purchaser has been deprived of the whole or part of the thing sold; (2) This
eviction is by a final judgment; (3) The basis thereof is by virtue of a right prior
to the sale made by the vendor; and (4) The vendor has been summoned and
made co-defendant in the suit for eviction at the instance of the vendee.
ART 1561
DE YSASI vs. ARCEO, G.R. NO. 136586, November 22, 2001
Petitioner admitted that he inspected the premises three or four times before
signing the lease contract and during his inspection, he noticed the rotten
plywood on the ceiling which in his opinion was caused by leaking water or
"anay" (termites), yet he decided to go through with the lease agreement. The
lessor is responsible for warranty against hidden defects, but he is not
answerable for patent defects or those which are visible.
C. REMEDIES AGAINST VIOLATIONS OF WARRANTIES
ART 1567
ENGINEERING & MACHINERY CORPORATION vs. COURT OF APPEALS,
G.R. NO. 52267, January 24, 1996
The original complaint is one for damages arising from breach of a written
contract - and not a suit to enforce warranties against hidden defects. The
remedy against violations of the warranty against hidden defects is either to
withdraw from the contract (redhibitory action) or to demand a proportionate
reduction of the price (accion quanti minoris), with damages in either case.

ART 1571
DINO vs COURT OF APPEALS, G.R. NO. 113564, June 20, 2001

27

Respondent made the last delivery of the vinyl products to petitioners on

September 28, 1988 and the action to recover the purchase price of the goods
petitioners returned to the respondent was filed on July 24, 1989, more than
nine months from the date of last delivery. Actions arising from breach of
warranty against hidden defects shall be barred after six months from the
delivery of the thing sold.
XIII. BREACH OF CONTRACT
ART 1545
LAFORTEZA vs. MACHUCA, G.R. NO. 137552, June 16, 2000
A MOA has this stipulation "....SELLER-LESSOR hereby agrees to sell unto
BUYER-LESSEE the property described within six (6) months from the
execution date hereof, or upon issuance by the Court of a new owner's
certificate of title and the execution of extrajudicial partition with sale of the
estate of Francisco Laforteza, whichever is earlier;...". Petitioner contends that
since the condition was not met, they no longer had an obligation to proceed
with the sale of the house and lot. The petitioners fail to distinguish between a
condition imposed upon the perfection of the contract and a condition imposed
on the performance of an obligation, failure to comply with the first condition
results in the failure of a contract, while the failure to comply with the second
condition only gives the other party the option either to refuse to proceed with
the sale or to waive the condition.
ART 1583
INTEGRATED PACKAGING CORP. vs. COURT OF APPEALS, G.R. NO.
115117, June 8, 2000
There is no dispute that the agreement provides for the delivery of printing
paper on different dates and a separate price has been agreed upon for each
delivery. When there is a contract of sale of goods to be delivered by stated
installments, which are to be separately paid for, and the seller makes defective
deliveries in respect of one or more installments, it depends in each case on the
terms of the contract and the circumstances of the case, whether the breach of
contract is so material as to justify the injured party in refusing to proceed
further and suing for damages for breach of the entire contract, or whether the
breach is severable, giving rise to a claim for compensation but not to a right to
treat the whole contract as broken.
ART 1597
VISAYAN SAWMILL COMPANY, INC., vs. THE HONORABLE COURT OF
APPEALS, G.R. NO. 83851. M arch 3, 1993.

28

The petitioner agreed to deliver the scrap iron only upon payment of the
purchase price by means of an irrevocable and unconditional letter of credit,
which the respondent failed to obtain, thus, there was no actual sale. Where
the goods have not been delivered to the buyer, and the buyer has repudiated
the contract of sale, or has manifested his inability to perform his obligations,
thereunder, or has committed a breach thereof, the seller may totally rescind
the contract of sale by giving notice of his election to do to the buyer.
XIV. EXTINGUSHMENT OF THE SALE
EAGLE RIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL and CRISPIN I.
OBEN vs. CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC., G.R. No. 204700,
November 24, 2014, J. Leonen
Cameron Grandville filed a motion for reconsideration for the April 10, 2013 decision of the
Supreme Court. It argues that the right of Eagle Ridge Development to extinguish the
obligation has already lapsed. However, the Court in resolving this case stated that under
the circumstances of this case, the 30-day period under Article 1634 within which Eagle
Ridge Developments could exercise their right to extinguish their debt should beg in to run
only from the time they were informed of the actual price paid by the assignee for the
transfer of their debt.
JUAN P. CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19, 2014, J. Leonen
Sale of a portion of the property is considered an alteration of the thing owned in common.
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 co-ownership.
If the alienation precedes the partition, the co-owner cannot sell a definite portion of the
land without consent from his or her co-owners. He or she could only sell the undivided
interest of the co-owned property.
The undivided interestof 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 co-owned 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.
In this case, 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.
29

While the rules allow respondent to sell his undivided interest in the coownership, this was
not the object of the sale between him and petitioner.
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.
Thus, 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 absence of a contract of sale means that there is no source of obligations for
respondent, as seller, orpetitioner, 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.
ROBERTO R. DAVID vs. EDUARDO C. DAVID, G.R. No. 162365, JANUARY 15, 2014, J.
Bersamin
Eduardo and his brother Edwin sold their properties to Roberto with the agreement that
they would be given the right to repurchase within three years from the execution of the
deed of sale. Eduardo paid the repurchase price to Roberto by depositing the proceeds of
the sale of the Baguio City lot in the latter s account. The Supreme Court ruled such
payment was an effective exercise of the right to repurchase. In a sale with right to
repurchase, title and ownership of the property sold are immediately vested in the vendee,
subject to the resolutory condition of repurchase by the vendor within the stipulated
period. Accordingly, the ownership of the affected properties reverted to Eduardo once he
complied with the condition for the repurchase, thereby entitling him to the possession of
the other motor vehicle with trailer.
REDEMPTION
680 HOME APPLIANCES, INC. V THE HONORABLE COURT OF APPEALS, THE
HONORABLE MARYANNE. CORPUS-MAALAC, in her capacity as the PRESIDING
JUDGE OF THE REGIONAL TRIAL COURT OF MA.KATI CITY, BRANCH 141, ATTY.
ENGRACIO ESCASINAS, JR., in his capacity as THE EX-OFFICIO SHERIFF/CLERK OF
COURT VII, OFFICE OF THE CLERK OF COURT, REGIONAL TRIAL COURT, MA.KATI
CITY, FIRST SOVEREIGN ASSET MANAGEMENT (SPV-AMC), INC. and ALDANCO
MERLMAR, INC. G.R No. 206599, September 29, 2014. J. BRION
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
30

ownership. In fact, the issuance of the writ of possession at this point becomes ministerial
for the court.
The debtor contesting the purchaser s 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. FSAMI s
consolidation of ownership therefore makes the remedy under Section 8 of Act No. 3135
unavailable for 680 Home.
FE H. OKABE v ERNESTO A. SATURNINO, G.R No. 196040, August 26, 2014. J. PERALTA
If the purchaser is a third party who acquired the property after the redemption period, a
hearing must be conducted to determine whether possession over the subject property is
still with the mortgagor or is already in the possession of a third party holding the same
adversely to the defaulting debtor or mortgagor. If the property is in the possession of the
mortgagor, a writ of possession could thus be issued. Otherwise, the remedy of a writ of
possession is no longer available to such purchaser, but he can wrest possession over the
property through an ordinary action of ejectment.
GE MONEY BANK, INC. (FORMERLY KEPPEL BANK PHILIPPINES) vs. SPOUSES
VICTORINO M. DIZON AND ROSALINA L. DIZON, G.R. No. 184301, March 23, 2015, J.
Peralta
An insufficient sum was tendered by the Spouses Dizon during the redemption period.
Whether the total redemption price is PhP 251,849.77 as stated in the Petition for Review,
or PhP
,
. as stated in the Bank s Motion for Reconsideration of the CA Decision, or
PhP
,
. as stated in its Appellant s Brief, is immaterial. What cannot be denied is
that the amount of PhP 90,000.00 paid by the Spouses Dizon during the redemption period
is less than half of PhP 181,956.72 paid by the Bank at the extrajudicial foreclosure sale... If
only to prove their willingness and ability to pay, the Spouses Dizon could have tendered a
redemption price that they believe as the correct amount or consigned the same. Seventeen
long years passed since the filing of the complaint but they did not do either. Indeed, they
manifestly failed to show good faith.
The Spouses Dizon s own evidence show that, after payment of PhP ,
. , the earliest
date they exerted a semblance of effort to re-acquire the subject property was on October
15, 1996. Apart from being way too late, the tender was not accompanied by the remaining
balance of the redemption price. The same is true with respect to their letter dated
February
,
, wherein they were still making proposals to the Bank. The court s
intervention was resorted to only on April 3, 1998 after the redemption period expired on
October 18, 1994, making it too obvious that such recourse was merely a delayed
afterthought to recover a right already lost.
A. SALE W ITH PACTO DE RETRO
ART 1601
31

NOOL vs. COURT OF APPEALS, G.R. NO. 116635, July 24, 1997
Petitioners contend that they could repurchase the property that they "sold" to
private respondents when they allowed the respondent to redeem the properties
for them from DBP. DBP, howe ver, certified that the petitioner-mortgagors'
right of redemption was not exercised within the period, hence DBP became the
absolute owner of said parcels of land when it entered into a Deed of
Conditional Sale involving the same parcels of land with Private Respondent as
vendee. One "repurchases" only what one has previously sold since the right to
repurchase presupposes a valid contract of sale between the same parties.
DIAM ANTE vs. HON. COURT OF APPEALS, G.R. NO. L -51824 February 7,
1992

A right to repurchase was granted subsequently in an instrument different

from the original document of sale which caused the cancellation of the permit
or lease by the Secretary of Fisheries. An agreement to repurchase becomes a
promise to sell when made after the sale, because when the sale is made
without such an agreement, the purchaser acquires the thing sold absolutely,
and if he afterwards grants the vendor the right to repurchase, it is a new
contract entered into by the purchaser, as absolute owner already of the object.
VASQUEZ vs. HONORABLE COURT OF APPEALS, G.R. NO. 83759 July 12,
1991
Respondents sold the lot to the petitioners under a Deed of Sale, On the same
day and along with the execution of the Deed of Sale, a separate instrument,
denominated as Right to Repurchase was executed by the parties, Later,
petitioners resisted the action for redemption. The transaction between the
petitioners and private respondents was not a sale with right to repurchase,
the second instrument is just an option to buy since it is not embodied in the
same document of sale but in a separate document, and since such option is
not supported by a consideration distinct from the price, said deed for right to
repurchase is not binding upon them.
ART 1603
BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008

Where in a contract of sale with pacto de retro, the vendor remains in

possession, as a lessee or otherwise, the contract shall be presumed to be an
equitable mortgage because in a contract of sale with pacto de retro, the legal
title to the property is immediately transferred to the vendee, subject to the
32

vendors right to redeem and retention by the vendor of the possession of the
property is inconsistent with the vendees acquisition of the right of ownership
under a true sale.
ART 1606
ABILLA vs. ANG GOBONSENG, JR., G.R. NO. 146651, January 17, 2002
The legal question to be resolved is "May the vendors in a sale judicially
declared as a pacto de retro exercise the right of repurchase under Article
1606, third paragraph, of the Civil Code, after they have taken the position that
the same was an equitable mortgage?" No, where the proofs established that
there could be no honest doubt as to the parties intention, that the transaction
was clearly and definitely a sale with pacto de retro, the vendor a retro is not
entitled to the benefit of the third paragraph of Article 1606.
AGAN vs. HEIRS OF SPS. NUEVA, G.R. NO. 155018, December 11, 2003
The lower court's dispositive position states: "Howe ver, the vendors can still
exercise the right to repurchase said property within thirty (30) days from
receipt of this decision pursuant to Article 1606 and 1607 of the New Civil
Code." Article 1606 grants the vendor a retro thirty (30) days from the time
final judgment was rendered, not from the defendants receipt of the judgment,
"final judgment must be construed to mean one that has become final and
executory.

ART 1607
Spouses CRUZ vs. LEIS et al., G.R. NO. 125233, M arch 9, 2000
The lower court rationalized that petitioners failed to comply with the
provisions of Article 1607 of the Civil Code requiring a judicial order for the
consolidation of the ownership in the vendee a retro to be recorded in the
Registry of Property. A judicial order is necessary in order to determine the
true nature of the transaction and to prevent the interposition of buyers in
good faith while the determination is being made, however, notwithstanding
Article 1607, the recording in the Registry of Property of the consolidation of
ownership of the vendee is not a condition sine qua non to the transfer of
ownership for the method prescribed thereunder is merely for the purpose of
registering the consolidated title.
ART 1616
BPI FAM ILY SAVINGS BANK, INC. vs. SPS. VELOSO, G.R. NO. 141974,
August 9, 2004
33

The respondents offer to redeem the foreclosed properties and the subsequent
consignation in court were made within the period of redemption, but the
amount consigned did not include the interest and was also way below the
amount paid by the highest bidder-purchaser of the properties during the
auction sale. The redemption price should either be fully offered in legal tender
or else validly consigned in court because only by such means can the auction
winner be assured that the offer to redeem is being made in good faith.
ART 1619
LEE CHUY REALTY CORPORATION vs.HON. COURT OF APPEALS, G.R. NO.
104114 December 4, 1995

Petitioner questions the ruling of the Court of Appeals which concluded that a
prior tender or offer of redemption is a prerequisite or precondition to the filing
of the action for legal redemption. To avail of the right of redemption what is
essential is to make an offer to redeem within the prescribed period. There is
actually no prescribed form for an offer to redeem to be properly effected. It can
either be through a formal tender with consignation, or by filing a complaint in
court coupled with consignation of the redemption price within the prescribed
period.

VILLANUEVA vs. HON. ALFREDO C. FLORENDO, G.R. NO. L -33158,

October 17, 1985
It is not disputed that co-ownership exists but the lower court disallowed
redemption because it considered the vendee, Vallangca, a co-heir, being
married to Concepcion Villanueva.
The term "third person" or "stranger in Art. 1620 refers to all persons who are
not heirs in succession, either by will or the law or any one who is not a coowner.
ART 1621
PRIMARY STRUCTURES CORP. vs. SPS. VALENCIA, G.R. NO. 150060.
August 19, 2003
Article 1621 of the Civil Code expresses that the right of redemption it grants to
an adjoining owner of the property conveyed may be defeated if it can be shown
that the buyer or grantee does not own any other rural land.
34

ART 1622
G.R. NO. 134117. February 9, 2000
SEN PO EK MARKETING CORPORATION vs. MARTINEZ
Petitioner invokes its right of first refusal against private respondents, when
Teodora sold the property that petitioner has been leasing. Article 1622 of the
New Civil Code only deals with small urban lands that are bought for
speculation where only adjoining lot owners can exercise the right of pre emption or redemption. It does not apply to a lessee trying to buy the land that
it was leasing, especially when such right was never stipulated in any of the
several lease contracts.
ART 1623
JUAN P. CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19, 2014, J. Leonen
If the alienation precedes the partition, the co-owner cannot sell a definite portion of the
land without consent from his or her co-owners. He or she could only sell the undivided
interest of the co-owned property.
In the case at bar, no contract of sale exist. 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. There was no showing that respondent was authorized by his coowners 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.
SPOUSES MICHELLE M. NOYNAY and NOEL S. NOYNAY vs.CITIHOMES BUILDER AND
DEVELOPMENT, INC., G.R. No. 204160, September 22, 2014, J. Mendoza
Well-established is the rule that the assignee is deemed subrogated to the rights as well as
to the obligations of the seller/assignor. 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. What can be inferred from here is the
effect on the status of the assignor relative to the relations established by a contract which
has been subsequently assigned; that is, the assignor becomes a complete stranger to all
the mattersthat have been conferred to the assignee.
SPOUSES CHIN KONG WONG CHOI AND ANA O. CHUA vs. UNITED COCONUT PLANTERS
BANK, G.R. No. 207747, March 11, 2015, J. Carpio
UCPB assigned accounts receivable to Primetown. Thereafter, Spouses filed a complaint
against the latter for refund for payment. The court ruled that the agreement conveys the
straightforward intention of Primetown to sell, assign, transfer, convey and set over to

35

UCPB the receivables, rights, titles, interests and participation over the units covered by the
contracts to sell. It explicitly excluded any and all liabilities and obligations, which
Primetown assumed under the contracts to sell. In every case, the obligations between
assignor and assignee will depend upon the judicial relation which is the basis of the
assignment. An assignment will be construed in accordance with the rules of construction
governing contracts generally, the primary object being always to ascertain and carry out
the intention of the parties. This intention is to be derived from a consideration of the
whole instrument, all parts of which should be given effect, and is to be sought in the words
and language employed.
CABALES vs. COURT OF APPEALS, G.R. NO. 162421, August 31, 2007
Petitioners may redeem the subject property from respondents-spouses, but
they must do so within thirty days from notice in writing of the sale by their coowners vendors. In requiring written notice, Art. 1623 seeks to ensure that the
redemptioner is properly notified of (a) the sale and (b) the date of such notice,
as the date thereof becomes the reckoning point of the 30-day period of
redemption.

SPOUSES SI vs. COURT OF APPEALS, G.R. NO. 122047, October 12, 2000
Co-owners with actual notice of the sale are not entitled to written notice. A
written notice is a formal requisite to make certain that the co-owners have
actual notice of the sale to enable them to exercise their right of redemption
within the limited period of thirty days. But where the co-owners had actual
notice of the sale at the time thereof and/or afterwards, a written notice of a
fact already known to them, would be superfluous. The statute does not
demand what is unnecessary.
FRANCISCO vs. BOISER, G.R. NO. 137677, M ay 31, 2000

Art. 1623 of the Civil Code is clear in requiring that the written notification
should come from the vendor or prospective vendor, not from any other person.
Since the vendor of an undivided interest is in the best position to know who
are his co-owners who under the law must be notified of the sale, and is in the
best position to confirm whether consent to the essential obligation of se lling
the property and transferring ownership thereof to the vendee has been given.
LEDONIO vs. CAPITOL DEVELOPMENT CORPORATION, G.R. NO. 149040,
July 4, 2007

36

An assignment of credit has been defined as an agreement by virtue of which

the owner of a credit (known as the assignor), by a legal cause - such as sale,
dation in payment or exchange or donation - and without need of the debtor's
consent, transfers that credit and its accessory rights to another (known as the
assignee), who acquires the power to enforce it, to the same extent as the
assignor could have enforced it against the debtor.

ART 1625
TEOCO, JR.,vs M ETROPOLITAN BANK AND TRUST COMPANY, G.R. NO.
162333, December 23, 2008
Would the exercise by the brothers Teoco of the right to redeem the properties
in question be precluded by the fact that the assignment of right of redemption
was not contained in a public document? NO, the phrase "effect as against
third person" in Article 1625 of the Civil Code is interpreted as to be damage or
prejudice to such third person, hence if the third person would not be
prejudiced then the assignment of right to redeem may not be in a public
instrument.
B. EQUITABLE MORTGAGE
SPOUSES FELIPE SOLITATIOS AND JULIA TORDA VS. SPOUSES GASTON JAQUE AND
LILIA JAQUE, G.R. No. 199852. November 12, 2014, J. Velasco
A transaction is deemed to be an equitable mortgage, not an absolute sale, when a party
have remained in possession of the subject property and exercised acts of ownership over
the lot even after the purported absolute sale and it could be gleaned from the intention of
the parties that the transaction is intended secure the payment of a debt.
SPOUSES FELIPE SOLITATIOS AND JULIA TORDA VS. SPOUSES GASTON JAQUE AND
LILIA JAQUE, G.R. No. 199852. November 12, 2014, J. Velasco
Where the alleged sellers have remained in possession of the subject property and
exercised acts of ownership over the lot even after its purported absolute sale, the real
intention of the parties was for the transaction to secure the payment of a debt or an
equitable mortgage and not a sale as provided under Article 1602 of the New Civil Code. If
the transaction had really been one of sale, as the alleged buyers claim, they should have
asserted their rights for the immediate delivery and possession of the lot instead of
allowing the alleged sellers to freely stay in the premises for almost seventeen (17) years
from the time of the purported sale until their filing of the complaint.
HEIRS OF REYNALDO DELA ROSA, Namely: TEOFISTA DELA ROSA, JOSEPHINE
SANTIAGO AND JOSEPH DELA ROSA v MARIO A. BA TONGBACAL, IRENEO

37

BATONGBACAL, JOCELYN BA TONGBACAL, NESTOR BATONGBACAL AND LOURDES BA

TONGBACAL, G.R No. 179205, July 30, 2014, J. PEREZ
Reynaldo, one of the co-owners of an undivided parcel of land, sold his share to the spouses
Batongbacal in a Contract to Sell. The spouses advanced k with the balance deliverable
after Reynaldo delivers a SPA authorizing him to alienate the property in behalf of his co owners. Later, Reynaldo refused to deliver the SPA and the lot, claiming that there was no
contract to sell, but an equitable mortgage.
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.
In this case, Reynaldo failed to prove the second requisite. Nothing in the contract suggests,
even remotely, that the subject property was given to secure a monetary obligation.
BATONGBACAL, JOCELYN BA TONGBACAL, NESTOR BATONGBACAL AND LOURDES BA
TONGBACAL, G.R. No. 179205, July 30, 2014, J. Perez
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. Such that when the contract denominated as Resibo reveals that nothing therein
suggests, even remotely, that the subject property was given to secure a monetary
obligation but an intent to sell his share in the property, said contract is a contract of sale
and not an equitable mortgage.

ART 1602
HEIRS OF JOSE REYES, JR. vs. REYES, G.R. NO.
2010

158377, August 13,

The provisions of the Civil Code governing equitable mortgages disguised as

sale contracts, like the one herein, are primarily designed to curtail the evils
brought about by contracts of sale with right to repurchase, particularly the
circumvention of the usury law and pactum commissorium. Courts have taken
judicial notice of the well-known fact that contracts of sale with right to
repurchase have been frequently resorted to in order to conceal the true nature
of a contract, tha t is, a loan secured by a mortgage. It is a reality that grave
38

financial distress renders persons hard-pressed to meet even their basic needs
or to respond to an emergency, leaving no choice to them but to sign deeds of
absolute sale of property or deeds of sale with pacto de retro if only to obtain
the much-needed loan from unscrupulous money lenders. This reality precisely
explains why the pertinent provision of the Civil Code includes a peculiar rule
concerning the period of redemption, to wit:
Art. 1602. The contract shall be presumed to be an
equitable mortagage, in any of the following cases:
xxx
(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;
VDA. DE DELFIN vs DELLOTA, G.R. NO. 143697, January 28, 2008
The essential requisites of an equitable mortgage are: (1) the parties enter into
what appears to be a contract of sale, (2) but their intention is to secure an
existing debt by way of mortgage and the presence of even one of the
circumstances enumerated in Article 1602.
SPS. SANTIAGO vs. DIZON, G.R. NO. 172771, January 31, 2008
Respondent alleged that the transaction was an equitable mortgage because
after the sale of the property respondent remained therein, and the price
according to respondent was grossly inadequate. The presumption of equitable
mortgage created in Article 1602 of the Civil Code is not conclusive and may be
rebutted by competent and satisfactory proof of the contrary.

CEBALLOS vs. Intestate Estate of the Late EM IGDIO M ERCADO, G.R. NO.
155856, M ay 28, 2004
Petitioner argues that Mercados delay in registering the Deed of Absolute Sale
and transferring the land title shows that the real agreement was an equitable
mortgage. Delay in transferring title is not one of the instances enumerated by
law in which an equitable mortgage can be presumed.
CEBALLOS vs. Intestate Estate of the Late EM IGDIO M ERCADO, G.R. NO.
155856, M ay 28, 2004

39

Petitioners contend that the sale was only an equitable mortgage because (1)
the price was grossly inadequate, and (2) the vendors remained in possession
of the land and enjoyed its fruits. For the presumption of an equitable
mortgage to arise, one must first satisfy the requirement that the parties
entered into a contract denominated as a contract of sale, and that their
intention was to secure an existing debt by way of mortgage.
BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008

The purchase price stated in the deed was the amount of the indebtedness of
the respondent to petitioner but the deed purports to be a sale with right to
purchase. The rule is firmly settled that whenever it is clearly shown that a
deed of sale with pacto de retro, regular on its face, is given as security for a
loan, it must be regarded as an equitable mortgage.
ART 1604
DEHEZA-INAMARGA vs ALANO, G.R. NO. 171321, December 18, 2008
The provisions of Article 1602 shall also apply to a contract purporting to be an
absolute sale, and in case of doubt, a contract purporting to be a sale with
right to repurchase shall be construed as an equitable mortgage in consonance
with the rule that the law favors the least transmission of property rights.
XV. The Subdivision and Condominium Buyers' Protective Decree (P.D.
957)
AMBROSIO ROTAIRO (SUBSTITUTED BY HIS SPOUSE MARIA RONSAYRO ROTAIRO,
AND HIS CHILDREN FELINA ROTAIRO, ERLINDA ROTAIRO CRUZ, EUDOSIA ROTAIRO
CRIZALDO, NIEVES ROTAIRO TUBIG, REMEDIOS ROTAIRO MACAHILIG, FELISA
ROTAIRO TORREVILLAS, AND CRISENCIO R. ROTAIRO, MARCIANA TIBAY, EUGENIO
PUNZALAN, AND VICENTE DEL ROSARIO vs. ROVIRA ALCANTARA AND VICTOR
ALCANTARA, G.R. No. 173632, September 29, 2014, J. Reyes
In this case, the contract to sell between Rotairo and Ignacio & Company was entered into
in
, and the agreement was fully consummated with Rotairo s completion of payments
and the execution of the Deed of Sale in his favor in 1979. Clearly, P.D. No. 957 (Sale of
Subdivision Lots and Condominiums) is applicable in this case.
)t was error for the CA to rule that the retroactive application of P.D. No.
is warranted
only where the subdivision is mortgaged after buyers have purchased individual lots.
According to the CA, the purpose of Sec. 18 requiring notice of the mortgage to the buyers
is to give the buyer the option to pay the installments directly to the mortgagee; hence, if
the subdivision is mortgaged before the lots are sold, then there are no buyers to notify.
40

What the CA overlooked is that Sec. 21 requires the owner or developer of the subdivision
project to complete compliance with its obligations within two years from 1976. The two year compliance provides the developer the opportunity to comply with its obligation to
notify the buyers of the existence of the mortgage, and consequently, for the latter to
exercise their option to pay the installments directly to the mortgagee.
FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK, INC., vs. SPOUSES
CONRADO AND MARIA VICTORIA RONQUILLO, G.R. No. 185798, JANUARY 13, 2014, J.
Perez
The Spouses Rosario purchased a condominium unit from Fil-Estate. Fil-Estate failed to
comply with its obligations. The Supreme Court held that the Spouses are entitled to
rescission, pursuant to Section 23 of P.D. 957 which regulates the sale of subdivisions and
condominium lots. The Spouses Rosario may be reimbursed the total amount paid
including amortization interests but excluding delinquency interests, with interest thereon
at the legal rate.

EUGENIO vs. EXECUTIVE SECRETARY, G.R. NO. 109404, January 22,

1996
Did the failure to develop a subdivision constitute legal justification for the
non-payment of amortizations by a buyer on installment under land purchase
agreements entered into prior to the enactment of P.D. 957, "The Subdivision
and Condominium Buyers' Protective Decree"?
P.D. 957 is undeniably applicable to the contracts in question, it follows that
Section 23 thereof had been properly invoked by private respondent when he
desisted from making further payment to petitioner due to petitioner's failure to
develop the subdivision project according to the approved plans and within the
time limit for complying with the same.

PNB vs. OFFICE OF THE PRESIDENT, G.R. NO. 104528, January 18, 1996
A buyer of a property at a foreclosure sale cannot disposses prior purchasers
on installment of individual lots therein, or compel them to pay again for the
lots which they previously bought from the defaulting mortgagor-subdivision
developer on the theory that P.D. 957, "The Subdivision and Condominium
Buyers' Protective Decree", is not applicable to the mortgage contract in
question, the same having been executed prior to the enactment of P.D. 957.
Moreover, the SC held that, P.D. 957 being applicable, Section 18 of said law
obliges petitioner Bank to accept the payment of the remaining unpaid
41

amortizations tendered by private respondents. Privity of contracts as a defense

does not apply in this case for the law explicitly grants to the buyer the option
to pay the installment payment for his lot or unit directly to the mortgagee
(petitioner), which is required to apply such payments to reduce the
corresponding portion of the mortgage indebtedness secured by the particular
lot or unit being paid for.

XVI. The Condominium Act (R.A. NO. 4726)

HULST vs. PR BUILDERS, INC., G.R. NO. 156364, September 25, 2008
Petitioner contends that the Contract to Sell between petitioner and respondent
involved a condominium unit and did not violate the Constitutional
proscription against ownership of land by aliens. The law expressly allows
foreigners to acquire condominium units and shares in condominium
corporations up to not more than 40% of the total and outstanding capital
stock of a Filipino-owned or controlled corporation, since under this set up, the
ownership of the land is legally separated from the unit itself.

CARDINAL BUILDING OWNERS ASSOCIATION, INC. vs. ASSET RECOVERY

AND M ANAGEMENT CORPORATION, G.R. No. 149696, July 14, 2006
Section 20 of R.A. No. 4726, otherwise known as the Condominium Act,
provides:
Sec. 20. An assessment upon any condominium made in accordance with a
duly registered declaration of restrictions shall be an obligation of the owner
thereof at the time the assessment is made. The amount of any such
assessment plus any other charges thereon, such as interest, costs (including
attorney's fees) and penalties, as such may be provided for in the declaration of
restrictions, shall be and become a lien upon the condominium assessed when
the management body causes a notice of assessment to be registered with the
Register of Deeds of the city or province where such condominium project is
located. The notice shall state the amount of such assessment and such other
charges thereon as may be authorized by the declaration of restrictions, a
description of the condominium unit against which the same has been
assessed, and the name of the registered owner thereof. Such notice shall be
signed by an authorized representative of the management body or as
otherwise provided in the declaration of restrictions. Upon payment of said
assessment and charges or other satisfaction thereof, the management body
shall cause to be registered a release of the lien.
Such lien shall be superior to all other liens registered subsequent to the
42

registration of said notice of assessment except real property tax liens and
except that the declaration of restrictions may provide for the subordination
thereof to any other liens and encumbrances. Such liens may be enforced in
the same manner provided for by law for the judicial or extra-judicial
foreclosure of mortgage or real property. Unless otherwise provided for in the
declaration of restrictions, the management body shall have power to bid at
foreclosure sale. The condominium owner shall have the right of redemption as
in cases of judicial or extra-judicial foreclosure of mortgages.
Records do not show that petitioner had its notice of assessment registered
with the Registry of Deeds of Manila in order that the amount of such
assessment could be considered a lien upon Marual's two condominium units.
Clearly, pursuant to the above provisions, petitioner's claim can not be
considered superior to that of respondent. As mentioned earlier, the deed of
sale wherein Marual conveyed to respondent his two condominium units, was
registered in the Registry of Deeds of Manila.
CHATEAU DE BAIE CONDOMINIUM CORPORATION vs. SPOUSES MORENO,
G.R. NO. 186271, February 23, 2011
The petition sought to prohibit the scheduled extrajudicial sale for lack of a
special power to sell from the registered owner. Under RA 4726 (the
Condominium Act), when a unit owner fails to pay the association dues, the
condominium corporation can enforce a lien on the condominium unit by
selling the unit in an extrajudicial foreclosure sale, and a special authority
from the condominium owner before a condominium corporation can initiate a
foreclosure proceeding is not needed.
SUCCESSION
BERNARDINA P. BARTOLOME vs. SOCIAL SECURITY SYSTEM AND SCANMAR
MARITIME SERVICES, INC. G.R. No. 192531, November 12, 2014, J. Velaso, Jr.
At the time of the adoptive parent s death, which was prior to the effectivity of the Family
Code, the governing provision is Art. 984 of the New Civil Code, which provides that in case
of the death of an adopted child, leaving no children or descendants, his parents and
relatives by consanguinity and not by adoption, shall be his legal heirs. The adoptive
parent s death during the adopted child s minority resulted in the restoration of the
biological mother s parental authority over the adopted child. As a consequence thereof,
the biological mother shall be the adopted child s sole legal heir.
SPOUSES PERALTA v BERNARDINA ABALON, represented by MANSUETO ABALON.
G.R No. 183448, June 30, 2014. J. SERENO

43

Under Article 975 of the Civil Code, siblings Mansueto and Amelia Abalon, being niece and
nephew of a decedent who had no issue, are the legal heirs of Bernardina. As such, they
succeeded to her estate when she passed away. While the Court agreed with the CA that the
donation mortis causa in favor of the siblings was invalid in the absence of a will, the CA
erred in concluding that the heirs acquired the subject property through ordinary
acquisitive prescription. The subject parcel of land is a titled property; thus, acquisitive
prescription is not applicable. Upon the death of Bernardina, Mansueto and Amelia, being
her legal heirs, acquired the subject property by virtue of succession, and not by ordinary
acquisitive prescription.
NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG vs. ROSARIO CALALANGGARCIA, LEONORA CALALANG-SABILE, and CARLITO S. CALALANG, G.R. No. 184148,
June 9, 2014, J. Villarama, Jr.
It is hornbook doctrine that successional rights are vested only at the time of death. Article
777 of the New Civil Code provides that "the rights to the succession are transmitted from
the moment of the death of the decedent. Thus, in this case, 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 officious donation inter vivos),
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 .
NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG v ROSARIO CALALANGGARCIA, LEONORA CALALANG-SABILE, and CARLITO S. CALALANG, G.R No. 184148,
June 9, 2014. VILLARAMA, JR.
It is hornbook doctrine that successional rights are vested only at the time of death. Article
777 of the New Civil Code provides that "the 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 vivos), the
heirs have no right to question the sale of the disputed property on the ground that their
father deprived them of their respective shares.
MA. ELENA R. DIVINAGRACIA AS ADMINISTRATIX OF THE ESTATE OF THE LATE
SANTIAGO C. DIVINAGRACIA VS. CORONACION PARILLA ET AL. G.R. No. 196750.
March 11, 2015, J. Perlas-Bernabe

44

The heirs whether in their own capacity or in representation of their direct ascendant
have vested rights over the subject land and, as such, should be impleaded as indispensable
parties in an action for partition thereof. In fine, the absence of the indispensable parties in
the complaint for judicial partition renders all subsequent actions of the RTC null and void
for want of authority to act.

Death & Presumptive Death & Death of M arriage;

Inheritance v. Succession, Patrimony; M oney Obligations
Transmission, Non-transmission; Presumptive Legitimes
Survivorship Agreement, Succession & Taxes; Aleatory Contract (Art.
2010, NCC)

Laws governing Form and content

In the matter of the Testate Estate of Edward Christensen, G.R. L -16749,
January 31, 1963
Whether or not, the intrinsic validity of the testamentary disposition should be
governed by Philippine Law, when the national law of the testator refers back to
the Philippine Law. Edward is domiciled in the Philippines hence, Philippine
court must apply its own laws which makes natural children legally
acknowledge as forced heirs of the parent recognizing them.

Vitug vs. Court of Appeals, G.R.NO. 82027, M ar. 29, 1990 183 SCRA 755
A will has been defined as "a personal, solemn, revocable and free act by which
a capacitated person disposes of his property and rights and declares or
complies with duties to take effect after his death."
Cayatenao vs Leonidas, 129 SCRA 524
The law which governs Adoracion Campos will is the law of Pennsylvania, USA
which is the national law of the decedent. It is settled that as regards to the
intrinsic validity of the provisions of the wills as provided for by article 16 and
1039 of the New Civil Code, the national law of the decedent must apply.
Subjects and Object of Succession
Parish Priest of Victoria vs. Rigor, 89 SCRA 483

45

The issue in this case is whether or not a male relative referred in the will
should include those who are born after the testators death. To construe it as
referring to the nearest male relative at any time after his death would render
the provisions difficult to apply and create uncertainty as to the disposition of
the estate.

Opening of Succession
De Borja vs De Borja, G.R. No, L-28040, August 18, 1972
There is no legal bar to a successor to dispose his or her share immediately
after such death, even if the actual extent of such share is not determined until
the subsequent liquidation of the estate. The effect of such alienation is to be
deemed limited to what is ultimately adjudicated to the vendor heir.

Bonilla vs Leon Barcena, G.R. L-41715, June 18, 1976

The right of the heirs to the property of the deceased vests in them even before
the judicial declaration of their being declared as heirs. When Fortunata died,
her claim or right to the parcel of land in litigation in civil case number 856
was not extinguished by her death but was transmitted to her heirs upon her
death.
Borromeo-Herrera vs Borromeo, 152 SCRA 171
The properties included in an existing inheritance cannot be the subject of a
contract. The heirs acquire a right to succession from the moment of death of
the decedent. In this case, the purported waiver of hereditary rights cannot be
considered effective.

Testamentary Succession
Form and Solemnities of Notarial Wills
Baltazar v. Laxa, G.R.NO. 174489, April, 11, 2012
It is an established rule that "[a] testament may not be disallowed just because
the attesting witnesses declare against its due execution; neither does it have
to be necessarily allowed just because all the attesting witnesses declare in
favor of its legalization; what is decisive is that the court is convinced by
evidence before it, not necessarily from the attesting witnesses, although they
must testify, that the will was or was not duly executed in the manner required
by law."
46

Echavez vs. Dozen Cons., G.R.NO. 192916, Oct. 11, 2010

An attestation must state all the details the third paragraph of Article 805
requires. In the absence of the required avowal by the witnesses themselves,
no attestation clause can be deemed embodied in the Acknowledgement of the
Deed of Donation Mortis Causa.

Lopez v. Lopez, G.R.NO. 189984, Nov. 12, 2012

The law is clear that the attestation must state the number of pages used upon
which the will is written. The purpose of the law is to safeguard against
possible interpolation or omission of one or some of its pages and prevent any
increase or decrease in the pages.

Azuela v. CA, 487 SCRA 119

The signatures on the left-hand corner of every page signify, among others, that
the witnesses are aware that the page they are signing forms part of the will.
On the other hand, the signatures to the attestation clause establish that the
witnesses are referring to the statements contained in the attestation clause
itself.
Lee v. Tambago, 544 SCRA 393
An acknowledgment is the act of one who has executed a deed in going before
some competent officer or court and declaring it to be his act or deed. It
involves an extra step undertaken whereby the signatory actually declares to
the notary public that the same is his or her own free act and deed. The
acknowledgment in a notarial will has a two-fold purpose: (1) to safeguard the
testators wishes long after his demise and (2) to assure that his estate is
administered in the manner that he intends it to be done.
Suroza vs. Honrado, 110 SCRA 388
In the opening paragraph of the will, it was stated that English was a language
"understood and known" to the testatrix but in its concluding paragraph, it was
stated that the will was read to the testatrix "and translated into Filipino
language". That could only mean that the will was written in a language not
known to the illiterate testatrix and, therefore, it is void because of the
mandatory provision of article 804 of the Civil Code that every will must be
executed in a language or dialect known to the testator.

47

Garcia vs. Vasquez, 32 SCRA 489

The rationale behind the requirement of reading the will to the testator if he is
blind or incapable of reading the will himself (as when he is illiterate), is to
make the provisions thereof known to him, so that he may be able to object if
they are not in accordance with his wishes. That the aim of the law is to insure
that the dispositions of the will are properly communicated to and understood
by the handicapped testator, thus making them truly reflective of his desire, is
evidenced by the requirement that the will should be read to the latter, not only
once but twice, by two different persons, and that the witnesses have to act
within the range of his (the testator's) other senses.

Alvarado vs. Gaviola, Jr., 226 SCRA 348

This Court has held in a number of occasions that substantial compliance is
acceptable where the purpose of the law has been satisfied, the reason being
that the solemnities surrounding the execution of wills are intended to protect
the testator from all kinds of fraud and trickery but are never intended to be so
rigid and inflexible as to destroy the testamentary privilege.
In the case at bar, private respondent read the testator's will and codicil aloud
in the presence of the testator, his three instrumental witnesses, and the
notary public. Prior and subsequent thereto, the testator affirmed, upon being
asked, that the contents read corresponded with his instructions. Only then
did the signing and acknowledgement take place. There is no evidence, and
petitioner does not so allege, that the contents of the will and codicil were not
sufficiently made known and communicated to the testator. On the contrary,
with respect to the "Huling Habilin," the day of the execution was not the first
time that Brigido had affirmed the truth and authenticity of the contents of the
draft. The uncontradicted testimony of Atty. Rino is that Brigido Alvarado
already acknowledged that the will was drafted in accordance with his
expressed wishes even prior to 5 November 1977 when Atty. Rino went to the
testator's residence precisely for the purpose of securing his conformity to the
draft.
Javellana vs. Ledesma GR. No. L-7179, 97 Phil 258
The subsequent signing and sealing by the notary of his certification that the
testament was duly acknowledged by the participants therein is no part of the
acknowledgment itself nor of the testamentary act. Hence their separate
execution out of the presence of the testatrix and her witnesses cannot be said
to violate the rule that testaments should be completed without interruption.
Cruz vs. Villasor NO.L-32213, 54 SCRA 31

48

The notary public before whom the will was acknowledged cannot be
considered as the third instrumental witness since he cannot acknowledge
before himself his having signed the will. This cannot be done because he
cannot split his personality into two so that one will appear before the other to
acknowledge his participation in the making of the will.
Caneda vs. CA, 222 SCRA 781
The rule on substantial compliance in Article 809 cannot be revoked or relied
on by respondents since it presupposes that the defects in the attestation
clause can be cured or supplied by the text of the will or a consideration of
matters apparent therefrom which would provide the data not expressed in the
attestation clause or from which it may necessarily be gleaned or clearly
inferred that the acts not stated in the omitted textual requirements were
actually complied within the execution of the will.
Lopez v. Lopez, 685 SCRA 209
The statement in the Acknowledgment portion of the subject last will and
testament that it "consists of 7 pages including the page on which the
ratification and acknowledgment are written" cannot be deemed substantial
compliance. The will actually consists of 8 pages including its acknowledgment
which discrepancy cannot be explained by mere examination of the will itself
but through the presentation of evidence aliunde.
Guerrero v. Bihis, 521 SCRA 394
The issue in this case whether the will acknowledged by the testatrix and the
instrumental witnesses before a notary public acting outside the place of his
commission satisfies the requirement under Article 806 of the Civil Code?
Outside the place of his commission, he is bereft of power to perform any
notarial act; he is not a notary public. Any notarial act outside the limits of his
jurisdiction has no force and effect.
Celada v. Abena, 556 SCRA 569
While it is true that the attestation clause is not a part of the will, error in the
number of pages of the will as stated in the attestation clause is not material to
invalidate the subject will. It must be noted that the subject instrument is
consecutively lettered with pages A, B, and C which is a sufficient safeguard
from the possibility of an omission of some of the pages.
Form and Solemnities of Holographic W ills
Rodelas vs. Aranza, 119 SCRA 16
The photostatic or xerox copy of a lost or destroyed holographic will may be
admitted because then the authenticity of the handwriting of the deceased can
be determined by the probate court.
49

Codoy vs. Calugay, 312 SCRA 333

The word shall connotes a mandatory order. We have ruled that shall in a
statute commonly denotes an imperative obligation and is inconsistent with the
idea of discretion and that the presumption is that the word shall, when used
in a statute is mandatory."
Ajero vs. CA, 236 SCRA 488
Thus, unless the unauthenticated alterations, cancellations or insertions were
made on the date of the holographic will or on testator's signature, their
presence does not invalidate the will itself. The lack of authentication will only
result in disallowance of such changes.
Kalaw vs. Relova, 132 SCRA 237
To state that the Will as first written should be given efficacy is to disregard the
seeming change of mind of the testatrix. But that change of mind can neither
be given effect because she failed to authenticate it in the manner required by
law by affixing her full signature.
Roxas vs. De Jesus, 134 SCRA 245
As a general rule, the "date" in a holographic Will should include the day,
month, and year of its execution. However, when as in the case at bar, there is
no appearance of fraud, bad faith, undue influence and pressure and the
authenticity of the Will is established and the only issue is whether or not the
date "FEB.,61" appearing on the holographic Will is a valid compliance with
Article 810 of the Civil Code, probate of the holographic Will should be allowed
under the principle of substantial compliance.

Labrador vs. CA, 184 SCRA 170

The law does not specify a particular location where the date should be placed
in the will. The only requirements are that the date be in the will itself and
executed in the hand of the testator.

Seangio v. Reyes, 508 SCRA 172

Holographic wills being usually prepared by one who is not learned in the law,
as illustrated in the present case, should be construed more liberally than the
ones drawn by an expert, taking into account the circumstances surrounding
the execution of the instrument and the intention of the testator.
50

Palaganas v. Palaganas, 2011 640 SCRA 538

A foreign will can be given legal effects in our jurisdiction. But, reprobate or re authentication of a will already probated and allowed in a foreign country is
different from that probate where the will is presented for the first time before a
competent court.
Vda.De Perez vs. Tolete, 232 SCRA 722
What the law expressly prohibits is the making of joint wills either for the
testators reciprocal benefit or for the benefit of a third person (Civil Code of the
Philippines, Article 818). In the case at bench, the Cunanan spouses executed
separate wills. Since the two wills contain essentially the same provisions and
pertain to property which in all probability are conjugal in nature, practical
considerations dictate their joint probate.

Revocation of W ills and Testamentary Disposition

Modes of Revocation
Casiano vs CA 158 SCRA 451
Revocation under this condition to be effective must have complied with the
two requirements: the overt act as mentioned under the law; the intent to
revoke on the part of the testator. The document or paper burned by one of the
witnesses was not satisfactorily established to be the will at all, much less the
will of Adriana.

Adriana M aloto vs. CA, 158 SCRA 451

For one, the document or papers burned by Adriana's maid, Guadalupe, was
not satisfactorily established to be a will at all, much less the will of Adriana
Maloto. For another, the burning was not proven to have been done under the
express direction of Adriana. And then, the burning was not in her presence.

Gago vs. M amuyac NO. L-26317, 49 Phil 902

Where a will which cannot be found is shown to have been in the possession of
the testator, when last seen, the presumption is, in the absence of other
competent evidence, that the same was cancelled or destroyed. The same
presumption arises where it is shown that the testator had ready access to the
will and it cannot be found after his death. It will not be presumed that such
51

will has been destroyed by any other person without the knowledge or
authority of the testator.

Seangio v. Reyes, 2006 508 SCRA 172

For disinheritance to be valid, Article 916 of the Civil Code requires that the
same must be effected through a will wherein the legal cause therefor shall be
specified. With regard to the reasons for the disinheritance that were stated by
Segundo in his document, the Court believes that the incidents, taken as a
whole, can be considered a form of maltreatment of Segundo by his son,
Alfredo, and that the matter presents a sufficient cause for the disinheritance
of a child or descendant under Article 919 of the Civil Code.

Doctrine of dependent relative revocation

Molo vs. M olo NO. L- 2538, 90 Phil 37
The failure of a new testamentary disposition upon whose validity the
revocation depends, is equivalent to the non-fulfillment of a suspensive
conditions, and hence prevents the revocation of the original will. But a mere
intent to make at some time a will in the place of that destroyed will not render
the destruction conditional.
Allowance of W ills
Requirements for probate
Gan vs Yap, 104 Phil. 509
The loss of the holographic will entail the loss of the only medium of proof; if
the ordinary will is lost, the subscribing witnesses are available to
authenticate. In case of holographic will if oral testimony were admissible only
one man could engineer the fraud this way.
Rodelas vs Aranza 119 SCRA 16
If the holographic will has been lost or destroyed and no other copy is available,
the will cannot be probated because the best and only evidence is the
handwriting of the testator. But a photostatic copy or Xerox copy of the
holographic will may be allowed because comparison can be made with the
standard writings of the testator.
Azaola vs Singson 109 Phil. 102
Since the authenticity of the will was not contested, the appellant is not
required to produce more than one witness. Even if the genuiness of the
52

holographic will were contested, article 811 cannot be interpreted as to require

the compulsory presentation of three witnesses to identify the handwriting of
the testator, under penalty of having denied the probate.
Codoy vs Calugay, 312 SCRA 333
We cannot eliminate the possibility that if the will is contested, the law requires
that three witnesses to declare that the will was in the handwriting of the
deceased. A visual examination of the holographic will convince us that the
strokes are different when compared with other documents written by the
testator.

Effect of allowance of W ills

Gallanosa vs Arcangel, 83 SCRA 676
After the finality of the allowance of a will, the issue as to the voluntariness of
its execution cannot be raised anymore. It is not only the 1939 probate
proceeding that can be interposed as res judicata with respect to private
respondents complaint.
Roberts vs Leonidas, 129 SCRA 33
It is anomalous that the estate of a person who died testate should be settled in
an intestate proceeding. Therefore, the intestate case should be consolidated
with the testate proceeding and the judge assigned to the testate proceeding
should hearing the two cases.
Nepomuceno vs CA, 139 SCRA 206
The general rule is that in probate proceedings, the courts area of inquiry is
limited to an examination and resolution of the extrinsic validity of the will.
Where practically considerations demand that the intrinsic validity of the will
be passed upon, even before it is probated, the court should meet the issue.

Legitime, Institution, Preterition

Aznar vs. Duncan, 17 SCRA 590
To constitute preterition, the omission must be total and complete, such that
nothing must be given to the compulsory heir.
Acain vs. IAC, 155 SCRA 100
Preterition annuls the institution of an heir and annulment throws open to
intestate succession the entire inheritance. The only provisions which do not
53

result in intestacy are the legacies and devises made in the will for they should
stand valid and respected, except insofar as the legitimes are concerned.
Nuguid vs. Nuguid, 17 SCRA 449
The will here does not explicitly disinherit the testatrix's parents, the forced
heirs. It simply omits their names altogether. Said will rather than be labeled
ineffective disinheritance is clearly one in which the said forced heirs suffer
from preterition.

Seangio v. Reyes G.R.NO. 140371-72, Nov. 27, 2006 508 SCRA 172
The mere mention of the name of one of the petitioners, Virginia, in the
document did not operate to institute her as the universal heir. Her name was
included plainly as a witness to the altercation between Segundo and his son,
Alfredo.

Legitime and Simulated Contracts; Spousal M arital Estrangement

Francisco vs. Francisco-Alfonso, 354 SCRA 112
Obviously, the sale was Gregorio's way to transfer the property to his
illegitimate daughters at the expense of his legitimate daughter. The sale was
executed to prevent respondent Alfonso from claiming her legitime and rightful
share in said property.
Capitle v. Elbambuena, 509 SCRA 444
Although estranged from Olar, respondent Fortunata remained his wife and
legal heir, mere estrangement not being a legal ground for the disqualification
of a surviving spouse as an heir of the deceased spouse.
Reserva Troncal Art. 891
Sienes vs. Esparcia, 1 SCRA 750
The sale made by Andrea Gutang in favor of appellees was, therefore, subject to
the condition that the vendees would definitely acquire ownership, by virtue of
the alienation, only if the vendor died without being survived by any person
entitled to the reservable property. Inasmuch much as when Andrea Gutang
died, Cipriana Yaeso was still alive, the conclusion becomes inescapable that
the previous sale made by the former in favor of appellants became of no legal
effect and the reservable property subject matter thereof passed in exclusive
ownership to Cipriana.
54

Gonzales vs. CFI, 104 SCRA 479

Mrs. Legarda could not convey in her holographic will to her sixteen
grandchildren the reservable properties which she had inherited from her
daughter Filomena because the reservable properties did not form part of her
estate (Cabardo vs. Villanueva, 44 Phil. 186, 191). The reservor cannot make a
disposition mortis causa of the reservable properties as long as the reservees
survived the reservor.

Vizconde v. CA, 286 SCRA 217

Estrellita, it should be stressed, died ahead of Rafael, in fact, it was Rafael who
inherited from Estrellita an amount more than the value of the Valenzuela
property. Hence, even assuming that the Valenzuela property may be collated
collation may not be allowed as the value of the Valenzuela property has long
been returned to the estate of Rafael.

Substitution of Heirs
Palacios vs Ramirez, 111 SCRA 704
The word degree means generation and the present code has obviously
followed this interpretation by providing that the substitution shall not go
beyond one degree from the heir originally instituted. The code thus clearly
indicates that the second heir must be related to and one generation from the
first heir.

Crisologo vs Singzon, 49 SCRA 491

In fideicommissary substitution clearly impose an obligation upon the first heir
to preserve and transmit to another the whole or part of the estate bequeathed
to him, upon his death or upon the happening of a particular event.
Legal or Intestate Succession
Rosales vs Rosales, 148 SCRA 69
The daughter-in-law is not an intestate heir of her spouses parents. There is
no provision in the civil code which states that a widow is an intestate heir of
her mother-in-law.
Delos Santos vs Dela Cruz, 37 SCRA 555
55

In an intestate succession, a grandniece of the deceased cannot participate in

the inheritance with the surviving nieces and nephews because the existence of
the latter excluded the more distant relatives. In the collateral line, the right of
representation does not go beyond the children of brothers and sisters.
Corpuz vs Corpuz, 85 SCRA 567
Since, Teodoro was an acknowledged natural child or was illegitimate and since
Juanita was the legitimate child of Tomas, himself was a legitimate child,
appellant Tomas has no cause of action to recovery of the supposed hereditary
share of his daughter, Juanita as a legal heir, in Yangcos estate .
Santillon vs M irandan, 14 SCRA 563
If there is only one legitimate child surviving with the spouse since they shall
equally, one-half of the estate goes to the child and the other half goes to the
surviving spouse. Although the law refers to children or descendants, the rule
in the statutory construction that the plural can be understood to include the
singular.
Bacayo vs Borromeo, 14 SCRA 986
A decedents uncle and aunt may not succeed intestate so long as nephews and
nieces of the decedent survive and are willing and qualified to succeed. In this
case, the nephews and nieces were not inheriting by right of representation
because they only do so if they concur with the brothers and sisters of the
decedent.
Provisions Common to Testate and Intestate Succession

SPOUSES DOMINADOR MARCOS and GLORIA MARCOS, vs. HEIRS OF ISIDRO BANGI
and GENOVEVA DICCION, represented by NOLITO SABIANO, G.R. No. 185745, October
15, 2014, J. Reyes.
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 b e inferred from
circumstances sufficiently strong to support the presumption. Thus, after a long
possession in severalty, a deed of partition may be presumed. The evidence presented by
the parties indubitably 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. Accordingly, considering that Eusebio already owned the subject
property at the time he sold the one-third portion thereof.

56

THELMA M. ARANAS vs. TERESITA V. MERCAO, FELIMON V. MERCADO, CARMENCIA M.

STUERHLAND, RICHARD V. MERCADO, MA. TERESITA M. ANDERSON, AND FRANKLIN
L. MERCADO, G.R. No. 156407, JANUARY 15, 2014, J. Bersamin
The probate court is authorized to determine the issue of ownership of properties for
purposes of their inclusion or exclusion from the inventory to be submitted by the
administrator, but its determination shall only be provisional unless the interested parties
are all heirs of the decedent, or the question is one of collation or advancement, or the
parties consent the assumption of jurisdiction by the probate court and the rights of third
parties are not impaired. Its jurisdiction extends to matters incidental or to the settlement
and distribution of the estate, such as the determination of the status of each heir and
whether property included in the inventory is the conjugal or exclusive property of the
deceased spouse.
Legitime; Proximity & Representation; Art. 962;
Bagunu vs. Piedad, 347 SCRA 571
The rule on proximity is a concept that favors the relatives nearest in degree to
the decedent and excludes the more distant ones except when and to the
extent that the right of representation can apply. In the collateral line, the right
of representation may only take place in favor of the children of brothers or
sisters of the decedent when such children survive with their uncles or aunts.
Sayson vs. CA, 205 SCRA 321
The relationship created by the adoption is between only the adopting parents
and the adopted child and does not extend to the blood relatives of either party.
Corpus vs. Corpus, 85 SCRA 567
In default of natural ascendants, natural and legitimated children shall be
succeeded by their natural brothers and sisters in accordance with the rules
established for legitimate brothers and sisters." Hence, Teodoro R. Yangco's
half brothers on the Corpus side, who were legitimate, had no right to succeed
to his estate under the rules of intestacy.
Suntay v. Cojuangco-Suntay, 621 SCRA 142
Petitioners argument that the successional bar between the legitimate and
illegitimate relatives of a decedent does not apply in this instance where facts
indubitably demonstrate the contrary Emilio III, an illegitimate grandchild of
the decedent, was actually treated by the decedent and her husband as their
own son, reared from infancy, educated and trained in their businesses, and
eventually legally adopted by decedents husband, the original oppositor to
respondents petition for letters of administration.

57

Diaz vs. IAC, 150 SCRA 645

It is therefore clear from Article 992 of the New Civil Code that the phrase
"legitimate children and relatives of his father or mother" includes Simona
Pamuti Vda. de Santero as the word "relative" includes all the kindred of the
person spoken of. The record shows that from the commencement of this case
the only parties who claimed to be the legitimate heirs of the late Simona
Pamuti Vda. de Santero are Felisa Pamuti Jardin and the six minor natural or
illegitimate children of Pablo Santero.
Diaz vs. IAC, 182 SCRA 427
The term relatives, although used many times in the Code, is not defined by it.
In accordance therefore with the canons of statutory interpretation, it should
be understood to have a general and inclusive scope, inasmuch as the term is a
general one.
Heirs of Uriarte vs. CA, 284 SCRA 511
A nephew is considered a collateral relative who may inherit if no descendant,
ascendant, or spouse survive the decedent. That private respondent is only a
half-blood relative is immaterial.
Delos Santos vs Ferraris-Borromeo, 14 SCRA 986
Nephews and nieces alone do not inherit by right of representation unless
concurring with the brothers or sisters of the deceased which is provided in
article 975 when children of one or more brothers or sisters of the deceased
survive with their uncles and aunts but if they alone survive, they shall inherit
in equal portions.

P ARTNERSHIP
I. Contract of Partnership
LIM TONG LIM vs. PHILIPPINE FISHING GEAR INDUSTRIES, INC., G.R. NO.
136448, November 3, 1999
A partnership may be deemed to exist among parties who agree to borrow
money to pursue a business and to divide the profits or losses that may arise
therefrom, even if it is shown that they have not contributed any capital of their
own to a "common fund." Their contribution may be in the form of credit or
industry, not necessarily cash or fixed assets.

58

ROSARIO U. YULO vs. YANG CHIAO SENG, G.R. NO. L-12541, August 28,
1959
The following are the requisites of partnership: (1) two or more persons who
bind themselves to contribute money, property, or industry to a common fund;
(2) intention on the part of the partners to divide the profits among themselves.
(Art. 1767, Civil Code.).

HEIRS OF TAN ENG KEE vs .COURT OF APPEALS and BENGUET LUMBER

COMPANY
G.R. NO. 126881; October 3, 2000
In determining whether a partnership exists, these rules shall apply:
(1) Except as provided by Article 1825, persons who are not partners as to each
other are not partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a partnership,
whether such co-owners or co-possessors do or do not share any profits made
by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership,
whether or not the persons sharing them have a joint or common right or
interest in any property which the returns are derived;
(4) The receipt by a person of a share of the profits of a business is a prima
facie evidence that he is a partner in the business, but no such inference shall
be drawn if such profits were received in payment:
(a) As a debt by installment or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits of
the business;
(e) As the consideration for the sale of a goodwill of a business or other property
by installments or otherwise.

II. Rights and Obligations of Partnership

ALFREDO N. AGUILA, JR vs. COURT OF APPEALS and FELICIDAD S. VDA.
DE ABROGAR, G.R. NO. 127347, November 25, 1999
Under Art. 1768 of the Civil Code, a partnership has a juridical personality
separate and distinct from that of each of the partners. The partners cannot
be held liable for the obligations of the partnership unless it is shown that the
legal fiction of a different juridical personality is being used for fraudulent,
unfair, or illegal purposes, hence it is the partnership, not its officers or agents,
59

which should be impleaded in any litigation involving property registered in its

name, violation of this rule will result in the dismissal of the complaint.
Villareal vs. Ramirez, G.R. NO. 144214. July 14, 2003
Since it is the partnership, as a separate and distinct entity, that must refund
the shares of the partners, the amount to be refunded is necessarily limited to
its total resources. In other words, it can only pay out what it has in its coffers,
which consists of all its assets. However, before the partners can be paid their
shares, the creditors of the partnership must first be compensated. After all the
creditors have been paid, whatever is left of the partnership assets becomes
available for the payment of the partners shares.
Angeles vs. Secretary of Justice, G.R. NO. 142612, July 29, 2005
The Angeles spouses position that there is no partnership because of the lack
of a public instrument indicating the same and a lack of registration with the
Securities and Exchange Commission (SEC) holds no water for the following
reasons: first, the Angeles spouses contributed money to the partnership and
not immovable property; and second, mere failure to register the contract of
partnership with the SEC does not invalidate a contract that has the essential
requisites of a partnership. The purpose of registration of the contract of
partnership is to give notice to third parties. Failure to register the contract of
partnership does not affect the liability of the partnership and of the partners
to third persons. Neither does such failure to register affect the partnerships
juridical personality. A partnership may exist even if the partners do not use
the words partner or partnership.
Ortega vs. CA, G.R. NO. 109248, July 3, 1995
The right to choose with whom a person wishes to associate himself is the very
foundation and essence of that partnership. Its continued existence is, in turn,
dependent on the constancy of that mutual resolve, along with each partner's
capability to give it, and the absence of a cause for dissolution provided by the
law itself. Verily, any one of the partners may, at his sole pleasure, dictate a
dissolution of the partnership at will. He must, however, act in good faith, not
that the attendance of bad faith can prevent the dissolution of the
partnership but that it can result in a liability for damages. Among
partners, mutual agency arises and the doctrine of delectus personae allows
them to have the power, although not necessarily the right, to dissolve the
partnership. An unjustified dissolution by the partner can subject him to a
possible action for damages.

III. Rights and Obligations of Partners Among Themselves

60

Liwanag vs. CA, G.R. NO. 114398, October 24, 1997

Petitioner was charged with the crime of estafa and advances the theory that
the intention of the parties was to enter into a contract of partnership, wherein
Rosales (private complainant for Estafa) would contribute the funds while she
would buy and sell the cigarettes, and later divide the profits between
them But even assuming that a contract of partnership was indeed entered
into by and between the parties, SC ruled that when money or property have
been received by a partner for a specific purpose (such as that obtaining in the
instant case) and he later misappropriated it, such partner is guilty of estafa.
Moran, Jr. vs. CA, G.R. NO. L-59956, October 31, 1984
The rule is, when a partner who has undertaken to contribute a sum of money
fails to do so, he becomes a debtor of the partnership for whatever he may have
promised to contribute (Art. 1786, Civil Code) and for interests and damages
from the time he should have complied with his obligation (Art. 1788, Civil
Code). Thus in Uy v. Puzon (79 SCRA 598), which interpreted Art. 2200 of the
Civil Code of the Philippines, we allowed a total of P200,000.00 compensatory
damages in favor of the appellee because the appellant therein was remiss in
his obligations as a partner and as prime contractor of the construction
projects in question.

Tai Tong Chuache & Co. vs. Insurance Commission, G.R. NO. L-55397
February 29, 1988
Petitioner being a partnership may sue and be sued in its name or by its duly
authorized representative. Thus, Chua as the managing partner of the
partnership may execute all acts of administration including the right to sue
debtors of the partnership in case of their failure to pay their obligations when
it became due and demandable.
Catalan vs. Gatchalian, G.R. NO. L-11648, April 22, 1959
Catalan and Gatchalian as partners mortgaged two lots together with the
improvements thereon to secure a credit. Catalan redeemed the property and
he contends that title should be cancelled and a new one must be issued in his
name. Under Article 1807 of the NCC every partner becomes a trustee for his
co-partner with regard to any benefits or profits derived from his act as a
partner. Consequently, when Catalan redeemed the properties in question, he
became a trustee and held the same in trust for his co partner Gatchalian,
subject to his right to demand from the latter his contribution to the amount of
redemption.

61

Evangelista & Co. vs. Abad Santos, G.R. NO. L-31684 June 28, 1973
Respondent industrial partner has the right to demand for a formal accounting
and to receive her share in the net profit that may result from such an
accounting.

IV. Obligations of Partnership, Partners to Third Persons

ISLAND SALES, INC. vs. UNITED PIONEERS GENERAL CONSTRUCTION
COMPANY, G.R. NO. L-22493, July 31, 1975
Defendant company, a general partnership purchased from the plaintiff a
motor vehicle on an installment basis with the condition that failure to pay any
of said installments as they fall due would render the whole unpaid balance
immediately due and demandable. Having failed to receive the installment, the
plaintiff sued the defendant company for the unpaid balance with Benjamin C.
Daco, Daniel A. Guizona, Noel C. Sim, Romulo B. Lumauig, and Augusto
Palisoc were included as co-defendants in their capacity as general partners of
the defendant company. In this case, there were five (5) general partners when
the promissory note in question was executed for and in behalf of the
partnership. Since the liability of the partners is pro rata, the liability of the
appellant Benjamin C. Daco shall be limited to only one -fifth of the obligations
of the defendant company. The fact that the complaint against the defendant
Romulo B. Lumauig was dismissed, upon motion of the plaintiff, does not
unmake the said Lumauig as a general partner in the defendant company. In
so moving to dismiss the complaint, the plaintiff merely condoned Lumauig's
individual liability to the plaintiff.
ELMO MUASQUE vs. COURT OF APPEALS, G.R. NO. L -39780, November
11, 1985
There is a general presumption that each individual partner is an authorized
agent for the firm and that he has authority to bind the firm in carrying on the
partnership transactions. The presumption is sufficient to permit third persons
to hold the firm liable on transactions entered into by one of members of the
firm acting apparently in its behalf and within the scope of his authority.
ANTONIO C. GOQUIOLAY, ET AL. vs. WASHINGTON Z. SYCIP, ET AL, G.R.
NO. L-11840, December 10, 1963
Where the partnership business is to deal in merchandise and goods, i.e.,
movable property, the sale of its real property (immovables) is not within the
ordinary powers of a partner, because it is not in line with the normal business
of the firm. But where the express and avowed purpose of the partnership is to
buy and sell real estate (as in the present case), the immovables thus acquired
62

by the firm from part of its stock-in-trade, and the sale thereof is in pursuance
of partnership purposes, hence within the ordinary powers of the partner.
J. TIOSEJO INVESTMENT CORP. vs. Ang, G.R. NO. 174149, September 8,
2010
Petitioner cannot avoid liability by claiming that it was not in any way privy to
the Contracts to Sell executed by PPGI and respondents. As correctly argued
by the respondent, a joint venture is considered in this jurisdiction as a form of
partnership and is, accordingly, governed by the law of partnerships and under
Article 1824 of the Civil Code of the Philippines, all partners are solidarily liable
with the partnership for everything chargeable to the partnership, including
loss or injury caused to a third person or penalties incurred due to any
wrongful act or omission of any partner acting in the ordinary course of the
business of the partnership or with the authority of his co-partners.

V. Dissolution
PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION
LAZATIN-MAGAT, et.al, G.R. NO. 167379, June 27, 2006

vs.

On dissolution, the partnership is not terminated but continues until the

winding up of partnership affairs is completed. Winding up means the
administration of the assets of the partnership for the purpose of terminating
the business and discharging the obligations of the partnership.
MARJORIE TOCAO vs. COURT OF APPEALS, G.R. NO. 127405, October 4,
2000
An unjustified dissolution by a partner can subject him to action for damages
because by the mutual agency that arises in a partnership, the doctrine
of delectus personae allows the partners to have the power, although not
necessarily the right to dissolve the partnership.
VI. Limited Partnership
COMMISSIONER OF INTERNAL REVENUE vs. W ILLIAM J. SUTER, G.R. NO.
L-25532, February 28, 1969
A limited partnership, named "William J. Suter 'Morcoin' Co., Ltd.," was formed
on 30 September 1947 by herein respondent William J. Suter as the general
partner, and Julia Spirig and Gustav Carlson, as the limited partners. The
thesis that the limited partnership, William J. Suter "Morcoin" Co., Ltd., has
been dissolved by operation of law because of the marriage of the only general
partner, William J. Suter to the originally limited partner, Julia Spirig one year
63

after the partnership was organized is not tenable. The subsequent marriage of
the partners does not operate to dissolve it, such marriage not being one of the
causes provided for that purpose either by the Spanish Civil Code or the Code
of Commerce. The appellant's view, that by the marriage of both partners the
company became a single proprietorship, is equally erroneous. The capital
contributions of partners William J. Suter and Julia Spirig were separately
owned and contributed by them before their marriage; and after they were
joined in wedlock, such contributions remained their respective separate
property under the Spanish Civil Code.
AGENCY
ALVIN PATRIMONIO v NAPOLEON GUTIERREZ and OCTAVIO MARASIGAN III, G.R No.
187769, June 4, 2014. J. BRION
As a general rule, a contract of agency may be oral. However, it must be written when the
law requires a specific form, for example, in a sale of a piece of land or any interest therein
through an agent. Article 1878 paragraph 7 of the Civil Code expressly requires a special
power of authority before an agent can loan or borrow money in behalf of the principal, but
it does not state that the authority be in writing.
)n this case, Alvin Patrimonio s agent, Gutierrez, did not have any authority to borrow
money in Patrimonio s behalf. Patrimonio did not execute any SPA in favor of Gutierrez, nor
was Gutierrez given any authority, whether verbally or in writing, to borrow money in his
behalf, nor was he aware of any such transaction. Patrimonio s acts of pre-signing blank
checks and releasing them to Gutierrez does not establish that Patrimonio authorized
Gutierrez to fill them out and contract the loan in his behalf.
SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES ROGELIO AND
ELIZABETH RABAJA AND ROSARIO GONZALES, G.R. No. 199990, February 04, 2015, J.
Mendoza
Persons dealing with an agent must ascertain not only the fact of agency, but also the
nature and extent of the agent s authority. A third person with whom the agent wishes to
contract on behalf of the principal may require the presentation of the power of attorney,
or the instructions as regards the agency. 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 the
agent. They required her presentation of the power of attorney before they transacted with
her principal. And when the agent presented the SPA to Spouses Rabaja, the latter had no
reason not to rely on it.
I.Definition of Agency

64

Country Bankers Insurance Corp.. vs. Keppel Cebu Shipyard, June 18,
2012, G.R. NO. 166044
In a contract of agency, a person, the agent, binds himself to re present
another, the principal, with the latters consent or authority. Thus, agency is
based on representation, where the agent acts for and in behalf of the principal
on matters within the scope of the authority conferred upon him. Such acts
have the same legal effect as if they were personally done by the principal. By
this legal fiction of representation, the actual or legal absence of the principal is
converted into his legal or juridical presence.
Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006
It bears stressing that in an agent-principal relationship, the personality of the
principal is extended through the facility of the agent. In so doing, the agent, by
legal fiction, becomes the principal, authorized to perform all acts which the
latter would have him do. Such a relationship can only be effected with the
consent of the principal, which must not, in any way, be compelled by law or
by any court.

Eurotech Industrial Technologies, Inc. Cuizon, G.R. NO. 167552, April 23,
2007
In a contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another with the latters consent.
The underlying principle of the contract of agency is to accomplish results by
using the services of others to do a great variety of things like selling, buying,
manufacturing, and transporting. Its purpose is to extend the personality of
the principal or the party for whom another acts and from whom he or she
derives the authority to act. It is said that the basis of agency is representation,
that is, the agent acts for and on behalf of the principal on matters within the
scope of his authority and said acts have the same legal effect as if they were
personally executed by the principal. By this legal fiction, the actual or real
absence of the principal is converted into his legal or juridical presence qui
facit per alium facit per se. The elements of the contract of agency are: (1)
consent, express or implied, of the parties to establish the relationship; (2) the
object is the execution of a juridical act in relation to a third person; (3) the
agent acts as a representative and not for himself; (4) the agent acts within the
scope of his authority.

II. Powers

65

III. Express vs. Implies Agency

Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006
An agency may be expressed or implied from the act of the principal, from his
silence or lack of action, or his failure to repudiate the agency knowing that
another person is acting on his behalf without authority. Acceptance by the
agent may be expressed, or implied from his acts which carry out the agency,
or from his silence or inaction according to the circumstances. Agency may be
oral unless the law requires a specific form. However, to create or convey real
rights over immovable property, a special power of attorney is necessary. Thus,
when a sale of a piece of land or any portion thereof is through an agent, the
authority of the latter shall be in writing, otherwise, the sale shall be void.

IV. Agency by Estoppel

Naguiat vs. Court of Appeals, G.R. NO. 118375, October 3, 2003
The Court of Appeals recognized the existence of an agency by estoppels citing
Article 1873 of the Civil Code. Apparently, it considered that at the very least,
as a consequence of the interaction between Naguiat and Ruebenfeldt, Queao
got the impression that Ruebenfeldt was the agent of Naguiat, but Naguiat did
nothing to correct Queaos impression. In that situation, the rule is
clear. One who clothes another with apparent authority as his agent, and
holds him out to the public as such, cannot be permitted to deny the authority
of such person to act as his agent, to the prejudice of innocent third parties
dealing with such person in good faith, and in the honest belief that he is what
he appears to be. The Court of Appeals is correct in invoking the said rule on
agency by estoppel.

V. General vs. Special Agency

Siasat vs. Intermediate Appellate Court, G.R. NO. L-67889, October 10,
1985
A general agent is one authorized to do all acts pertaining to a business of a
certain kind or at a particular place, or all acts pertaining to a business of a
particular class or series. He has usually authority either expressly conferred
in general terms or in effect made general by the usages, customs or nature of
the business which he is authorized to transact. An agent, therefore, who is
empowered to transact all the business of his principal of a particular kind or
in a particular place, would, for this reason, be ordinarily deemed a general
agent. A special agent is one authorized to do some particular act or to act
66

upon some particular occasion, acts usually in accordance with specific

instructions or under limitations necessarily implied from the nature of the act
to be done
VI. Agency Couched in General Terms
Veloso vs. Court of Appeals, G.R. NO. 102737, August 21, 1996
There was no need to execute a separate and special power of attorney since
the general power of attorney had expressly authorized the agent or attorney in
fact the power to sell the subject property. The special power of attorney can
be included in the general power when it is specified therein the act or
transaction for which the special power is required. Whether the instrument be
denominated as general power of attorney or special power of attorney, what
matters is the extent of the power or powers contemplated upon the agent or
attorney in fact. If the power is couched in general terms, then such power
cannot go beyond acts of administration. However, where the power to sell is
specific, it not being merely implied, much less couched in general terms, there
cannot be any doubt that the attorney in fact may execute a valid sale. An
instrument may be captioned as special power of attorney but if the powers
granted are couched in general terms without mentioning any specific power to
sell or mortgage or to do other specific acts of strict dominion, then in that case
only acts of administration may be deemed conferred
VII. Agency Requiring Special Power of Attorney
ARDO C. CASTILLO, represented by LENNARD V. CASTILLO v SECURITY BANK
CORPORATION, JRC POULTRY FARMS or SPOUSES LEON C. CASTILLO, JR.,
and TERESITA FLORESCASTILLO, G.R No. 196118, July 30, 2014. J. PERALTA
In this case, the validity of a mortgage was attacked on the ground that Leon (petitioner
Leonardo s brother was not authorized to contract it. Leon claims that the Community Tax
Certificate presented during the notarization of the SPA was obtained after the SPA had
been executed.
However, the defective notarization did not avoid the SPA. The 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.
Article 1358 of the Civil Code requires that the form of a contract that transmits or
extinguishes real rights over immovable property should be in a public document, yet the
failure to observe the proper form does not render the transaction invalid. The necessity of
a public document for said contracts is only for convenience; it is not essential for validity
or enforceability.

67

MACARIA ARGUELLES AND THE HEIRS OF THE DECEASED PETRONIO ARGUELLES VS.
MALARAYAT RURAL BANK INC. G.R. No. 200468 March 19, 2014, J. Villarama Jr.
The issue in this case is case is whether Malarayat Rural Bank is a mortgagee in good faith
who is entitled to protection on its mortgage lien.
In this case, Malarayat Rural Bank fell short of the required degree of diligence, prudence,
and care in approving the loan application of the spouses Guia. Respondent should have
diligently conducted an investigation of the land offered as collateral. Although the Report
of Inspection and Credit Investigation found at the dorsal portion of the Application for
Agricultural Loan proved that the respondent Malarayat Rural Bank inspected the land, the
respondent turned a blind eye to the finding therein that the "lot is planted [with]
sugarcane with annual yield (crops) in the amount of P15,000. They merely derived the
authority to mortgage the lot from the Special Power of Attorney allegedly executed by the
late Fermina M. Guia. Hence, it was incumbent upon the respondent Malarayat Rural Bank
to be more cautious in dealing with the spouses Guia, and inquire further regarding the
identity and possible adverse claim of those in actual possession of the property. Since the
subject land was not mortgaged by the owner thereof and since the respondent Malarayat
Rural Bank is not a mortgagee in good faith, said bank is not entitled to protection under
the law. The unregistered sale in favor of the spouses Arguelles must prevail over the
mortgage lien of respondent Malarayat Rural Bank.
SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES ROGELIO AND
ELIZABETH RABAJA AND ROSARIO GONZALES, G.R. No. 199990, February 04, 2015, J.
Mendoza
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.
Orbeta vs. Sendiong, G.R. NO. 155236, July 8, 2005
A special power of attorney simply refers to a clear mandate specifically
authorizing the performance of a specific power and of express acts subsumed
therein, and there is a specific authority given to Mae Sendiong to sign her
name in behalf of Paul Sendiong in contracts and agreements and to institute
suits in behalf of her father. Neither would the fact that the document is
captioned General Power of Attorney militate against its construction as
granting specific powers to the agent pertaining to the petition for annulment of
judgment she instituted in behalf of her father. As Justice Paras has noted, a
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general power of attorney may include a special power if such special power is
mentioned or referred to in the general power.
Country Bankers Insurance Corp. vs. Keppel Cebu Shipyard, June 18,
2012, G.R. NO. 166044
Our law mandates an agent to act within the scope of his authority. The scope
of an agents authority is what appears in the written terms of the power of
attorney granted upon him. Under Article 1878(11) of the Civil Code, a special
power of attorney is necessary to obligate the principal as a guarantor or
surety.
Mercado vs. Allied Banking Corpporation, G.R. NO. 171460, July 24, 2007
Equally relevant is the rule that a power of attorney must be strictly construed
and pursued. The instrument will be held to grant only those powers which
are specified therein, and the agent may neither go beyond nor deviate from the
power of attorney. Where powers and duties are specified and defined in an
instrument, all such powers and duties are limited and are confined to those
which are specified and defined, and all other powers and duties are excluded.
This is but in accord with the disinclination of courts to enlarge the authority
G.R.anted beyond the powers expressly given and those which incidentally flow
or derive therefrom as being usual and reasonably necessary and proper for the
performance of such express powers.
Angeles vs. Philippines National Railways, G.R. NO. 150128, August 31,
2006
A power of attorney is only but an instrument in writing by which a person, as
principal, appoints another as his agent and confers upon him the authority to
perform certain specified acts on behalf of the principal. The written
authorization itself is the power of attorney, and this is clearly indicated by the
fact that it has also been called a letter of attorney. Its primary purpose is not
to define the authority of the agent as between himself and his principal but to
evidence the authority of the agent to third parties with whom the agent deals.
Except as may be required by statute, a power of attorney is valid although no
notary public intervened in its execution.
SHOPPERS PARADISE REALTY & DEVELOPMENT CORPORATION vs.
EFREN P. ROQUE, G.R. NO. 148775, January 13, 2004
Article 1878 of the Civil Code expresses that a special power of attorney is
necessary to lease any real property to another person for more than one year.
The lease of real property for more than one year is considered not merely an

69

act of administration but an act of strict dominion or of ownership. A special

power of attorney is thus necessary for its execution through an agent.
VIII. Agency by Operation of Law
IX. Rights and Obligations of Principal
VICTORIAS MILLING CO., INC. vs. COURT OF , G.R. NO. 117356, June 19,
2000
One factor which most clearly distinguishes agency from other legal concepts is
control; one person - the agent - agrees to act under the control or direction of
another - the principal. Indeed, the very word "agency" has come to connote
control by the principal. The control factor, more than any other, has caused
the courts to put contracts between principal and agent in a separate category.
X. Irrevocable Agency
Republic vs. Evangelista, G.R. NO. 156015, August 11, 2005
A contract of agency is generally revocable as it is a personal contract of
representation based on trust and confidence reposed by the principal on his
agent. As the power of the agent to act depends on the will and license of the
principal he represents, the power of the agent ceases when the will or
permission is withdrawn by the principal. Thus, generally, the agency may be
revoked by the principal at will. However, an exception to the revocability of a
contract of agency is when it is coupled with interest, i.e., if a bilateral contract
depends upon the agency. The reason for its irrevocability is because the
agency becomes part of another obligation or agreement. It is not solely the
rights of the principal but also that of the agent and third persons which are
affected. Hence, the law provides that in such cases, the agency cannot be
revoked at the sole will of the principal.

Lim vs. Saban, G.R. NO. 163720, December 16, 2004

Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral
contract depends upon it, or if it is the means of fulfilling an obligation already
contracted, or if a partner is appointed manager of a partnership in the
contract of partnership and his removal from the management is
unjustifiable. Stated differently, an agency is deemed as one coupled with an
interest where it is established for the mutual benefit of the principal and of the
agent, or for the interest of the principal and of third persons, and it cannot be
revoked by the principal so long as the interest of the agent or of a third person
subsists. In an agency coupled with an interest, the agents interest must be
in the subject matter of the power conferred and not merely an interest in the
70

exercise of the power because it entitles him to compensation. When an agents

interest is confined to earning his agreed compensation, the agency is not one
coupled with an interest, since an agents interest in obtaining his
compensation as such agent is an ordinary incident of the agency relationship.

XI. M odes of Extinguishment

RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS vs.

FELIX GO CHAN & SONS REALTY CORPORATION, G.R. NO. L-24332,
January 31, 1978
By reason of the very nature of the relationship between principal and agent,
agency is extinguished ipso jure upon the death of either principal or agent.
Although a revocation of a power of attorney to be effective must be
communicated to the parties concerned, yet a revocation by operation of law,
such as by death of the principal is, as a rule, instantaneously effective
inasmuch as "by legal fiction the agent's exercise of authority is regarded as an
execution of the principal's continuing will. With death, the principal's will
ceases or is the of authority is extinguished.
TRUST
ELIZA ZUNIGA-SANTOS,* represented by her Attorney-in Fact, NYMPHA Z. SALES v
MARIA DIVINA GRACIA SANTOS-GRAN** and REGISTER OF DEEDS OF MARIKINA
CITY, G.R No. 197380, October 8, 2014. J. PERLAS-BERNABE.
To determine when the prescriptive period commenced in an action for reconveyance, the
plaintiff s possession of the disputed property is material. )f 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. On the other hand, 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.
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.
Here, the filing of the complaint was beyond the 10-year prescriptive period, warranting
the dismissal of the complaint.

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HEIRS OF VALENTIN BASBAS, ANSELMA B. ENDRINAL, GERTRUD ES BASBAS,

RUFINA BASBAS, CEFERINA B. CARTECIANO, ANACLETO BASBAS, ARSENIA
BASBAS, ANASTACIO BASBAS, BEDACIO BASBAS, TEODOCIA B. OCAMPO,
SEGUNDO C. BASBAS, MARIA B. RAMOS AND EUGENIO BASBAS IN
REPRESENTATION OF PEDRO BASBAS; HERINO T. BASBAS AND NESTOR T.
BASBAS IN REPRESENTATION OF LUCAS BASBAS; ADELAIDA B. FLORENTINO,
RODRIGO BASBAS, FELIX BASBAS, JR., TEODULO BASBAS, ANDRESITO
BASBAS, LARRY BASBAS AND JOEY BASBAS IN REPRESENTATION OF FELIX
BASBAS, SR., VICTOR BEATO, ALIPIO BEATO, EUTIQUIO BEATO, JULIANA B.
DIAZ, PABLO BEATO AND ALEJANDRO BEATO IN REPRESENTATION OF
REMIGIA B. BEATO, AS REPRESENTED BY RODRIGO BASBAS V RICARDO
BASBAS as represented by EUGENIO BASBAS, G.R No. 188773, Septembe r 10, 2014. J.
PEREZ
Based on the evidence on hand, defendants including herein respondent Ricardo acquired
the property in question through fraud and, therefore, an implied trust was created in favor
of petitioners under Article 1456 of the New Civil Code.
Since a constructive trust was created, [petitioners] have the right to recover the property
subject of this action. The fact that the decision of the RTC, Bian, Laguna
approving/granting the petition for the reconstitution of the title covering Lot No. 39 and
said decision has obtained its finality, is of no moment. It has been held: "the rule that
registration of real property under the Torrens System has the effect of constructive notice
to the whole world cannot be availed of when the purpose of the action is to compel a
trustee to convey the property registered in his name for the benefit of the cestui que trust.
In other words, the defense of prescription cannot be set up in an action to enforce a trust.
JOSE JUAN TONG, ET AL. vs. GO TIAT KUN, ET AL., G.R. No. 196023, April 21, 2014,
J.Reyes
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 1448which 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.
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.
COM PROM ISE
DOA ADELA EXPORT INTERNATIONAL, INC., vs. TRADE AND INVESTMENT
DEVELOPMENT CORPORATION (TIDCORP), AND THE BANK OF THE PHILIPPINE
ISLANDS, G.R. No. 201931, February 11, 2015, J. Villarama
72

Petitioner did not sign the compromise agreement. The Supreme Court held that it is basic
in law that a compromise agreement, as a contract, is binding only upon the parties to the
compromise, and not upon non-parties. This is the doctrine of relativity of contracts. The
rule is based on Article
of the Civil Code which provides that contracts take effect
only between the parties, their assigns and heirs. The sound reason for the exclusion of
non-parties to an agreement is the absence of a vinculum or juridical tie which is the
efficient cause for the establishment of an obligation. Consistent with this principle, a
judgment based entirely on a compromise agreement is binding only on the parties to the
compromise the court approved, and not upon the parties who did not take part in the
compromise agreement and in the proceedings leading to its submission and approval by
the court.

I.Definition
Air Transportation Office v. Gopuco, Jr., G.R. NO. 158563. June 30, 2005
A compromise agreement, when not contrary to law, public order, public policy,
morals, or good customs, is a valid contract which is the law between the
parties. It is a contract perfected by mere consent, whereby the parties,
making reciprocal concessions, avoid litigation or put an end to one already
commenced. It has the force of law and is conclusive between the parties, and
courts will not relieve parties from obligations voluntarily assumed, simply
because their contracts turned out to be unwise

II.Void Compromise
SERCONSISION R. MENDOZA vs. AURORA MENDOZA FERMIN, G.R. No. 177235, July 7,
2014, J. Peralta

Fermin filed a case for Annulment of Deed of Absolute Sale, Transfer Certificate of Title and
Damages alleging that the signature of her father was forged. While the Court recognize
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.
Uy vs. Chua, G.R. NO. 183965, September 18, 2009

73

Like any other contract, a compromise agreement must comply with the
requisites in Article 1318 of the Civil Code, to wit: (a) consent of the
contracting parties; (b) object certain that is the subject matter of the contract;
and (c) cause of the obligation that is established. And, like any other contract,
the terms and conditions of a compromise agreement must not be contrary to
law, morals, good customs, public policy and public order. Any compromise
agreement that is contrary to law or public policy is null and void, and vests no
rights in and holds no obligation for any party. It produces no legal effect at
all.
Rivero vs. Court of Appeals, G.R. NO. 141273, M ay 17, 2005
Article 2035(1) of the New Civil Code provides that no compromise upon the
civil status of persons shall be valid. As such, paternity and filiation, or the
lack of the same, is a relationship that must be judicially established, and it is
for the court to determine its existence or absence. It cannot be left to the will
or agreement of the parties.
III.Effect
Philippine National Oil Company-Energy Development Corporation (PNOCEDC) v. Abella, G.R. NO. 153904, January 17, 2005
A compromise once approved by final orders of the court has the force of res
judicata between the parties and should not be disturbed except for vices of
consent or forgery. Hence, a decision on a compromise agreement is final and
executory. Such agreement has the force of law and is conclusive on the
parties. It transcends its identity as a mere contract binding only upon the
parties thereto, as it becomes a judgment that is subject to execution in
accordance with the Rules. Judges therefore have the ministerial and
mandatory duty to implement and enforce it. Hence, compromise agreements
duly approved by the courts are considered the decisions in the particular
cases they involve.

CREDIT TRANSAC TIO NS

CREDIT
I. LOAN

74

PHILIPPINE NATIONAL BANK vs. CARMELITA S. SANTOS, REYME L. SANTOS,

ET.AL/LINA B. AGUILAR vs. CARMELITA SANTOS, REYME L. SANTOS, ET.AL, G.R. No.
208293/G.R. No. 208295, December 10, 2014, J. Leonen
The contractual relationship between banks and their depositors is governed by the Civil
Code provisions on simple loan. Once a person makes a deposit of his or her money to the
bank, he or she is considered to have lent the bank that money. The bank becomes his or
her debtor, and he or she becomes the creditor of the bank, which is o bligated to pay him or
her on demand.
LAND BANK OF THE PHILIPPINES VS. EMMANUEL OATE G.R. No. 192371, J. Del
Castillo
Land Bank unilaterally offset the funds of the respondent without legal justification and
commit undocumented withdrawals from the said fund. The SC held that the same was
tantamount to a forbearance of money and considered it as an involuntary loan.
CONTRACT OF LOAN
PHILIPPINE NATIONAL BANK vs. SPOUSES EDUARDO AND MA. ROSARIO TAJONERA
AND EDUAROSA REALTY DEVELOPMENT, INC., G.R. No. 195889, September 24, 2014,
J. Mendoza
The agreement between PNB and [Spouses Tajonera] 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 3rd
Amendment had no right to demand from [Spouses Tajonera s] 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.
PHILIPPINE NATIONAL BANK vs. SPOUSES EDUARDO AND MA. ROSARIO TAJONERA
and EDUAROSA REALTY DEVELOPMENT, INC.G.R. No. 195889, September 24, 2014, J.
Mendoza
75

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.

CHECKS
NEIL B. AGUILAR AND RUBEN CALIMBAS vs. LIGHTBRINGERS CREDIT
COOPERATIVE, G.R. No. 209605, January 12, 2015, J. Mendoza
The Court holds that there was indeed a contract of loan between the petitioners and
respondent. The signatures of the petitioners were present on both the PNB checks and the
cash disbursement vouchers. The checks were also made payable to the order of the
petitioners. The Court pointed out that a check functions more than a promissory note
since it not only contains an undertaking to pay an amount of money but is an "order
addressed to a bank and partakes of a representation that the drawer has funds on de posit
against which the check is drawn, sufficient to ensure payment upon its presentation to the
bank."

BONEVIE vs CA, G.R. NO. L-49101 October 24, 1983

Petitioner assails the validity of the mortgage between Lozano and PBCOM
arguing that on the day the deed was executed there was yet no principal
obligation to secure as the loan of P75,000.00 was not received by the Lozano
spouses, so that in the absence of a principal obligation, there is want of
consideration in the accessory contract, which consequently impairs its validity
and fatally affects its very existence. A contract of loan being a consensual
contract, said contract of loan was perfected at the same time the contract of
mortgage was executed, and the promissory note is only an evidence of
indebtedness and does not indicate lack of consideration of the mortgage at the
time of its execution.

SAURA IMPORT and EXPORT CO., INC. vs. DEVELOPMENT BANK OF THE
PHILIPPINES, G.R. NO. L-24968, April 27, 1972

76

The trial court rendered judgment for the plaintiff, ruling that there was a
perfected contract between the parties when the application of Saura, Inc. for a
loan was approved by resolution of the defendant, and the corresponding
mortgage was executed and registered and that the defendant was guilty of
breach thereof.
An accepted promise to deliver something, by way of commodatum or simple
loan is binding upon the parties, but the commodatum or simple loan itself
shall not be perferted until the delivery of the object of the contract.
FRANCISCO HERRERA vs. PETROPHIL CORPORATION, G.R. NO. L -48349,
December 29, 1986
Pursuant to a contract, the defendant-appellee paid to the plaintfff-appellant
advance rentals for the first eight years, subtracting therefrom the amount of
the interest or discount for the first eight years, Plaintiff-appellant insists that
the lower court erred in the computation of the interest collected out of the
rentals paid for the first eight years; that such interest was excessive and
violative of the Usury Law.
The contract between the parties is one of lease and not of loan since the
provision for the payment of rentals in advance cannot be construed as a
repayment of a loan because there was no grant or forbearance of money as to
constitute an indebtedness on the part of the lessor, hence usury law will not
apply.
PNB vs. CA, G.R. NO. 75223, M arch 14, 1990
An escalation clause is a valid provision in the loan agreement provided that
(1) the increased rate imposed or charged does not exceed the ceiling fixed by
law or the Monetary Board; (2) the increase is made effective not earlier than
the effectivity of the law or regulation authorizing such an increase; and (3) the
remaining maturities of the loans are more than 730 days as of the effectivity of
the law or regulation authorizing such an increase.
ART 1249
SPOUSES TAGUMPAY N. ALBOS AND AIDA C. ALBOS vs. SPOUSES NESTOR M. EMBISAN
AND ILUMINADA A. EMBISAN, DEPUTY SHERIFF MARINO V. CACHERO, AND THE
REGISTER OF DEEDS OF QUEZON CITY, G.R. No. 210831, November 26, 2014, J.
Velasco Jr.
The compounding of interest should be in writing. Article 1956 of the New Civil Code,
which refers to monetary interest provides that No interest shall be due unless it has been
expressly stipulated in writing. As mandated by the foregoing provision, payment of
77

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.
The imposition of an unconscionable rate of interest on a money debt, even if knowingly
and voluntarily assumed, is immoral and unjust.
In the case at bar, it is undisputed that the parties have agreed for the loan to earn 5%
monthly interest, the stipulation to that effect put in writing. When the petitioners
defaulted, the period for payment was extended, carrying over the terms of the original
loan agreement, including the 5% simple interest. However, by the third extension of the
loan, respondent spouses decided to alter the agreement by changing the manner of
earning interest rate, compounding it beginning June 1986. This is apparent from the
Statement of Account prepared by the spouses Embisan themselves. Thus, Spouses
Embisan, having imposed, unilaterally at that, the compounded interest rate, had the
correlative duty of clarifying and reducing in writing how the said interest shall be earned.
Having failed to do so, the silence of the agreement on the manner of earning interest is a
valid argument for prohibiting them from charging interest at a compounded rate.

MCMP CONSTRUCTION CORP. VS. MONARK EQUIPMENT CORP. G.R. No. 201001.
November 10, 2014, J. Velaso Jr.
The interest rate of 24% per annum, penalty and collection charge of 3% or 36 % per
annum on rental fees provided by invoices for the lease of heavy equipment was found by
the court to be iniquitous, unconscionable and therefore void. Although C.B. Circular No.
905-82, which took effect on January 1, 1983, effectively removed the ceiling on interest
rates for both secured and unsecured loans, regardless o f maturity, nothing in the said
circular could possibly be read as granting carte blanche authority to lenders to raise
interest rates to levels which would either enslave their borrowers or lead to a
hemorrhaging of their assets. Therefore the rates may be validly reduced by the court.
SUN LIFE OF CANADA (PHILIPPINES), INC. vs. SANDRA TAN KIT and The Estate of the
Deceased NORBERTO TAN KIT, G.R. No. 183272, October 15, 2014, J. Del Castillo
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. This being the case and judging from the tenor of the CA,
there can be no other conclusion than that the interest imposed by the appellate -court is in
the nature of compensatory interest.
ROLANDO C. DE LA PAZ vs. L & J DEVELOPMENT COMPANY, G.R. No. 183360,
September 8, 2014, J. Del Castillo

78

When a person granted an unsecured loan without a maturity date in favor of a corporation
and its president and general manager (who is a lawyer) without reducing the loan
transaction in writing, the creditor cannot enforce payment of 6% monthly interest. The
payments of the debtor to the creditor must be considered as payment of the principal
amount of the loan because Article 1956 was not complied with. In addition, e ven if the
interest was in writing, it cannot be collected because it is unconscionable.
ANCHOR SAVINGS BANK vs. PINZMAN REALTY AND DEVELOPMENT CORPORATION,
MARYLIN MANALAC AND RENATO GONZALES, G.R. No. 192304, August 13, 2014, J.
Villarama Jr.
Foreclosure sale arising from a usurious mortgage cannot be given legal effect. This Court
has previously struck down a foreclosure sale where the amount declared as mortgage
indebtedness involved excessive, unreasonable, and unconscionable interest charges. In no
uncertain terms, this Court ruled that a mortgagor cannot be legally compelled to pay for a
grossly inflated loan. In the case at bar, the unlawful interest charge which led to the
amount demanded will result to the invalidity of the subsequent foreclosure sale.

ECE REALTY and DEVELOPMENT, INC. vs. HAYDYN HERNANDEZ, G.R. No. 212689,
August 6, 2014, J. Reyes
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 Hernandez 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. 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.
CONRADO A. LIM vs. HMR PHILIPPINES, INC., TERESA SANTOS-CASTRO, HENRY
BUNAG AND NELSON CAMILLER, G.R. No. 201483, August 04, 2014, J. Mendoza
Lim argues that legal interest in accordance with the case of Eastern Shipping must also be
awarded. The rules on legal interest in Eastern Shipping have, however, been recently
modified by Nacar in accordance with Bangko Sentral ng Pilipinas Monetary Board (BSPMB) Circular No. 799, which became effective on July 1, 2013. Pertinently, it amended the
rate of legal interest in judgments from 12% to 6% per annum, with the qualification that
the new rate be applied prospectively. Thus, the 12% per annum legal interest in

79

judgments under Eastern Shipping shall apply only until June 30, 2013, and the new rate of
6% per annum shall be applied from July 1, 2013 onwards.
SPOUSES EDUARDO and LYDIA SILOS v PHILIPPINE NATIONAL BANK, G.R No. 181045,
July 2, 2014. J. DEL CASTILLO
Since the escalation clause was annulled for being violative of the mutuality principle, the
principal amount of the loan is subject to the original or stipulated rate of interest, and
upon maturity, the amount due shall be subject to legal interest at the rate of 12% per
annum.
ESTANISLAO AND AFRICA SINAMBAN VS. CHINA BANKING CORPORATION G.R. No.
193890. March 11, 2015, J. REYES
The subject three PNs bear interests ranging from 21% to 23% per annum, exclusive of
penalty of 1% on the overdue amount per month of delay, whereas in its complaint,
Chinabank prayed to recover only the legal rate of 12% on whatever judgment it could
obtain. Meanwhile, the Monetary Board of the Bangko Sentral ng Pilipinas in its Resolution
No. 796 dated May 16, 2013, and now embodied in Monetary Board Circular No. 799, has
effective July 1, 2013 reduced to 6%, from 12%, the legal rate of interest for the loan or
forbearance of any money, goods or credits and the rate allowed in judgments, in the
absence of stipulation. Since Chinabank demanded only the legal, not the stipulated,
interest rate on the deficiency and attorney s fees due, the defendants will solidarily pay
interest on their shares in the deficiency at the rate of 12% from November 18, 1998 to
June 30, 2013, and 6% from July 1, 2013 until fully paid.
ILEANA DR. MACALINAO vs BANK OF THE PHILIPPINE ISLANDS, G.R. NO.
175490, September 17, 2009
In its Complaint, respondent BPI originally imposed the interest and penalty
charges at the rate of 9.25% per month or 111% per annum which was
declared as unconscionable by the lower courts for being clearly excessive, and
was thus reduced to 2% per month or 24% per annum but which the CA
modified increased them to 3% per month or 36% per annum based on the
Terms and Conditions Governing the Issuance and Use of the BPI Credit Card,
which governs the transaction between petitioner Macalinao and respondent
BPI.
The courts may reduce the interest rate as reason and equity demand, for
stipulations demanding interest excessive, iniquitous, unconscionable and
exorbitant interest rates are void for being contrary to morals, if not against the
law.

COMMODATUM
80

CATHOLIC VICAR APOSTOLIC

September 21, 1988

CHURCH

vs.

CA,

G.R.

L-80294-95,

When respondents allowed the free use of the property they became bailors in
commodatum and the petitioner the bailee. The bailees' failure to return the
subject matter of commodatum to the bailor did not mean adverse possession
on the part of the borrower. The bailee held in trust the property subject matter
of commodatum. Hence, an adverse claim could not ripen into title by way of
ordinary acquisitive prescription because of the absence of just title.
REPUBLIC OF THE PHILIPPINES vs BAGTAS, G.R. NO. L-17474, October
25, 1962

The appellant had been in possession of the bull even after the expiration of the
contract. He contends, however, that since the contract was commodatum the
appellee retained ownership or title to the bull. Hence, it should suffer its loss
due to force majeure.
A contract of commodatum is essentially gratuitous. If the breeding fee be
considered a compensation, then the contract would be a lease of the bull.
Under article 1671 of the Civil Code the lessee would be subject to the
responsibilities of a possessor in bad faith, because she had continued
possession of the bull after the expiry of the contract. And even if the contract
be commodatum, still the appellant is liable, because article 1942 of the Civil
Code provides that a bailee in a contract of commodatum
. . . is liable for loss of the things, even if it should be through a fortuitous
event:
(2) If he keeps it longer than the period stipulated . . .
(3) If the thing loaned has been delivered with appraisal of its value, unless
there is a stipulation exempting the bailee from responsibility in case of a
fortuitous event; xxx

REPUBLIC OF THE PHILIPPINES vs. CA, G.R. NO. L -46145 November 26,
1986
The disputed property is private land and this possession was interrupted on ly
by the occupation of the land by the U.S. Navy which eventually abandoned the
premises. The heirs of the late Baloy, are now in actual possession, and this
has been so since the abandonment by the U.S. Navy.
81

The occupancy of the U.S. Navy partakes of the character of a commodatum,

and one's ownership of a thing may be lost by prescription by reason of
another's possession if such possession be under claim of ownership, not
where the possession is only intended to be transient, in which case the owner
is not divested of his title, although it cannot be exercised in the meantime.
MUTUUM
INTEGRATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK,
G.R. NO. L-60705, June 28, 1989
OVERSEAS BANK OF MANILA vs. COURT OF APPEALS, G.R. NO. L -60907,
June 28, 1989
OBM contends that it had agreed to pay interest only up to the dates of
maturity of the certificates of time deposit and that respondent Santos is not
entitled to interest after the maturity dates had expired, unless the contracts
are renewed. When respondent invested his money in time deposits with OBM
they entered into a contract of simple loan or mutuum, not a contract of
deposit.

REPUBLIC OF THE PHILIPPINES vs. GRIJALDO, G.R. NO. L -20240,

December 31, 1965
The appellant maintains that because the loans were secured by a chattel
mortgage on the standing crops on a land owned by him and these crops were
lost or destroyed through enemy action his obligation to pay the loans was
thereby extinguished.
The chattel mortgage on the crops growing on appellant's land simply stood as
a security for the fulfillment of appellant's obligation, which is the payment of
the loan. The loss of the crops did not extinguish his obligation to pay, because
his obligation, as a simple loan or mutuum, was to pay a generic thing, the
amount of money with interest.
HERRERA vs. PETROPHIL CORPORATION, G.R. NO. L -48349 December
29, 1986

The difference between a discount and a loan or forbearance is that the former
does not have to be repaid. The loan or forbearance is subject to repayment
and is therefore governed by the laws on usury.

82

BRIONES vs. CAMMAYO, G.R. NO. L-23559, October 4, 1971

In simple loan with stipulation of usurious interest, the prestation of the debtor
to pay the principal debt, which is the cause of the contract is not illegal. The
illegality lies only as to the prestation to pay the stipulated interest. Hence,
being separable, the latter only should be deemed void, since it is the only one
that is illegal.
II. DEPOSIT
INTEGRATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK,
G.R. NO. L-60705, June 28, 1989
OVERSEAS BANK OF MANILA vs. CA, G.R. NO. L -60907, June 28, 1989
OBM contends that it had agreed to pay interest only up to the dates of
maturity of the certificates of time deposit and that respondent Santos is not
entitled to interest after the maturity dates had expired, unless the contracts
are renewed. When respondent invested his money in time deposits with OBM
they entered into a contract of simple loan or mutuum, not a contract of
deposit.

BPI vs. CA, G.R. NO. L-66826 August 19, 1988

The document which embodies the contract states that the US$3,000.00 was
received by the bank for safekeeping. A deposit is constituted from the
moment a person receives a thing belonging to another, with the obligation of
safely keeping it and of returning the same, but if the safekeeping of the thing
delivered is not the principal purpose of the contract, there is no deposit but
some other contract.
BPI vs. CA, G.R. NO. 104612, M ay 10, 1994

Bank deposits are in the nature of irregular deposits; they are really loans
because they earn interest. The relationship then between a depositor and a
bank is one of creditor and debtor, and the deposit under the questioned
account was an ordinary bank deposit; hence, it was payable on demand of the
depositor.
SERRANO vs. CENTRAL BANK OF THE PHILIPPINES, G.R. NO. L -30511,
February 14, 1980
83

All kinds of bank deposits, whether fixed, savings, or current are to be treated
as loans and are to be covered by the law on loans because it can use the
same. Failure of he respondent Bank to honor the time deposit is failure to pay
s obligation as a debtor and not a breach of trust arising from depositary's
failure to return the subject matter of the deposit

WAREHOUSE RECEIPT LAW

LUA KIAN vs. MANILA RAILROAD COMPANY, G.R. NO. L-23033, January
5, 1967

The legal relationship between an arrastre operator and the consignee is akin
to that of a depositor and warehouseman. As a custodian of the goods
discharged from the vessel, it was defendant arrastre operator's duty, like that
of any ordinary depositary, to take good care of the goods and to turn them
over to the party entitled to their possession. Under this particular set of
circumstances, said defendant should have withheld delivery because of the
discrepancy between the bill of lading and the markings and conducted its own
investigation, not unlike that under Section 18 of the Warehouse Receipts Law,
or called upon the parties, to interplead, such as in a case under Section 17 of
the same law, in order to determine the rightful owner of the goods.

TRUST RECEIPT
VINTOLA vs. INSULAR BANK OF ASIA AND AMERICA, G.R. NO. 73271,
May 29, 1987

A trust receipt is considered as a security transaction intended to aid in

financing importers and retail dealers who do not have sufficient funds or
resources to finance the importation or purchase of merchandise, and who may
not be able to acquire credit except through utilization, as collateral of the
merchandise imported or purchased.

III. GUARANTY AND SURETYSHIP

SURETY
OFFICE OF THE OMBUDSMAN, vs. AMALIO A. MALLARI, G.R. No. 183161, December
03, 2014, J. Mendoza
84

Mallari was administratively charged due to the fact the he approved surety bond in favor
of ECOBEL without consideration of the policies by GSIS. The court finds substantial
evidence to prove Mallari s administrative liability. The Court notes that irregularities,
defects and infirmities attended the processing, approval, issuance, and the actual
drawdown of the US$10,000,000.00 ECOBEL bond in which Mallari actively participated. In
a letter, dated September 13, 2002, to the FFIB, Mr. Reynaldo R. Nograles, OIC-Office of the
President, Internal Audit Service, GSIS, attached a copy of the excerpts from the Final
Report on the GSIS Audit of Underwriting Departments. Said Audit Report found that: there
was non-adherence to existing policies/SOPs in the processing and release of the Ecobel
Land, Inc. guaranty payment bond, as well as non-adherence to GS)S G)G s business policy
statement on survey, inspection or assessment of risks/properties to be insured including
re-inspection and survey of insured properties.

CENTENNIAL GUARANTEE ASSURANCE CORPORATION vs. UNIVERSAL MOTORS

CORPORATION, RODRIGO T. JANEO, JR., GERARDO GELLE, NISSAN CAGAYAN DE ORO
DISTRIBUTORS, INC., JEFFERSON U. ROLIDA, and PETER YAP, G.R. No. 189358, October 8,
2014, J. Perlas-Bernabe.

Verily, in a contract of suretyship, one lends his credit by joining in the principal debtor s
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 CGAC s other principal, Orimaco, who was determined to have
permanently left the country with his family to evade execution of any judgment against
him.
PEOPLE'S TRANS-EAST ASIA INSURANCE CORPORATION, a.k.a. PEOPLE'S GENERAL
INSURANCE CORPORATIONvs. DOCTORS OF NEW MILLENNIUM HOLDINGS, INC., G.R.
No. 172404, August 13, 2014, J. Leonen
The liabilities of an insurer under the surety bond are not extinguished when the
modifications in the principal contract do not substantially or materially alter the
principal's obligations. The surety is jointly and severally liable with its principal when the
latter defaults from its obligations under the principal contract. On the basis of petitioner s
own admissions, the principal contract of the suretyship is the signed agreement. The
surety, therefore, is presumed to have acquiesced to the terms and conditions embodied in
the principal contract when it issued its surety bond.
GILAT SATELLITE NETWORKS, LTD vs. UNITED COCONUT PLANTERS BANK GENERAL
INSURANCE CO., INC., G.R. No. 189563, April 7, 2014, CJ. Sereno
In suretyship, the oft-repeated rule is that a surety s liability is joint and solidary with that
of the principal debtor. This undertaking makes a surety agreement an ancillary contract,
85

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.
After a thorough examination of the pieces of evidence presented by both parties, the RTC
found that Gilathad delivered all the goods to One Virtual and installed them. Despite these
compliances, One Virtual still failed to pay its obligation, triggering UCPB s liability to Gilat
as the former s surety. In other words, the failure of One Virtual, as the principal debtor, to
fulfill its monetary obligation to Gilat gave the latter an immediate right to pursue UCPB as
the surety.
YULIM INTERNATIONAL COMPANY LTD., JAMES YU, JONATHAN YU, and ALMERICK
TIENG LIM vs. INTERNATIONAL EXCHANGE BANK (now Union Bank of the
Philippines), G.R. No. 203133, February 18, 2015, J. Reyes
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.

TRADE AND INVESTMENT DEVELOPMENT CORPORATION OF THE PHILIPPINES

(Formerly PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE
CORPORATION VS. ASIA PACES CORPORATION, PACES INDUSTRIAL
CORPORATION, NICOLAS
C.
BALDERRAMA,
SIDDCOR
INSURANCE
CORPORATION, G.R. No. 187403 February 12, 2014, J. Perlas-Bernabe
A surety is an insurer of the debt, whereas a guarantor is an insurer of the solvency of the
debtor. A suretyship is an undertaking that the debt shall be paid; a guaranty, an
undertaking that the debtor shall pay. Stated differently, a surety promises to pay the
principal s debt if the principal will not pay, while a guarantor agrees that the creditor,
after proceeding against the principal, may proceed against the guarantor if the principal is
unable to pay. A surety binds himself to perform if the principal does no t, without regard to
his ability to do so. A guarantor, on the other hand, does not contract that the principal will
pay, but simply that he is able to do so. In other words, a surety undertakes directly for the
payment and is so responsible at once if the principal debtor makes default, while a
guarantor contracts to pay if, by the use of due diligence, the debt cannot be made out of
the principal debtor.

86

Article 2079 of the Civil Code provides that "[a]n extension granted to the debtor by the
creditor without the consent of the guarantor extinguishes the guaranty," equally applies to
both contracts of guaranty and suretyship.
STRONGHOLD INSURANCE COMPANY, INC., vs. SPOUSES RUNE AND LEA
STROEM, G.R. No. 204689, January 21, 2015, J. Leonen
It is settled that a surety s solidary obligation for the performance of the principal debtor s
obligation is indirect and merely secondary. Nevertheless, the surety s 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. In enforcing a surety contract,
the complementary-contracts-construed-together doctrine finds application. According to
this principle, an accessory contract must be read in its entirety and together with the
principal agreement, as provided in Article 1374.

GUARANTY
HOME GUARANTY CORPORATION, vs. LA SAVOIE DEVELOPMENT CORPORATION, G.R.
No. 168616, January 28, 2015, J. Leonen
Home Guaranty Corporation is a guarantor of La Savoie. Subsequently, La Savoie was
placed under receivership. The Supreme Court held that placing La Savoie under
receivership brings into operation the rule against preference of creditors. Home Guaranty
Corporation must submit itself, like La Savoie's other creditors, to how La Savoie's Petition
for Rehabilitation shall be resolved. As a paying guarantor, Home Guaranty Corporation
was subrogated into the rights of La Savoie's creditors and now stands as the latter's own
creditor.
COMMONWEALTH INSURANCE CORPORATION vs. CA, G.R. NO. 130886.
January 29, 2004
Petitioners liability under the suretyship contract is different from its liability
under the law. There is no question that as a surety, petitioner should not be
made to pay more than its assumed obligation under the surety bonds.
However, it is clear from the above-cited jurisprudence that petitioners liability
for the payment of interest is not by reason of the suretyship agreement itself
but because of the delay in the payment of its obligation under the said
agreement.

THE M ANILA INSURANCE CO INC vs SPOUSES AMURAO, G.R. NO. 179628,

January 16, 2013
87

Petitioner imputes error on the part of the CA in treating petitioner as a

solidary debtor instead of a solidary guarantor and argues that while a surety
is bound solidarily with the obligor, this does not make the surety a solidary
co-debtor. A suretys liability is joint and several and although the contract of
suretyship is secondary to the principal contract, the suretys liability to the
obligee is nevertheless direct, primary, and absolute.

THE IMPERIAL INSURANCE, INC. vs. DE LOS ANGELES, G.R. NO. L -28030,
January 18, 1982

Imperial Insurance, Inc. bound itself solidarily with the principal, the deceased
defendant Reyes. In accordance with Article 2059, par. 2 of the Civil Code of
the Philippines, excussion (previous exhaustion of the property of the debtor)
shall not take place "if he (the guarantor) has bound himself solidarily with the
debtor," hence the petitioner cannot escape liability on its counter-bonds.
MANILA SURETY & FIDELITY CO., INC. vs. ALMEDA, G.R. NO. L -27249
July 31, 1970

There is no question that under the bonds posted in favor of the NAMARCO in
this case, the surety company assumed to make immediate payment to said
firm of any due and unsettled accounts of the debtor-principal, even without
demand and notice of the debtor's non-payment, the surety, in fact, agreeing
that its liability to the creditor shall be direct, without benefit of exhaustion of
the debtor's properties, and to remain valid and continuous until the
guaranteed obligation is fully satisfied. In short, appellant secured to the
creditor not just the payment by the debtor-principal of his accounts, but the
payment itself of such accounts. Clearly, a contract of suretyship was thus
created, the appellant becoming the insurer, not merely of the debtor's solvency
or ability to pay, but of the debt itself. Under the Civil Code, with the debtor's
insolvency having been judicially recognized, herein appellant's resort to the
courts to be released from the undertaking thus assumed would have been
appropriate.
RCBC vs. ARRO, G.R. NO. L-49401, July 30, 1982

The surety agreement which was earlier signed by Enrique and private
respondent, is an accessory obligation, it being dependent upon a principal one
which, in this case is the loan obtained by Daicor as evidenced by a promissory
88

note. By the terms, it can be clearly seen that the surety agreement was
executed to guarantee future debts which Daicor may incur with petitioner
since a guaranty may also be given as security for future debts, the amount of
which is not yet known; there can be no claim against the guarantor until the
debt is liquidated.
REPUBLIC OF THE PHILIPPINES vs. PAL-FOX LUMBER CO., INC., G.R. NO.
L-26473, February 29, 1972

On whether the surety's liability can exceed the amount of its bond, it is
enough to remark that while the guarantee was for the original amount of the
debt of Gabino Marquez, the amount of the judgment by the trial court in no
way violates the rights of the surety. If it (the guaranty) be simple or indefinite,
it shall comprise not only the principal obligation but also all its accessories,
including judicial costs, provided with respect to the latter, that the guarantor
shall only be liable for those costs incurred after he has been judicially
required to pay.
IV. PLEDGE AND REAL MORTGAGE
ROLANDO ROBLES, REPRESENTED BY ATTY. CLARA C. ESPIRITU vs. FERNANDO FIDEL
YAPCINCO, PATROCINIO B. YAPCINCO, MARIA CORAZON B. YAPCINCO, and MARIA
ASUNCION B. YAPCINCO-FRONDA, G.R. No. 169569, October 22, 2014, J. Bersamin
The effect of the failure of Apolinario Cruz, the predecessor-in-interest of Rolando Robles,
petitioner to this case, to obtain the judicial confirmation was only to prevent the title to
the property from being transferred to him. For sure, such failure did not give rise to any
right in favor of the mortgagor or the respondents as his successors-in-interest to take back
the property already validly sold through public auction. Nor did such failure invalidate the
foreclosure proceedings. To maintain otherwise would render nugatory the judicial
foreclosure and foreclosure sale, thus unduly disturbing judicial stability.
RURAL BANK OF CABADBARAN, INC v JORGITA A. MELECIO-YAP, LILIA MELECIO
PACIFICO (deceased, substituted by her only child ERILL* ISAAC M. PACIFICO, JR.),
REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMA-GIL, G.R No. 178451,
July 30, 2014. PERLAS-j. BERNABE

In this case, the bank claims that it should be deemed a mortgagee in good faith for having
conducted exhaustive investigations on the history of the mortgagor s title.

However, the Court found this argument untenable. first, the doctrine of mortgagee in good
faith applies only to lands registered under the Torrens system and not to unregistered
lands, as the properties in suit; and second, the principle is inapplicable to banking
89

institutions which are behooved to exercise greater care and prudence before entering into
a mortgage contract.
RURAL BANK OF CABADBARAN, INC. vs. JORGITA A. MELECIO-YAP, LILIA MELECIO
PACIFICO (deceased, substituted by her only child ERILL*ISAAC M. PACIFICO, JR.),
REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMA-GIL, G.R. No. 178451,
July 30, 2014, J. Perlas-Bernabe
When a bank relied on a forged SPA, it has the burden to prove its authenticity and due
execution as when there is a defect in the notarization of a document, the clear and
convincing evidentiary standard normally attached to a duly-notarized document is
dispensed with, and the measure to test the validity of such document is preponderance of
evidence.
However, where a mortgage is not valid due to a forged SPA, the principal obligation which
it guarantees is not thereby rendered null and void. What is lost is merely the right to
foreclose the mortgage as a special remedy for satisfying or settling the indebtedness
which is the principal obligation. In case of nullity, the mortgage deed remains as evidence
or proof of a personal obligation of the debtor and the amount due to the creditor may be
enforced in an ordinary action.
The partial invalidity of the subject real estate mortgage brought about by the forged status
of the subject SPA would not, therefore, result into the partial invalidation of the loan
obligation principally entered into by the parties; thus, absent any cogent reason to hold
otherwise, the need for the recomputation of said loan obligation should be dispensed with.
LEONARDO C. CASTILLO, represented by LENNARD V. CASTILLO vs. SECURITY BANK
CORPORATION, JRC POULTRY FARMS or SPOUSES LEON C. CASTILLO, JR., and
TERESITA FLORESCASTILLO, G.R. No. 196118, July 30, 2014, J. Peralta
In a real estate mortgage, allegations of forgery, like all other allegations, must be proved
by clear, positive, and convincing evidence by the party alleging it. But even if there is
variation on the date of issuance of the Community Tax Certificate (CTC) as indicated on
the notarization of the alleged SPA and on the day it was actually secured, such defect in the
SPA does not automatically render it invalid. 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.
The law requires that the form of a contract that transmits or extinguishes real rights over
immovable property should be in a public document, yet the failure to observe the proper
form does not render the transaction invalid. The necessity of a public document for said
contracts is only for convenience; it is not essential for validity or enforceability.
PHILIPPINE NATIONAL BANK vs. JOSE GARCIA and CHILDREN et al., G.R. No. 182839,
June 2, 2014, J. Brion

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The Amendment of Real Estate Mortgage constituted by Jose Sr. over the entire property
without his co-owners' consent is not necessarily void in its entirety. The right of the PNB
as mortgagee is limited though only to the portion which may be allotted to Jose Sr. in the
event of a division and liquidation of the subject property. Registration of a property alone
in the name of one spouse does not destroy its conjugal nature. What is material is the time
when the property was acquired.
METROPOLITAN FABRICS INC. ET AL. VS. PROSPERITY CREDIT RESOURCES ENC. ET AL. G.R.
No. 154390 March 17, 2014, J. Bersamin

Contrary to their modified defense of absence of consent, the testimony adduced tended at
best to prove the vitiation of their consent through insidious words, machinations or
misrepresentations amounting to fraud, which showed that the contract of mortgage was
voidable. Where the consent was given through fraud, the contract was voidable, not void
ab initio. This is because a voidable or annullable contract is existent, valid and binding,
although it can be annulled due to want of capacity or because of the vitiated consent of
one of the parties.
ATTY. LEO N. CAUBANG vs. JESUS G. CRISOLOGO AND NANETTE B. CRISOLOGO, G.R.
No. 174581, February 04, 2015, J. Peralta
In an extrajudicial foreclosure of a real estate mortgage, failure to comply with the
publication requirement by the mortgagee brought by the failure of its lawyer to make an
effort to inquire as to whether the Oriental Daily Examiner was indeed a newspaper of
general circulation, as required by law, and as a result, the mortgagee became the sole
bidder, will invalidate the notice and render the sale voidable. The principal object of a
notice of sale in a foreclosure of mortgage is to notify the mortgagor and to inform the
public generally of the nature and condition of the property to be sold, and of the time,
place, and terms of the sale. These are given to secure bidders and prevent a sacrifice of
the property.
SPOUSES JOSE O. GATUSLAO AND ERMILA LEONILA LIMSIACO-GATUSLAO vs. LEO RAY
V. YANSON, G.R. No. 191540, January 21, 2015, J. Del Castillo
Yanson, as a transferee or successor-in-interest of PNB by virtue of the contract of sale
between them, is considered to have stepped into the shoes of PNB. As such, he is
necessarily entitled to avail of the provisions of Section 7 of Act No. 3135. Verily, one of the
rights that PNB acquired as purchaser of the subject properties at the public auction sale,
which it could validly convey by way of its subsequent sale of the same to respondent, is
the availment of a writ of possession. This can be deduced from the stipulation that the
vendee further agrees to undertake, at xxx his expense, the ejectment of any occupant of
the property. Accordingly, Yanson filed the contentious ex parte motion for a writ of
possession to eject Spouses Gatuslao therefrom and take possession of the subject
properties.

91

Further, respondent may rightfully take possession of the subject properties through a wr it
of possession, even if he was not the actual buyer thereof at the public auction sale, in
consonance with the Court s ruling in Ermitao v. Paglas. The Court ruled that after the
expiration of the redemption period without redemption having been made by petitioner,
respondent became the owner thereof and consolidation of title becomes a right. Being
already then the owner, respondent became entitled to possession. Petitioner already lost
his possessory right over the property after the expiration of the said period.
DEVELOPMENT BANK OF THE PHILIPPINES vs. GUARINA AGRICULTURAL AND
REALTY DEVELOPMENT CORPORATION, G.R. No. 160758, JANUARY 15, 2014, J.
Bersamin
Guarina executed a real estate mortgage over several real properties in favor of DBP as
security for a loan. However, before the loan was due, DBP foreclosed upon the mortgage.
The Supreme Court held that foreclosure of a mortgage prior to the mortgagor's default on
the principal obligation is premature, and should be undone for being void and ineffec tual.
The mortgagee who has been meanwhile given possession of the mortgaged property by
virtue of a writ of possession issued to it as the purchaser at the foreclosure sale may be
required to restore the possession of the property to the mortgagor and to pay reasonable
rent for the use of the property during the intervening period.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L -45710 October
3, 1985
The fact that when Sulpicio M. Tolentino executed a real estate mortgage, no
consideration was then in existence, as there was no debt yet because Island
Savings Bank had not made any release on the loan, does not make the real
estate mortgage void for lack of consideration. It is not necessary that any
consideration should pass at the time of the execution of the contract of real
mortgage, it may either be a prior or subsequent matter, but when the
consideration is subsequent to the mortgage, the mortgage can take effect only
when the debt secured by it is created as a binding contract to pay.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October
3, 1985

Where the indebtedness actually owing to the holder of the mortgage is less
than the sum named in the mortgage, the mortgage cannot be enforced for
more than the actual sum due.
INTEG.R.ATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK,
G.R. NO. L-60705, June 28, 1989

92

OVERSEAS BANK OF MANILA vs.CA, G.R. NO. L -60907 June 28, 1989
The facts and circumstances leading to the execution of the deed of
assignment, has satisfied the requirements of a contract of pledge (1) that it be
constituted to secure the fulfillment of a principal obligation; (2) that the
pledgor be the absolute owner of the thing pledged; (3) that the persons
constituting the pledge have the free disposal of their property, and in the
absence thereof, that they be legally authorized for the purpose. The further
requirement that the thing pledged be placed in the possession of the creditor,
or of a third person by common agreement was complied with by the execution
of the deed of assignment in favor of PNB.
YULIONGSIU vs. PNB, G.R. NO. L-19227, February 17, 1968
The defendant bank as pledgee was therefore entitled to the actual possession
of the vessels, and while it is true that plaintiff continued operating the vessels
after the pledge contract was entered into, his possession was expressly made
"subject to the order of the pledgee." On the other hand, there is an authority
supporting the proposition that the pledgee can temporarily entrust the
physical possession of the chattels pledged to the pledgor without invalidating
the pledge. In such a case, the pledgor is regarded as holding the pledged
property merely as trustee for the pledgee.
MAKATI LEASING and FINANCE CORPORATION vs. WEAREVER TEXTILE
MILLS, INC., G.R. NO. L-58469, M ay 16, 1983
A house of strong materials may be considered as personal property for
purposes of executing a chattel mortgage thereon as long as the parties to the
contract so agree and no innocent third party will be prejudiced there by. There
is absolutely no reason why a machinery, which is movable in its nature and
becomes immobilized only by destination or purpose, may not be likewise
treated as such. This is really because one who has so agreed is estopped from
denying the existence of the chattel mortgage.
BUNDALIAN vs. CA, G.R. NO. L-55739, June 22, 1984
The contract also provides that "it is agreed that the vendor shall have the right
to possess, use, and build on, the property during the period of redemption."
When the vendee acknowledged the right of the vendor to retain possession of
the property the contract is one of loan guaranteed by mortgage, not a
conditional sale or an option to repurchase.
93

TIOSECO vs. CA, G.R. NO. L-66597, August 29, 1986

When the respondents chose to enforce their right of redemption thru a court
action they were well within their right as the action was filed within one year
from the registration of the foreclosure sale of the real estate. The law does not
even require any previous notice to the vendee, nor a meeting between him and
the redemptioner, much less a previous formal tender before any action is
begun in court to enforce the right of redemption.
PNB vs. CA, G.R. NO. L-60208, December 5, 1985
When the foreclosure proceedings are completed and the mortgaged property is
sold to the purchaser then all interest of the mortgagor are cut off from the
property Prior to the completion of the foreclosure, the mortgagor is liable for
the interests on the mortgage. However, after the foreclosure proceedings and
the execution of the corresponding certificate of sale of the property sold at
public auction in favor of the successful bidder, the redemptioner mortgagor
would be bound to pay only for the amount of the purchase price with interests
thereon at the rate of one per centum per month in addition up to the time of
redemption, together with the amount of any assessments or taxes which the
purchaser may have paid thereon after the purchase and interest on such last
named amount at the same rate.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October
3, 1985
Where the indebtedness actually owing to the holder of the mortgage is less
than the sum named in the mortgage, the mortgage cannot be enforced for
more than the actual sum due.
RAMIREZ vs. CA, G.R. NO. L-38185, September 24, 1986
The antichretic creditor cannot ordinarily acquire by prescription the land
surrendered to him by the debtor. The petitioners are not possessors in the
concept of owner but mere holders placed in possession of the land by its
owners, thus, their possession cannot serve as a title for acquiring dominion.
OCAMPO vs. DOM ALANTA, G.R. NO. L-21011, August 30, 1967

94

A proceeding for judicial foreclosure of mortgage is an action quasi in rem. It is

based on a personal claim sought to be enforced against a specific property of a
person named party defendant. And, its purpose is to have the property seized
and sold by court order to the end that the proceeds thereof be applied to the
payment of plaintiff's claim.

CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October
3, 1985

A pledge or mortgage is indivisible e ven though the debt may be divided among
the successors in interest of the debtor or creditor. Therefore, the debtor's heirs
who has paid a part of the debt can not ask for the proportionate
extinguishment of the pledge or mortgage as long as the debt is not completely
satisfied, neither can the creditor's heir who have received his share of the debt
return the pledge or cancel the mortgage, to the prejudice of other heirs who
have not been paid.
P ACTUM COM M ISSORIUM
PHILNICO INDUSTRIAL CORPORATION vs. PRIVATIZATION AND MANAGEMENT
OFFICE, G.R. No. 199420, August 27, 2014, J. Leonardo-De Castro
The SC disagreed with the findings of the CA that there is no pactum commissorium, on the
ground that since the ARDA and the Pledge Agreement are entirely separate and distinct
contract and that neither contract contains both elements of pactum commissoriu m: the
ARDA solely has the second element, while the Pledge Agreement only has the first
element, such provision cannot be considered as one of pactum commissorium.
Jurisprudence holds 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.
In determining the existence of pactum commissorium, had focused more on the evident
intention of the parties, rather than the formal or written form.
Here, the ARDA and the Pledge Agreement herein, although executed in separate written
instruments, are integral to one another. It was the intention of the parties to enter into
and execute both contracts for a complete effectuation of their agreement.
EXTRA- JU DIC IAL FORECL OSURE

95

RURAL BANK OF CABADBARAN, INC v JORGITA A. MELECIO-YAP, LILIA MELECIO

PACIFICO (deceased, substituted by her only child ERILL* ISAAC M. PACIFICO, JR.),
REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMA-GIL, G.R No. 178451,
July 30, 2014. J. PERLAS-BERNABE
Where a mortgage is not valid, the principal obligation which it guarantees is not thereby
rendered null and void. what is lost is merely the right to foreclose the mortgage as a
special remedy for satisfying or settling the indebtedness which is the principal obligation.
In case of nullity, the mortgage deed remains as evidence or proof of a personal obligation
of the debtor and the amount due to the creditor may be enforced in an ordinary action.
Based on the foregoing, the partial invalidity of the subject real estate mortgage brought
about by the forged status of the subject SPA would not, therefore, result into the partial
invalidation of the loan obligation principally entered into by RBCI and Spouses Mantala.
SPOUSES RODOLFO and MARCELINA GUEVARRA vs. THE COMMONER LENDING
CORPORATION, INC., G.R. No. 204672, J. Perlas-Bernabe

In an extra-judicial foreclosure of registered land acquired under a free patent, the

mortgagor may redeem the property within two (2) years from the date of foreclosure if
the land is mortgaged to a rural bank under Republic Act No. (RA) 720, as amended,
otherwise known as the Rural Banks Act, or within one (1) year from the registration of
the certificate of sale if the land is mortgaged to parties other than rural banks pursuant to
Act No. 3135. If the mortgagor fails to exercise such right, he or his heirs may still
repurchase the property within five (5) years from the expiration of the redemption period
pursuant to Section 119 of the Public Land Act. The RTC and CA both correctly ruled that
Spouses Guevarra s right to repurchase the subject property had not yet expired when
Cadastral Case No. 122 was filed on September 8, 2005.
METROPOLITAN BANK AND TRUST COMPANY vs. S.F. NAGUIAT ENTERPRISES, INC.,
G.R. No. 178407, March 18, 2015, J. Leonen
The insolvency court has exclusive jurisdiction to deal with the property of the insolvent.
Consequently, after the mortgagor-debtor has been declared insolvent and the insolvency
court has acquired control of his estate, a mortgagee may not, without the permission of
the insolvency court, institute proceedings to enforce its lien.

ATTY. LEO N. CAUBANG, vs. JESUS G. CRISOLOGO AND NANETTE B. CRISOLOGO, G.R.
No. 174581, February 04, 2015, J. Peralta
Petitioner failed to have the notice of sale published in a newspaper of general circulation.
The Supreme Court held that the principal object of a notice of sale in a foreclosure of
mortgage is to inform the public generally of the nature and condition of the property to be
96

sold, and of the time, place, and terms of the sale. Notices are given to secure bidders and
prevent a sacrifice of the property. Therefore, statutory provisions governing publication
of notice of mortgage foreclosure sales must be strictly complied with and slight deviations
therefrom will invalidate the notice and render the sale, at the very least, voidable.
L EASE
OWEN PROSPER A. MACKAY vs. SPOUSES DANA CASWELL AND CERELINA CASWELL,
G.R. No. 183872, November 17, 2014, J. Del Castillo
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. In the case at bar, Mackay was
given the opportunity to rectify his work. Subsequent to Zameco )) s disapproval to supply
the spouses Caswell electricity for several reasons, credence must be given to the latter s
claim that they looked for said Mackay to demand a rectification of the work, but said
Mackay and his group were nowhere to be found.
PRO-GUARD SECURITY SERVICES CORPORATION v TORMIL REALTY AND
DEVELOPMENT CORPORATION, G.R No. 176341, July 7, 2014. J. DEL CASTILLO
Tormil filed an unlawful detainer case against Torres-Pabalan. Meanwhile the building was
being leased to Pro-Guard. Tormil eventually prevailed in the ejectment case, and was
adjudged entitled to Pro-Guard s payment of rent. The issue in this case is when the rentals
should be reckoned.
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. 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-Guard s 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-Guard s occupation.
NEW WORLD DEVELOPERS AND MANAGEMENT INC. vs. AMA COMPUTER LEARNING
CENTER INC., G.R. Nos. 187930 & 188250, February 23, 2015, C.J. Sereno
New World and AMA entered into a lease agreement whereby New World agreed to lease
to AMA its commercial building located in Manila. AMA failed to pay its rentals citing
financial losses. AMA then preterminated the 8 year lease agreement and demanded the

97

refund of its security deposit and advance rentals. It also prayed that its liabilities be
reduced on account of its financial difficulties.
The Supreme Court ruled that 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 [h]e 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.
MANUEL JUSAYAN,ALFREDO JUSAYAN, AND MICHAEL JUSAYANvs.JORGE SOMBILLA,
G.R. No. 163928, January 21, 2015, J. Bersamin
By virtue of Republic Act No. 3844, the sharing of the harvest in proportion to the
respective contributions of the landholder and tenant (share tenancy) was abolished.
Hence, to date, the only permissible system of agricultural tenancy is leasehold tenan cy, a
relationship wherein a fixed consideration is paid instead of proportionately sharing the
harvest as in share tenancy. Its elements are: (1) the object of the contract or the
relationship is an agricultural land that is leased or rented for the purpo se 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. In the case at bar, there is no doubt that a land with a total area of 7.9 hectares
were susceptible of cultivation by a single person with the help of the members of his
immediate farm household. Also, one s knowledge of and familiarity with the landholding,
its production and the instances when the landholding was struck by drought definitely
established that the lessee personally cultivated the land. Moreover, the fact that an
agricultural lessee has a regular employment does not render his ability to farm physically
impossible.
Pagurayan vs. Reyes, G.R. NO. 154577, July 23, 2008
A contract of lease is a consensual, bilateral, onerous and commutative
contract by which the owner temporarily grants the use of his property to
another who undertakes to pay the rent. Being a consensual contract, it is
perfected at the moment there is a meeting of the minds on the thing and the
cause and consideration which are to constitute the contract. Without the
agreement of both parties, no contract of lease can be said to have been created
or established. Nobody can force an owner to lease out his property if he is not
willing.
98

I. Lease of Things

CA-AG.R.O-INDUSTRIAL DEVELOPMENT CORP. vs. Court of Appeals, G.R.

NO. 90027, M arch 3, 1993
We agree with the petitioner's contention that the contract for the rent of the
safety deposit box is not an ordinary contract of lease as defined in Article 1643
of the Civil Code. It cannot be characterized as an ordinary contract of lease
under Article 1643 because the full and absolute possession and control of the
safety deposit box was not given to the joint renters the petitioner and the
Pugaos.
II. Lease of Work or Services
III. Lease of Rural and Urban Lands
IV. Rights and Obligations of Lessor and Lessee
V. Special Rules for Lease of Rural,Urban Lands
VI. Household Service (Exclude, for inclusion in Labor Law)
VII. Contract of Labor (Exclude, for inclusion in Labor Law)
VIII. Contract for Piece of Work (Exclude, for inclusion in Labor Law)

SOL UTIO IN DEBITI

CBK POWER COMPANY LIMITED VS. COMMISSIONER OF INTERNAL REVENUE, G.R.
Nos.198729-30, January 15, 2014, J. Sereno
The principle of Solutio Indebiti is not applicable in the case at bar. According to this
principle, if something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises. In that situation, a creditor debtor relationship is created under a quasi-contract, whereby the payer becomes the
creditor who then has the right to demand the return of payment made by mistake, and the
person who has no right to receive the payment becomes obligated to return it. The quasicontract of solutio indebiti is based on the ancient principle that no one shall enrich oneself
unjustly at the expense of another.
There is solutio indebiti when:
(1) Payment is made when there exists no binding relation between the payer, who has no
duty to pay, and the person who received the payment; and
(2) Payment is made through mistake, and not through liberality or some other cause.
Though the principle of solutio indebiti may be applicable to some instances of claims for a
refund, the elements thereof are wanting in this case. First, there exists a binding re lation
between petitioner and the CIR, the former being a taxpayer obligated to pay VAT. Second,
the payment of input tax was not made through mistake, since petitioner was legally
99

obligated to pay for that liability. The entitlement to a refund or credit of excess input tax is
solely based on the distinctive nature of the VAT system. At the time of payment of the
input VAT, the amount paid was correct and proper.
L AND TITL ES AN D DEEDS
Torrens System
MARIFLOR T. HORTIZUELA, represented by JOVIER TAGAUFA vs. GREGORIA TAGUFA,
ROBERTO TAGUFA and ROGELIO LUMABAN, G.R. No. 205867, February 23, 2015, J.
Mendoza
Petitioner assails the decision of the CA that the action for reconveyance filed by her was
not the proper remedy on the ground that it constitutes a collateral attack on the validity of
the subject certificate of title. The SC however ruled that it is not unmindful of the principle
of indefeasibility of a Torrens title and that a certificate of title shall not be subject to
collateral attack. Contrary to the pronouncements of the MCTC and the CA, however, the
complaint of petitioner was not a collateral attack on the title warranting dismissal. As a
matter of fact, an action for reconveyance is a recognized remedy, an action in personam,
available to a person whose property has been wrongfully registered under the Torrens
system in another s name. )n an action for reconveyance, the decree is not sought to be set
aside. It does not seek to set aside the decree but, respecting it as incontrovertible and no
longer open to review, seeks to transfer or reconvey the land from the registered owner to
the rightful owner.
IMELDA, LEONARDO, FIDELINO, AZUCENA, JOSEFINA, ANITA AND SISA, ALL
SURNAMED SYJUCO VS FELISA D. BONIFACIO AND VSD REALTY & DEVELOPMENT
CORPORATION, .R. No. 148748. January 14, 2015, J. Leonardo-De Castro
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. ."

100

IMELDA SYJUCO, et.al vs. FELISA D. BONIFACIO and VSD REALTY & CORPORATION,
G.R. No. 148748, January 14, 2015, J. Leonardo-De Castro
The filing of an action to quiet title is imprescriptible if the disputed real property is in the
possession of the plaintiff. 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. The Syjucos' title, shows that it originated from OCT No. 994
registered on May 3, 1917 while Bonficacio's title shows that that it likewise originated
from OCT No. 994, but registered on April 19, 1917. This case affirmed the earlier finding
that there is only one OCT No.
, the registration date of which had already been
decisively settled as May
and not
April
and categorically concluded that
OCT No.
which reflects the date of
April
as its registration date is null and
void.
UNGAY MALOBAGO MINES, INC. vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 187892,
January 14, 2015, J. Peralta
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, Ungay
Malobago Mines, Inc. 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., thus it has no legal capacity to institute a petition for reconstitution of a lost
certificate.
REPUBLIC OF THE PHILIPPINES vs. HEIRS OF SPOUSES DONATO SANCHEZ and JUANA
MENESES represented by RODOLFO S. AGUINALDO, G.R. No. 212388, December 10,
2014, J. Velasco, Jr.
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.

SPOUSES CARLOS J. SUNTAY and ROSARIO R. SUNTAY vs. KEYSER MERCANTILE INC.,
G.R. No. 208462, December 10, 2014, J. Mendoza
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.
FLORENTINO W. LEONG AND ELENA LEONG, ET AL. vs. EDNA C. SEE, G.R. No. 194077,
December 03, 2014, J. Leonen
Spouses owned the subject property wherein petitioner Elena was allowed to stay. Upon
the spouses divorce, the property went to the wife. She sold it to the respondent See. The

101

Court held that See was a buyer in good faith. She went to the Register of Deeds to verify
the title and relied on the marriage settlement agreement. The Court found that she exerted
due diligence. 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
person s claim.

HEIRS OF GREGORIO LOPEZ, REPRESENTED BY ROGELIA LOPEZ, ET AL., vs.

DEVELOPMENT BANK OF THE PHILIPPINES [NOW SUBSTITUTED BY PHILIPPINE
INVESTMENT TWO (SPV-AMC), INC.], G.R. No. 193551, November 19, 2014, J. Leonen
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. Marietta cannot
claim the protection 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.
AMADA COTONER -ZACARIAVS. SPOUSES ALFREDO REVILLA AND THE HEIRS OF
PAZ REVILLA, G.R. No. 190901, November 12, 2014, J. Leonen
Amada argues that the subsequent buyer of the disputed parcel of land is in good faith.
The court has held that the rule in land registration law that the issue of whether the
buyer of realty is in good or bad faith is relevant only where the subject of the sale is
registered land and the purchase was made from the registered owner whose title to
the land is clean.
ONOFRE ANDRES, SUBSTITUTED BY HIS HEIRS, NAMELY: FERDINAND, ROSALINA,
ERIBERTO, FROILAN, MA. CLEO FE, NELSON, GERMAN, GLORIA, ALEXANDER, MAY,
ABRAHAM, AND AFRICA, ALL SURNAMED ANDRES vs. PHILIPPINE NATIONAL BANK,
G.R. No. 173548, October 15, 2014, J. Leonen
A bank that accepts a mortgage based upon a title which appears valid on its face and after
exercising the requisite care, prudence, and diligence appropriate to the public interest
character of its business can be deemed a mortgagee in good faith. The subsequent
consolidation of title in its name after a valid foreclosure shall be respected
notwithstanding later proof showing that the title was based upon a void transaction. In
this case, PNB is considered as a mortgagee in good faith because it complied with the
standard operating practice expected from banks.

102

ELIZA ZUNIGA-SANTOS, represented by her Attorney-in Fact, NYMPHA Z. SALES vs. MARIA
DIVINA GRACIA SANTOS-GRAN and REGISTER OF DEEDS OF MARIKINA CITY, G.R. No. 197380,
October 8, 2014, J. Perlas-Bernabe

To determine when the prescriptive period commenced in an action for reconveyance, the
plaintiff s possession of the disputed property is material. 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. On the other hand, 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 the case at bar, a reading of the allegations of the Amended Complaint failed to show that
Eliza remained in possession of the subject properties in dispute.
SPOUSES MARIO OCAMPO and CARMELITA F. OCAMPO vs. HEIRS OF BERNARDINO U.
DIONISIO, represented by ARTEMIO SJ. DIONISIO, G.R. No. 191101, October 1, 2014, J.
Reyes
Jurisprudence consistently holds that "prescription and laches cannot apply to registered
land covered by the Torrens system" because "under the Property Registration Decree, no
title to registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession.
Mario claimed that they have been in possession of the said parcel of land since 1969 and
that cause of action of the Dionisios is already barred by laches. Jurisprudence consistently
holds that "prescription and laches cannot apply to registered land covered by the Torrens
system" because "under the Property Registration Decree, no title to registered land in
derogation to that of the registered owner shall be acquired by prescription or adverse
possession.

AMBROSIO ROTAIRO (SUBSTITUTED BY HIS SPOUSE MARIA RONSAYRO ROTAIRO,

AND HIS CHILDREN FELINA ROTAIRO, ERLINDA ROTAIRO CRUZ, EUDOSIA ROTAIRO
CRIZALDO, NIEVES ROTAIRO TUBIG, REMEDIOS ROTAIRO MACAHILIG, FELISA
ROTAIRO TORREVILLAS, AND CRISENCIO R. ROTAIRO, MARCIANA TIBAY, EUGENIO
PUNZALAN, AND VICENTE DEL ROSARIO vs. ROVIRA ALCANTARA AND VICTOR
ALCANTARA, G.R. No. 173632, September 29, 2014, J. Reyes
More than the charge of constructive knowledge, the surrounding circumstances of this
case show Rovira s actual knowledge of the disposition of the subject property and
Rotairo s possession thereof. )t is undisputed that after the contract to sell was executed
Rotairo immediately secured a mayor s permit for the construction of his residential house
on the property. 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,
103

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 Rovira cannot rely solely on the
title and assurances of Pilipinas Bank; it was incumbent upon her 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.
ENRIQUETA M. LOCSIN vs. BERNARDO HIZON, CARLOS HIZON, SPS. JOSE MANUEL
AND LOURDES GUEVARA, G.R. No. 204369, September 17, 2014, J. Velasco Jr.
A purchaser of property under the Torrens system cannot simply invoke that he is an
innocent purchaser for value when there are attending circumstances that raise suspicions.
In that case, he cannot merely rely on the title and must look beyond to ascertain the truth
as to the right of the seller to convey the property.
HEIRS OF SPOUSES JOAQUIN MANGUARDIA AND SUSANA MANALO, ET AL vs.
HEIRS OF SIMPLICIO VALLES AND MARTA VALLES, ET AL., G.R. No. 177616,
August 27, 2014, J. Del Castillo
The petitioners assail the decision of the CA affirming in toto the decision of the RTC
declaring that their predecessors-in-interest are not buyers in good faith and for value. In
denying the petition the SC ruled that the transfers of the properties in question did not go
far, but were limited to close family relatives by affinity and consanguinity. 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 to dispel the notion that apparent anomalies attended the transactions among
close relations.

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
be proved. x x x Petitioners have failed to discharge that burden."

104

HECTOR L. UY vs. VIRGINIA G. FULE; HEIRS OF THE LATE AMADO A. GARCIA, HEIRS OF
THE LATE GLORIA GARCIA ENCARNACION; HEIRS OF THE LATE PABLO GARCIA; and
HEIRS OF THE LATE ELISA G. HEMEDES,G.R. No. 164961, June 30, 2014, J. Bersamin
The standard is that for one to be a purchaser in good faith in the eyes of the law, he should
buy the property of another without notice that some other person has a right to, or
interest in, such property, and should pay a full and fair price for the same at the time of
such purchase, or before he has notice of the claim or interest of some other persons in the
property. He buys the property with the belief that the person from whom he receives the
property was the owner and could convey title to the property. Indeed, a purchaser cannot
close his eyes to facts that should put a reasonable man on his guard and still claim he acted
in good faith.
SPOUSES DOMINADOR PERALTA AND OFELIA PERALTA vs. HEIRS OF BERNARDINA
ABALON / HEIRS OF BERNARDINA ABALON vs. MARISSA ANDAL, LEONIL AND AL,
ARNEL AND AL, SPOUSES DOMINDOR PERALTA AND OFELIA PERALTA, and HEIRS of
RESTITUTO RELLAMA, represented by his children ALEX, IMMANUEL, JULIUS and
SYLVIA, all surnamed RELLAMA, G.R. No. 183448 / G.R. No. 183464, June 30, 2014, CJ.
Sereno
The established rule is that a forged deed is generally null and cannot convey title, the
exception thereto, pursuant to Section 55 of the Land Registration Act, denotes the
registration of titles from the forger to the innocent purchaser for value. Thus, the
qualifying point here is that there must be a complete chain of registered titles. This means
that all the transfers starting from the original rightful owner to the innocent holder for
value and that includes the transfer to the forger must be duly registered, and the title
must be properly issued to the transferee.
NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG vs.ROSARIO CALALANGGARCIA, LEONORA CALALANG-SABILE, and CARLITO S. CALALANG, G.R. No. 184148,
June 9, 2014, J. Villarama, Jr.
Further strong proofs that the properties in question are the paraphernal properties of a
spouse are the very Torrens Titles covering said properties.
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. As the sole and exclusive owner, Pedro
Calalang had the right to convey his property in favor of Nora B. Calalang-Parulan by
executing a Deed of Sale on February 17, 1984. A close perusal of the records of this case
would show that 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
105

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.
REPUBLIC OF THE PHILIPPINES vs. FRANKLIN M. MILLADO, G.R. No. 194066, June 4,
2014, J. Villarama, Jr.
Where the authority to proceed is conferred by a statute and the manner of obtaining
jurisdiction is mandatory, the same must be strictly complied with, or the proceedings will
be void. For non-compliance with the actual notice requirement to all other persons who
may have interest in the property, in this case the registered owners and/or their heirs, in
accordance with Section 13 in relation to Section 12 of RA 26, the trial court did not acquire
jurisdiction over L.R.A. The proceedings therein were therefore a nullity and the Decision
was void.
VERGEL PAULINO AND CIREMIA PAULINOvs.COURT OF APPEALS AND REPUBLIC OF
THE PHILIPPINES, represented by the ADMINISTRATOR of the LAND REGISTRATION
AUTHORITY, G.R. No. 205065, June 4, 2014, J. Mendoza
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. 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 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.
DOLORES CAMPOS vs. DOMINADOR ORTEGA, SR. AND JAMES SILOS, G.R. No. 171286,
June 02, 2014, J. Peralta
It cannot be argued that Dolores had already acquired a vested right over the subject
property when the NHA recognized her as the censused owner by assigning to her a tag
number TAG No. 77-0063. While it is true that NHA recognizes Dolores as the censused
owner of the structure built on the lot, the issuance of the tag number is not a guarantee for
lot allocation. The census, tagging, and Dolores 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 when the NHA, informed her that her petition for
the award of the lot was denied.

106

AZNAR BROTHERS REALTY COMPANY vs. SPOUSES JOSE AND MAGDALENA YBAEZ,
G.R. No. 161380, April 21, 2014, J. Bersamin
The settled rule is that a free patent issued over a private land is null and void, and
produces no legal effects whatsoever. Private ownership of land as when there is a prima
facie proof of ownership like a duly registered possessory information or a clear showing of
open, continuous, exclusive, and notorious possession, by present or previous occupants
is not affected by the issuance of a free patent over the same land, because the Public Land
Law applies only to lands of the public domain. Lot No. 18563, not being land of the public
domain as it was already owned by Aznar Brothers, was no longer subject to the free patent
issued to the Spouses Ybaez.
Grey Alba vs. De la Cruz, 17 SCRA 49
The Torren system generally refer to the system of registration of transactions
with interest in land whose declared object is, under governmental authority, to
establish and certify to the ownership of an absolute and indefeasible title to
realty, and to simplify its transfer.
Legarda vs. Saleeby, G.R. NO. 8936, Oct. 2, 1915
The real purpose of the Torrens system of registration is to quiet title to land; to
put a stop forever to any question of the legality of the title, except claims
which were noted at the time of registration, in the certificate, or which may
arise subsequent thereto.
Government of the Philippine Islands v. Abural, 39 Phil. 996
The Torrens system aims to decree land titles that shall be final, irrevocable,
and indisputable, and to relieve the land of the burden of known as well as
unknown claims.
Sta. Lucia

vs.

Pasig, G.R.NO.

166838,

June

15,

2011

While a certificate of title is conclusive as to its ownership and location, this

does not preclude the filing of an action for the very purpose of attacking the
statements therein. Mere reliance therefore on the face of the TCTs will not
suffice as they can only be conclusive e vidence of the subject properties'
locations if both the stated and described locations point to the same area.
Regalian Doctrine
REPUBLIC OF THE PHILIPPINES REPRESENTED BY AKLAN NATIONAL COLLEGE OF
FISHERIES (ANCF) AND DR. ELENITA R. ANDRADE, IN HER CAPACITY AS ANCF
SUPERINTENDENT VS. HEIRS OF MAXIMA LACHICA SIN, NAMELY: SALVACION L. SIN,
ROSARIO S. ENRIQUEZ, FRANCISCO L. SIN, MARIA S. YUCHINTAT, MANUEL L. SIN,
107

JAIME CARDINAL SIN, RAMON L. SIN, AND CEFERINA S. VITA G.R. No. 157485 March
26, 2014, J. Leonardo-De Castro
It is the respondent applicants which have the burden to identify a positive act of the
government, such as an official proclamation, declassifying inalienable public land into
disposable land for agricultural or other purposes. Since respondents failed to do so, the
alleged possession by them and by their predecessorsininterest is inconsequential and
could never ripen into ownership. Accordingly, respondents cannot be considered to
have private rights within the purview of Proclamation No. 2074 as to prevent the
application of said proclamation to the subject property.

REPUBLIC OF THE PHILIPPINES vs. REMMAN ENTERPRISES, INC., represented by

RONNIE P. INOCENCIO, G.R. No. 199310 February 19, 2014, J. Reyes
That the subject properties are not part of the bed of Laguna Lake, however, does not
necessarily mean that they already form part of the alienable and disposable lands of the
public domain. It is still incumbent upon the respondent to prove, with well-nigh
incontrovertible evidence, that the subject properties are indeed part of the alienable and
disposable lands of the public domain.
REPUBLIC OF THE PHILIPPINES VS.
February 5, 2014, J. Reyes

EMMANUEL C. CORTEZ, G.R. No. 186639

Lands of the public domain that are patrimonial in character are susceptible to acquisitive
prescription and, accordingly, eligible for registration under Section 14(2) of P.D. No. 1529
but the period of acquisitive prescription would only begin to run from the time that the
State officially declares that the public dominion property is no longer intended for public
use, public service, or for the development of national wealth. The Court finds no evidence
of any official declaration from the state attesting to the patrimonial character of the
subject property. Cortez failed to prove that acquisitive prescription has begun to run
against the State, much less that he has acquired title to the subject property by virtue
thereof. It is of no moment that Cortez and his predecessors-in-interest have been in
possession of the subject property for 57 years at the time he applied for the registration of
title thereto. "[l]t is not the notorious, exclusive and uninterrupted possession and
occupation of an alienable and disposable public land for the mandated periods that
converts it to patrimonial. The indispensability of an official declaration that the property is
now held by the State in its private capacity or placed within the commerce of man for
prescription to have any effect against the State cannot be overemphasized.
REPUBLIC OF THE PHILIPPINES vs. SPS. JOSE CASTUERA AND PERLA CASTUERA, G.R.
No. 203384, January 14, 2015, J. Carpio

108

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.
REMMAN ENTERPRISES, INC. vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 188494,
November 26, 2014, J. Reyes
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 appro ved 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. Thus, the
property registration of a corporation merely relying on the CENRO Certification must be
dismissed for failure to prove that the land had been declared alienable and disposable.
DANILO ALMERO, TERESITA ALAGON, CELIA BULASO, LUDY RAMADA, REGINA
GEGREMOSA, ISIDRO LAZARTE, THELMA EMBARQUE, FELIPE LAZARTE, GUILERMA
LAZARTE, DULCESIMA BENIMELEvs. HEIRS OF MIGUEL PACQUING, as represented by
LINDA PACQUING FADRILAN, G.R. No. 199008, November 19, 2014, J. Brion
Thus, in order for the homestead grantees or their direct compulsory heirs to retain their
homestead, the following conditions must 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 homestead land. That parcels of
land are covered by homestead patents will not automatically exempt them from the
operation of land reform. It is the continued cultivation by the original grantees or their
direct compulsory heirs that shall exempt their lands from land reform coverage."
HOLY TRINITY REALTY & DEVELOPMENT CORPORATION, vs. VICTORIO DELA CRUZ,
LORENZO MANALAYSAY, RICARDO MARCELO, JR. and LEONCIO DE GUZMAN, G.R. No.
200454, October 22, 2014, J. Bersamin
Consequently, before land may be placed under the coverage of Republic Act No. 6657, two
requisites must be met, namely: (1) that the land must be devoted to agricultural activity;
and (2) that the land must not be classified as mineral, forest, residential, commercial or
industrial land. For land to be covered under Presidential Decree No. 27, it must be devoted
to rice or corn crops, and there must be a system of share-crop or lease-tenancy obtaining
therein. Unfortunately, the Dakila property did not meet these requirements.

109

CARMEN T. GAHOL, substituted by her heirs, RICARDO T. GAHOL, MARIA ESTER

GAHOL PEREZ, JOSE MARI T. GAHOL, LUISITO T. GAHOL and ALCREJ CORPORATION
vs. ESPERANZA COBARRUBIAS, G.R. No. 187144, September 17, 2014, J. Peralta
Petitioner Gahol applied for Townsite Sales Application with the DENR for the land
adjacent to her property. Respondent Cobarrubias filed a protest, stating that she and her
family are occupying said lot. The Court ruled that Gahol s application must be rejected
because one of the requirements was that the applicant must not own any other lot but
Gahol is a registered owner of a residential lot. She also stated that there are no signs of
improvement or occupation in the said lot but it was in fact occupied by Cobarrubias. She is
disqualified due to the untruthful statements in her application.

KASAMAKA-CANLUBANG, INC., represented by PABLITO M. EGILDO vs. LAGUNA

ESTATE DEVELOPMENT CORPORATION, G.R. No. 200491, June 9, 2014, J. Peralta
The approval by city and municipal boards and councils of an application for subdivision
through an ordinance should already be understood to include approval of the
reclassification of the land, covered by said application, from agricultural to the inte nded
non-agricultural use. Otherwise, the approval of the subdivision application would serve no
practical effect; for as long as the property covered by the application remains classified as
agricultural, it could not be subdivided and developed for non-agricultural use.
REPUBLIC OF THE PHILIPPINES vs. CRISANTO S. RANESES, G.R. No. 189970, June 9, 2014, J.
Villarama, Jr.

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.
In this case, the records do not support the findings made by the RTC and the CA that the
subject properties are part of the alienable and disposable portion of the public domain. It
bears noting that in support of his claim that the subject properties are alienable and
disposable, Raneses 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.
Raneses failed to hurdle this burden and his reliance on the said annotation and Inter Office Memorandum is clearly insufficient. Clearly, the pieces of evidence submitted by
Raneses before the RTC in this case hardly satisfy the aforementioned documenta ry
requirements.

110

REPUBLIC OF THE PHILIPPINES vs.

185092, June 4, 2014, J. Mendoza

CORAZON C. SESE and FE C. SESE, G.R. 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 or claiming ownership, who must
prove that the land is alienable or disposable. To overcome this presumption,
incontrovertible evidence must be established that the land is alienable or disposable.
There must be an 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. In this case, petitioners cite a
surveyor geodetic engineer s 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. A mere surveyor has no authority to reclassify lands
of the public domain. By relying solely on the said surveyor s assertion, petitioners have
not sufficiently proven that the land in question has been declared alienable."
REPUBLIC OF THE PHILIPPINES vs. FRANCISCA, GERONIMO AND CRISPIN, ALL
SURNAMED SANTOS, G.R. No. 191516, June 4, 2014, J. Peralta
Petitioner Republic assails the decision of the CA affirming in toto the decision of the trial
court holding that the respondents was able to prove that the subject lots had been
classified as alienable and disposable. Ruling in favor of Republic, the SC ruled that the
evidence required to establish that land subject of an application for registration is
alienable and disposable are: (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 the present case, the foregoing documents had not
been submitted in evidence. There is no copy of the original classification approved by the
DENR Secretary. As ruled by this Court, a mere certification issued by the Forest Utilization
& Law Enforcement Division of the DENR is not enough. Republic is then correct that
evidence on record is not sufficient to prove that subject lots had been declared alienable
and disposable lands.
Republic vs. Santos, G.R.NO. 180027, July

18,

2012

Jura Regalia simply means that the State is the original proprietor of all lands
and, as such, is the general source of all private titles. Thus, pursuant to this
principle, all claims of private title to land, save those acquired from native
title, must be traced from some grant, whether express or implied, from the
State. Absent a clear showing that land had been let into private ownership
through the States imprimatur, such land is presumed to belong to the State.

111

Yu Chang vs. Republic, G.R.NO. 171726, Feb. 23, 2011

The fact that the area within which the subject parcels of land are located is
being used for residential and commercial purposes does not serve to convert
the subject parcels of land into agricultural land. It is fundamental that before
any land may be declassified from the forest group and converted into alienable
or disposable land for agricultural or other purposes, there must be a positive
act from the government.

Republic vs. East Silverlane, G.R. No. 186961, Feb.

20,

2012

It is primordial that the status of the property as patrimonial be first

established. Furthermore, the period of possession preceding the
classification of the property as patrimonial cannot be considered in
determining the completion of the prescriptive period.

Citizenship Requirement
Krivenko vs. Register of Deeds 79 Phil 461
Aliens mat not acquire private or public agricultural lands.
Ong Ching Po v. Court of Appeals G.R. NO. 113472, Dec. 20, 1994, 239
SCRA 341.
The capacity to acquire private land is made dependent upon the capacity to
acquire or hold lands of the public domain. Private land may be transferred or
only to individuals or entities qualified to acquire lands of the public domain.
Halili vs. Court of Appeals, 287 SCRA 465
A natural-born citizen of the Philippines who has lost his citizenship may be a
transferee of private lands, subject to limitations provided by law.

Director of Lands vs. Intermediate Appellate Court and Acme, 146 SCRA
509
The time to determine whether a person acquiring land is qualified is the time
the right to own it is acquired and not the time to register ownership.

112

Original Registration
LUZVIMINDA APRAN CANLAS vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 200894,
November 10, 2014, J. Leonen
An applicant for land registration or judicial confirmation of incomplete or imperfect title
under Section 14(1) of Presidential Decree No. 1529 must prove the following
requisites:(1) that the subject land forms part of the disposable and alienable lands of the
public domain, and (2) that the applicant has 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. Concomitantly, the burden to prove these requisites rests on
the applicant. With regard to the first requisite, it is undisputed that the land subject of
registration is part of the alienable and disposable lands of the public domain. The trial
court found the Department of Environment and Natural Resources report sufficient to
prove the existence of the first requisite. The Court of Appeals decision was silent on this
matter. Respondent Republic failed to make objections on the issue as well. Thus, we do not
see any reason to deviate from the findings of the lower courts.
RODOLFO V. FRANCISCO vs. EMILIANA M. ROJAS, and the legitimate heirs of JOSE A.
ROJAS, namely: JOSE FERDINAND M. ROJAS II, ROLANDO M. ROJAS, JOSE M. ROJAS, JR.,
CARMELITA ROJAS-JOSE, VICTOR M.ROJAS, and LOURDES M. ROJAS, all represented
by JOSEFERDINAND M. ROJAS II, G.R. No. 167120, April 23, 2014, J. Peralta
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. After the promulgation
of the Guido, it can no longer be said that an original registration proceeding is proper,
since Guido held that certificate of title are genuine and authentic. What the land
registration court should have done was to dismiss the application for registration upon
learning that the same property was already covered by a valid title.
REPUBLIC OF THE PHILIPPINES VS. EMETERIA G. LUALHATI, G.R. No. 183511,
March 25, 2015, J. Peralta
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. To support her contention that the lands subject of her application is
alienable and disposable, Lualhati submitted certifications from the DENR-CENRO, Region
IV, Antipolo City, stating that no public land application or land patent covering the subject
lots is pending nor are the lots embraced by any administrative title. It has been repeatedly
ruled that certifications issued by the CENRO, or specialists of the DENR, as well as Survey
Plans prepared by the DENR containing annotations that the subject lots are alienable, do
not constitute incontrovertible evidence to overcome the presumption that the property
sought to be registered belongs to the inalienable public domain. Rather, this Court
stressed the importance of proving alienability by presenting a copy of the original
113

classification of the land approved by the DENR Secretary and certified as true copy by the
legal custodian of the official records.
Moreover, as petitioner Republic aptly points out, Lualhati 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. A mere casual cultivation of portions of the land by
the claimant, and the raising thereon of cattle, do not constitute possession under claim of
ownership. In that sense, possession is not exclusive and notorious as to give rise to a
presumptive grant from the State.
REPUBLIC OF THE PHILIPPINES vs. SPOUSES DANTE and LOLITA BENIGNO, G.R. No.
205492, March 11, 2015, J. Del Castillo
The State is not estopped from the acts of the Clerk of Court in land registration cases.
Illegal acts of government agents do not bind the State. Assuming that it is, the respondents
did not prove that the land sought to be registered is an alienable and disposable land. All
applications for original registration under the Property Registration Decr ee must include
both (1) a CENRO or PENRO certification and (2) a certified true copy of the original
classification made by the DENR Secretary.
SURVIVING HEIRS OF ALFREDO R. BAUTISTA, namely: EPIFANIA G. BAUTISTA and
ZOEY G. BAUTISTA vs. FRANCISCO LINDO and WELHILMINA LINDO; and HEIRS OF
FILIPINA DAQUIGAN, IMELDA DAQUIGAN and CORSINO DAQUIGAN, REBECCA
QUIAMCO and ANDRES QUIAMCO, ROMULO LORICA and DELIA LORCIA, GEORGE
CAJES and LAURA CAJES, MELIDA BANEZ AND FRANCISCO BANEZ, MELANIE
GOFREDO, GERVACIO CAJES and ISABEL CAJES, EGMEDIO SEGOVIA and VERGINIA
SEGOVIA, ELSA N. SAM, PEDRO M. SAM, and LINA SAM, SANTIAGO MENDEZ and MINA
MENDEZ, HELEN M. BURTON and LEONARDO BURTON, JOSE JACINTO and
BIENVENIDA JACINTO, IMELDA DAQUIGAN, LEO MATIGA and ALICIA MATIGA,
FLORENCIO ACEDO JR., and LYLA VALERIO, G.R. No. 208232, March 10, 2014, J.
Velasco Jr.
Alfredo Bautista was awarded a free-patent land, which he subdivided and subsequently
sold to several vendees. He tried to repurchase the said lands three years later. The
Supreme Court held that while the deeds of sale do not explicitly contain the stipulation
that the sale is subject to repurchase by the applicant within a period of five (5) years from
the date of conveyance pursuant to Sec. 119 of CA 141, still, such legal provision is deemed
integrated and made part of the deed of sale as prescribed by law. It is basic that the law is
deemed written into every contract. Although a contract is the law between the parties, the
provisions of positive law which regulate contracts are deemed written therein and shall
limit and govern the relations between the parties. Thus, it is a binding prestation in favor
of Bautista which he may seek to enforce.

114

RAFAEL VALES, CECILIA VALES-VASQUEZ, and YASMIN VALES-JACINTO, vs. MA. LUZ
CHORESCA GALINATO, ERNESTO CHORESCA, TEOFILO AMADO, LORNA PARIAN
MEDIANERO, REBECCA PORCAL, and VIVENCIO ORDOYO, G.R. No. 180134, March 5,
2014, J. Perlas-Bernabe
DAR Memorandum provides that tenants should (a) have actual knowledge of unregistered
transfers of ownership of lands covered by Torrens Certificate of Titles prior to October 21,
1972, (b) have recognized the persons of the new owners, and (c) have been paying
rentals/amortization to such new owners in order to validate the transfer and bind the
tenants to the same. In the case at bar, it is undisputed that the subject sale was not
registered or even annotated on the certificates of title covering the subject lands.
SPOUSES MARIO AND JULIA CAMPOS, vs. REPUBLIC OF THE PHILIPPINES,G.R. No.
184371, March 5, 2014, J. Brion
Persons applying for registration of title under Section 14(1) of Presidential Decree No.
1529 must prove: (1) that the land sought to be registered forms part of the disposable and
alienable lands of the public domain, and (2) that they 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. It is emphasized that since the effectivity of P.D.
No. 1073 on January 25, 1977, a mere showing of possession and occupation for thirty (30)
years or more is no longer sufficient.
SPS. ANTONIO FORTUNA AND ERLINDA FORTUNA, vs. REPUBLIC OF THE
PHILIPPINES,G.R. No. 173423, March 05, 2014, J. Brion
Mere notations appearing in survey plans are inadequate proof of the covered properties
alienable and disposable character. These notations, at the very least, only establish that
the land subject of the application for registration falls within the approved alienable and
disposable area per verification through survey by the proper government office. The
applicant, however, must also present a copy of the original classification of the land into
alienable and disposable land, as declared by the DENR Secretary or as proclaimed by the
President.
THE HON. SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM VS. NEMESIO
DUMAGPI, REPRESENTED BY VICENTE DUMAGPI, G.R. No. 195412, February 04,
2015, J. Reyes
The respondent claims that he is the owner of the disputed parcel of land by virtue of
his open, exclusive, notorious and continuous possession of the land for more than 30
years. The Supreme Court ruled that adverse possession can only ripen into ownership
when the land adversely owned is classified as an agricultural land. If the disputed land
is non-agricultural, adverse possession cannot ripen into ownership.

115

REPUBLIC OF THE PHILIPPINES vs. 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, J. Peralta

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 -ininterest, 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.
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 alie nable and
disposable.
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-in-interest had been in adverse, open, continuous, and notorious possession
in the concept of an owner even before June 12, 1945.
LUZVIMINDA APRAN CANLAS vs. REPUBLIC OF THE PHILIPPINES, G.R. No.
200894. November 10, 2014, J. Leonen
An applicant for land registration or judicial confirmation of incomplete or imperfect title
under Section 14(1) of Presidential Decree No. 1529 must prove the following
requisites:"(1) that the subject land forms part of the disposable and alienable lands of the
public domain, and (2) that [the applicant has] 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." Concomitantly, the burden to prove these requisites rests
on the applicant.
The two requisites were complied with in this case. With regard to the first requisite, the
land subject of registration is part of the alienable and disposable lands of the public
domain by virtue of Department of Environment and Natural Resources report. With
regard to the second requisite, applicant acquired the property by inheritance from
Honorio and Gregorio S. Apran and she and her predecessors-in-interest have been in its
continuous possession of the alienable and disposable parcel of land of the public domain
under a bona fide claim of ownership since 1900.

116

SAINT MARY CRUSADE TO ALLEVIATE POVERTY OF BRETHREN FOUNDATION, INC.

VS. HON. TEODORO T. RIEL, ACTING PRESIDING JUDGE, REGIONAL TRIAL COURT,
NATIONAL CAPITAL JUDICIAL REGION, BRANCH 85, QUEZON CITY, UNIVERSITY OF
THE PHILIPPINES, G.R. No. 176508. January 12, 2015, J. Bersamin
The petition for judicial reconstitution of Original Certificate of Title was validly dismissed
for failure of the petitioner to present the duplicate or certified copy of Original Certificate
of Title .Thereby, it disobeyed Section 2 and Section 3 of Republic Act No. 26, the provisions
that expressly listed the acceptable bases for judicial reconstitution of an existing Torrens
title.
REPUBLIC OF THE PHILIPPINES VS. SPOUSES JOSE CASTURA AND CASTUERA G.R. No.
203384. January 14, 2015, J. CARPIO
The advance plan and the CENRO certification are insufficient proofs of the alienable and
disposable character of the property. The applicants for registration of title must present a
certified true copy of the Department of Environment and Natural Resources Secretary s
declaration or classification of the land as alienable and disposable.
UNGAY MALOBAGO MINES INC. VS. REPUBLIC OF THE PHILIPPINES, G.R. No. 187892.
January 14, 2015, J. PERALTA
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. Thus, not having an
interest on the land amounting to a title to the same, petitioner is not possessed of a legal
personality to institute a petition for judicial reconstitution of the alleged lost Original
Certificate of Title.

IMELDA LEONARDO, FIDELINO AZUCENA, JOSEFINA, ANITA AND SISA ALL SURNAMED
SYJUCO VS. FELISA D. BONIFACIO AND VSD REALTY & DEVELOPMENT CORPORATION,
G.R. No. 148748. January 14, 2015, J. LEONARDO-DE CASTRO
SC found untenable the contention that the action instituted by petitioners is a prohibited
collateral attack on the certificate of title of respondents over the subject land.
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.
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
117

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 TCTs. 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.
REPUBLIC OF THE PHILIPPINES VS. EMMANUEL C. CORTEZ, G.R. No. 186639
February 5, 2014, J. Reyes

A survey plan does not constitute incontrovertible evidence to overcome the presumption
that the subject property remains part of the inalienable public domain. Cortez failed to
present a certification from the proper government agency as to the classification of the
subject property. Cortez likewise failed to present any evidence showing that the DENR
Secretary had indeed classified the subject property as alienable and disposable.
REPUBLIC OF THE PHILIPPINES vs. REMMAN ENTERPRISES, INC., represented by RONNIE P.
INOCENCIO, G.R. No. 199310 February 19, 2014, J. REYES

To prove that the subject property forms part of the alienable and disposable lands of the
public domain, the respondent presented two certifications issued by Senior Forest
Management Specialist of the DENR attesting that Lots form part of the aliena ble and
disposable lands of the public domain "under Project No. 27-B of Taguig, Metro Manila as
per LC Map 2623, approved on January 3, 1968." However, the said certifications are
insufficient to prove that the subject properties are alienable and disposable. The
certification issued by the proper government agency that a parcel of land is alienable and
disposable, applicants for land registration must prove that the DENR Secretary had
approved the land classification and released the land of public domain as alienable and
disposable. They must present a copy of the original classification approved by the DENR
Secretary and certified as true copy by the legal custodian of the records.
With regard to possession, although it was testified that the respondent and its
predecessors-in-interest cultivated the subject properties, by planting different crops
thereon, his testimony is bereft of any specificity as to the nature of such cultivation as to
warrant the conclusion that they have been indeed in possession and occupation of the
subject properties in the manner required by law. There was no showing as to the number
of crops that are planted in the subject properties or to the volume of the produce
harvested from the crops supposedly planted thereon.

118

Further, assuming ex gratia argumenti that the respondent and its predecessors-in-interest
have indeed planted crops on the subject properties, it does not necessarily follow that the
subject properties have been possessed and occupied by them in the manner contemp lated
by law. The supposed planting of crops in the subject properties may only have amounted
to mere casual cultivation, which is not the possession and occupation required by law.
REPUBLIC OF THE PHILIPPINES VS. ZURBARAN REALTY & DEVELOPMENT CORP. G.R.
No. 164408, March 24, 2014, J. BERSAMIN
Registration under Section 14(1) of P.D. No. 1529 is based on possession and occupation of
the alienable and disposable land of the public domain since June 12, 1945 or earlier,
without regard to whether the land was susceptible to private ownership at that time. The
applicant needs only to show that the land had already been declared alienable and
disposable at any time prior to the filing of the application for registration.
On the other hand, an application under Section 14(2) of P.D. No. 1529 is based on
acquisitive prescription and must comply with the law on prescription as provided by the
Civil Code. In that regard, only the patrimonial property of the State may be acquired by
prescription pursuant to the Civil Code. For acquisitive prescription to set in, therefore, the
land being possessed and occupied must already be classified or declared as patrimonial
property of the State. Otherwise, no length of possession would vest any right in the
possessor if the property has remained land of the public dominion. Malabanan stresses
that even if the land is later converted to patrimonial property of the State, possession of it
prior to such conversion will not be counted to meet the requisites of acquisitive
prescription. Thus, registration under Section 14(2) of P.D. No. 1529 requires that the land
had already been converted to patrimonial property of the State at the onset of the period
of possession required by the law on prescription.
An application for registration based on Section 14(2) of P.D. No. 1529 must, therefore,
establish the following requisites, to wit: (a) the land is an alienable and disposable, and
patrimonial property of the public domain; (b) the applicant and its predecessors -ininterest have been in possession of the land for at least 10 years, in good faith and with just
title, or for at least 30 years, regardless of good faith or just title; and (c) the land had
already been converted to or declared as patrimonial property of the State at the begin ning
of the said 10-year or 30-year period of possession.

Republic vs. Gomez, G.R.NO. 189021, Feb. 22, 2012

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.
119

Republic vs. Vega, 639 SCRA 541

While Cayetano failed to submit any certification which would formally attest to
the alienable and disposable character of the land applied for, the Certification
by DENR Regional Technical Director Celso V. Loriega, Jr., as annotated on the
subdivision plan submitted in evidence by Paulita, constitutes substantial
compliance with the legal requirement. It clearly indicates that Lot 249 had
been verified as belonging to the alienable and disposable area as early as July
18, 1925.
Ong vs. Republic, 548 SCRA 160
Actual possession of a land consists in the manifestation of acts of dominion
over it of such a nature as a party would naturally exercise over his own
property.
Republic vs. Espinosa, 677 SCRA 92
There must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial.
Without such express declaration, the property, even if classified as alienable
or disposable, remains property of the public dominion, pursuant to Article
420(2), and thus incapable of acquisition by prescription. It is only when such
alienable and disposable lands are expressly declared by the State to be no
longer intended for public service or for the development of the national wealth
that the period of acquisitive prescription can begin to run. Such declaration
shall be in the form of a law duly enacted by Congress or a Presidential
Proclamation in cases where the President is duly authorized by law.
Thus, granting that Isabel and, later, Espinosa posse ssed and occupied the
property for an aggregate period of thirty (30) years, this does not operate to
divest the State of its ownership. The property, albeit allegedly alienable and
disposable, is not patrimonial. As the property is not held by the State in its
private capacity, acquisition of title thereto necessitates observance of the
provisions of Section 48(b) of the PLA in relation to Section 14(1) of P.D. No.
1529 or possession and occupation since June 12, 1945. For prescription to
run against the State, there must be proof that there was an official declaration
that the subject property is no longer earmarked for public service or the
development of national wealth. Moreover, such official declaration should have
been issued at least ten (10) or thirty (30) years, as the case may be, prior to
the filing of the application for registration. The period of possession and
occupation prior to the conversion of the property to private or patrimonial
120

shall not be considered in determining completion of the prescriptive period.

Indeed, while a piece of land is still reserved for public service or the
development of national wealth, even if the same is alienable and disposable,
possession and occupation no matter how lengthy will not ripen to ownership
or give rise to any title that would defeat that of the States if such did not
commence on June 12, 1945 or earlier.
At any rate, the notation on the survey plan does not constitute
incontrovertible evidence that would overcome the presumption that the
property belongs to the inalienable public domain.

Tan vs. Republic April

16,

2012

Possession is open when it is patent, visible, apparent, notorious and

not clandestine. It is continuous when uninterrupted, unbroken and
not intermittent or occasional; exclusive when the adverse possessor
can show exclusive dominion over the land and an appropriation of it to
his own use and benefit; and notorious when it is so conspicuous that it
is generally known and talked of by the public or the people in the
neighborhood.
Rep. vs.

M etro Index

Realty, G.R. No. 198585, July 2, 2012

The mere planting of a sign or symbol of possession cannot justify a Magellan like claim of dominion over an immense tract of territory. Possession as a
means of acquiring ownership, while it may be constructive, is not a mere
fiction.
Roman Catholic Apostolic Administrator
Registration Commission, 102 Phil. 596.

of

Davao,

Inc.

vs.

Land

A corporation sole, which consists of one person only, is vested with the right
to purchase and hold real estate and to register the same in trust for the
faithful or members of the religious society or church for which the corporation
was organized.
Subsequent Registration
Lucena vs. CA, G.R. NO. L-77468, August 25, 1999
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.
His mere refusal to believe that such defect exists, or his willful closing of his
121

eyes to the possibility of the existence of a defect in his vendor's title, will not
make him an innocent purchaser for value, if it afterwards develops that the
title was in fact defective, and it appears that he had such notice of the defect
as would have led to its discovery had he acted with that measure of
precaution which may reasonably be required of a prudent man in a like
situation.
Heirs of Brusas vs. CA, G.R. No. 126875, August 26, 1999
In the instant case, the litigated property is still registered in the name of Ines
Brusas, so that insofar as procedure is concerned, petitioners were correct in
availing of the remedy of reconveyance. However, an action for reconveyance
presupposes the existence of a defrauded party who is the lawful owner of the
disputed property.
Philippine National Bank vs. Court of Appeals, 98 SCRA 207
A person dealing with registered land is not required to go behind the register
to determine the condition of the property. He is only charged with notice of the
burdens on the property which are noted on the face of the register or the
certificate of title. To require him to do more is to defeat one of the primary
objects of the Torrens system.
Potenciano vs. Dineros, G.R. No. L-7614, M ay 31, 1955
The judgment creditor may not, as purchaser at the auction sale, invoke the
protection accorded by law to purchasers in good faith, because at the time of
the auction he already had notice, thru the third party claim filed by
Potenciano, that the property had already been acquired by the latter from the
judgment debtor.

Guaranteed Homes Inc vs. Valdez, G.R. No. 171531, Jan. 30, 2009
Every conveyance, mortgage, lease, lien, attachment, order, judgment,
instrument or entry affecting registered land shall, if registered, filled or
entered in the office of the Register of Deeds of 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.
Fudot vs. Cattleya Land Inc., G.R. No. 171008 , Sept. 13, 2007
The registration of a void deed, for instance, is not an impediment to a
declaration by the courts of its invalidity.

122

Cusi vs. Domingo, G.R.NO. 195825, Feb. 27, 2013

As the purchasers of the property, they also came under the clear obligation to
purchase the property not only in good faith but also for value. A purchaser in
good faith is one who buys the property of another without notice that some
other person has a right to, or interest in, such property and pays full and fair
price for the same.

Non-Registrable Properties
Malabanan vs. Republic, 587 SCRA 172
Only when the property has become patrimonial can the prescriptive period for
the acquisition of property of the public domain begin to run.

Alvarez vs. PICOP Resources, Inc., 606 SCRA 444

Forest lands cannot be alienated in favor of petitioner private persons or
entities.
Republic vs. Fabio, G.R. No. 159589, Dec. 23, 2008
The usual proviso requiring the reservation to be subject to private rights
simply means that persons claiming rights over the reserved land are not
precluded from proving their claims.
Almagro vs. Kwan, 634 SCRA 250
To qualify as foreshore land, it must be shown that the land lies between the
high and low water marks and is alternately wet and dry according to the flow
of the tide. The land's proximity to the waters alone does not automatically
make it a foreshore land.
Republic vs. Espinosa G.R.NO. 171514, July 18, 2012
The notation made by a surveyor-geodetic engineer that the property surveyed
is alienable and disposable is not the positive government act that would
remove the property from the inalienable domain. Neither it is the evidence
accepted as sufficient to controvert the presumption that the property is
inalienable.
Chavez v. Public Estates Authority and AM ARI Coastal Development
Corporation, G.R. No. 133250, July 9, 2002
123

Foreshore and submerged areas irrefutably belonged to the public domain and
were inalienable unless reclaimed, classified as alienable lands open to
disposition and further declared no longer needed for public service. The fact
that alienable lands of the public domain were transferred to the PEA (now
PRA) and issued land patents or certificates of title in PEAs name did not
automatically make such lands private.
Republic vs. Paraaque G.R.NO. 191109, July 18, 2012
The subject reclaimed lands are still part of the public domain, owned
by the State and, therefore, exempt from payment of real estate taxes.
Here, the subject lands are reclaimed lands, specifically portions of the
foreshore and offshore areas of Manila Bay. As such, these lands
remain public lands and form part of the public domain.
Dealings with Unregistered Land
Heirs of Tanyag

vs.

Gabriel, 669

SCRA

284

It is continuous when uninterrupted, unbroken and not intermittent

or occasional. It is exclusive when the adverse possessor can show
exclusive dominion over the land and an appropriation of it to his own
use and benefit. It is notorious when it is so conspicuous that it is
generally known and talked of by the public or the people in the
neighborhood.
The party who asserts ownership by adverse possession must prove
the presence of the essential elements of acquisitive prescription.
Tan vs. Republic,
2012

G.R. No. 193443

G.R. No. 193443, April 16,

There must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial.
Without such express declaration, the property, even if classified as alienable
or disposable, remains property of the public dominion, pursuant to Article
420(2), and thus incapable of acquisition by prescription.
For one to invoke the provisions of Section 14(2) and set up acquisitive
prescription against the State, it is primordial that the status of the property as
patrimonial be first established. Furthermore, the period of possession
preceding the classification of the property as patrimonial cannot be considered
in determining the completion of the prescriptive period.
124

Tan vs. Republic,

2012

G.R. No. 193443

G.R. No. 193443, April 16,

Possession is open when it is patent, visible, apparent, notorious and not

clandestine. It is continuous when uninterrupted, unbroken and not
intermittent or occasional; exclusive when the adverse possessor can show
exclusive dominion over the land and an appropriation of it to his own use and
benefit; and notorious when it is so conspicuous that it is generally known and
talked of by the public or the people in the neighborhood. The party who
asserts ownership by adverse possession must prove the presence of the
essential elements of acquisitive prescription.
Tax declarations per se do not qualify as competent evidence of actual
possession for purposes of prescription.
A claim of ownership will not proper on the basis of tax declarations if
unaccompanied by proof of actual possession.
Valiao v. Republic, 661 SCRA 299
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. It is settled that the applicant must present proof of
specific acts of ownership to substantiate the claim and cannot just offer
general statements which are mere conclusions of law than factual evidence of
possession.
DUTY OF THE BUYER/BUYER IN GOOD FAITH
THE HEIRS OF VICTORINO SARILI, NAMELY: ISABEL A. SARILI,* MELENCIA** S.
MAXIMO, ALBERTO A. SARILI, IMELDA S. HIDALGO, all herein represented by CELSO
A. SARILI vs. PEDRO F. LAGROSA, represented in this act by his Attorney-in-Fact
LOURDES LABIOS MOJICA, G.R. No. 193517, January 15, 2014, J. Perlas-Bernabe
A higher degree of prudence is required from one who buys from a person who is not the
registered owner, although the land object of the transaction is registered. The buyer also
has the duty to ascertain the identity of the person with whom he is dealing with and the
latter s legal authority to convey the property.
The strength of the buyer s inquiry on the seller s capacity or legal authority to sell depends
on the proof of capacity of the seller. If the proof of capacity consists of a special power of
125

attorney duly notarized, mere inspection of the face of such public document already
constitutes sufficient inquiry. If no such special power of attorney is provided or there is
one but there appears to be flaws in its notarial acknowledgment, mere inspection of the
document will not do; the buyer must show that his investigation went beyond the
document and into the circumstances of its execution.

In the present case, it is undisputed that Spouses Sarili purchased the subject property
from Ramos on the strength of the latter s ostensible authority to sell under the subject
SPA. The said document, however, readily indicates flaws in its notarial acknowledgment
since the respondent s community tax certificate CTC number was not indicated thereon.
Despite this irregularity, however, Spouses Sarili failed to show that they conducted an
investigation beyond the subject SPA and into the circumstances of its execution as
required by prevailing jurisprudence. Hence, Spouses Sarili cannot be considered as
innocent purchasers for value.
FLORENTINO W. LEONG AND ELENA LEONG, ET AL. vs. EDNA C. SEE, G.R. No. 19407 7,
December 03, 2014, J. Leonen
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 ano ther person s
claim. One claiming to be an innocent purchaser for value has the burden of proving such
status. 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
Florentino s 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. The Supreme Court
upheld the ruling of the lower courts which considered the inquiries made by respondent
to be acts of an innocent purchaser in good faith and for value.
KRYSTLE REALTY DEVELOPMENT CORPORATION, rep. by CHAIRMAN OF THE
BOARD, WILLIAM C. CU vs. DOMINGO ALIBIN, as substituted by his heirs, G.R. No.
196117/G.R. No. 196129, August 13, 2014, J. Perlas-Bernabe
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. Further, 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.
The agreement of the parties to submit the determination of the genuineness of Domingo s
signature to a handwriting expert of the NBI does not, authorize the RTC to accept the
findings of such expert. The opinion of a handwriting expert, therefore, does not

126

mandatorily bind the court, the expert's function being to place before the court data upon
which it can form its own opinion.
RAUL SABERON, JOAN F. SABERON and JACQUELINE SABERON vs. OSCAR
VENTANILLA, JR., and CARMEN GLORIA D. VENTANILLA, G.R. No. 192669, April 21,
2014, J. Mendoza
While a third party may not be considered as innocent purchaser for value, he can still
rightfully claim for actual and compensatory damages, considering that he did not join the
other defendants in their efforts to frustrate plaintiffs rights over the disputed properties
and who might well be an unwilling victim of the fraudulent scheme employed by the other
defendants.
Nonetheless, even if when no bad faith can be ascribed to the parties alike, an equal footing
of the parties necessarily tilts in favor of the superiority of the notice of levy and the
constructive notice against the whole world which the original party to the contract of sale
had produced and which effectively bound third persons. Thus, the latter has two options
available: 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.
ALFARO VS. DUMALAGAN, G.R. No.186622, January 22, 2014, J. Perez
A purchaser in good faith is one who buys the property of another without notice that some
other person has a right to, or an interest in such property, and pays a full and fair price for
the same at the time of such purchase, or before he has notice of some other person s claim
or interest in the property. The petitioners are not such purchaser.
Petitioners had prior knowledge of the previous sales by installment of portions of the
property to several purchasers. Moreover, petitioners had prior knowledge of responden ts
possession over the subject property. Hence, the rule on double sale is inapplicable in the
case at bar. As correctly held by the appellate court, petitioners prior registration of the
subject property, with prior knowledge of respondents claim of ownership and possession,
cannot confer ownership or better right over the subject property.
SPOUSES BERNADETTE and RODULFO VILLABAR VS.ANGELITO L. OPININ, G.R. N.O
17604, January 15, 2014. J. del Castillo
Bad faith cannot be presumed. It is a question of fact that must be proven by clear and
convincing evidence. The burden of proving bad faith rests on the one alleging it. Spouses
Vilbar failed to adduce the necessary evidence. Furthermore, the Court recognizes the
settled rule that levy on attachment, duly registered, takes preference over a prior
unregistered sale. This result is a necessary consequence of the fact that the properties
involved were duly covered by the Torrens system which works under the fundamental
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principle that registration is the operative act which gives validity to the transfer or creates
a lien upon the land.

JUST COMPENSATION
LAND BANK OF THE PHILIPPINES vs. JAIME K. IBARRA, ANTONIO K. IBARRA, JR., LUZ
IBARRA VDA. DE JIMENEZ, LEANDRO K IBARRA, and CYNTHIA IBARRAGUERRERO, G.R. No. 182472. November 24, 2014, J. Peralta
The petitioner s lands were subjected to the coverage of the agrarian reform program. The
petitioner then filed a complaint for just compensation of the said land. The issue in the
case is what will be the basis of valuation of the property taken for Just Compensation.
The Supreme Court held that the seizure of landholdings or properties covered by PD No.
27 did not take place on October 21, 1972, but upon the payment of just
compensation. Indeed, acquisition of property under the Operation Land Transfer Program
under PD No. 27 does not necessarily mean that the computation of just compensation
thereof must likewise be governed by the same law. In determining the applicable formula,
the date of the payment of just compensation must be taken into consideration for such
payment marks the completion of the agrarian reform process. If the agrarian reform
process is still incomplete as when just compensation is not settled prior to the passage of
RA No. 6657, it should be computed in accordance with said law despite the fact that the
property was acquired under PD No. 27. Clearly, by law and jurisprudence, R.A. No. 6657,
upon its effectivity, became the primary law in agrarian reform covering all then pending
and uncompleted processes, with P.D. No. 27 and E.O. No. 228 being only suppletory to the
said law.
It is, therefore, on equitable considerations that the retroactive application of RA No. 6657
is based for it would be highly inequitable on the part of the landowners to compute just
compensation using the values not at the time of the payment but at the time of the taking
in 1972, considering that the government and the farmer-beneficiaries have already
benefitted from the land.
CANCELLATION OF TITLE
ROSARIO BANGUIS-TAMBUYAT vs. WENIFREDA BALCOM-TAMBUYAT, G.R. No.
202805, March 23, 2015, J. Del Castillo
Under Sec. 108 of PD 1529, the proceeding for the erasure, alteration, or amendment of a
certificate of title may be resorted to in seven instances: (1) when registered interests of
any description, whether vested, contingent, expectant, or inchoate, have terminated and
ceased; (2) when new interests have arisen or been created which do not appear upon the
certificate; (3) when any error, omission or mistake was made in entering a certificate or
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any memorandum thereon or on any duplicate certificate; (4) when the name of any person
on the certificate has been changed; (5) when the registered owner has been married, or,
registered as married, the marriage has been terminated and no right or interest of heirs or
creditors will thereby be affected; (6) when a corporation, which owned registered land
and has been dissolved, has not conveyed the same within three years after its dissolution;
and (7) when there is reasonable ground for the amendment or alteration of title. The
present case falls under (3) and (7), where the Registrar of Deeds of Bulacan committed an
error in issuing TCT Tin the name of Adriano M. Tambuyat married to Rosario E.
Banguis when, in truth and in fact, respondent Wenifreda and not Banguis is Adriano s
lawful spouse.
ACTION FOR RECONVEYANCE
HEIRS OF FRANCISCO I. NARVASA, SR., ANDHEIRS OF PETRA IMBORNAL AND
PEDRO FERRER,REPRESENTED BY THEIR ATTORNEY -IN-FACT, MRS. REMEDIOS B.
NARVASA-REGACHO vs. EMILIANA, VICTORIANO, FELIPE, MATEO, RAYMUNDO,
MARIA,AND EDUARDO, ALL SURNAMED IMBORNAL, G.R. No. 182908, August 06,
2014, J. Perlas Bernabe
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. Hence, when a complaint for
reconveyance is filed beyond the 10-year reglementary period, such cause of action is
barred by prescription.
HEIRS OF TELESFORO JULAO, namely, ANITA VDA. DE ENRIQUEZ, SONIA J.
TOLENTINO and RODERICK JULAO v SPOUSES ALEJANDRO and MORENITA DE JESUS,
G.R No. 176020, September 29, 2014. DEL CASTILLO.
In an action to recover, the property must be identified. Article 434 of the Civil Code states
that "[i]n an action to recover, the property must be identified, and the plaintiff must rely
on the strength of his title and not on the weakness of the defendant's claim." The plaintiff,
therefore, is duty-bound to clearly identify the land sought to be recovered, in accordance
with the title on which he anchors his right of ownership. It bears stressing that the failure
of the plaintiff to establish the identity of the property claimed is fatal to his case. In this
case, petitioners failed to identify the property they seek to recover as they failed to
describe the location, the area, as well as the boundaries thereof. No survey plan was
presented by petitioners to prove that respondent spouses actually encroached upon the
70-square meter portion of petitioners' property.
TORTS AN D DAM AGES

THE TORTFEASOR

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RUKS KONSULT AND CONSTRUCTION vs. ADWORLD SIGN AND ADVERTISING

CORPORATION* AND TRANSWORLD MEDIA ADS, INC.,G.R. No. 204866, January 21,
2015, J. Perlas-Bernabe
Pursuant to Article 2194, joint tortfeasors are solidarily liable. They are each liable as
principals, to the same extent and in the same manner as if they had performed the
wrongful act themselves. When a construction of a billboard s lower structure without the
proper foundation by the first contractor, and that of the second contractor s finishing its
upper structure and just merely assuming that the first would reinforce the weak
foundation are the two successive acts which were the direct and proximate cause of the
damages sustained by the company who hired their services. Worse, both contractors were
fully aware that the foundation for the billboard was weak; yet, neither of them took any
positive step to reinforce the same. They merely relied on each other s word that repairs
would be done to such foundation, but none was done at all.
Ylarde vs. Aquino, 163 SCRA 697
Teacher Edgardo Aquino, after bringing his pupils to an excavation site dug by
them, left them all by themselves, and one of the pupils fell into the pit. A
teacher acted with fault and gross negligence because a teacher who stands in
loco parentis to his pupils would have made sure that the children are
protected from all harm in his company.

Cogeo-Cubao Operators and Drivers Association vs. Court of Appeals, G.R.

NO. 100727, M arch 18, 1992
Cogeo-Cubao Operators and Drivers Association, a group of drivers, took over
all jeepneys of a transportation company, Lungsod Corporation, as well as the
operation of the service in the companys route without authority from the
Public Service Commission. The act was in violation of Article 21 of the Civil
Code [Any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for damages] because the constitutional right of the drivers to redress
their grievances with the company should not undermine public peace and
order nor should it violate the legal rights of other persons.
PROXIMATE CAUSE
F.F. Cruz and Co. vs. Court of Appeals, 164 SCRA 731
A fire that broke out in the furniture shop of the petitioner spread to an
adjacent house because of the shop owners failure to construct a firewall as
required by a city ordinance. The doctrine of res ipsa loquitur, which is applied
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by the Court in this case, may be stated as follows: Where the thing which
caused the injury complained of is shown to be under the management of the
defendant or his servants and the accident is such as in the ordinary course of
things does not happen if those who have its management or control use
proper care, it affords reasonable evidence, in the absence of explanation by
the defendant, that the accident arose from want of care.
Phoenix Construction, Inc. vs. Dionisio, 148 SCRA 353
The driver of a dump truck parked it improperly at night near his residence
and it was bumped by the driver of a car, who suffered damages. The
proximate cause of the accident was the improper parking of the dump truck.
Africa vs. Caltex, 16 SCRA 448
A fire broke out at a gasoline station while gasoline was being hosed from a
tank truck into the underground storage, right at the opening of the receiving
tank where the nozzle of the hose was inserted, as a result of which several
houses were burned. Under the principle of res ipsa loquitor, the employees
negligence was the proximate cause of the fire which in the ordinary course of
things does not happen.
Gabeto vs. Araneta, 42 Phil. 232
Araneta stopped a calesa with passengers aboard on the street and seized the
rein of the horses bridle, by reason of which the driver brought the carromata
to the adjacent curb and alighted to fix the bridle, and while the driver was
engaged at the horses head, the horse moved forward bringing down a police
telephone box, and because of the noise caused thereby, the horse was
frightened and it ran away and one of the passengers jumped and was killed.
Araneta's act in stopping the horse was held as not the proximate cause of the
accident because the bridle was old, and the leather of which it was made was
probably so weak as to be easily broken.

Gregorio vs. Go, 102 Phil. 556

Go ordered his cargador, who had only a students permit to drive his truck,
but a policeman who boarded the truck took the wheel, and while driving the
truck, it hit and ran over a pedestrian. There was no direct and proximate
casual connection between the defendants negligence and the death because
the proximate immediate and direct cause of the death was the negligence of
the policeman.

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Phoenix Construction, Inc. vs. Intermediate Appellate Court, 148 SCRA

353
Dionisio's negligence was only contributory, that the "immediate and proximate
cause" of the injury remained the truck driver's "lack of due care" and that
consequently respondent Dionisio may recover damages though such damages
are subject to mitigation by the courts (Article 2179, Civil Code of the
Philippines).
Phoenix Construction, Inc. vs. Intermediate Appellate Court, 148 SCRA
353
Petitioners sought the application of the doctrine of "last clear chance".
The Supreme Court said that the common law rule of contributory negligence
prevented any recovery at all by a plaintiff who was also negligent, even if the
plaintiff's negligence was relatively minor as compared with the wrongful act or
omission of the defendant. The common law notion of last clear chance
permitted courts to grant recovery to a plaintiff who had also been negligent
provided that the defendant had the last clear chance to avoid the casualty and
failed to do so. Accordingly, it is difficult to see what role, if any, the common
law last clear chance doctrine has to play in a jurisdiction where the common
law concept of contributory negligence as an absolute bar to recovery by the
plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code
of the Philippines.
Is there perhaps a general concept of "last clear chance" that may be extracted
from its common law matrix and utilized as a general rule in negligence cases
in a civil law jurisdiction like ours? We do not believe so. Under Article 2179,
the task of a court, in technical terms, is to determine whose negligence the
plaintiff's or the defendant's was the legal or proximate cause of the injury.
That task is not simply or even primarily an exercise in chronology or physics,
as the petitioners seem to imply by the use of terms like "last" or "intervening"
or "immediate." The relative location in the continuum of time of the plaintiff's
and the defendant's negligent acts or omissions, is only one of the relevant
factors that may be taken into account. Of more fundamental importance are
the nature of the negligent act or omission of each party and the character and
gravity of the risks created by such act or omission for the rest of the
community. The petitioners urge that the truck driver (and therefore his
employer) should be absolved from responsibility for his own prior negligence
because the unfortunate plaintiff failed to act with that increased diligence
which had become necessary to avoid the peril precisely cre ated by the truck
driver's own wrongful act or omission. To accept this proposition is to come too
close to wiping out the fundamental principle of law that a man must respond
for the forseeable consequences of his own negligent act or omission. Our law
on quasi-delicts seeks to reduce the risks and burdens of living in society and
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to allocate them among the members of society. To accept the petitioners' proposition must tend to weaken the very bonds of society.

Philippine Bank of Commerce vs. Court of Appeals, 269 SCRA 695

Respondent entrusted companys cash for deposit to his secretary who
defrauded the company by depositing the money, not to the companys
account, but to her husband who maintained similar account with the bank,
made possible because the duplicate slip was not compulsory required by the
bank in accepting the deposits. Under the doctrine of last clear chance, an
antecedent negligence of a person does not preclude the recovery of damages
for the supervening negligence of, or bar a defense against liability sought by
another, if the latter, who had the last fair chance, could have avoided, the
impending harm by the exercise of due diligence. Here, assuming that the
respondent company was negligent in entrusting cash to a dishonest employee,
thus providing the latter with the opportunity to defraud the company, as
advanced by the petitioner, yet it cannot be denied that the petitioner bank,
thru its teller, had the last clear opportunity to avert the injury incurred by its
client, simply by faithfully observing their self-imposed validation procedure.
Pantranco North Express, Inc. vs. Baesa, 179 SCRA 384
The driver of a Pantranco bus encroached into the lane of an incoming jeepney
and failed to return the bus immediately to its own lane upon seeing the
jeepney coming from the opposite direction, resulting to the death of eight
passengers of the jeep. The doctrine of last clear chance does not take into
operation here because it applies only in a situation where the plaintiff was
guilty of prior or antecedent negligence but the defendant, who had the last fair
chance to avoid the impending harm and failed to do so, is made liable for all
the consequences of the accident notwithstanding the prior negligence of the
plaintiff.

Cebu Shipyard and Engineering W orks, Inc. vs. W illiam Lines, Inc., 306
SCRA 762
The passenger ship of William Lines, Inc. caught fire and sank while in the
custody of Cebu Shipyard and Engineering Works to which it was brought for
annual repair. The doctrine of res ipsa loquitor applies here because the fire
that occurred and consumed MV Manila City would not have happened in the
ordinary course of things if reasonable care and diligence had been exercised
by Cebu Shipyard.
Radio Communications of the Phils., Inc. [RCP I] vs. Court of Appeals, 143
SCRA 657
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Defamatory words were inserted in the telegram sent by respondent Timan,

which were not noticed and were included by the RCPI in the teleG.R.am when
delivered. Since negligence may be hard to substantiate in some cases, we may
apply the doctrine of RES IPSA LOQUITUR (the thing speaks for itself), by
considering the presence of facts or circumstances surrounding the injury.

LEGAL INJURY
Custodio vs. Court of Appeals, 253 SCRA 483
Custodio filed a case for damages because his tenants cancelled their contract
of lease due to adobe fences constructed by adjoining lot owners which
restricted passage from and to his apartment. To warrant the recovery of
damages, there must be both a right of action for a legal wrong inflicted by the
defendant, and damage resulting to the plaintiff therefrom as a wrong without
damage, or damage without wrong, does not constitute a cause of action, since
damages are merely part of the remedy allowed for the injury caused by a
breach or wrong.
Metropolitan Bank and Trust Company vs. Tan Chuan Leong, 42 SCRA
352
Although B&I Trading had knowledge of the simulated sale between Tan Chuan
Leong and his son and had entered into the contract of mortgage pursuant to a
design to defraud Leongs creditors, no damage or prejudice appears to have
been suffered by the petitioner thereby. Absent damage or prejudice, no right of
action arises in favor of the petitioner because wrongful violation of a legal right
is not a sufficient element of a cause of action unless it has resulted in an
injury causing loss or damages.

INTENTIONAL TORTS
Yu vs. Court of Appeals, 217 SCRA 328
House of Mayfair, a foreign manufacturer of wall covering products, with which
Yu has had an exclusive distributorship aageement was duped into believing
that the goods ordered through the FNF Trading were to be shipped to Nigeria
only, but the goods were actually sent to and sold in the Philippines. A ploy of
this character is akin to the scenario of a third person who induces a party to
renege on or violate his undertaking under a contract, thereby entitling the
other contracting party to relief therefrom.

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Valenzuela vs. Court of Appeals, G.R. NO. 83122, October 19, 1990
Valenzuela did not receive his full commission which amounted to P1.6 Million
from the P4.4 Million insurance coverage of the Delta Motors he obtained for
Philippine American General Insurance (Philamgen) because the Philamgen
terminated their agency agreement after Valenzuela refused to share his
commission with the company. Philamgen was found to have acted with bad
faith and with abuse of right in terminating the agency under the principle that
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 (Art. 19, Civil Code), and every person who, contrary to law, willfully or
negligently causes damages to another, shall indemnify the latter for the same.

NEGLIGENCE
DR. FILOTEO A. ALANO vs, ZENAIDA MAGUD-LOGMAO, G.R. No. 175540, April 7, 2014, J.
Peralta

It also clearly 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.
He could not have made his directives any clearer. He even specifically mentioned that
permission is only being granted IF the Department of Surgery has complied with all the
requirements of the law. Verily, Dr. Alano could not have been faulted for having full
confidence in the ability of the doctors in the Department of Surgery to comprehend the
instructions, obeying all his directives, and acting only in accordance with the requirements
of the law.
DAVAO HOLIDAY TRANSPORT SERVICES CORPORATION vs. SPOUSES EULOGIO AND
CARMELITA EMPHASIS, G.R. No. 211424, November 26, 2014, J. Reyes
Contending that it exercised extraordinary diligence in the selection and supervision of its
drivers, petitioner argues that it should be absolved from any liability for damages caused
by its employee. The SC ruled that when an employee causes damage due to his own
negligence while performing his own duties, there arises the juris tantum presumption that
his employer is negligent, rebuttable only by proof of observance of the diligence of a good
father of a family. Failure however of petitioner to establish the modes and measures it
adopted to ensure the proper selection and supervision of its employees, petitioner
therefore should be held liable for the damages cause by its employee.

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CAGAYAN ELECTRIC COOPERATIVE, INC. REPRESENTED BY ITS GENERAL MANAGER

AND CHIEF EXECUTIVE OFFICER, GABRIEL A. TORDESILLAS vs. ALAN RAPANAN AND
MARY GINE TANGONAN, G.R. No. 199886, December 3, 2014, J. Villarama Jr.
1 died and 2 suffered injury due to mishap along the highway. The respondents contended
that the cause of death and injuries was due to live tension wire of Cagayan Electric
Cooperative Inc. The court ruled there was no negligence on the part of Cagayan Electric
Cooperative Inc. Thus, there is no negligence on the part of petitioner that was allegedly the
proximate cause of Camilo s death and Rapanan s injuries. From the testimonies of
petitioner s 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 a ny threat to
passing motor vehicles and even pedestrians. Hence, if the victims of the mishap were
strangled by said wires, it can only mean that either the motorcycle careened towards the
shoulder or even more likely, since the police found the motorcycle not on the shoulder but
still on the road, that the three passengers were thrown off from the motorcycle to the
shoulder of the road and caught up with the wires.
PHILIPPINE NATIONAL BANK vs. CARMELITA S. SANTOS, REYME L. SANTOS,
ET.AL/LINA B. AGUILAR vs. CARMELITA SANTOS, REYME L. SATNTOS, ET.AL, G.R. No.
208293/G.R. No. 208295, December 10, 2014, J. Leonen
PNB failed to release to respondents their deposits as they released it to someone else. The
Supreme Court ruled that PNB, being a bank, should have exercised a degree of diligence
higher than that of a good father of a family. However, their actions and inactions
constitute gross negligence. Thus, the award for moral damages was in order. PNB and
Aguilar s gross negligence deprived Angel C. Santos heirs what is rightfully theirs.
Respondents also testified that they experienced anger and embarrassment when
petitioners PNB and Aguilar refused to release Angel C. Santos deposit.

Exemplary damages should also be awarded. The law allows the grant of exemplary
damages by way of example for the public good. The public relies on the banks sworn
profession of diligence and meticulousness in giving irreproachable service, which must be
maintained at all times by the banking sector.
RUKS KONSULT AND CONSTRUCTION vs. ADWORLD SIGN AND ADVERTISING
CORPORATION* AND TRANSWORLD MEDIA ADS, INC., G.R. No. 204866, January 21,
2015, J. Perlas-Bernabe
The petitioners were found negligent by both the RTC and the Court of Appeals and
ordered to pay jointly and severally for damages. The petitioners allege that they are not
negligent. The Supreme Court ruled that as 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
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that degree of care, precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury. CA correctly affirmed the RTC s finding that
Transworld and Ruks are guilty of negligence.
R TRANSPORT CORPORATIONvs. LUISITO G. YU, G.R. No. 174161, February 18, 2015,
J. Peralta

Negligence has been 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. Verily, foreseeability is the
fundamental test of negligence. 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.
The records show that driver Gimena was clearly running at a reckless speed. He did not
take the necessary precaution and instead, drove on and bumped the deceased despite
being aware that he was traversing a commercial center where pedestrians were crossing
the street. Gimena should have observed due diligence of a reasonably prudent man by
slackening his speed and proceeding cautiously while passing the area.
UNKNOWN OWNER OF THE VESSEL M/V CHINA JOY, SAMSUN SHIPPING LTD.,
AND INTER-ASIA MARINE TRANSPORT, INC. vs. ASIAN TERMINALS, INC., G.R.
No. 195661, March 11, 2015, J. Reyes
AT) suffered damage due to the fault of petitioners negligence. (owever, petitioners
contended that they should not be held liable for there was no negligence on their part. The
court ruled that Negligence, on the other hand, is defined as the failure to observe that
degree of care, precaution and vigilance that the circumstances justly demand, whereby
another suffers injury. In the case under consideration, the parties do not dispute the facts
of damage upon AT) s unloader, and of such damage being the consequence of someone s
negligence. However, the petitioners deny liability claiming that it was not established with
reasonable certainty whose negligence had caused the co-mingling of the metal bars with
the soybean meal cargo. The Court, on this matter, agrees with the CA s disquisition that
the petitioners should be held jointly and severally liable to ATI. ATI cannot be faulted for
its lack of direct access to evidence determinative as to who among the shipowner, Samsun,
ContiQuincyBunge and Inter-Asia should assume liability. The CA had exhaustively
discussed why the doctrine of res ipsa loquitur applies.
EASTERN SHIPPING LINES, INC., Petitioner, v. BPI/MS INSURANCE CORP., & MITSUI
SUMITOMO INSURANCE CO., LTD. G.R. No. 182864. January 12, 2015, J. PEREZ
Mere proof of delivery of the goods in good order to a common carrier and of their arrival
in bad order at their destination constitutes a prima facie case of fault or negligence against
the carrier. If no adequate explanation is given as to how the deterioration, loss, or
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destruction of the goods happened, the transporter shall be held responsible. From the
foregoing, the fault is attributable to ESLI. While no longer an issue, it may be nonetheless
state that ATI was correctly absolved of liability for the damage.
BJDC CONSTRUCTION, REPRESENTED BY ITS MANAGER/PROPRIETOR JANET S. DELA CRUZ
vs. NENA E. LANUZO, CLAUDETTE E. LANUZO, JANET E. LANUZO, JOAN BERNABE E. LANUZO,
AND RYAN JOSE E. LANUZO, G.R. No. 161151 March 24, 2014, J. BERSAMIN

This case involves a claim for damages arising from the death of a motorcycle rider in a
night time accident due to the supposed negligence of a construction company then
undertaking reblocking work on a national highway. The plaintiffs insisted that the
accident happened because the construction company did not provide adequate lighting on
the site, but the latter countered that the fatal accident was caused by the negligence of the
motorcycle rider himself. In order that a party may be held liable for damages for any
injury brought about by the negligence of another, the claimant must prove that the
negligence was the immediate and proximate cause of the injury. 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.
The company has shown the installation of the necessary warning signs and lights in the
project site. In that context, the fatal accident was not caused by any instrumentality within
the exclusive control of the company. In contrast, Balbino had the exclusive control of how
he operated and managed his motorcycle. The records disclose that he himself did not take
the necessary precautions. As Zamora declared, Balbino overtook another motorcycle rider
at a fast speed, and in the process could not avoid hitting a barricade at the site, caus ing
him to be thrown off his motorcycle onto the newly cemented road. SPO Corporal s
investigation report corroborated Zamora s declaration. )t was shown that the proximate
and immediate cause of the death of Balbino was his own negligence. Hence, the heirs could
not recover damages.
VICENTE JOSEFA v MANILA ELECTRIC COMPANY, G.R No. 182705, July 18, 2014.
J. BRION
Paragraph 5, Article 2180 of the Civil Code holds the employer vicariously liable for
damages caused by his employees within the scope of their assigned tasks. In this case,
Josefa seeks to avoid 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

138

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.
INDOPHIL TEXTILE MILLS, INC v ENGR. SALVADOR ADVIENTO, G.R No. 171212,
August 4, 2012. PERALTA.
Engr. Adviento was hired by Indophil Textile Mills to maintain its thread-manufacturing
facilities. Later he was diagnosed with Chronic Poly Sinusitis. Engr. Adviento filed a case for
damages based on quasi-delict with the RTC, alleging that he contracted such occupational
disease by reason of the gross negligence of petitioner to provide him with a safe, healthy
and workable environment. Indophil moved to dismiss, arguing that jurisdiction is with the
Labor Arbiter.
True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases.
(owever, Adviento s claim for damages is specifically grounded on petitioner s gross
negligence to provide a safe, healthy and workable environment for its employees a case
of quasi-delict.
Clearly, injury and damages were allegedly suffered by respondent, an element of quasidelict. Secondly, the previous contract of employment between petitioner and respondent
cannot be used to counter the element of "no pre-existing contractual relation" since
petitioner s alleged gross negligence in maintaining a hazardous work environment cannot
be considered a mere breach of such contract of employment, but falls squarely within the
elements of quasi-delict under Article 2176 of the Civil Code since the negligence is direct,
substantive and independent.
NEDLLOYD LIJNEN B.V. ROTTERDAM and THE EAST ASIATIC CO., LTD. vs. GLOW LAKS
ENTERPRISES, LTD, G.R. No. 156330 , November 19, 2014, J. PEREZ
The respondent loaded to the vessel owned by the petitioner who is common carrier. By an
unfortunate turn of events, however, unauthorized persons managed to forge the covering
bills of lading and on the basis of the falsified documents, the ports authority releas ed the
goods.
In this case, there is no dispute that the custody of the goods was never turned over to the
consignee or his agents but was lost into the hands of unauthorized persons who secured
possession thereof on the strength of falsified documents. The loss or the misdelivery of the
goods in the instant case gave rise to the presumption that the common carrier is at fault or
negligent.
A common carrier is presumed to have been negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported. When the goods shipped are either
lost or arrived in damaged condition, a presumption arises against the carrier of its failure
to observe that diligence, and there need not be an express finding of negligence to hold it
liable. To overcome the presumption of negligence, the common carrier must establish by
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adequate proof that it exercised extraordinary diligence over the goods. It must do more
than merely show that some other party could be responsible for the damage. In the
present case, petitioners failed to prove that they did exercise the degree of diligence
required by law over the goods they transported.
Sanitary Steam Laundry, Inc. vs. Court of Appeals, 300 SCRA 20
The driver was in violation of the Land Transportation and Traffic Code when
its vehicle got involved in an accident that killed three persons. For the driver
to be found negligent petitioner must show that the violation of the statute was
the proximate or legal cause of the injury or that it substantially contribute d
thereto because such negligence, consisting in whole or in part, of violation of
law, like any other negligence is without legal consequence unless it is a
contributing cause of the injury.
Mckee vs. Intermediate Appellate Court, 211 SCRA 517
A head-on-collision took place between a cargo truck driver and a car driver
Jose Koh, which resulted in the death of Jose Koh and two others because the
Koh avoided hitting two boys who suddenly darted across the lane. Under the
Emergency Rule, Koh was not negligent because his entry into the lane of the
truck was necessary in order to avoid what was, in his mind at that time, a
greater peril of death or injury to the two boys. Under this rule, a person who,
without fault or negligence on his part, is suddenly placed in an emergency or
unexpected danger and compelled to act instantly and instinctively with no
time for reflection and exercise of the required precaution, is not guilty of
negligence and, therefore, exempt from liability, if he did not make the wisest
choice of the available courses of conduct to avoid injury which a reasonably
prudent person would have made under normal circumstances.

Del Rosario vs. M anila Electric Co., 57 Phil. 478

An overhead wire of Meralco conducting electricity parted and one of the
charged ends fell to the ground, and a nine (9) year old school child touched
the wire and was electrocuted. It is doubtful whether contributory negligence
can properly be imputed to the deceased, owing to his immature years and the
natural curiosity which a child would feel to do something out of the ordinary,
and the mere fact that the deceased ignored the caution of a companion of the
age of 8 years does not, in our opinion, alter the case.

Astudillo vs. M anila Electric Co., 55 Phil. 327

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A young man by the name of Juan Diaz Astudillo met his death through
electrocution, when he placed his right hand on a wire connected with an
electric light pole owned by Meralco. Meralco was negligent in so placing the
pole and wires as to be within the proximity of a place frequented by many
persons, with the possibility of coming in contact with a highly charged and
defectively insulated wire.
Bernardo vs. Legaspi, 29 Phil. 12
Two automobiles, going in opposite directions, collide on turning a street
corner, and it appears from the evidence that the drivers were equally negligent
and contributed equally to the collision. Under the doctrine of contributory
negligence, neither can recover from the other for the damages suffered.
Negros Navigation Co., Inc. vs. Court of Appeals, 281 SCRA 534
The ship captain of MT Tacloban City, an oil tanker owned by PNOC, was
playing mah-jong when it collided off the Tablan Strait in Mindoro, with M,V
Don Juan owned by petitioner NENACO. The owner of the ship was found
equally negligent with the ship captain because of tolerating the playing of
mahjong by the ship captain and other crew members while on board the ship
and failing to keep the ship seaworthy.
Philippine Long Distance Telephone Co., Inc. vs. Court of Appeals, 178
SCRA 94
The jeepney of the respondents fell into an open excavation when the jeep
swerved from the inside lane of the street, respondents being aware of the
presence of said excavation. The negligence of respondent Antonio Esteban was
not only contributory to his injuries and those of his wife but goes to the very
cause of the occurrence of the accident, as one of its determining factors, and
thereby precludes their right to recover damages.
GROSS M ISCONDUCT
DR. IDOL L. BONDOC vs. MARILOU R. MANTALA, G.R. No. 203080, November 12, 2014,
J. Villarma, Jr.
A physician is guilty of gross misconduct when he chose to conduct a normal delivery and
deliberately left her patient to a midwife and two inexperienced assistants despite knowing
that the patient was under prolonged painful labor and about to give birth to a macrosomic
baby by vaginal delivery which resulted to a stillborn baby and the loss of her reproductive
capacity. A physician should be dedicated to provide competent medical care with f ull
professional skill in accordance with the current standards of care, compassion,
independence and respect for human dignity.
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NOEL CASUMPANG, RUBY SANGA-MIRANDA AND SAN JUAN DE DIOS HOSPITAL, vs.
NELSON CORTEJO, G.R. No. 171127/DRA. RUBY SANGA-MIRANDA, v. NELSON
CORTEJO, G.R. No. 171217/SAN JUAN DE DIOS HOSPITAL, vs. NELSON CORTEJO, G.R.
No. 171228, March 11, 2015, J. Brion
Dr. Casumpang and Dr. Miranda are accused of negligence leading to the death of a young
boy. The SC held that, to successfully pursue a medical malpractice suit, the plaintiff (in this
case, the deceased patient's heir) 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 negligence are: (1) duty; (2) breach; (3) injury; and (4) proximate causation. Given
these elements, only Dr. Casumpang, attending physician, was found to be negligent for
having failed to promptly detect dengue fever and undertake the proper medical
management needed for this disease.

THE CONJUGAL PARTNERSHIP OF THE SPOUSES VICENTE VADAVEDO AND BENITA

ARCOYCADAVEDO(both deceased), substituted by their heirs, namely: HERMINIA,
PASTORA, Heirs of FRUCTUOSA, Heirs of RAQUEL, EVANGELINE, VICENTE JR., and
ARMANO, all surnamed CADAVEDO vs. VICTORINO (VIC) T. LACAYA, married to Rosa
Legados, G.R. No. 173188, January 15, 2014, J. Brion

Atty. Lacaya claims he had an arrangement with his client that he would be awarded one
half of the property acquired by his client if they obtained favorable judgment.
Article 1491 (5) of the Civil Code forbids lawyers from acquiring, by purchase or
assignment, the property that has been the subject of litigation in which they have taken
part by virtue of their profession. The same proscription is provided under Rule 10 of the
Canons of Professional Ethics.
A thing is in litigation if there is a contest or litigation over it in court or when it is subject
of the judicial action. Following this definition, SC held that the subject lot was still in
litigation when Atty. Lacaya acquired the disputed one-half portion. We note in this regard
the following established facts:(1)on September 21, 1981, Atty. Lacaya filed a motion for
the issuance of a writ of execution in Civil Case No. 1721; (2) on September 23, 1981, the
spouses Ames filed Civil Case No. 3352 against the spouses Cadavedo; (3)on October 16,
1981, the RTC granted the motion filed for the issuance of a writ of execution in Civil Case
No. 1721 and the spouses Cadavedo took possession of the subject lot on October 24, 1981;
(4) soon after, the subject lot was surveyed and subdivided into two equal portions, and
Atty. Lacaya took possession of one of the subdivided portions; and (5) on May 13, 1982,
Vicente and Atty. Lacaya executed the compromise agreement.

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From these timelines, whether by virtue of the alleged oral contingent fee agr eement or an
agreement subsequently entered into, Atty. Lacaya acquired the disputed one -half portion
(which was after October 24, 1981) while Civil Case No. 3352 and the motion for the
issuance of a writ of execution in Civil Case No. 1721 were already pending before the
lower courts. Similarly, the compromise agreement, including the subsequent judicial
approval, was effected during the pendency of Civil Case No. 3352. In all of these, the
relationship of a lawyer and a client still existed between Atty. Lacaya and the spouses
Cadavedo.
Thus, whether we consider these them to be prohibited and void by reason of public policy.
Under Article 1409 of the Civil Code, contracts which are contrary to public policy and
those expressly prohibited or declared void by law are considered in existent and void
from the beginning.
While contingent fee agreements are indeed recognized in this jurisdiction as a valid
exception to the prohibitions under Article 1491(5) of the Civil Code, this recognition does
not apply to the present case. A contingent fee contract is an agreement in writing where
the fee, often a fixed percentage of what may be recovered in the action, is made to depend
upon the success of the litigation. The payment of the contingent fee is not made durin g the
pendency of the litigation involving the client s property but only after the judgment has
been rendered in the case handled by the lawyer.
In the present case, we reiterate that the transfer or assignment of the disputed one -half
portion to Atty. Lacaya took place while the subject lot was still under litigation and the
lawyer-client relationship still existed between him and the spouses Cadavedo. Thus, the
general prohibition provided under Article 1491 of the Civil Code, rather than the
exception provided in jurisprudence, applies.
The compromise agreement entered into between Vicente and Atty. Lacaya in Civil Case No.
ejectment case was intended to ratify and confirm Atty. Lacaya s acquisition and
possession of the disputed one-half portion which were made in violation of Article 1491
(5) of the Civil Code. As earlier discussed, such acquisition is void; the compromise
agreement, which had for its object a void transaction, should be void.
A contract whose cause, object or purpose is contrary to law, morals, good customs, public
order or public policy is in existent and void from the beginning. It can never be ratified nor
the action or defense for the declaration of the in existence of the contract prescribe; and
any contract directly resulting from such illegal contract is likewise void and in existent.
Consequently, the compromise agreement did not supersede the written contingent fee
agreement providing for attorney s fee of P2,000.00.

SC fixed the attorney s fees on a quantum meruit basis.The doctrine of quantum meruit is a
device to prevent undue enrichment based on the equitable postulate that it is unjust for a
person to retain benefit without paying for it.

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SPECIAL LIABILITY IN PARTICULAR ACTIVITIES

Doctors
PEDRITO DELA TORRE vs. DR. ARTURO IMBUIDO, DRA. NORMA IMBUIDO in their capacity as
owners and operators of DIVINE SPIRIT GENERAL HOSPITAL and/or DR. NESTOR PASAMBA,
G.R. No. 192973, September 29, 2014, J. Reyes

Medical malpractice or, more appropriately, 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.
As the Court held in Spouses Flores v. Spouses Pineda, et al. ,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. As regards the respondents' counterclaim, the CA's award of P48,515.58 is
sustained.
Ramos vs. Court of Appeals, 321 SCRA 584
At the time of her admission, patient Erlinda Ramos was neurologically sound
but during the administration of anesthesia and prior to the performance of a
gall bladder operation, she suffered irreparable damage to her brain and was
diaganosed to be suffering from diffuse cerebral parenchymal damage. The
damage sustained by Erlinda Erlinda in her brain prior to a scheduled gall
bladder operation presents a case for the application of res ipsa loquitur in
medical malpractice as it was found out that brain damage does not normally
occur in the process of gall bladder operations, and does not happen in the
absence of negligence of someone in the administration of anesthesia and in
the use of endotracheal tube.

Batiquin vs. Court of Appeals, 258 SCRA 334

A piece of rubber glove was left in the abdomen of a patient after a caesarean
section operation. The doctrine of res ipsa loquitor applies because aside from
the caesarean section, private respondent Villegas underwent no other
operation which could have caused the offending piece of rubber to appear in
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her uterus, it stands to reason that such could only have been a by-product of
the caesarean section performed by Dr. Batiquin.
Lawyers
Roque vs. Gunigundo, 89 SCRA 178
Atty. Gunigundo was charged by his client Roque with G.R.oss negligence in
not seasonably filing their motion for reconsideration and in not perfecting an
appeal from the trial courts order of dismissal. Atty. Gunigundo's filing of
motions for extension on the last day and sending them by registered mail
(thus giving the court insufficient time to act before the extension sought had
expired) and his omission to verify whether his second motion for extension
was granted are indicative of lack of competence, diligence and fidelity in the
dispatch of his clients business.
Adarne vs. Aldaba, 83 SCRA 734
Adarne was declared in default for failure to appear in the hearing because his
one of his lawyers honestly believed that he had appeared for the complainant
only for a special purpose and that the complainant had agreed to contact his
attorney of record to handle his case after the hearing of October 23, 1964, so
that he did nothing more about it. An attorney is not bound to exercise
extraordinary diligence, but only a reasonable degree of care and skill having
reference to the character of the business he undertakes to do.
STRICT LIABILITY
Vestil vs. Intermediate Appellate Court, 179 SCRA 47
Theness, a three-year old child, was killed after she was bitten by a dog while
she was playing with the child of Purita Vestil in the house of Vicente Miranda,
the late father of Purita. Spouses Vestils contention that they cannot be
faulted as they are not the owner of the house where the child was bitten
cannot be accepted because under the Article 2183 of the Civil Code the
possessor of animal is liable even if the animal should escape or be lost and
so be removed from his control.
Amadora vs. Court of Appeals, 160 SCRA 315
Amadora was shot dead by his classmate Daffon inside the school auditorium,
when the classes had formally ended. As long as it can be shown that the
student is in the school premises in pursuance of a legitimate student
objective, in the exercise of a legitimate student right, and even in the
enjoyment of a legitimate student privilege, the responsibility of the school
authorities over the student continues.
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Caedo vs. Yu Khe Thai, 26 SCRA 410

Yu was inside his car when his driver bumped a carretela in front and at the
same time hit another car coming from the opposite direct. Under [Article
2184], if the causative factor was the drivers negligence, the owner of the
vehicle who was present is likewise held liable if he could have prevented the
mishap by the exercise of due diligence.
ART 2176 , 2177
ANDAMO vs. IAC, G.R. NO. 74761November 6, 1990
Clearly, from petitioner's complaint, the waterpaths and contrivances built by
respondent corporation are alleged to have inundated the land of petitioners.
All the elements of a quasi-delict or culpa aquiliana are present, to wit: (a)
damages suffered by the plaintiff, (b) fault or negligence of the defendant, or
some other person for whose acts he must respond; and (c) the connection of
cause and effect between the fault or negligence of the defendant and the
damages incurred by the plaintiff.

PONCE vs. LEGASPI, G.R. NO. 79184 M ay 6, 1992

The present case stemmed from the filing before the Supreme Court OF a
complaint for disbarment against respondent by petitioner which was
dismissed. Respondent thereafter filed a complaint for damages against the
petitioner. The adverse result of an action does not per se make the action
wrongful and subject the actor to make payment of damages for the law could
not have meant to impose a penalty on the right to because one who exercises
his rights does no injury, and if damage results from a person's exe rcising his
legal rights, it is damnum absque injuria.
EXTRAORDINARY DILIGENCE
EASTERN SHIPPING LINES INC., vs. BPI/MS INSURANCE CORP. and MITSUI SUM TOMO
INSURANCE CO. LTD., G.R. No. 193986
January 15, 2014, J. Villarama, Jr.
It bears stressing unto petitioner that common carriers, from the nature of their business
and for reasons of public policy, are bound to observe extraordinary diligence in the
vigilance over the goods transported by them. Subject to certain exceptions enumerated
under Article 1734 of the Civil Code, common carriers are responsible for the loss,
destruction, or deterioration of the goods. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed in the possession of, and
146

received by the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has a right to receive
them. Owing to this high degree of diligence required of them, common carriers, as a
general rule, are presumed to have been at fault or negligent if the goods they transported
deteriorated or got lost or destroyed. That is, unless they prove that they exercised
extraordinary diligence in transporting the goods. In order to avoid responsibility for any
loss or damage, therefore, they have the burden of proving that they observed such high
level of diligence. In this case, petitioner failed to hurdle such burden.
RES IPSA LOQUITUR
VICENTE JOSEFA vs. MANILA ELECTRICCOMPANY, G.R. No. 182705, July 18, 2014,
J.Brion
For the doctrine of res ipsa loquitur to apply, the complainant must show that: (1) the
accident is of such character as to warrant an inference that it would not have happened
except for the defendant s negligence (2) the accident must have been caused by an agency
or instrumentality within the exclusive management or control of the person charged with
the negligence complained of and
the accident must not have been due to any
voluntary action or contribution on the part of the person injured. The present case
satisfies all the elements of res ipsa loquitur.
UNKNOWN OWNER OF THE VESSEL M/V CHINA JOY, SAMSUN SHIPPING LTD., AND
INTER-ASIA MARINE TRANSPORT, INC. v. ASIAN TERMINALS, INC, G.R. No. 195661.
March 11, 2015, J. REYES
The three requisites to the application of the doctrine of res ipsa loquitur are found to be
attendant in the case at bar. First, the co-mingling of the two foreign metal objects with the
soybean meal cargo and the consequent damage to AT) s unloader is an accident which
ordinarily does not occur in the absence of someone s negligence. Second, the foreign metal
objects were found in the vessel s (old No. , which is within the exclusive control of the
petitioners. Third, records do not show that AT) s negligence had in any way contributed to
the damage caused to its unloader. All 3 requisites of res ipsa loquitur being present, the
presumption or inference arises that defendants negligence was the proximate cause of
the damage to AT) s unloader. The burden of evidence shifted to defendants to prove
otherwise. The defendants failed to do so.
INTERNATIONAL CONTAINER TERMINAL SERVICES INC. VS. CELESTE M. CHUA, G.R.
No. 195031March 26, 2014, J. PEREZ
The container van loaded with the personal effects of respondent Chua arrived at North
Harbor, Manila and was unloaded in the depot belonging to petitioner for safekeeping
pending the customs inspection. The container van was stripped and partially inspected by
custom authorities. Further inspection thereof was scheduled on May 8, 1997. However, on
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the date scheduled, petitioner s depot was gutted by fire and respondent s container van
was burned.
Under the circumstances of this case, petitioner is liable to respondent for damages on
account of the loss of the contents of her container van. Petitioner itself admitted during
the pretrial of this case that respondent s container van caught fire while stored within its
premises. Absent any justifiable explanation on the part of petitioner on the cause of the
fire as would absolve it from liability, the presumption that there was negligence on its part
comes into play. The situation in this case, therefore, calls for the application of the
doctrine of res ipsa loquitur.
The doctrine is based on the theory that the defendant either knows the cause of the
accident or has the best opportunity of ascertaining it and the plaintiff, having no
knowledge thereof, is compelled to allege negligence in general terms. In such instance, the
plaintiff relies on proof of the happening of the accident alone to establish negligence. The
principle, furthermore, provides a means by which a plaintiff can hold liable a defendant
who, if innocent, should be able to prove that he exercised due care to prevent the acc ident
complained of from happening. )t is, consequently, the defendant s responsibility to show
that there was no negligence on his part. The doctrine, however, can be invoked when and
only when, under the circumstances involved, direct evidence is absent and not readily
available. Here, there was no evidence as to how or why the fire in the container yard of
petitioner started; hence, it was up to petitioner to satisfactorily prove that it exercised the
diligence required to prevent the fire from happening. This it failed to do. Thus, the trial
court and the Court of Appeals acted appropriately in applying the principle of res ipsa
loquitur to the case at bar.
VICENTE JOSEFA v MANILA ELECTRIC COMPANY, G.R No. 182705, July 18, 2014. J.
BRION
Res ipsa loquitor is the doctrine which postulates that, as a matter of common knowledge
and experience and in the absence of some explanation by the defendant who is charged
with negligence, the very nature of occurrences may justify an inference of negligence on
the part of the person who controls the instrumentality causing the injury.
In this case, the driver Bautista is presumed to be negligent in driving the truck under the
res ipsa loquitor doctrine. The present case satisfies all the elements of res ipsa loquitur. It
is very unusual and extraordinary for the truck to hit an electricity post, an immovable and
stationary object, unless Bautista, who had the exclusive management and control of the
truck, acted with fault or negligence.

DAM AGES

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NEW WORLD DEVELOPERS AND MANAGEMENT INC. vs. AMA COMPUTER LEARNING
CENTER INC., G.R. Nos. 187930 & 188250, February 23, 2015, C.J. Sereno
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. Also proper is an award of exemplary damages since
pursuant to Article 2234, petitioner was able to prove he was entitled moral, temperate or
compensatory damages were it not for the stipulation of liquidated damages.
MERALCO vs. RAM OY, G.R. NO. 158911, M arch 4, 2008
In the present case, MERALCO wilfully caused injury to Leoncio Ramoy by
withholding from him and his tenants the supply of electricity to which they
were entitled under the Service Contract. MERALCO's failure to exercise
utmost care and diligence in the performance of its obligation to its customer,
is tantamount to bad faith hence is entitled to moral damages.
MINDANAO TERM INAL AND BROKERAGE SERVICE, INC. vs. PHOENIX
ASSURANCE COMPANY OF NEW YORK,MCGEE & CO., INC., G.R. NO.
162467, M ay 8, 2009
The Court ruled that Mindanao Terminal had duly exercised the required
degree of diligence in loading and stowing the cargoes, which is the ordinary
diligence of a good father of a family. There is no basis for the award of
attorneys fees in favor of petitioner since none of the circumstances
enumerated in Article 2208 of the Civil Code exists because the present case is
clearly not an unfounded civil action against the plaintiff as there is no
showing that it was instituted for the mere purpose of vexation or injury.
AIR FRANCE vs.CARRASCOSO, G.R. NO. L-21438, September 28, 1966
Plaintiff was forced out of his seat in the first class compartment of the plane
belonging to the defendant Air France while at Bangkok, and was transferred to
the tourist class without his consent and against his will. The contract of air
carriage, therefore, generates a relation attended with a public duty, and
neglect or malfeasance of the carrier's employees, naturally, could give ground
for an action for damages.

149

BAYANI vs. PANAY ELECTRIC CO., INC., G.R. NO. 139680, April 12, 2000
The requisites for an action for damages based on malicious prosecution are:
(1) the fact of the prosecution and the further fact that the defendant was
himself the prosecutor, and that the action was finally terminated with an
acquittal;
(2) that in bringing the action, the prosecutor acted without probable cause;
and
(3) the prosecutor was actuated or impelled by legal malice.
WASSMER vs VELEZ, G.R. NO. L-20089, December 26, 1964

Two days before the wedding, defendant, who was then 28 years old, simply left
a note for plaintiff stating: "Will have to postpone wedding My mother
opposes it ... ", then enplaned to his home city in Mindanao, and never
returned and was never heard from again. This is not a case of mere breach of
promise to marry but unjustifiably contrary to good customs for which
defendant must be held answerable in damages in accordance with Article 21
aforesaid and per express provision of Article 2219 (10) of the New Civil Code,
moral damages are recoverable in the cases mentioned in Article 21 of said
Code.

SANTOS VENTURA HOCORMA FOUNDATION, INC. vs. ERNESTO V.

SANTOS and RIVERLAND, INC., G.R. NO. 153004, November 5, 2004
The demand letter sent to the petitioner on October 28, 1992, was in
accordance with an extra-judicial demand contemplated by law. When the
debtor knows the amount and period when he is to pay, interest as damages is
generally allowed as a matter of right.
EXEMPLARY DAM AGES
METROPOLITAN BANK AND TRUST COMPANY vs. ANA GRACE ROSALES AND YO YUK
TO, G.R. No. 183204, JANUARY 13, 2014, J. del Castillo
As to the award of exemplary damages, Article 2229 of the 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. They are
awarded only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. The bank acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner when it refused to release the deposits of respondents without any
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legal basis. The banking industry is impressed with public interest. As such, the highest
degree of diligence is expected, and high standards of integrity and performance are even
required of it. It must therefore treat the accounts of its depositors with meticulous care
and always to have in mind the fiduciary nature of its relationship with them.
SEVEN BROTHERS SHIPPING CORPORATION vs. DMC-CONSTRUCTION RESOURCES,
INC., G.R. No. 193914. November 26, 2014, C.J. Sereno
Petitioner questions the decision of the CA awarding respondent nominal damages after
having ruled that the actual damages awarded by the RTC was unfounded. Petitioner
argues that nominal damages are only awarded to vindicate a right that has been violated
and not to indemnify a party for any loss suffered by the latter. The SC r uled that what
should have been awarded was temperate and not nominal damages. 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. Considering that it has been established that respondent suffered a loss, even if
the amount thereof cannot be proven with certainty, the Court ruled that what should have
been awarded was temperate damages.
PEOPLE OF THE PHILIPPINES vs. SHIRLEY A. CASIO, G.R. No. 211465, December 3,
2014, J. Leonen
The payment of P500,000 as moral damages and P100,000 as exemplary damages for the
crime of Trafficking in Persons as a Prostitute finds basis in Article 2219 of the Civil Code,
which provides that Moral and Exemplary Damages may be awarded in cases of seduction,
abduction, rape, or other lascivious acts. 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. To be trafficked as a prostitute without one s consent and to be sexually
violated four to five times a day by different strangers is horrendous and atrocious. There
is no doubt that Lolita experienced physical suffering, mental anguish, fright, ser ious
anxiety, besmirched reputation, wounded feelings, moral shock, and social humiliation
when she was trafficked as a prostitute in Malaysia. Since the crime of Trafficking in
Persons was aggravated, being committed by a syndicate, the award of exemplary damages
is likewise justified.
TELEFAST COMMUNICATIONS vs. CASTRO, G.R. NO. 73867, February 29,
1988
Petitioner and private respondent entered into a contract whereby, for a fee,
petitioner undertook to send said private respondent's message overseas by
teleG.R.am but which petitioner did not do, despite performance by said private
respondent of her obligation by paying the required charges. The award of
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exemplary damages by the trial court is likewise justified and, therefore,

sustained as a warning to all teleG.R.am companies to observe due diligence in
transmitting the messages of their customers.
BANK OF THE PHILIPPINE ISLANDS vs.COURT OF APPEALS, G.R. NO.
136202, January 25, 2007
Upon the prompting of Templonuevo and with full knowledge of th e brewing
dispute between Salazar and Templonuevo, petitioner debited the account held
in the name of the sole proprietorship of Salazar without even serving due
notice upon her. The award of exemplary damages is justified when the acts
of the bank are attended by malice, bad faith or gross negligence and the award
of reasonable attorneys fees is proper where exemplary damages are awarded
because depositors are compelled to litigate to protect their interest.
ACTUAL or COMPENSATORY DAMAGES
S.V. MORE PHARMA CORPORATION AND ALBERTO SANTILLAN VS. DRUGMAKERS
LABORATORIES INC. AND ELIEZER DEL MUNDO G.R. Nos. 200408/200416. November
12, 2014, J. PERLAS-BERNABE
It was an error to award actual damages for supposed loss of profits based on the
erroneous sales projection. 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. Nevertheless,
considering that injured party palpably suffered some form of pecuniary loss resulting
from the breach of contract it was proper to, instead, award in their favor temperate
damages.
ALEJANDRO C. ALMENDRAS JR. VS. ALEXIS C. ALMENDRAS G.R. No. 179491. January
14, 2015, J. SERENO
In awarding damages in libel cases, the court is given ample discretion to determine the
amount, depending upon the facts of the particular case. Article 2219 of the Civil Code
expressly authorizes the recovery of moral damages in cases of libel, slander or any other
form of defamation. However, "while no proof of pecuniary loss is necessary in order that
moral damages may be awarded, it is nevertheless essential that the claimant should
satisfactorily show the existence of the factual basis of damages and its causal connection
to defendant s acts." Considering that respondent sufficiently justified his claim for
damages (he testified that he was "embarrassed by the said letters and ashamed to show
his face in government offices"), the Court found that he was entitled to moral and
exemplary damages.

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LITO CORPUZ vs. PEOPLE OF THE PHILIPPINES, G.R. No. 180016 April 29, 2014, J.
PERALTA
In our jurisdiction, civil indemnity is awarded to the offended party as a kind of monetary
restitution or compensation to the victim for the damage or infraction that was done to the
latter by the accused, which in a sense only covers the civil aspect. Precisely, it is civil
indemnity. Thus, in a crime where a person dies, in addition to the penalty of imprisonment
imposed to the offender, the accused is also ordered to pay the victim a sum of money as
restitution. Clearly, this award of civil indemnity due to the death of the victim could not be
contemplated as akin to the value of a thing that is unlawfully taken which is the basis in
the imposition of the proper penalty in certain crimes. Thus, the reasoning in increasing the
value of civil indemnity awarded in some offense cannot be the same reasoning that would
sustain the adoption of the suggested ratio. Also, it is apparent from Article 2206 that the
law only imposes a minimum amount for awards of civil indemnity, which is P3,000.00.
The law did not provide for a ceiling. Thus, although the minimum amount for the award
cannot be changed, increasing the amount awarded as civil indemnity can be validly
modified and increased when the present circumstance warrants it. Corollarily, moral
damages under Article 2220of the Civil Code also does not fix the amount of damages that
can be awarded. It is discretionary upon the court, depending on the mental anguish or the
suffering of the private offended party. The amount of moral damages can, in relation to
civil indemnity, be adjusted so long as it does not exceed the award of civil indemnity.
SNOW MOUNTAIN DAIRY CORPORATION vs. GMA VETERANS FORCE, INC., G.R. No.
192446, November 19, 2014, J. Peralta
Actual or compensatory damages are those awarded in satisfaction of, or in recompense
for, loss or injury sustained. The burden is to establish one's case by a preponderance of
evidence which means that the evidence, as a whole, adduced by one side, is sup erior to
that of the other. Actual damages are not presumed. In this case, GMA Veterans had not
shown that the security guards were not assigned to another employer, and that it was
compelled to pay the guards despite the pre-termination of the security agreement to be
entitled to the amount of PI6,014.00 per month. Indeed, no evidence was presented by
GMA Veterans establishing the actual amount of loss suffered by reason of the pre termination. It is elementary that to recover damages, there must be pleading and proof of
actual damages suffered. Temperate damages may be allowed in cases where from the
nature of the case, definite proof of pecuniary loss cannot be adduced, although the court is
convinced that the aggrieved party suffered some pecuniary loss. The SC also take into
consideration that GMA Veterans certainly spent for the security guard's training, firearms
with ammunitions, uniforms and other necessary things before their deployment to Snow
Mountain. Hence, the SC find it just and proper to award temperate damages in the amount
of P200,000.00 in lieu of actual damages.

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LOADSTAR SHIPPINGCOMPANY, INCORPORATED and LOADSTARINTERNATIONAL

SHIPPINGCOMPANY, INCORPORATED vs. MALAYAN INSURANCE COMPANY,
INCORPORATED, G.R. No. 185565, November 26, 2014, J. Reyes
Actual damages are not presumed. The claimant must prove the actual amount of loss with
a reasonable degree of certainty premised upon competent proof and on the best evidence
obtainable. Thus, an insurer of copper concentrates which were contaminated by seawater
while at sea, who, along with the consignee, arbitrarily fixed the salvage value of the cargo,
and who failed to refute expert testimony from the common carrier as regards the lack of
any adverse effect of seawater on copper concentrates, then actual damages are not
proven.
ART 2203
VELASCO vs.MERALCO, G.R. NO. L-18390, August 6, 1971
It is undisputed that a sound unceasingly emanates from the substation of
MERALCO and whether this sound constitutes an actionable nuisance or not is
the principal issue in this case and appellant asked that he be declared entitled
to recover compensatory, moral and other damages. Article 2203 clearly
obligates the injured party to undertake measures that will alleviate and not
aggravate his condition after the infliction of the injury, and places upon him
the burden of explaining why he could not do so.
MORAL DAMAGES
ARCO PULP AND PAPER CO. v DAN T. LIM, G.R No. 206806, June 25, 2014. J. LEONEN
Moral damages are not recoverable on the mere breach of contract. Article 2220 requires
that the breach be done fraudulently or in bad faith. 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. When the party
to a contract s actions clearly show "a dishonest purpose o r 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 be awarded. Here, the Court
justified the award since the debtor issued a bouncing check in partial payment of its
obligation, 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 the creditor.

154

WPM INTERNATIONAL TRADING, INC. and WARLITO P. MANLAPAZ v FE CORAZON

LABAYEN, G.R No. 182770, September 17, 2014. J. BRION
On the award of moral damages, the Court found the award in order in view of WPM's
unjustified refusal to pay a just debt. Such cold refusal to pay a just debt amounts to a
breach of contract in bad faith, as contemplated by Article 2220.
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.
FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK, INC., vs. SPOUSES
CONRADO AND MARIA VICTORIA RONQUILLO, G.R. No. 185798, JANUARY 13, 2014, J.
Perez
In order that moral damages may be awarded in breach of contract cases, the defendant
must have acted in bad faith, must be found guilty of gross negligence amounting to bad
faith, or must have acted in wanton disregard of contractual obligations. Petitioners acted
in bad faith when they breached their contract, when they failed to address respondents
grievances and when they adamantly refused to refund respondents' payment.

SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES ROGELIO AND

ELIZABETH RABAJA AND ROSARIO GONZALES,G.R. No. 199990, February 04, 2015, J.
Mendoza

The award of damages to Spouses Rabaja cannot be sustained by this Court. 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. Article 2220
of the New Civil Code provides that to award moral damages in a breach of contract, the
defendant must act fraudulently or in bad faith. In this case, Spouses Rabaja failed to
sufficiently show that Spouses Salvador acted in a fraudulent manner or with bad faith
when it breached the contract of sale. Thus, the award of moral damages cannot be
warranted.
NANCY S. MONTINOLA v PHILIPPINE AIRLINES. G.R No. 198656, September 8, 2014.
LEONEN
Illegally suspended employees, similar to illegally dismissed employees, are entitled to
moral damages when their suspension was attended by bad faith or fraud, oppressive to
labor, or done in a manner contrary to morals, good customs, or public policy.
In this case, a PAL employee was suspended for one year. In upholding the award of moral
damages, the Court said that PAL s act was contrary to morals, good customs, and public
policy. PAL was willing to deprive Montinola of the wages she would have earned during
155

her year of suspension even if there was no substantial evidence that she was involved in
the pilferage.
BPI EXPRESS CARD CORPORATION vs. MA. ANTONIA R. ARMOVIT, G.R. No. 163654,
October 8, 2014, J. Bersamin
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. Malice or bad faith 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. Nowhere in the terms and conditions requires the
defendant to submit new application form in order to reactivate her credit card. Indeed,
BPI Express Credit did not observe the prudence expected of banks whose business was
imbued with public interest, hence, defendant is entitled to damages.
JOSE ESPINELI a.k.a. DANILO ESPINELI vs. PEOPLE OF THE PHILIPPINES, G.R. No.
179535, June 9, 2014, J. Del Castillo
Moral damages 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, such as when the
victim was gunned down in front of his house. If medical and funeral expenses were
substantiated, actual damages may be awarded. However, damages for loss of earning
capacity may not be awarded absent 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 testimony of the wife of the victim, a Senior Desk Coordinator of a
radio station, as to the latter s monthly salary without any documentary evidence will not
suffice to substantiate the claim.
BPI vs CA, G.R. NO. 136202, January 25, 2007
The bank froze and later unilaterally debited an amount from the account of
A.A. Salazar Construction and Engineering Services without informing her that
it had already done so, which caused plaintiff-appellee great damage and
prejudice particularly when she had already issued checks drawn against the
said account and as can be expected, the said checks bounced, thereby
causing private respondent Salazar undue embarrassment and inflicting
damage to her standing in the business community.

156

A depositor has the right to recover reasonable moral damages even if the
banks negligence may not have been attended with malice and bad faith, if the
former suffered mental anguish, serious anxiety, embarrassment and
humiliation.
VILLA REY TRANSIT, INC., vs. THE COURT OF APPEALS, G.R. NO. L25499 February 18, 1970
The trial court and the Court of Appeals, both found that the accident and the
death of Policronio had been due to the negligence of the bus driver, for whom
petitioner was liable under its contract of carriage with the deceased but the
only issue raised in this appeal is the amount of damages recoverable by
private respondents herein. The determination of the indemnity to be awarded
to the heirs of a deceased person has therefore no fixed basis and much is left
to the discretion of the court considering the moral and material damages
involved, and so it has been said that "(t)here can be no exact or uniform rule
for measuring the value of a human life and the measure of damages cannot be
arrived at by precise mathematical calculation, but the amount recoverable
depends on the particular facts and circumstances of each case.
PEOPLE vs. EBAROLA, G.R. NO. L-69666, January 23, 1992

Appellant had been convicted of homicide and the trial court awarded the
amount of P100,000.00 to the heirs of Manahan as indemnity for death. The
indemnity for death must be reduced to P50,000.00 conformably with
prevailing jurisprudence on the matter and aside from the ordinary indemnity
for death appellant is obliged: (1) to compensate the heirs for the latter's loss of
earning capacity; (2) to give support in the form of expenses for education to
dependents of the deceased and (3) to pay the heirs for moral damages for the
mental anguish suffered by them.
COJUANGCO vs. COURT OF APPEALS, G.R. NO. 119398. July 2, 1999
To hold public officers personally liable for moral and exemplary damages and
for attorneys fees for acts done in the performance of official functions, the
plaintiff must prove that these officers exhibited acts characterized by evident
bad faith, malice, or gross negligence, but even if their acts had not been so
tainted, public officers may still be held liable for nominal damages if they had
violated the plaintiffs constitutional rights.

TEMPERATE DAMAGES

157

S.V. MORE PHARMA CORPORATION and ALBERTO A. SANTILLANA vs. DRUGMAKERS LABO
RA TORIES, INC. and ELIEZER DEL MUNDO; S.V. MORE PHARMA CORPORATION and ALBERTO
A. SANTILLANA vs. DRUGMAKERS LABO RA TORIES, INC. and ELIEZER DEL MUNDO, G.R. No.
200408; G.R. No. 200416, November 12, 2014, J. Perlas- Bernabe
The existence of contractual breach in this case revolves around the exclusive status of Drugmakers
as the manufacturer of the subject pharmaceutical products. In particular, the Contract
Manufacturing Agreement states that Drugmakers, being the exclusive manufacturer of the subject
pharmaceutical products, had to first give its written consent before S.V. More could contract the
services of another manufacturer. The agreements notwithstanding, S.V More, through the CMPP
and absent the prior written consent of Drugmakers, contracted the services of Hizon Laboratories
to manufacture some of the pharmaceutical products covered by the said contracts. Considering
that Drugmakers palpably suffered some form of pecuniary loss resulting from S.V. More s 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.

PLENO vs. COURT OF APPEALS, G.R. NO. L -56505, M ay 9, 1988

Temperate damages are included within the context of compensatory damages

and in arriving at a reasonable level of temperate damages to be awarded, trial
courts are guided by our ruling that: There are cases where from the nature of
the case, definite proof of pecuniary loss cannot be offered, although the court
is convinced that there has been such loss.
NOM INAL DAMAGES
ONE NETWORK RURAL BANK, INC., vs. DANILO G. BARIC, G.R. No. 193684, March 5,
2014, J. Castillo
Palado was the registered owner of real property with a building containing commercial
spaces for lease who eventually transferred his title to Network Bank. Baric was a lessee
therein, operating a barber shop on one of the commercial spaces. Baric demanded nominal
damages against Network Bank after having been evicted from the building. The Supreme
Court held he was not entitled to nominal damages. Under Article 2221 of the Civil Code,
nominal damages may be awarded to a plaintiff whose right has been violated or invaded
by the defendant, for the purpose of vindicating or recognizing that right, not for
indemnifying the plaintiff for any loss suffered. Nominal damages are not for
indemnification of loss suffered but for the vindication or recognition of a right violated or
invaded. Network Bank did not violate any of Baric's rights; it was merely a purchaser or
transferee of the property. )f any, it was Palado who violated Baric s rights.

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LIBCAP MARKETING v BAQUIAL, G.R No. 192011, June 30, 2014. DEL CASTILLO
Unpaid overtime pay should not be included in the computation for the award of nominal
damages. The Court did not agree with the CA s finding that since respondent rendered
overtime work for four years without receiving any overtime pay, she is entitled to
P100,000.00 nominal damages. Nominal damages are awarded for the purpose of
vindicating or recognizing a right and not for indemnifying a loss. Hence, the CA should
have limited the justification of the award of nominal damages to petitioners violation o f
respondent s right to due process in effecting her termination. )t should not have
considered the claimed unpaid overtime pay.
AREOLA vs. COURT OF APPEALS, G.R. NO. 95641 September 22, 1994
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 whatsoe ver have been or can be shown.
ATTORNEYS FEES

WILLAWARE PRODUCTS CORPORATION vs. JESICHRIS MANUFACTURING

CORPORATION, G.R. No. 195549, September 3, 2014, J. Peralta
This is a case where the plaintiff in a case of unfair competition under the Civil Code fails to
satisfactorily prove that it had lost income. Since the award of Two Million Pesos
(P2,000,000.00) in actual damages had been deleted and in its place Two Hundred
Thousand Pesos (P200,000.00) in nominal damages is awarded, the attorney's fees should
concomitantly be modified and lowered to Fifty Thousand Pesos (P50,000.00).
RICARDO A. DALUSONG vs. EAGLE CLARC SHIPPING PHILIPPINES, INC., et al., G.R. No.
204233, September 3, 2014, Acting C.J. Carpio
Attorneys fees is not available when the defendant employer is not guilty of bad faith.
Thus, when the company-designated physician gave the seafarer a final, permanent partial
disability grading beyond the 120-day period but before the 240 day maximum, then the
latter is not entitled to permanent disability benefits. The employer is not in ba d faith in
refusing to give the seafarer full disability benefits; thus the award of attorney s fees in
favor of the seafarer is unwarranted.

AUGUSTO M. AQUINO, vs. HON. ISMAEL P. CASABAR, as Presiding Judge Regional Trial
Court-Guimba, Nueva Ecija, Branch 33 and MA. ALA F. DOMINGO and MARGARITA
IRENE F. DOMINGO, substituting Heirs of the deceased ANGEL T. DOMINGO, G.R. No.
191470, January 26, 2015, J. Peralta

159

The award that the court may grant to a successful party by way of attorney s fee is an
indemnity for damages sustained by him in prosecuting or defending his cause in court. It
may be decreed in favor of the party, not his lawyer, in any of the instances authorized by
law. On the other hand, the attorney s fee which a client pays his counsel refers to the
compensation for the latter s services. The losing party against whom damages by way of
attorney s fees may be assessed is not bound by, nor is his liability dependent upon, the fee
arrangement of the prevailing party with his lawyer. The amount stipulated in such fee
arrangement may, however, be taken into account by the court in fixing the amount of
counsel fees as an element of damages. The fee as an item of damages belongs to the party
litigant and not to his lawyer. It forms part of his judgment recoveries against the losing
party. The client and his lawyer may, however, agree that whatever attorney s fee as an
element of damages the court may award shall pertain to the lawyer as his compensation
or as part thereof.
ALEJANDRO C. ALMENDRAS, JR. vs. ALEXIS C. ALMENDRAS, G.R. No. 179491, January
14, 2015, C.J. Sereno
The award of attorney's fees is not proper because respondent failed to justify satisfactorily
his claim, and both the trial and appellate courts failed to explicitly state in their respective
decisions the rationale for the award. It is an accepted doctrine that the award thereof as an
item of damages is the exception rather than the rule, and counsel's fees are not to be
awarded every time a party wins a suit. The power of the court to award attorney's fees
under Article 2208 of the Civil Code demands factual, legal and equitable justification,
without which the award is a conclusion without a premise, its basis being improperly left
to speculation and conjecture. In all events, the court must explicitly state in the text of the
decision, and not only in the decretal portion thereof, the legal reason for the award of
attorney's fees. The same is true for the award of litigation expenses because respondent
failed to satisfactorily justify his claim.
RICARDO C. HONRADO vs. GMA NETWORK FILMS, INC. G.R. No. 204702. January 14,
2015, CARPIO
The trial court awarded attorney's fees to petitioner as it "deemed it just and reasonable"
to do so, using the amount provided by petitioner on the witness stand. Undoubtedly,
attorney's fees may be awarded if the trial court "deems it just and equitable." Such ground,
however, must be fully elaborated in the body of the ruling. Its mere invocation, without
more, negate the nature of attorney's fees as a form of actual damages.
JUAN CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19, 2014, J. LEONEN
Petitioner is not entitled to attorney's fees and the costs of litigation since he did not have a
clear right over the property in question. The Court of Appeals awarded attorney's fees and
litigation costs on the erroneous premise that the contract between petitioner and
respondent was perfected. Without a valid contract that stipulates his rights, petitioner
risked litigation in order to determine if he has rights, and not to protect rights that he
160

currently has. Hence, the award of attorney's fees and litigation costs was not properly
justified.
BANK OF THE PHILIPPINE ISLANDS VS, AMADOR DOMINGO (DECEASED)
SUBSTITUTED BU HIS CHILDREN, JOANN MOYA, ET AL. G.R. No. 169407. March 25,
2015, J. LEONARDO-DE CASTRO
It is basic that the claim for actual, moral and punitive damages as well as exemplary
damages and attorney s fees must each be independently identified and justified.

ALEJANDRO C. ALMENDRAS, JR. vs. ALEXIS C. ALMENDRAS, G.R. No. 179491, January
14, 2015, C.J. Sereno

In awarding damages in libel cases, the court is given ample discretion to determine the
amount, depending upon the facts of the particular case. Article 2219 of the Civil Code
expressly authorizes the recovery of moral damages in cases of libel, slander or any other
form of defamation. (owever, while no proof of pecuniary loss is necessary in order that
moral damages may be awarded, x x x it is nevertheless essential that the claimant should
satisfactorily show the existence of the factual basis of damages and its causal connection
to defendant s acts. Considering that respondent sufficiently justified his claim for
damages (i.e. he testified that he was embarrassed by the said letters [and] ashamed to
show his face in [sic] government offices , the Court finds him entitled to moral and
exemplary damages. However, the Court equitably reduce the amounts awarded because
even though the letters were libellous, respondent has not suffered such grave or
substantial damage to his reputation to warrant receiving P5,000,000 as moral damages
and P100,000.00 as exemplary damages.
As to the award of attorney s fees, it is an accepted doctrine that the award thereof as an
item of damages is the exception rather than the rule, and counsel s fees are not to be
awarded every time a party wins a suit. The power of the court to award attorney s fees
under Article 2208 of the Civil Code demands factual, legal and equitable justification,
without which the award is a conclusion without a premise, its basis being improperly left
to speculation and conjecture. In all events, the court must explicitly state in the text of the
decision, and not only in the decretal portion thereof, the legal reason for the award of
attorney s fees.
RICARDO C. HONRADO vs. GMA NETWORK FILMS, INC., G.R. No. 204702, January 14,
2015, J. Carpio

In a licensing contract, the essence of which is the transfer by the licensor, Honrado 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 Honrado signed the
161

contract in such capacity. Being a stranger to such arrangements, they are not entitled to
complain of any breach by Honrado of his contracts with the film owners than the film
owners are for any breach by a stranger of its Agreement with aforementioned. The trial
court awarded attorney s fees to (onrado as it deemed it just and reasonable to do so,
using the amount provided by Honrado on the witness stand (P100,000). Undoubtedly,
attorney s fees may be awarded if the trial court deems it just and equitable. Such ground,
however, must be fully elaborated in the body of the ruling. Its mere invocation, without
more, negates the nature of attorney s fees as a form of actual damages.
INTEREST/COMPUTATION

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC

WORKS AND HIGHWAYS vs. ARLENE R. SORIANO, G.R. No. 211666, February 25, 2015,
J. Peralta
Effectively, therefore, the debt incurred by the government on account of the taking of the
property subject of an expropriation constitutes a forbearance which runs contrary to the
trial court s opinion that the same is in the nature of indemnity for damages calling for the
application of Article 2209 of the Civil Code. Nevertheless, in line with the recent circular of
the Monetary Board of the BSP-MB No. 799, Series of 2013, effective July 1, 2013, the
prevailing rate of interest for loans or forbearance of money is six percent (6%) per annum,
in the absence of an express contract as to such rate of interest.
The records of this case reveal that DPWH did not delay in its payment of just
compensation as it had deposited the pertinent amount in full due to respondent on
January 24, 2011, or four (4) months before the taking thereof, which was when the RTC
ordered the issuance of a Writ of Possession and a Writ of Expropriation on May 27, 2011.
The amount deposited was deemed by the trial court to be just, fair, and equitable, taking
into account the well-established factors in assessing the value of land, such as its size,
condition, location, tax declaration, and zonal valuation as determined by the BIR.
Considering, therefore, the prompt payment by the DPWH of the full amount of just
compensation as determined by the RTC, the Court finds that the imposition of interest
thereon is unjustified and should be deleted.
FAJ CONSTRUCTION & DEVELOPMENT CORPORATION vs. SUSAN M. SAULOG, G.R. No.
200759, March 25, 2015, J. Del Castillo
FAJ Construction was found guilty of violating the construction agreement for its defective
and incomplete work, delay, and for unjustified abandonment of the project. Susan argued
that the issue of whether the trial and appellate courts correctly decided the amount of
damages is a factual issue which is beyond the jurisdiction of this Court. The Supreme
Court held that it is not a trier of facts and does not normally undertake the reexamination of the evidence presented by the contending parties during trial.

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PEOPLE OF THE PHILIPPINES vs. BENJAMIN CASAS Y VINTULAN, G.R. No. 212565,
February 25, 2015, J. Perlas-Bernabe
The formula for the computation of loss of earning capacity is as follows:
Net earning capacity = Life Expectancy x [Gross Annual Income - Living Expenses (50% of
gross annual income)], where life expectancy = 2/3 (80 - the age of the deceased).
CIVIL LIABILITY

ANTONIO M. GARCIA vs. FERRO CHEMICALS, INC.,G.R. No. 172505, October 01, 2014, J.
Leonen
Ferro Chemicals, Inc. joined the public prosecutor in filing the petition for certiorari before
this court. Ramon Garcia, President of Ferro Chemicals, Inc., signed the verification and
certification of non-forum shopping of the petition for certiorari. When the civil action for
the recovery of civil liability ex delicto is instituted with the criminal action, whether by
choice of private complainant (i.e., no reservation is made or no prior filing of a separate
civil action) or as required by the law or rules, the case will be prosecuted under the
direction and control of the public prosecutor. The civil action cannot proceed
independently of the criminal case.
OTHER LAWS EXCLUDED FROM THE SYLLABUS

EUFROCINA NIEVES vs. ERNESTO DULDULAO and FELIPE PAJARILLO, G.R. No.
190276, April 2, 2014, J. Perlas-Bernabe
Agricultural lessees, being entitled to security of tenure, may be ejected from their
landholding only on the grounds provided by law. These grounds the existence of which
is to be proven by the agricultural lessor in a particular case are enumerated in Section
of Republic Act No. RA
, otherwise known as the Agricultural Land Reform
Code. )n this case, it was established that the agricultural lessees willfully and deliberately
failed to pay the lease rentals when they fell due, which is one o f the grounds for
dispossession of their landholding as provided in said provision of law.
CHARLES BUMAGAT, et al. vs. REGALADO ARRIBAY, G.R. No. 194818, June 9, 2014, J.
Del Castillo
A case involving agricultural land does not immediately qualify it as an agrarian dispute.
The mere fact that the land is agricultural does not ipso facto make the possessor an
agricultural lessee or tenant; there are conditions or requisites before he can qualify as an
agricultural lessee or tenant, and the subject matter being agricultural land constitutes
simply one condition. In order to qualify as an agrarian dispute, there must likewise exist a
tenancy relation between the parties. Thus, when farmer-beneficiaries of PD 27 who are
registered owners of agricultural lands filed a complaint for forcible entry against a person
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whose claim of ownership over the same parcels of land emanates from a donation by the
heirs of the original owner, it is a civil case within the jurisdiction of the ordinary courts, as
all the elements for an agrarian dispute are not present.
MARIANO JOSE, FELICISIMO JOSE, DECEASED, SUBSTITUTED BY HIS CHILDREN
MARIANO JOSE, CAMILO JOSE, TIBURCIA JOSE, FERMINA JOSE, AND VICTORIA JOSE vs.
ERNESTO M. NOVIDA, RODOLFO PALAYPAY, JR., ALEX M. BELARMINO, RODRIGO
LIBED, LEONARDO L. LIBED, BERNARDO B. BELARMINO, BENJAMIN G. ACOSTA,
MODESTO A. ORLANDA, WARLITO B. MEJIA, MAMERTO B. BELARMINO, MARCELO O.
DELFIN AND HEIRS OF LUCINO A. ESTEBAN, REPRESENTED BY CRESENCIA M. VDA.
ESTEBAN, G.R. No. 177374, July 2, 2014, J. Del Castillo
In Heirs of Lazaro Gallardo vs. Soliman, the DARAB has exclusive jurisdiction over cases
involving the cancellation of registered EPs; the DAR Secretary, on the other hand, has
exclusive jurisdiction over the issuance, recall or cancellation of EPs or Certificates of Land
Ownership Awards that are not yet registered with the Register of Deeds.
Thus, since certificates of title have been issued in the respective names of the respondents
as early as in 1990, the DAR Region I Director had no jurisdiction to cancel their titles; the
same is true with respect to the DAR Secretary. Thus, their respective January 30, 1991 and
August
,
Orders are null and void; consequently, respondents EPs and titles
subsists, contrary to petitioner s claim that they have been cancelled. Void judgments or
orders have no legal and binding effect, force or efficacy for any purpose; in contemplation
of law, they are nonexistent.
LAND BANK OF THE PHILIPPINES vs. JOSE T. LAJOM, represented by PORFIRIO
RODRIGUEZ et al., G.R. No. 184982 & 185048, August 20, 2014, J. Perlas-Bernabe
Properties of the Lajoms were taken due to the Agrarian Reform Program. Just
compensation was partially given. The Lajoms contested the computation of just
compensation due to an alleged error in the applicable law. The Court ruled that the date of
taking of the subject land for purposes of computing just compensation should be reckoned
from the issuance dates of the emancipation patents. An emancipation patent constitutes
the conclusive authority for the issuance of a Transfer Certificate of Title in the n ame of the
grantee. It is from the issuance of an emancipation patent that the grantee can acquire the
vested right of ownership in the landholding, subject to the payment of just compensation
to the landowner.
RENATO L. DELFINO, SR. (Deceased), Represented by his Heirs, namely: GRACIA
DELFINO, GREGORIO A. DELFINO; MA. ISABEL A. DELFINO, RENATO A. DELFINO, JR.,
MA. REGINA DELFINO ROSELLA, MA. GRACIA A. DELFINO, MARIANO A. DELFINO, MA.
LUISA DELFINO GREGORIO and REV. FR. GABRIELA. DELFINO vs. AVELINO K. ANASAO
and ANGEL K. ANASAO (Deceased and represented by his sole heir, SIXTO C.
ANASAO), G.R. No. 197486, September 10, 2014, J. Villarama, Jr.

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The right to choose the area to be retained, which shall be compact or contiguous, shall
pertain to the landowner; Provided, however, That in case the area selected for retention
by the landowner is tenanted, the tenant shall have the option to choose whether to remain
therein or be a beneficiary in the same or another agricultural land with similar or
comparable features. In case the tenant chooses to remain in the retained area, he shall be
considered a leaseholder and shall lose his right to be a beneficiary under this Act. In case
the tenant chooses to be a beneficiary in another agricultural land, he loses his right as a
leaseholder to the land retained by the landowner. The tenant must exercise this option
within a period of one (1) year from the time the landowner manifests his choice of the
area for retention.
AUTOMAT REALTY AND DEVELOPMENT CORPORATION, LITO CECILIA AND LEONOR
LIM vs. SPOUSES MARCIANO DELA CRUZ, SR. AND OFELIA DELA CRUZ, G.R. No.
192026, October 01, 2014, J. Leonen
When Automat asked the spouses to vacate the premises, the spouses refused to vacate
unless they were paid compensation. They claimed they were agricultural tenants [who]
enjoyed security of tenure under the law. The Court ruled that tenancy relationship cannot
be presumed. The allegation of its existence must be proven by evidence, and working on
another s landholding raises no presumption of an agricultural tenancy. Consequently, the
landowner s consent to an agricultural tenancy relationship must be shown.
REMIGIO D. ESPIRITU and NOEL AGUSTIN vs. LUTGARDA TORRES DEL ROSARIO
represented by SYLVIA R. ASPERILLA, G.R. No. 204964, October 15, 2014, J. Leonen

Lands classified as non-agricultural in zoning ordinances approved by the Housing and

Land Use Regulatory Board or its predecessors prior to June 15, 1998 are outside the
coverage of the compulsory acquisition program of the Comprehensive Agrarian Reform
Law. However, there has to be substantial evidence to prove that lands sought to be
exempted fall within the non-agricultural classification. In this case del Rosario failed to
prove with substantial evidence that the subject property is industrial property and as such
is not sufficient to rebut the findings of both the Department of Agrarian Reform and the
Office of the President.
SPOUSES JAIME SEBASTIAN AND EVANGELINE SEBASTIANvs.BPI FAMILY BANK, INC.,
CARMELITA ITAPO AND BENJAMIN HAO, G.R. No. 160107, October 22, 2014, J.
Bersamin
It bears emphasizing that Republic Act No. 6552 aimed to protect buyers of real estate on
installment payments, not borrowers or mortgagors who obtained a housing loan to pay
the costs of their purchase of real estate and used the real estate as security for their loan.
The "financing of real estate in installment payments" referred to in Section 3, should be
construed only as a mode of payment vis--vis the seller of the real estate, and excluded the
concept of bank financing that was a type of loan. Accordingly, Sections 3, 4 and 5, supra,
must be read as to grant certain rights only to defaulting buyers of real estate on
installment, which rights are properly demandable only against the seller of real estate
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The Sps. Sebastian s insistence would have been correct if the monthly amortizations being
paid to BPI Family arose from a sale or financing of real estate. In their case, however, the
monthly amortizations represented the installment payments of a housing loan that BPI
Family had extended to them as an employee s benefit. The monthly amortizations they
were liable for was derived from a loan transaction, not a sale transaction, thereby giving
rise to a lender-borrower relationship between BPI Family and the petitioners.
MONCAYO INTEGRATED SMALL-SCALE MINERS ASSOCIATION, INC. (MISSMA) vs.
SOUTHEAST MINDANAO GOLD MINING CORP. (SMGMC), BALITE INTEGRATED
SMALL-SCALE MINING CORP., (BISSMICO) ET AL., G.R. No. 149638 (consolidated),
December 10, 2014, J. Leonen
The issue in these two consolidated cases involves the tightly contested Diwalwal Gold
Rush Area DGRA in Mt. Diwata, Mindanao, specifically, the
-hectare portion excluded
from SMGMC s Mineral Production Sharing Agreement application (MPSA No. 128), and
declared as People s Small Scale Mining Area. SMGMC was the assignee of the original
holder of a permit to explore (EP 133) covering 4,941 hectares of DGRA. Due to
supervening events, [the Court] declares the petitions moot and academic.
IRENE D. OFILADA, vs. SPOUSES RUBEN ANDAL AND MIRAFLOR ANDAL, G.R. No.
192270, January 26, 2015, J. del Castillo
While a tenancy relationship cannot be extinguished by the sale, alienation, or transfer of
the legal possession of the landholding, the same may nevertheless be terminated due to
circumstances more advantageous to the tenant and his/her family. The tenants having
received an adequate consideration of P1.1 million, it can be reasonably concluded that the
tenancy relationship between the previous owners and the spouses Andal had already been
severed.
IRENE D. OFILADA, vs. SPOUSES RUBEN ANDAL AND MIRAFLOR ANDAL, G.R. No.
192270, January 26, 2015, J. del Castillo
The fact alone of working on another s landholding does not raise a presumption of the
existence of agricultural tenancy. For tenancy to be proven, all indispensable elements
must be established, the absence of one or more requisites will not make the alleged tenant
a de facto one. These are: 1) the parties are the landowner and the tenant; 2) the subject is
agricultural land; 3) there is consent by the landowner; 4) the purpose is agricultural
production; 5) there is personal cultivation; and 6) there is sharing of the harvests.
RICARDO V. QUINTOS vs. DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD AND KANLURANG MINDORO FARMER'S COOPERATIVE, INC, G.R. No. 185838
February 10, 2014, J. PERLAS-BERNABE
GCFI contracted substantial loans with the PNB DBP which were secured by several real
estate mortgages over GCFI properties. In 1981, Romualdez abandoned the management of
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the GCFI properties, after which DBP took over. Sometime during the same year, certain
people started to plant palay on the subject property, eventually covering the riceland.
After the EDSA revolution, the possession and management of the GCFI properties were
returned to GCFI. However, in July 1987, the properties were sequestered by the PCGG
albeit, eventually cleared. In the meantime, PNB and DBP transferred their financial claims
against GCFI to the Asset Privatization Trust (APT). KAMIFCI members were allegedly
installed as tenants by APT, the "legal possessor" of the land. However there was no
showing that APT was authorized by the property s landowner, GCF), to install tenants
thereon. Thus, since the consent of the standing landowner, GCFI, had not been secured by
APT in this case, it had no authority to enter into any tenancy agreement with the KAMIFCI
members. The right to hire a tenant is basically a personal right of a landowner, except as
may be provided by law. Hence, the consent of the landowner should be secured prior to
the installation of tenants.
DEPARTMENT OF AGRARIAN REFORM, now represented by OIC-SEC. NASSER
PANGANDAMAN vs .TRINIDAD VALLEY REALTY & DEVELOPMENT CORPORATION,ET
AL./ GRACE B. FUA, ET AL. VS. TRINIDAD VALLEY REALTY & DEVELOPMENT
CORPORATION ET AL/ TRINIDAD VALLEY REALTY & DEVELOPMENT CORPORATION
ET AL. VS. REPUBLIC OF THE PHILIPPINES, ET AL. G.R. No. 1733866 174162 February
11, 2014, J. VILLARAMA JR.
Under Republic Act No. 6657, the Comprehensive Agrarian Reform Law, the Special
Agrarian Courts shall have original and exclusive jurisdiction over all petitions for the
determination of just compensation to landowners, and the prosecution of all criminal
offenses. The case at bar deals with acts of the DAR and the application, implementation,
enforcement, or interpretation of RA 6657 - issues which do not involve the "special
jurisdiction" of the RTC acting as a Special Agrarian Court. Hence, when the court a quo
heard and decided the instant case, it did so without jurisdiction. Decisions, orders, awards
or rulings of the DAR may be brought to the CA by certiorari and not with the RTC through
an ordinary action for cancellation of title.
FRANCLER P. ONDE v THE OFFICE OF THE LOCAL CIVIL REGISTRATION OF LAS PIAS
CITY, G.R No. 197174, September 10, 2014. J. VILLARAMA
Francler Onde filed a petition for correction of entries in his birth certificate with the RTC,
impleading the LCR of Las Pinas City. The RTC held that a correction on his birth certificate
that his parents were married on December 23, 1983 in Bicol to "not married" is a
substantial correction affecting his legitimacy that requires adversarial proceedings.

The Supreme Court agreed. Said correction is substantial as it will affect his legitimacy and
convert him from a legitimate child to an illegitimate one. Corrections of entries in the civil
register including those on citizenship, legitimacy of paternity or filiation, or legitimacy of
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marriage, involve substantial alterations. Substantial errors in a civil registry may be

corrected and the true facts established provided the parties aggrieved by the error avail
themselves of the appropriate adversary proceedings.
SPOUSES EDUARDO and LYDIA SILOS v PHILIPPINE NATIONAL BANK, G.R No. 181045,
July 2, 2014. J. DEL CASTILLO
One of the promissory notes issued by PNB to the spouses Silos contained a penalty clause
where upon default, a penalty charge of 24% per annum based on the defaulted principal
amount shall be imposed. PNB claims this penalty charge should be covered by the real
estate mortgage along with the principal.
The Court ruled that the penalty may not be included as part of the secured amount. An
examination of the mortgage agreements reveals that nowhere is it stated that penalties
are to be included in the secured amount. Having the attributes of a contract of adhesion as
the principal credit documents, we must construe the mortgage contracts strictly, and
against the party who drafted it.
BIGNA Y EX-IM PHILIPPINES, INC. vs. UNION BANK OF THE PIDLIPPINES/UNION
BANK OF THE PIDLIPPINES vs. BIGNAY EX-IM PHILIPPINES, INC., G.R. No. 171590
171598 February 12, 2014, J. DEL CASTILLO
Eviction shall take place whenever by a final judgment based on a right prior to the sale or
an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing
purchased. In case eviction occurs, the vendee shall have the right to demand of the vendor,
among others, the return of the value which the thing sold had at the time of the eviction,
be it greater or less than the price of the sale; the expenses of the contract, if the vendee has
paid them; and the damages and interests, and ornamental expenses, if the sale was made
in bad faith.
REX M. TUPAL VS. JUDGE REMEGIO V. ROJO ETC., M. No. MTJ-14-1842 February 24,
2014, J. LEONEN
Municipal trial court judges cannot notarize affidavits of cohabitation of parties whose
marriage they will solemnize.

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