Civ 2 Cases

UNITED ALLOY PHILIPPINES, SPOUSES DAVID and LUTEN CHUA,
Petitioners vs. UNITED COCONUT PLANTERS BANK, Respondent

G.R. No. 175949 (January 30, 2017)
Second Division
Justice Peralta
I. NATURE OF THE ACTION: Sum of Money with Prayer for Preliminary

Attachment
II. FACTS:
United Alloy Philippines (UNIALLOY) was granted a credit accommodation

by UCPB as evidenced by a Credit Agreement. Part of UNIALLOY's obligation
was secured by a Surety Agreement executed by UNIALLOY’s Chairman, Jakob
Van Der Sluis, President, David Chua and his spouse (Spouses Chua), and one
Yang Kim Eng (Yang). Promissory Notes, were later executed by UNIALLOY in
UCPB's favor.
UNIALLOY failed to pay its loan, hence, UCPB filed an action for Sum of
Money with Prayer for Preliminary Attachment with RTC Makati. UCPB also
unilaterally rescinded its lease-purchase contract with UNIALLOY. On the other
hand, UNIALLOY filed against UCPB, its Vice-President Robert Chua and Van
Der Sluis a complaint for Annulment and/or Reformation of Contract with
Damages with RTC CDO. UNIALLOY contended that Van Der Sluis, in cahoots
with Chua, committed fraud, manipulation and misrepresentation to obtain the
subject loan for their own benefit. In turn, UCPB filed a Motion to Dismiss on the
grounds of improper venue, forum shopping, litis pendentia, and harassment suit,
which was granted.
Thereafter, RTC CDO issued an Order of Execution directing UNIALLOY

to turn over to UCPB the property subject of their lease-purchase agreement.
UNIALLOY then filed a petition for certiorari and mandamus with CA questioning
said Orders, but was dismissed. Subsequently, RTC Makati rendered judgment in
the collection case in favor of UCPB. CA affirmed.
III. ISSUE: Whether or not UNIAALOY, et. al. are liable to pay UCPB.
IV: RULING:
Yes. Petitioners do not deny their liability under the Surety Agreement. Art.
1159 of the Civil Code expressly provides that "obligations arising from
contracts have the force of law between the contracting parties and should
be complied with in good faith." The RTC as well as CA found nothing which
would justify or excuse petitioners from non-compliance with their obligations
under the contract they have entered into. Thus, it becomes apparent that
petitioners are merely attempting to evade or, at least, delay the inevitable
performance of their obligation to pay under the Surety Agreement and the
subject promissory notes which were executed in UCPB’s favor.
1|Civil Law Review II

PHILIPPINE STOCK EXCHANGE, INC., Petitioner vs. LITONJUA and
LITONJUA, JR., Respondents
G.R. No. 204014 (December 5, 2016)
Third Division
Justice Perez
I. NATURE OF ACTION: Sum of Money with Damages
II. FACTS:
Litonjua Group (LG) wrote a letter-agreement to Trendline Securities, Inc.

through its President Precilla Zapanta, conforming a previous agreement for the
acquisition of 85% majority equity of Trendline’s membership seat in Philippine
Stock Exchange (PSE), to engage in the business of operating a market for the
buying and selling of securities. LG undertook to pay Php 18M directly to PSE
upon confirmation that it will be for the full settlement of all claims and
outstanding obligations including interest of Trendline to lift its membership
suspension and the resumption to normal trading operation. PSE sent a letter to
Trendline advising the latter that PSE have resolved to accept Php 19M as full
and final settlement of its outstanding obligations. In compliance, LG delivered to
PSE three (3) check payments which were duly received.
Despite several exchange of letters of conformity and delivery of checks,

PSE failed to lift the suspension imposed on Trendline’s seat, hence, LG
requested reimbursement of the Php 19M it had paid with interest, upon
knowledge that the transfer of membership seat under the agreement will no
longer be possible. However, PSE refused to refund, hence, LG filed a Complaint
for Collection of Sum of Money with Damages on the ground of unjust
enrichment.
III. ISSUE: Whether or not PSE should reimburse LG as it unjustly enriched itself
for accepting the payment.
IV. RULING:
Yes. Art. 22 of the Civil Code provides that: “Every person who through an
act of performance by another, or any other means, acquires or comes into
possession of something at the expense of the latter without just or legal ground,
shall return the same to him.” There is unjust enrichment when a person
unjustly retains a benefit to the loss of another, or when a person retains money
or property of another against the fundamental principles of justice, equity and
good conscience. The principle of unjust enrichment requires two (2) conditions:
(1) a person is benefited without a valid basis or justification, and (2) such benefit
is derived at the expense of another.
Applying law and jurisprudence, the principle of unjust enrichment requires

PSE to return the money it had received at the expense of LG since it benefited
from the use of it without any valid justification.

SPOUSES AMADO O. IBAÑEZ and ESTHER R. IBAÑEZ, Petitioners vs.
JAMES HARPER as Representative of the Heirs of FRANCISCO MUÑOZ,
SR., Respondents
G.R. No. 194272 (February 15, 2017)
Justice Jardeleza
I. NATURE OF ACTION: Complaint for Injunction and Damages
II. FACTS:
Sps. Ibañez obtained a loan, secured by a Real Estate Mortgage on a

parcel of land, from Muñoz amounting to Php 1.3M payable within three (3)
months. Thereafter, the mortgage was extrajudicially foreclosed. Sps. Ibañez
filed a Complaint for injunction and damages contending that there is no reason
to proceed with the foreclosure because the real estate mortgage was novated.
The property in question was not redeemed within the period prescribed by law.
Hence, the Office of the Clerk of Court and Ex-Officio Sheriff sold the same
property at public auction where Francisco E. Muñoz Sr. was the highest bidder.
The parties then filed a Joint Motion for Approval of Amended

Compromise Agreement which was approved by the RTC. With Sps. Ibañez’s
failure to comply with obligations of the said agreement, respondents filed an
Omnibus Motion for Execution and for the Issuance of Writ of Possession, which
was granted by the RTC.
III. ISSUE: Whether or not the obligation is solidary.
IV. RULING:
No. Sps. Ibañez agreed to pay Francisco, et.al. Php 3M, with initial
payment of Php 2M to be sourced from the proceeds of a GSIS loan and secured
by Sps. Ibañez while the remaining balance of Php 1M to be paid one year from
the date of the Amended Compromise Agreement. There is nothing in the “Hatol”,
and the Amended Compromise Agreement it is based on, which shows a
declaration that the obligation created was solidary. In any case, solidary
obligations cannot be inferred lightly. They must be positively and clearly
expressed. Given that solidarity could not be inferred from the agreement, the
presumption under the law applies — the obligation is joint.
As defined in Art. 1208, a joint obligation is one where there is a

concurrence of several creditors, or of several debtors, or of several debtors, or
of several creditors and debtors, by virtue of which each of the creditors has a
right to demand, and each of the debtors is bound to render compliance with his
proportionate part of the prestation which constitutes the object of the obligation.
Each debtor answers only for a part of the whole liability and to each obligee
belongs only a part of the correlative rights as it is only in solidary obligations that
payment made to any one of the solidary creditors extinguishes the entire
obligation.

LUIS JUAN VIRATA and UEM-MARA PHILIPPINES (now Cavitex
Infrastructure Corp), Petitioner vs. ALEJANDRO NG WEE, et.al.,
Respondent
G.R. No. 220926 (July 5, 2017)
Third Division
Justice Velasco, Jr.
I. NATURE OF THE ACTION: Collection of Sum of Money with Damages
II. FACTS:
Alejandro Ng Wee was enticed by the branch manager of Westmont Bank

to make money placements with Westmont Investment Corp. (Wincorp). Lured by
representations that the “sans recourse” transactions are safe, high-yielding, and
involve little to no risk, Ng Wee agreed. His initial investments were matched with
Hottick Holdings, with credit facility of Php 1.5B secured by a Suretyship
Agreement executed by Luis Virata. When Hottick defaulted, Wincorp filed a
collection suit, but Virata offered to guarantee the full payment of the loan.
Wincorp then executed a Waiver and Quitclaim releasing Virata of his obligations
arising from a Memorandum of Agreement to transfer 40% equity of UEM and
40% of UPDI’s interest in the tollway project of Wincorp. Apparently, said MOA is
a mere accommodation that is not meant to give rise to any legal obligation in
favor of Wincorp, other than the stipulated equity transfer.
Wincorp assured Ng Wee that the losses will be absorbed by the

company, and his investments would be transferred instead to a new borrower
account – Power Merge Corporation (PMC). PMC’s credit line amounted to Php
2.18M, hence, it issued Promissory Notes in favor of Wincorp or cetain investors.
In turn, Wincorp issued Confirmation Advices to Ng Wee, but unknown to him,
side contracts were executed absolving PMC of liability as regards the
Promissory Notes. Despite repeated demands, Ng Wee was not able to collect
PMC’s outstanding obligation. Hence, he instituted a Complaint for Sum of
Money with Damages against Virata, PMC, Wincorp and others. Ng Wee claimed
he fell prey to the intricate scheme of fraud and deceit hatched by Wincorp and
PMC. RTC ruled in favor of Ng Wee, which CA affirmed.
II. ISSUE: Whether or not Wincorp and PMC are liable to Ng Wee.
III. RULING:
Yes. Wincorp is liable to Ng Wee for fraud, while PMC is liable based on
contract. Under Art. 1170 of the Civil Code “those who, in the performance of
their obligations are guilty of fraud, are liable for damages.” Here, Wincorp
foisted insidious machinations upon Ng Wee to entice the latter into investing a
significant amount of wealth into a mere empty shell of a corporation. And instead
of guarding the investments of its client, Wincorp executed Side Agreements that
exonerated PMC of liability.
On the other hand, PMC is not guilty of fraud, but is liable under the Credit
Line Agreement. Under its terms, PMC obligated itself to issue Promissory Notes
in favor of Wincorp, for itsel “or on behalf of certain investors” for each of its
drawdowns. Virata and PMC cannot deny knowledge that the amounts may not
necessarily be from Wincorp’s own coffers.

CHINATRUST COMMERCIAL BANK, Petitioner vs.
PHILIP TURNER, Respondent
G.R. No. 191458 (July 3, 2017)
Second Division
Justice Leonen
I. NATURE OF THE ACTION: Breach of Contract
II. FACTS:
British national, Philip Turner, initiated via Chinatrust the telegraphic

transfer of $430 to the account of Min Travel/Esmat Azmy in Citibank, Cairo,
Egypt. However, Turner had to cancel his travel-tour because his wife got ill and
requested Chinatrust the refund of his money. Chinatrust explained that since the
funds were already remitted to the beneficiary’s account, they could no longer be
retrieved without Citibank-Cairo’s consent. Turner allegedly insisted on
withdrawing the funds from Chinatrust, hence, the latter required him to at least
secure his travel agency’s written certification denying receipt of the funds.
However, Turner purportedly failed to submit the same despite reminders.
Turner then filed a Complaint against Chinatrust for Breach of Contract,

demanding refund plus damages. MeTC dismissed said Complaint, which RTC
reversed. CA affirmed RTC’s decision, ruling that Chinatrust is liable for
negligence when it did not immediately refund the funds, and when it did not
immediately relay to Citibank-Cairo Turner’s demand for cancellation of the
transaction.
II. ISSUE: Whether or not Chinatrust is liable for negligence.
III. RULING:
No. It was established that $430 was actually credited to the account of
Min Travel, thus, Chinatrust is deemed to have fully executed the telegraphic
transfer agreement and its obligation to Turner was extinguished. CA’s ruling that
the act of Chinatrust constituted an actionable negligence under Art. 1172 of the
Civil Code was improper.
CA misappreciated the true import of the discrepancy notice. Said notice

does not mean that the funds were not received by the beneficiary bank. On the
contrary, what it implies is that these funds were actually received by Citibank-
Cairo but it could not apply the same because of mismatch of beneficiary name.
Turner, indeed clarified with Chinatrust that the account name was not “Min
Travel/Esmat Azmy” but only “Min Travel”. Therefore, Chinatrust had nothing to
do with the mismatch.

AL DELA CRUZ, Petitioner vs. CAPT. RENATO OCTAVIANO and
WILMA OCTAVIANO, Respondents
G.R. No. 219649 (July 26, 2017)
Second Division
Justice Peralta
I. NATURE OF THE ACTION: Damages
II. FACTS:
Capt. Renato Octaviano, a military dentist, together with his mother and
sister, Wilma and Janet, rode a tricycle driven by Eduardo Padilla. Allegedly, an
oncoming fast car hit the back portion of the tricycle which caused the latter to
turn around and land on the pavement. Renato was thrown from the tricycle that
led to his leg’s amputation. Renato spent a total of Php 623, 268 for his medical
bills.
Renato and his mother filed a case for damages against Al Dela Cruz, the
owner of the vehicle. RTC ruled in favor of Dela Cruz, which CA reversed.
II. ISSUE: Whether or not Dela Cruz was negligent while driving.
III. RULING:
Yes. Under Art. 1173 of the Civil Code, negligence consists of the
omission of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the person, of the time and of the place.
Here, the Police Report shows that Dela Cruz was positive for alcohol breath.
Such statement was corroborated by two other witnesses.
Clearly, all the requisites under Art. 2176 are clearly are present in this
case. Thus, petitioners are entitled to claim damages.

ASIA BREWERY, INC. AND CHARLIE S. GO , Petitioners vs. EQUITABLE PCI
BANK (now BANCO DE ORO-EPCI, INC.), Respondent
G.R. No. 190432 (April 25, 2017)
First Division
Chief Justice Sereno
I. NATURE OF THE ACTION: Complaint for Payment, Reimbursement, or

Restitution
II. FACTS:
Several checks and demand drafts (“instruments”) were issued in the

name of Charlie Go, and bore the annotation: “endorsed by PCI Bank, Ayala
Branch, All Prior Endorsement And/Or Lack of Endorsement Guaranteed.” All the
instruments fell into the hands of a certain Raymond Keh, then Sales Accounting
Manager of Asia Brewery, who falsely pretended to be the payee, Charlie S. Go.
Keh was charged and convicted of theft but not a single centavo was collected.
In demanding payment from PCI, petitioners relied on Associated Bank

vs. CA, in which the Court held “the possession of check on a forged or
unauthorized indorsement is wrongful, and when the money is collected on the
check, the bank can be held for moneys had and received.” PCI argued that the
payee of a negotiable instrument acquires no interest with respect thereto until its
delivery to him. Delivery of an instrument means transfer of possession, actual
or constructive, from one person to another. Without the initial delivery of the
instrument from the drawer to the payee, there can be no liability on the
instrument. RTC ruled in favor of PCI.
III. ISSUE: Whether or not the fact that the instruments never reached the payee
did not mean that there was no delivery, because delivery can be either actual or
constructive.
RULING:
Yes. It was erroneous that there was no delivery, just because the checks
did not reach the payee. RTC failed to consider Sec. 16 of the Negotiable
Instruments Law, which envisions instances when instruments may have been
delivered to a person other than the payee. The provision states:
“Section 16. Delivery; when effectual; when presumed – Every contract on

a negotiable instrument is incomplete and revocable until delivery of the
instrument for the purpose of giving effect thereto. As between immediate parties
and as regards a remote party other than a holder In due course, the delivery, in
order to be effectual, must be made either by or under the authority of the party
making, drawing, accepting, or indorsing, as the case may be; and, in such case,
the delivery may be shown to have been conditional, or for a special purpose
only, and not for the purpose of transferring the property in the instrument. But
where the instrument is in the hands of a holder in due course, a valid delivery
thereof by all parties prior to him so as to make them liable to him is conclusively
presumed. And where the instrument is no longer in the possession of a party
whose signature appears thereon, a valid and intentional delivery by him is
presumed until the contrary is proved.”

PHILIPPINE NATIONAL BANK, Petitioner vs. LILIBETH CHAN, Respondent
G.R. No. 206037 (March 13, 2017)
First Division
Justice Del Castillo
I. NATURE OF THE ACTION: Unlawful Detainer
II. FACTS:
Lilibeth Chan owns a commercial building leased to PNB for a period of 5

years. When the leased expired, PNB continued to occupy the property on a
month-to-month basis rental. Meanwhile, Chan obtained a loan from PNB
secured by a real estate mortgage over the leased property, and likewise
executed a Deed of Assignment over the rental payments in favor of PNB. When
the amount of the loan increased, the mortgage over the leased property was
released and substituted by a mortgage over a parcel of land in Manila.
Chan then filed a Complaint for Unlawful Detainer against PNB for alleged
failure to pay rentals. In defense, PNB claimed that it received a demand letter
from a certain Lamberto Chua who claimed to be the new owner of the leased
property. Thus, PNB deposited the rentals in a separate account for the benefit of
the rightful party. According to PNB, the money should be applied to offset
Chan’s outstanding loan pursuant to the Deed of Assignment. Chan countered
that PNB had no right to retain the amount consigned with the court as her loan
was fully paid. MeTC and RTC ruled in favor of Chan. CA affirmed ruling that
PNB did not properly consign the amount as it merely opened a savings account.
III. ISSUE: Whether or not PNB properly consigned the rentals.
IV. RULING:
No. Consignation is the act of depositing the thing due with the court or
judicial authorities whenever the creditor cannot accept or refuses to accept
payment. It generally requires a prior tender of payment. For consignation to be
valid, the debtor must comply with the following requirements: (a) there was a
debt due; (b) valid prior tender of payment, unless the consignation was made
because of some legal cause in Art. 1256; (c) previous notice of consignation has
been given to persons interested in the performance of the obligation; (d) amount
was placed at the disposal of the court; and (e) after consignation had been
made, persons interested were notified thereof.
Here, PNB’s deposit of the rentals in a non-drawing savings account is not

the consignation contemplated by law, precisely because it does not place the
same at the disposal of the court. Consignation is necessarily judicial, it is not
allowed in venues other than the courts. Consequently, PNB’s obligation to pay
rent remained subsisting, as the deposit of the rentals cannot be considered to
have the effect of payment.

TEODORICO A. ZARAGOZA, Petitioner vs. ILOILO SANTOS
TRUCKERS, INC., Respondent
G.R. No. 224022 (June 28, 2017)
First Division
Justice Perlas – Bernabe
I. NATURE OF ACTION: Interpleader
II. FACTS:
Teodorico Zaragoza bought a parcel of land from his parents, and

eventually, had the same registered under his name. Zaragoza claimed that
unknown to him, his father, Florentino, leased a portion of the subject land to
Iloilo Santos Truckers (IST). Zaragoza also claimed that when his father died, IST
stopped paying rent. On the other hand, IST maintained that it was willing to pay
rent, but was uncertain as to whom payment should be made as it received
separate demands from Florentino's heirs. Thus, IST filed an interpleader case.
RTC dismissed the action for interpleader, but stated that IST may avail of
the remedy of consignation. Hence, IST submitted a Manifestation and Notice
informing Zaragoza that it had consigned the rental amount RTC. This
notwithstanding, Zaragoza sent IST a letter stating that granting without
conceding the propriety of consignation, the same did not extinguish the latter's
obligation because the amount consigned was insufficient to cover the unpaid
rentals plus interests. In this regard, Zaragosa demanded payment and at the
same time, for IST to vacate the subject land. As his demands went unheeded,
Zaragoza filed for unlawful detainer.
MTCC ruled in Zaragoza’s favor, and accordingly, ordered IST to vacate

and pay back rentals, plus legal interest. RTC reversed ruling that consignation
of the rental amounts was proper. CA affirmed the RTC ruling.
III. ISSUE: Whether or not Zaragoza could not eject IST as the latter fully
complied with its obligation to pay monthly rent thru consignation.
IV. RULING:
No. The amount consigned with RTC represents monthly rentals only for
two months, which is two (2) more months short of what was being demanded by
Zaragoza. From the foregoing, it appears that even assuming arguendo that
IST’s consignation of was made in accordance with law, it still failed to comply its
obligation in the lease contract to pay monthly rentals.
It is apparent that at the time Zaragoza filed the unlawful detainer suit, IST
was not updated in its monthly rental payments, as there is no evidence of such
payment for several months. Irrefragably, said omission constitutes a violation of
the lease contract.

ILOILO JAR CORPORATION, Petitioner vs. COMGLASCO CORPORATION /
AGUILA GLASS, Respondent
G.R. No. 219509 (January 18, 2017)
Second Division
Justice Mendoza
I. NATURE OF THE ACTION: Breach of Contract and Damages
II. FACTS:
Iloilo Jar Corporation (IJC), as lessor, and Comglasco, as lessee, entered

into a lease contract over a portion of a warehouse for 3 years. After a year,
Comglasco requested pre-termination of the lease, but was rejected as such pre-
termination was not stipulated in the contract. Despite denial, Comglasco
removed all its stocks and equipment, as notwithstanding several demands, no
longer paid rentals.
IJC filed an action for Breach of Contract and Damages. Comglasco

argued that under Art. 1267 of the Civil Code, it was released from its
obligation under the lease contract, viz:
“Art. 1267 - When the services has become difficult as to be manifestly

beyond the contemplation of the parties, the obligor may also be released
therefrom, in whole or in part.”
It explained that the consideration had become so difficult due to the

global and regional economic crisis.
III. ISSUE: Whether or not Comglasco may be relieved from its obligation
because of financial difficulties.
IV. RULING:
No. Art. 1267 applies only to “obligations to do” and not to “obligations to
give”. The obligation to pay rentals or deliver the thing in a contract of lease falls
within the prestation “to give”. A financial problem is not an absolute change of
circumstances that equity demands assistance for the debtor. Financial struggles
due to economic crisis is not enough reason for the courts to grant reprieve from
contractual obligations.
10 | C i v i l L a w R e v i e w I I
DELFIN C. GONZALEZ, JR., Petitioner vs. MAGDALENO M. PEÑA,
ALABANG COUNTRY CLUB, INC., and MS. ARSENIA VERA, Respondents
G.R. No. 214303 (January 30, 2017)
First Division
Chief Justice Serreno
I. NATURE OF THE ACTION: Restitution of Shares
II. FACTS:
RTC Baguio City adjudged Delfin Gonzales, Jr. liable to Magdaleno M.

Peña for the payment of the agency's fees and damages amounting to Php
28.5M. Gonzales appealed the Decision, while Peña moved for execution
pending appeal. The grant of that motion resulted in the sale to Peña of
Gonzales’ ACCI shares, which the latter was able to sell and transfer to Arsenia
Vera. Eventually, Supreme Court issued a Decision which vacated with finality
the Decision of RTC Baguio City. Considering that said Decision was completely
vacated and declared null and void, Supreme Court held that the concomitant
execution pending appeal was likewise null and without effect.
Thus, Gonzales was entitled to the full restoration of their ownership and
possession of all properties that were executed pending appeal, such as the
subject shares. RTC refused to restore the actual ownership of the respective
club shares on the pretext that such restitution is impossible as these had
already been transferred to third parties.
III. ISSUE: Whether or not Gonzales should be restored the shares illegally
obtained by Peña.
IV: RULING:
Yes. Void transactions do not produce any legal or binding effect, and any
contract directly resulting from that illegality is likewise void and inexistent.
Therefore, Peña could not have been a valid transferee of the property. As a
consequence, his successor-in-interest, Vera, could not have validly acquired
those shares. Neither was RTC correct in its characterization of the actual
restitution of the ACCI shares to petitioner as "impossible." For the obligation to
be considered impossible under Article 1266 of the Civil Code, its physical or
legal impossibility must first be proven.
Here, RTC did not make any finding on whether or not it was physically
impossible to effect the actual restitution of the property. On the other hand,
petitioner correctly points out that since the shares are movable by nature, the
same can be transferred back to Gonzalez, Jr. by recording the transaction in the
stock and transfer book of the club.
As regards legal impossibility, the RTC appears to have jumped to the

conclusion that because of the perfected sale of the shares to Vera, petitioner
can no longer claim actual restitution of the property.
CALIFORNIA MANUFACTURING COMPANY, INC., Petitioner
vs. ADVANCED TECHONOLOGY SYSTEM, INC., Respondent
G.R. No. 202454 (April 25, 2017)
First Division
I. NATURE OF THE ACTION: Sum of Money and Attorney’s fees
II. FACTS:
California Manufacturing Company, Inc. (CMCI) leased from Advanced

Technology Systems, Inc. (ATSI) a Prodopak machine. Later on, ATSI filed a
Complaint for Sum of Money against CMCI to collect unpaid rentals for the
months of June, July, August, and September 2003. ATSI claimed that CMCI
ignored all billing statements and demand letter. Hence, ATSI also sought
payment for the contingent attorney’s fees.
CMCI moved for the dismissal of the complaint on the ground of

extinguishment of obligation through legal compensation. CMCI averred
that ATSI was one and the same with Processing Partners and Packaging
Corporation (PPPC), which was a toll packer of CMCI products. Upon the
request of PPPC, through its Executive Vice President Felicisima Celones, CMCI
advanced Php 4M as mobilization fund. CMCI likewise claims that in a letter,
Felicisima proposed to set off PPPC’s obligation to pay the mobilization fund with
the rentals for the Prodopak machine. CMCI argued that the proposal was
binding on both PPPC and ATSI because Felicisima was an officer of the two
corporations. RTC ruled that legal compensation did not apply because PPPC
had a separate legal personality from its individual stockholders. CA affirmed.
III. ISSUE: Whether or not there is legal compensation.
RULING:
None. Assuming arguendo that Felicisima was sufficiently clothed with

authority to propose the offsetting of obligations, her proposal cannot bind ATSI
because at that time the latter had no machine. Felicisima’s reference to the
Prodopak machines in its letter could only mean that those were different from
the Prodopak machine that CMCI had leased from ATSI.
Under Article 1279 - In order that compensation may be proper, it is

necessary that: (1) each one of the obligors be bound principally, and that he be
at the same time a principal creditor of the other; (2) both debts consist in a sum
of money, or if the things due are consumable, they be of the same kind, and
also of the same quality if the latter has been stated; (3) two debts be due; (4)
they be liquidated and demandable; and (5) over neither of them there be any
retention or controversy, commenced by third persons and communicated in due
time to the debtor.
CMCI has not presented any credible proof, or even just an exact
computation, of the supposed debt of PPPC. The uncertainty in the supposed
debt of PPPC to CMCI negates the latter’s invocation of legal compensation as
justification for its non-payment of the rentals.
PARADIGM DEVELOPMENT CORPORATION OF THE PHILIPPINES,
Petitioner vs. BANK OF THE PHILIPPINE ISLANDS, Respondent
G.R. No. 191174 (June 7, 2017)
Third Division
Justice Reyes
I. NATURE OF THE ACTION: Complaint for Annulment of Mortgage,

Foreclosure, Certificate of Sale and Damages
II. FACTS:
Sengkon Trading, a sole proprietorship owned by Anita Go, obtained a

several loans from Far East Bank and Trust Company (FEBTC) under credit
facilities. Two real estate mortgage (REM) contracts were executed by PDCP
President Anthony Go to partially secure Sengkon's obligations. Later, Sengkon
requested to change the account name from SENGKON TRADING to
SENGKON TRADING, INC. (STI), which FEBTC approved. Eventually, Sengkon
defaulted payment despite demand. Thereafter, BPI acquired FEBTC and
assumed the rights and obligations of the latter. FEBTC then initiated foreclosure
proceedings.
Consequently, PDCP filed a Complaint for Annulment of Mortgage,

Foreclosure, Certificate of Sale and Damages against BPI, successor-in-interest
of FEBTC, alleging that without the knowledge and consent of PDCP, obligation
of SENGKON has been transferred to STI, a juridical personality separate and
distinct from SENGKON. This substitution of SENGKON, as debtor, by STI
effectively novated the obligation of PDCP to FEBTC. RTC ruled nullifying the
REMs and the foreclosure proceedings. CA reversed.
III. ISSUE: Whether or not there is novation.
IV. RULING:
None. Novation is a mode of extinguishing an obligation by changing its

objects or principal obligations, by substituting a new debtor in place of the old
one, or by subrogating a third person to the rights of the creditor. Art. 1293 of the
Civil Code defines novation as "consists in substituting a new debtor in the place
of the original one, which may be made even without the knowledge or against
the will of the latter, but not without the consent of the creditor." However, while
the consent of the creditor need not be expressed but may be inferred from the
creditor's clear and unmistakable acts, to change the person of the debtor, the
former debtor must be expressly released from the obligation, and the third
person or new debtor must assume the former's place in the contractual relation.
Here, PDCP failed to prove that Sengkon was already expressly released
from the obligation and that STI assumed the former's obligation. Rejection of the
claim of novation is not based on the absence of the mortgagor's conformity to
the Deed of Assumption, but on the fact that the non-execution of the Deed of
Assumption by Sengkon, STI and FEBTC rendered the existence of novation
doubtful because of lack of clear proof that Sengkon is being expressly released
from its obligation; that STI was already assuming Sengkon's former place in the
contractual relation; and that FEBTC is giving its conformity to this arrangement.
KT CONSTRUCTION SUPPLY, INC., represented by WILLIAM GO,
Petitioner vs. PHILIPPINE SAVINGS BANK, Respondent
G.R. No. 228435 (June 21, 2017)
Second Division
Justice Mendoza
I. NATURE OF THE ACTION: Sum of money
II. FACTS:
KT Construction Supply obtained a loan from PS Bank in the amount of

Php 2.5M, which was evidenced by a Promissory Note. The promissory note
stipulated that the loan was payable within sixty (60) months, and for the
payment of attorney's fees in case of litigation.
For KT’s failure to pay despite demand, PS Bank filed a complaint for sum
of money. KT argued that it cannot be held liable on the basis of the Promissory
Note, the latter being a contract of adhesion, hence, null and void. RTC ruled in
favor of PS Bank. CA affirmed.
III. ISSUE: Whether or not the promissory note is null and void for being a
contract of adhesion.
IV: RULING:
No. It may be true that KT had no hand in the preparation of the

Promissory Note. Still, it has been ruled in a plethora of cases that a Contract of
Adhesion is not invalid per se. Contracts of adhesion, where one party
imposes a ready-made form of contract on the other, are not entirely prohibited.
The one who adheres to the contract is, in reality, free to reject it entirely; if he
adheres, he gives his consent.
In this case, KT Construction was not in any way compelled to accept the
terms of the promissory note.
ENCARNACION CONSTRUCTION & INDUSTRIAL CORPORATION,
Petitioner vs. PHOENIX READY CONCRETE DEVELOPMENT &
CONSTRUCTION, INC., Respondent
G.R. No. 225402 (September 4, 2017)
Second Division
Justice Perlas – Bernabe
I. NATURE OF ACTION: Sum of Money
II. FACTS:
Phoenix entered into two (2) separate Contract Proposals and

Agreements (Agreements) 5 with ECIC for the delivery of various quantities of
ready-mix concrete. ECIC received the delivery in due course. However, despite
written demands from Phoenix, ECIC refused to pay. Hence, Phoenix filed the
Complaint for Sum of Money. In its Answer with Counterclaim for damages, ECIC
claimed that it opted to suspend payment since Phoenix delivered substandard
ready-mix concrete. RTC ruled in favor of Phoenix, which CA affirmed.
III. ISSUE: Whether or not the CA erred in denying ECIC's counterclaim for
damages.
IV. RULING:
No. ECIC maintains that it is entitled to damages because the Agreement

with Phoenix is void for being a contract of adhesion; and, the ready-mix
concrete was substandard, causing it to incur additional expenses.
A contract of adhesion is one wherein one party imposes a ready-made

form of contract on the other. It is a contract whereby almost all of its provisions
are drafted by one party, with the participation of the other party being limited to
affixing his or her signature or "adhesion" to the contract. However, contracts of
adhesion are not invalid per se as they are binding as ordinary contracts. While
the Court has occasionally struck down contracts of adhesion as void, it did so
when the weaker party has been imposed upon in dealing with the dominant
bargaining party and reduced to the alternative of taking it or leaving it,
completely deprived of the opportunity to bargain on equal footing.
In this case, there is no proof that ECIC was disadvantaged or utterly

inexperienced in dealing with Phoenix. There were likewise no allegations and
proof that its representative, Ramon Encarnacion, was uneducated, or under
duress or force when he signed the Agreement on its behalf. In fact, Encarnacion
is presumably an astute businessman who signed the Agreement with full
knowledge of its import. Case law states that the natural presumption is that one
does not sign a document without first informing himself of its contents and
consequences. This presumption has not been debunked.
MANUEL UBAS SR., Petitioner vs. WILSON CHAN, Respondent
GR. No. 215910 (February 6, 2017)
First Division
Justice Perlas-Bernabe
I. NATURE OF ACTION: Complaint for Sum of Money
II. FACTS:
Manuel Ubas filed a Complaint for Sum of Money against Wilson Chan
alleging that the latter, “doing business under the name and style of
UNIMASTER”, was indebted to him in the amount of Php 1.5 Million,
representing the price of construction materials purchased from him for the
construction of Macagtas Dam Project. He claimed that said obligation has long
been due and demandable and yet, Chan unjustly refused to pay the same
despite repeated demands. Further, he asserts that Chan had issued three (3)
checks, payable to "CASH" for Php 500,000.00 each, but all were dishonored
due to a stop payment order.
Chan filed an seeks dismissal of the case on the following grounds: (a) the
complaint states no cause of action, since the checks do not belong to him but to
Unimasters; (b) there is no contract that ever existed between him and Ubas; and
(c) if Ubas even had a right of action at all, the complaint should have been filed
against Unimasters, which has a separate juridical personality. On trial, Chan
admitted to having issued the subject checks but claimed that they were not
issued to Ubas, but to Engr. Merelos for replenishment of the project's revolving
fund, but the latter lost the same. RTC ruled in favor of Ubas, but CA reversed.
II. ISSUE: Whether or not the CA erred in dismissing the complaint.
IV. RULING:
Yes. Where the plaintiff-creditor possesses and submits in evidence an

instrument showing the indebtedness, a presumption that the credit has not been
satisfied arises in his favor. Thus, the defendant is, in appropriate instances,
required to overcome the said presumption and present evidence to prove the
fact of payment so that no judgment will be entered against him." This
presumption stems from Section 24 of the NIL, which provides that:
“Section 24. Presumption of Consideration. - Every negotiable instrument

is deemed prima facie to have been issued for a valuable consideration; and
every person whose signature appears thereon to have become a party thereto
for value.”
The source of obligation, as claimed by Ubas, stems from his contract with
Chan. When they agreed upon the purchase of the construction materials on
credit for the amount of Php 1.5 Million, the contract between them was
perfected. Therefore, even if corporate checks were issued for the payment of
the obligation, the fact remains that the juridical tie between the two (2) parties
was already established during the contract's perfection stage and, thus, does
not preclude the creditor from proceeding against the debtor during the contract's
consummation stage.
PHILIPPINE PORTS AUTHORITY, Petitioner vs. NASIPIT INTEGRATED
ARRASTRE AND STEVEDORING SERVICES, Respondent
G.R. No. 214864 (March 22, 2017)
First Division
Justice Caguioa
I. NATURE OF THE ACTION: Petition for Mandamus
II. FACTS:
Philippine Ports Authority (PPA) awarded a 10-year sole cargo handling

contract with Nasipit Integrated Arrastre and Stevedoring Services (NIASS).
Concord Arrastre filed a protest alleging that two of NIASS’ stockholders are
legislators who are constitutionally prohibited from having financial interest in any
government contract. Notwithstanding, PPA issued a Notice of Award to NIASS.
However, NIASS requested PPA to issue a Hold-Over Authority in its favor, in
view of Concord’s pending protest.
After the last extension of the HOA, PPA revoked the extension due to
complaints received regarding poor quality of its services. NIASS filed a Petition
for Mandamus to turn over the operations of the cargo-handling services back to
NIASS.
III. ISSUE: Whether or not the Notice of Award constitutes as counter-offer, and
as a consequence, did not give rise to a perfected contract.
IV. RULING:
No. Under, Art. 1315 of the Civil Code, contracts are perfected by mere
consent, upon the acceptance by the offeree of the offer made by the offeror.
However, while there was a perfected contract between PPA and NIASS, said
contract already expired. The 10-year term of the perfected contract must be
deemed interrupted when PPA assumed management and control over NIASS’
cargo-handling operations. To compel PPA to execute a 10-year contract on the
basis of conditions prevailing two decades ago would certainly be unreasonable
and iniquitous.
FLORDALIZA LLANES GRANDE, Petitioner vs. PHILIPPINE NAUTICAL
TRAINING COLLEGE, Respondent
G.R. No. 213137 (March 1, 2017)
Second Division
Justice Peralta
I. NATURE OF THE ACTION: Complaint for Illegal Dismissal
II. FACTS:
Philippine Nautical Training College employed petitioner Flordaliza Grande

as Instructor for medical courses, but later on resigned as she had to carry on
her plan to immigrate to Canada. In 2009, Grande was invited by PNTC to
resume teaching, and was again employed as Director for Research and Course
Department and Assistant Vice-President for Training Department. One day, VP
for Corporate Affairs, Frederick Pios relayed to Grande the message of PNTC's
President, Atty. Hernani Fabia, for her to tender her resignation in view of the
discovery of anomalies in the Registration Department that reportedly involved
her. Pios assured her of absolution if she would resign. Grande then filed her
resignation letter and accomplished the necessary exit clearance.
The next day, petitioner filed a complaint for illegal dismissal. She alleged
that she was forced to resign from her employment. On the other hand, PNTC
claimed that Grande voluntarily resigned to evade the pending administrative
charge against her. Labor Arbiter found Grande’s claim of forced resignation
established by substantial evidence. Concomitantly, her resignation was declared
null and void. NLRC and CA affirmed the Labor Arbiter’s decision. However, upon
motion for reconsideration, CA reversed its ruling.
III. ISSUE: Whether or not undue influence was exerted on Grande for her to
leave her employment.
IV. RULING:
Yes. While indeed there was no employment of force from the language
used by Pios, SC was convinced that there was the presence of undue influence
exerted on petitioner for her to leave her employment. Undue influence is
defined under Article 1337 of the Civil Code, to wit: “There is undue influence
when a person takes improper advantage of his power over the will of another,
depriving the latter of a reasonable freedom of choice. The following
circumstances shall be considered: the confidential, family, spiritual, and other
relations between the parties, or the fact that the person alleged to have been
unduly influenced was suffering from mental weakness, or was ignorant or in
financial distress.”
Petitioner's resignation immediately tendered after her conversation with

Pios is not voluntary. With an order coming from the President of PNTC, no less,
undue influence and pressure was exerted upon her.
SPOUSES FIRMO S. ROSARIO AND AGNES ANNABELLE DEAN-ROSARIO,
Petitioners vs. PRISCILLA P. ALVAR, Respondent
G.R. No. 212731 (September 6, 2017)
First Division
I. NATURE OF THE ACTION: Declaration of Nullity of Contract of Sale and

Mortgage, Cancellation of Transfer Certificates of Title and Issuance of New
TCTs with Damages
II. FACTS:
Agnes Dean-Rosario borrowed from Priscilla Alvar Php 600,000, secured

by real estate mortgages over two parcels of land. In 1990, the mortgages were
discharged. Agnes executed two Deeds of Absolute Sale over the two lots in
favor of Priscilla's daughter, Evangeline Arceo for Php 900,000 each. Evangeline
later sold the lots to Priscilla also for the same price. Priscilla then sent a demand
letter to Sps. Rosario asking them to vacate Lot 1. This prompted the spouses to
file a Complaint for Declaration of Nullity of Contract of Sale and Mortgage,
Cancellation of Transfer Certificates of Title and Issuance of new TCTs with
Damages. They alleged that Priscilla deceived Agnes into signing the Deeds of
Absolute Sale, as Agnes merely intended to renew the mortgages over the lots.
In turn, Priscilla filed a case for Recovery of Possession. The cases were
consolidated and RTC rendered a Decision granting Priscilla's complaint while
denying that of Sps. Rosario's. However, CA reversed ruling that although the
transfers were identified as absolute sales, the contracts are deemed equitable
mortgages pursuant to Art. 1602 of the Civil Code. CA further ruled that although
the subject deeds of sale were actually for mortgage, said type of simulation of
contracts does not result in the nullification of the deeds but requires the
reformation of the instrument, pursuant to Art. 1365 of the Civil Code.
III. ISSUE: Whether or not a reformation of the contract is required before the
subject lots may be foreclosed.
IV. RULING:
No. Reformation of an instrument is a remedy in equity where a written

instrument already executed is allowed by law to be reformed or construed to
express or conform to the real intention of the parties. The rationale of the
doctrine is that it would be unjust and inequitable to allow the enforcement of a
written instrument that does not express or reflect the real intention of the parties.
In ruling that the Deeds of Absolute Sale were actually mortgages, CA, in
effect, had reformed the instruments based on the true intention of the parties.
Thus, the filing of a separate complaint for reformation of instrument is no longer
necessary because it would only be redundant and a waste of time. Besides, CA
already declared that absent any proof that spouses Rosario had fully paid their
obligation, Priscilla may seek the foreclosure of the subject lots. The parties'
intention to execute an equitable mortgage is sufficient reformation of such
instrument.
POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT
CORPORATION (PSALM), Petitioner vs. SEM-CALACA
POWER CORPORATION, Respondent
G.R.No. 204719 (December 5, 2016)
Third Division
Justice Peralta
I. NATURE OF THE ACTION: Petition for Dispute Resolution
II. FACTS:
The Electric Power Industry Reform Act of 2001 (EPIRA), or Republic Act
(R.A.) No. 9136 provided for the privatization of the assets of the National Power
Corporation (NPC). It also provided for the creation of Power Sector Assets and
Liabilities Management Corporation (PSALM), which shall manage the orderly
sale, disposition, and privatization of NPC generation assets, real estate and
other disposable assets, and IPP contracts. PSALM sold the Calaca Power
Plant, an asset of NPC, to DMCI though an Asset Purchase Agreement (APA).
DMCI later sold the same to SEM-Calaca Power Corporation (SCPC).
Upon taking over the management and operations of the Calaca Power
Plant, SCPC started providing electricity to customers listed in Schedule W of the
APA, among which is MERALCO. 169,000 kW appears in Schedule was
MERALCO’s monthly average demand, while 10.841% is found under the name
of MERALCO. SCPC contends that it is obliged to supply 10.841% of
MERALCO's total requirement but not to exceed 169,000 kW in any hourly
interval. However, PSALM contends that SCPC is bound to supply the entire
10.841% of what MERALCO requires, without regard to any cap or limit.
In 2010, when SCPC fell short of supplying the entire 10.841% of

MERALCO's requirements, the deficiency was filled by supply from the
Wholesale Electricity Spot Market (WESM). Thus, NPC and PSALM, billed
MERALCO for the electricity delivered by SCPC and that supplied through
WESM. SCPC claims, however, that PSALM withheld MERALCO's payments
even for the electricity that SCPC supplied without the latter's knowledge nor
consent. NPC also allegedly replaced SCPC Power Bills to MERALCO with
PSALM Power Bills, with instructions that payments be remitted directly to
PSALM instead of SCPC. PSALM then refused to release the payments due to
SCPC until after deducting the cost of power supplied by WESM.
SCPC filed a Petition for Dispute Resolution (with Prayer for Provisional
Remedies) before the Energy Regulatory Commission (ERC) against NPC and
PSALM. ERC ruled in favor of SCPC, and ruled, among others, that SCPC's
obligation under Schedule W of the APA is to deliver 10.841% of MERALCO's
energy requirements but not to exceed 169,000 kW capacity allocation, at any
given hour. CA affirmed.
III. ISSUE: Whether or not CA properly interpreted the Asset Purchase

Agreement, the contract between the parties.
IV. RULING:
No. Among the key principles in the interpretation of contracts is that

espoused in Art. 1370 of the Civil Code, which states that: “If the terms of a
contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control.” The rule means that
where the language of a written contract is clear and unambiguous, the contract
must be taken to mean that which, on its face, it purports to mean, unless some
good reason can be assigned to show that the words should be understood in a
different sense.
A contract provision is ambiguous if it is susceptible of two reasonable

alternative interpretations. In such case, its interpretation is left to the court, or
another tribunal with jurisdiction over it. In the case at bar, the Court finds that
ambiguity indeed surrounds the figures 10.841% and169,000 kW found in the
contract, the former because it does not indicate a base value with a specific
quantity and a definite unit of measurement and the latter because there is
uncertainty as to whether it is a cap or limit on the party's obligation or not. These
were similarly the findings of both the ERC and the appellate court.
Following the above rules and principles, the ERC correctly interpreted the
ambiguity in Schedule W in a way that would render all of the contracts'
provisions effectual. SCPC's obligation is to deliver 10.841% of MERALCO's
energy requirements but not to exceed 169,000kW capacity allocation, at any
given hour.
PIONEER INSURANCE AND SURETY CORPORATION, Petitioner
vs. APL CO. PTE. LTD., Respondent
G.R. No. 226345 (August 2, 2017)
Second Division
Justice Mendoza
I. NATURE OF THE ACTION: Sum of Money
II. FACTS:
The shipper, Chillies Export, turned over to APL 250 bags of chili pepper
for transport from India to Manila. In turn, BSFIL Technologies (consignee)
insured the cargo with Pioneer Insurance. Upon receipt of the goods, BSFIL
discovered that 76 bags were wet and infested with molds, and was declared as
total loss. As a result, BSFIL made a formal claim against APL and Pioneer. It
was found out that the shipment was wet because the water seeped inside the
container van APL provided. Pioneer then paid BSFIL Php 195k after evaluating
the claim.
After having been subrogated to all rights of BSFIL, Pioneer filed a case
for Sum of Money against APL. MTC granted the Complaint, which was affirmed
by RTC. However, CA reversed said decisions, ruling that the action was barred
by prescription, as the Bill of Lading set out a 9-month prescriptive period.
II. ISSUE: Whether or not the action was barred by prescription.
III. RULING:
No. The cardinal rule in the interpretation of contracts is embodied in

Art. 1370(1) of the Civil Code: “if the terms of a contract are clear and leave no
doubt upon the intention of the contracting parties, the literal meaning of its
stipulations shall control.”
In the subject Bill of Lading, it was stated that the carrier shall be
discharged from liability in respect of the goods, unless suit is brought in the
proper forum within 9 months after delivery. However, the same is qualified in
that when the 9-month period is contrary to any law compulsory applicable, the
period prescribed by said law shall apply.
Under the COGSA, in case of loss or damage cargo, the prescriptive

period is 1 year. Hence, the 9-month period in the Bill of Lading is inapplicable.
SPOUSES ROMEO PAJARES and IDA T. PAJARES, Petitioners vs.
REMARKABLE LAUNDRY AND DRY CLEANING, represented by
ARCHEMEDES G. SOLIS, Respondents
G.R. No. 212690 (February 20, 2017)
First Division
I. NATURE OF ACTION: Breach of contract and damages
II. FACTS:
Remarkable Laundry and Dry Cleaning (RLDC) filed a complaint

for breach of contract and damages against Sps. Romeo and Ida Pajares.
RLDC alleged that it entered into a Remarkable Dealer Outlet Contract with the
spouses whereby the latter shall accept and receive items for laundry which are
then picked up and processed by the former in its laundry outlet. They further
alleged that spouses violated Article IV (Standard Required Quota & Penalties)
of said contract, which required them to produce at least 200 kilos of laundry
items each week, when they ceased dealer outlet operations on account of lack
of personnel; that RLDC made written demands for payment of penalties
provided for in the contract, but the latter failed to pay. RTC dismissed the case
but was reversed by the CA.
II. ISSUE: Whether or not the Complaint for “Breach of Contract and Damages”
is considered as an action for specific performance or a complaint for
rescission contract.
III. RULING:
No. The complaint is one for damages. True, breach of contract may
give rise to a complaint for specific performance or rescission of contract. In
which case, the subject matter is incapable of pecuniary estimation and,
therefore, jurisdiction is lodged with the RTC. However, breach of contract may
also be the cause of action in a complaint for damages. Thus, it is not correct to
immediately conclude, as the CA erroneously did, that since the cause of action
is breach of contract, the case would only either be specific performance or
rescission of contract because it may happen, as in this case, that the
complaint is one for damages.
RUTCHER T. DAGASDAS, Petitioner vs. GRAND PLACEMENT
AND GENERAL SERVICES, Respondent
G.R. No. 205727 (January 18, 2017)
First Division
I. NATURE OF THE ACTION: Illegal Dismissal
II. FACTS:
Rutcher Dagasdas was hired as Network Technician by Grand Placement

(GP) for Saudi Arabia. His employment contract was duly approved by the
POEA. Upon his arrival in Saudi, he signed a new employment contract which
stipulated his position as Superintendent; placed him under a 3-month
probationary period; and that the new contract shall cancel all prior contracts.
Dagasdas started working and was given tasks suited for a Mechanical Engineer.
He raised his concern to his supervisor, however, before his case was
investigated, his employment was severed.
After repatriation, Dagasdas filed a case for illegal dismissal against GP.
The Labor Arbiter dismissed the case, ruling that when Dagasdas signed the new
contract in Saudi, he accepted its stipulations. NLRC reversed, but CA reinstated
the ruling of the Labor Arbiter.
III. ISSUE: Whether or not the new contract signed in Saudi superseded the
original contract.
IV. RULING:
No. The new contract, which served as basis for dismissing

Dagasdas, is void. Under the Labor Code, unless the employment contract of
an OFW is processed through the POEA, the same does not bind the concerned
OFW, as the state has no means of determining the suitability of foreign laws to
our overseas workers.
The new contract also breached Dagasdas original contract as it was

entered into even before the expiration of the latter. Therefore, it cannot
supersede the original contract; its terms and conditions are void.
JOSE S. OCAMPO, Petitioner vs. RICARDO S. OCAMPO, SR., Respondent
G.R. No. 227894 (July 5, 2017)
Third Division
Justice Velasco, Jr.
I. NATURE OF THE ACTION: Partition and Annulment of TCT
II. FACTS:
Jose and Ricardo Ocampo are full-blooded brothers. The case arose from
a complaint filed by respondent Ricardo against petitioner Jose for partition and
annulment of Transfer Certificate of Title (TCT). Ricardo alleged that he and Jose
are co-owners of the Subject Property, which was a conjugal property left by their
parents. He likewise claimed that Jose and his wife conspired in falsifying his
signature on a notarized Extrajudicial Settlement with Waiver ("ESW") and
effecting the transfer of the property in the name of Jose under a new TCT.
National Bureau of Investigation found out that the signature was indeed forged.
Ricardo requested for partition of the property, but Jose refused to do so and
secretly mortgaged the property.
In their Answer, Jose and wife claimed that their parents executed a Deed
of Donation Propter Nuptias of the Subject Property in their favor, with a promise
on their part to demolish the old house and replace it with a new house, which
they did. He further claimed that their father executed the ESW and secured
Ricardo’s signature. Finally, Jose argued that the action to annul the TCT had
prescribed since it was filed 21 years and 7 months from the issuance of the title.
The trial court dismissed the complaint on the ground of prescription, but CA
reversed and ruled the RTC Order as null and void. Meanwhile, Jose filed a
Motion for Leave to File Amended Answer which alleged that after in
consideration of a loan, Ricardo and their father waived their rights to the
property under the ESW. He further claimed that their father executed a Deed of
Absolute Sale in his favor. RTC ruled in favor of Ricardo, which CA affirmed. CA
found that Ricardo was able to prove that his signature on the ESW is not
genuine. Hence, the action to annul the ESW is imprescriptible since it is a void
or inexistent contract.
II. ISSUE: Whether or not the ESW is a void or inexistent contract.
III. RULING:
Yes. The Court sees no reason to overturn the factual findings of the trial
court, as affirmed by the CA, as the records show that preponderant evidence
established the falsity of the ESW and the fraudulent registration of the subject
property in Jose’s name.
Prescription has not set in. Under the Torrens System as enshrined in P.D.
No. 1529, the decree of registration and the certificate of title issued become
incontrovertible upon the expiration of one (1) year from the date of entry of the
decree of registration, without prejudice to an action for damages against the
applicant or any person responsible for the fraud. However, actions for
reconveyance based on implied trusts may be allowed beyond the one-year
period. Notwithstanding the irrevocability of the Torrens title already issued in the
name of another person, he can still be compelled under the law to reconvey the
subject property to the rightful owner. The property registered is deemed to be
held in trust for the real owner by the person in whose name it is registered. After
all, the Torrens system was not designed to shield and protect one who had
committed fraud or misrepresentation and thus holds title in bad faith. In an
action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property, in this
case the title thereof, which has been wrongfully or erroneously registered in
another person's name, to its rightful and legal owner, or to one with a better
right.
Given the falsity of the ESW, it becomes apparent that petitioner obtained
the registration through fraud. This wrongful registration gives occasion to the
creation of an implied or constructive trust under Article 1456 of the New Civil
Code. Under Art. 476, whenever there is 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, an
action may be brought to remove such cloud or to quiet the title. An action may
also be brought to prevent a cloud from being cast upon title to real property or
any interest therein. A cloud on a title exists when (1) there is an instrument
(deed, or contract) or record or claim or encumbrance or proceeding; (2) which is
apparently valid or effective; (3) but is, in truth and in fact, invalid, ineffective,
voidable, or unenforceable or extinguished (or terminated) or barred by extinctive
prescription; and (4) and may be prejudicial to the title. Since it was already
established that respondent's signature on the ESW was forged, and then it is
only necessary for the cloud on respondent's title to be removed.
CATHAY LAND, INC. and CATHAY METAL CORP., Petitioners vs.
AYALA LAND, INC., AVIDA LAND CORPORATION and
LAGUNA TECHNOPARK, INC., Respondents
G.R. No. 210209 (August 9, 2017)
First Division
I. NATURE OF THE ACTION: Easement of Right of Way
II. FACTS:
Cathay Group filed a Complaint for Easement of Right of Way against

Ayala Land, Avida Land and Laguna Technopark, alleging that Ayala Group
unjustifiably denied passage to Cathay’s personnel, vehicles and heavy
equipment through its properties which caused the development of the latter’s
South Forbes Golf City project to be delayed. However, before trial could ensue,
the parties executed a Compromise Agreement wherein Ayala granted an
easement of right of way, in consideration of Cathay’s undertaking not to develop
the following: cemetery or memorial park, industrial park, high-rise buildings; low-
cost housing, and warehouse.
RTC approved the Compromise Agreement in its Judgment, hence Cathay

commenced the development of its project. However, Ayala noted that the
materials for the project showed plans to develop high-rise buildings. Thus, Ayala
made verbal and written demands to Cathay, but to no avail. Consequently, Ayala
filed a Motion for Execution with Application for Issuance of TRO. Cathay
opposed that the Compromise Agreement does not contain a provision limiting
building height at 3-storeys, and the proscription therein only pertains to “high-
rise buildings” without specific qualifications. RTC ruled in favor of Ayala, and
while the case was pending before CA, RTC issued a Writ of Execution.
Eventually, CA affirmed the decision of RTC.
II. ISSUE: Whether or not RTC and CA erred in issuing and affirming the
issuance of a Writ of Execution.
III. RULING:
Yes. Under Article 2037 of the Civil Code, a compromise is a contract

whereby the parties, by making reciprocal concessions, avoid a litigation or put
an end to one already commenced. It has the effect and authority of res judicata
upon the parties, but there shall be no execution except in compliance with a
judicial compromise.
In implementing a Compromise Agreement, the courts cannot modify,

impose terms different from the terms of the agreement, or set aside the
compromise and reciprocal concessions made in good faith by the parties
without gravely abusing their discretion. Here, the remedies available to Ayala
under the Compromise Agreement were either to withdraw or suspend the grant
of easement of right of way. Thus, RTC gravely abused its discretion when it
granted a remedy that it is not available to Ayala, thereby imposing terms
different from what was agreed upon by the parties in their Compromise
Agreement.
LOLITA BAS CAPABLANCA, Petitioner vs. HEIRS OF PEDRO BAS,
represented by JOSEFINA BAS ESPINOSA and REGISTER OF DEEDS OF
THE PROVINCE OF CEBU, Respondents
G.R. No. 224144 (June 28, 2017)
Second Division
Justice Leonen
I. NATURE OF THE ACTION: Cancellation of the titles
II. FACTS:
Andres and Pedro Bas acquired a lot. Pedro then sold to Faustina
Manreal his portion of the lot as evidenced by a notarized Deed of Sale. After the
death of Faustina, several transfers took place, until the land was eventually sold
to Norberto Bas, who took possession of and built a house on it. Norberto died
and was succeeded by his niece and only heir, Lolita Bas Capablanca.
Subsequently, Lolita learned that a Transfer Certificate of Title (TCT) was issued
in the names of Andres and Pedro on the basis of a reconstituted Deed of
Conveyance. A notarized Partition Agreement of Real Property was executed
between the heirs of Andres and Lolita, but when the latter sought to register her
portion, it was denied by the Register of Deeds. Lolita learned that several TCTs
had been issued in the name of the Heirs of Pedro, represented by Josefina Bas
Espinosa.
Lolita filed a complaint for the cancellation of the titles. In their Answer, the
Heirs of Pedro Bas claimed that the sale between Pedro and Faustina was fake,
spurious and invalid because Pedro was an illiterate and never learned how to
write his name, so that the signature appearing thereon could not have been
made by him. Heirs of Bas further claimed that it was necessary for Lolita to be
first declared as Norberto’s heir before filing the complaint. RTC ruled in favor of
Lolita. CA reversed and dismissed Lolita’s Complaint.
II. ISSUE: Whether or not CA erred in dismissing the Complaint for Cancellation
of the Titles.
IV: RULING:
Yes. The dispute in this case is not about the heirship of Lolita to Norberto
but the validity of the sale of the property from Pedro to Faustina, from which
followed a series of transfer transactions that culminated in the sale of the
property to Norberto. SC agrees with RTC when it held that there was substantial
evidence to prove that Lolita had been in long possession of the lot under a claim
of ownership as the heir of Norberto and that it was not necessary for her to be
first declared as his heir before filing the complaint.
As ruled by the trial court, SC upheld the validity of the Deed of Sale
executed by Pedro in favor of Faustina. It found Josefina's uncorroborated
testimony of Pedro's illiteracy as self-serving and unconvincing to contradict the
regularity of the notarized deed. The object of the sale was determinate, i.e.,
Pedro's share in the lot was specified by the boundaries indicated in the Deed of
Sale. Consequently, with Pedro's sale of his share, his heirs acquired no portion
by inheritance and their titles were null and void and should be cancelled.
SPRING HOMES SUBDIVISION CO., INC., SPOUSES PEDRO L. LUMBRES
and REBECCA T. ROARING, Petitioners vs. SPOUSES PEDRO TABLADA,
JR. and ZENAIDA TABLADA, Respondents
G.R. No. 200009 (January 23, 2017)
Second Division
Justice Peralta
I. NATURE OF THE ACTION: Nullification of Title, Reconveyance and Damages
II. FACTS:
Spouses Pedro and Rebecca Lumbres entered into a Joint Venture

Agreement with Spring Homes Subdivision for the development of several
parcels of land. Spring Homes then entered into a Contract to Sell with Spouses
Pedro and Zenaida Tablada for the sale of a parcel of land. Spouses Lumbres
filed a complaint for Sum of Money against Spring Homes for its alleged failure to
comply with the terms of the Joint Venture Agreement. Unaware of the pending
action, Spouses Tablada began constructing their house and occupied the same.
Afterward, Spring Homes executed a Deed of Absolute Sale in favor of the
Spouses Tablada, who paid Php 179,500 (more than the stated price of Php
157,500) as total purchase price. The title over the subject property, however,
remained with Spring Homes for its failure to cause the cancellation of the TCT
and the issuance of a new one.
Subsequently, Spouses Tablada discovered that the subject property was

mortgaged as a security for a loan with Premiere Development Bank, with Spring
Homes as mortgagor. Meanwhile, Spouses Lumbres and Spring Homes entered
into a Compromise Agreement as to the Sum of Money case, wherein Spring
Homes conveyed the subject property, as well as several others, to the Spouses
Lumbres. By virtue of said agreement, Spouses Lumbres were authorized to
collect Spring Homes' account receivables arising from the conditional sales of
several properties, as well as to cancel said sales in the event of default in the
payment. In the exercise of such power, Spouses Lumbres sent demand letters
to Spouses Tablada for the payment of an alleged outstanding balance of the
purchase price amounting to Php 230,000.00. When no payment was received,
Spouses Lumbres caused the cancellation of the Contract to Sell previously
executed by Spring Homes in favor of Spouses Tablada. Thereafter, Spouses
Lumbres and Spring Homes executed a Deed of Absolute Sale over the subject
property, and as a result, a new title was issued in the name of the Spouses
Lumbres.
Consequently, Spouses Tablada filed a complaint for Nullification of Title,

Reconveyance and Damages against Spring Homes and Spouses Lumbres
praying for the nullification of the second Deed of Absolute Sale executed in favor
of the Spouses Lumbres, as well as the title issued as a consequence thereof.
RTC rendered its Decision dismissing Spouses Tablada's action. CA reversed the
RTC Decision finding that at the time when Spouses Tablada entered into a
contract of sale with Spring Homes, the title over the subject property was
already registered in the name of Spring Homes. Thus, the Deed of Absolute
Sale between them was valid and with sufficient consideration.
III. ISSUE: Whether or not the second Deed of Sale between Spouses Lumbres
and Spring Homes is null and void.
IV: RULING:
Yes. The issue involves what appears to be a double sale. Spring Homes
executed a Deed of Absolute Sale in favor of Spouses Tablada in 1996. Then, in
2000, Spouses Lumbres and Spring Homes executed a Deed of Absolute Sale
over the same property. Spouses Lumbres argued that out of the Php 409,500
purchase price, Spouses Tablada merely paid Php 179,500, but the Court
disagrees. If the total selling price was indeed Php 409,500, said amount should
have appeared as the consideration in the 1996 deed of absolute sale. However,
only Php 157,500 was stated.
Moreover, under Art. 1544 of the Civil Code: “If the same thing should
have been sold to different vendees, the ownership shall be transferred to the
person who may have first taken possession thereof in good faith, if it should be
movable property.” Here, the first buyers, Spouses Tablada, were able to take
said property into possession but failed to register the same because of Spring
Homes' unjustified failure to deliver the owner's copy of the title. But while
Spouses Lumbres successfully caused the transfer of the title in their names, the
same was done in bad faith. At the time of the execution of their Compromise
Agreement, they were indisputably and reasonably informed that the subject lot
was previously sold to Spouses Tablada. They were also already aware that
Spouses Tablada had constructed a house and were in physical possession
thereof.
Knowledge gained by the second buyer of the first sale defeats his rights
even if he is first to register the second sale, since such knowledge taints his
prior registration with bad faith. In order for Spouses Lumbres to obtain priority
over Spouses Tablada, the law requires a continuing good faith and innocence or
lack of knowledge of the first sale that would enable their contract to ripen into full
ownership through prior registration. Clearly, Spouses Lumbres were in bad faith
the moment they entered into the second Deed of Absolute Sale and thereafter
registered the subject property in their names. Therefore, the Court cannot
consider them as the true and valid owners of the disputed property and permit
them to retain title thereto.
DASMARIÑAS T. ARCAINA and MAGNANI T. BANTA, Petitioners vs.
NOEMI L. INGRAM, represented by MA. NENETTE L. ARCHINUE,
Respondents
G.R. No. 196444 (February 15, 2017)
Third Division
Justice Jardeleza
I. NATURE OF ACTION: Recovery of possession
II. FACTS:
Dasmarinas Arcaina, through her attorney-in-fact, Magnani Banta

entered into a contract of sale with Noemi Ingram through her attorney-in-fact,
Ma. Nenette Archinue. The contract price of the property was P1.8 Million. With
Ingram making installment payments for a total of Php 1.715 Million, Banta and
Ingram thereafter executed a Memorandum of Agreement acknowledging said
payments and that Ingram still had the remaining balance of Php 145,000.00.
They also separately executed deeds of absolute sale over the property in
Ingram's favor.
Subsequently, Ingram caused the property to be surveyed and

discovered a 5,800 sqm difference. Upon learning the actual area, Banta
insisted that the difference remains unsold, which was opposed by Ingram.
Petitioners denied that the sale contemplates the entire property and
contended that the parties agreed that only 6,200 sqm shall be sold. MCTC
held that Ingram cannot claim ownership and possession of the whole property.
On appeal, the RTC reversed stating that Art. 1542, which covers sale of real
estate in lump sum, applies. CA affirmed.
III. ISSUE: Whether or not the sale was made in lump sum.
IV. RULING:
No. In sales involving real estate, the parties may choose between two
types of pricing agreement: a unit price contract wherein the purchase price is
determined by way of reference to a stated rate per unit area (e.g., Php 1,000.00
per sqm.) or a lump sum contract which states a full purchase price for an
immovable the area of which may be declared based on an estimate or where
both the area and boundaries are stated (e.g., Php 1 million for 1,000 sqm).
Here, the Deeds of Sale executed by Banta and Arcaina, both show that the
property was conveyed to Ingram at the predetermined price of Php 1.8M. There
was no indication that it was bought on a per-square-meter basis. Thus, Art.
1542 of the Civil Code governs the sale, viz.:
“Art. 1542. In the sale of real estate, made for a lump sum and not at the
rate of a certain sum for a unit of measure or number, there shall be no increase
or decrease of the price, although there be a greater or less area or number than
that stated in the contract.”
The same rule shall be applied when two or more immovables are sold for
a single price; but 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.
In a lump sum contract, a vendor is generally obligated to deliver all the

land covered within the boundaries, regardless of whether the real area should
be greater or smaller than that recited in the deed. However, in case there is
conflict between the area actually covered by the boundaries and the estimated
area stated in the contract of sale, he/she shall do so only when the excess or
deficiency between the former and the latter is reasonable.
PILIPINAS MAKRO, INC., Petitioner vs. COCO CHARCOAL PHILIPPINES,
INC. and LIM KIM SAN, Respondents
G.R. No. 196419 (October 4, 2017)
Third Division
Justice Martires
I. NATURE OF THE ACTION: Sum of Money
II. FACTS:
Pilipinas Makro, Inc. (Makro) was in need of acquiring real properties in

Davao City. Makro found two parcels of land contiguous and parallel to each
other belonging to Coco Charcoal Phils., (CCP) and Lim Kim San (Lim). Aside
from the technical descriptions, Makro, CCP and Lim executed two (2) deeds of
sale containing identical provisions, similar terms, conditions, and warranties.
After the resurvey, it was discovered that 131 square meters of the lot purchased
from CCP, and 130 square meters from Lim had been encroached upon by
DPWH project. Initially, Makro offered a compromise agreement in consideration
of a refund of 75% of the value of the encroached portions. Failing to recover
such, Makro filed separate complaints against CCP and Lim to collect the refund
sought.
RTC ruled in favor of Markro, but CA reversed. While CA agreed that the
DPWH project encroached upon the properties, it ruled that Makro was not
entitled to a refund. It explained that the warranty expressed in Section 4(i) 11 of
the deeds of sale is similar to the warranty against eviction under Art. 1548 of
the Civil Code. As such, only a buyer in good faith may sue to a breach of
warranty against eviction. It averred that Makro could not feign ignorance of the
ongoing road widening project, and noted Makro's actual knowledge of the
encroachment before the execution of the sale constitutes its recognition that
CCP and Lim's warranty against liens, easements, and encumbrances does not
include the respective 131 and 130 square meters.
III. ISSUE: Whether or not CA erred in denying Makro a refund on the ground of
bad faith.
IV. RULING:
Yes. An express warranty pertains to any affirmation of fact or any

promise by the seller relating to the thing, the natural tendency of which is to
induce the buyer to purchase the same. It includes all warranties derived from
the language of the contract, so long as the language is express-it may take the
form of an affirmation, a promise or a representation. On the other hand, an
implied warranty is one which the law derives by application or inference from the
nature of transaction or the relative situation or circumstances of the parties,
irrespective of any intention of the seller to create it. In other words, an express
warranty is different from an implied warranty in that the former is found within
the very language of the contract while the latter is by operation of law.
Thus, CA erred in treating Section 4(i) of the deeds of sale as akin to an

implied warranty against eviction. First, the deeds of sale categorically state that
the sellers assure that the properties sold were free from any encumbrances
which may prevent Makro from fully and absolutely possessing the properties in
question. Second, in order for the implied warranty against eviction to be
enforceable, the following requisites must concur: (a) there must be a final
judgment; (b) the purchaser has been deprived of the whole or part of the thing
sold; (c) said deprivation was by virtue of a prior right to the sale made by the
vendor; and (d) the vendor has been summoned and made co-defendant in the
suit for eviction at the instance of the vendee. Evidently, there was no final
judgment and no opportunity for the vendors to have been summoned precisely
because no judicial action was instituted.
Further, even if Section 4(i) of the deeds of sale was to be deemed similar
to an implied warranty against eviction, CA erred in concluding that Makro acted
in bad faith. It is undisputed that Makro's legal counsel conducted an ocular
inspection on the properties in question before the execution of the deeds of sale
and that there were noticeable works and constructions going on near them.
Nonetheless, these are insufficient to charge Makro with actual knowledge that
the DPWH project had encroached upon respondents' properties. A mere ocular
inspection could not have possibly determined the exact extent of the
encroachment. It is for this reason that only upon a relocation survey was it
discovered that 131 and 130 square meters of the lots purchased from CCP and
Lim, respectively, had been adversely affected by the DPWH project.
RODOLFO LAYGO and WILLIE LAYGO, Petitioners, vs. MUNICIPAL MAYOR
OF SOLANO, NUEVA VIZCAYA, Respondent
G.R. No. 188448 (January 11, 2017)
Third Division
Justice Jardeleza
I. NATURE OF THE ACTION: Petition for Mandamus
II. FACTS:
After being asked to vacate the stalls, Aniza Bandrang informed then
Mayor Santiago Dickson of the illegal sublease she entered into with Rodolfo and
Willie Laygo over 4 public market stalls which the latter leased from the
Municipality. Bandrang requested for the cancellation of the lease contract
between the Municipality and the Laygos. The Sanggunian informed Mayor
Dickson that Resolution No. 183-2004 authorizes the Mayor to enforce the
provision against subleasing. In response, Mayor Dickson averred that the stalls
were constructed under a Build-Operate-Transfer (BOT) scheme, which meant
that Laygos had the right to keep their stalls until the agreement was satisfied.
Eventually, Bandrang filed a Petition for Mandamus alleging that despite

already being aware of the violations, Mayor Dickson still refused to enforce the
provisions against subleasing. Hence, such inaction constitutes as an unlawful
neglect in the performance of his public duty. In his Answer, Mayor Dickson
claimed that under the principle of in pari delicto, Bandrang had no right to seek
remedy with the court as she was guilty herself in subleasing the market stalls.
He likewise asserted that the subject of the mandamus was not proper as it
entailed an act which was purely discretionary on his part. Conversely, Laygos
maintained that the prohibition on subleasing would not apply because the
contract between the Municipality and their mother, Clarita, was one under a
BOT scheme. RTC ruled in favor of Bandrang, which CA affirmed.
III. ISSUE: Whether or not the contract of the Laygos with the municipality is one
of lease.
IV. RULING:
Yes. Although the contract of the Municipality with Clarita, was converted
into a BOT agreement for a time due to the fire that razed the public market, she
re-occupied the stalls under a lease contract with the Municipality. In fact, in his
2007 Notice, the Municipal Treasurer reminded the Laygos of their delinquent
stall rentals. If the stalls were still under a BOT scheme, the Municipal Treasurer
could not have assessed petitioners of any delinquency.
However, Mandamus is not proper because the privilege of operating a

market stall is under the discretionary power of the government. Mandamus is
applicable when the act sought for is mandated by the law to be done by the
person, corporation or government agency. As it was, Mayor Dickson did act on
the matter before him. He exercised his discretion by choosing not to cancel the
contract on the ground of pari delicto.
REPUBLIC OF THE PHILIPPINES, THROUGH ITS TRUSTEE, THE
PRIVATIZATION AND MANAGEMENT OFFICE, Petitioner vs. PHILIPPINE
INTERNATIONAL CORPORATION, Respondent
G.R. No. 181984 (March 20, 2017)
I. NATURE OF THE ACTION: Unlawful Detainer
II. FACTS:
Cultural Center of the Philippines (CCP) and PIC entered into a Lease
Agreement over a parcel of land for 25 years. CCP then alienated the subject
property in favor of Philippine National Bank (PNB) through a Deed of Dacion in
Payment with Lease. In the same deed, PNB leased the property back to CCP.
Accordingly, TCT was issued to PNB. Proclamation No. 50 was issued for
privatization of certain government corporations and created the Asset
Privatization Trust (APT). Subsequently, PNB assigned the subject property to
the national government, and then the latter executed a Trust Agreement with
APT, conveying the leased premises in trust for administration and disposition.
PIC requested PNB to annotate its leasehold rights on the TCT but PNB
refused in view of APT’s insistence that it was not bound by the Lease
Agreement. Thus, PIC instituted a complaint to compel CCP, PNB, and APT to
respect the terms and conditions of the Lease Agreement. RTC ruled in favor of
PIC after finding that APT already had constructive notice of the lease, which the
latter must respect. CA affirmed, and PIC’s leasehold rights were annotated.
PIC then wrote APT that it was exercising its option to renew the lease
pursuant to the Lease Agreement, which APT denied. Meanwhile, the term of
APT ended, and by virtue of E.O. No. 323, PMO was created to take over the
assets and functions of APT. Now, PMO demanded that PIC vacate the subject
property, but the latter refused. Hence, PMO filed a Complaint for unlawful
detainer. MeTC ruled in favor of PIC and held that by PIC's notice of the exercise
of its option to renew the lease, the lease was deemed renewed under the same
terms and conditions of the Lease Agreement. RTC and CA affirmed.
III. ISSUE: Whether or not PMO is bound by the Lease Agreement.
IV. RULING:
Yes. PMO is the successor APT, and assumes the existing obligation of
APT upon the termination of the latter’s existence. One of which was to respect
the Lease Agreement. To recall, there was a previous judgment finding that APT
had an obligation to respect the lease by virtue of its constructive notice of the
same. This judgment has lapsed into finality.
At any rate, assuming that PMO was a third party to the Lease Agreement,
it is still bound by it. PIC's leasehold rights have been clearly annotated. It is
settled that once a lease is recorded, it becomes binding on third persons.
Therefore, from the time of the execution of the lease contract, its efficacy
continues until it is terminated on the grounds provided for by law. On account of
the foregoing annotation, as well as the finding that APT had constructive notice
of the lease, PMO can no longer deflect the binding effect of the Lease
Agreement on the latter.
MANUEL BAUTISTA, ANGEL SAHAGUN, CARMELITA BAUTISTA and
ANIANO BAUTISTA, Petitioners vs. MARGARITO BAUTISTA, Respondent
G.R. No. 202088 (March 8, 2017)
Second Division
Justice Peralta
I. NATURE OF THE ACTION: Partition and Accounting
II. FACTS:
The Bautista Siblings – Margarito, Manuel, Carmelita, Aniano, Florencia

and Ester – established a lending business through a common fund. Due to said
business, they were able to acquire several properties in San Pablo City. Amelia
Mendoza obtained a loan from Florencia and secured the same with a real estate
mortgage over a parcel of land in Sta. Monica, TCT was likewise turned over to
Florencia.
Later on, Amelia allegedly sold the same property to Margarito through a
“Kasulatan ng Bilihang Tuluyan”. On the same date, Florencia filed a Petition for
Issuance of Second Owner’s Duplicate of TCT claiming she could no longer
locate the same despite diligent search. Florencia also executed a Special Power
of Attorney in favor of Margarito to represent her in the proceedings.
Other Bautista siblings instituted a Complaint for Partition and Accounting

over the Sta. Monica property, claiming co-ownership. They presented bank
transactions and a “Kasulatan ng Bilihang Tuluyan” without vendee’s name,
which was purportedly executed by Amelia in favor of Bautista siblings. RTC
ruled in favor of the latter, but CA reversed.
III. ISSUE: Whether or not there is implied trust between Margarito and his
siblings.
IV. RULING:
Yes. There is implied trust when a property is sold and the legal estate is
granted to one party but the price is paid by another for the purpose of having the
beneficial interest of the property. Its elements are: (a) actual payment of money,
property or services, or equivalent valuable consideration; and (b) such
consideration must be furnished by the alleged beneficiary of a resulting trust. A
trust, which derives its strength from the confidence one reposes on another
especially between families, does not lose that character simply because of what
appears in a legal document.
In this case, the pieces of evidence presented demonstrate the parties

intention to acquire the property in the course of their business, just like their
other properties. Although the subject property was titled in the name of
Margarito, the surrounding circumstances speak of the intent that the equitable or
beneficial ownership should belong to the Bautista siblings.
DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner vs. HON.
EMMANUEL CARPIO, Presiding Judge, RTC Branch 16, Davao City,
COUNTRY BANKERS INSURANCE, DABAY ABAD, HATAB ABAD,
OMAR ABAS, et.al., Respondents
G.R. No. 195450 (February 1, 2017)
Second Division
Justice Mendoza
I. NATURE OF THE ACTION: Complaint for Delivery of Certificates of Title
II. FACTS:
Dabay Abad, Hatab Abad, et.al. filed a Complaint for Delivery of

Certificates of Title against DBP and Guarantee Fund for Small and Medium
Enterprise (GFSME). They alleged that their certificates of title were submitted to
DBP for safekeeping pursuant to a loan agreement. The same were turned over
by DBP to GFSME because of its call on GFSME’s guarantee on their loan, and
pursuant to the guarantee agreement between DBP and GFSME.
III. ISSUE: Whether or not DBP can still enforce the guarantee agreement with
GFSME despite alleged unlawful taking of the certificates of title, which served as
security for the loan.
IV. RULING:
Yes. A contract of guaranty gives rise to a subsidiary obligation on the

part of the guarantor. The guarantor agrees that the creditor, after proceeding
against the principal, may proceed against the guarantor if the principal is unable
to pay. Moreover, he contracts to pay if, by the use of due diligence, the debt
cannot be made out of the principal debtor.
PRUDENTIAL BANK (now BANK OF THE PHILIPPINE ISLANDS), Petitioner
vs. RONALD RAPANOT and HOUSING & LAND USE REGULATORY BOARD,
Respondents
G.R. No. 191636 (January 16, 2017)
First Division
Justice Caguioa
I. NATURE OF THE ACTION: Cancellation of Mortgage
II. FACTS:
Golden Dragon is the developer of Wack-Wack Twin Towers Condominium

wherein Ronald Rapanot paid a reservation fee for Unit 2308-B2. Prudential
Bank extended a loan to Golden Dragon secured by a Mortgage Agreement over
several condominium units including that of Rapanot’s. Subsequently, Rapanot
and Golden Dragon entered into a Contract to Sell and Rapanot completed
payment of the full purchase price. Golden Dragon then executed a Deed of
Absolute Sale in favor of Rapanot.
Thereafter, Rapanot made several verbal demands for the delivery of his
unit. Thus, Golden Dragon requested the bank for a substitution of collateral,
replacing Unit 2308-B2 with another unit. However, the Bank denied Golden
Dragon's request due to the latter's unpaid accounts. For non-compliance,
Rapanot filed a Complaint with HLURB. The Bank argued that as a mortgagee in
good faith and for value, it must be accorded protection and should not be held
liable. Still, HLURB ruled that the mortgage over Unit 2308-B2 is null and void.
The Office of the President and the CA affirmed HLURB’s decision.
III. ISSUE: Whether or not the Bank is a mortgagee in good faith.
IV. RULING:
No. Under Section 18 of PD 957, no mortgage on any condominium unit

may be constituted by a developer without prior written approval of the National
Housing Authority, now HLURB. PD 957 further requires developers to notify
buyers of the loan value of their corresponding mortgaged properties before the
proceeds of the secured loan are released. Thus, the Mortgage Agreement
cannot have the effect of curtailing Rapanot's right as buyer of Unit 2308-B2,
precisely because of the Bank's failure to comply with PD 957. Moreover, the
Bank cannot be considered a mortgagee in good faith. It failed to ascertain
whether Golden Dragon secured HLURB's prior written approval as required by
PD 957 before it accepted Golden Dragon's properties as collateral. It also failed
to ascertain whether any of the properties offered as collateral already had
corresponding buyers at the time the Mortgage Agreement was executed.
The highest degree of diligence is expected, and high standards of

integrity and performance are even required, of banking institutions. The Bank
should not have relied only on the representation of the mortgagor that the latter
had secured all requisite permits and should have required the submission of
documents and verified their authenticity through its own independent effort.
Having been negligent in finding out what respondent's rights were over the lot,
petitioner must be deemed to possess constructive knowledge of those rights.
DELFIN DOMINGO DADIS, Petitioner vs. SPOUSES MAGTANGGOL DE
GUZMAN and NORA Q. DE GUZMAN, and THE REGISTER OF
DEEDS OF TALAVERA, NUEVA ECIJA, Respondents.
G.R. No. 206008 (June 7, 2017)
Second Division
Justice Peralta
I. NATURE OF THE ACTION: Reconveyance and damages
II. FACTS:
Delfin Dadis filed a Complaint for reconveyance and damages against

Spouses De Guzman alleging that he and his deceased wife, were the registered
owners of a parcel of land, and that their daughter, Marissa Dadis, entered into a
contract of real estate mortgage over the said property in favor of De Guzman to
secure a loan obligation. Delfin also alleged that the Special Power of Attorney in
favor of Marissa was a forged document because it was never issued by him,
especially so since he was in USA at the time of its execution.
In their Answer with Motion to Dismiss, Spouses De Guzman countered

that they have no knowledge as regards the supposed falsity of the SPA; Delfin
defaulted in paying the obligation despite several demands, and to give enough
time and opportunity to reacquire the property, it was only after three years from
the time the obligation became due that they effected the foreclosure of the
property. RTC ruled that while the mortgage is void, the obligation of Dadis is
valid because the money redounded to the benefit of the family. However, CA
reversed said ruling.
III. ISSUE: Whether or not De Guzman is a mortgagee is in good faith.
IV. RULING:
No. The doctrine of mortgagee in good faith presupposes that the

mortgagor, who is not the rightful owner of the property, has already succeeded
in obtaining a Torrens title over the property in his or her name and that, after
obtaining the said title, he or she succeeds in mortgaging the property to another
who relies on what appears on the said title. In this case, Marissa is undoubtedly
not the registered owner of the subject lot; and the certificate of title was in the
name of her parents at the time of the mortgage transaction. She merely acted
as the attorney-in-fact by virtue of the falsified SPA. The protection accorded by
law to mortgagees in good faith cannot be extended to mortgagees of properties
that are not yet registered with the RD or registered but not under the
mortgagor's name.
When the mortgagee does not directly deal with the registered owner of
the real property, like an attorney-in-fact of the owner, it is incumbent upon the
mortgagee to exercise greater care and a higher degree of prudence in dealing
with such mortgagor.
CONCEPCION C. DAPLAS, CITY TREASURER, PASAY CITY, AND
CONCURRENT OIC, REGIONAL DIRECTOR BUREAU OF LOCAL
GOVERNMENT FINANCE (BLGF) REGION VII, Petitioner vs. DEPARTMENT
OF FINANCE, REPRESENTED BY TROY FRANCIS C. PIZARRO, JOSELITO
F. FERNANDEZ, REYNALDO L. LAZARO, MELCHOR B. PIOL, AND ISMAEL
S. LEONOR, AND THE OFFICE OF THE OMBUDSMAN, Respondents
G.R. No. 221153 (April 17, 2017)
First Division
Justice Perlas-Bernabe
I. NATURE OF THE CASE: Administrative case for dishonesty, grave

misconduct, and violation of Section 8(a) of Republic Act No. 6713
II. FACTS:
Concepcion Daplas was appointed as the Pasay City Treasurer and was
concurrently holding the position of Officer-in-charge, Regional Director of the
Bureau of Local Government Finance (BLGF) in Cebu City. Separate complaints
were filed against her with the Office of the Ombudsman for dishonesty, grave
misconduct, and conduct prejudicial to the best interest of the service, arising out
of her failure to disclose the true and detailed statement of her assets, liabilities,
and net worth, business interests, and financial connections, and those of her
spouse in her SALN.
The Ombudsman found Daplas guilty and imposed the penalty of

dismissal and its accessory penalties, without prejudice to criminal prosecution.
CA affirmed giving no credence to her defense of good faith.
III. ISSUE: Whether or not Daplas is liable for dishonesty, grave misconduct, and
violation of Section 8(a) of RA 6713.
IV. RULING:
No. Negligence is the omission of the 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. In the case of public officials, there is negligence
when there is a breach of duty or failure to perform the obligation, and there is
gross negligence when a breach of duty is flagrant and palpable. An act done in
good faith, which constitutes only an error of judgment and for no ulterior and/or
purposes, as in the present case, is merely simple negligence.
Likewise, the charge of grave misconduct must fail. Verily, the omission to
include the subject properties in her SALN, by itself, does not amount to grave
misconduct, in the absence of showing that such omission had, in some way,
hindered the rendition of sound public service for there is no direct relation or
connection between the two.
BDO UNIBANK, INC., Petitioner vs. ENGR. SELWYN LAO, doing business
under the name and style "SELWYN F. LAO CONSTRUCTION" and
"WING AN CONSTRUCTION AND DEVELOPMENT CORPORATION"
and INTERNATIONAL EXCHANGE BANK
(now UNION BANK OF THE PHILIPPINES), Respondents
G.R. No. 227005 (June 19, 2017)
Second Division
Justice Mendoza
I. NATURE OF THE ACTION: Sum of money
II. FACTS:
Engr. Selwyn S. Lao filed a complaint for sum of money against Equitable
Banking Corporation (now BDO), Everlink Pacific Ventures, and George Wu. Lao
alleged that he entered into a transaction with Everlink, through its
representative, Wu, under which, Everlink would supply him with "HCG sanitary
wares", and as down payment, he issued two (2) Equitable crossed checks
payable to Everlink. Lao further averred that Everlink failed to perform its
obligation, but learned that the checks were deposited in two different accounts
at Union Bank. He was later informed that the two bank accounts belonged to
Wu and New Wave Plastic. Consequently, Lao filed a complaint against Everlink
and Wu for their failure to comply with their obligation and against BDO for
allowing the encashment of the checks. He later withdrew his complaint against
Everlink as the corporation had ceased existing.
BDO answered that it had no obligation to ascertain the owner of the

account/s to which the checks were deposited because the instruction to deposit
the said checks to the payee's account only was directed to the payee and the
collecting bank - Union Bank; that as the drawee bank, its obligations consist in
examining the genuineness of the signatures appearing on the checks, and
paying the same if there were sufficient funds in the account under which the
checks were drawn; and that the subject checks were properly negotiated and
paid in accordance with the instruction of Lao in crossing them as they were
deposited to the account of the payee Everlink with Union Bank, which then
presented them for payment with BDO.
Lao then impleaded Union Bank for allowing the deposit of the crossed
checks in two bank accounts other than the payee's, in violation of its obligation
to deposit the same only to the payee's account. RTC absolved BDO from any
liability, but ordered Union Bank to pay Lao moral and exemplary damages. CA
affirmed with modification ruling that BDO violated its duty to charge to the
drawer's account only those authorized by the latter when it paid the value of the
check. Thus, BDO was liable for the amount charged to the drawer's account.
II. ISSUE: Whether or not the party which did not exercise the required
diligence is the cause of the loss and bears the damages, hence, Union Bank is
the one liable.
IV. RULING:
Yes. In cases of unauthorized payment of checks to a person other than

the payee named therein, the drawee bank may be held liable to the drawer. The
drawee bank, in turn, may seek reimbursement from the collecting bank for the
amount of the check. On the other hand, the liability of the collecting bank is
anchored on its guarantees as the last endorser of the check.
In the present case, it is clear that BDO violated its duty to charge to Lao's
account only those payables authorized by him. Nevertheless, even with such
clear violation by BDO of its duty, the loss would have ultimately pertained to
Union Bank. By stamping at the back of the subject check the phrase "all prior
endorsements and/or lack of it guaranteed," Union Bank had, for all intents and
purposes treated the check as a negotiable instrument and, accordingly,
assumed the warranty of an endorser. Without such warranty, BDO would not
have paid the proceeds of the check. Union Bank was clearly negligent when it
allowed the check to be presented by, and deposited in the account of New
Wave, despite knowledge that it was not the payee named therein. Further, it
could not have escaped its attention that the subject checks were crossed
checks.
To summarize, Lao, the drawer of the subject check, has a right of action
against BDO for its failure to comply with its duty as the drawee bank. BDO, in
turn, would have a right of action against Union Bank because of the falsity of its
warranties as the collecting bank. Considering, however, that BDO was not made
a party in the appeal, it could no longer be held liable to Lao. Thus, following the
rule in Associated Bank, the proceedings for recovery must be simplified and Lao
should be allowed to recover directly from Union Bank.
JOHN E.R. REYES and MERWIN JOSEPH REYES, Petitioner vs.
ORICO DOCTOLERO, ET.AL., Respondents
G.R. No. 185597 (August 2, 2017)
Third Division
Justice Jardeleza
I. NATURE OF THE ACTION: Damages
II. FACTS:
As John E.R. Reyes was approaching the basement parking of Makati

Cinema Square (MCS), Security Guard Orico Doctolero stopped him to give way
to outgoing cars. Allegedly, after several “stop and go” signals and heated
arguments, Orico shot John in the left leg. He also shot Merwin when the latter
rushed to John’s rescue. When he missed, Merwin caught Orico and pushed him
down, but was unable to control his speed. As a result, Merwin went inside MCS,
where he was shot in the stomach by another Security Guard, Romeo Avila.
John and Merwin filed a Complaint for Damages against the two guards
and their employer, Grandeur. They also impleaded MCS on the ground that it
was negligent in getting Grandeur’s services. RTC ruled against the guards, but
dismissed the complaint against Grandeur and MCS. CA affirmed RTC’s
decision.
II. ISSUE: Whether or not Grandeur and MCS are vicariously liable for the
damages caused by the guards.
III. RULING:
No. As a general rule laid down in Art. 2176, one is only responsible for his
own act or omission, except when employer is made vicariously liable for the tort
committed by his employee under Art. 2180. Here, no employer-employee
relationship exists between MCS and the guards assigned to it by an agency.
Hence, Art. 2180 cannot apply.
On the other hand, Grandeur must prove two things to rebut the
presumption of negligence: first, that it had exercised due diligence in the
selection of employees, and second, that after hiring them, Grandeur had
exercised due diligence in supervising them. Here, both RTC and CA found that
Grandeur was able to prove, through testimonial and documentary evidence, that
it had exercised the diligence of a good father of a family in the selection and
hiring of the guards. They presented among others, clearances from various
government agencies, certificates, and favorable test results in medical and
psychiatric examinations
To the question of diligent supervision, Grandeur presented evidence on

its standard operational procedures, certificates of attendance to various
seminars, and other related testimonial and documentary evidence.
MAERSK FILIPINAS CREWING, INC., and MAERSK CO. IOM LTD.,
Petitioners vs. JOSELITO R. RAMOS, Respondent
G.R. No. 184256 (January 18, 2017)
First Division
Chief Justice Serreno
I. NATURE OF THE ACTION: Complaint for total permanent disability, illness

allowance, moral and exemplary damages and attorney's fees with the NLRC.
II. FACTS:
Maersk employed Joselito Ramos as able-seaman of M/V NKOSSA II.

While on board the vessel, Ramos’ left eye was hit by a screw, thus he was
repatriated to Manila and was referred to the company-designated physician for a
check-up. Ramos was examined by Dr. Anthony Martin S. Dolor at the Medical
Center Manila and was diagnosed with "corneal scar and cystic macula, left,
post-traumatic." Then, he underwent a "repair of corneal perforation and removal
of foreign body to anterior chamber, left eye." Thereafter, he underwent several
examinations and consultations with several doctors.
Since Ramos’ demand for disability benefits was rejected by Maersk, he

then filed with the NLRC a complaint for total permanent disability, illness
allowance, moral and exemplary damages and attorney's fees. Meanwhile, in his
medical report Dr. Dolor stated that although Ramos’ left eye cannot be improved
by medical treatment, he can return to duty and is still fit to work. Subsequently,
the Labor Arbiter rendered a Decision dismissing the Complaint for being
prematurely filed. On appeal, NLRC set aside the decision of the Labor Arbiter
and ordered Maersk to pay Ramos disability compensation benefit, moral and
exemplary damages and attorney's fees. The CA affirmed all the findings of the
NLRC but deleted the award of moral and exemplary damages, because there
was no "sufficient factual legal basis for the awards."
III. ISSUE: Whether or not Ramos suffers from permanent partial disability and is
entitled to disability compensation and attorney’s fees.
IV. RULING:
Yes. Under Section 2, Rule VII of the Amended Rules on Employees'

Compensation, “a disability is partial and permanent if as a result of the injury or
sickness the employee suffers a permanent partial loss of the use of any part of
his body.” In this case, while Maersk's own company-designated physician
certified that Ramos was still fit to work, the former admitted that the latter’s left
eye could no longer be improved by medical treatment. Hence, he is entitled to
disability compensation.
With respect to the award of attorney's fees, SC ruled in the affirmative

pursuant to Article 2208(2) of the Civil Code, which justifies the award of
attorney's fees in actions for indemnity under workmen's compensation and
employer liability laws.
PRYCE PROPERTIES CORPORATION, Petitioner vs. SPOUSES SOTERO
OCTOBRE, JR., HENRISSA A. OCTUBRE, and CHINA BANKING
CORPORATION, Respondents
GR No. 186976 (December 7, 2016)
Third Division
Justice Jardeleza
I. NATURE OF ACTION: Specific performance, revocation of certificate of

registration, refund of payments, damages and attorney’s fees
II. FACTS:
Spouses Sotero and Henrissa Octubre signed a Reservation Agreement

with Pryce Properties Corporation for the purchase of two (2) lots. The parties
subsequently executed a Contract to Sell over the lot for the price of Php 2.8M.
Pryce then issued a certification that the Spouses had fully paid the purchase
price and amortization interests as well as the transfer fees and other charges in
relation to the property, amounting to a total of Php 4.9M. However, Pryce had
yet to deliver the certificates of title despite repeated demands. Thus, the
Spouses filed a complaint before the Housing and Land Use Regulatory Board
(HLURB) for specific performance, revocation of certificate of registration, refund
of payments, damages and attorney’s fees.
HLURB Arbiter ordered Pryce to refund the payments with legal interest
and to pay the latter compensatory damages amounting to Php 30,000,
attorney’s fees and costs of suit. Office of the President affirmed. On appeal, CA
denied the petition for review. CA found that Pryce acted in bad faith because it
“did not disclose (that the titles were in the custody of China Bank) to Spouses
Octubre until the latter demanded delivery of the titles.” Hence, Pryce’s
contractual breach justified the award of compensatory damages, attorney’s fees
and costs of suit.
III. ISSUE: Whether or not breach of contract automatically triggers the award of
actual or compensatory damages.
IV. RULING:
No. Art. 2199 of the Civil Code provides that: “Except as provided by law
or by stipulation, one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved. Such compensation is
referred to as actual or compensatory damages.” To be entitled to
compensatory damages, the amount of loss must therefore be capable of proof
and must be actually proven with a reasonable degree of certainty, premised
upon competent proof or the best evidence obtainable.
Records are bereft of any evidentiary basis for the award of compensatory
damages. When HLURB Arbiter initially awarded the amount, it merely
mentioned that “Spouses are entitled to compensatory damages, which is just
and equitable in the circumstances, even against an obligor in good faith since
said damages are natural and probable consequences of the contractual breach
committed.” In the absence of adequate proof, compensatory damages should
not have been awarded.
Nonetheless, SC finds that nominal damages, in lieu of compensatory
damages, are proper in this case. Under Art. 2221, nominal damages may be
awarded in order that the plaintiff’s right, which has been violated or invaded by
the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered. So long as there is a violation of
the right of the plaintiff—whether based on law, contract, or other sources of
obligations – an award of nominal damages is proper. Proof of bad faith is not
required.
It is undisputed that Pryce failed to deliver the titles to the lots subject of
the Contract to Sell even as Spouses Octubre had already fully settled that
purchase price. Its inability to deliver the titles despite repeated demands
undoubtedly constitutes a violation of Spouses Octubre’s right under their
contract. That Pryce had transferred custody of the titles to China Bank pursuant
to a Deed of Assignment is irrelevant, considering that Spouses Octubre were
not privy to such agreement. In fine, contractual breach is sufficient to justify an
award for nominal damages but not compensatory damages.
PEOPLE OF THE PHILIPPINES vs. WILLY VALLAR, HERACLEO VALLAR,
JR., DANNY VALLAR, AND EDGARDO MABELIN, Respondents
G.R.No. 196256 (December 5, 2016)
First Division
I. NATURE OF ACTION: Robbery with homicide, and frustrated homicide
II. FACTS:
Willy Vallar, Danny Vallar, Heracleo Vallar and Edgardo Mabelin while
wearing masks and armed with M14 rifle robbed Cipriano Opiso and Eufracio
Bagabaldo in the latter’s store. Eufracio was shot in his head which resulted to
his instantaneous death, while Cipriano suffered serious stab wounds in his
abdomen.
After the trial, RTC found the four accused guilty of robbery with homicide
and frustrated homicide, and was sentenced to a penalty of reclusion perpetua
and to indemnify the offended parties – Heirs of Eufracio: Php 100,000 as moral
damages and Php 50,000 as compensatory damages; and to Opiso: Pkp 50,000
as actual damages, and Php 30,000 as moral damages. CA affirmed with
modifications.
III. ISSUE: Whether or not the CA was correct in granting the award of damages.
IV. RULING:
Yes. In robbery with homicide, civil indemnity and moral damages are
awarded automatically without need of allegation and evidence other than the
death of the victim owing to the crime. As to Opiso, who suffered mortal or fatal
wounds could have died if not for timely medical intervention, is also entitled to
civil indemnity and moral damages.
CA further awarded exemplary damages in view of the two aggravating

circumstances of disguise and abuse of superior strength. As for temperate
damages, CA awarded temperate damages in the amount of Php 25,000 in lieu
of actual damages, it having been shown that the offended parties suffered some
pecuniary losses, though its amount could not be proven with certainty.
SANTOS-YLLANA REALTY CORPORATION, Petitioner vs. SPOUSES
RICARDO DEANG and FLORENTINA DEANG, Respondents
G.R. No. 190043 (June 21, 2017)
Third Division
Justice Velasco
I. NATURE OF THE ACTION:
II. FACTS:
Florentina Deang is a former lessee of a stall at Santos-Yllana Shopping

Center. For failure to pay rents, Santo-Yllana Realty (SYR) filed a Complaint for
Ejectment with Damages, but eventually, a Compromise Agreement was entered
into. SYR then filed a Motion for Execution due to Deang's failure to comply with
the terms of the Compromise. DEang objected, alleging that the amount due had
already been paid in full. Still, thereafter, an Order upholding the Writ of
Execution and commanding the sheriff to immediately implement the same was
issued. Consequently, the Sheriff implemented the writ and padlocked the stall.
Aggrieved, Spouses Deang filed a Complaint for Damages against SYR

and the Sheriff, alleging that the Writ of Execution was illegally implemented.
They claim to have suffered damages as a result of the illegal closure of their
stall since important documents, checks, money, and bank books, among others,
were locked inside the stall and could not be retrieved, thereby preventing them
from operating their business, and causing their business to suffer and their
goodwill to be tarnished. RTC adjudged SYR and the Sheriff, jointly and severally
liable for moral and exemplary damages. CA affirmed.
III. ISSUE: Whether or not moral and exemplary damages should be awarded.
IV: RULING:
No. A civil complaint for damages necessarily alleges that the defendant
committed a wrongful act or omission that would serve as basis for the award of
damages. As such, it was incumbent upon Deang to overcome the presumption
and to prove that SYR abused its rights and willfully intended to inflict damage
before they can claim damages from the former.
Moral damages are awarded to enable the injured party to obtain means,
diversions, or amusements that will serve to alleviate the moral suffering he has
undergone, by reason of the defendant's culpable action. The claimant must
prove: (1) an injury, whether physical, mental or psychological, clearly sustained
by the claimant; (2) culpable act or omission factually established; (3) wrongful
act or omission of the defendant is the proximate cause of the injury sustained by
the claimant; and (4) award of damages is predicated on any of the cases stated
in Art. 2219 of the Civil Code.
The award of exemplary damages is proper only if respondents showed

their entitlement to moral, temperate or compensatory damages; yet, similar to
moral damages claimed, Deangs were not able to establish their entitlement.
JUDITH DARINES and JOYCE DARINES, Petitioners vs.
EDUARDO QUINONES and ROLANDO QUITAN, Respondents
G.R. No. 206468 (August 2, 2017)
First Division
I. NATURE OF THE ACTION: Breach of Contract of Carriage and Damages
II. FACTS:
Judith Darines and her daughter, Joyce, boarded Amianan Bus Line to
Baguio City, driven by Rolando Quitan. While travelling along Kennon Road, the
bus crashed into a truck. As a result, Joyce suffered cerebral concussion while
Judith had an eye wound which required operation. Hence, they filed a case for
Breach of Contract of Carriage and Damages against Quitan and Eduardo
Quinones (operator).
Respondents answer that Quitan was driving in a careful and prudent

manner, and that the proximate cause of the incident was the negligence of the
truck driver who parked right after the curve without early warning device. RTC
ruled in favor of Petitioners, which CA reversed. CA likewise deleted the award of
moral and exemplary damages and attorney’s fees.
II. ISSUE: Whether or not Respondents are liable for moral and exemplary
damages and attorney’s fees.
III. RULING:
No. The principle that, in an action for Breach of Contract of Carriage,

moral damages may be awarded only in case (1) an accident results in death of
a passenger; or (2) the carrier is guilty of fraud or bad faith, is pursuant to Art.
1764 in relation to Art. 2206(3) of the Civil Code, and Art. 2220 thereof. There
being neither allegation nor proof that respondents acted in fraud or bad faith in
performing their duties, they are then not liable for moral damages.
Pursuant to Art. 2229 and 2234, exemplary damages may be awarded

only in addition to moral, temperate, liquidated or compensatory damages. Since
petitioners are not entitled to those, then their claim for exemplary damages is
bereft of merit. Finally, considering the absence of any circumstances under Art.
2208, where attorney’s fees may be awarded, the same cannot be granted to
petitioners.
EDDIE C. CORTEL AND YELLOW BUS LINE, INC., Petitioners vs.
CECILE GEPAYA-LIM, Respondent
G.R.No. 218014 (December 7, 2016)
Second Division
Justice Carpio
I. NATURE OF ACTION: Damages
II. FACTS:
While Eddie Cortel was driving a bus operated by Yellow Bus Line, he
noticed two trucks with glaring lights coming from the opposite direction. Cortel
claimed that he was driving at a speed of 40 to 50 kph, but reduced it to 20 kph,
but still hit a black motorcycle, driven by SPO3 Robert Lim, who was thrown
upward and then slammed into the bus. According to Cortel, the motorcycle had
no tail light reflector, and Lim was wearing black jacket and was driving without
helmet.
Lim’s widow, Cecile Gepaya-Lim, filed a complaint for damages against

the Cortel and Yellow Bus Line. RTC ruled that the accident is the proximate
cause of Lim’s death and included in the award the loss of earning capacity. CA
affirmed.
III. ISSUE: Whether or not CA erred in its award of loss of earning capacity.
IV. RULING:
No. The increase in the award for loss of earning capacity is proper due to
the computation of the award in accordance with the following formula:
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)
CA clearly intended to award to temperate damages amounting to

P5,000 for burial and funeral expenses, instead of the P15,000 representing the
actual damage to the motorcycle awarded by the trial court, because no evidence
was presented to prove the same.
KABISIG REAL WEALTH DEV., INC. and FERNANDO C. TIO, Petitioners vs.
YOUNG BUILDERS CORPORATION, Respondent
G.R. No. 212375 (January 25, 2017)
Second Division
Justice Peralta
I. NATURE OF THE ACTION: Collection of Sum of Money
II. FACTS:
Kabisig Real Wealth Dev., Inc. through Ferdinand Tio, contracted the
services of Young Builders to supply labor, tools, equipment, and materials for
the renovation of its building. Young Builders finished the work and billed Kabisig
for Php 4,123,320.95. However, despite numerous demands, Kabisig failed to
pay. It contended that no written contract was ever entered into between the
parties, and it was never informed of the estimated cost of the renovation. Thus,
Young Builders filed an action for Collection of Sum of Money.
RTC ruled in favor of Young Builders. CA affirmed with modification,

deleting the award for actual damages and ordered payment of Php 2,400,000 as
temperate damages.
III. ISSUES:
1. Whether or not there was a perfected contract between the parties.

2. Whether or not Young Builders is entitled only to temperate damages, and
not to actual damages as claimed.
IV: RULING:
1. Yes. Under the Civil Code, a contract is a meeting of minds, with respect to
the other, to give something or to render some service. Article 1318 reads:
“There is no contract unless the following requisites (essential elements)
concur: (1) Consent o f the contracting parties; (2) Object certain which is the
subject matter o f the contract; and (3) Cause of the obligation which is
established. By law, a contract of sale, is perfected at the moment there is a
meeting of the minds upon the thing that is the object of the contract and
upon the price. Indeed, it is a consensual contract which is perfected by mere
consent.
Kabisig's claim as to the absence of a written contract does not hold

water. Art. 1356 of the Civil Code provides: “Contracts shall be obligatory in
whatever form they may have been entered into, provided all the essential
requisites for their validity are present.” Also, the Court notes that neither
Kabisig nor Tio had objected to the renovation work, until it was already time
to settle the bill.
2. Yes. CA aptly reduced the amount of damages awarded by the RTC. Under
Art. 2199 of the Civil Code, actual or compensatory damages are those
awarded in satisfaction of, or in recompense for, loss or injury sustained. For
an injured party to recover actual damages, however, he is required to prove
the actual amount of loss with reasonable degree of certainty premised upon
competent proof and on the best evidence available.
Here, evidence reveals that Young Builders failed to submit any
competent proof of the specific amount of actual damages being claimed. The
documents submitted by Young Builders either do not bear the name of
Kabisig or Tio, their conformity, or signature, or do not indicate in any way that
the amount reflected on its face actually refers to the renovation project.
Notwithstanding the absence of sufficient proof, Young Builders still

deserves to be recompensed for actually completing the work. In the absence
of competent proof on the amount of actual damages, the courts allow the
party to receive temperate damages. Temperate or moderate damages,
which are more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been suffered
but its amount cannot, from the nature of the case, be proved with certainty.
The principle of quantum meruit justifies the payment o f the reasonable value
of the services rendered and should apply in the absence of an express
agreement on the fees.

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UNITED ALLOY PHILIPPINES, SPOUSES DAVID and LUTEN CHUA,

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RTC Baguio City adjudged Delfin Gonzales, Jr. liable to Magdaleno M.

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III. ISSUE: Whether or not there is legal compensation.

None. Assuming arguendo that Felicisima was sufficiently clothed with

Under Article 1279 - In order that compensation may be proper, it is

I. NATURE OF THE ACTION: Complaint for Annulment of Mortgage,