Civil Law SC Rulings Up To March 2013

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 1
March 2014 rulings of the Supreme Court of

the Philippines on civil law:
CIVIL CODE
Action for quieting of title; trial court had no
jurisdiction to determine who among the
parties have better right over the disputed
property which is admittedly still part of the
public domain. Having established that the
disputed property is public land, the trial court
was therefore correct in dismissing the
complaint to quiet title for lack of jurisdiction.
The trial court had no jurisdiction to determine
who among the parties have better right over
the disputed property which is admittedly still
part of the public domain. As held in Dajunos
v. Tandayag (G.R. Nos. L-32651-52, 31
August 1971, 40 SCRA 449):
x x x The Tarucs action was for quieting of
title and necessitated determination of the
respective rights of the litigants, both
claimants to a free patent title, over a piece of
property, admittedly public land. The law,
administration, disposition and alienation of
public lands with the Director of Lands
subject, of course, to the control of the
Secretary of Agriculture and Natural
Resources.
In sum, the decision rendered in Civil Case
No. 1218 on October 28, 1968 is a patent
nullity. The lower court did not have power to
determine who (the Firmalos or the Tarucs)
were entitled to an award of free patent title
over that piece of property that yet belonged to
the public domain. Neither did it have power
to adjudge the Tarucs as entitled to the true
equitable ownership thereof, the latters effect
being the same: the exclusion of the Firmalos
in favor of the Tarucs. Heirs of Pacifico
Pocido, et al. v. Arsenia Avila and Emelinda
Chua, G.R. No. 199146, March 19, 2014.
Action for quieting of title. In an action for
quieting of title, the complainant is seeking for
an adjudication that a claim of title or interest
in property adverse to the claimant is invalid,
to free him from the danger of hostile claim,
and to remove a cloud upon or quiet title to
land where stale or unenforceable claims or

demands exist. Heirs of Pacifico Pocido, et
al. v. Arsenia Avila and Emelinda Chua, G.R.
No. 199146, March 19, 2014.
Action for quieting of title; two indispensable
requisites. Under Articles 476 and 477 of the
Civil Code, the two indispensable requisites in
an action to quiet title are: (1) that the plaintiff
has a legal or equitable title to or interest in the
real property subject of the action; and (2) that
there is a cloud on his title by reason of any
instrument, record, deed, claim, encumbrance
or proceeding, which must be shown to be in
fact invalid or inoperative despite its prima
facie appearance of validity. Heirs of Pacifico
Pocido, et al. v. Arsenia Avila and Emelinda
Chua, G.R. No. 199146, March 19, 2014.
Co-ownership; Article 493 of the Civil Code;
rights of a co-owner of a certain property; each
one of the co-owners with full ownership of
their parts can sell their fully owned part.
Article 493 of the Code defines the ownership
of the co-owner, clearly establishing that each
co-owner shall have full ownership of his part
and of its fruits and benefits. Pertinent to this
case, Article 493 dictates that each one of the
parties herein as co-owners with full
ownership of their parts can sell their fully
owned part. The sale by the petitioners of their
parts shall not affect the full ownership by the
respondents of the part that belongs to them.
Their part which petitioners will sell shall be
that which may be apportioned to them in the
division upon the termination of the coownership. With the full ownership of the
respondents remaining unaffected by
petitioners sale of their parts, the nature of the
property, as co-owned, likewise stays. In lieu
of the petitioners, their vendees shall be coowners with the respondents. The text of
Article 493 says so. Raul V. Arambulo and
Teresita Dela Cruz v. Genaro Nolasco and
Jeremy Spencer Nolasco, G.R. No. 189420,
March 26, 2014.
partition. Article 494 of the Civil Code

provides that no co-owner shall be obliged to
remain in the co-ownership, and that each coowner may demand at any time partition of the
thing owned in common insofar as his share is
concerned. Raul V. Arambulo and Teresita
Dela Cruz v. Genaro Nolasco and Jeremy
Spencer Nolasco, G.R. No. 189420, March 26,
2014.
when this may be resorted to. Article 498 of
the Civil Code states that whenever the thing is
essentially indivisible and the co-owners
cannot agree that it be allotted to one of them
who shall indemnify the others, it shall be sold
and its proceeds accordingly distributed. This
is resorted to (a) when the right to partition the
property is invoked by any of the co-owners
but because of the nature of the property,
it cannot be subdivided or its subdivision
would prejudice the interests of the co-owners,
and (b) the co-owners are not in agreement as
to who among them shall be allotted or
assigned the entire property upon proper
reimbursement of the co-owners. Raul V.
Arambulo and Teresita Dela Cruz v. Genaro
Nolasco and Jeremy Spencer Nolasco, G.R.
No. 189420, March 26, 2014.
Damages; actual or compensatory damages.
Article 2199 of the Civil Code states that
[e]xcept as provided by law or by stipulation,
one is entitled to an adequate compensation
only for such pecuniary loss suffered by him a
he has duly proved. Such compensation is
referred to as actual or compensatory
damages. Actual damages are compensation
for an injury that will put the injured party in
the position where it was before the injury.
They pertain to such injuries or losses that are
actually sustained and susceptible of
measurement. Except as provided by law or by
stipulation, a party is entitled to adequate
compensation only for such pecuniary loss as
is duly proven. Basic is the rule that to recover
actual damages, not only must the amount of
loss be capable of proof; it must also be
actually proven with a reasonable degree of
certainty, premised upon competent proof or

the best evidence obtainable. International
Container Terminal Services, Inc. v. Celeste
M. Chua, G.R. No. 195031, March 26, 2014.
Damages; Attorneys fees; when allowed.
Article 2208 of the Civil Code does not
prohibit recovery of attorneys fees if there is a
stipulation in the contract for payment of the
same. Thus, in Asian Construction and
Development Corporation v. Cathay Pacific
SteelCorporation (CAPASCO), the Court,
citingTitan ConstructionCorporation v. UniField Enterprises, Inc., noted that the law
allows a party to recover attorneys fees under
a written agreement. In Barons Marketing
Corporation v. Court of Appeals, the Court
ruled that attorneys fees are in the nature of
liquidated damages and the stipulation therefor
is aptly called a penal clause. It has been said
that so long as such stipulation does not
contravene law, morals, or public order, it is
strictly binding upon defendant. The attorneys
fees so provided areawarded in favor of the
litigant, not his counsel.On the other hand, the
law also allows parties to a contract tostipulate
on liquidated damages to be paid in case of
breach. A stipulationon liquidated damages is a
penalty clause where the obligor assumes
agreater liability in case of breach of an
obligation. The obligor is bound topay the
stipulated amount without need for proof on
the existence and onthe measure of damages
caused by the breach. However, even if such
attorneys fees are allowed by law, the courts
still have the power to reduce the same if it is
unreasonable. Mariano Lim v. Security Bank
Corporation,G.R. No. 188539, March 12,
2014.
Damages; Attorneys fees; when proper. An
award of attorneys fees has always been the
exception rather than the rule and there must
be some compelling legal reason to bring the
case within the exception and justify the
award. In this case, none of the exceptions
applies. Attorneys fees are not awarded
every time a party prevails in a suit. The policy

of the Court is that no premium should be
placed on the right to litigate. Even when a
claimant is compelled to litigate with third
persons or to incur expenses to protect his
rights, still, attorneys fees may not be awarded
where no sufficient showing of bad faith could
be reflected in a partys persistence in a case
other than an erroneous conviction of the
righteousness of his cause. International
M. Chua, G.R. No. 195031, March 26, 2014.
Damages; moral damages. Certainly, an award
of moral damages must be anchored on a clear
showing that the party claiming the same
actually experienced mental anguish,
besmirched reputation, sleepless nights,
wounded feelings, or similar injury. In the
case herein under consideration, the records
are bereft of any proof that respondent in fact
suffered moral damages as contemplated in the
afore-quoted provision of the Civil Code. The
ruling of the trial court provides simply that:
[Petitioners] outright denial and unjust
refusal to heed [respondents] claim for
payment of the value of her lost/damaged
shipment caus[ed] the latter to suffer serious
anxiety, mental anguish and wounded feelings
warranting the award of moral damages x x x.
The testimony of respondent, on the other
hand, merely states that when she failed to
recover damages from petitioner, she was
saddened, had sleepless nights and anxiety
without providing specific details of the
suffering she allegedly went through. Since
an award of moral damages is predicated on a
categorical showing by the claimant that she
actually experienced emotional and mental
sufferings, it must be disallowed absent any
evidence thereon. International Container
Terminal Services, Inc. v. Celeste M.
Chua, G.R. No. 195031, March 26, 2014.
Damages; Nominal damages; when awarded;
Network Bank did not violate any of Barics
rights.Nominal damages are recoverable where
a legal right is technically violated and must be
vindicated against an invasion that has
produced no actual present loss of any kind or

where there has been a breach of contract and
no substantial injury or actual damages
whatsoever have been or can be shown.
Under Article 2221 of the Civil Code, nominal
damages may be awarded to a plaintiff whose
right has been violated or invaded by the
defendant, for the purpose of vindicating or
recognizing that right, not for indemnifying the
plaintiff for any loss suffered. Nominal
damages are not for indemnification of loss
suffered but for the vindication or recognition
of a right violated or invaded.
Network Bank did not violate any of Barics
rights; it was merely a purchaser or transferee
of the property. Surely, it is not prohibited
from acquiring the property even while the
forcible entry case was pending, because as the
registered owner of the subject property,
Palado may transfer his title at any time and
the lease merely follows the property as a lien
or encumbrance. Any invasion or violation of
Barics rights as lessee was committed solely
by Palado, and Network Bank may not be
implicated or found guilty unless it actually
took part in the commission of illegal acts,
which does not appear to be so from the
evidence on record. On the contrary, it appears
that Barie was ousted through Palados acts
even before Network Bank acquired the
subject property or came into the picture.
Thus, it was error to hold the bank liable for
nominal damages. One Network Rural Bank,
Inc. v. Danilo G. Baric,G.R. No. 193684,
March 5, 2014.
Damages; Temperate damages. In the absence
of competent proof on the amount of actual
damages suffered, a party is entitled to receive
temperate damages. Article 2224 of the New
Civil Code provides that: Temperate or
moderate damages, which are more than
nominal but less than compensatory
damages, may be recovered when the court
finds that some pecuniary loss has been
suffered but its amount cannot, from the nature
of the case, be proved with certainty. The

amount thereof is usually left to the sound
discretion of the courts but the same should be
reasonable, bearing in mind that temperate
damages should be more than nominal but
less than compensatory.International
M. Chua, G.R. No. 195031, March 26, 2014.
Fraud; concept of; Article 1338 of the Civil
Code. According to Article 1338 of the Civil
Code, there is fraud when one of the
contracting parties, through insidious words or
machinations, induces the other to enter into
the contract that, without the inducement, he
would not have agreed to. Yet, fraud, to vitiate
consent, must be the causal (dolo causante),
not merely the incidental (dolo incidente),
inducement to the making of the contract.
In Samson v. Court of Appeals (G.R. No.
108245, November 25, 1994, 238 SCRA 397),
causal fraud is defined as a deception
employed by one party prior to or
simultaneous to the contract in order to secure
the consent of the other.
Fraud cannot be presumed but must be proved
by clear and convincing evidence. Whoever
alleges fraud affecting a transaction must
substantiate his allegation, because a person is
always presumed to take ordinary care of his
concerns, and private transactions are similarly
presumed to have been fair and regular. To be
remembered is that mere allegation is
definitely not evidence; hence, it must be
proved by sufficient evidence. Metropolitan
Fabrics, Inc., et al. v. Prosperity Credit
Resources, Inc. et al.,G.R. No. 154390, March
17, 2014.
Fraud; Article 1390, in relation to Article 1391
of the Civil Code; consent obtained through
fraud; action for annulment; prescriptive
period. Article 1390, in relation to Article 1391
of the Civil Code, provides that if the consent
of the contracting parties was obtained through
fraud, the contract is considered voidable and
may be annulled within four years from the
time of the discovery of the
fraud.Metropolitan Fabrics, Inc., et al. v.
Prosperity Credit Resources, Inc. et al., G.R.

No. 154390, March 17, 2014.
Mortgage; a higher degree of prudence must
be exercised by the mortgagee in cases where
he does not directly deal with the registered
owner of real property. In Bank of Commerce
v. Spouses San Pablo, Jr. (550 Phil. 805, 821
(2007)), the court declared that a mortgagee
has a right to rely in good faith on the
certificate of title of the mortgagor of the
property offered as security, and in the absence
of any sign that might arouse suspicion, the
mortgagee has no obligation to undertake
further investigation.
However, in Bank of Commerce v. Spouses
San Pablo, Jr. (550 Phil. 805, 821 (2007)), the
court also ruled that [i]n cases where the
mortgagee does not directly deal with the
registered owner of real property, the law
requires that a higher degree of prudence be
exercised by the mortgagee. Specifically, the
court cited Abad v. Sps. Guimba (503 Phil.
321, 331-332 (2005)), where it held,
x x x While one who buys from the registered
owner does not need to look behind the
certificate of title, one who buys from one who
is not the registered owner is expected to
examine not only the certificate of title but all
factual circumstances necessary for [one] to
determine if there are any flaws in the title of
the transferor, or in [the] capacity to transfer
the land.
Although the instant case does not involve a
sale but only a mortgage, the same rule applies
inasmuch as the law itself includes a
mortgagee in the term purchaser.
Thus, where the mortgagor is not the registered
owner of the property but is merely an
attorney-in-fact of the same, it is incumbent
upon the mortgagee to exercise greater care
and a higher degree of prudence in dealing
with such mortgagor. Macaria Arguelles and
the Heirs of the Deceased Petronio Arguelles
v. Malarayat Rural Bank, Inc., G.R. No.
200468, March 19, 2014.

Mortgage; banks are enjoined to exert a higher
degree of diligence, care, and prudence than
individuals in handling real estate transactions;
it cannot rely merely on the certificate of
title. In Ursal v. Court of Appeals (509 Phil.
628, 642 (2005)), the court held that where the
mortgagee is a bank, it cannot rely merely on
the certificate of title offered by the mortgagor
in ascertaining the status of mortgaged
properties. Since its business is impressed with
public interest, the mortgagee-bank is dutybound to be more cautious even in dealing
with registered lands. Indeed, the rule that
person dealing with registered lands can rely
solely on the certificate of title does not apply
to banks. Thus, before approving a loan
application, it is a standard operating practice
for these institutions to conduct an ocular
inspection of the property offered for mortgage
and to verify the genuineness of the title to
determine the real owners thereof. The
apparent purpose of an ocular inspection is to
protect the true owner of the property as well
as innocent third parties with a right, interest
or claim thereon from a usurper who may have
acquired a fraudulent certificate of title
thereto. Macaria Arguelles and the Heirs of
the Deceased Petronio Arguelles v. Malarayat
Rural Bank, Inc., G.R. No. 200468, March 19,
2014.
1. Negligence, the Court said in
Layugan v. Intermediate Appellate
Court (G.R. No. L-73998, November
14, 1988), is the omission to do
something which a reasonable man,
guided by those considerations which
ordinarily regulate the conduct of
human affairs, would do, or the doing
of something which a prudent and
reasonable man would not do, or as
Judge Cooley defines it, (t)he failure
to observe for the protection of the
interests of another person, that
degree of care, precaution, and
vigilance which the circumstances
justly demand, whereby such other
person suffers injury. In order that

a party may be held liable for
damages for any injury brought about
by the negligence of another, the
claimant must prove that the
negligence was the immediate and
proximate cause of the injury. BJDC
Construction, represented by its
Manager/Proprieto Janet S. Dela
Cruz v. Nena E. Lanuzo, et al., G.R.
No. 161151, March 24, 2014.
Negligence; Medical negligence; four elements
the plaintiff must prove by competent
evidence. An action upon medical negligence
whether criminal, civil or administrative
calls for the plaintiff to prove by competent
evidence each of the following four elements,
namely: (a) the duty owed by the physician to
the patient, as created by the physician-patient
relationship, to act in accordance with the
specific norms or standards established by his
profession; (b) the breach of the duty by the
physicians failing to act in accordance with
the applicable standard of care; (3) the
causation, i.e., there must be a reasonably
close and causal connection between the
negligent act or omission and the resulting
injury; and (4) the damages suffered by
thepatient. Dr. Fernando P. Solidum v. People
of the Philippines,G.R. No. 192123, March 10,
2014.
Negligence; Medical Negligence; standard of
care of the medical profession; standard of
care observed by other members of the
profession in good standing under similar
circumstances. Negligence is defined as the
failure to observe for the protection of the
interests of another person that degree of care,
precaution, and vigilance that the
circumstances justly demand, whereby such
other person suffers injury. Reckless
imprudence, on the other hand, consists of
voluntarily doing or failing to do, without
malice, an act from which material damage
results by reason of an inexcusable lack of

precaution on the part of the person
performing or failing to perform such act.
The Court aptly explained in Cruz v. Court of
Appeals that: Whether or not a physician has
committed an inexcusable lack of precaution
in the treatment of his patient is to be
determined according to the standard of care
observed by other members of the profession
in good standing under similar circumstances
bearing in mind the advanced state of the
profession at the time of treatment or the
present state of medical science. In the recent
case of Leonila Garcia-Rueda v. Wilfred L.
Pacasio,et. al., this Court stated that in
accepting a case, a doctor in effect represents
that, having the needed training and skill
possessed by physicians and surgeons
practicing in the same field, he will employ
such training, care and skill in the treatment of
his patients. He therefore has a duty to use at
least the same level of care that any other
reasonably competent doctor would use to treat
a condition under the same circumstances. It is
in this aspect of medical malpractice that
expert testimony is essential to establish not
only the standard of care of the profession but
also that the physicians conduct in the
treatment and care falls below such standard.
Further, inasmuch as the causes of the injuries
involved in malpractice actions are
determinable only in the light of scientific
knowledge, it has been recognized that expert
testimony is usually necessary to support the
conclusion as to causation. Dr. Fernando P.
Solidum v. People of the Philippines,G.R. No.
192123, March 10, 2014.
Negligence; Medical negligence; standard of
care; an objective standard by which the
conduct of a physician sued for negligence or
malpractice may be measured.In the medical
profession, specific norms or standards to
protect the patient against unreasonable risk,
commonly referred to asstandards of care, set
the duty of the physician to act in respect of
the patient. Unfortunately, no clear definition
of the duty of a particular physician in a
particular case exists. Because most medical

malpractice cases are highly technical,
witnesses with special medical qualifications
must provide guidance by giving the
knowledge necessary to render a fair and just
verdict. As a result, the standard of medical
care of a prudent physician must be
determined from expert testimony in most
cases; and in the case of a specialist (like an
anesthesiologist), the standard of care by
which the specialist is judged is the care and
skill commonly possessed and exercised by
similar specialists under similar
circumstances. The specialty standard ofcare
may be higher than that required of the general
practitioner. Dr. Fernando P. Solidum v.
People of the Philippines,G.R. No. 192123,
March 10, 2014.
Negligence, test to determine its existence. The
test by which the existence of negligence in a
particular case is determined is aptly stated in
the leading case of Picart v. Smith (G.R. No.
12219, March 15, 1918).
According to this case, the test by which to
determine the existence of negligence in a
particular case may be stated as follows:
Did the defendant in doing the alleged
negligent act use that reasonable care and
caution which an ordinarily prudent person
would have used in the same situation? If not,
then he is guilty of negligence. The law here in
effect adopts the standard supposed to be
supplied by the imaginary conduct of the
discreet paterfamilias of the Roman law. The
existence of negligence in a given case is not
determined by reference to the personal
judgment of the actor in the situation before
him. The law considers what would be
reckless, blameworthy, or negligent in the man
of ordinary intelligence and prudence and
determines liability by that.
The question as to what would constitute the
conduct of a prudent man in a given situation
must of course be always determined in the
light of human experience and in view of the
facts involved in the particular case. Abstract

speculation cannot here be of much value but
this much can be profitably said:
Reasonable men govern their conduct by
the circumstances which are before them or
known to them. They are not, and are not
supposed to be, omniscient of the future.
Hence they can be expected to take care only
when there is something before them to
suggest or warn of danger. Could a prudent
man, in the case under consideration, foresee
harm as a result of the course actually
pursued? If so, it was the duty of the actor
to take precautions to guard against that
harm. Reasonable foresight of harm, followed
by the ignoring of the suggestion born of this
prevision, is always necessary before
negligence can be held to exist. Stated in these
terms, the proper criterion for determining the
existence of negligence in a given case is this:
Conduct is said to be negligent when a prudent
man in the position of the tortfeasor would
have foreseen that an effect harmful to another
was sufficiently probable to warrant his
foregoing the conduct or guarding against its
consequences. BJDC Construction,
represented by its Manager/Proprieto Janet S.
Dela Cruz v. Nena E. Lanuzo, et al.,G.R. No.
161151, March 24, 2014.
Property; Recovery of possession of real
property; three kinds of actions available.
In Sps. Bonifacio R. Valdez, Jr. et al. vs. Hon.
Court of Appeals, et al. (523 Phil. 39 (2006)),
the Court is instructive anent the three kinds of
actions available to recover possession of real
property, viz: (a) accion interdictal; (b)accion
publiciana; and (c) accion reivindicatoria.
Accion interdictal comprises two distinct
causes of action, namely, forcible entry
(detentacion) and unlawful detainer
(desahuico) [sic]. In forcible entry, one is
deprived of physical possession of real
property by means of force, intimidation,
strategy, threats, or stealth whereas in unlawful
detainer, one illegally withholds possession
after the expiration or termination of his right
to hold possession under any contract, express
or implied. The two are distinguished from

each other in that in forcible entry, the
possession of the defendant is illegal from the
beginning, and that the issue is which party has
prior de facto possession while in unlawful
detainer, possession of the defendant is
originally legal but became illegal due to the
expiration or termination of the right to
possess.
The jurisdiction of these two actions, which
are summary in nature, lies in the proper
municipal trial court or metropolitan trial
court. Both actions must be brought within one
year from the date of actual entry on the land,
in case of forcible entry, and from the date of
last demand, in case of unlawful detainer. The
issue in said cases is the right to physical
possession.
Accion publiciana is the plenary action to
recover the right of possession which should
be brought in the proper regional trial court
when dispossession has lasted for more than
one year. It is an ordinary civil proceeding to
determine the better right of possession of
realty independently of title. In other words, if
at the time of the filing of the complaint more
than one year had elapsed since defendant had
turned plaintiff out of possession or
defendants possession had become illegal, the
action will be, not one of the forcible entry or
illegal detainer, but an accion publiciana. On
the other hand, accion reivindicatoria is an
action to recover ownership also brought in the
proper regional trial court in an ordinary civil
proceeding. Carmencita Suarez v. Mr. and
Mrs. Felix E. Emboy, Jr. and Marilou P.
Emboy-Delantar, G.R. No. 187944, March 12,
2014.
Res ipsa loquitor; a mode of proof or a mere
procedural convenience.In Jarcia, Jr. v.
People, the court has underscored that the
doctrine is not a rule of substantive law, but
merely a mode of proof or a mere procedural
convenience. The doctrine, when applicable to
the facts and circumstances of a given case, is
not meant to and does not dispense with the

requirement of proof of culpable negligence
against the party charged. It merely determines
and regulates what shall be prima
facie evidence thereof, and helps the plaintiff
in proving a breach of the duty. The doctrine
can be invoked when and only when, under the
circumstances involved, direct evidence is
absent and not readily available. Dr. Fernando
P. Solidum v. People of the Philippines,G.R.
No. 192123, March 10, 2014.
Res ipsa loquitor; applicability in medical
negligence cases. The applicability of the
doctrine of res ipsa loquitur in medical
negligence cases was significantly and
exhaustively explained in Ramos v. Court of
Appeals, where the Court saidMedical
malpractice cases do not escape the application
of this doctrine. Thus, res ipsa loquitur has
been applied when the circumstances attendant
upon the harm are themselves of such a
character as to justify an inference of
negligence as the cause of that harm. The
application of resipsa loquitur in medical
negligence cases presents a question of law
since it is a judicial function to determine
whether a certain set of circumstances does, as
a matter of law, permit a given inference.
Although generally, expert medical testimony
is relied upon in malpractice suits to prove that
a physician has done a negligent act or that he
has deviated from the standard medical
procedure, when the doctrine of res ipsa
loquitur is availed by the plaintiff, the need for
expert medical testimony is dispensed with
because the injury itself provides the proof of
negligence. The reason is that the general rule
on the necessity of expert testimony applies
only to such matters clearly within the domain
of medical science, and not to matters that are
within the common knowledge of mankind
which may be testified to by anyone familiar
with the facts. Ordinarily, only physicians and
surgeons of skill and experience are competent
to testify as to whether a patient has been
treated or operated upon with a reasonable
degree of skill and care. However, testimony
as to the statements and acts of physicians and

surgeons, external appearances, and manifest
conditions which are observable by any one
may be given by non-expert witnesses. Hence,
in cases where the res ipsa loquitur is
applicable, the court is permitted to find a
physician negligent upon proper proof of
injury to the patient, without the aid of expert
testimony, where the court from its fund of
common knowledge can determine the proper
standard of care. Where common knowledge
and experience teach that a resulting injury
would not have occurred to the patient if due
care had been exercised, an inference of
negligence may be drawn giving rise to an
application of the doctrine of res ipsa
loquitur without medical evidence, which is
ordinarily required to show not only what
occurred but how and why it occurred. When
the doctrine is appropriate, all that the patient
must do is prove a nexus between the
particular act or omission complained of and
the injury sustained while under the custody
and management of the defendant without
need to produce expert medical testimony to
establish the standard of care. Resort to res
ipsa loquitur is allowed because there is no
other way, under usual and ordinary
conditions, by which the patient can obtain
redress for injury suffered by him. Dr.
Fernando P. Solidum v. People of the
Philippines,G.R. No. 192123, March 10, 2014.
Res ipsa loquitur; applied in conjunction with
the doctrine of common knowledge.It is
simply a recognition of the postulate that, as a
matter of common knowledge and experience,
the very nature of certain types of occurrences
may justify an inference of negligence on the
part of the person who controls the
instrumentality causing the injury in the
absence of some explanation by the defendant
who is charged with negligence. It is grounded
in the superior logic of ordinary human
experience and on the basis of such experience
or common knowledge, negligence may be
deduced from the mere occurrence of the

accident itself. Hence, res ipsa loquitur is
applied in conjunction with the doctrine
ofcommon knowledge. Dr. Fernando P.
Solidum v. People of the Philippines,G.R. No.
192123, March 10, 2014.
Res ipsa loquitor. Res ipsa loquitur is literally
translated as the thing or the transaction
speaks for itself. The doctrine res ipsa
loquitur means that where the thing which
causes injury is shown to be under the
management of the defendant, and the accident
is such as in the ordinary course of things does
not happen if those who have the management
use proper care, it affords reasonable evidence,
in the absence of an explanation by the
defendant, thatthe accident arose from want of
care. Dr. Fernando P. Solidum v. People of
the Philippines,G.R. No. 192123, March 10,
2014.
Res ipsa loquitur. The doctrine of res ipsa
loquitur is based on the theory that the
defendant either knows the cause of the
accident or has the best opportunity of
ascertaining it and the plaintiff, having no
knowledge thereof, is compelled to allege
negligence in general terms. In such
instance, the plaintiff relies on proof of the
happening of the accident alone to establish
negligence. The principle, furthermore,
provides a means by which a plaintiff can hold
liable a defendant who, if innocent, should be
able to prove that he exercised due care to
prevent the accident complained of from
happening. It is, consequently, the defendants
responsibility to show that there was no
negligence on his part. International
M. Chua, G.R. No. 195031, March 26, 2014.
Res ipsa loquitur; concept of; requirements for
the doctrine to apply. In Tan v. JAM Transit,
Inc. (G.R. No. 183198, November 25, 2009),
the Court noted that res ipsa loquitur is a Latin
phrase that literally means the thing or the
transaction speaks for itself. It is a maxim for
the rule that the fact of the occurrence of an
injury, taken with the surrounding
circumstances, may permit an inference or

raise a presumption of negligence, or make out
a plaintiffs prima facie case, and present a
question of fact for defendant to meet with an
explanation. Where the thing that caused
the injury complained of is shown to be under
the management of the defendant or his
servants; and the accident, in the ordinary
course of things, would not happen if those
who had management or control used
proper care, it affords reasonable evidencein
the absence of a sufficient, reasonable and
logical explanation by defendantthat the
accident arose from or was caused by the
defendants want of care. This rule is grounded
on the superior logic of ordinary human
experience, and it is on the basis of such
experience or common knowledge that
negligence may be deduced from the mere
occurrence of the accident itself. Hence, the
rule is applied in conjunction with the doctrine
of common knowledge.
For the doctrine to apply, the following
requirements must be shown to exist, namely:
(a) the accident is of a kind that ordinarily does
not occur in the absence of someones
negligence; (b) it is caused by an
instrumentality within the exclusive control of
the defendant or defendants; and (c) the
possibility of contributing conduct that would
make the plaintiff responsible is
eliminated. BJDC Construction, represented
by its Manager/Proprieto Janet S. Dela Cruz
v. Nena E. Lanuzo, et al., G.R. No. 161151,
March 24, 2014.
Res ipsa loquitor; doctrine does not
automatically apply to all cases of medical
negligence as to mechanically shift the burden
of proof to the defendant.Despite the fact that
the scope of res ipsa loquitur has been
measurably enlarged, it does not automatically
apply to all cases of medical negligence as to
mechanically shift the burden of proof to the
defendant to show that he is not guilty of the
ascribed negligence. Res ipsa loquitur is not a
rigid or ordinary doctrine to be perfunctorily

used but a rule to be cautiously applied,
depending upon the circumstances of each
case. It is generally restricted to situations in
malpractice cases where a layman is able to
say, as a matter of common knowledge and
observation, that the consequences of
professional care were not as such as would
ordinarily have followed if due care had been
exercised. A distinction must be made between
the failure to secure results, and the occurrence
of something more unusual and not ordinarily
found if the service or treatment rendered
followed the usual procedure of those skilled
in that particular practice. It must be conceded
that the doctrine of res ipsa loquitur can have
no application in a suit against a physician or
surgeon which involves the merits of a
diagnosis or of a scientific treatment. The
physician or surgeon is not required at his peril
to explain why any particular diagnosis was
not correct, or why any particular scientific
treatment did not produce the desired result.
Thus, res ipsa loquitur is not available in a
malpractice suit if the only showing is that the
desired result of an operation or treatment was
not accomplished. The real question, therefore,
is whether or not in the process of the
operation any extraordinary incident or
unusual event outside of the routine
performance occurred which is beyond the
regular scope of customary professional
activity in such operations, which, if
unexplained would themselves reasonably
speak to the average man as the negligent
cause or causes of the untoward consequence.
If there was such extraneous intervention, the
doctrine of res ipsa loquitur may be utilized
and the defendant is calledupon to explain the
matter, by evidence of exculpation, if he
could. Dr. Fernando P. Solidum v. People of
2014.
Res ipsa loquitor; essential requisites.In order
to allow resort to the doctrine, therefore, the
following essential requisites must first be
satisfied, to wit: (1) the accident was of a kind
that does not ordinarily occur unless someone

is negligent; (2) the instrumentality or agency
that caused the injury was under the exclusive
control of the person charged; and (3) the
injury suffered must not have been due to any
voluntary action or contribution of the person
injured. Dr. Fernando P. Solidum v. People of
2014.
Res ipsa loquitur; when may be invoked. The
doctrine can be invoked when and only
when, under the circumstances involved,
direct evidence is absent and not readily
available. Here, there was no evidence as to
how or why the fire in the container yard of
petitioner started; hence, it was up to petitioner
to satisfactorily prove that it exercised the
diligence required to prevent the fire from
happening. International Container Terminal
Services, Inc. v. Celeste M. Chua, G.R. No.
195031, March 26, 2014.
Suretyship; Continuing suretyship; nature of;
example of.A Continuing Suretyship, which
the Court described in Saludo, Jr. v. Security
Bank Corporation as follows:
The essence of a continuing surety has been
highlighted in the case of Totanes v. China
Banking Corporation in this wise:
Comprehensive or continuing surety
agreements are, in fact, quite commonplace in
present day financial and commercial practice.
A bank or financing companywhich anticipates
entering into a series of credit transactions
with a particular company, normallyrequires
the projected principal debtor to execute
acontinuing surety agreement along with its
sureties. Byexecuting such an agreement, the
principal places itselfin a position to enter into
the projected series oftransactions with its
creditor; with such suretyshipagreement, there
would be no need to execute a separatesurety
contract or bond for each financing or
creditaccommodation extended to the principal
debtor.
The terms of the Continuing Suretyship
executed by petitioner are very clear. It states

that petitioner, as surety, shall, without need
for any notice, demand or any other act or
deed, immediately become liable and shall pay
all credit accommodations extended by the
Bank to the Debtor, including increases,
renewals, roll-overs, extensions,
restructurings, amendments or novations
thereof, as well as (i) all obligations of
theDebtor presently or hereafter owing to
the Bank, as appears in theaccounts, books
and records of the Bank, whether direct or
indirect, and (ii) any and all expenses which
the Bank may incur in enforcing any of its
rights, powers and remedies under the Credit
Instruments as defined hereinbelow. Mariano
Lim v. Security Bank Corporation,G.R. No.
188539, March 12, 2014.
Suretyship. A contract of suretyship is an
agreement whereby a party, called the surety,
guarantees the performance by another party,
called the principal or obligor, of an obligation
or undertaking in favor of another party, called
the obligee. Although the contract of a surety
is secondary only to a valid principal
obligation, the surety becomes liable for the
debt or duty of another although it possesses
no direct or personal interest over the
obligations nor does it receive any benefit
therefrom. This was explained in the case
of Stronghold Insurance Company, Inc. v.
Republic-Asahi Glass Corporation, where it
was written: The suretys obligation is not an
original and direct one for the performance of
his own act, but merely accessory or collateral
to the obligation contracted by the principal.
Nevertheless,although the contract of a
suretyis in essence secondary only to a valid
principalobligation, his liability to the
creditor or promisee of theprincipal is said
to be direct, primary and absolute; inother
words, he is directly and equally bound with
theprincipal.
Thus, suretyship arises upon the solidary
binding of a person deemed the surety with the
principal debtor for the purpose of fulfilling an
obligation. A surety is considered in law as
being the same party asthe debtor in

relation to whatever is adjudged touching
the obligationof the latter, and their
liabilities are interwoven as to be
inseparable. Mariano Lim v. Security Bank
Corporation,G.R. No. 188539, March 12,
2014.
SPECIAL LAWS
Comprehensive Agrarian Reform Law
(CARL); Section 65 of R.A. 6657; DAR is
empowered to authorize, under certain
conditions, the reclassification or
conversion of agricultural lands. Under
Section 65 of R.A. No. 6657, the DAR is
empowered to authorize, under certain
conditions, the reclassification or conversion
of agricultural lands. Pursuant to this authority
and in the exercise of its rulemaking power
under Section 49 of R.A. No. 6657, the DAR
issued Administrative Order No. 12, series of
1994 (DAR A.O. 12-94) (the then prevailing
administrative order), providing the rules and
procedure governing agricultural land
conversion. Item VII of DAR A.O. 12-94
enumerates the documentary requirements for
approval of an application for
land conversion.35 Notably, Item VI-E
provides that no application for conversion
shall be given due course if: (1) the DAR has
issued a Notice of Acquisition under the
compulsory acquisition process; (2) a
Voluntary Offer to Sell covering the subject
property has been received by the DAR; or (3)
there is already a perfected agreement between
the landowner and the beneficiaries under
Voluntary Land Transfer. Heirs of Teresita
Montoya, et al. v. National Housing Authority,
et al., G.R. No. 181055, March 19, 2014.
Comprehensive Agrarian Reform Law
(CARL); Section 6 of R.A. 6657; retention
limits. Section 6 of R.A. No. 6657 specifically
governs retention limits. Under its last
paragraph, any sale, disposition, lease,
management, contract or transfer of possession
of private lands executed by the original
landowner in violation of [R.A. No. 6657] is

considered null and void. A plain reading of
the last paragraph appears to imply that the
CARL absolutely prohibits sales or
dispositions of private agricultural lands. The
interpretation or construction of this
prohibitory clause, however, should be made
within the context of Section 6, following the
basic rule in statutory construction that every
part of the statute be interpreted with
reference to the context, i.e., that every part of
the statute must be considered together with
the other parts, and kept subservient to the
general intent of the whole enactment.
Notably, nothing in this paragraph, when read
with the entire section, discloses any
legislative intention to absolutely prohibit the
sale or other transfer agreements of private
agricultural lands after the effectivity of the
Act.
In other words, therefore, the sale, disposition,
etc. of private lands that Section 6 of R.A. No.
6657 contextually prohibits and considers as
null and void are those which the original
owner executes in violation of this provision,
i.e., sales or dispositions executed with the
intention of circumventing the retention limits
set by R.A. No. 6657. Consistent with this
interpretation, the proscription in Section 6 on
sales or dispositions of private agricultural
lands does not apply to those that do not
violate or were not intended to circumvent the
CARLs retention limits. Heirs of Teresita
Montoya, et al. v. National Housing Authority,
et al., G.R. No. 181055, March 19, 2014.
Emancipation of Tenants; P.D. 27; CLT; legal
effects of issuance; tenant-farmer does not
acquire full ownership of the covered
landholding simply by the issuance of a CLT.
A CLT is a document that the government
issues to a tenant-farmer of an agricultural land
primarily devoted to rice and corn production
placed under the coverage of the governments
OLT program pursuant to P.D. No. 27. It serves
as the tenant-farmers (grantee of the
certificate) proof of inchoate right over the
land covered thereby.
A CLT does not automatically grant a tenantfarmer absolute ownership of the covered
landholding. Under PD No. 27, land transfer is
effected in two stages: (1) issuance of the CLT
to the tenant-farmer in recognition that said
person is a deemed owner; and (2) issuance
of an Emancipation Patent (EP) as proof of full
ownership upon the tenant-farmers full
payment of the annual amortizations or lease
rentals.
As a preliminary step, therefore, the issuance
of a CLT merely evinces that the grantee
thereof is qualified to avail of the statutory
mechanism for the acquisition of ownership of
the land tilled by him, as provided under P.D.
No. 27. The CLT is not a muniment of title that
vests in the tenant-farmer absolute ownership
of his tillage. It is only after compliance with
the conditions which entitle the tenant-farmer
to an EP that the tenant-farmer acquires the
vested right of absolute ownership in the
landholding. Stated otherwise, the tenantfarmer does not acquire full ownership of the
covered landholding simply by the issuance of
a CLT. The tenant-farmer must first comply
with the prescribed conditions and procedures
for acquiring full ownership but until then, the
title remains with the landowner. Heirs of
Teresita Montoya, et al. v. National Housing
Authority, et al., G.R. No. 181055, March 19,
2014.
Land registration; Classification of land;
evidence of a positive act from the government
reclassifying the lot as alienable and
disposable agricultural land of the public
domain. Accordingly, jurisprudence has
required that an applicant for registration of
title acquired through a public land grant must
present incontrovertible evidence that the land
subject of the application is alienable or
disposable by establishing the existence of
a positive act of the government, such as a
presidential proclamation or an executive
order; an administrative action; investigation
reports of Bureau of Lands investigators; and a
legislative act or a statute. Sps. Antonio

Fortuna and Erlinda Fortuna v. Republic of
2014.
Land registration; Classification of land;
Executive prerogative.Under Section 6 of the
Public Land Act, the classification and the
reclassification of public lands are the
prerogative of the Executive Department. The
President, through a presidential proclamation
or executive order, can classify or reclassify a
land to be included or excluded from the
public domain. The Department of
Environment and Natural Resources Secretary
is likewise empowered by law to approve a
land classification and declare such land as
alienable and disposable. Sps. Antonio Fortuna
and Erlinda Fortuna v. Republic of the
Land registration; it is essential for any
applicant for registration of title to land
derived through a public grant to establish
foremost the alienable and disposable nature of
the land. The Constitution declares that all
lands of the public domain are owned by the
State. Of the four classes of public land,i.e.,
agricultural lands, forest or timber lands,
mineral lands, and national parks, only
agricultural lands may be alienated. Public
land that has not been classified as alienable
agricultural land remains part of the
inalienable public domain. Thus, it is essential
for any applicant for registration of title
toland derived through a public grant to
establish foremost the alienableand
disposable nature of the land. The Public
Land Act provisions on the grant and
disposition of alienable public lands,
specifically, Sections 11 and 48(b), will find
application only from the time that a public
land has been classified as agricultural and
declared as alienable and disposable. Sps.
Antonio Fortuna and Erlinda Fortuna v.
Republic of the Philippines,G.R. No. 173423,
March 5, 2014.
Land registration; Judicial confirmation of
imperfect or incomplete title; cut-off date for
applications. As mentioned, the Public Land

Act is the law that governs the grant and
disposition of alienable agricultural lands.
Under Section 11 of the PLA, alienable lands
of the public domain may be disposed of,
among others, by judicial confirmation of
imperfect or incomplete title. This mode of
acquisition of title is governed by Section
48(b) of the PLA, the original version of
which states:
Sec. 48. The following-described citizens of
the Philippines, occupying lands of the public
domain or claiming to own any such lands or
an interest therein, but whose titles have not
been perfected or completed, may apply to the
Court of First Instance of the province where
the land is located for confirmation of their
claims and the issuance of a certificate of title
therefor, under the Land Registration Act, to
wit:
xxxx
(b) Those who by themselves or through their
predecessors-in-interest have been in open,
continuous, exclusive, and notorious
possession and occupation of agricultural lands
of the public domain, under a bona fide claim
of acquisition or ownership, except as against
the Government, since July twenty-sixth,
eighteen hundred and ninety-four, except
when prevented by war or force majeure.
These shall be conclusively presumed to have
performed all the conditions essential to a
government grant and shall be entitled to a
certificate of title under the provisions of this
chapter. [emphasis supplied]
On June 22, 1957, the cut-off date of July 26,
1894 was replaced by a 30-year period of
possession under RA No. 1942. Section 48(b)
of the PLA, as amended by RA No. 1942, read:
predecessors in interest have been in open,
continuous, exclusive and notorious possession
and occupation of agricultural lands of the
public domain, under a bona fide claim of
acquisition of ownership, for at least thirty
years immediately preceding the filing of the

application for confirmation of title, except
On January 25, 1977, PD No. 1073 replaced
the 30-year period of possession by requiring
possession since June 12, 1945. Section 4 of
PD No. 1073 reads:
SEC. 4. The provisions of Section 48(b) and
Section 48(c), Chapter VIII of the Public Land
Act are hereby amended in the sense that these
provisions shall apply only to alienable and
disposable lands of the public domain which
have been in open, continuous, exclusive and
notorious possession and occupation by the
applicant himself or thru his predecessor-ininterest, under a bona fide claim of acquisition
of ownership, since June 12, 1945.
Under the P.D. No. 1073 amendment,
possession of at least 32 years from 1945 up
to its enactment in 1977 is required. This
effectively impairs the vested rights of
applicants who had complied with the 30-year
possession required under the RA No. 1942
amendment, but whose possession commenced
only after the cut-off date of June 12, 1945 was
established by the PD No. 1073 amendment.
To remedy this, the Court ruled in Abejaron v.
Nabasa that Filipino citizens who by
themselves or their predecessors-in-interest
have been, prior to the effectivity of P.D.
1073on January 25, 1977, in open,
acquisition of ownership, for at least 30
years, or atleast since January 24, 1947 may
apply for judicial confirmation of their
imperfect or incomplete title under Sec. 48(b)
of the [PLA]. January 24,1947 was
considered as the cut off date as this was
exactly 30 yearscounted backward from
January 25, 1977 the effectivity date of
PDNo. 1073.
It appears, however, that January 25, 1977
was the date PD No. 1073
was enacted; based on the certification from
the National PrintingOffice, PD No. 1073
was published in Vol. 73, No. 19 of the

Official Gazette, months later than its
enactment or on May 9,
1977. Thisuncontroverted fact materially
affects the cut-off date for applications
forjudicial confirmation of incomplete title
under Section 48(b) of the PLA.Although
Section 6 of PD No. 1073 states that [the]
Decree shalltake effect upon its promulgation,
the Court has declared in Taada, et al.v. Hon.
Tuvera, etc., et al. that the publication of laws
is an indispensablerequirement for its
effectivity. [A]ll statutes, including those of
localapplication and private laws, shall be
published as a condition for theireffectivity,
which shall begin fifteen days after publication
unless a differenteffectivity date is fixed by the
legislature. Accordingly, Section 6 of PDNo.
1073 should be understood to mean that the
decree took effect onlyupon its publication, or
on May 9, 1977. This, therefore, moves the
cut-off date for applications for judicial
confirmation of imperfect or incomplete
title under Section 48(b) of the PLA to May
8, 1947. In otherwords, applicants must prove
that they have been in open,
continuous,exclusive and notorious
possession and occupation of agricultural
lands ofthe public domain, under a bona fide
claim of acquisition of ownership,for at least
30 years, or at least since May 8, 1947. Sps.
Antonio Fortuna and Erlinda Fortuna v.
Republic of the Philippines,G.R. No. 173423,
March 5, 2014.
Land registration; Possession; as a requirement
for the application for registration of title.Notably, Section 48(b) of the PLA speaks of
possession and occupation. Since these words
are separated by the conjunction and, the clear
intention of the law is not to make one
synonymous with the other. Possession is
broader than occupation because it includes
constructive possession. When, therefore, the
law adds the word occupation, it seeks to
delimit the all-encompassing effect of
constructive possession. Taken together with

the words open, continuous, exclusive and
notorious, the wordoccupation serves to
highlight the fact that for an applicant to
qualify, his possession must not be a mere
fiction. Nothing in Tax Declaration No. 8366
shows that Pastora exercised acts of possession
and occupation such as cultivation of or
fencing off the land. Indeed, the lot was
described as cogonal. Sps. Antonio Fortuna
and Erlinda Fortuna v. Republic of the
Public Land Act; Sec 48(b), as amended by
P.D. 1073; requirements for judicial
confirmation of title.The requirements for
judicial confirmation of imperfect title are
found in Section 48(b) of the Public Land Act,
as amended by Presidential Decree No. 1073,
as follows:
Sec. 48. The following described citizens of
Court of First Instance of the province where
the land is located for confirmation of their
claims and the issuance of a certificate of title
therefor, under the Land Registration Act, to
wit:
xxxx
predecessors in interest have been in the open,
possession and occupation of alienable and
disposable lands of the public domain, under a
bona fide claim of acquisition or ownership,
since June 12, 1945, or earlier, immediately
preceding the filing of the application for
confirmation of title except when prevented by
war or force majeure. These shall be
conclusively presumed to have performed all
the conditions essential to a Government grant
and shall be entitled to a certificate of title
under the provisions of this chapter.
Republic of the Philippines represented by
Aklan National Colleges of Fisheries (ANCF)
and Dr. Elenita R. Adrade, in her capacity as
ANCF Superintendent v. Heirs of Maxima

Lachica Sin, namely: Salvacion L. Sin,
Rosario S. Enriquez, Francisco L. Sin, Maria
S. Yuchintat, Manuel L. Sin, Jaime Cardinal
Sin, Ramon L. Sin, and Ceferina S. Vita,G.R.
No. 157485, March 26, 2014.
Regalian Doctrine; all lands of the public
domain belong to the State and that lands not
appearing to be clearly within private
ownership are presumed to belong to the State.
As this Court held in the fairly recent case of
Valiao v. Republic (G.R. No. 170757,
November 28, 2011,): Under the Regalian
doctrine, which is embodied in our
Constitution, all lands of the public domain
belong to the State, which is the source of any
asserted right to any ownership of land. All
lands not appearing to be clearly within private
ownership are presumed to belong to the State.
Accordingly, public lands not shown to have
been reclassified or released as alienable
agricultural land or alienated to a private
person by the State remain part of the
inalienable public domain. Unless public land
is shown to have been reclassified as alienable
or disposable to a private person by the State,
it remains part of the inalienable public
domain. Property of the public domain is
beyond the commerce of man and not
susceptible of private appropriation and
acquisitive prescription. Occupation thereof in
the concept of owner no matter how long
cannot ripen into ownership and be registered
as a title. The burden of proof in overcoming
the presumption of State ownership of the
lands of the public domain is on the person
applying for registration (or claiming
ownership), who must prove that the land
disposable. To overcome this presumption,
incontrovertible evidence must be established
that the land subject of the application (or
claim) is alienable or disposable. Republic of
the Philippines represented by Aklan National
Colleges of Fisheries (ANCF) and Dr. Elenita
R. Adrade, in her capacity as ANCF

Superintendent v. Heirs of Maxima Lachica
Sin, namely: Salvacion L. Sin, Rosario S.
Enriquez, Francisco L. Sin, Maria S.
Yuchintat, Manuel L. Sin, Jaime Cardinal Sin,
Ramon L. Sin, and Ceferina S. Vita, G.R. No.
157485, March 26, 2014.
Public Land Act; two requisites for judicial
confirmation of title. The two requisites for
judicial confirmation of imperfect or
incomplete title under CA No. 141, namely:
(1) open, continuous, exclusive, and notorious
possession and occupation of the subject land
by himself or through his predecessors-ininterest under a bona fide claim of ownership
since time immemorial or from June 12, 1945;
and (2) the classification of the land as
alienable and disposable land of the public
domain. Republic of the Philippines
represented by Aklan National Colleges of
Fisheries (ANCF) and Dr. Elenita R. Adrade,
in her capacity as ANCF Superintendent v.
Heirs of Maxima Lachica Sin, namely:
Salvacion L. Sin, Rosario S. Enriquez,
Francisco L. Sin, Maria S. Yuchintat, Manuel
L. Sin, Jaime Cardinal Sin, Ramon L. Sin, and
Ceferina S. Vita, G.R. No. 157485, March 26,
2014.
Regalian Doctrine; failure of Republic to show
competent evidence that the subject land was
declared a timberland before its formal
classification as such in 1960 does not lead to
the presumption that said land was alienable
and disposable prior to said date. Accordingly,
in the case at bar, the failure of petitioner
Republic to show competent evidence that the
subject land was declared a timberland before
its formal classification as such in 1960
does not lead to the presumption that said
land was alienable and disposable prior to said
date. On the contrary, the presumption is that
unclassified lands are inalienable public lands.
It is therefore the respondents which have the
burden to identify a positive act of the
government, such as an official proclamation,
declassifying inalienable public land into
disposable land for agricultural or other
purposes. Since respondents failed to do so,

the alleged possession by them and by their
predecessors-in-interest is inconsequential and
could never ripen into ownership. Republic of
the Philippines represented by Aklan National
Colleges of Fisheries (ANCF) and Dr. Elenita
R. Adrade, in her capacity as ANCF
Superintendent v. Heirs of Maxima Lachica
Sin, namely: Salvacion L. Sin, Rosario S.
Enriquez, Francisco L. Sin, Maria S.
Yuchintat, Manuel L. Sin, Jaime Cardinal Sin,
Ramon L. Sin, and Ceferina S. Vita, G.R. No.
157485, March 26, 2014.
February 2014 rulings of the Supreme Court
of the Philippines on civil law:
Contract law; principle of relativity. The basic
principle of relativity of contracts is that
contracts can only bind the parties who entered
into it, and cannot favor or prejudice a third
person, even if he is aware of such contract
and has acted with knowledge thereof Where
there is no privity of contract, there is likewise
no obligation or liability to speak
about. Philippine National Bank v. Teresita
Tan Dee, et al., G.R. No. 182128, February 19,
2014.
Contract of sale; obligations of the parties;
there is nothing in the decision of the HLURB,
as affirmed by the OP and the CA, which
shows that the petitioner is being ordered to
assume the obligation of any of the
respondents.In a contract of sale, the parties
obligations are plain and simple. The law
obliges the vendor to transfer the ownership of
and to deliver the thing that is the object of
sale. On the other hand, the principal
obligation of a vendee is to pay the full
purchase price at the agreed time.Philippine
National Bank v. Teresita Tan Dee, et al., G.R.
No. 182128, February 19, 2014.
Contract to sell; ownership; right to mortgage
the property by the owner. Note that at the time
PEPI mortgaged the property to the petitioner,
the prevailing contract between respondents
PEPI and Dee was still the Contract to Sell, as
Dee was yet to fully pay the purchase price of

the property. On this point, PEPI was acting
fully well within its right when it mortgaged
the property to the petitioner, for in a contract
to sell, ownership is retained by the seller and
is not to pass until full payment of the
purchase price. In other words, at the time of
the mortgage, PEPI was still the owner of the
property. Thus, in China Banking Corporation
v. Spouses Lozada the Court affirmed the right
of the owner/developer to mortgage the
property subject of development, to wit:
[P.D.] No. 957 cannot totally prevent the
owner or developer from mortgaging the
subdivision lot or condominium unit when the
title thereto still resides in the owner or
developer awaiting the full payment of the
purchase price by the installment
buyer. Philippine National Bank v. Teresita
Tan Dee, et al., G.R. No. 182128, February 19,
2014.
Dacion en pago; concept of.Dacion en pago or
dation in payment is the delivery and
transmission of ownership of a thing by the
debtor to the creditor as an accepted equivalent
of the performance of the obligation. It is a
mode of extinguishing an existing obligation
and partakes the nature of sale as the creditor
is really buying the thing or property of the
debtor, the payment for which is to be charged
against the debtors debt. Dation in payment
extinguishes the obligation to the extent of the
value of the thing delivered, either as agreed
upon by the parties or as may be proved,
unless the parties by agreement express or
implied, or by their silence consider the thing
as equivalent to the obligation, in which case
the obligation is totally
extinguished.Philippine National Bank v.
Teresita Tan Dee, et al.,G.R. No. 182128,
February 19, 2014.
Co-ownership; when present.Art. 484. There is
co-ownership whenever the ownership of an
undivided thing or right belongs to different
persons. Art. 1078. When there are two or
more heirs, the whole estate of the decedent is,
before its partition, owned in common by such
heirs, subject to the payment of debts of the

deceased. Teodoro S. Teodoro, et al. v. Danilo
Espino, et al., G.R. No. 189248, February 5,
2014.
Co-ownership; right of possession.Certainly,
and as found by the trial courts, the whole of
Lot No. 2476 including the portion now
litigated is, owing to the fact that it has
remained registered in the name of Genaro
who is the common ancestor of both parties
herein, co-owned property. All, or both
Teodoro Teodoro and respondents are entitled
to exercise the right of possession as coowners. Neither party can exclude the other
from possession. Although the property
remains unpartitioned, the respondents in fact
possess specific areas. Teodoro Teodoro can
likewise point to a specific area, which is that
which was possessed by Petra. Teodoro
Teodoro cannot be dispossessed of such area,
not only by virtue of Petras bequeathal in his
favor but also because of his own right of
possession that comes from his co-ownership
of the property. Teodoro S. Teodoro, et al. v.
Danilo Espino, et al., G.R. No. 189248,
February 5, 2014.
Alienable and disposable land; to prove that
the land subject of an application for
registration is alienable, an applicant must
establish the existence of a positive act of the
government; annotation in the survey plan is
not sufficient. However, Cortez reliance on
the foregoing annotation in the survey plan is
amiss; it does not constitute incontrovertible
evidence to overcome the presumption that the
subject property remains part of the inalienable
public domain. In Republic of the Philippines
v. Tri-Plus Corporation, the Court clarified
that, the applicant must at the very least submit
a certification from the proper government
agency stating that the parcel of land subject of
the application for registration is indeed
alienable and disposable, viz: It must be
stressed that incontrovertible evidence must be
presented to establish that the land subject of
the application is alienable or disposable. In

the present case, the only evidence to prove the
character of the subject lands as required by
law is the notation appearing in the Advance
Plan stating in effect that the said properties
are alienable and disposable. However, this is
hardly the kind of proof required by law. To
prove that the land subject of an application for
registration is alienable, anapplicant must
government such as a presidential
proclamation or an executive order, an
administrative action, investigation reports of
Bureau of Lands investigators, and a
legislative act or statute. The applicant may
also secure a certification from the
Government that the lands applied for are
alienable and disposable. Republic of the
Philippines v. Emmanuel C. Cortez, G.R. No.
186639. February 5, 2014.
Patrimonial property; susceptible to acquisitive
prescription; start of the running of the
prescriptive period.The Civil Code makes it
clear that patrimonial property of the State
may be acquired by private persons through
prescription. This is brought about by Article
1113, which states that [a]ll things which are
within the commerce of man are susceptible to
prescription, and that [p]roperty of the State
or any of its subdivisions not patrimonial in
character shall not be the object of
prescription.Nonetheless, Article 422 of the
Civil Code states that [p]roperty of public
dominion, when no longer intended for public
use or for public service, shall form part of the
patrimonial property of the State. It is this
provision that controls how public dominion
property may be converted into patrimonial
property susceptible to acquisition by
prescription. After all, Article 420(2) makes
clear that those property which belong to the
State, without being for public use, and are
intended for some public service or for the
development of the national wealth are public
dominion property. For as long as the property
belongs to the State, although already
classified as alienable or disposable, it remains
property of the public dominion if when it is

intended for some public service or for the
development of the national wealth.
Accordingly, there must be an express
declaration by the State that the public
dominion property is no longer intended for
public service or the development of the
national wealth or that the property has been
converted into patrimonial. Without such
express declaration, the property, even if
classified as alienable or disposable, remains
property of the public dominion, pursuant to
Article 420(2), and thus incapable of
acquisition by prescription. It is only when
such alienable and disposable lands are
expressly declared by the State to be no longer
intended for public service or for the
development of the national wealth that the
period of acquisitive prescription can begin to
run. Such declaration shall be in the form of a
law duly enacted by Congress or a Presidential
Proclamation in cases where the President is
duly authorized by law. Republic of the
Philippines v. Emmanuel C. Cortez,G.R. No.
186639. February 5, 2014.
Sale; warranties of sellers.Indeed, this Court is
convinced from an examination of the
evidence and by the concurring opinions of the
courts below that Bignay purchased the
property without knowledge of the pending
Civil Case No. Q-52702. Union Bank is
therefore answerable for its express
undertaking under the December 20, 1989
deed of sale to defend its title to the Parcel/s
of Land with improvement thereon against the
claims of any person whatsoever. By this
warranty, Union Bank represented to Bignay
that it had title to the property, and by
assuming the obligation to defend such title, it
promised to do so at least in good faith and
with sufficient prudence, if not to the best of
its abilities. Bignay EX-IM Philippines, Inc. v.
Union Bank of the Philippines / Union Bank of
the Philippines v. Bignay EX-IM Philippines,
Inc., G.R. No. 171590 & G.R. No. 171598,
February 12, 2014.

Breach of contract; gross negligence.The
record reveals, however, that Union Bank was
grossly negligent in the handling and
prosecution of Civil Case No. Q-52702. Its
appeal of the December 12, 1991 Decision in
said case was dismissed by the CA for failure
to file the required appellants brief. Next, the
ensuing Petition for Review on Certiorari filed
with this Court was likewise denied due to late
filing and payment of legal fees. Finally, the
bank sought the annulment of the December
12, 1991 judgment, yet again, the CA
dismissed the petition for its failure to comply
with Supreme Court Circular No. 28-91. As a
result, the December 12, 1991 Decision
became final and executory, and Bignay was
evicted from the property. Such negligence in
the handling of the case is far from
coincidental; it is decidedly glaring, and
amounts to bad faith. [N]egligence may be
occasionally so gross as to amount tomalice
[or bad faith]. Indeed, in culpa contractual or
breach of contract, gross negligence of a party
amounting to bad faith is a ground for the
recovery of Damages by the injured
party.Bignay EX-IM Philippines, Inc. v. Union
Bank of the Philippines / Union Bank of the
Philippines v. Bignay EX-IM Philippines,
Inc., G.R. No. 171590 & G.R. No. 171598,
February 12, 2014.
Unenforceable contract; entering into a
contract without or beyond authority; sale of
property despite objection of laymens
committee.The Court finds it erroneous for the
CA to ignore the fact that the laymens
committee objected to the sale of the lot in
question. The Canons require that ALL the
church entities listed in Article IV (a) thereof
should give its approval to the transaction.
Thus, when the Supreme Bishop executed the
contract of sale of petitioners lot despite the
opposition made by the laymens committee,
he acted beyond his powers. This case clearly
falls under the category of unenforceable
contracts mentioned in Article 1403, paragraph
(1) of the Civil Code, which provides, thus:
Art. 1403. The following contracts are

unenforceable, unless they are ratified: (1)
Those entered into in the name of another
person by one who has been given no authority
or legal representation, or who has acted
beyond his powers; In Mercado v. Allied
Banking Corporation, the Court explained that:
x x x Unenforceable contracts are those which
cannot be enforced by a proper action in court,
unless they are ratified, because either they are
entered into without or in excess of authority
or they do not comply with the statute of
frauds or both of the contracting parties do not
possess the required legal capacity. x x
x. Iglesia Felipina Independiente v. Heirs of
Bernardino Taeza,G.R. No. 179597, February
3, 2014.
Unenforceable contract; analogous cases.
Closely analogous cases of unenforceable
contracts are those where a person signs a deed
of extrajudicial partition in behalf of co-heirs
without the latters authority; where a mother
as judicial guardian of her minor children,
executes a deed of extrajudicial partition
wherein she favors one child by giving him
more than his share of the estate to the
prejudice of her other children; and where a
person, holding a special power of attorney,
sells a property of his principal that is not
included in said special power of
attorney. Iglesia Felipina Independiente v.
Heirs of Bernardino Taeza,G.R. No. 179597,
February 3, 2014.
Article 1456, Civil Code; implied trust;
acquiring property through mistake. In the
present case, however, respondents
predecessor-in-interest, Bernardino Taeza, had
already obtained a transfer certificate of title in
his name over the property in question. Since
the person supposedly transferring ownership
was not authorized to do so, the property had
evidently been acquired by mistake. In Vda.
de Esconde v. Court ofAppeals, the Court
affirmed the trial courts ruling that the
applicable provision of law in such cases is
Article 1456 of the Civil Code which states

that [i]f property is acquired through mistake
or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for
the benefit of the person from whom the
property comes. Iglesia Felipina
Independiente v. Heirs of Bernardino
Taeza,G.R. No. 179597, February 3, 2014.
Constructive trust; concept of. A deeper
analysis of Article 1456 reveals that it is not a
trust in the technical sense for in a typical trust,
confidence is reposed in one person who is
named a trustee for the benefit of another who
is called the cestui que trust, respecting
property which is held by the trustee for the
benefit of the cestui que trust. A constructive
trust, unlike an express trust, does not emanate
from, or generate a fiduciary relation. While in
an express trust, a beneficiary and a trustee are
linked by confidential or fiduciary relations, in
a constructive trust, there is neither a promise
nor any fiduciary relation to speak of and the
so-called trustee neither accepts any trust nor
intends holding the property for the
beneficiary. Iglesia Felipina Independiente v.
Heirs of Bernardino Taeza,G.R. No. 179597,
February 3, 2014.
Constructive trust; prescriptive period.A
constructive trust having been constituted by
law between respondents as trustees and
petitioner as beneficiary of the subject
property, may respondents acquire ownership
over the said property? The Court held in the
same case of Aznar, that unlike in express
trusts and resulting implied trusts where a
trustee cannot acquire by prescription any
property entrusted to him unless he repudiates
the trust, in constructive implied trusts, the
trustee may acquire the property through
prescription even if he does not repudiate the
relationship. It is then incumbent upon the
beneficiary to bring an action for reconveyance
before prescription bars thesame.An action for
reconveyance based on an implied or
constructive trust must perforce prescribe in
ten years and not otherwise. A long line of
decisions of this Court, and of very recent
vintage at that, illustrates this rule.

Undoubtedly, it is now well-settled that an
action for reconveyance based on an implied
or constructive trust prescribes in ten years
from the issuance of the Torrens title over the
property. It has also been ruled that the tenyear prescriptive period begins to run from the
date of registration of the deed or the date of
the issuance of the certificate of title over the
property, Iglesia Felipina Independiente v.
Heirs of Bernardino Taeza, G.R. No. 179597,
February 3, 2014.
Surety; concept of. A surety is considered in
law as being the same party as the debtor in
relation to whatever is adjudged touching the
obligation of the latter, and their liabilities are
interwoven as to be inseparable. Although the
contract of a surety is in essence secondary
only to a valid principal obligation, his liability
to the creditor is direct, primary and absolute;
he becomes liable for the debt and duty of
another although he possesses no direct or
personal interest over the obligations nor does
he receive any benefit therefrom. Trade and
Investment Development Corporation of the
Philippines (Formerly Philippine Export and
Foreign Loan Guarantee Corporation) v. Asia
Paces Corporation, et al., G.R. No. 187403.
February 12, 2014.
Surety; solidary debtor. The fundamental
reason therefor is that a contract of suretyship
effectively binds the surety as a solidary
debtor. This is provided under Article 2047 of
the Civil Code which states: By guaranty a
person, called the guarantor, binds himself to
the creditor to fulfill the obligation of the
principal debtor in case the latter should fail to
do so. If a person binds himself solidarily with
the principal debtor, the provisions of Section
4, Chapter 3, Title I of this Book shall be
observed. In such case the contract is called a
suretyship. Thus, since the surety is a solidary
debtor, it is not necessary that the original
debtor first failed to pay before the surety
could be made liable; it is enough that a
demand for payment is made by the creditor

for the suretys liability to attach. Trade and
February 12, 2014.
Surety; distinguished from guarantor.
Comparing a suretys obligations with that of a
guarantor, the Court, in the case of Palmares v.
CA, illumined that a surety is responsible for
the debts payment at once if the principal
debtor makes default, whereas a guarantor
pays only if the principal debtor is unable to
pay, viz. : A surety is an insurer of the debt,
whereas a guarantor is an insurer of the
solvency of the debtor. A suretyship is an
undertaking that the debt shall be paid; a
guaranty, an undertaking that the debtor shall
pay. Stated differently, a surety promises to
pay the principals debt if the principal will not
pay, while a guarantor agrees that the creditor,
after proceeding against the principal, may
proceed against the guarantor if the principal is
unable to pay. A surety binds himself to
perform if the principal does not, without
regard to his ability to do so. A guarantor, on
the other hand, does not contract that the
principal will pay, but simply that he is able to
do so. In other words, a surety undertakes
directly for the payment and is so responsible
at once if the principal debtor makes default,
while a guarantor contracts to pay if, by the
use of due diligence, the debt cannot be made
out of the principal debtor. Trade and
February 12, 2014.
Surety; extension given to debtor without
consent of guarantor; effect of. Despite these
distinctions, the Court in Cochingyan, Jr. v.
R&B Surety & Insurance Co., Inc., and later in
the case of Security Bank, held that Article
2079 of the Civil Code, which pertinently
provides that [a]n extension granted to the
debtor by the creditor without the consent of

the guarantor extinguishes the guaranty,
equally applies to bothcontracts of guaranty
and suretyship. The rationale therefor was
explained by the Court as follows: The theory
behind Article 2079 is that an extension of
time given to the principal debtor by the
creditor without the suretys consent would
deprive the surety of his right to pay the
creditor and to be immediately subrogated to
the creditors remedies against the principal
debtor upon the maturity date. The surety is
said to be entitled to protect himself against the
contingency of the principal debtor or the
indemnitors becoming insolvent during the
extended period. Trade and Investment
Development Corporation of the Philippines
(Formerly Philippine Export and Foreign
Loan Guarantee Corporation) v. Asia Paces
Corporation, et al., G.R. No. 187403.
February 12, 2014.
Surety; extension given to debtor without
consent of guarantor; the payment extensions
granted by Banque Indosuez and PCI Capital
to TIDCORP under the Restructuring
Agreement did not have the effect of
extinguishing the bonding companies
obligations to TIDCORP under the Surety
Bonds, notwithstanding the fact that said
extensions were made without their consent.
This is because Article 2079 of the Civil Code
refers to a payment extension granted by the
creditor to the principal debtor without the
consent of the guarantor or surety. In this case,
the Surety Bonds are suretyship contracts
which secure the debt of ASPAC, the principal
debtor, under the Deeds of Undertaking to pay
TIDCORP, the creditor, the damages and
liabilities it may incur under the Letters of
Guarantee, within the bounds of the bonds
respective coverage periods and amounts. No
payment extension was, however, granted by
TIDCORP in favor of ASPAC in this regard;
hence, Article 2079 of the Civil Code should
not be applied with respect to the bonding

companies liabilities to TIDCORP under the
Surety Bonds.
The payment extensions granted by Banque
Indosuez and PCI Capital pertain to
TIDCORPs own debt under the Letters of
Guarantee wherein it (TIDCORP) irrevocably
and unconditionally guaranteed full payment
of ASPACs loan obligations to the banks in
the event of its (ASPAC) default. In other
words, the Letters of Guarantee secured
ASPACs loan agreements to the banks. Under
this arrangement, TIDCORP therefore acted as
a guarantor, with ASPAC as the principal
debtor, and the banks as creditors. Trade and
February 12, 2014.
Deed of mortgage; effect when the authorized
agent failed to indicate in the mortgage that
she was acting for and on behalf of her
principal. Similarly, in this case, the authorized
agent failed to indicate in the mortgage that
she was acting for and on behalf of her
principal. The Real Estate Mortgage, explicitly
shows on its face, that it was signed by
Concepcion in her own name and in her own
personal capacity. In fact, there is nothing in
the document to show that she was acting or
signing as an agent of petitioner. Thus,
consistent with the law on agency and
established jurisprudence, petitioner cannot be
bound by the acts of Concepcion. Nicanora G.
v. Rural Bank of El Salvador, Inc. et al., G.R.
No. 179625. February 24, 2014.
Bank; negligence of. At this point, we find it
significant to mention that respondent bank has
no one to blame but itself. Not only did it act
with undue haste when it granted and released
the loan in less than three days, it also acted
negligently in preparing the Real Estate
Mortgage as it failed to indicate that
Concepcion was signing it for and on behalf of
petitioner. We need not belabor that the words
as attorney-in-fact of, as agent of, or for
and on behalf of, are vital in order for the

principal to be bound by the acts of his agent.
Without these words, any mortgage, although
signed by the agent, cannot bind the principal
as it is considered to have been signed by the
agent in his personal capacity.Nicanora G. v.
Rural Bank of El Salvador, Inc. et al., G.R. No.
179625. February 24, 2014.
Agent; liability when deed of mortgage is
signed in personal capacity. Concepcion, on
the other hand, is liable to pay respondent bank
her unpaid obligation under the Promissory
Note dated June 11, 1982, with interest. As we
have said, Concepcion signed the Promissory
Note in her own personal capacity; thus, she
cannot escape liability. She is also liable to
reimburse respondent bank for all damages,
attorneys fees, and costs the latter is adjudged
to pay petitioner in this case. Nicanora G. v.
Rural Bank of El Salvador, Inc. et al., G.R. No.
179625. February 24, 2014.
Article 1308 of the Civil Code; principle of
mutuality of contracts. The credit agreement
executed succinctly stipulated that the loan
would be subjected to interest at a rate
determined by the Bank to be its prime rate
plus applicable spread, prevailing at the
current month. This stipulation was carried
over to or adopted by the subsequent renewals
of the credit agreement. PNB thereby
arrogated unto itself the sole prerogative to
determine and increase the interest rates
imposed on the Spouses Manalo. Such a
unilateral determination of the interest rates
contravened the principle of mutuality of
contracts embodied in Article 1308 of the Civil
Code.Philippine National Bank v. Sps. Enrique
Manalo & Rosalinda Jacinto, et al., G.R. No.
174433, February 24, 2014.
Contracts; a contract where there is no
mutuality between the parties partakes of the
nature of a contract of adhesion. The Court has
declared that a contract where there is no
mutuality between the parties partakes of the
nature of a contract of adhesion, and any
obscurity will be construed against the party

who prepared the contract, the latter being
presumed the stronger party to the agreement,
and who caused the obscurity. PNB should
then suffer the consequences of its failure to
specifically indicate the rates of interest in the
credit agreement. We spoke clearly on this in
Philippine Savings Bank v. Castillo, to wit:
The unilateral determination and imposition of
the increased rates is violative of the principle
of mutuality of contracts under Article 1308 of
the Civil Code, which provides that [t]he
contract must bind both contracting parties; its
validity or compliance cannot be left to the
will of one of them. A perusal of the
Promissory Note will readily show that the
increase or decrease of interest rates hinges
solely on the discretion of petitioner. It does
not require the conformity of the maker before
a new interest rate could be enforced. Any
contract which appears to be heavily weighed
in favor of one of the parties so as to lead to an
unconscionable result, thus partaking of the
nature of a contract of adhesion, is void. Any
stipulation regarding the validity or
compliance of the contract left solely to the
will of one of the parties is likewise
invalid. Philippine National Bank v. Sps.
Enrique Manalo & Rosalinda Jacinto, et
al., G.R. No. 174433, February 24, 2014.
Interest; interest should be computed from the
time of the judicial or extrajudicial demand;
rule when there is no demand. Indeed, the
Court said in Eastern Shipping Lines, Inc. v.
Court of Appeals that interest should be
computed from the time of the judicial or
extrajudicial demand. However, this case
presents a peculiar situation, the peculiarity
being that the Spouses Manalo did not demand
interest either judicially or extrajudicially. In
the RTC, they specifically sought as the main
reliefs the nullification of the foreclosure
proceedings brought by PNB, accounting of
the payments they had made to PNB, and the
conversion of their loan into a long term one.
In its judgment, the RTC even upheld the
validity of the interest rates imposed by PNB.
In their appellants brief, the Spouses Manalo

again sought the nullification of the
foreclosure proceedings as the main relief. It is
evident, therefore, that the Spouses Manalo
made no judicial or extrajudicial demand from
which to reckon the interest on any amount to
be refunded to them. Such demand could only
be reckoned from the promulgation of the CAs
decision because it was there that the right to
the refund was first judicially recognized.
Nevertheless, pursuant to Eastern Shipping
Lines, Inc. v. Court of Appeals, the amount to
be refunded and the interest thereon should
earn interest to be computed from the finality
of the judgment until the full refund has been
made.Philippine National Bank v. Sps.
Enrique Manalo & Rosalinda Jacinto, et
al., G.R. No. 174433, February 24, 2014.
Interest; Monetary Board Circular No. 799
reduced the interest rates from 12% per annum
to 6% per annum. Anent the correct rates of
interest to be applied on the amount to be
refunded by PNB, the Court, in Nacar v.
Gallery Frames and S.C. Megaworld
Construction v. Parada, already applied
Monetary Board Circular No. 799 by reducing
the interest rates allowed in judgments from
12% per annum to 6% per annum. Philippine
National Bank v. Sps. Enrique Manalo &
Rosalinda Jacinto, et al., G.R. No. 174433,
February 24, 2014.
Interest; prospective application of Monetary
Board Circular No. 799. According to Nacar v.
Gallery Frames, MB Circular No. 799 is
applied prospectively, and judgments that
became final and executory prior to its
effectivity on July 1, 2013 are not to be
disturbed but continue to be implemented
applying the old legal rate of 12% per annum.
Hence, the old legal rate of 12% per annum
applied to judgments becoming final and
executory prior to July 1, 2013, but the new
rate of 6% per annum applies to judgments
becoming final and executory after said
date. Philippine National Bank v. Sps. Enrique

Manalo & Rosalinda Jacinto, et al., G.R. No.
174433, February 24, 2014.
Mortgagee in good faith; doctrine of. In Bank
of Commerce v. San Pablo, Jr., the doctrine of
mortgagee in good faith was explained:There
is, however, a situation where, despite the fact
that the mortgagor is not the owner of the
mortgaged property, his title being fraudulent,
the mortgage contract and any foreclosure sale
arising there from are given effect by reason of
public policy. This is the doctrine of the
mortgagee in good faith based on the rule that
all persons dealing with property covered by
the Torrens Certificates of Title, as buyers or
mortgagees, are not required to go beyond
what appears on the face of the title. The
public interest in upholding indefeasibility of a
certificate of title, as evidence of lawful
ownership of the land or of any encumbrance
thereon, protects a buyer or mortgagee who, in
good faith, relied upon what appears on the
face of the certificate of title. Homeowners
Savings and Loan Bank v. Asuncion P. Felonia
and Lydia C. De Guzman, rep. by Maribel
Frias, et al., G.R. No. 189477. February 26,
2014.
Mortgagee in good faith; HSLB, as a
mortgagee, had a right to rely in good faith on
Delgados title, and in the absence of any sign
that might arouse suspicion, HSLB had no
obligation to undertake further
investigation.When the property was
mortgaged to HSLB, the registered owner of
the subject property was Delgado who had in
her name TCT No. 44848. Thus, HSLB cannot
be faulted in relying on the face of Delgados
title. The records indicate that Delgado was at
the time of the mortgage in possession of the
subject property and Delgados title did not
contain any annotation that would arouse
HSLBs suspicion. HSLB, as a mortgagee, had
a right to rely in good faith on Delgados title,
and in the absence of any sign that might
arouse suspicion, HSLB had no obligation to
undertake further investigation. As held by this
Court in Cebu International Finance Corp. v.
CA: The prevailing jurisprudence is that a

mortgagee has a right to rely in good faith on
the certificate of title of the mortgagor of the
property given as security and in the absence
of any sign that might arouse suspicion, has no
obligation to undertake further investigation.
Hence, even if the mortgagor is not the rightful
owner of, or does not have a valid title to, the
mortgaged property, the mortgagee or
transferee in good faith is nonetheless entitled
to protection. Homeowners Savings and Loan
Bank v. Asuncion P. Felonia and Lydia C. De
Guzman, rep. by Maribel Frias, et al., G.R.
No. 189477. February 26, 2014.
Purchaser in good faith; doctrine of; duty of a
prospective buyer. purchaser in good faith is
defined as one who buys a property without
notice that some other person has a right to, or
interest in, the property and pays full and fair
price at the time of purchase or before he has
notice of the claim or interest of other persons
in the property.When a prospective buyer is
faced with facts and circumstances as to arouse
his suspicion, he must take precautionary steps
to qualify as a purchaser in good faith. In
Spouses Mathay v. CA, we determined the
duty of a prospective buyer: Although it is a
recognized principle that a person dealing on a
registered land need not go beyond its
certificate of title, it is also a firmly settled rule
that where there are circumstances which
would put a party on guard and prompt him to
investigate or inspect the property being sold
to him, such as the presence of
occupants/tenants thereon, it is of course,
expected from the purchaser of a valued piece
of land to inquire first into the status or nature
of possession of the occupants, i.e., whether or
not the occupants possess the land en concepto
de dueo, in the concept of the owner. As is the
common practice in the real estate industry, an
ocular inspection of the premises involved is a
safeguard a cautious a nd prudent purchaser
usually takes. Should he find out that the land
he intends to buy is occupied by anybody else
other than the seller who, as in this case, is not

in actual possession, it would then be
incumbent upon the purchaser to verify the
extent of the occupants possessory rights. The
failure of a prospective buyer to take such
precautionary steps would mean negligence on
his part and would thereby preclude him from
claiming or invoking the rights of a purchaser
in good faith. Homeowners Savings and Loan
No. 189477. February 26, 2014.
Notice of lis pendens; definition of; purpose
of. Lis pendens is a Latin term which literally
means, a pending suit or a pending litigation
while a notice of lis pendens is an
announcement to the whole world that a real
property is in litigation, serving as a warning
that anyone who acquires an interest over the
property does so at his/her own risk, or that
he/she gambles on the result of the litigation
over the property. It is a warning to
prospective buyers to take precautions and
investigate the pending litigation.
The purpose of a notice of lis pendens is to
protect the rights of the registrant while the
case is pending resolution or decision. With the
notice of lis pendens duly recorded and
remaining uncancelled, the registrant could
rest secure that he/she will not lose the
property or any part thereof during
litigation. Homeowners Savings and Loan
No. 189477. February 26, 2014.
Notice of lis pendens; effect of actual
knowledge of the annotated Notice of Lis
Pendens. Indeed, at the time HSLB bought the
subject property, HSLB had actual knowledge
of the annotated Notice of Lis Pendens. Instead
of heeding the same, HSLB continued with the
purchase knowing the legal repercussions a
notice of lis pendens entails. HSLB took upon
itself the risk that the Notice of Lis Pendens
leads to. As correctly found by the CA, the
notice of lis pendens was annotated on 14
September 1995, whereas the foreclosure sale,
where the appellant was declared as the

highest bidder, took place sometime in 1997.
There is no doubt that at the time appellant
purchased the subject property, it was aware of
the pending litigation concerning the same
property and thus, the title issued in its favor
was subject to the outcome of said
litigation. Homeowners Savings and Loan
No. 189477. February 26, 2014.
Mortgage; mortgagor must be absolute owner
of the thing mortgaged. That the mortgagor be
the absolute owner of the thing mortgaged is
an essential requisite of a contract of mortgage.
Article 2085 (2) of the Civil Code specifically
says so: Art. 2085. The following requisites are
essential to the contracts of pledge and
mortgage: x x x x (2) That the pledgor or
mortagagor be the absolute owner of the thing
pledged or mortgaged. Succinctly, for a valid
mortgage to exist, ownership of the property is
an essential requisite. Reyes v. De Leon cited
the case of Philippine National Bank v. Rocha
where it was pronounced that a mortgage of
real property executed by one who is not an
owner thereof at the time of the execution of
the mortgage is without legal existence. Such
that, according to DBP v. Prudential Bank,
there being no valid mortgage, there could also
be no valid foreclosure or valid auction
sale. Homeowners Savings and Loan Bank v.
Asuncion P. Felonia and Lydia C. De Guzman,
rep. by Maribel Frias, et al., G.R. No. 189477.
February 26, 2014.
SPECIAL LAWS
P.D. No. 957; subdivision lots; a bank dealing
with a property that is already subject of a
contract to sell and is protected by the
provisions of P.D. No. 957, is bound by the
contract to sell.Thus, in Luzon Development
Bank v. Enriquez, the Court reiterated the rule
that a bank dealing with a property that is
already subject of a contract to sell and is
protected by the provisions of P.D. No. 957, is
bound by the contract to sell. However, the

transferee BANK is bound by the Contract to
Sell and has to respect Enriquezs rights
thereunder. This is because the Contract to
Sell, involving a subdivision lot, is covered
and protected by PD 957. x x x. x x x x x x x
Under these circumstances, the BANK knew
or should have known of the possibility and
risk that the assigned properties were already
covered by existing contracts to sell in favor of
subdivision lot buyers. As observed by the
Court in another case involving a bank
regarding a subdivision lot that was already
subject of a contract to sell with a third
party:[The Bank] should have considered that
it was dealing with a property subject of a real
estate development project. A reasonable
person, particularly a financial institution x x
x, should have been aware that, to finance the
project, funds other than those obtained from
the loan could have been used to serve the
purpose, albeit partially. Hence, there was a
need to verify whether any part of the property
was already intended to be the subject of any
other contract involving buyers or potential
buyers. In granting the loan, [the Bank] should
not have been content merely with a clean title,
considering the presence of circumstances
indicating the need for a thorough
investigation of the existence of buyers x x x.
Wanting in care and prudence, the [Bank]
cannot be deemed to be an innocent
mortgagee. x x xPhilippine National Bank v.
Teresita Tan Dee, et al., G.R. No. 182128,
February 19, 2014.
Section 14 of P.D. No. 1529; original
registration of title to land; who may apply.
Applicants for original registration of title to
land must establish compliance with the
provisions of Section 14 of P.D. No. 1529,
which pertinently provides that: Sec.14. Who
may apply. The following persons may file in
the proper Court of First Instance an
application for registration of title to land,
whether personally or through their duly
authorized representatives:(1) Those who by
themselves or through their predecessors-in
interest have been in open, continuous,

exclusive and notorious possession and
occupation of alienable and disposable lands of
the public domain under a bona fide claim of
ownership since June 12, 1945, or earlier. (2)
Those who have acquired ownership of private
lands by prescription under the provision of
existing laws.Republic of the Philippines v.
Emmanuel C. Cortez, G.R. No. 186639.
February 5, 2014.
Section 14 of P.D. No. 1529; original
registration of title to land; requisites.Section
14(1) of P.D. No. 1529 refers to the judicial
confirmation of imperfect or incomplete titles
to public land acquired under Section 48(b)of
C.A. No.141, as amended by P.D. No. 1073.
Under Section 14(1) [of P.D. No. 1529],
applicants for registration of title must
sufficiently establish first, that the subject land
forms part of the disposable and alienable
lands of the public domain; second, that the
applicant and his predecessors-in-interest have
been in open, continuous, exclusive, and
notorious possession and occupation of the
same; and third, that it is under a bona fide
claim of ownership since June 12, 1945, or
earlier. Republic of the Philippines v.
Emmanuel C. Cortez, G.R. No. 186639.
February 5, 2014.
Psychological incapacity; concept of;
characterizations. Psychological incapacity,
as a ground to nullify a marriage under Article
36 of the Family Code, should refer to no less
than a mental not merely physical
incapacity that causes a party to be truly
incognitive of the basic marital covenants that
concomitantly must be assumed and
discharged by the parties to the marriage
which, as so expressed in Article 68 of the
Family Code, among others, include their
mutual obligations to live together, observe
love, respect and fidelity and render help
and support.There is hardly any doubt that the
intendment of the law has been to confine the
meaning of psychological incapacity to the
most serious cases of personality disorders

clearly demonstrative of an utter insensitivity
or inability to give meaning and significance to
the marriage. Republic of the Philippines v.
Rodolfo O. De Gracia, G.R. No. 171557.
February 12, 2014.
Psychological incapacity; emotional
immaturity, irresponsibility, or even sexual
promiscuity, cannot be equated with
psychological incapacity.Keeping with these
principles, the Court, in Dedel v. CA, held that
therein respondents emotional immaturity and
irresponsibility could not be equated with
psychological incapacity as it was not shown
that these acts are manifestations of a
disordered personality which make her
completely unable to discharge the essential
marital obligations of the marital state, not
merely due to her youth, immaturity or sexual
promiscuity. Republic of the Philippines v.
February 12, 2014.
Psychological incapacity; although expert
opinions furnished by psychologists regarding
the psychological temperament of parties are
usually given considerable weight by the
courts, the existence of psychological
incapacity must still be proven by independent
evidence. Verily, although expert opinions
furnished by psychologists regarding the
psychological temperament of parties are
usually given considerable weight by the
courts, the existence of psychological
incapacity must still be proven by independent
evidence. Republic of the Philippines v.
February 12, 2014.
Psychological incapacity; refusal to live with
Rodolfo and to assume her duties as wife and
mother as well as her emotional immaturity,
irresponsibility and infidelity do not rise to the
level of psychological incapacity that would
justify the nullification of the parties
marriage. To the Courts mind, Natividads
refusal to live with Rodolfo and to assume her
duties as wife and mother as well as her
emotional immaturity, irresponsibility and
infidelity do not rise to the level of

psychological incapacity that would justify the
nullification of the parties marriage. Indeed, to
be declared clinically or medically incurable is
one thing; to refuse or be reluctant to perform
ones duties is another. To hark back to what
has been earlier discussed, psychological
incapacity refers only to the most serious cases
of personality disorders clearly demonstrative
of an utter insensitivity or inability to give
meaning and significance to the
marriage. Republic of the Philippines v.
February 12, 2014.
Section 14 (1), Presidential Decree No. 1529;
incomplete titles to public land; requisites.
Section 14(1) of P.D. No. 1529 refers to the
incomplete titles to public land acquired under
Section 48(b) of Commonwealth Act (C.A.)
No. 141, or the Public Land Act, as amended
by P.D. No. 1073. Under Section 14(1) of P.D.
No. 1529, applicants for registration of title
must sufficiently establish: first, that the
subject land forms part of the disposable and
alienable lands of the public domain; second,
that the applicant and his predecessors-ininterest have been in open, continuous,
exclusive, and notorious possession and
occupation of the same; and third, that it is
under a bona fide claim of ownership since
June 12, 1945, or earlier. Republic of the
Philippines v. Remman Enterprises, Inc.
represented by Ronnie P. Inocencio, G.R. No.
199310. February 19, 2014.
Proof that land is alienable and disposable;
certifications insufficient. However, the said
certifications presented by the respondent are
insufficient to prove that the subject properties
are alienable and disposable. In Republic of
the Philippines v. T.A.N. Properties, Inc., the
Court clarified that, in addition to the
certification issued by the proper government
agency that a parcel of land is alienable and
disposable, applicants for land registration

must prove that the DENR Secretary had
approved the land classification and released
the land of public domain as alienable and
disposable. They must present a copy of the
original classification approved by the DENR
Secretary and certified as true copy by the
legal custodian of the records. Republic of the
Philippines v. Remman Enterprises, Inc.
represented by Ronnie P. Inocencio, G.R. No.
199310. February 19, 2014.
Possession and occupation; proof of specific
acts of ownership must be presented to
substantiate the claim of open, continuous,
occupation of the land subject of the
application. For purposes of land registration
under Section 14(1) of P.D. No. 1529, proof of
specific acts of ownership must be presented to
substantiate the claim of open, continuous,
occupation of the land subject of the
application. Applicants for land registration
cannot just offer general statements which are
mere conclusions of law rather than factual
evidence of possession. Actual possession
consists in the manifestation of acts of
dominion over it of such a nature as a party
would actually exercise over his own
property. Republic of the Philippines v.
Remman Enterprises, Inc. represented by
Ronnie P. Inocencio, G.R. No. 199310.
February 19, 2014.
Possession and occupation; mere casual
cultivation of portions of the land by the
claimant does not constitute possession under
claim of ownership. Although Cerquena
testified that the respondent and its
predecessors-in-interest cultivated the subject
properties, by planting different crops thereon,
his testimony is bereft of any specificity as to
the nature of such cultivation as to warrant the
conclusion that they have been indeed in
possession and occupation of the subject
properties in the manner required by law.
There was no showing as to the number of
crops that are planted in the subject properties
or to the volume of the produce harvested from

the crops supposedly planted thereon. Further,
assuming ex gratia argumenti that the
respondent and its predecessors-in-interest
have indeed planted crops on the subject
properties, it does not necessarily follow that
the subject properties have been possessed and
occupied by them in the manner contemplated
by law. The supposed planting of crops in the
subject properties may only have amounted to
mere casual cultivation, which is not the
possession and occupation required by law. A
mere casual cultivation of portions of the land
by the claimant does not constitute possession
under claim of ownership. For him, possession
is not exclusive and notorious so as to give rise
to a presumptive grant from the state. The
possession of public land, however long the
period thereof may have extended, never
confers title thereto upon the possessor
because the statute of limitations with regard
to public land does not operate against the
state, unless the occupant can prove possession
and occupation of the same under claim of
ownership for the required number of
years. Republic of the Philippines v. Remman
Enterprises, Inc. represented by Ronnie P.
Inocencio, G.R. No. 199310. February 19,
2014.
January 2014 rulings of the Supreme Court of
Civil Code
Bad faith cannot be presumed; it is a question
of fact that must be proven by clear and
convincing evidence. It is worth stressing at
this point that bad faith cannot be presumed.
It is a question of fact that must be proven
by clear and convincing evidence. [T]he
burden of proving bad faith rests on the one
alleging it. Sadly, spouses Vilbar failed to
adduce the necessary evidence. Thus, this
Court finds no error on the part of the CA
when it did not find bad faith on the part of
Gorospe, Sr. Sps. Bernadette and Rodulfo
Vilbar v. Angelito L. Opinion, G.R. No.
176043. January 15, 2014.

Banks; exercise the highest degree of
diligence, as well as to observe the high
standards of integrity and performance in all
its transactions because its business was
imbued with public interest. Being a banking
institution, DBP owed it to Guaria
Corporation to exercise the highest degree of
diligence, as well as to observe the high
its transactions because its business was
imbued with public interest. The high
standards were also necessary to ensure public
confidence in the banking system, for,
according to Philippine National Bank v. Pike:
The stability of banks largely depends on the
confidence of the people in the honesty and
efficiency of banks.Development Bank of the
Philippines (DBP) v. Guaria Agricultural and
Realty Development Corporation,G.R. No.
160758. January 15, 2014
Common carrier; cargoes while being
unloaded generally remain under the custody
of the carrier. It is settled in maritime law
jurisprudence that cargoes while being
unloaded generally remain under the custody
of the carrier. As hereinbefore found by the
RTC and affirmed by the CA based on the
evidence presented, the goods were damaged
even before they were turned over to ATI.
Such damage was even compounded by the
negligent acts of petitioner and ATI which both
mishandled the goods during the discharging
operations. Eastern Shipping Lines, Inc. v.
BPI/MS Insurance Corp., and Mitsui
Sumitomo Insurance Co., Ltd.,G.R. No.
193986, January 15, 2014.
Common carrier; extraordinary
diligence.Common carriers, from the nature of
their business and for reasons of public policy,
are bound to observe extraordinary diligence in
the vigilance over the goods transported by
them. Subject to certain exceptions enumerated
under Article 1734 of the Civil Code, common
carriers are responsible for the loss,
destruction, or deterioration of the goods. The
extraordinary responsibility of the common
carrier lasts from the time the goods are

unconditionally placed in the possession of,
and received by the carrier for transportation
until the same are delivered, actually or
constructively, by the carrier to the consignee,
or to the person who has a right to receive
them. Owing to this high degree of diligence
required of them, common carriers, as a
general rule, are presumed to have been at
fault or negligent if the goods they transported
deteriorated or got lost or destroyed. That is,
unless they prove that they exercised
extraordinary diligence in transporting the
goods. In order to avoid responsibility for any
loss or damage, therefore, they have the
burden of proving that they observed such high
level of diligence. Eastern Shipping Lines, Inc.
v. BPI/MS Insurance Corp., and Mitsui
Sumitomo Insurance Co., Ltd.,G.R. No.
193986, January 15, 2014.
Contracts; breach of contract; petitioner is
guilty of breach of contract when it
unjustifiably refused to release respondents
deposit despite demand; liable for damages. In
cases of breach of contract, moral damages
may be recovered only if the defendant acted
fraudulently or in bad faith, or is guilty of
gross negligence amounting to bad faith, or in
wanton disregard of his contractual
obligations.
In this case, a review of the circumstances
surrounding the issuance of the Hold Out
order reveals that petitioner issued the Hold
Out order in bad faith. First of all, the order
was issued without any legal basis. Second,
petitioner did not inform respondents of the
reason for the Hold Out. Third, the order
was issued prior to the filing of the criminal
complaint. Records show that the Hold Out
order was issued on July 31, 2003, while the
criminal complaint was filed only on
September 3, 2003. All these taken together
lead us to conclude that petitioner acted in bad
faith when it breached its contract with
respondents. As we see it then, respondents are
entitled to moral damages. Metropolitan Bank

& Trust Company v. Ana Grace Rosales and
Yo Yuk To, G.R. No. 183204, January 13, 2014.
Contracts; buyer in good faith. It is settled that
a party dealing with a registered land does not
have to inquire beyond the Certificate of Title
in determining the true owner thereof, and in
guarding or protecting his interest, for all that
he has to look into and rely on are the entries
in the Certificate of Title.
Inarguably, Opinion acted in good faith in
dealing with the registered owners of the
properties. He relied on the titles presented to
him, which were confirmed by the Registry of
Deeds to be authentic, issued in accordance
with the law, and without any liens or
encumbrances. Sps. Bernadette and Rodulfo
Vilbar v. Angelito L. Opinion, G.R. No.
176043. January 15, 2014.
Contracts; Doctrine of in pari delicto;
exception. According to Article 1412 (1) of the
Civil Code, the guilty parties to an illegal
contract cannot recover from one another and
are not entitled to an affirmative relief because
they are in pari delicto or in equal fault. The
doctrine of in pari delicto is a universal
doctrine that holds that no action arises, in
equity or at law, from an illegal contract; no
suit can be maintained for its specific
performance, or to recover the property agreed
to be sold or delivered, or the money agreed to
be paid, or damages for its violation; and
where the parties are in pari delicto, no
affirmative relief of any kind will be given to
one against the other.
Nonetheless, the application of the doctrine
of in pari delicto is not always rigid. An
accepted exception arises when its application
contravenes well-established public policy. In
this jurisdiction, public policy has been
defined as that principle of the law which
holds that no subject or citizen can lawfully do
that which has a tendency to be injurious to the
public or against the public good. Domingo
Gonzalo v. John Tarnate, Jr., G.R. No.
160600, January 15, 2014.
Contracts; Hold-out clause; applies only if

there is a valid and existing obligation arising
from any of the sources of obligation
enumerated in Article 1157. Considering that
respondent Rosales is not liable under any of
the five sources of obligation, there was no
legal basis for petitioner to issue the Hold
Out order.
The Hold Out clause applies only if there is
a valid and existing obligation arising from
any of the sources of obligation enumerated in
Article 1157 of the Civil Code, to wit: law,
contracts, quasi-contracts, delict, and quasidelict. In this case, petitioner failed to show
that respondents have an obligation to it under
any law, contract, quasi-contract, delict, or
quasi-delict. And although a criminal case was
filed by petitioner against respondent Rosales,
this is not enough reason for petitioner to issue
a Hold Out order as the case is still pending
and no final judgment of conviction has been
rendered against respondent Rosales. In fact, it
is significant to note that at the time petitioner
issued the Hold Out order, the criminal
complaint had not yet been filed. Thus,
considering that respondent Rosales is not
liable under any of the five sources of
obligation, there was no legal basis for
petitioner to issue the Hold Out
order. Metropolitan Bank & Trust Company v.
Ana Grace Rosales and Yo Yuk To,G.R. No.
183204, January 13, 2014.
Contracts; Mortgage; nature of mortgage. It is
true that loans are often secured by a mortgage
constituted on real or personal property to
protect the creditors interest in case of the
default of the debtor. By its nature, however, a
mortgage remains an accessory contract
dependent on the principal obligation, such
that enforcement of the mortgage contract will
depend on whether or not there has been a
violation of the principal obligation. While a
creditor and a debtor could regulate the order
in which they should comply with their
reciprocal obligations, it is presupposed that in
a loan the lender should perform its obligation

the release of the full loan amount before it
could demand that the borrower repay the
loaned amount. Development Bank of the
Philippines (DBP) v. Guaria Agricultural and
Realty Development Corporation, G.R. No.
160758. January 15, 2014.
Contracts; mortgagee in good faith. Assuming
arguendo that the Gorospes titles to the
subject properties happened to be fraudulent,
public policy considers Opinion to still have
acquired legal title as a mortgagee in good
faith. As held in Cavite Development Bank v.
Spouses Lim:
There is, however, a situation where, despite
the fact that the mortgagor is not the owner of
the mortgaged property, his title being
fraudulent, the mortgage contract and any
foreclosure sale arising therefrom are given
effect by reason of public policy. This is the
doctrine of the mortgagee in good faith based
on the rule that all persons dealing with
property covered by a Torrens Certificate of
Title, as buyers or mortgagees, are not required
to go beyond what appears on the face of the
title. The public interest in upholding the
indefeasibility of a certificate of title, as
evidence of the lawful ownership of the land or
of any encumbrance thereon, protects a buyer
or mortgagee who, in good faith, relied upon
what appears on the face of the certificate of
title.
Sps. Bernadette and Rodulfo Vilbar v. Angelito
L. Opinion, G.R. No. 176043. January 15,
2014.
Sales; proof capacity of seller; difference when
there is a special power of attorney and when
there is none.The strength of the buyers
inquiry on the sellers capacity or legal
authority to sell depends on the proof of
capacity of the seller. If the proof of capacity
consists of a special power of attorney duly
notarized, mere inspection of the face of such
public document already constitutes sufficient
inquiry. If no such special power of attorney is
provided or there is one but there appears to be
flaws in its notarial acknowledgment, mere
inspection of the document will not do; the

buyer must show that his investigation went
beyond the document and into the
circumstances of its execution. The Heirs of
Victorino Sarili, namely, Isabel A. Sarili, et al.
v. Pedro F. Lagrosa, represented in this act by
his Attorney-in-Fact, Lourdes Labios
Mojica, G.R. No. 193517, January 15, 2014.
Contracts; Principle of quantum merit; when
allowed. Case law instructs that under this
principle (quantum meruit), a contractor is
allowed to recover the reasonable value of the
thing or services rendered despite the lack of a
written contract, in order to avoid unjust
enrichment. Quantum meruitmeans that, in an
action for work and labor, payment shall be
made in such amount as the plaintiff
reasonably deserves. The measure of recovery
should relate to the reasonable value of the
services performed because the principle aims
to prevent undue enrichment based on the
equitable postulate that it is unjust for a person
to retain any benefit without paying for
it. Rivelisa Realty, Inc., represented by Ricardo
P. Venturina v. First Sta. Clara Builders
Corporation, represented by Ramon A.
Pangilinan, as President, G.R. No. 189618.
January 15, 2014.
Contracts; rescission; proper when there is
non-performance of obligation. Article 1191.
The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors
should not comply with what is incumbent
upon him. The injured party may choose
between the fulfillment and the rescission of
the obligation, with payment of damages in
either case. He may also seek rescission, even
after he has chosen fulfillment, if the latter
should become impossible. Fil-Estate
Properties, Inc. and Fil-Estate Network, Inc. v.
Spouses Conrado and Maria Victoria
Ronquillo, G.R. No. 185798, January 13, 2014.
Contracts; void contract; effects. Under Article
1409 (1) of the Civil Code, a contract whose
cause, object or purpose is contrary to law is a
void or inexistent contract. As such, a void

contract cannot produce a valid one. To the
same effect is Article 1422 of the Civil Code,
which declares that a contract, which is the
direct result of a previous illegal contract, is
also void and inexistent. Domingo Gonzalo v.
John Tarnate, Jr., G.R. No. 160600, January
15, 2014.
Damages; moral damages; when awarded.
[S]uffice it to say that the dispute over the
subject property had caused respondent serious
anxiety, mental anguish and sleepless nights,
thereby justifying the aforesaid award.
Likewise, since respondent was constrained to
engage the services of counsel to file this suit
and defend his interests, the awards of
attorneys fees and litigation expenses are also
sustained. The Heirs of Victorino Sarili,
namely, Isabel A. Sarili, et al. v. Pedro F.
Lagrosa, represented in this act by his
Attorney-in-Fact, Lourdes Labios Mojica, G.R.
No. 193517, January 15, 2014.
Damages; moral damages; when awarded.
Every person is entitled to the physical
integrity of his body. Although we have long
advocated the view that any physical injury,
like the loss or diminution of the use of any
part of ones body, is not equatable to a
pecuniary loss, and is not susceptible of exact
monetary estimation, civil damages should be
assessed once that integrity has been violated.
The assessment is but an imperfect estimation
of the true value of ones body. The usual
practice is to award moral damages for the
physical injuries sustained. Dr. Encarnacion
C. Lumantas v. Hanz Calapiz, represented by
his parents, Hilario Calapiz, Jr. and Helita
Calapiz, G.R. No. 163753. January 15, 2014.
Foreclosure; premature foreclosure; order of
restoration of possession and payment of
reasonable rentals. Having found and
pronounced that the extrajudicial foreclosure
by DBP was premature, and that the ensuing
foreclosure sale was void and ineffectual, the
Court affirms the order for the restoration of
possession to Guarifia Corporation and the
payment of reasonable rentals for the use of
the resort. The CA properly held that the

premature and invalid foreclosure had unjustly
dispossessed Guarifia Corporation of its
properties. Consequently, the restoration of
possession and the payment of reasonable
rentals were in accordance with Article 561 of
the Civil Code, which expressly states that one
who recovers, according to law, possession
unjustly lost shall be deemed for all purposes
which may redound to his benefit to have
enjoyed it without interruption. Development
Bank of the Philippines (DBP) v. Guaria
Agricultural and Realty Development
Corporation, G.R. No. 160758. January 15,
2014.
Foreclosure; purchaser in foreclosure sale may
take possession of the property even before the
expiration of the redemption period. A writ of
possession is a writ of execution employed to
enforce a judgment to recover the possession
of land. It commands the sheriff to enter the
land and give possession of it to the person
entitled under the judgment. It may be issued
in case of an extrajudicial foreclosure of a real
estate mortgage under Section 7 of Act No.
3135, as amended by Act No. 4118.
Under said provision, the writ of possession
may be issued to the purchaser in a foreclosure
sale either within the one-year redemption
period upon the filing of a bond, or after the
lapse of the redemption period, without need
of a bond.
We have consistently held that the duty of the
trial court to grant a writ of possession is
ministerial. Such writ issues as a matter of
course upon the filing of the proper motion and
the approval of the corresponding bond. No
discretion is left to the trial court. Any question
regarding the regularity and validity of the
sale, as well as the consequent cancellation of
the writ, is to be determined in a subsequent
proceeding as outlined in Section 8 of Act No.
3135. Such question cannot be raised to
oppose the issuance of the writ, since the
proceeding is ex parte. The recourse is
available even before the expiration of the

redemption period provided by law and the
Rules of Court. LZK Holdings and
Development Corporation v. Planters
Development Bank, G.R. No. 187973, January
20, 2014.
Interest; legal interest; interest rate pegged at
6% regardless of the source of obligation. The
resulting modification of the award of legal
interest is, also, in line with our recent ruling
in Nacar v. Gallery Frames, embodying the
amendment introduced by the Bangko Sentral
ng Pilipinas Monetary Board in BSP-MB
Circular No. 799 which pegged the interest
rate at 6% regardless of the source of
obligation.Fil-Estate Properties, Inc. and FilEstate Network, Inc. v. Spouses Conrado and
Maria Victoria Ronquillo, G.R. No. 185798,
January 13, 2014.
Interest; legal interest; proper rate. In Eastern
Shipping, it was observed that the
commencement of when the legal interest
should start to run varies depending on the
factual circumstances obtaining in each case.
As a rule of thumb, it was suggested that
where the demand is established with
reasonable certainty, the interest shall begin to
run from the time the claim is made judicially
or extrajudicially (Art. 1169, Civil Code) but
when such certainty cannot be so reasonably
established at the time the demand is made, the
interest shall begin to run only from the date
the judgment of the court is made (at which
time the quantification of damages may be
deemed to have been reasonably ascertained).
During the pendency of this case, however, the
Monetary Board issued Resolution No. 796
dated May 16, 2013, stating that in the absence
of express stipulation between the parties, the
rate of interest in loan or forbearance of any
money, goods or credits and the rate allowed in
judgments shall be 6% per annum. Said
Resolution is embodied in Bangko Sentral ng
Pilipinas Circular No. 799, Series of2013,
which took effect on July 1, 2013. Hence, the
12% annual interest mentioned above shall
apply only up to June 30, 2013. Thereafter, or
starting July 1, 2013, the applicable rate of

interest for both the debited amount and
undocumented withdrawals shall be 6% per
annum compounded annually, until fully
paid. Land Bank of the Philippines v.
Emmanuel C. Oate, G.R. No. 192371,
January 15, 2014.
Interest; legal interest; rate. The legal interest
rate to be imposed from February 11, 1993, the
time of the extrajudicial demand by
respondent, should be 6% per annum in the
absence of any stipulation in writing in
accordance with Article 2209 of the Civil
Code, which provides:
Article 2209. If the obligation consists in the
payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages,
there being no stipulation to the contrary, shall
be the payment of the interest agreed upon,
and in the absence of stipulation, the legal
interest, which is six per cent per annum. First
United Constructors Corporation, et al. v.
Bayanihan Automotive Corporation, G.R. No.
164985, January 15, 2014.
Interest; legal interest; when awarded. Many
years have gone by since Hanz suffered the
injury. Interest of 6% per annum should then
be imposed on the award as a sincere means of
adjusting the value of the award to a level that
is not only reasonable but just and
commensurate. Unless we make the
adjustment in the permissible manner by
prescribing legal interest on the award, his
sufferings would be unduly compounded. For
that purpose, the reckoning of interest should
be from the filing of the criminal information
on April 1 7, 1997, the making of the judicial
demand for the liability of the petitioner. Dr.
Encarnacion C. Lumantas v. Hanz Calapiz,
represented by his parents, Hilario Calapiz, Jr.
and Helita Calapiz, G.R. No. 163753. January
15, 2014.
Obligations; default; borrower would not be in
default without demand to pay. Considering
that it had yet to release the entire proceeds of
the loan, DBP could not yet make an effective

demand for payment upon Guaria
Corporation to perform its obligation under the
loan. According toDevelopment Bank of the
Philippines v. Licuanan, it would only be when
a demand to pay had been made and was
subsequently refused that a borrower could be
considered in default, and the lender could
obtain the right to collect the debt or to
foreclose the mortgage. Development Bank of
the Philippines (DBP) v. Guaria Agricultural
and Realty Development Corporation, G.R.
No. 160758. January 15, 2014.
Obligations; extinguishment of obligations;
compensation; requisites. Compensation is
defined as a mode of extinguishing obligations
whereby two persons in their capacity as
principals are mutual debtors and creditors of
each other with respect to equally liquidated
and demandable obligations to which no
retention or controversy has been timely
commenced and communicated by third
parties.53 The requisites therefor are provided
under Article 1279 of the Civil Code which
reads as follows:
Art. 1279. In order that compensation may be
proper, it is necessary:
(1) That each one of the obligors be bound
principally, and that he be at the same time a
principal creditor of the other;
(2) That 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) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any
retention or controversy, commenced by third
persons and communicated in due time to the
debtor.
The rule on legal compensation is stated in
Article 1290 of the Civil Code which provides
that [w]hen all the requisites mentioned in
Article 1279 are present, compensation takes
effect by operation of law, and extinguishes
both debts to the concurrent amount, even
though the creditors and debtors are not aware
of the compensation. Union Bank of the

Philippines v. Development Bank of the
Philippines, G.R. No. 191555, January 20,
2014.
Obligations; legal compensation; requisites.
Legal compensation takes place when the
requirements set forth in Article 1278 and
Article 1279 of the Civil Code are present, to
wit:
Article 1278. Compensation shall take place
when two persons, in their own right, are
creditors and debtors of each other.
Article 1279. In order that compensation may
be proper, it is necessary:
(1) That each of the obligors be bound
(2) That both debts consists in a sum of money,
debtor.
First United Constructors Corporation, et al.
v. Bayanihan Automotive Corporation, G.R.
No. 164985, January 15, 2014.
Property; builder in good faith; concept of. To
be deemed a builder in good faith, it is
essential that a person asserts title to the land
on which he builds, i.e. , that he be a possessor
in concept of owner, and that he be unaware
that there exists in his title or mode of
acquisition any flaw which invalidates it. Good
faith is an intangible and abstract quality with
no technical meaning or statutory definition,
and it encompasses, among other things, an
honest belief, the absence of malice and the
absence of design to defraud or to seek an
unconscionable advantage. It implies honesty
of intention, and freedom from knowledge of
circumstances which ought to put the holder
upon inquiry. The Heirs of Victorino Sarili,

namely, Isabel A. Sarili, et al. v. Pedro F.
Lagrosa, represented in this act by his
No. 193517, January 15, 2014.
Property; ownership; accession; accessory
follows the principal; exception. While it is a
hornbook doctrine that the accessory follows
the principal, that is, the ownership of the
property gives the right by accession to
everything which is produced thereby, or
which is incorporated or attached thereto,
either naturally or artificially, such rule is not
without exception. In cases where there is a
clear and convincing evidence to prove that the
principal and the accessory are not owned by
one and the same person or entity, the
presumption shall not be applied and the actual
ownership shall be upheld. In a number of
cases, we recognized the separate ownership of
the land from the building and brushed aside
the rule that accessory follows the
principal. Magdalena T. Villasi v. Filomena
Garcia, substituted by his heirs, namely,
Ermelinda H. Garcia, et al., G.R. No. 190106,
January 15, 2014.
Quasi-contracts; Unjust enrichment. Unjust
enrichment exists, according to Hulst v. PR
Builders, Inc., when a person unjustly retains
a benefit at 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 prevention
of unjust enrichment is a recognized public
policy of the State, for Article 22 of the Civil
Code explicitly provides that [e]very 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. Domingo Gonzalo v. John
Tarnate, Jr., G.R. No. 160600, January 15,
2014.
Sales; Article 1599 of the Civil Code;
recoupment; definition of; when entitled.
Recoupment (reconvencion) is the act of
rebating or recouping a part of a claim upon
which one is sued by means of a legal or

equitable right resulting from a counterclaim
arising out of the same transaction. It is the
setting up of a demand arising from the same
transaction as the plaintiffs claim, to abate or
reduce that claim.
The legal basis for recoupment by the buyer is
the first paragraph of Article 1599 of the Civil
Code, viz:
Article 1599. Where there is a breach of
warranty by the seller, the buyer may, at his
election:
(1) Accept or keep the goods and set up against
the seller, the breach of warranty by way of
recoupment in diminution or extinction of the
price;
xxxx
First United Constructors Corporation, et al.
v. Bayanihan Automotive Corporation, G.R.
No. 164985, January 15, 2014.
Sales; sale of a piece of land or any interest
therein is through an agent; authority of the
agent shall be in writing; otherwise, the sale
shall be void. The due execution and
authenticity of the subject SPA are of great
significance in determining the validity of the
sale entered into by Victorino and Ramon since
the latter only claims to be the agent of the
purported seller (i.e., respondent). Article 1874
of the Civil Code provides that [w]hen a sale
of a piece of land or any interest therein is
through an agent, the authority of the latter
shall be in writing; otherwise, the sale shall be
void. In other words, if the subject SPA was
not proven to be duly executed and authentic,
then it cannot be said that the foregoing
requirement had been complied with; hence,
the sale would be void. The Heirs of Victorino
Sarili, namely, Isabel A. Sarili, et al. v. Pedro
F. Lagrosa, represented in this act by his
No. 193517, January 15, 2014.
SPECIAL LAWS
Section 23 of Presidential Decree No. 957;
non-forfeiture of payments. Section 23 of
Presidential Decree No. 957, the rule

governing the sale of condominiums, which
provides: No installment payment made by a
buyer in a subdivision or condominium project
for the lot or unit he contracted to buy shall be
forfeited in favor of the owner or developer
when the buyer, after due notice to the owner
or developer, desists from further payment due
to the failure of the owner or developer to
develop the subdivision or condominium
project according to the approved plans and
within the time limit for complying with the
same. Such buyer may, at his option, be
reimbursed the total amount paid including
amortization interests but excluding
delinquency interests, with interest thereon at
the legal rate. Fil-Estate Properties, Inc. and
Fil-Estate Network, Inc. v. Spouses Conrado
and Maria Victoria Ronquillo,G.R. No.
185798, January 13, 2014.
Section 6 of Presidential Decree No. 1594;
right of assignment and subcontract. There is
no question that every contractor is prohibited
from subcontracting with or assigning to
another person any contract or project that he
has with the DPWH unless the DPWH
Secretary has approved the subcontracting or
assignment. This is pursuant to Section 6 of
Presidential Decree No. 1594, which provides
that [T]he contractor shall not assign, transfer,
pledge, subcontract or make any other
disposition of the contract or any part or
interest therein except with the approval of the
Minister of Public Works, Transportation and
Communications, the Minister of Public
Highways, or the Minister of Energy, as the
case may be. Approval of the subcontract shall
not relieve the main contractor from any
liability or obligation under his contract with
the Government nor shall it create any
contractual relation between the subcontractor
and the Government. Domingo Gonzalo v.
John Tarnate, Jr., G.R. No. 160600, January
15, 2014.
Family law; conjugal property; all property of
the marriage is presumed to be conjugal,
unless it is shown that it is owned exclusively
by the husband or the wife. There is a

presumption that all property of the marriage is
conjugal, unless it is shown that it is owned
exclusively by the husband or the wife; this
presumption is not overcome by the fact that
the property is registered in the name of the
husband or the wife alone; and the consent of
both spouses is required before a conjugal
property may be mortgaged. However, we find
it iniquitous to apply the foregoing
presumption especially since the nature of the
mortgaged property was never raised as an
issue before the RTC, the CA, and even before
this Court. In fact, petitioner never alleged in
his Complaint that the said property was
conjugal in nature. Hence, respondent had no
opportunity to rebut the said
presumption. Francisco Lim v. Equitable PCI
Bank, now known as Banco De Oro Unibank,
Inc., G.R. No. 183918. January 15, 2014.
Family law; exclusive property of spouse;
when the property is registered in the name of
a spouse only and there is no showing as to
when the property was acquired by said
spouse, this is an indication that the property
belongs exclusively to said spouse. Article 160
of the Civil Code provides as follows: All
property of the marriage is presumed to belong
to the conjugal partnership, unless it be proved
that it pertains exclusively to the husband or to
the wife.
The presumption applies to property acquired
during the lifetime of the husband and wife. In
this case, it appears on the face of the title that
the properties were acquired by Donata
Montemayor when she was already a widow.
When the property is registered in the name of
a spouse only and there is no showing as to
when the property was acquired by said
spouse, this is an indication that the property
belongs exclusively to said spouse. And this
presumption under Article 160 of the Civil
Code cannot prevail when the title is in the
name of only one spouse and the rights of
innocent third parties are involved. Francisco
Lim v. Equitable PCI Bank, now known as

Banco De Oro Unibank, Inc., G.R. No.
183918. January 15, 2014.
Torrens system; certificate of title; a certificate
of title serves as evidence of an indefeasible
and incontrovertible title to the property in
favor of the person whose name appears
therein. [A] certificate of title serves as
evidence of an indefeasible and
incontrovertible title to the property in favor of
the person whose name appears therein.
Having no certificate of title issued in their
names, spouses Vilbar have no indefeasible
and incontrovertible title over Lot 20 to
support their claim. Further, it is an established
rule that registration is the operative act
which gives validity to the transfer or creates a
lien upon the land. Any buyer or mortgagee
of realty covered by a Torrens certificate of
title x x x is charged with notice only of such
burdens and claims as are annotated on the
title. Failing to annotate the deed for the
eventual transfer of title over Lot 20 in their
names, the spouses Vilbar cannot claim a
greater right over Opinion, who acquired the
property with clean title in good faith and
registered the same in his name by going
through the legally required procedure. Sps.
Bernadette and Rodulfo Vilbar v. Angelito L.
Opinion, G.R. No. 176043. January 15, 2014.
Torrens system; Torrens title; a person dealing
with a registered land has a right to rely upon
the face of the Torrens certificate of title;
exceptions. The well-known rule in this
jurisdiction is that a person dealing with a
registered land has a right to rely upon the face
of the torrens certificate of title and to dispense
with the need of inquiring further, except when
the party concerned has actual knowledge of
facts and circumstances that would impel a
reasonably cautious man to make such inquiry.
A torrens title concludes all controversy over
ownership of the land covered by a final
decree of registration. Once the title is
registered the owner may rest assured without
the necessity of stepping into the portals of the
court or sitting in the mirador de su casa to
avoid the possibility of losing his

land. Francisco Lim v. Equitable PCI Bank,
now known as Banco De Oro Unibank,
Inc., G.R. No. 183918. January 15, 2014.
Torrens title; a person dealing with a registered
land has a right to rely upon the face of the
Torrens certificate of title; exception in the
case of a person who buys from a person who
is not the registered owner.The general rule is
that every person dealing with registered land
may safely rely on the correctness of the
certificate of title issued therefor and the law
will in no way oblige him to go beyond the
certificate to determine the condition of the
property. Where there is nothing in the
certificate of title to indicate any cloud or vice
in the ownership of the property, or any
encumbrance thereon, the purchaser is not
required to explore further than what the
Torrens Title upon its face indicates in quest
for any hidden defects or inchoate right that
may subsequently defeat his right thereto.
However, a higher degree of prudence is
required from one who buys from a person
who is not the registered owner, although the
land object of the transaction is registered. In
such a case, the buyer is expected to examine
not only the certificate of title but all factual
circumstances necessary for him to determine
if there are any flaws in the title of the
transferor. The buyer also has the duty to
ascertain the identity of the person with whom
he is dealing with and the latters legal
authority to convey the property. The Heirs of
Torrens system;even if the procurement of a
certificate of title was tainted with fraud and
misrepresentation, such defective title may be
the source of a completely legal and valid title
in the hands of an innocent purchaser for
value. It is well-settled that even if the
procurement of a certificate of title was tainted
with fraud and misrepresentation, such

defective title may be the source of a
completely legal and valid title in the hands of
an innocent purchaser for value. Where
innocent third persons, relying on the
correctness of the certificate of title thus
issued, acquire rights over the property, the
court cannot disregard such rights and order
the total cancellation of the certificate. The
effect of such an outright cancellation would
be to impair public confidence in the
certificate of title, for everyone dealing with
property registered under the Torrens system
would have to inquire in every instance
whether the title has been regularly or
irregularly issued. This is contrary to the
evident purpose of the law. The Heirs of
Torrens system; levy on attachment, duly
registered, takes preference over a prior
unregistered sale.[T]he settled rule that levy
on attachment, duly registered, takes
preference over a prior unregistered sale. This
result is a necessary consequence of the fact
that the [properties] involved [were] duly
covered by the Torrens system which works
under the fundamental principle that
registration is the operative act which gives
validity to the transfer or creates a lien upon
the land. Sps. Bernadette and Rodulfo Vilbar
v. Angelito L. Opinion, G.R. No. 176043.
January 15, 2014.
December 2013 rulings of the Supreme Court
Civil Code
Contracts; concept of contracts. A contract is
what the law defines it to be, taking into
consideration its essential elements, and not
what the contracting parties call it. The real
nature of a contract may be determined from
the express terms of the written agreement and
from the contemporaneous and subsequent acts
of the contracting parties. However, in the
construction or interpretation of an instrument,
the intention of the parties is primordial and is

to be pursued. The denomination or title given
by the parties in their contract is not conclusive
of the nature of its contents. ACE Foods, Inc.
v. Micro Pacific Technologies Co., Ltd., G.R.
No. 200602, December 11, 2013.
Contracts; contract of loan; interest stipulated;
reduced for being iniquitous and
unconscionable. Parties to a loan contract have
wide latitude to stipulate on any interest rate in
view of the Central Bank Circular No. 905 s.
1982 which suspended the Usury Law ceiling
on interest effective January 1, 1983. It is,
however, worth stressing that interest rates
whenever unconscionable may still be declared
illegal. There is nothing in the circular which
grants lenders carte blanche authority to raise
interest rates to levels which will either
enslave their borrowers or lead to a
hemorrhaging of their assets.InMenchavez v.
Bermudez, the interest rate of 5% per month,
which when summed up would reach 60% per
annum, is null and void for being excessive,
iniquitous, unconscionable and exorbitant,
contrary to morals, and the law. Florpina
Benvidez v. Nestor Salvador, G.R. No. 173331,
December 11, 2013.
Damages; award of costs; when entitled. Costs
shall be allowed to the prevailing party as a
matter of course unless otherwise provided in
the Rules of Court. The costs Ramirez may
recover are those stated in Section 10, Rule
142 of the Rules of Court. For instance,
Ramirez may recover the lawful fees he paid in
docketing his action for annulment of sale
before the trial court. The court adds thereto
the amount of P3,530 or the amount of docket
and lawful fees paid by Ramirez for filing this
petition before this Court. 35(35) The court
deleted the award of moral and exemplary
damages; hence, the restriction under Section
7, Rule 142 of the Rules of Courtwould have
prevented Ramirez to recover any cost of suit.
But the court certifies, in accordance with said
Section 7, that Ramirezs action for annulment
of sale involved a substantial and important

right such that he is entitled to an award of
costs of suit. Needless to stress, the purpose of
paragraph N of the real estate mortgage is to
apprise the mortgagor, Ramirez, of any action
that the mortgagee-bank might take on the
subject properties, thus according him the
opportunity to safeguard his rights. Jose T.
Ramirez v. The Manila Banking
Corporation, G.R. No. 198800, December 11,
2013.
Damages; exemplary damages; when entitled.
No exemplary damages can be awarded since
there is no basis for the award of moral
damages and there is no award of temperate,
liquidated or compensatory
damages.Exemplary damages are imposed by
way of example for the public good, in
addition to moral, temperate, liquidated or
compensatory damages. Jose T. Ramirez v. The
Manila Banking Corporation, G.R. No.
198800, December 11, 2013.
Damages; moral damages; when entitled.
Nothing supports the trial courts award of
moral damages. There was no testimony of any
physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation,
wounded feelings, moral shock, social
humiliation, and similar injury suffered by
Ramirez. The award of moral damages must be
anchored on a clear showing that Ramirez
actually experienced mental anguish,
besmirched reputation, sleepless nights,
wounded feelings or similar injury. Ramirezs
testimony is also wanting as to the moral
damages he suffered. Jose T. Ramirez v. The
Manila Banking Corporation, G.R. No.
198800, December 11, 2013.
Foreclosure; extrajudicial foreclosure; notice
of extrajudicial foreclosure proceedings not
necessary unless stipulated by the parties.
In Carlos Lim, et al. v. Development Bank of
the Philippines, the court held that unless the
parties stipulate, personal notice to the
mortgagor in extrajudicial foreclosure
proceedings is not necessary because Section 3
of Act No. 3135 only requires the posting of
the notice of sale in three public places and the

publication of that notice in a newspaper of
general circulation. In this case, the parties
stipulated in paragraph N of the real estate
mortgage that all correspondence relative to
the mortgage including notifications of
extrajudicial actions shall be sent to mortgagor
Ramirez at his given address. Respondent had
no choice but to comply with this contractual
provision it has entered into with Ramirez. The
contract is the law between them. Hence, the
court cannot agree with the bank that
paragraph N of the real estate mortgage does
not impose an additional obligation upon it to
provide personal notice of the extrajudicial
foreclosure sale to the mortgagor
Ramirez. Jose T. Ramirez v. The Manila
Banking Corporation, G.R. No. 198800,
December 11, 2013.
Foreclosure of mortgage; proceeds; obligations
covered. The petitioner contends that there was
no excess or surplus that needs to be returned
to the respondent because her other
outstanding obligations and those of her
attorney-in-fact were paid out of the proceeds.
The relevant provision, Section 4 of Rule 68 of
the Rules of Civil Procedure, mandates that:
Section 4. Disposition of proceeds of sale.
The amount realized from the foreclosure sale
of the mortgaged property shall, after
deducting the costs of the sale, be paid to the
person foreclosing the mortgage, and when
there shall be any balance or residue, after
paying off the mortgage debt due, the same
shall be paid to junior encumbrancers in the
order of their priority, to be ascertained by the
court, or if there be no such encumbrancers or
there be a balance or residue after payment to
them, then to the mortgagor or his duly
authorized agent, or to the person entitled to it.
Thus, in the absence of any evidence showing
that the mortgage also covers the other
obligations of the mortgagor, the proceeds
from the sale should not be applied to
them. Philippine Bank of Communication v.

Mary Ann O. Yeung, G.R. No. 179691,
December 4, 2013.
Laches; concept of. Well settled is the rule that
the elements of laches must be proven
positively. Laches is evidentiary in nature, a
fact that cannot be established by mere
allegations in the pleadings and cannot be
resolved in a motion to dismiss. At this stage
therefore, the dismissal of the complaint on the
ground of laches is premature. Those issues
must be resolved at the trial of the case on the
merits, wherein both parties will be given
ample opportunity to prove their respective
claims and defenses. Modesto Sanchez v.
Andrew Sanchez, G.R. No. 187661, December
4, 2013.
Mortgage; redemption period; reckoning of the
period of redemption by the mortgagor or his
successor-in-interest starts from the
registration of the sale in the Register of
Deeds. The reckoning of the period of
redemption by the mortgagor or his successorin-interest starts from the registration of the
sale in the Register of Deeds. Although Section
6 of Act No. 3135, as amended, specifies that
the period of redemption
starts from and after the date of the sale,
jurisprudence has since settled that such period
is more appropriately reckoned from the date
of registration.United Coconut Planters Bank
v. Christopher Lumbo and Milagros
Lumbo, G.R. No. 162757, December 11, 2013.
Obligations; force majeure; concept of force
majeure. Anent petitioners reliance on force
majeure, suffice it to state that Peakstars
breach of its obligations to Metro Concast
arising from the MoA cannot be classified as a
fortuitous event under jurisprudential
formulation.
Fortuitous events by definition are
extraordinary events not foreseeable or
avoidable. It is therefore, not enough that the
event should not have been foreseen or
anticipated, as is commonly believed but it
must be one impossible to foresee or to avoid.
The mere difficulty to foresee the happening is

not impossibility to foresee the same.
To constitute a fortuitous event, the following
elements must concur: (a) the cause of the
unforeseen and unexpected occurrence or of
the failure of the debtor to comply with
obligations must be independent of human
will; (b) it must be impossible to foresee the
event that constitutes the caso fortuito or, if it
can be foreseen, it must be impossible to
avoid; (c) the occurrence must be such as to
render it impossible for the debtor to fulfill
obligations in a normal manner; and, (d) the
obligor must be free from any participation in
the aggravation of the injury or loss. Metro
Concast Steel Corp., Spouses Jose S. Dychiao
and Tiu Oh Yan, et al. v. Allied Bank
2013.
Obligations; modes of extinguishment. Article
1231 of the Civil Code states that obligations
are extinguished either by payment or
performance, the loss of the thing due, the
condonation or remission of the debt, the
confusion or merger of the rights of creditor
and debtor, compensation or novation. Metro
Concast Steel Corp., Spouses Jose S. Dychiao
and Tiu Oh Yan, et al. v. Allied Bank
2013.
Obligations; novation; extinctive novation
distinguished from modificatory novation.To
be sure, novation, in its broad concept, may
either be extinctive or modificatory. It is
extinctive when an old obligation is terminated
by the creation of a new obligation that takes
the place of the former; it is merely
modificatory when the old obligation subsists
to the extent it remains compatible with the
amendatory agreement. In either case,
however, novation is never presumed, and
the animus novandi, whether totally or
partially, must appear by express agreement of
the parties, or by their acts that are too clear
and unequivocal to be mistaken. ACE Foods,

Inc. v. Micro Pacific Technologies Co.,
Ltd., G.R. No. 200602, December 11, 2013.
Property; action for reconveyance; prescriptive
period; exception. The Court likewise takes
note that Paraguyas complaint is likewise in
the nature of an action for reconveyance
because it also prayed for the trial court to
order Sps. Crucillo to surrender ownership
and possession of the properties in question to
[Paraguya], vacating them altogether . . . .
Despite this, Paraguyas complaint remains
dismissible on the same ground because the
prescriptive period for actions for
reconveyance is ten (10) years reckoned from
the date of issuance of the certificate of title,
except when the owner is in possession of the
property, in which case the action for
reconveyance becomes imprescriptible. Laura
F. Paraguya v. Sps. Alma Escurel-Crucillo and
Emeterio Crucillo and the Register of Deeds
of Sorsogon, G.R. No. 200265, December 2,
2013.
Property; possessor in good faith;
reimbursement of necessary and useful
expenses. Dionisio was well aware that this
temporary arrangement may be terminated at
any time. Respondents cannot now refuse to
vacate the property or eventually demand
reimbursement of necessary and useful
expenses under Articles 448 and 546 of the
New Civil Code, because the provisions apply
only to a possessor in good faith, i.e., one who
builds on land with the belief that he is the
owner thereof. Persons who occupy land by
virtue of tolerance of the owners are not
possessors in good faith. Heirs of Cipriano
Trazona, et al. v. Heirs of Dionisio Caada, et
al., G.R. No. 175874, December 11, 2013.
Property; Spanish titles can no longer be used
as evidence of ownership after six (6) months
from the effectivity of PD 892. Based on
Section 1 of PD 892, entitled Discontinuance
of the Spanish Mortgage System of
Registration and of the Use of Spanish Titles
as Evidence in Land Registration
Proceedings, Spanish titles can no longer be
used as evidence of ownership after six (6)

months from the effectivity of the law, or
starting August 16, 1976. Laura F. Paraguya v.
Sps. Alma Escurel-Crucillo and Emeterio
Crucillo and the Register of Deeds of
Sorsogon, G.R. No. 200265, December 2,
2013.
Property; waiver of interest; when absolute and
unconditional.Lucila did not say, to put
everything in proper order, I promise to waive
my right to the property, which is a future
undertaking, one that is demandable only when
everything is put in proper order. But she
instead said, to put everything in proper order,
I hereby waive etc. The phrase hereby
waive means that Lucila was, by executing
the affidavit, already waiving her right to the
property, irreversibly divesting herself of her
existing right to the same. After he and his coowner Emelinda accepted the donation, Isabelo
became the owner of half of the subject
property having the right to demand its
partition.Isabelo C. Dela Cruz v. Lucila C.
Dela Cruz, G.R. No. 192383, December 4,
2013.
Quasi-contract; unjust enrichment; concept
of; elements.In light of the foregoing, it is
unfair to deny petitioner a refund of all his
contributions to the car plan. Under Article 22
of the Civil Code, [e]very person who
through an act of performance by another, or
any other means, acquires or comes into
the same to him. Antonio Locsin II v. Mekeni
Food Corporation, G.R. No. 192105,
December 9, 2013.
Quasi-contract; concept of quasi-contract.
Article 2142 of the same Code likewise
clarifies that there are certain lawful, voluntary
and unilateral acts which give rise to the
juridical relation of quasi-contract, to the end
that no one shall be unjustly enriched or
benefited at the expense of another. In the
absence of specific terms and conditions
governing the car plan arrangement between

the petitioner and Mekeni, a quasi-contractual
relation was created between them. Antonio
Locsin II v. Mekeni Food Corporation, G.R.
No. 192105, December 9, 2013.
Quasi-delict; elements. Article 2176 of the
Civil Code provides that [w]hoever by act or
omission causes damage to another, there
being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if
there is no pre-existing contractual relation
between the parties, is a quasi-delict. Under
this provision, the elements necessary to
establish a quasi-delict case are: (1) damages
to the plaintiff; (2) negligence, by act or
omission, of the defendant or by some person
for whose acts the defendant must respond,
was guilty; and (3) the connection of cause and
effect between such negligence and the
damages. These elements show that the source
of obligation in a quasi-delict case is the
breach or omission of mutual duties that
civilized society imposes upon its members, or
which arise from non-contractual relations of
certain members of society to others. Dra.
Leila A. Dela Llana v. Rebecca Biong, doing
business under the name and style of Pongkay
Trading, G.R. No. 182356, December 4, 2013.
Quasi-delict; quantum of proof; preponderance
of evidence. Based on these requisites, Dra.
dela Llana must first establish by
preponderance of evidence the three elements
of quasi-delict before we determine Rebeccas
liability as Joels employer. She should show
the chain of causation between Joels reckless
driving and her whiplash injury. Only after she
has laid this foundation can the presumption
that Rebecca did not exercise the diligence
of a good father of a family in the selection
and supervision of Joel
arise.Once negligence, the damages and the
proximate causation are established, this Court
can then proceed with the application and the
interpretation of the fifth paragraph of Article
2180 of the Civil Code. Under Article 2176 of
the Civil Code, in relation with the fifth
paragraph of Article 2180, an action
predicated on an employees act or omission

may be instituted against the employer who is
held liable for the negligent act or omission
committed by his employee.The rationale for
these graduated levels of analyses is that it is
essentially the wrongful or negligent act or
omission itself which creates the vinculum
juris in extra-contractual obligations. Dra.
Leila A. Dela Llana v. Rebecca Biong, doing
business under the name and style of Pongkay
Trading, G.R. No. 182356, December 4, 2013.
Sales; car plan benefit; contributions as
installment payments distinguished from rental
payments. From the evidence on record, it is
seen that the Mekeni car plan offered to
petitioner was subject to no other term or
condition than that Mekeni shall cover onehalf of its value, and petitioner shall in turn
pay the other half through deductions from his
monthly salary. Mekeni has not shown, by
documentary evidence or otherwise, that there
are other terms and conditions governing its
car plan agreement with petitioner. There is no
evidence to suggest that if petitioner failed to
completely cover one-half of the cost of the
vehicle, then all the deductions from his salary
going to the cost of the vehicle will be treated
as rentals for his use thereof while working
with Mekeni, and shall not be refunded.
Indeed, there is no such stipulation or
arrangement between them. Thus, the CAs
reliance on Elisco Tool is without basis, and its
conclusions arrived at in the questioned
decision are manifestly mistaken. To repeat
what was said in Elisco Tool, [P]etitioner
does not deny that private respondent Rolando
Lantan acquired the vehicle in question under
a car plan for executives of the Elizalde group
of companies. Under a typical car plan, the
company advances the purchase price of a car
to be paid back by the employee through
monthly deductions from his salary. The
company retains ownership of the motor
vehicle until it shall have been fully paid for.
However, retention of registration of the car in
the companys name is only a form of a lien on

the vehicle in the event that the employee
would abscond before he has fully paid for it.
There are also stipulations in car plan
agreements to the effect that should the
employment of the employee concerned be
terminated before all installments are fully
paid, the vehicle will be taken by the employer
and all installments paid shall be considered
rentals per agreement.
It was made clear in this pronouncement that
installments made on the car plan may be
treated as rentals only when there is an express
stipulation in the car plan agreement to such
effect. It was therefore patent error for the
appellate court to assume that, even in the
absence of express stipulation, petitioners
payments. Antonio Locsin II v. Mekeni Food
2013.
Sales; contract of sale; elements; distinguished
from contract to sell. Corollary thereto, a
contract of sale is classified as a consensual
contract, which means that the sale is perfected
by mere consent. No particular form is
required for its validity. Upon perfection of the
contract, the parties may reciprocally demand
performance, i.e., the vendee may compel
transfer of ownership of the object of the sale,
and the vendor may require the vendee to pay
the thing sold.
In contrast, a contract to sell is defined as a
bilateral contract whereby the prospective
seller, while expressly reserving the ownership
of the property despite delivery thereof to the
prospective buyer, binds himself to sell the
property exclusively to the prospective buyer
upon fulfillment of the condition agreed
upon, i.e., the full payment of the purchase
price. A contract to sell may not even be
considered as a conditional contract of sale
where the seller may likewise reserve title to
the property subject of the sale until the
fulfillment of a suspensive condition, because
in a conditional contract of sale, the first
element of consent is present, although it is
conditioned upon the happening of a
contingent event which may or may not

occur. ACE Foods, Inc. v. Micro Pacific
Technologies Co., Ltd., G.R. No. 200602,
December 11, 2013.
Sales; contract to sell; concept of.Verily, in a
contract to sell, the prospective seller binds
himself to sell the property subject of the
agreement exclusively to the prospective buyer
upon fulfillment of the condition agreed upon
which is the full payment of the purchase price
but reserving to himself the ownership of the
subject property despite delivery thereof to the
prospective buyer.The full payment of the
purchase price in a contract to sell is a
suspensive condition, the non-fulfillment of
which prevents the prospective sellers
obligation to convey title from becoming
effective, as in this case.Optimum
Development Bank v. Spouses Benigno v.
Jovellanos and Lourdes R. Jovellanos, G.R.
No. 189145, December 4, 2013.
Sales; contract to sell; real property in
installments; covered by Realty Installment
Buyer Protection Act. Further, it is significant
to note that given that the Contract to Sell in
this case is one which has for its object real
property to be sold on an installment basis, the
said contract is especially governed by and
thus, must be examined under the provisions of
RA 6552, or the Realty Installment Buyer
Protection Act, which provides for the rights
of the buyer in case of his default in the
payment of succeeding installments. Optimum
Development Bank v. Spouses Benigno v.
Jovellanos and Lourdes R. Jovellanos, G.R.
No. 189145, December 4, 2013.
SPECIAL LAWS
Property Registration Decree; alienable lands
of public domain; proof of; to prove that the
land subject of an application for registration is
alienable, an applicant must establish the
existence of a positive act of the Government.
The burden of proof in overcoming the
presumption of State ownership of lands of the
public domain is on the person applying for
registration, or in this case, for homestead

patent. The applicant must show that the land
disposable. It must be stressed that
incontrovertible evidence must be presented to
establish that the land subject of the
application is alienable or disposable.
As the court pronounced in Republic of the
Phils. v. Tri-Plus Corporation, to prove that
the land subject of an application for
registration is alienable, an applicant must
Government such as a presidential
proclamation or an executive order, an
administrative action, investigation reports of
Bureau of Lands investigators, and a
legislative act or statute. The applicant may
also secure a certification from the
Government that the lands applied for are
alienable and disposable. Republic of the
Philippines-Bureau of Forest Development v.
Vicente Roxas, et al./Provident Tree Farms,
Inc. v. Vicente Roxas, et al., G.R. Nos.
157988/160640, December 11, 2013.
Property Registration Decree; estoppel; the
principle of estoppel does not operate against
the Government for the act of its agents.
Neither can respondent Roxas successfully
invoke the doctrine of estoppel against
petitioner Republic. While it is true that
respondent Roxas was granted Homestead
Patent No. 111598 and OCT No. P-5885 only
after undergoing appropriate administrative
proceedings, the Government is not now
estopped from questioning the validity of said
homestead patent and certificate of title. It is,
after all, hornbook law that the principle of
estoppel does not operate against the
Government for the act of its agents. And
while there may be circumstances when
equitable estoppel was applied against public
authorities, i.e., when the Government did not
undertake any act to contest the title for an
unreasonable length of time and the lot was
already alienated to innocent buyers for value,
such are not present in this case. More
importantly, we cannot use the equitable
principle of estoppel to defeat the

law. Republic of the Philippines-Bureau of
Forest Development v. Vicente Roxas, et
al./Provident Tree Farms, Inc. v. Vicente
Roxas, et al., G.R. Nos. 157988/160640,
December 11, 2013.
Property Registration Decree; homestead
patent; once registered, the certificate of title
issued by virtue of said patent has the force
and effect of a Torrens title issued under said
registration laws; provided that the land
covered by said certificate is a disposable
public land within the contemplation of the
Public Land Law.It is true that once a
homestead patent granted in accordance with
the Public Land Act is registered pursuant to
Act 496, otherwise known as The Land
Registration Act, or Presidential Decree No.
1529, otherwise known as The Property
Registration Decree, the certificate of title
issued by virtue of said patent has the force
and effect of a Torrens title issued under said
registration laws.We expounded in Ybaez v.
Intermediate Appellate Court that:
The certificate of title serves as evidence of an
indefeasible title to the property in favor of the
person whose name appears therein. After the
expiration of the one (1) year period from the
issuance of the decree of registration upon
which it is based, it becomes incontrovertible.
The settled rule is that a decree of registration
and the certificate of title issued pursuant
thereto may be attacked on the ground of
actual fraud within one (1) year from the date
of its entry and such an attack must be direct
and not by a collateral proceeding. The validity
of the certificate of title in this regard can be
threshed out only in an action expressly filed
for the purpose.
It must be emphasized that a certificate of title
issued under an administrative proceeding
pursuant to a homestead patent, as in the
instant case, is as indefeasible as a certificate
of title issued under a judicial registration
proceeding, provided the land covered by said
certificate is a disposable public land within

the contemplation of the Public Land
Law. Republic of the Philippines-Bureau of
Forest Development v. Vicente Roxas, et
al./Provident Tree Farms, Inc. v. Vicente
Roxas, et al., G.R. Nos. 157988/160640,
December 11, 2013.
Property Registration Decree; reversion; nature
of; grounds. We do not find evidence
indicating that respondent Roxas committed
fraud when he applied for homestead patent
over the subject property. It does not appear
that he knowingly and intentionally
misrepresented in his application that the
subject property was alienable and disposable
agricultural land. Nonetheless, we recognized
inRepublic of the Phils. v. Mangotara that
there are instances when we granted reversion
for reasons other than fraud:
Reversion is an action where the ultimate relief
sought is to revert the land back to the
government under the Regalian doctrine.
Considering that the land subject of the action
originated from a grant by the government, its
cancellation is a matter between the grantor
and the grantee. In Estate of the Late Jesus S.
Yujuico v. Republic (Yujuico case), reversion
was defined as an action which seeks to restore
public land fraudulently awarded and disposed
of to private individuals or corporations to the
mass of public domain. It bears to point out,
though, that the Court also allowed the resort
by the Government to actions for reversion to
cancel titles that were void for reasons other
than fraud, i.e., violation by the grantee of a
patent of the conditions imposed by law; and
lack of jurisdiction of the Director of Lands to
grant a patent covering inalienable forest land
or portion of a river, even when such grant was
made through mere oversight. In Republic v.
Guerrero, the Court gave a more general
statement that the remedy of reversion can be
availed of only in cases of fraudulent or
unlawful inclusion of the land in patents or
certificates of title. Republic of the
Philippines-Bureau of Forest Development v.
Vicente Roxas, et al./Provident Tree Farms,
Inc. v. Vicente Roxas, et al., G.R. Nos.

157988/160640, December 11, 2013.
Property Registration Decree; Torrens
certificate of title is not conclusive proof of
ownership. It is an established rule that a
Torrens certificate of title is not conclusive
proof of ownership. Verily, a party may seek
its annulment on the basis of fraud or
misrepresentation. However, such action must
be seasonably filed, else the same would be
barred. Laura F. Paraguya v. Sps. Alma
Escurel-Crucillo and Emeterio Crucillo and
the Register of Deeds of Sorsogon, G.R. No.
200265, December 2, 2013.
Property Registration Decree; Torrens
certificate of title is not conclusive proof of
ownership becomes incontrovertible and
indefeasible after one (1) year from the date of
its entry. In this relation, Section 32 of PD
1529 provides that the period to contest a
decree of registration shall be one (1) year
from the date of its entry and that, after the
lapse of the said period, the Torrens certificate
of title issued thereon becomes
incontrovertible and indefeasible, viz.:
Sec. 32. Review of decree of registration;
Innocent purchaser for value. The decree of
registration shall not be reopened or revised by
reason of absence, minority, or other disability
of any person adversely affected thereby, nor
by any proceeding in any court for reversing
judgments, subject, however, to the right of
any person, including the government and the
branches thereof, deprived of land or of any
estate or interest therein by such adjudication
or confirmation of title obtained by actual
fraud, to file in the proper Court of First
Instance a petition for reopening and review of
the decree of registration not later than one
year from and after the date of the entry of
such decree of registration, but in no case shall
such petition be entertained by the court where
an innocent purchaser for value has acquired
the land or an interest therein, whose rights
may be prejudiced. Whenever the phrase
innocent purchaser for value or an

equivalent phrase occurs in this Decree, it shall
be deemed to include an innocent lessee,
mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year,
the decree of registration and the certificate of
title issued shall become incontrovertible. Any
person aggrieved by such decree of registration
in any case may pursue his remedy by action
for damages against the applicant or any other
persons responsible for the fraud. (Emphases
and underscoring supplied) Laura F. Paraguya
v. Sps. Alma Escurel-Crucillo and Emeterio
Crucillo and the Register of Deeds of
Sorsogon, G.R. No. 200265, December 2,
2013.
November 2013 rulings of the Supreme Court
CIVIL CODE
Contracts; binding effect. It is hornbook
doctrine in the law on contracts that the parties
are bound by the stipulations, clauses, terms
and conditions they have agreed to provided
that such stipulations, clauses, terms and
conditions are not contrary to law, morals,
public order or public policy.Consolidated
Industrial Gases, Inc. v. Alabang Medical
Center, G.R. No. 181983, November 13, 2013.
Contracts; breach of; when moral damages
may be awarded. In Francisco v. Ferrer,this
Court ruled that moral damages may be
awarded on the following bases:
To recover moral damages in an action for
breach of contract, the breach must be palpably
wanton, reckless, malicious, in bad faith,
oppressive or abusive.
Under the provisions of this law, in culpa
contractual or breach of contract, moral
damages may be recovered when the defendant
acted in bad faith or was guilty of gross
negligence (amounting to bad faith) or in
wanton disregard of his contractual obligation
and, exceptionally, when the act of breach of
contract itself is constitutive of tort resulting in
physical injuries.
Moral damages may be awarded in breaches of

contracts where the defendant acted
fraudulently or in bad faith.
Bad faith does not simply connote bad
judgment or negligence, it imports a dishonest
purpose or some moral obliquity and conscious
doing of a wrong, a breach of known duty
through some motive or interest or ill will that
partakes of the nature of fraud.
The person claiming moral damages must
prove the existence of bad faith by clear and
convincing evidence for the law always
presumes good faith. It is not enough that one
merely suffered sleepless nights, mental
anguish, serious anxiety as the result of the
actuations of the other party. Invariably such
action must be shown to have been willfully
done in bad faith or will ill motive. Mere
allegations of besmirched reputation,
embarrassment and sleepless nights are
insufficient to warrant an award for moral
damages. It must be shown that the proximate
cause thereof was the unlawful act or omission
of the [private respondent] petitioners.
An award of moral damages would require
certain conditions to be met, to wit: (1) first,
there must be an injury, whether physical,
mental or psychological, clearly sustained by
the claimant; (2) second, there must be
culpable act or omission factually established;
(3) third, the wrongful act or omission of the
defendant is the proximate cause of the injury
sustained by the claimant; and (4) fourth, the
award of damages is predicated on any of the
cases stated in Article 2219 of the Civil
Code. Alejandro V. Tankeh v. Development
Bank of the Philippines, et al., G.R. No.
171428, November 11, 2013.
Contracts; breach of; damages; exemplary
damages; concept. Exemplary damages are
discussed in Article 2229 of the Civil Code, as
follows:
ART. 2229. Exemplary or corrective damages
are imposed, by way of example or correction
of the public good, in addition to moral,

temperate, liquidated or compensatory
damages.
Exemplary damages are further discussed in
Articles 2233 and 2234, particularly regarding
the pre-requisites of ascertaining moral
damages and the fact that it is discretionary
upon this Court to award them or not:
ART. 2233. Exemplary damages cannot be
recovered as a matter of right; the court will
decide whether or not they should be
adjudicated.
ART. 2234. While the amount of the
exemplary damages need not be proven, the
plaintiff must show that he is entitled to moral,
temperate or compensatory damages before the
court may consider the question of whether or
not exemplary damages should be awarded x x
x
The purpose of exemplary damages is to serve
as a deterrent to future and subsequent parties
from the commission of a similar offense. The
case of People v. Rante citing People v.
Dalisay held that:
Also known as punitive or vindictive
damages, exemplary or corrective damages are
intended to serve as a deterrent to serious
wrong doings, and as a vindication of undue
sufferings and wanton invasion of the rights of
an injured or a punishment for those guilty of
outrageous conduct. These terms are generally,
but not always, used interchangeably. In
common law, there is preference in the use of
exemplary damages when the award is to
account for injury to feelings and for the sense
of indignity and humiliation suffered by a
person as a result of an injury that has been
maliciously and wantonly inflicted, the theory
being that there should be compensation for
the hurt caused by the highly reprehensible
conduct of the defendantassociated with
such circumstances as willfulness, wantonness,
malice, gross negligence or recklessness,
oppression, insult or fraud or gross fraudthat
intensifies the injury. The terms punitive or
vindictive damages are often used to refer to
those species of damages that may be awarded
against a person to punish him for his

outrageous conduct. In either case, these
damages are intended in good measure to deter
the wrongdoer and others like him from
similar conduct in the future.
To justify an award for exemplary damages,
the wrongful act must be accompanied by bad
faith, and an award of damages would be
allowed only if the guilty party acted in a
wanton, fraudulent, reckless or malevolent
manner. Alejandro V. Tankeh v. Development
171428, November 11, 2013.
Contracts; fraud; concept; dolo incidente
distinguished from dolo causante. In Solidbank
Corporation v. Mindanao Ferroalloy
Corporation, et al.,this Court elaborated on the
distinction between dolo causante and dolo
incidente: Fraud refers to all kinds of
deception whether through insidious
machination, manipulation, concealment or
misrepresentation that would lead an
ordinarily prudent person into error after
taking the circumstances into account. In
contracts, a fraud known as dolo causante or
causal fraud is basically a deception used by
one party prior to or simultaneous with the
contract, in order to secure the consent of the
other. Needless to say, the deceit employed
must be serious. In contradistinction, only
some particular or accident of the obligation is
referred to by incidental fraud or dolo
incidente, or that which is not serious in
character and without which the other party
would have entered into the contract
anyway. Alejandro V. Tankeh v. Development
171428, November 11, 2013.
Contracts; fraud; dolo incidente and dolo
causante; effect on contracts.The distinction
between fraud as a ground for rendering a
contract voidable or as basis for an award of
damages is provided in Article 1344: In order
that fraud may make a contract voidable, it
should be serious and should not have been
employed by both contracting parties.

Incidental fraud only obliges the person
employing it to pay damages. (1270) There are
two types of fraud contemplated in the
performance of contracts: dolo incidente or
incidental fraud and dolo causante or fraud
serious enough to render a contract voidable.
This fraud or dolo which is present or
employed at the time of birth or perfection of a
contract may either be dolo causante or dolo
incidente. The first, or causal fraud referred to
in Article 1338, are those deceptions or
misrepresentations of a serious character
employed by one party and without which the
other party would not have entered into the
contract. Dolo incidente, or incidental fraud
which is referred to in Article 1344, are those
which are not serious in character and without
which the other party would still have entered
into the contract. Dolo causante determines or
is the essential cause of the consent, while dolo
incidente refers only to some particular or
accident of the obligation. The effects of dolo
causante are the nullity of the contract and the
indemnification of damages, and dolo
incidente also obliges the person employing it
to pay damages. Alejandro V. Tankeh v.
Development Bank of the Philippines, et
al., G.R. No. 171428, November 11, 2013.
Contracts; fraud; quantum of evidence
required to prove existence of; clear and
convincing evidence. Neither law nor
jurisprudence distinguishes whether it is dolo
incidente or dolo causante that must be proven
by clear and convincing evidence. It stands to
reason that both dolo incidente and dolo
causante must be proven by clear and
convincing evidence. The only question is
whether this fraud, when proven, may be the
basis for making a contract voidable (dolo
causante), or for awarding damages (dolo
incidente), or both.
The standard of proof required is clear and
convincing evidence. This standard of proof is
derived from American common law. It is less
than proof beyond reasonable doubt (for
criminal cases) but greater than preponderance
of evidence (for civil cases). The degree of

believability is higher than that of an ordinary
civil case. Civil cases only require a
preponderance of evidence to meet the
required burden of proof. However, when
fraud is alleged in an ordinary civil case
involving contractual relations, an entirely
different standard of proof needs to be
satisfied. The imputation of fraud in a civil
case requires the presentation of clear and
convincing evidence. Mere allegations will not
suffice to sustain the existence of fraud. The
burden of evidence rests on the part of the
plaintiff or the party alleging fraud. The
quantum of evidence is such that fraud must be
clearly and convincingly shown.Alejandro V.
Tankeh v. Development Bank of the
Philippines, et al., G.R. No. 171428,
November 11, 2013.
Contracts; Reciprocal obligations; concept; for
failing to perform all its correlative obligation
under the reciprocal contract, a party cannot
unilaterally demand performance by the other
party. Reciprocal obligations are those which
arise from the same cause, and in which each
party is a debtor and a creditor of the other,
such that the obligation of one is dependent
upon the obligation of the other. They are to be
performed simultaneously, so that the
performance of one is conditioned upon the
simultaneous fulfillment of the other. In
reciprocal obligations, neither party incurs in
delay if the other does not comply or is not
ready to comply in a proper manner with what
is incumbent upon him. From the moment one
of the parties fulfills his obligation, delay by
the other begins.
In reciprocal obligations, before a party can
demand the performance of the obligation of
the other, the former must also perform its own
obligation. Consolidated Industrial Gases, Inc.
v. Alabang Medical Center, G.R. No. 181983,
November 13, 2013.
Contracts; rescission; grounds. Rescission of a
contract will not be permitted for a slight or
casual breach, but only for such substantial and

fundamental violations as would defeat the
very object of the parties in making the
agreement. Whether a breach is substantial is
largely determined by the attendant
circumstances. Consolidated Industrial Gases,
Inc. v. Alabang Medical Center, G.R. No.
181983, November 13, 2013.
Damages; actual damages; concept; when
awarded. For damages to be recovered, the
best evidence obtainable by the injured party
must be presented. Actual or compensatory
damages cannot be presumed, but must be
proved with reasonable degree of certainty.
The Court cannot rely on speculation,
conjecture or guesswork as to the fact and
amount of damages, but must depend upon
competent proof that they have been suffered
and on evidence of the actual amount. If the
proof is flimsy and unsubstantial, no damages
will be awarded. Consolidated Industrial
Gases, Inc. v. Alabang Medical Center, G.R.
No. 181983, November 13, 2013.
Estoppel; cannot be made to apply against the
government. Granting that the persons
representing the government was negligent, the
doctrine of estoppel cannot be taken against
the Republic. It is a well-settled rule that the
Republic or its government is not estopped by
mistake or error on the part of its officials or
agents.
In any case, even granting that the said official
was negligent, the doctrine of estoppel cannot
operate against the State. It is a well-settled
rule in our jurisdiction that the Republic or its
government is usually not estopped by mistake
or error on the part of its officials or agents
(Manila Lodge No. 761 vs. CA, 73 SCRA 166,
186; Republic vs. Marcos, 52 SCRA 238, 244;
Luciano vs. Estrella, 34 SCRA 769).Republic
of the Philippines v. Antonio Bacas, et al., G.R.
No. 182913, November 20, 2013.
Sales; sale of real property; authority of the
agent must be in writing; otherwise the sale is
null and void. Articles 1874 of the Civil Code
provides:
Art. 1874. When a sale of a piece of land or

any interest therein is through an agent, the
authority of the latter shall be in writing;
otherwise, the sale shall be void.
Likewise, Article 1878 paragraph 5 of the Civil
Code specifically mandates that the authority
of the agent to sell a real property must be
conferred in writing, to wit:
Art. 1878. Special powers of attorney are
necessary in the following cases:
(1) x x x
xxx
(5) To enter into any contract by which the
ownership of an immovable is transmitted or
acquired either gratuitously or for a valuable
consideration;
x x x.
The foregoing provisions explicitly require a
written authority when the sale of a piece of
land is through an agent, whether the sale is
gratuitously or for a valuable consideration.
Absent such authority in writing, the sale is
null and void. Spouses Eliseo R. Bautista and
Emperatriz C. Bautista v. Spouses Mila
Jalandoni and Antonio Jalandoni and Manila
Credit Corporation, G.R. No. 171464/G.R.
No. 199341, November 27, 2013.
Sales; sale of real property; buyer in good
faith; conditions to prove good faith; failure to
verify extent and nature of agents authority. A
buyer in good faith is one who buys the
property of another without notice that some
other person has a right to or interest in such
property. He is a buyer for value if he pays a
full and fair price at the time of the purchase or
before he has notice of the claim or interest of
some other person in the property. Good faith
connotes an honest intention to abstain from
taking unconscientious advantage of
another.To prove good faith, the following
conditions must be present: (a) the seller is the
registered owner of the land; (b) the owner is
in possession thereof; and (3) at the time of the
sale, the buyer was not aware of any claim or
interest of some other person in the property,
or of any defect or restriction in the title of the

seller or in his capacity to convey title to the
property. All these conditions must be present,
otherwise, the buyer is under obligation to
exercise extra ordinary diligence by
scrutinizing the certificates of title and
examining all factual circumstances to enable
him to ascertain the sellers title and capacity
to transfer any interest in the property. Spouses
Eliseo R. Bautista and Emperatriz C. Bautista
v. Spouses Mila Jalandoni and Antonio
Jalandoni and Manila Credit
Corporation, G.R. No. 171464/G.R. No.
199341, November 27, 2013.
Sales; sale of real property on installment;
grace period. Section 3(a) of R.A. 6552
provides that the total grace period
corresponds to one month for every one year
of installment payments made, provided that
the buyer may exercise this right only once in
every five years of the life of the contract and
its extensions. The buyers failure to pay the
installments due at the expiration of the grace
period allows the seller to cancel the contract
after 30 days from the buyers receipt of the
notice of cancellation or demand for rescission
of the contract by a notarial act.
Sale of real property on installment; cash
surrender value; when the buyer is entitled
thereto. Republic Act No. 6552, also known as
the Maceda Law, or the Realty Installment
Buyer Protection Act, has the declared public
policy of protecting buyers of real estate on
installment payments against onerous and
oppressive conditions.
Section 3 of R.A. 6552 provides for the rights
of a buyer who has paid at least two years of
installments but defaults in the payment of
succeeding installments. Section 3 provides
that in all transactions or contracts involving
the sale or financing of real estate on
installment payments, including residential
condominium apartments but excluding
industrial lots, commercial buildings and sales
to tenants under R.A. No. 3844, as amended by
R.A. No. 6389, where the buyer has paid at
least two years of installments, the buyer is
entitled to the following rights in case he

defaults in the payment of succeeding
installments:
(a) To pay, without additional interest, the
unpaid installments due within the total grace
period earned by him which is hereby fixed at
the rate of one month grace period for every
one year of installment payments made:
Provided, That this right shall be exercised by
the buyer only once in every five years of the
life of the contract and its extensions, if any.
(b) If the contract is cancelled, the seller shall
refund to the buyer the cash surrender value of
the payments on the property equivalent to
fifty per cent of the total payments made, and,
after five years of installments, an additional
five per cent every year but not to exceed
ninety per cent of the total payments made:
Provided, That the actual cancellation of the
contract shall take place after thirty days from
receipt by the buyer of the notice of
cancellation or the demand for rescission of
the contract by a notarial act and upon full
payment of the cash surrender value to the
buyer.
Down payments, deposits or options on the
contract shall be included in the computation
of the total number of installment payments
made. Gatchalian Realty, Inc. v. Evelyn
Angeles, G.R. No. 202358, November 27,
2013.
Sales; sale of real property on installment;
cancellation of; twin requirements of a
notarized notice of cancellation and a refund of
the cash surrender value. The Court has been
consistent in ruling that a valid and effective
cancellation under R.A. 6552 must comply
with the mandatory twin requirements of a
notarized notice of cancellation and a refund of
the cash surrender value.
In Olympia Housing, Inc. v. Panasiatic Travel
Corp., the Court ruled that the notarial act of
rescission must be accompanied by the refund
of the cash surrender value.
The actual cancellation of the contract can
only be deemed to take place upon the expiry

of a 30-day period following the receipt by the
buyer of the notice of cancellation or demand
for rescission by a notarial act and the full
payment of the cash surrender value.
In Pagtalunan v. Dela Cruz Vda. De Manzano,
the Court ruled that there is no valid
cancellation of the Contract to Sell in the
absence of a refund of the cash surrender
value. It stated that Sec. 3 (b) of R.A. No.
6552 requires refund of the cash surrender
value of the payments on the property to the
buyer before cancellation of the contract. The
provision does not provide a different
requirement for contracts to sell which allow
possession of the property by the buyer upon
execution of the contract like the instant case.
Hence, petitioner cannot insist on compliance
with the requirement by assuming that the cash
surrender value payable to the buyer had been
applied to rentals of the property after
respondent failed to pay the installments
due. Gatchalian Realty, Inc. v. Evelyn
Angeles, G.R. No. 202358, November 27,
2013.
SPECIAL LAWS
Land registration; application for land
registration requires that the names and
addresses of all adjoining owners and
occupants be stated, if known, and if not
known, to state the search made to find them;
omission thereof constitutes fraud. The
governing rule in the application for
registration of lands at that time was Section
21 of Act 496 which provided for the form and
content of an application for registration, and it
provides that the application shall be in
writing, signed and sworn to by applicant, or
by some person duly authorized in his behalf.
It shall also state the name in full and the
address of the applicant, and also the names
and addresses of all adjoining owners and
occupants, if known; and, if not known, it shall
state what search has been made to find them.
The reason behind the law was explained in
the case of Fewkes vs. Vasquez,where it was
noted that under Section 21 of the Land
Registration Act an application for registration

of land is required to contain, among others, a
description of the land subject of the
proceeding, the name, status and address of the
applicant, as well as the names and addresses
of all occupants of the land and of all adjoining
owners, if known, or if unknown, of the steps
taken to locate them. When the application is
set by the court for initial hearing, it is then
that notice (of the hearing), addressed to all
persons appearing to have an interest in the lot
being registered and the adjoining owners, and
indicating the location, boundaries and
technical description of the land being
registered, shall be published in the Official
Gazette for two consecutive times. It is this
publication of the notice of hearing that is
considered one of the essential bases of the
jurisdiction of the court in land registration
cases, for the proceedings being in rem, it is
only when there is constructive seizure of the
land, effected by the publication and notice,
that jurisdiction over the res is vested on the
court. Furthermore, it is such notice and
publication of the hearing that would enable all
persons concerned, who may have any rights
or interests in the property, to come forward
and show to the court why the application for
registration thereof is not to be
granted.Republic of the Philippines v. Antonio
Bacas, et al., G.R. No. 182913, November 20,
2013.
Land registration; any title to inalienable
public land is void ab initio; all proceedings of
the Land Registration Court involving the such
property is without legal effect, hence cannot
attain finality. InCollado v. Court of Appeals
and the Republic, the Court declared that any
title to an inalienable public land is void ab
initio. Any procedural infirmities attending the
filing of the petition for annulment of
judgment are immaterial since the LRC never
acquired jurisdiction over the property. All
proceedings of the LRC involving the property
are null and void and, hence, did not create any
legal effect. A judgment by a court without

jurisdiction can never attain finality. The Land
Registration Court has no jurisdiction over
non-registrable properties, such as public
navigable rivers which are parts of the public
domain, and cannot validly adjudge the
registration of title in favor of private
applicant. Republic of the Philippines v.
Antonio Bacas, et al., G.R. No. 182913,
November 20, 2013.
Land registration; confirmation and
registration of imperfect and incomplete title;
qualifications. C.A. No. 141 governs the
classification and disposition of lands of the
public domain. Section 11 of C.A. No. 141
provides, as one of the modes of disposing
public lands that are suitable for agriculture,
the confirmation of imperfect or incomplete
titles. Section 48, on the other hand,
enumerates those who are considered to have
acquired an imperfect or incomplete title over
public lands and, therefore, entitled to
confirmation and registration under the Land
Registration Act.
As amended by P.D. No. 1073 on January 25,
1977, Section 48(b) of C.A. No. 141 provides:
Section 48. The following described citizens of
Court of First Instance [now Regional Trial
Court] of the province where the land is
located for confirmation of their claims and the
issuance of a certificate of title therefor, under
the Land Registration Act, to wit:
xxxx
possession and occupation of agricultural lands
of the public domain, under a bona fide claim
of acquisition or ownership, since June 12,
1945, or earlier, immediately preceding the
filing of the application for confirmation of
title except when prevented by war or force
majeure. These shall be conclusively presumed
to have performed all the conditions essential

to a Government grant and shall be entitled to
a certificate of title under the provisions of this
chapter.
Prior to the amendment introduced by P.D. No.
1073, Section 48(b) of C.A. No. 141, then
operated under the Republic Act (R.A.) No.
1942 (June 22, 1957) amendment, which
reads:
acquisition or ownership, for at least thirty
years, immediately preceding the filing of the
application for confirmation of title except
These shall be conclusively presumed to have
performed all the conditions essential to a
Government grant and shall be entitled to a
certificate of title under the provisions of this
chapter.
xxx
In relation to C.A. No. 141, Section 14 of
Presidential Decree P.D.) No. 1529 or the
Property Registration Decree specifies those
who are qualified to register their incomplete
title over an alienable and disposable public
land under the Torrens system. P.D. No. 1529,
which was approved on June 11, 1978,
superseded and codified all laws relative to the
registration of property.
The pertinent portion of Section 14 of P.D. No.
1529 reads:
Section 14. Who may apply. The following
persons may file in the proper Court of First
Instance [now Regional Trial Court] an
application for registration of title to land,
whether personally or through their duly
authorized representatives:
(1) Those who by themselves or through their
and occupation of alienable and disposable
lands of the public domain under a bona fide

claim of ownership since June 12, 1945, or
earlier.
Roman Catholic Archbishop of Manila v.
Cresencia Sta. Teresa Ramos, assisted by her
husband, Ponciano Francisco, G.R. No.
179181, November 18, 2013.
Land registration; confirmation and
registration of imperfect and incomplete title;
open, continuous, exclusive and notorious
possession. The possession contemplated by
Section 48(b) of C.A. No. 141 is actual, not
fictional or constructive. In Carlos v Republic
of the Philippines,the Court explained the
character of the required possession, as
follows:
The law speaks of possession and occupation.
Since these words are separated by the
conjunction and, the clear intention of the law
is not to make one synonymous with the other.
Possession is broader than occupation because
it includes constructive possession. When,
therefore, the law adds the word occupation, it
seeks to delimit the all-encompassing effect of
constructive possession. Taken together with
the words open, continuous, exclusive and
notorious, the word occupation serves to
highlight the fact that for an applicant to
qualify, his possession must not be a mere
fiction. Actual possession of a land consists in
the manifestation of acts of dominion over it of
such a nature as a party would naturally
exercise over his own property.
Proof of actual possession of the property at
the time of the filing of the application is
required because the phrase adverse,
continuous, open, public, and in concept of
owner, the RCAM used to describe its alleged
possession, is a conclusion of law,not an
allegation of fact. Possession is open when it is
patent, visible, apparent [and] notorious x x x
continuous when uninterrupted, unbroken and
not intermittent or occasional; exclusive when
[the possession is characterized by acts
manifesting] exclusive dominion over the land
and an appropriation of it to [the applicants]
own use and benefit; and notorious when it is
so conspicuous that it is generally known and

talked of by the public or the people in the
neighborhood.Roman Catholic Archbishop of
Manila v. Cresencia Sta. Teresa Ramos,
assisted by her husband, Ponciano
Francisco, G.R. No. 179181, November 18,
2013.
Land registration; lands forming part of a
military reservation are inalienable, hence not
registrable. The law governing the applications
was Commonwealth Act (C.A.) No. 141,as
amended by RA 1942, particularly Sec. 48(b)
which provided that those who by themselves
or through their predecessors in interest have
been in open, continuous, exclusive and
notorious possession and occupation of
agricultural lands of the public domain, under
a bona fide claim of acquisition of ownership,
for at least thirty years immediately preceding
the filing of the application for confirmation of
title except when prevented by war or force
majeure. These shall be conclusively presumed
to have performed all the conditions essential
to a Government grant and shall be entitled to
a certificate of title under the provisions of this
chapter.
As can be gleaned therefrom, the necessary
requirements for the grant of an application for
land registration are the following:
1. The applicant must, by himself or through
his predecessors-in-interest, have been in
possession and occupation of the subject land;
2. The possession and occupation must be
open, continuous, exclusive and notorious;
3. The possession and occupation must be
under a bona fide claim of ownership for at
least thirty years immediately preceding the
filing of the application; and
4. The subject land must be an agricultural
land of the public domain. As earlier stated, in
1938, President Quezon issued Presidential
Proclamation No. 265, which took effect on
March 31, 1938, reserving for the use of the
Philippine Army parcels of the public domain
situated in the barrios of Bulua and Carmen,
then Municipality of Cagayan, Misamis

Oriental. The subject parcels of land were
withdrawn from sale or settlement or reserved
for military purposes, subject to private
rights, if any there be.
Such power of the President to segregate lands
was provided for in Section 64(e) of the old
Revised Administrative Code and C.A. No.
141 or the Public Land Act. Later, the power of
the President was restated in Section 14,
Chapter 4, Book III of the 1987 Administrative
Code. When a property is officially declared a
military reservation, it becomes inalienable
and outside the commerce of man.It may not
be the subject of a contract or of a compromise
agreement. A property continues to be part of
the public domain, not available for private
appropriation or ownership, until there is a
formal declaration on the part of the
government to withdraw it from being such. In
the case of Republic v. Court of Appeals and
De Jesus, it was even stated that
Lands covered by reservation are not subject to
entry, and no lawful settlement on them can
beacquired.The claims of persons who have
settled on, occupied, and improved a parcel of
public land which is later included in a
reservation are considered worthy of
protection and are usually respected, but where
the President, as authorized by law, issues a
proclamation reserving certain lands and
warning all persons to depart therefrom, this
terminates any rights previously acquired in
such lands by a person who was settled thereon
in order to obtain a preferential right of
purchase. And patents for lands which have
been previously granted, reserved from sale, or
appropriate, are void. Republic of the
Philippines v. Antonio Bacas, et al., G.R. No.
182913, November 20, 2013.
Trademark registration; not a mode of
acquiring ownership but merely creates
presumption of the validity of the registration,
of the registrants ownership of the trademark
and of the exclusive right to the use thereof. It
must be emphasized that registration of a
trademark, by itself, is not a mode of
acquiring ownership.If the applicant is not the

owner of the trademark, he has no right to
apply for its registration. Registration merely
creates a prima facie presumption of the
validity of the registration, of the registrants
ownership of the trademark, and of the
exclusive right to the use thereof. Such
presumption, just like the presumptive
regularity in the performance of official
functions, is rebuttable and must give way to
evidence to the contrary.
Clearly, it is not the application or registration
of a trademark that vests ownership thereof,
but it is the ownership of a trademark that
confers the right to register the same. A
trademark is an industrial property over which
its owner is entitled to property rights which
cannot be appropriated by unscrupulous
entities that, in one way or another, happen to
register such trademark ahead of its true and
lawful owner. The presumption of ownership
accorded to a registrant must then necessarily
yield to superior evidence of actual and real
ownership of a trademark.
The Courts pronouncement in Berris
Agricultural Co., Inc. v. Abyadang is
instructive on this point:
The ownership of a trademark is acquired by
its registration and its actual use by the
manufacturer or distributor of the goods made
available to the purchasing public. x x x A
certificate of registration of a mark, once
issued, constitutes prima facie evidence of the
validity of the registration, of the registrants
ownership of the mark, and of the registrants
exclusive right to use the same in connection
with the goods or services and those that are
related thereto specified in the certificate. x x x
In other words, the prima facie presumption
brought about by the registration of a mark
may be challenged and overcome in an
appropriate action, x x x by evidence of prior
use by another person, i.e. , it will controvert a
claim of legal appropriation or of ownership
based on registration by a subsequent user.
This is because a trademark is a creation of use

and belongs to one who first used it in trade or
commerce.
September 2013 rulings of the Supreme Court
CIVIL CODE
Civil registry; nature of civil register books;
books making up the civil register and all
documents relating thereto are public
documents and shall be prima facie evidence
of the facts therein contained; as public
documents, they are admissible in evidence
even without further proof of their due
execution and genuineness.There is no
question that the documentary evidence
submitted by petitioner are all public
documents. As provided in the Civil Code:
ART. 410. The books making up the civil
register and all documents relating thereto
shall be considered public documents and shall
be prima facie evidence of the facts therein
contained.
As public documents, they are admissible in
evidence even without further proof of their
due execution and genuineness. Thus, the RTC
erred when it disregarded said documents on
the sole ground that the petitioner did not
present the records custodian of the NSO who
issued them to testify on their authenticity and
due execution since proof of authenticity and
due execution was not anymore necessary.
Moreover, not only are said documents
admissible, they deserve to be given
evidentiary weight because they
constitute prima facie evidence of the facts
stated therein. And in the instant case, the facts
stated therein remain unrebutted since neither
the private respondent nor the public
prosecutor presented evidence to the contrary.
In Yasuo Iwasawa v. Felisa Custodio Gangan
(a.k.a. Felisa Gangan Arambulo and
Felisa Gangan Iwasawa), et al., G.R. No.
204169, September 11, 2013.
Contracts; contract to sell distinguished from
contract of sale; in a contract to sell, ownership
remains with the vendor and does not pass to
the vendee until full payment of the purchase
price; a deed of sale is absolute when there is

no stipulation in the contract that title to the
property remains with the seller until the full
payment of the purchase price. In a
conditional sale, as in a contract to sell,
ownership remains with the vendor and does
not pass to the vendee until full payment of the
purchase price. The full payment of the
purchase price partakes of a suspensive
condition, and non-fulfillment of the condition
prevents the obligation to sell from arising. To
differentiate, a deed of sale is absolute when
there is no stipulation in the contract that title
to the property remains with the seller until full
payment of the purchase price. Ramos v.
Heruela held that Articles 1191 and 1592 of
the Civil Code are applicable to contracts of
sale, while R.A. No. 6552 applies to contracts
to sell. Manuel Uy & Sons, Inc. v. Valbueco,
Incorporated, G.R. No. 179594, September 11,
2013.
Contracts; lease contracts; lease contracts
survive the death of the parties and continue to
bind the heirs except if the contract states
otherwise; the provision in the lease contract
stating that this contract is nontransferable
unless prior written consent of the lessor is
obtained in writing refers to transfers inter
vivos and not transmissions mortis causa. The
Supreme Court has previously ruled that lease
contracts, by their nature, are not personal. The
general rule, therefore, is lease contracts
survive the death of the parties and continue to
bind the heirs except if the contract states
otherwise. In Sui Man Hui Chan v. Court of
Appeals, we held that: A lease contract is not
essentially personal in character. Thus, the
rights and obligations therein are transmissible
to the heirs. The general rule, therefore, is that
heirs are bound by contracts entered into by
their predecessors-in-interest except when the
rights and obligations arising therefrom are not
transmissible by (1) their nature, (2) stipulation
or (3) provision of law. In the subject Contract
of Lease, not only were there no stipulations
prohibiting any transmission of rights, but its

very terms and conditions explicitly provided
for the transmission of the rights of the lessor
and of the lessee to their respective heirs and
successors. The contract is the law between the
parties. The death of a party does not excuse
nonperformance of a contract, which involves
a property right, and the rights and obligations
thereunder pass to the successors or
representatives of the deceased. Similarly,
nonperformance is not excused by the death of
the party when the other party has a property
interest in the subject matter of the contract.
Section 6 of the lease contract provides that
[t]his contract is nontransferable unless prior
consent of the lessor is obtained in writing.
Section 6 refers to transfers inter vivos and not
transmissions mortis causa. What Section 6
seeks to avoid is for the lessee to substitute a
third party in place of the lessee without the
lessors consent. Manuel Uy & Sons, Inc. v.
Valbueco, Incorporated, G.R. No. 179594,
September 11, 2013.
Contracts; lease contracts; sublease
arrangement; concept. Assignment or transfer
of lease, which is covered by Article 1649 of
the Civil Code, is different from a sublease
arrangement, which is governed by Article
1650 of the same Code. In a sublease, the
lessee becomes in turn a lessor to a sub-lessee.
The sub-lessee then becomes liable to pay
rentals to the original lessee. However, the
juridical relation between the lessor and lessee
is not dissolved. The parties continue to be
bound by the original lease contract. Thus, in a
sublease arrangement, there are at least three
parties and two distinct juridical
relations. Manuel Uy & Sons, Inc. v. Valbueco,
2013.
Contracts; lease contracts; lessees right upon
the termination of the lease to (a) claim
reimbursement from the lessor for half the
value of the useful improvements introduced
by the lessee in good faith, or to (b) demolish
of such improvements. The CA erred in not
applying Article 1678 of the Civil Code which
provides: Art. 1678. If the lessee makes, in

good faith, useful improvements which are
suitable to the use for which the lease is
intended, without altering the form or
substance of the property leased, the lessor
upon the termination of the lease shall pay the
lessee one-half of the value of the
improvements at that time. Should the lessor
refuse to reimburse said amount, the lessee
may remove the improvements, even though
the principal thing may suffer damage thereby.
He shall not, however, cause any more
impairment upon the property leased than is
necessary. With regard to ornamental
expenses, the lessee shall not be entitled to any
reimbursement, but he may remove the
ornamental objects, provided no damage is
caused to the principal thing, and the lessor
does not choose to retain them by paying their
value at the time the lease is extinguished.
The foregoing provision applies if the
improvements were: (1) introduced in good
faith; (2) useful; and (3) suitable to the use for
which the lease is intended, without altering
the form and substance. We find that the
aforementioned requisites are satisfied in this
case. The buildings were constructed before
Germans demise, during the subsistence of a
valid contract of lease. It does not appear that
HDSJ prohibited German from constructing
the buildings. Thus, HDSJ should have
reimbursed German (or his estate) half of the
value of the improvements as of 2001. If HDSJ
is not willing to reimburse the Inocencios, then
the latter should be allowed to demolish the
buildings. Manuel Uy & Sons, Inc. v.
Valbueco, Incorporated, G.R. No. 179594,
September 11, 2013.
Contracts; tortious interference; elements;
exception. As correctly pointed out by the
Inocencios, tortious interference has the
following elements: (1) existence of a valid
contract; (2) knowledge on the part of the third
person of the existence of the contract; and (3)
interference of the third person without legal
justification or excuse. In So Ping Bun v.

Court of Appeals, we held that there was no
tortious interference if the intrusion was
impelled by purely economic motives. In So
Ping Bun, we explained that: Authorities
debate on whether interference may be
justified where the defendant acts for the sole
purpose of furthering his own financial or
economic interest. One view is that, as a
general rule, justification for interfering with
the business relations of another exists where
the actors motive is to benefit himself. Such
justification does not exist where his sole
motive is to cause harm to the other. Added to
this, some authorities believe that it is not
necessary that the interferers interest
outweighs that of the party whose rights are
invaded, and that an individual acts under an
economic interest that is substantial, not
merely de minimis, such that wrongful and
malicious motives are negatived, for he acts in
self-protection. Moreover, justification for
protecting ones financial position should not
be made to depend on a comparison of his
economic interest in the subject matter with
that of others. It is sufficient if the impetus of
his conduct lies in a proper business interest
rather than in wrongful motives. Analita P.
Inocencion, substituting for Ramon Inocencion
(deceased) v. Hospicio de San Jose, G.R. No.
201787, September 25, 2013.
Damages; loss of earning capacity;
compensation for lost income is in the nature
of damages and as such requires due proof of
the damages suffered; there must be unbiased
proof of the deceaseds income. In People v.
Caraig, the Supreme Court had drawn two
exceptions to the rule that documentary
evidence should be presented to substantiate
the claim for damages for loss of earning
capacity, and have thus awarded damages
where there is testimony that the victim was
either (1) self-employed earning less than the
minimum wage under current labor laws, and
judicial notice may be taken of the fact that in
the victims line of work no documentary
evidence is available; or (2) employed as a
daily-wage worker earning less than the

minimum wage under current labor laws.
In People of the Philippines v. Edwin Ibanez y
Albante, et al., G.R. No. 197813, September
25, 2013.
Estoppel; requisites. For estoppel to take
effect, there must be knowledge of the real
facts by the party sought to be estopped and
reliance by the party claiming estoppel on the
representation made by the former. In this
case, petitioner cannot be estopped from
asking for the return of the vessel in the
condition that it had been at the time it was
seized by respondent because he had not
known of the deteriorated condition of the
ship. Ernesto Dy v. Hon. Gina M. BibatPalamos, in her capacity as Presiding Judge
of the RTC, Branch 64, Makati City, and Orix
Metro Leasing and Finance Corporation, G.R.
No. 196200, September 11, 2013.
Interest; Judgment award; imposition of
interests; under BSP Circular No. 799,
effective on July 1, 2013, the interest rate to
be imposed for a loan or forbearance of
judgments in the absence of stipulation
thereon, was changed from 12% to
6%. Notice must be taken that in Resolution
No. 796 dated May 16, 2013, the Monetary
Board of the Bangko Sentral ng Pilipinas
approved the revision of the interest rate to be
imposed for the loan or forbearance of any
judgments, in the absence of an express
contract as to such rate of interest. Thus, under
BSP Circular No. 799, issued on June 21, 2013
and effective on July 1, 2013, the said rate of
interest is now back at six percent (6%), S.C.
Megaworld Construction and Development
Corporation v. Engr. Luis U. Parada,
represented by Engr. Leonardo A. Parada of
Genlite Industries, G.R. No. 183804,
September 11, 2013.
Laches; concept; the question of laches is
addressed to the sound discretion of the court

and, being an equitable doctrine, its application
is controlled by equitable
considerations. Laches has been defined as the
failure or neglect for an unreasonable and
unexplained length of time to do that which,
by exercising due diligence, could or should
have been done earlier, thus, giving rise to a
presumption that the party entitled to assert it
either has abandoned or declined to assert it.
On this score, it is a well-settled principle of
law that laches is a recourse in equity, which
is, applied only in the absence of statutory law.
And though laches applies even to
imprescriptible actions, its elements must be
proved positively. Ultimately, the question of
laches is addressed to the sound discretion of
the court and, being an equitable doctrine, its
application is controlled by equitable
considerations. Citibank, N.A. and the
Citigroup Private Bank v. Ester H. TancoGabaldon, et al./ Carol Lim v. Ester H. TancoGabaldon, et al., G.R. No. 198444/G.R. No.
198469-70, September 4, 2013.
Obligations; novation; concept; elements. In
novation, a subsequent obligation extinguishes
a previous one through substitution either by
changing the object or principal conditions, by
substituting another in place of the debtor, or
by subrogating a third person into the rights of
the creditor. Novation requires (a) the
existence of a previous valid obligation; (b) the
agreement of all parties to the new contract; (c)
the extinguishment of the old contract; and (d)
the validity of the new one. There cannot be
novation in this case since the proposed
substituted parties did not agree to the PRAs
supposed assignment of its obligations under
the contract for the electrical and light works at
Heritage Park to the HPMC. The latter
definitely and clearly rejected the PRAs
assignment of its liability under that contract to
the HPMC. Philippine Reclamation Authority
(formerly known as the Public Estates
Authority v. Romago, Inc./Romago, Inc. Vs.
Philippine Reclamation Authority, G.R. Nos.
174665 and 175221, September 18, 2013.
Obligations; novation as a mode of

extinguishing an obligation; concept; novation
is never presumed but must be clearly and
unequivocally shown. 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. It is the substitution of a new
contract, debt, or obligation for an existing one
between the same or different parties. The
settled rule is that novation is never presumed,
but must be clearly and unequivocally shown.
In order for a new agreement to supersede the
old one, the parties to a contract must
expressly agree that they are abrogating their
old contract in favor of a new one. Thus, the
mere substitution of debtors will not result in
novation, and the fact that the creditor accepts
payments from a third person, who has
assumed the obligation, will result merely in
the addition of debtors and not novation, and
the creditor may enforce the obligation against
both debtors. If there is no agreement as to
solidarity, the first and new debtors are
considered obligated jointly. Philippine
Reclamation Authority (formerly known as
thePublic Estates Authority v. Romago,
Inc./Romago, Inc. Vs. Philippine Reclamation
Authority,G.R. Nos. 174665 and 175221,
September 18, 2013.
SPECIAL LAWS
Land registration; an applicant who seeks to
have a land registered in his name has the
burden of proving that he is its owner in fee
simple. As held in Republic v. Lee:
The most basic rule in land registration cases is
that no person is entitled to have land
registered under the Cadastral or Torrens
system unless he is the owner in fee simple of
the same, even though there is no opposition
presented against such registration by third
persons. x x x In order that the petitioner for
the registration of his land shall be permitted to
have the same registered, and to have the
benefit resulting from the certificate of title,

finally, issued, the burden is upon him to show
that he is the real and absolute owner, in fee
simple.
In First Gas Power Corporation v. Republic of
the Philippines, Represented by the Office of
the Solicitor General, G.R. No. 169461,
September 2, 2013.
Land registration; Nature of land registration
proceedings; land registration proceedings are
in rem in nature and, hence, by virtue of the
publication requirement, all claimants and
occupants of the subject property are deemed
to be notified of the existence of a cadastral
case involving the subject lots; parties are
precluded from re-litigating the same issues
already determined by final judgment. In this
case, records disclose that petitioner itself
manifested during the proceedings before the
RTC that there subsists a decision in a previous
cadastral case, i.e., Cad. Case No. 37, which
covers the same lots it applied apprised of the
existence of the foregoing decision even before
the rendition of the RTC Decision and
Amended Order through the LRA Report dated
as early as November 24, 1998 which, as
above-quoted, states that the subject lots were
previously applied for registration of title in
the [c]adastral proceedings and were both
decided under [Cad. Case No. 37], GLRO
Record No. 1969, and are subject to the
following annotation x x x: Lots 1298 (45-1)
[and] 1315 (61-1) Pte. Nueva doc. Since it
had been duly notified of an existing decision
which binds over the subject lots, it was
incumbent upon petitioner to prove that the
said decision would not affect its claimed
status as owner of the subject lots in fee
simple. In First Gas Power Corporation v.
Republic of the Philippines, Represented by
the Office of the Solicitor General, G.R. No.
169461, September 2, 2013.
Land registration proceedings; nature; being a
proceeding in rem, there is no need to give
personal notice to the owners or claimants of
the land sought to be registered in order to vest

the courts with power and authority over the
res. Since no issue was raised as to Antonia
Victorinos compliance with the prerequisites
of notice and publication, she is deemed to
have followed such requirements. As a
consequence, petitioner is deemed sufficiently
notified of the hearing of Antonias
application. Hence, she cannot claim that she
is denied due process. In Crisanta GuidoEnriquez v. Alicia I. Victorino, et al.,G.R. No.
180427, September 30, 2013.
Land registration; requirement that the
application for land registration must state the
full names and addresses of all occupants of
the land and those of the adjoining owners, if
known, and if not known, it must state the
extent of the search made to find them. As to
the alleged denial of petitioners right to due
process due to Antonia Victorinos failure to
identify petitioner as indispensable party in her
application for registration, as well as to serve
her with actual and personal notice, Section 15
of Presidential Decree No. 1529 simply
requires that the application for registration
shall state the full names and addresses of all
occupants of the land and those of the
adjoining owners, if known, and, if not known,
it shall state the extent of the search made to
find them. A perusal of Antonia Victorinos
Application shows that she enumerated the
adjoining owners. She also indicated therein
that, to the best of her knowledge, no person
has any interest or is in possession of the
subject land. The fact that she did not identify
petitioner as an occupant or an adjoining
owner is not tantamount to denial of
petitioners right to due process and does not
nullify the RTC Decision granting such
application. InCrisanta Guido-Enriquez v.
Alicia I. Victorino, et al., G.R. No. 180427,
September 30, 2013.
Land Registration; Torrens title; conclusive
evidence of ownership of the land; the phrase

married to is merely descriptive of the civil
status of the registered owner. A Torrens title is
generally a conclusive evidence of the
ownership of the land referred to, because
there is a strong presumption that it is valid
and regularly issued.25 The phrase married
to is merely descriptive of the civil status of
the registered owner. In Juan Sevilla Salas, Jr.
v. Eden Villena Aguil, G.R. No. 202370,
September 23, 2013.
Marriage; property regimes for marriages that
are subsequently declared void under Article
36 of the Family Code; property acquired
during the marriage is presumed to have been
obtained through the couples joint efforts and
governed by the rules on coownership. In Dio v. Dio, the Supreme
Court held that Article 147 of the Family Code
applies to the union of parties who are legally
capacitated and not barred by any impediment
to contract marriage, but whose marriage is
nonetheless declared void under Article 36 of
the Family Code, as in this case. Article 147 of
the Family Code provides:
ART. 147. When a man and a woman who are
capacitated to marry each other, live
exclusively with each other as husband and
wife without the benefit of marriage or under a
void marriage, their wages and salaries shall be
owned by them in equal shares and the
property acquired by both of them through
their work or industry shall be governed by
the rules on coownership.
In the absence of proof to the contrary,
properties acquired while they lived
together shall be presumed to have been
obtained by their joint efforts, work or
industry, and shall be owned by them in
equal shares. For purposes of this Article, a
party who did not participate in theacquisition
by the other party of any property shall be
deemed to have contributed jointly in the
acquisition thereof if the formers efforts
consisted in the care and maintenance of the
family and of the household.
Neither party can encumber or dispose by

acts inter vivos of his or her share in the
property acquired during cohabitation and
owned in common, without the consent of the
other, until after the termination of their
cohabitation.
When only one of the parties to a void
marriage is in good faith, the share of the party
in bad faith in the co-ownership shall be
forfeited in favor of their common children. In
case of default of or waiver by any or all of the
common children or their descendants, each
vacant share shall belong to the respective
surviving descendants. In the absence of
descendants, such share shall belong to the
innocent party. In all cases, the forfeiture shall
take place upon termination of the
cohabitation. (Emphasis supplied)
Under this property regime, property acquired
during the marriage is prima facie presumed to
have been obtained through the couples joint
efforts and governed by the rules on coownership. In Juan Sevilla Salas, Jr. v. Eden
Villena Aguil, G.R. No. 202370, September 23,
2013.
Marriage; nullity of marriage; a judicial
declaration of nullity is required before a valid
subsequent marriage can be contracted, or else,
what transpires is a bigamous marriage. The
Supreme Court has consistently held that a
judicial declaration of nullity is required before
a valid subsequent marriage can be contracted;
or else, what transpires is a bigamous
marriage, which is void from the beginning as
provided in Article 35(4) of the Family Code
of the Philippines. In Yasuo Iwasawa v. Felisa
Custodio Gangan (a.k.a. Felisa Gangan
Arambulo and Felisa Gangan Iwasawa),
et al., G.R. No. 204169, September 11, 2013.
Realty Installment Buyer Act; right of buyer to
refund on installments in case he defaults in
the payments of succeeding installments
accrues only when he has paid at least two
years of installments.Under R.A. No. 6552, the
right of the buyer to refund accrues only when

he has paid at least two years of installments.
In this case, respondent has paid less than two
years of installments; hence, it is not entitled to
a refund. Manuel Uy & Sons, Inc. v. Valbueco,
2013.
August 2013 rulings of the Supreme Court of
Compensation; Concept;
Requisites. Compensation is a mode of
extinguishing to the concurrent amount, the
debts of persons who in their own right are
creditors and debtors of each other. The object
of compensation is the prevention of
unnecessary suits and payments through the
mutual extinction by operation of law of
concurring debts. Article 1279 of the Civil
Code provides for the requisites for
compensation to take effect:
Article 1279. In order that compensation may
be proper, it is necessary:
(1)That each one of the obligors be bound
(2)That both debts consist in a sum of money,
(3)That the two debts be due;
(4)That they be liquidated and demandable;
(5)That over neither of them there be any
debtor.
Adelaida Soriano v. People of the
Philippines, G.R. No. 181692, August 14,
2013.
Compensation; when both debts are liquidated
and demandable. A debt is liquidated when
the amount is known or is determinable by
inspection of the terms and conditions of
relevant documents.Adelaida Soriano v.
People of the Philippines, G.R. No. 181692,
August 14, 2013.
Contracts; determination of nature of
contract. In determining the nature of a
contract, courts are not bound by the title or

name given by the parties. The decisive factor
in evaluating such agreement is the intention
of the parties, as shown not necessarily by the
terminology used in the contract but by their
conduct, words, actions and deeds prior to,
during and immediately after executing the
agreement. As such, therefore, documentary
and parol evidence may be submitted and
admitted to prove such intention. Hur Tin Yang
v. People of the Philippines, G.R. No. 195117,
August 14, 2013.
Co-ownership; rights of co-owners. Having
succeeded to the property as heirs of Gregoria
and Romana, petitioners and respondents
became co-owners thereof. As co-owners, they
may use the property owned in common,
provided they do so in accordance with the
purpose for which it is intended and in such a
way as not to injure the interest of the coownership or prevent the other co-owners from
using it according to their rights. They have
the full ownership of their parts and of the
fruits and benefits pertaining thereto, and may
alienate, assign or mortgage them, and even
substitute another person in their enjoyment,
except when personal rights are involved. Each
co-owner may demand at any time the
partition of the thing owned in common,
insofar as his share is concerned. Finally, no
prescription shall run in favor of one of the coheirs against the others so long as he expressly
or impliedly recognizes the coownership. Antipolo Ining (deceased),
survived by Manuel Villanueva, Teodora
Villanueva-Francisco, Camilo Francisco,
Adolfo Francisco, Lucimo Francisco, Jr.,
Milagros Francisco,Celedonio Francisco,
Herminigildo Francisco; Ramon Tresvalles,
Roberto Tajonera, Natividad Ining-Ibea
(deceased) survived by Edilberto Ibea, Josefa
Ibea, Martha Ibea, Carmen Ibea, Amparo
Ibea-Fernandez, Henry Ruiz, Eugenio Ruiz
and Pastor Ruiz; Dolores Ining-Rimon
(deceased) survived by Jesus Rimon, Cesaria
Rimon Gonzales and Remedios Rimon

Cordero; and Pedro Ining (deceased) survived
by Elisa Tan Ining (wife) and Pedro Ining, Jr.
v. Leonardo R. Vega, substituted by Lourdes
Vega, Restonilo I. Vega, Crispulo M. Vega,
Milbuena Vega-Restituto and Lenard
Vega, G.R. No. 174727, August 12, 2013.
Co-ownership; prescription; for prescription to
set in, the repudiation must be done by a coowner; requisites. Time and again, it has been
held that a co-owner cannot acquire by
prescription the share of the other co-owners,
absent any clear repudiation of the coownership. In order that the title may prescribe
in favor of a co-owner, the following requisites
must concur: (1) the co-owner has performed
unequivocal acts of repudiation amounting to
an ouster of the other co-owners; (2) such
positive acts of repudiation have been made
known to the other co-owners; and (3) the
evidence thereof is clear and convincing. In
fine, since none of the co-owners made a valid
repudiation of the existing co-ownership,
Leonardo could seek partition of the property
at any time. Antipolo Ining (deceased),
survived by Manuel Villanueva, Teodora
Villanueva-Francisco, Camilo Francisco,
Adolfo Francisco, Lucimo Francisco, Jr.,
Milagros Francisco,Celedonio Francisco,
Herminigildo Francisco; Ramon Tresvalles,
Roberto Tajonera, Natividad Ining-Ibea
(deceased) survived by Edilberto Ibea, Josefa
Ibea, Martha Ibea, Carmen Ibea, Amparo
Ibea-Fernandez, Henry Ruiz, Eugenio Ruiz
and Pastor Ruiz; Dolores Ining-Rimon
(deceased) survived by Jesus Rimon, Cesaria
Rimon Gonzales and Remedios Rimon
Cordero; and Pedro Ining (deceased) survived
by Elisa Tan Ining (wife) and Pedro Ining, Jr.
v. Leonardo R. Vega, substituted by Lourdes
Vega, Restonilo I. Vega, Crispulo M. Vega,
Milbuena Vega-Restituto and Lenard
Vega, G.R. No. 174727, August 12, 2013.
Damages; actual damages; requires competent
proof of the actual amount of loss. To justify
an award for actual damages, there must be
competent proof of the actual amount of loss.
Credence can be given only to claims duly

supported by receipts. Respondents did not
submit any documentary proof, like receipts, to
support their claim for actual
damages. Comsavings Bank (now GSIS Family
Bank) v. Sps. Danilo and Estrella
Capistrano, G.R. No. 170942, August 28,
2013.
Damages; attorneys fees; allowed when
exemplary damages are awarded or where the
plaintiff has incurred expenses to protect his
interest by reason of defendants act or
omission. Article 2208 of theCivil Code allows
recovery of attorneys fees when exemplary
damages are awarded or where the plaintiff has
incurred expenses to protect his interest by
reason of defendants act or omission.
Considering that exemplary damages were
properly awarded here, and that respondents
hired a private lawyer to litigate its cause, the
Supreme Court agrees with the RTC and CA
that the P30,000.00 allowed as attorneys fees
were appropriate and reasonable. Comsavings
Bank (now GSIS Family Bank) v. Sps. Danilo
and Estrella Capistrano, G.R. No. 170942,
August 28, 2013.
Damages; Award of attorneys fees and
litigation expenses and costs; justified when
there is bad faith.Even granting that Atty.
Sabitsana has ceased to act as the Muertegui
familys lawyer, he still owed them his
loyalty. The termination of attorney-client
relation provides no justification for a lawyer
to represent an interest adverse to or in conflict
with that of the former client on a matter
involving confidential information which the
lawyer acquired when he was counsel. The
clients confidence once reposed should not be
divested by mere expiration of professional
employment. This is underscored by the fact
that Atty. Sabitsana obtained information from
Carmen which he used to his advantage and to
the detriment of his client.
[F]rom the foregoing disquisition, it can be
seen that petitioners are guilty of bad faith in

pursuing the sale of the lot despite being
apprised of the prior sale in respondents favor.
Moreover, petitioner Atty. Sabitsana has
exhibited a lack of loyalty toward his clients,
the Muerteguis, and by his acts, jeopardized
their interests instead of protecting them. Over
and above the trial courts and the CAs
findings, this provides further justification for
the award of attorneys fees, litigation
expenses and costs in favor of the
respondent. Spouses Celemencio C. Sabitsana,
Jr. and Ma. Rosario M. Sabitsana v. Juanito F.
Muertegui, represented by his attorney-in-fact,
Domingo A. Muertegui, Jr., G.R. No. 181359,
August 5, 2013.
Damages; Attorneys fees; what constitute bad
faith. There was no gross and evident bad faith
on the part of Asian Construction in filing its
complaint against Sumitomo since it was
merely seeking payment of its unpaid works
done pursuant to the Agreement. Neither can
its subsequent refusal to accept Sumitomos
offered compromise be classified as a badge of
bad faith since it was within its right to either
accept or reject the same owing to its
contractual nature. Absent any other just or
equitable reason to rule otherwise, these
incidents are clearly off-tangent with a finding
of gross and evident bad faith which altogether
negates Sumitomos entitlement to attorneys
fees. Asian Construction and Development
Corporation v. Sumitomo Corporation /
Sumitomo Corporation v. Asia Construction
and Development Corporation, G.R. No.
196723 / G.R. No. 196728, August 28, 2013.
Damages; Attorneys fees; when awarded.
Jurisprudence dictates that in the absence of a
governing stipulation, attorneys fees may be
awarded only in case the plaintiffs action or
defendants stand is so untenable as to amount
to gross and evident bad faith. This is
embodied in Article 2208 of the Civil Code
which states:
Article 2208. In the absence of stipulation,
attorneys fees and expenses of litigation, other
than judicial costs, cannot be recovered,

except:
xxxx
(5) Where the defendant acted in gross and
evident bad faith in refusing to satisfy the
plaintiffs plainly valid, just and demandable
claim;
xxxx
Asian Construction and Development
Corporation v. Sumitomo Corporation /
Sumitomo Corporation v. Asia Construction
and Development Corporation, G.R. No.
196723 / G.R. No. 196728, August 28, 2013.
Damages; Exemplary damages; the law allows
the grant of exemplary damages to set an
example for the public good. The law allows
the grant of exemplary damages to set an
example for the public good. The business of a
bank is affected with public interest; thus, it
makes a sworn profession of diligence and
meticulousness ingiving irreproachable
service. For this reason, the bank should guard
against injury attributable to negligence or bad
faith on its part. The banking sector must at all
times maintain a high level of meticulousness.
The grant of exemplary damages is justified by
the initial carelessness of petitioner,
aggravated by its lack of promptness in
repairing its error. Comsavings Bank (now
GSIS Family Bank) v. Sps. Danilo and Estrella
2013.
Damages; Moral damages; recoverable for acts
or actions referred to in Article 20 of the Civil
Code. In their amended complaint, respondents
claimed that the acts of GCB Builders and
Comsavings Bank had caused them to suffer
sleepless nights, worries and anxieties. The
claim was well founded. Danilo worked in
Saudi Arabia in order to pay the loan used for
the construction of their family home. His
anxiety and anguish over the incomplete and
defective construction of their house, as well
as the inconvenience he and his wife
experienced because of this suit were not
easily probable. On her part, Estrella was a

mere housewife, but was the attorney-in-fact
of Danilo in matters concerning the loan
transaction. With Danilo working abroad, she
was alone in overseeing the house construction
and the progress of the present case. Given her
situation, she definitely experienced worries
and sleepless nights. The award of moral
damages of P100,000.00 awarded by the CA as
exemplary damages is proper. Comsavings
Bank (now GSIS Family Bank) v. Sps. Danilo
and Estrella Capistrano, G.R. No. 170942,
August 28, 2013.
Damages; Temperate damages; may be
recovered when the court finds that some
pecuniary loss was suffered but its amount
cannot be proved with certainty. Nonetheless,
it cannot be denied that they had suffered
substantial losses. Article 2224 of the Civil
Code allows the recovery of temperate
damages when the court finds that some
pecuniary loss was suffered but its amount
cannot be proved with certainty. In lieu of
actual damages, therefore, temperate damages
of P25,000.00 are awarded. Such amount, in
the courts view, is reasonable under the
circumstances. Comsavings Bank (now GSIS
Family Bank) v. Sps. Danilo and Estrella
2013.
Damages; Interests; Eastern Shipping Lines
guidelines as modified by BSP-MB Circular
No. 799. The Supreme Court set out the
following guidelines on damages and interest
due:
1. When an obligation, regardless of its source,
i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can
be held liable for damages. The provisions
under Title XVIII on Damages of the Civil
Code govern in determining the measure of
recoverable damages.
2. With regard particularly to an award of
interest in the concept of actual and
compensatory damages, the rate of interest, as
well as the accrual thereof, is imposed, as

follows:
(a) When the obligation is breached, and it
consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the
interest due should be that which may have
been stipulated in writing. Furthermore, the
interest due shall itself earn legal interest from
the time it is judicially demanded. In the
absence of of stipulation, the rate of interest
shall be 6% per annum to be computed from
default, i.e., from judicial or extrajudicial
demand under and subject to the provisions of
Article 1169 the Civil Code.
(b) When an obligation, not constituting a loan
or forbearance of money, is breached, an
interest on the amount of damages awarded
may be imposed at the discretion of the court
at the rate of 6% per annum. No interest,
however, shall be adjudged on unliquidated
claims or damages, except when or until the
demand can be established with reasonable
certainty. Accordingly, where the demand is
established with reasonable certainty, the
interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art.
1169, Civil Code), but when such certainty
cannot be so reasonably established at the time
the demand is made, the interest shall begin to
run only from the date the judgment of the
court is made (at which time the quantification
of damages may be deemed to have been
reasonably ascertained). The actual base for
the computation of legal interest shall, in any
case, be on the amount finally adjudged.
(c) When the judgment of the court awarding
a sum of money becomes final and executory,
the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall
be 6% per annum from such finality until its
satisfaction, this interim period being deemed
to be by then an equivalent to a forbearance of
credit. Dario Nacar v. Gallery Frames and/or
Felipe Borde, Jr., G.R. No. 189871, August 13,
2013.

Gross negligence; concept. Based on the
provisions, a banking institution like
Comsavings Bank is obliged to exercise the
highest degree of diligence as well as high
its transactions because its business is imbued
with public interest. As aptly declared
in Philippine National Bank v. Pike: [T]he
stability of banks largely depends on the
confidence of the people in the honesty and
efficiency of banks. Gross negligence
connotes want of care in the performance of
ones duties; it is a negligence characterized by
the want of even slight care, acting or omitting
to act in a situation where there is duty to act,
not inadvertently but willfully and
intentionally, with a conscious indifference to
consequences insofar as other persons may be
affected. It evinces a thoughtless disregard of
consequences without exerting any effort to
avoid them. Comsavings Bank (now GSIS
Family Bank) v. Sps. Danilo and Estrella
2013.
Interest; Legal rate of interest effective July 1,
2013; pursuant to BSP Circular 799, series of
2013, the legal rate of interest shall be 6% per
annum. The Court held that [P]ursuant to
Circular No. 799, series of 2013 of the Bangko
Sentral ng Pilipinas which took effect July 1,
2013, the amount of P6,000.00, erroneously
paid by Petitioner to the bank, shall earn
interest at the rate of 6% per annum computed
from the filing of the Petition in Civil Case No.
5535 up to its full satisfaction. Virginia M.
Venzon v. Rural Bank of Buenavista, Inc.,
represented by Lourdesita E. Parajes, G.R.
No. 178031, August 28, 2013.
Interest; legal rate of interest; interest at 6%
per annum imposed on award in favor of
illegally dismissed employees. Interest at the
rate of 6% per annum must be imposed on the
award for separation pay, back wages, and
attorneys fees to illegally dismissed
employees in accordance with Circular No.
799, Series of 2013 of the Bangko Sentral ng
Pilipinas which took effect July 1,

2013. Vicente Ang v. Seferino San Joaquin, Jr.,
and Diosdado Fernandez, G.R. No. 185549,
August 7, 2013.
Interest; legal interest; where obligation
constitutes a loan or forbearance of money,
goods or credit; legal rate allowed in
judgments. In the absence of an express
stipulation as to the rate of interest that would
govern the parties, the rate of legal interest for
loans or forbearance of any money, goods or
credits and the rate allowed in judgments shall
no longer be 12% per annum. As reflected in
the case of Eastern Shipping Lines and
Subsection X305.1 of the Manual of
Regulations for Banks and Sections 4305Q.1,
4305S.3 and 4303P.1 of the Manual of
Regulations for Non-Bank Financial
Institutions, before its amendment by BSP-MB
Circular No. 799, the interest rate will now be
6% per annum effective July 1, 2013. Dario
Nacar v. Gallery Frames and/or Felipe Borde,
Jr., G.R. No. 189871, August 13, 2013.
Interest; Legal interest; prospective
application. It should be noted that the new
rate could only be applied prospectively and
not retroactively. Consequently, the 12% per
annum legal interest shall apply only until June
30, 2013. Come July 1, 2013 the new rate of
6% per annum shall be the prevailing rate of
interest when applicable. Nonetheless, with
regard to those judgments that have become
final and executory prior to July 1, 2013, said
judgments shall not be disturbed and shall
continue to be implemented applying the rate
of interest fixed therein. Dario Nacar v.
Gallery Frames and/or Felipe Borde, Jr., G.R.
No. 189871, August 13, 2013.
Laches; definition. The Court observes that
laches had already set in, thereby precluding
the Andrades from pursuing their claim. Case
law defines laches as the failure to assert a
right for an unreasonable and unexplained
length of time, warranting a presumption that
the party entitled to assert it has either

abandoned or declined to assert it. Bobby Tan
v. Grace Andrade, et al./Grace Andrade, et al.
v. Bobby Tan,G.R. Nos. 171904 & 172017,
August 7, 2013.
Quasi-contracts; solutio indebiti; concept. In a
controversy over payment made after the
foreclosure of the mortgaged property, the
Court held: Since respondent was not entitled
to receive the said amount, as it is deemed
fully paid from the foreclosure of petitioners
property since its bid price at the auction sale
covered all that petitioner owed it by way of
principal, interest, attorneys fees and charges,
it must return the same to petitioner. If
something is received when there is no right to
demand it, and it was unduly delivered through
mistake, the obligation to return it
arises. Virginia M. Venzon v. Rural Bank of
Buenavista, Inc., represented by Lourdesita E.
Parajes, G.R. No. 178031, August 28, 2013.
Sales; double sale involving unregistered land;
Article 1544 of the Civil Code does not apply;
prior sale, even if made through an unnotarized
deed of sale, prevails; registration of second
sale is unavailing as registration does not vest
title; Under Act 3344, registration if
instruments affecting unregistered lands is
without prejudice to a third party with a better
right; actual and prior knowledge of the
first sale makes the subsequent buyers
purchasers in bad faith. Article 1544 of the
Civil Code does not apply to sales involving
unregistered land. Both the trial court and the
CA are, however, wrong in applying Article
1544 of the Civil Code. Both courts seem to
have forgotten that the provision does not
apply to sales involving unregistered land.
Suffice it to state that the issue of the buyers
good or bad faith is relevant only where the
subject of the sale is registered land, and the
purchaser is buying the same from the
registered owner whose title to the land is
clean. In such case, the purchaser who relies
on the clean title of the registered owner is
protected if he is a purchaser in good faith for

value.
The sale to respondent Juanito was executed
on September 2, 1981 via an unnotarized deed
of sale, while the sale to petitioners was made
via a notarized document only on October 17,
1991, or ten years thereafter. Thus, Juanito
who was the first buyer has a better right to the
lot, while the subsequent sale to petitioners is
null and void, because when it was made, the
seller Garcia was no longer the owner of the
lot. Nemo dat quod non habet.
The fact that the sale to Juanito was not
notarized does not alter anything, since the sale
between him and Garcia remains valid
nonetheless. Notarization, or the requirement
of a public document under the Civil Code, is
only for convenience, and not for validity or
enforceability. And because it remained valid
as between Juanito and Garcia, the latter no
longer had the right to sell the lot to
petitioners, for his ownership thereof had
ceased.
Nor can petitioners registration of their
purchase have any effect on Juanitos rights.
The mere registration of a sale in ones favor
does not give him any right over the land if the
vendor was no longer the owner of the land,
having previously sold the same to another
even if the earlier sale was unrecorded. Neither
could it validate the purchase thereof by
petitioners, which is null and void.
Registration does not vest title; it is merely the
evidence of such title. Our land registration
laws do not give the holder any better title than
what he actually has.
Under Act No. 3344, registration of
instruments affecting unregistered lands is
without prejudice to a third party with a better
right. The aforequoted phrase has been held
by the Court to mean that the mere registration
of a sale in ones favor does not give him any
right over the land if the vendor was not
anymore the owner of the land having
previously sold the same to somebody else
even if the earlier sale was unrecorded.

Petitioners defense of prescription, laches and
estoppel are unavailing since their claim is
based on a null and void deed of sale. The fact
that the Muerteguis failed to interpose any
objection to the sale in petitioners favor does
not change anything, nor could it give rise to a
right in their favor; their purchase remains
void and ineffective as far as the Muerteguis
are concerned. Spouses Celemencio C.
Sabitsana, Jr. and Ma. Rosario M. Sabitsana v.
Juanito F. Muertegui, represented by his
attorney-in-fact, Domingo A. Muertegui,
Jr., G.R. No. 181359, August 5, 2013.
Sales; actual and prior knowledge of the first
sale makes the subsequent buyers purchasers
in bad faith. Petitioners actual and prior
knowledge of the first sale to Juanito makes
them purchasers in bad faith. It also appears
that petitioner Atty. Sabitsana was remiss in his
duties as counsel to the Muertegui family.
Instead of advising the Muerteguis to register
their purchase as soon as possible to forestall
any legal complications that accompany
unregistered sales of real property, he did
exactly the opposite: taking advantage of the
situation and the information he gathered from
his inquiries and investigation, he bought the
very same lot and immediately caused the
registration thereof ahead of his clients,
thinking that his purchase and prior
registration would prevail. The Court cannot
tolerate this mercenary attitude. Instead of
protecting his clients interest, Atty. Sabitsana
practically preyed on him. Spouses
Celemencio C. Sabitsana, Jr. and Ma. Rosario
M. Sabitsana v. Juanito F. Muertegui,
represented by his attorney-in-fact, Domingo
A. Muertegui, Jr., G.R. No. 181359, August 5,
2013.
Succession; siblings are heirs of decedent who
died without issue. Since Leon died without
issue, his heirs are his siblings, Romana and
Gregoria, who thus inherited the property in
equal shares. In turn, Romanas and Gregorias
heirs the parties herein became entitled to

the property upon the sisters passing. Under
Article 777 of the Civil Code, the rights to the
succession are transmitted from the moment of
death. Antipolo Ining (deceased), survived by
Manuel Villanueva, Teodora VillanuevaFrancisco, Camilo Francisco, Adolfo
Francisco, Lucimo Francisco, Jr., Milagros
Francisco,Celedonio Francisco, Herminigildo
Francisco; Ramon Tresvalles, Roberto
Tajonera, Natividad Ining-Ibea (deceased)
survived by Edilberto Ibea, Josefa Ibea,
Martha Ibea, Carmen Ibea, Amparo IbeaFernandez, Henry Ruiz, Eugenio Ruiz and
Pastor Ruiz; Dolores Ining-Rimon (deceased)
survived by Jesus Rimon, Cesaria Rimon
Gonzales and Remedios Rimon Cordero; and
Pedro Ining (deceased) survived by Elisa Tan
Ining (wife) and Pedro Ining, Jr. v. Leonardo
R. Vega, substituted by Lourdes Vega,
Restonilo I. Vega, Crispulo M. Vega, Milbuena
Vega-Restituto and Lenard Vega, G.R. No.
174727, August 12, 2013.
Special Laws
Correction of name; adversary proceeding;
impleading and notice to affected and
interested parties; when failure to implead and
notify is cured by publication of notice of
hearing; strict compliance with the Rules of
Court mandated when petition involves
substantial and controversial
alterations.Respondents birth certificate shows
that her full name is Anita Sy, that she is a
Chinese citizen and a legitimate child of Sy
Ton and Sotera Lugsanay. In filing the petition,
however, she seeks the correction of her first
name and surname, her status from
legitimate to illegitimate and her
citizenship from Chinese to Filipino.
Thus, respondent should have impleaded and
notified not only the Local Civil Registrar but
also her parents and siblings as the persons
who have interest and are affected by the
changes or corrections respondent wanted to
make.

The fact that the notice of hearing was
published in a newspaper of general circulation
and notice thereof was served upon the State
will not change the nature of the proceedings
taken. A reading of Sections 4 and 5, Rule 108
of the Rules of Court shows that the Rules
mandate two sets of notices to different
potential oppositors: one given to the persons
named in the petition and another given to
other persons who are not named in the
petition but nonetheless may be considered
interested or affected parties. Summons must,
therefore, be served not for the purpose of
vesting the courts with jurisdiction but to
comply with the requirements of fair play and
due process to afford the person concerned the
opportunity to protect his interest if he so
chooses.
While there may be cases where the Court held
that the failure to implead and notify the
affected or interested parties may be cured by
the publication of the notice of hearing, earnest
efforts were made by petitioners in bringing to
court all possible interested parties. Such
failure was likewise excused where the
interested parties themselves initiated the
corrections proceedings; when there is no
actual or presumptive awareness of the
existence of the interested parties; or when a
party is inadvertently left out.
It is clear from the foregoing discussion that
when a petition for cancellation or correction
of an entry in the civil register involves
substantial and controversial alterations,
including those on citizenship, legitimacy of
paternity or filiation, or legitimacy of
marriage, a strict compliance with the
requirements of Rule 108 ofthe Rules of Court
is mandated. If the entries in the civil register
could be corrected or changed through mere
summary proceedings and not through
appropriate action wherein all parties who may
be affected by the entries are notified or
represented, the door to fraud or other mischief
would be set open, the consequence of which
might be detrimental and far
reaching. Republic of the Philppines v. Dr.

Norma S. Lugsanay Uy, G.R. No. 198010,
August 12, 2013.
Correction of name; Appropriate adversary
proceeding; definition. What is meant by
appropriate adversary proceeding? Blacks
Law Dictionary defines adversary
proceeding as follows:
One having opposing parties; contested, as
distinguished from an ex parte application, one
of which the party seeking relief has given
legal warning to the other party, and afforded
the latter an opportunity to contest it. Excludes
an adoption proceeding. Republic of the
Philppines v. Dr. Norma S. Lugsanay Uy, G.R.
No. 198010, August 12, 2013.
Correction of name; errors in a civil registry
and facts established in an appropriate
adversary proceeding. It has been settled in a
number of cases starting with Republic v.
Valencia that even substantial errors in a civil
registry may be corrected and the true facts
established provided the parties aggrieved by
the error avail themselves of the appropriate
adversary proceeding. The pronouncement of
the Court in that case is illuminating:
It is undoubtedly true that if the subject
matter of a petition is not for the correction of
clerical errors of a harmless and innocuous
nature, but one involving nationality or
citizenship, which is indisputably substantial
as well as controverted, affirmative relief
cannot be granted in a proceeding summary in
nature. However, it is also true that a right in
law may be enforced and a wrong may be
remedied as long as the appropriate remedy is
used. This Court adheres to the principle that
even substantial errors in a civil registry may
be corrected and the true facts established
provided the parties aggrieved by the error
avail themselves of the appropriate adversary
proceeding. Republic of the Philppines v. Dr.
Norma S. Lugsanay Uy, G.R. No. 198010,
August 12, 2013.
Family Relations; Conjugal property;
presumption that all property of the marriage is

presumed to belong to the conjugal
partnership, unless it be proved that it pertains
exclusively to the husband or to the wife; for
presumption to apply, party invoking the same
must preliminarily prove that the property was
indeed acquired during the marriage;
presumption cannot apply where there is no
showing as to when the property alleged to be
conjugal was acquired. Pertinent to the
resolution of this second issue is Article 160 of
the Civil Code which states that [a]ll property
of the marriage is presumed to belong to the
conjugal partnership, unless it be proved that it
pertains exclusively to the husband or to the
wife. For this presumption to apply, the party
invoking the same must, however,
preliminarily prove that the property was
indeed acquired during the marriage. As held
in Go v. Yamane:
x x As a condition sine qua non for the
operation of [Article 160] in favor of the
conjugal partnership, the party who invokes
the presumption must first prove that the
property was acquired during the marriage.
In other words, the presumption in favor of
conjugality does not operate if there is no
showing of when the property alleged to be
conjugal was acquired. Moreover, the
presumption may be rebutted only with strong,
clear, categorical and convincing evidence.
There must be strict proof of the exclusive
ownership of one of the spouses, and the
burden of proof rests upon the party asserting
it.
In this case, there is no evidence to indicate
when the property was acquired by petitioner
Josefina. Thus, we agree with petitioner
Josefinas declaration in the deed of absolute
sale she executed in favor of the respondent
that she was the absolute and sole owner of the
property. Bobby Tan v. Grace Andrade, et
al./Grace Andrade, et al. v. Bobby Tan, G.R.
Nos. 171904 & 172017, August 7, 2013.
Family relations. Under the Family Code,
family relations, which is the primary basis for
succession, exclude relations by
affinity. Antipolo Ining (deceased), survived by

Manuel Villanueva, Teodora VillanuevaFrancisco, Camilo Francisco, Adolfo
Francisco, Lucimo Francisco, Jr., Milagros
Francisco,Celedonio Francisco, Herminigildo
Francisco; Ramon Tresvalles, Roberto
Tajonera, Natividad Ining-Ibea (deceased)
survived by Edilberto Ibea, Josefa Ibea,
Martha Ibea, Carmen Ibea, Amparo IbeaFernandez, Henry Ruiz, Eugenio Ruiz and
Pastor Ruiz; Dolores Ining-Rimon (deceased)
survived by Jesus Rimon, Cesaria Rimon
Gonzales and Remedios Rimon Cordero; and
Pedro Ining (deceased) survived by Elisa Tan
Ining (wife) and Pedro Ining, Jr. v. Leonardo
R. Vega, substituted by Lourdes Vega,
Restonilo I. Vega, Crispulo M. Vega, Milbuena
Vega-Restituto and Lenard Vega, G.R. No.
174727, August 12, 2013.
Land titles; indefeasibility of certificate of title
to public land issued pursuant to a grant or
patent; false statement exception; reversion of
land. The certificate of title issued pursuant to
any grant or patent involving public lands is as
conclusive and indefeasible as any other
certificate of title issued to private lands in the
ordinary or cadastral registration proceedings.
It is not subject to collateral attack. However,
Section 91 of Commonwealth Act No. 141
(The Public Land Act) provides for the
cancellation of the concession, title or permit
granted for any false statement in the
application or omission of facts in the
application.
Once a patent is registered and the
corresponding certificate of title is issued, the
land covered by it ceases to be part of the
public domain and becomes private property,
and the Torrens Title issued pursuant to the
patent becomes indefeasible upon the
expiration of one year from the date of
issuance of such patent. However, as held
in The Director of Lands v. De Luna, et al.,
even after the lapse of one year, the State may
still bring an action under Section 101 of
Commonwealth Act No. 141 for the reversion

to the public domain of land which has been
fraudulently granted to private individuals. The
burden of proof rests on the party who asserts
the affirmative of an issue. Republic of the
Philippines v. Angeles Bellate, and Spouses
Jesus Cabanto and Marieta Juanerio, G.R.
No. 175685, August 7, 2013.
Land titles; Fraud in an application for grant of
title to public land or patent; definition. It was
held onLibudan v. Gil that [t]he fraud must
consist in an intentional omission of facts
required by law to be stated in the application
or a willful statement of a claim against the
truth. It must show some specific acts intended
to deceive and deprive another of his right.
The fraud must be actual and extrinsic, not
merely constructive or intrinsic; the evidence
thereof must be clear, convincing and more
than merely preponderant, because the
proceedings which are assailed as having been
fraudulent are judicial proceedings which by
law, are presumed to have been fair and
regular. Republic of the Philippines v. Angeles
Bellate, and Spouses Jesus Cabanto and
Marieta Juanerio, G.R. No. 175685, August 7,
2013.
Trust receipts; purpose. To emphasize, the
Trust Receipts Law was created to to aid in
financing importers and retail dealers who do
not have sufficient funds or resources to
finance the importation or purchase of
merchandise, and who may not be able to
acquire credit except through utilization, as
collateral, of the merchandise imported or
purchased. Hur Tin Yang v. People of the
2013.
Trust receipts; when not a trust receipts
transaction. Nonetheless, when both parties
enter into an agreement knowing fully well
that the return of the goods subject of the trust
receipt is not possible even without any fault
on the part of the trustee, it is not a trust receipt
transaction penalized under Sec. 13 of PD 115
in relation to Art. 315, par. 1(b) of the RPC, as
the only obligation actually agreed upon by the
parties would be the return of the proceeds of

the sale transaction. This transaction becomes
a mere loan, where the borrower is obligated to
pay the bank the amount spent for the purchase
of the goods. Hur Tin Yang v. People of the
2013.
July 2013 rulings of the Supreme Court of the
Philippines in civil law:
Civil Code
Agency; apparent authority of an agent based
on estoppel; concept. In Woodchild Holdings,
Inc. v. Roxas Electric and Construction
Company, Inc. the Court stated that persons
dealing with an assumed agency, whether the
assumed agency be a general or special one,
are bound at their peril, if they would hold the
principal liable, to ascertain not only the fact
of agency but also the nature and extent of
authority, and in case either is controverted,
the burden of proof is upon them to establish
it. In other words, when the petitioner relied
only on the words of respondent Alejandro
without securing a copy of the SPA in favor of
the latter, the petitioner is bound by the risk
accompanying such trust on the mere
assurance of Alejandro.
The same Woodchild case stressed that
apparent authority based on estoppel can arise
from the principal who knowingly permit the
agent to hold himself out with authority and
from the principal who clothe the agent
with indicia of authority that would lead a
reasonably prudent person to believe that he
actually has such authority. Apparent authority
of an agent arises only from acts or conduct
on the part of the principal and such acts or
conduct of the principal must have been
known and relied upon in good faith and as a
result of the exercise of reasonable prudence
by a third person as claimant and such must
have produced a change of position to its
detriment. In the instant case, the sale to the
Spouses Lajarca and other transactions where
Alejandro allegedly represented a considerable
majority of the co-owners transpired after the

sale to the petitioner; thus, the petitioner
cannot rely upon these acts or conduct to
believe that Alejandro had the same authority
to negotiate for the sale of the subject property
to him. Reman Recio v. Heirs of Spouses
Aguego and Maria Altamirano,G.R.
No.182349, July 24, 2013.
Agency; definition under the Civil Code; form
of contract. Article 1868 of the Civil Code
defines a contract of agency as a contract
whereby a person binds himself to render
some service or to do something in
representation or on behalf of another, with the
consent or authority of the latter. It may be
express, or implied from the acts of the
principal, from his silence or lack of action, or
his failure to repudiate the agency, knowing
that another person is acting on his behalf
without authority.
As a general rule, a contract of agency may be
oral.
However, it must be written when the law
requires a specific form. Specifically, Article
1874 of the Civil Code provides that the
contract of agency must be written for the
validity of the sale of a piece of land or any
interest therein. Otherwise, the sale shall be
void. A related provision, Article 1878 of the
Civil Code, states that special powers of
attorney are necessary to convey real rights
over immovable properties. Sally Yoshizaki v.
Joy Training Center of Aurora, Inc., G.R. No.
174978, July 31, 2013.
Agency; general power of attorney; an agency
couched in general terms comprises only acts
of administration. The certification is a mere
general power of attorney which comprises all
of Joy Trainings business. Article 1877 of the
Civil Code clearly states that [a]n agency
couched in general terms comprises only acts
of administration, even if the principal
should state that he withholds no power or
that the agent may execute such acts as he
may consider appropriate, or even though
the agency should authorize a general and
unlimited management. Sally Yoshizaki v.
Joy Training Center of Aurora, Inc., G.R. No.

174978, July 31, 2013.
Agency; sale of property by a supposed agent
is unenforceable if there is really no agency to
sell such property; persons dealing with an
agent must ascertain not only the fact of
agency, but also the nature and extent of the
agents authority. Necessarily, the absence of a
contract of agency renders the contract of sale
unenforceable; Joy Training effectively did not
enter into a valid contract of sale with the
spouses Yoshizaki. Sally cannot also claim that
she was a buyer in good faith. She
misapprehended the rule that persons dealing
with a registered land have the legal right to
rely on the face of the title and to dispense
with the need to inquire further, except when
the party concerned has actual knowledge of
facts and circumstances that would impel a
reasonably cautious man to make such inquiry.
This rule applies when the ownership of a
parcel of land is disputed and not when the fact
of agency is contested. Sally Yoshizaki v. Joy
Training Center of Aurora, Inc., G.R. No.
174978, July 31, 2013.
Agency; special power of attorney; must
express the powers of the agent in clear and
unmistakable language; when there is any
reasonable doubt that the language so used
conveys such power, no such construction
shall be given the document. We
unequivocably declared in Cosmic Lumber
Corporation v. Court of Appeals that a special
power of attorney must express the powers of
the agent in clear and unmistakable
language for the principal to confer the right
upon an agent to sell real estate. When there is
any reasonable doubt that the language so used
conveys such power, no such construction
shall be given the document. The purpose of
the law in requiring a special power of attorney
in the disposition of immovable property is to
protect the interest of an unsuspecting owner
from being prejudiced by the unwarranted act
of another and to caution the buyer to assure

himself of the specific authorization of the
putative agent. Sally Yoshizaki v. Joy Training
Center of Aurora, Inc., G.R. No. 174978, July
31, 2013.
Agency; special power of attorney for sale of
property; must expressly mention a sale or
include a sale as a necessary ingredient of the
authorized act. The special power of attorney
mandated by law must be one that expressly
mentions a sale or that includes a sale as a
necessary ingredient of the authorized
act. We unequivocably declared in Cosmic
Lumber Corporation v. Court of Appeals that a
special power of attorney must express the
powers of the agent in clear and
unmistakable languagefor the principal to
confer the right upon an agent to sell real
estate. When there is any reasonable doubt that
the language so used conveys such power, no
such construction shall be given the document.
The purpose of the law in requiring a special
power of attorney in the disposition of
immovable property is to protect the interest of
an unsuspecting owner from being prejudiced
by the unwarranted act of another and to
caution the buyer to assure himself of the
specific authorization of the putative
agent. Sally Yoshizaki v. Joy Training Center
of Aurora, Inc., G.R. No. 174978, July 31,
2013.
Agency; special power of attorney; required
for an agent to sell an immovable property;
authority must be in writing, otherwise sale is
void. In Alcantara v. Nido, the Court
emphasized the requirement of an SPA before
an agent may sell an immovable property. In
the said case, Revelen was the owner of the
subject land. Her mother, respondent Brigida
Nido accepted the petitioners offer to buy
Revelens land at Two Hundred Pesos
(P200.00) per sq m. However, Nido was only
authorized verbally by Revelen. Thus, the
Court declared the sale of the said land null
and void under Articles 1874 and 1878 of the
Civil Code. Reman Recio v. Heirs of Spouses
Aguego and Maria Altamirano, G.R.
No.182349, July 24, 2013.

Arrastre operator; functions; duty to take good
care of goods and to turn them over to the
party entitled to their possession. The
functions of an arrastre operator involve the
handling of cargo deposited on the wharf or
between the establishment of the consignee or
shipper and the ships tackle. Being the
custodian of the goods discharged from a
vessel, an arrastre operators duty is to take
good care of the goods and to turn them over
to the party entitled to their possession.
Handling cargo is mainly the arrastre
operators principal work so its
drivers/operators or employees should observe
the standards and measures necessary to
prevent losses and damage to shipments under
its custody. Asian Terminals, Inc. v. Philam
Insurance Co., Inc. (now Chartis Philippines
Insurance Inc.)/ Philam Insurance Co., Inc.
(now Chartis Philippines Insurance Inc.) v.
Westwind Shipping Corporation and Asian
Terminals, Inc./ Westwind Shipping
Corporation v. Philam Insurance Co., Inc. and
Asian Terminals, Inc., G.R. Nos.
181163/181262/181319, July 24, 2013.
Attorneys fees; dual concept. In order to
resolve the issues in this case, it is necessary to
discuss the two concepts of attorneys fees
ordinary and extraordinary. In its ordinary
sense, it is the reasonable compensation paid to
a lawyer by his client for legal services
rendered. In its extraordinary concept, it is
awarded by the court to the successful litigant
to be paid by the losing party as indemnity for
damages. Francisco L. Rosario, Jr. v. Lellani
De Guzman, Arleen De Guzman, et al., G.R.
No. 191247, July 10, 2013.
Attorneys fees for professional services
rendered; may be claimed in the very action
itself or in a separate action; prescription for
oral contract of attorneys fees is 6 years;
concept of quantum meruit; guidelines under
the Code of Professional Responsibility. The
Court now addresses two important questions:

(1) How can attorneys fees for professional
services be recovered? (2) When can an action
for attorneys fees for professional services be
filed? The case of Traders Royal Bank
Employees Union-Independent v. NLRC is
instructive:
As an adjunctive episode of the action for the
recovery of bonus differentials in NLRC-NCR
Certified Case No. 0466, private respondents
present claim for attorneys fees may be filed
before the NLRC even though or, better stated,
especially after its earlier decision had been
reviewed and partially affirmed. It is well
settled that a claim for attorneys fees may be
asserted either in the very action in which the
services of a lawyer had been rendered or in a
separate action.
With respect to the first situation, the remedy
for recovering attorneys fees as an incident of
the main action may be availed of only when
something is due to the client. Attorneys fees
cannot be determined until after the main
litigation has been decided and the subject of
the recovery is at the disposition of the court.
The issue over attorneys fees only arises when
something has been recovered from which the
fee is to be paid. While a claim for attorneys
fees may be filed before the judgment is
rendered, the determination as to the propriety
of the fees or as to the amount thereof will
have to be held in abeyance until the main case
from which the lawyers claim for attorneys
fees may arise has become final. Otherwise,
the determination to be made by the courts will
be premature. Of course, a petition for
attorneys fees may be filed before the
judgment in favor of the client is satisfied or
the proceeds thereof delivered to the client.
It is apparent from the foregoing discussion
that a lawyer has two options as to when to file
his claim for professional fees. Hence, private
respondent was well within his rights when he
made his claim and waited for the finality of
the judgment for holiday pay differential,
instead of filing it ahead of the awards
complete resolution. To declare that a lawyer
may file a claim for fees in the same action

only before the judgment is reviewed by a
higher tribunal would deprive him of his
aforestated options and render ineffective the
foregoing pronouncements of this Court.
In this case, petitioner opted to file his claim as
an incident in the main action, which is
permitted by the rules. As to the timeliness of
the filing, this Court holds that the questioned
motion to determine attorneys fees was
seasonably filed.
The records show that the August 8, 1994 RTC
decision became final and executory on
October 31, 2007. There is no dispute that
petitioner filed his Motion to Determine
Attorneys Fees on September 8, 2009, which
was only about one (1) year and eleven (11)
months from the finality of the RTC decision.
Because petitioner claims to have had an oral
contract of attorneys fees with the deceased
spouses, Article 1145 of the Civil Code16
allows him a period of six (6) years within
which to file an action to recover professional
fees for services rendered. Respondents never
asserted or provided any evidence that Spouses
de Guzman refused petitioners legal
representation. For this reason, petitioners
cause of action began to run only from the
time the respondents refused to pay him his
attorneys fees, as similarly held in the case of
Anido v. Negado.
With respect to petitioners entitlement to the
claimed attorneys fees, it is the Courts
considered view that he is deserving of it and
that the amount should be based on quantum
meruit. Quantum meruit literally meaning as
much as he deserves is used as basis for
determining an attorneys professional fees in
the absence of an express agreement. The
recovery of attorneys fees on the basis of
quantum meruit is a device that prevents an
unscrupulous client from running away with
the fruits of the legal services of counsel
without paying for it and also avoids unjust
enrichment on the part of the attorney himself.
An attorney must show that he is entitled to

reasonable compensation for the effort in
pursuing the clients cause, taking into account
certain factors in fixing the amount of legal
fees.
Rule 20.01 of the Code of Professional
Responsibility lists the guidelines for
determining the proper amount of attorney
fees, to wit:
Rule 20.1 A lawyer shall be guided by the
following factors in determining his fees:
a) The time spent and the extent of the services
rendered or required;
b) The novelty and difficulty of the questions
involved;
c) The importance of the subject matter;
d) The skill demanded;
e) The probability of losing other employment
as a result of acceptance of the proffered case;
f) The customary charges for similar services
and the schedule of fees of the IBP chapter to
which he belongs;
g) The amount involved in the controversy and
the benefits resulting to the client from the
service;
h) The contingency or certainty of
compensation;
i) The character of the employment, whether
occasional or established; and
j) The professional standing of the lawyer.
Francisco L. Rosario, Jr. v. Lellani De
Guzman, Arleen De Guzman, et al., G.R. No.
191247, July 10, 2013.
Attorneys fees; recoverable in actions for
indemnity under workmens compensation and
employers liability laws. However, the Court
finds that the petitioner is entitled to attorneys
fees pursuant to Article 2208(8) of the Civil
Code which states that the award of attorneys
fees is justified in actions for indemnity under
workmens compensation and employers
liability laws. Camilo A. Esguerra v. United
Philippines Lines, Inc., et al., G.R. No.
199932, July 3, 2013.
Attorneys fees; when recoverable. The Court
of Appeals rightfully upheld the NLRCs
affirmance of the grant of attorneys fees to
San Miguel. Thereby, the NLRC did not

commit any grave abuse of its discretion,
considering that San Miguel had been
compelled to litigate and to incur expenses to
protect his rights and interest. In Producers
Bank of the Philippines v. Court of Appeals,
the Court ruled that attorneys fees could be
awarded to a party whom an unjustified act of
the other party compelled to litigate or to incur
expenses to protect his interest. It was plain
that petitioners refusal to reinstate San Miguel
with backwages and other benefits to which he
had been legally entitled was unjustified,
thereby entitling him to recover attorneys
fees. Zuellig Freight and Cargo Systems v.
National Labor Relations Commission, et
al., G.R. No. 157900, July 22, 2013
Attorneys fees; when recoverable. With
respect to the award of attorneys fees, Article
2208 of the Civil Code provides, among
others, that such fees may be recovered when
exemplary damages are awarded, when the
defendants act or omission has compelled the
plaintiff to litigate with third persons or to
incur expenses to protect his interest, and
where the defendant acted in gross and evident
bad faith in refusing to satisfy the plaintiffs
plainly valid, just and demandable
claim. Joyce V. Ardiente v. Spouses Javier and
Ma. Theresa Pastofide, G.R. No. 161921, July
17, 2013.
Common carriers; extraordinary diligence in
vigilance of goods transported; cargoes while
being unloaded generally remain under the
custody of the carrier. Common carriers, from
the nature of their business and for reasons of
public policy, are bound to observe
extraordinary diligence in the vigilance over
the goods transported by them. Subject to
certain exceptions enumerated under Article
1734 of the Civil Code, common carriers are
responsible for the loss, destruction, or
deterioration of the goods. The extraordinary
responsibility of the common carrier lasts from
the time the goods are unconditionally placed
in the possession of, and received by the

carrier for transportation until the same are
delivered, actually or constructively, by the
carrier to the consignee, or to the person who
has a right to receive them. Asian Terminals,
Inc. v. Philam Insurance Co., Inc. (now
Chartis Philippines Insurance Inc.)/ Philam
Insurance Inc.) v. Westwind Shipping
Corporation and Asian Terminals, Inc./
Westwind Shipping Corporation v. Philam
Insurance Co., Inc. and Asian Terminals,
Inc., G.R. Nos. 181163/181262/181319, July
24, 2013.
Contract; absolutely simulated contracts; void
from the beginning. The Court is in accord
with the observation and findings of the (RTC,
Kalibo, Aklan) thus:
The amplitude of foregoing undisputed facts
and circumstances clearly shows that the sale
of the land in question was purely simulated. It
is void from the very beginning (Article 1346,
New Civil Code). If the sale was legitimate,
defendant Glenda should have immediately
taken possession of the land, declared in her
name for taxation purposes, registered the sale,
paid realty taxes, introduced improvements
therein and should not have allowed plaintiff
to mortgage the land. These omissions
properly militated against defendant Glendas
submission that the sale was legitimate and the
consideration was paid.
Dr. Lorna C. Formaran v. Dr. Glenda B. Ong
and Solomon S. Ong, G.R. No. 186264, July 8,
2013.
Contract of sale; elements. A valid contract of
sale requires: (a) a meeting of minds of the
parties to transfer ownership of the thing sold
in exchange for a price; (b) the subject matter,
which must be a possible thing; and (c) the
price certain in money or its
equivalent. Reman Recio v. Heirs of Spouses
Aguego and Maria Altamirano, G.R.
No.182349, July 24, 2013.
Contract to sell; payment of the price; positive
suspension condition; effect of failure to pay.
Clearly, the RTC arrived at the above-quoted
conclusion based on its mistaken premise that

rescission is applicable to the case. Hence, its
determination of whether there was substantial
breach. As may be recalled, however, the CA,
in its assailed Decision, found the contract
between the parties as a contract to sell,
specifically of a real property on installment
basis, and as such categorically declared
rescission to be not the proper remedy. This is
considering that in a contract to sell, payment
of the price is a positive suspensive condition,
failure of which is not a breach of contract
warranting rescission under Article 1191 of the
Civil Code but rather just an event that
prevents the supposed seller from being bound
to convey title to the supposed buyer. Also, and
as correctly ruled by the CA, Article 1191
cannot be applied to sales of real property on
installment since they are governed by the
Maceda Law.
There being no breach to speak of in case of
non-payment of the purchase price in a
contract to sell, as in this case, the RTCs
factual finding that Lourdes was willing and
able to pay her obligation a conclusion
arrived at in connection with the said courts
determination of whether the non-payment of
the purchase price in accordance with the
terms of the contract was a substantial breach
warranting rescission therefore loses
significance. The spouses Bonrostros reliance
on the said factual finding is thus misplaced.
They cannot invoke their readiness and
willingness to pay their obligation on
November 24, 1993 as an excuse from being
made liable for interest beyond the said
date. Sps. Nameal and Lourdes Bonrostro v.
Sps. Juan and Constacia Luna, G.R.
No.172346, July 24, 2013.
Damages; damages for loss of earning
capacity; must be duly proven by documentary
evidence; exceptions. The Supreme Court
agrees with the Court of Appeals when it
removed the RTCs award respecting the
indemnity for the loss of earning capacity. As
it has already previously ruled that damages

for loss of earning capacity is in the nature of
actual damages, which as a rule must be duly
proven by documentary evidence, not merely
by the self-serving testimony of the widow.
By way of exception, damages for loss of
earning capacity may be awarded despite the
absence of documentary evidence when (1) the
deceased is self-employed earning less than the
minimum wage under current labor laws, and
judicial notice may be taken of the fact that in
the deceaseds line of work no documentary
evidence is available; or (2) the deceased is
employed as a daily wage worker earning less
than the minimum wage under current labor
laws. People of the Philippines v. Garry
Vergara y Oriel and Joseph Incencio y
Paulino, G.R. No. 177763, July 3, 2013
Damages; exemplary damages; concept. As for
exemplary damages, Article 2229 provides that
exemplary damages may be imposed by way
of example or correction for the public good.
Nonetheless, exemplary damages are imposed
not to enrich one party or impoverish another,
but to serve as a deterrent against or as a
negative incentive to curb socially deleterious
actions. In the instant case, the Court agrees
with the CA in sustaining the award of
exemplary damages, although it reduced the
amount granted, considering that respondent
spouses were deprived of their water supply
for more than nine (9) months, and such
deprivation would have continued were it not
for the relief granted by the RTC. Joyce V.
Ardiente v. Spouses Javier and Ma. Theresa
Pastofide, G.R. No. 161921, July 17, 2013.
Damages; exemplary damages; awarded if
there is an aggravating circumstance, whether
ordinary or qualifying. Unlike the criminal
liability which is basically a State concern, the
award of exemplary damages, however, is
likewise, if not primarily, intended for the
offended party who suffers thereby. It would
make little sense for an award of exemplary
damages to be due the private offended party
when the aggravating circumstance is ordinary
but to be withheld when it is qualifying.
Withal, the ordinary or qualifying nature of an

aggravating circumstance is a distinction that
should only be of consequence to the criminal,
rather than to the civil, liability of the offender.
In fine, relative to the civil aspect of the case,
an aggravating circumstance, whether ordinary
or qualifying, should entitle the offended party
to an award of exemplary damages within the
unbridled meaning of Article 2230 of theCivil
Code. People of the Philippines v. Garry
Vergara y Oriel and Joseph Incencio y
Paulino, G.R. No. 177763, July 3, 2013.
Damages; interest thereon; where obligation
does not constitute a loan or forbearance of
money. The CA erred in imposing an interest
rate of 12% on the award of damages. Under
Article 2209 of the Civil Code, when an
obligation not constituting a loan or
forbearance of money is breached, an interest
on the amount of damages awarded may be
imposed at the discretion of the court at the
rate of 6% per annum. In the similar case of
Belgian Overseas Chartering and Shipping NV
v. Philippine First Insurance Co., lnc., the
Court reduced the rate of interest on the
damages awarded to the carrier therein to 6%
from the time of the filing of the complaint
until the finality of the decision. Asian
Terminals, Inc. v. Philam Insurance Co., Inc.
(now Chartis Philippines Insurance Inc.)/
Philam Insurance Co., Inc. (now Chartis
Philippines Insurance Inc.) v. Westwind
Shipping Corporation and Asian Terminals,
Inc./ Westwind Shipping Corporation v.
Philam Insurance Co., Inc. and Asian
Terminals, Inc., G.R. Nos.
181163/181262/181319, July 24, 2013.
Damages; moral damages; when
recoverable. In Philippine National Bank v.
Spouses Rocamora, the Supreme Court said
that:
Moral damages are not recoverable simply
because a contract has been breached. They are
recoverable only if the defendant acted
fraudulently or in bad faith or in wanton
disregard of his contractual obligations. The

breach must be wanton, reckless, malicious or
in bad faith, and oppressive or abusive.
Likewise, a breach of contract may give rise to
exemplary damages only if the guilty party
acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner.
Carlos Lim, et al. v. Development Bank of the
Philippines, G.R. No. 177050, July 1, 2013.
Damages; moral damages; awarded where the
victim of a crime suffered a violent death, even
in the absence of proof of mental and
emotional suffering of the victims heirs. The
Supreme Court sustained the RTCs award for
moral damages in the amount of P50,000.00
even in the absence of proof of mental and
emotional suffering of the victims heirs. As
borne out by human nature and experience, a
violent death invariably and necessarily brings
about emotional pain and anguish on the part
of the victims family. While no amount of
damages may totally compensate the sudden
and tragic loss of a loved one it is nonetheless
awarded to the heirs of the deceased to at least
assuage them. People of the Philippines v.
Garry Vergara y Oriel and Joseph Incencio y
Paulino, G.R. No. 177763, July 3, 2013
Damages; moral and exemplary damages in
claims for disability benefits; not recoverable
where employer was not negligent in affording
the employee with medical treatment, and
employer did not forsake employee during the
period of disability. The CA correctly denied
an award of moral and exemplary damages.
The respondents were not negligent in
affording the petitioner with medical treatment
neither did they forsake him during his period
of disability. Camilo A. Esguerra v. United
Philippines Lines, Inc., et al., G.R. No.
199932, July 3, 2013.
Human Relations; abuse of rights; Article 19
of the Civil Code; concept; damages as reliefs.
The principle of abuse of rights as enshrined in
Article 19 of the Civil Code provides that
every person must, in the exercise of his rights
and in the performance of his duties, act with
justice, give everyone his due, and observe

honesty and good faith.
In this regard, the Courts ruling in Yuchengco
v. The Manila Chronicle Publishing
Corporation is instructive, to wit:
xxxx
This provision of law sets standards which
must be observed in the exercise of ones
rights as well as in the performance of its
duties, to wit: to act with justice; give
everyone his due; and observe honesty and
good faith.
In Globe Mackay Cable and Radio
Corporation v. Court of Appeals, it was
elucidated that while Article 19 lays down a
rule of conduct for the government of human
relations and for the maintenance of social
order, it does not provide a remedy for its
violation. Generally, an action for damages
under either Article 20 or Article 21 would be
proper. The Court said:
One of the more notable innovations of the
New Civil Code is the codification of some
basic principles that are to be observed for the
rightful relationship between human beings
and for the stability of the social order.
[REPORT ON THE CODE COMMISSION
ON THE PROPOSED CIVIL CODE OF THE
PHILIPPINES, p. 39]. The framers of the
Code, seeking to remedy the defect of the old
Code which merely stated the effects of the
law, but failed to draw out its spirit,
incorporated certain fundamental precepts
which were designed to indicate certain
norms that spring from the fountain of good
conscience and which were also meant to
serve as guides for human conduct [that]
should run as golden threads through society,
to the end that law may approach its supreme
ideal, which is the sway and dominance of
justice. (Id.) Foremost among these principles
is that pronounced in Article 19 x x x.
xxxx
This article, known to contain what is
commonly referred to as the principle of abuse
of rights, sets certain standards which must be

observed not only in the exercise of ones
rights, but also in the performance of ones
duties. These standards are the following: to
act with justice; to give everyone his due; and
to observe honesty and good faith. The law,
therefore, recognizes a primordial limitation on
all rights; that in their exercise, the norms of
human conduct set forth in Article 19 must be
observed. A right, though by itself legal
because recognized or granted by law as such,
may nevertheless become the source of some
illegality. When a right is exercised in a
manner which does not conform with the
norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby
committed for which the wrongdoer must be
held responsible. But while Article 19 lays
down a rule of conduct for the government of
human relations and for the maintenance of
social order, it does not provide a remedy for
its violation. Generally, an action for damages
under either Article 20 or Article 21 would be
proper. Joyce V. Ardiente v. Spouses Javier and
Ma. Theresa Pastofide, G.R. No. 161921, July
17, 2013.
Human Relations; civil case for fraud; Article
33 of the Civil Code provides that a civil case
for damages based on fraud may proceed
independently of the criminal case therefor;
said civil case will not operate as a prejudicial
question that will justify the suspension of a
criminal case. It is well settled that a civil
action based on defamation, fraud and physical
injuries may be independently instituted
pursuant to Article 33 of the Civil Code, and
does not operate as a prejudicial question that
will justify the suspension of a criminal case.
This was precisely the Courts thrust in G.R.
No. 148193, thus:
Moreover, neither is there a prejudicial
question if the civil and the criminal action
can, according to law, proceed independently
of each other. Under Rule 111, Section 3 of the
Revised Rules on Criminal Procedure, in the
cases provided in Articles 32, 33, 34 and 2176
of the Civil Code, the independent civil action
may be brought by the offended party. It shall

proceed independently of the criminal action
and shall require only a preponderance of
evidence. In no case, however, may the
offended party recover damages twice for the
same act or omission charged in the criminal
action.
In the instant case, Civil Case No. 99-95381,
for Damages and Attachment on account of the
alleged fraud committed by respondent and his
mother in selling the disputed lot to PBI is an
independent civil action under Article 33 of the
Civil Code. As such, it will not operate as a
prejudicial question that will justify the
suspension of the criminal case at bar. Rafael
Jose Consing, Jr. v. People of the
Philippines,G.R. No. 161075, July 15, 2013.
Letter of credit; definition; nature. A letter of
credit is a financial device developed by
merchants as a convenient and relatively safe
mode of dealing with sales of goods to satisfy
the seemingly irreconcilable interests of a
seller, who refuses to part with his goods
before he is paid, and a buyer, who wants to
have control of his goods before paying.
However, letters of credit are employed by the
parties desiring to enter into commercial
transactions, not for the benefit of the issuing
bank but mainly for the benefit of the parties to
the original transaction, in these cases,
Nichimen Corporation as the seller and
Universal Motors as the buyer. Hence, the
latter, as the buyer of the Nissan CKD parts,
should be regarded as the person entitled to
delivery of the goods. Accordingly, for
purposes of reckoning when notice of loss or
damage should be given to the carrier or its
agent, the date of delivery to Universal Motors
is controlling. Asian Terminals, Inc. v. Philam
Insurance Inc.)/ Philam Insurance Co., Inc.
(now Chartis Philippines Insurance Inc.) v.
Westwind Shipping Corporation and Asian
Terminals, Inc./ Westwind Shipping

181163/181262/181319, July 24, 2013.
Mortgage; includes all natural or civil fruits
and improvements found on the mortgaged
property when the secured obligation becomes
due; in case of non-payment of the secured
debt, foreclosure proceedings shall cover not
only the hypothecated property but all its
accessions and accessories as well;
indispensable requisite that mortgagor be the
absolute owner of the encumbered
property. Rent, as an accessory, follows the
principal. In fact, when the principal property
is mortgaged, the mortgage shall include all
natural or civil fruits and improvements found
thereon when the secured obligation becomes
due as provided in Article 2127 of the Civil
Code, viz:
Art. 2127. The mortgage extends to the natural
accessions, to the improvements, growing
fruits, and the rents or income not yet received
when the obligation becomes due, and to the
amount of the indemnity granted or owing to
the proprietor from the insurers of the property
mortgaged, or in virtue of expropriation for
public use, with the declarations,
amplifications and limitations established by
law, whether the estate remains in the
possession of the mortgagor, or it passes into
the hands of a third person.
Consequently, in case of non-payment of the
secured debt, foreclosure proceedings shall
cover not only the hypothecated property but
all its accessions and accessories as well. This
was illustrated in the early case of Cu Unjieng
e Hijos v. Mabalacat Sugar Co. where the
Court held:
That a mortgage constituted on a sugar central
includes not only the land on which it is built
but also the buildings, machinery, and
accessories installed at the time the mortgage
was constituted as well as the buildings,
machinery and accessories belonging to the
mortgagor, installed after the constitution
thereof x x x [.]
Applying such pronouncement in the

subsequent case of Spouses Paderes v. Court
of Appeals, the Court declared that the
improvements constructed by the mortgagor
on the subject lot are covered by the real estate
mortgage contract with the mortgagee bank
and thus included in the foreclosure
proceedings instituted by the latter.
However, the rule is not without qualifications.
In Castro, Jr. v. CA the Court explained that
Article 2127 is predicated on the presumption
that the ownership of accessions and
accessories also belongs to the mortgagor as
the owner of the principal. After all, it is an
indispensable requisite of a valid real estate
mortgage that the mortgagor be the absolute
owner of the encumbered property. Philippine
National Bank v. Sps. Bernard and Cresencia
Maraon, G.R.No. 189316, July 1, 2013.
Mortgage; mortgagee in good faith; right to
have mortgage lien carried over and annotated
on the new certificate of title. The protection
afforded to PNB as a mortgagee in good faith
refers to the right to have its mortgage lien
carried over and annotated on the new
certificate of title issued to Spouses Maraon
as so adjudged by the RTC. Thereafter, to
enforce such lien thru foreclosure proceedings
in case of non- payment of the secured debt, as
PNB did so pursue. The principle, however, is
not the singular rule that governs real estate
mortgages and foreclosures attended by
fraudulent transfers to the
mortgagor. Philippine National Bank v. Sps.
Bernard and Cresencia Maraon, G.R.No.
189316, July 1, 2013.
Obligations; conditions; fulfillment thereof;
deemed fulfilled when obligor voluntarily
prevents it fulfillment; requisites. The spouses
Bonrostro want to be relieved from paying
interest on the amount of P214,492.62 which
the spouses Luna paid to Bliss as amortizations
by asserting that they were prevented by the
latter from fulfilling such obligation. They
invoke Art. 1186 of the Civil Code which
provides that the condition shall be deemed

fulfilled when the obligor voluntarily prevents
its fulfillment.
However, the Court finds Art. 1186
inapplicable to this case. The said provision
explicitly speaks of a situation where it is the
obligor who voluntarily prevents fulfillment of
the condition. Here, Constancia is not the
obligor but the obligee. Moreover, even if this
significant detail is to be ignored, the mere
intention to prevent the happening of the
condition or the mere placing of ineffective
obstacles to its compliance, without actually
preventing fulfillment is not sufficient for the
application of Art. 1186. Two requisites must
concur for its application, to wit: (1) intent to
prevent fulfillment of the condition; and, (2)
actual prevention of compliance. Sps. Nameal
and Lourdes Bonrostro v. Sps. Juan and
Constacia Luna,G.R. No.172346, July 24,
2013.
Obligations; constructive fulfillment; Article
1186 of the Civil Code; requisites. As aptly
pointed out by the CA, Article 1186 of the
Civil Code, which states that the condition
shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment, does not
apply in this case, viz:
Article 1186 enunciates the doctrine of
constructive fulfillment of suspensive
conditions, which applies when the following
three (3) requisites concur, viz: (1) The
condition is suspensive; (2) The obligor
actually prevents the fulfillment of the
condition; and (3) He acts voluntarily.
Suspensive condition is one the happening of
which gives rise to the obligation. It will be
irrational for any Bank to provide a suspensive
condition in the Promissory Note or the
Restructuring Agreement that will allow the
debtor-promissor to be freed from the duty to
pay the loan without paying it.
Carlos Lim, et al. v. Development Bank of the
Obligations; if an obligation consists of
payment of money, and the debtor incurs in
delay, the indemnity for damages, there being

no stipulation to the contrary, shall be the
payment of the interest agreed upon, and in the
absence of stipulation, the legal interest. Under
Article 2209 ofthe Civil Code, [i]fthe
obligation consists in the payment of a sum of
money, and the debtor incurs in delay, the
indemnity for damages, there being no
stipulation to the contrary, shall be the
payment of the interest agreed upon, and in
the absence of stipulation, the legal interest x x
x. There being no stipulation on interest in
case ofdelay in the payment ofamortization,
the CA thus correctly imposed interest at the
legal rate which is now 12%per annum. Sps.
Nameal and Lourdes Bonrostro v. Sps. Juan
and Constacia Luna, G.R. No.172346, July 24,
2013.
Penalties and interest rates; penalties and
interest rates should be expressly stipulated in
writing. As to the imposition of additional
interest and penalties not stipulated in the
Promissory Notes, this should not be allowed.
Article 1956 of the Civil Code specifically
states that no interest shall be due unless it
has been expressly stipulated in writing.
Thus, the payment of interest and penalties in
loans is allowed only if the parties agreed to it
and reduced their agreement in writing. Carlos
Lim, et al. v. Development Bank of the
Prescription; Article 1144 of the Civil
Code. We concur with the CAs ruling that
respondents action did not yet prescribe. The
legal provision governing this case was not
Article 1146 of the Civil Code, but Article
1144 of the Civil Code, which states:
Article 1144. The following actions must be
brought within ten years from the time the
cause of action accrues:
(1)Upon a written contract; (2) Upon an
obligation created by law; (3)Upon a
judgment.
Vector Shipping Corporation, et al. v.
American Home Assurance Co., et al., G.R.
No. 159213, July 3, 2013.

Property; co-ownership; sale of co-owned
property; if only one co-owner agreed to the
sale, said co-owner only sold his aliquot share
in the subject property. But as held by the
appellate court, the sale between the petitioner
and Alejandro is valid insofar as
the aliquot share of respondent Alejandro is
concerned. Being a co-owner, Alejandro can
validly and legally dispose of his share even
without the consent of all the other co-heirs.
Since the balance of the full price has not yet
been paid, the amount paid shall represent as
payment to his aliquot share. This then leaves
the sale of the lot of the Altamiranos to the
Spouses Lajarca valid only insofar as their
shares are concerned, exclusive of
thealiquot part of Alejandro, as ruled by the
CA. Reman Recio v. Heirs of Spouses Aguego
and Maria Altamirano, G.R. No.182349, July
24, 2013.
Property; patrimonial property and property of
public dominion; patrimonial property of the
State may be the object of prescription,
however, those intended for some public
service or the development of national wealth
are property of public dominion, which are not
susceptible to acquisition by prescription;
public domain lands become patrimonial
property only if there is a declaration that these
are alienable or disposable, together with an
express government manifestation that the
property is already patrimonial or no longer
retained for public service or the development
of national wealth.Under Article 422 of the
Civil Code, public domain lands become
patrimonial property only if there is a
declaration that these are alienable or
disposable, together with an express
government manifestation that the property is
already patrimonial or no longer retained for
public service or the development of national
wealth. Only when the property has become
patrimonial can the prescriptive period for the
acquisition of property of the public dominion
begin to run. Also under Section 14(2) of
Presidential Decree (P.D.) No. 1529, it is
provided that before acquisitive prescription

can commence, the property sought to be
registered must not only be classified as
alienable and disposable, it must also be
expressly declared by the State that it is no
longer intended for public service or the
development of the national wealth, or that the
property has been converted into patrimonial.
Absent such an express declaration by the
State, the land remains to be property of public
dominion. Dream Village Neighborhood
Association, Inc., represented by its Incumbent
President Greg Seriego v. Bases Conversion
Development Authority, G.R. No.192896, July
24, 2013.
Rent; civil fruit; rightful recipient. Rent is a
civil fruit that belongs to the owner of the
property producing it by right of accession.
The rightful recipient of the disputed rent in
this case should thus be the owner of the
subject lot at the time the rent
accrued. Philippine National Bank v. Sps.
Bernard and Cresencia Maraon, G.R.No.
189316, July 1, 2013.
Subrogation; basis; definition. Consistent with
the pertinent law and jurisprudence, therefore,
Exhibit I was already enough by itself to prove
the payment of P7,455,421.00 as the full
settlement of Caltexs claim. The payment
made to Caltex as the insured being thereby
duly documented, respondent became
subrogated as a matter of course pursuant to
Article 2207 of the Civil Code. In legal
contemplation, subrogation is the substitution
of another person in the place of the creditor,
to whose rights he succeeds in relation to the
debt; and is independent of any mere
contractual relations between the parties to be
affected by it, and is broad enough to cover
every instance in which one party is required
to pay a debt for which another is primarily
answerable, and which in equity and
conscience ought to be discharged by the
latter. Vector Shipping Corporation, et al. v.
American Home Assurance Co., et al., G.R.
No. 159213, July 3, 2013.

Subrogation in insurance cases; accrues simply
upon payment by the insurance company of
the insurance claim; payment by the insurer to
the insured operates as an equitable assignment
to the insurer of all remedies that the insured
may have against the third party whose
negligence or wrongful act caused the loss.
The Court holds that petitioner Philam has
adequately established the basis of its claim
against petitioners ATI and Westwind. Philam,
as insurer, was subrogated to the rights of the
consignee, Universal Motors Corporation,
pursuant to the Subrogation Receipt executed
by the latter in favor of the former. The right of
subrogation accrues simply upon payment by
the insurance company of the insurance claim.
Petitioner Philams action finds support in
Article 2207 of the Civil Code, which provides
as follows:
Art. 2207. If the plaintiffs property has been
insured, and he has received indemnity from
the insurance company for the injury or loss
arising out of the wrong or breach of contract
complained of, the insurance company shall be
subrogated to the rights of the insured against
the wrongdoer or the person who has violated
the contract. x x x.
Yet, even with the exclusion of Marine
Certificate No. 708-8006717-4, the
Subrogation Receipt, on its own, is adequate
proof that petitioner Philam paid the
consignees claim on the damaged goods.
Petitioners ATI and Westwind failed to offer
any evidence to controvert the same. In
Malayan Insurance Co., Inc. v. Alberto, the
Court explained the effect of payment by the
insurer of the insurance claim in this wise:
We have held that payment by the insurer to
the insured operates as an equitable assignment
to the insurer of all the remedies that the
insured may have against the third party whose
negligence or wrongful act caused the loss.
The right of subrogation is not dependent
upon, nor does it grow out of, any privity of
contract. It accrues simply upon payment by
the insurance company of the insurance claim.
The doctrine of subrogation has its roots in

equity. It is designed to promote and
accomplish justice; and is the mode that equity
adopts to compel the ultimate payment of a
debt by one who, in justice, equity, and good
conscience, ought to pay. Asian Terminals, Inc.
v. Philam Insurance Co., Inc. (now Chartis
Philippines Insurance Inc.)/ Philam Insurance
Co., Inc. (now Chartis Philippines Insurance
Inc.) v. Westwind Shipping Corporation and
Asian Terminals, Inc./ Westwind Shipping
181163/181262/181319, July 24, 2013.
Tender of payment; concept; tender of
payment, if refused without just cause, will
discharge the debtor only after a valid
consignation with the court; when tender of
payment is not accompanied by the means of
payment, and the debtor did not take any
immediate step to make a consignation, then
interest is not suspended from the time of such
tender. Tender of payment is the
manifestation by the debtor of a desire to
comply with or pay an obligation. If refused
without just cause, the tender of payment will
discharge the debtor of the obligation to pay
but only after a valid consignation of the sum
due shall have been made with the proper
court. Consignation is the deposit of the
[proper amount with a judicial authority] in
accordance with rules prescribed by law, after
the tender of payment has been refused or
because of circumstances which render direct
payment to the creditor impossible or
inadvisable.
Tender of payment, without more, produces
no effect. [T]o have the effect of payment
and the consequent extinguishment of the
obligation to pay, the law requires the
companion acts of tender of payment and
consignation.
As to the effect of tender of payment on
interest, noted civilist Arturo M. Tolentino
explained as follows:

When a tender of payment is made in such a
form that the creditor could have immediately
realized payment if he had accepted the tender,
followed by a prompt attempt of the debtor to
deposit the means of payment in court by way
of consignation, the accrual of interest on the
obligation will be suspended from the date of
such tender. But when the tender of payment
is not accompanied by the means of
payment, and the debtor did not take any
immediate step to make a consignation, then
interest is not suspended from the time of
such tender. x x x x (Emphasis supplied) Sps.
Nameal and Lourdes Bonrostro v. Sps. Juan
and Constacia Luna, G.R. No.172346, July 24,
2013.
Special Laws
Act No. 3135; foreclosure sale; personal notice
to the mortgagor in extrajudicial foreclosure
proceedings is necessary where there is a
stipulation to this effect, and failure to comply
with the stipulated notice requirement is a
contractual breach sufficient to render the
foreclosure sale null and void. It has been
consistently held that unless the parties
stipulate, personal notice to the mortgagor in
extrajudicial foreclosure proceedings is not
necessary because Section 3117 of Act 3135
only requires the posting of the notice of sale
in three public places and the publication of
that notice in a newspaper of general
circulation.
In this case, the parties stipulated in paragraph
11 of the Mortgage that:
11. All correspondence relative to this
mortgage, including demand letters, summons,
subpoenas, or notification of any judicial or
extra-judicial action shall be sent to the
Mortgagor at xxx or at the address that may
hereafter be given in writing by the Mortgagor
or the Mortgagee;
However, no notice of the extrajudicial
foreclosure was sent by DBP to petitioners
about the foreclosure sale scheduled on July
11, 1994. The letters dated January 28, 1994
and March 11, 1994 advising petitioners to
immediately pay their obligation to avoid the

impending foreclosure of their mortgaged
properties are not the notices required in
paragraph 11 of the Mortgage. The failure of
DBP to comply with their contractual
agreement with petitioners, i.e., to send notice,
is a breach sufficient to invalidate the
foreclosure sale. Carlos Lim, et al. v.
Development Bank of the Philippines, G.R.
No. 177050, July 1, 2013.
Bases Conversion Development Authority
(BCDA); BCDA holds title to Fort Bonifacio;
Dream Village sits on the abandoned C-5
Road, which lies outside the areas declared in
Proclamation Nos. 2476 and 172 as alienable
and disposable. That the BCDA has title to
Fort Bonifacio has long been decided with
finality. In Samahan ng Masang Pilipino sa
Makati, Inc. v. BCDA, it was categorically
ruled as follows:
First, it is unequivocal that the Philippine
Government, and now the BCDA, has title and
ownership over Fort Bonifacio. The case
of Acting Registrars of Land Titles and Deeds
of Pasay City, Pasig and Makatiis final and
conclusive on the ownership of the
then Hacienda de Maricaban estate by the
Republic of the Philippines. Clearly, the issue
on the ownership of the subject lands in Fort
Bonifacio is laid to rest. Other than their view
that the USA is still the owner of the subject
lots, petitioner has not put forward any claim
of ownership or interest in them. Dream
Village Neighborhood Association, Inc.,
represented by its Incumbent President Greg
Seriego v. Bases Conversion Development
Authority, G.R. No.192896, July 24, 2013.
Common Carrier; Carriage of Goods by Sea
Act (COGSA); prescriptive period for filing an
action for loss or damage of goods. The
prescriptive period for filing an action for the
loss or damage of the goods under the COGSA
is found in paragraph (6), Section 3, thus:
(6) Unless notice of loss or damage and the
general nature of such loss or damage be given
in writing to the carrier or his agent at the port

of discharge before or at the time of the
removal of the goods into the custody of the
person entitled to delivery thereof under the
contract of carriage, such removal shall be
prima facie evidence of the delivery by the
carrier of the goods as described in the bill of
lading. If the loss or damage is not apparent,
the notice must be given within three days of
the delivery. Said notice of loss or damage
maybe endorsed upon the receipt for the goods
given by the person taking delivery thereof.
The notice in writing need not be given if the
state of the goods has at the time of their
receipt been the subject of joint survey or
inspection.
In any event the carrier and the ship shall be
discharged from all liability in respect of loss
or damage unless suit is brought within one
year after delivery of the goods or the date
when the goods should have been delivered:
Provided, That if a notice of loss or damage,
either apparent or concealed, is not given as
provided for in this section, that fact shall not
affect or prejudice the right of the shipper to
bring suit within one year after the delivery of
the goods or the date when the goods should
have been delivered. Asian Terminals, Inc. v.
181163/181262/181319, July 24, 2013.
Common Carrier; Carriage of Goods by Sea
Act (COGSA); prescriptive period for filing an
action for loss or damage of goods. The
prescriptive period for filing an action for the
loss or damage of the goods under the COGSA
is found in paragraph (6), Section 3, thus:
(6) Unless notice of loss or damage and the
general nature of such loss or damage be given
in writing to the carrier or his agent at the port
of discharge before or at the time of the
removal of the goods into the custody of the
person entitled to delivery thereof under the

contract of carriage, such removal shall be
prima facie evidence of the delivery by the
carrier of the goods as described in the bill of
lading. If the loss or damage is not apparent,
the notice must be given within three days of
the delivery. Said notice of loss or damage
maybe endorsed upon the receipt for the goods
given by the person taking delivery thereof.
The notice in writing need not be given if the
state of the goods has at the time of their
receipt been the subject of joint survey or
inspection.
In any event the carrier and the ship shall be
discharged from all liability in respect of loss
or damage unless suit is brought within one
year after delivery of the goods or the date
when the goods should have been delivered:
Provided, That if a notice of loss or damage,
either apparent or concealed, is not given as
provided for in this section, that fact shall not
affect or prejudice the right of the shipper to
bring suit within one year after the delivery of
the goods or the date when the goods should
have been delivered. Asian Terminals, Inc. v.
181163/181262/181319, July 24, 2013.
Family Code; marriage; void ab initio for lack
of a marriage license; no inconsistency in
finding the marriage null and void ab initio
and, at the same time, non-existent; contracts
which are absolutely simulated or fictitious are
inexistent and void from the beginning. There
is no inconsistency in finding the marriage
between Benjamin and Sally null and void ab
initio and, at the same time, non-existent.
Under Article 35 of the Family Code, a
marriage solemnized without a license, except
those covered by Article 34 where no license is
necessary, shall be void from the beginning.

In this case, the marriage between Benjamin
and Sally was solemnized without a license. It
was duly established that no marriage license
was issued to them and that Marriage License
No. N-07568 did not match the marriage
license numbers issued by the local civil
registrar of Pasig City for the month of
February 1982. The case clearly falls under
Section 3 of Article 3520 which made their
marriage void ab initio.The marriage between
Benjamin and Sally was also non-existent.
Applying the general rules on void or
inexistent contracts under Article 1409 of the
Civil Code, contracts which are absolutely
simulated or fictitious are inexistent and void
from the beginning. Thus, the Court of
Appeals did not err in sustaining the trial
courts ruling that the marriage between
Benjamin and Sally was null and void ab
initio and non-existent. Sally Go-Bangayan v.
Benjamin Bangayan, Jr., G.R. No. 201061,
July 3, 2013.
Family Code; marriage license; certification
from the local civil registrar is adequate to
prove the non-issuance of a marriage license
and, absent any suspicious circumstance, the
certification enjoys probative value. The
certification from the local civil registrar is
adequate to prove the non-issuance of a
marriage license and absent any suspicious
circumstance, the certification enjoys
probative value, being issued by the officer
charged under the law to keep a record of all
data relative to the issuance of a marriage
license. Sally Go-Bangayan v. Benjamin
Bangayan, Jr., G.R. No. 201061, July 3, 2013.
Family Code; property relations in cases of
cohabitation without the benefit of marriage;
rules. The Court of Appeals correctly ruled that
the property relations of Benjamin and Sally is
governed by Article 148 of the Family Code
which states:
Art. 148. In cases of cohabitation not falling
under the preceding Article, only the properties
acquired by both of the parties through their
actual joint contribution of money, property, or
industry shall be owned by them in common in

proportion to their respective contributions. In
the absence of proof to the contrary, their
contributions and corresponding shares are
presumed to be equal. The same rule and
presumption shall apply to joint deposits of
money and evidences of credit.
If one of the parties is validly married to
another, his or her share in the co-ownership
shall accrue to the absolute community of
conjugal partnership existing in such valid
marriage. If the party who acted in bad faith is
not validly married to another, his or her share
shall be forfeited in the manner provided in the
last paragraph of the preceding Article.
The foregoing rules on forfeiture shall likewise
apply even if both parties are in bad faith.
Benjamin and Sally cohabitated without the
benefit of marriage. Thus, only the properties
acquired by them through their actual joint
contribution of money, property, or industry
shall be owned by them in common in
proportion to their respective contributions.
Sally Go-Bangayan v. Benjamin Bangayan,
Jr., G.R. No. 201061, July 3, 2013.
Land ownership; decree of registration for
which an OCT was issued is accorded greater
weight as against tax declarations and tax
receipts in the name of another; tax
declarations and tax receipts only become the
basis of a claim of ownership when coupled
with proof of actual possession of property. In
the case of Ferrer-Lopez v. CA, the Court ruled
that as against an array of proofs consisting of
tax declarations and/or tax receipts which are
not conclusive evidence of ownership nor
proof of the area covered therein, an original
certificate of title, which indicates true and
legal ownership by the registered owners over
the disputed premises, must prevail.
Accordingly, respondents Decree No. 98992
for which an original certificate of title was
issued should be accorded greater weight as
against the tax declarations and tax receipts
presented by petitioners in this case. Besides,
tax declarations and tax receipts may only

become the basis of a claim for ownership
when they are coupled with proof of actual
possession of the property. Heirs of Alejandra
Delfin, namely, Leopoldo Delfin, et al. v.
Avelina Rabadon, G.R. No. 165014, July 31,
2013.
Land registration; decree of registration bars
all claims and rights which arose or may have
existed prior to the decree of registration. It is
an elemental rule that a decree of registration
bars all claims and rights which arose or may
have existed prior to the decree of registration.
By the issuance of the decree, the land is
bound and title thereto quieted, subject only to
certain exceptions under the property
registration decree. Heirs of Alejandra Delfin,
namely, Leopoldo Delfin, et al. v. Avelina
Rabadon, G.R. No. 165014, July 31, 2013.
Republic Act No. 26; reconstitution of title;
nature of proceeding; Torrens system; sources
of reconstitution; mandatory requirements of
publication, posting, and notice. At the outset,
the Court notes that the present amended
petition for reconstitution is anchored on the
owners duplicate copy of TCT No. 8240 a
source for reconstitution of title under Section
3(a)29 of RA 26 which, in turn, is governed by
the provisions of Section 10 in relation to
Section 9 of RA 26 with respect to the
publication, posting, and notice requirements.
Section 10 reads:
SEC. 10. Nothing hereinbefore provided shall
prevent any registered owner or person in
interest from filing the petition mentioned in
section five of this Act directly with the proper
Court of First Instance, based on sources
enumerated in sections 2(a), 2(b), 3(a), 3(b),
and/or 4(a) of this Act: Provided, however,
That the court shall cause a notice of the
petition, before hearing and granting the same,
to be published in the manner stated in section
nine hereof: And, provided, further, That
certificates of title reconstituted pursuant to
this section shall not be subject to the
encumbrance referred to in section seven of
this Act.
Corollarily, Section 9 reads in part:

SEC. 9. x x x Thereupon, the court shall cause
a notice of the petition to be published, at the
expense of the petitioner, twice in successive
issues of the Official Gazette, and to be posted
on the main entrance of the provincial building
and of the municipal building of the
municipality or city in which the land lies, at
least thirty days prior to the date of hearing,
and after hearing, shall determine the petition
and render such judgment as justice and equity
may require. x x x.
The foregoing provisions, therefore, clearly
require that (a) notice of the petition should be
published in two (2) successive issues of the
Official Gazette; and (b) publication should be
made at least thirty (30) days prior to the date
of hearing. Substantial compliance with this
jurisdictional requirement is not enough; it
bears stressing that the acquisition of
jurisdiction over a reconstitution case is hinged
on a strict compliance with the requirements of
the law. Republic of the Philippines v.
Ricordito N. De Asis, Jr.,G.R. No. 193874,
July 24, 2013.
Torrens system; the issue on the validity of
title necessitates a remand of the case. The
Court recognizes the importance of protecting
the countrys Torrens system from fake land
titles and deeds. Considering that there is an
issue on the validity of the title of petitioner
VSD, which title is alleged to be traceable
to OCT No. 994 registered on April 19,
1917, which mother title was held to be
inexistent in Manotok Realty, Inc. v. CLT
Realty Development Corporation, in the
interest of justice, and to safeguard the correct
titling of properties, a remand is proper to
determine which of the parties derived valid
title from the legitimate OCT No. 994
registered on May 3, 1917. Since this Court is
not a trier of facts and not capacitated to
appreciate evidence of the first instance, the
Court may remand this case to the Court of
Appeals for further proceedings, as it has been
similarly tasked in Manotok Realty, Inc. v.

CLT Realty Development Corporation. VSD
Realty & Development Corporation v.
Uniwide Sales, Inc. and Dolores Baello
Tejada, G.R. No. 170677, July 31, 2013
Torrens system; Torrens title; lands under a
Torrens title cannot be acquired by prescription
or adverse possession. Moreover, it is a settled
rule that lands under a Torrens title cannot be
acquired by prescription or adverse possession.
Section 47 of P.D. No. 1529, the Property
Registration Decree, expressly provides that no
title to registered land in derogation of the title
of the registered owner shall be acquired by
prescription or adverse possession. And,
although the registered landowner may still
lose his right to recover the possession of his
registered property by reason
of laches, nowhere has Dream Village alleged
or proved laches, which has been defined as
such neglect or omission to assert a right,
taken in conjunction with lapse of time and
other circumstances causing prejudice to an
adverse party, as will operate as a bar in equity.
Put any way, it is a delay in the assertion of a
right which works disadvantage to another
because of the inequity founded on some
change in the condition or relations of the
property or parties. It is based on public policy
which, for the peace of society, ordains that
relief will be denied to a stale demand which
otherwise could be a valid claim. Dream
Village Neighborhood Association, Inc.,
represented by its Incumbent President Greg
Seriego v. Bases Conversion Development
Authority, G.R. No.192896, July 24, 2013.
June 2013 rulings of the Supreme Court of the
Philippines on civil law:
Civil Code
Contract; contract of carriage; definition;
common carrier; definition; breach of contract
of carriage; entitlement to damages; contract of
services; standard of care required; damages;
when recoverable; quasi-delict; solidary
liability of joint tortfeasors. A contract of
carriage is defined as one whereby a certain
person or association of persons obligate
themselves to transport persons, things, or

news from one place to another for a fixed
price. On its face, the airplane ticket is a valid
written contract of carriage. This Court has
held that when an airline issues a ticket to a
passenger confirmed on a particular flight, on a
certain date, a contract of carriage arises, and
the passenger has every right to expect that he
would fly on that flight and on that date. If he
does not, then the carrier opens itself to a suit
for breach of contract of carriage.
Under Article 1732 of the Civil Code, this
persons, corporations, firms, or associations
engaged in the business of carrying or
transporting passengers or goods or both, by
land, water, or air, for compensation, offering
their services to the public is called a
common carrier.
In contrast, the contractual relation between
Sampaguita Travel and respondents is a
contract for services. Since the contract
between the parties is an ordinary one or
services, the standard of care required of
respondent is that of a good father of a family
under Article 1173 of the Civil Code. This
connotes reasonable care consistent with that
which an ordinarily prudent person would have
observed when confronted with a similar
situation. The test to determine whether
negligence attended the performance of an
obligation is: did the defendant in doing the
alleged negligent act use that reasonable care
and caution which an ordinarily prudent person
would have used in the same situation? If not,
then he is guilty of negligence.
For one to be entitled to actual damages, it is
necessary to prove the actual amount of loss
with a reasonable degree of certainty, premised
upon competent proof and the best evidence
obtainable by the injured party. To justify an
award of actual damages, there must be
competent proof of the actual amount of loss.
Credence can be given only to claims which
are duly supported by receipts.
Under Article 2220 of the Civil Code of the
Philippines, an award of moral damages, in

breaches of contract, is in order upon a
showing that the defendant acted fraudulently
or in bad faith. What the law considers as bad
faith which may furnish the ground for an
award of moral damages would be bad faith in
securing the contract and in the execution
thereof, as well as in the enforcement of its
terms, or any other kind of deceit. In the same
vein, to warrant the award of exemplary
damages, defendant must have acted in
wanton, fraudulent, reckless, oppressive, or
malevolent manner.
Nominal damages are recoverable where a
legal right is technically violated and must be
vindicated against an invasion that has
produced no actual present loss of any kind or
where there has been a breach of contract and
no substantial injury or actual damages
whatsoever have been or can be shown. Under
Article 2221 of the Civil Code, nominal
damages may be awarded to a plaintiff whose
right has been violated or invaded by the
defendant, for the purpose of vindicating or
recognizing that right, not for indemnifying the
plaintiff for any loss suffered.
The amount to be awarded as nominal
damages shall be equal or at least
commensurate to the injury sustained by
respondents considering the concept and
purpose of such damages. The amount of
nominal damages to be awarded may also
depend on certain special reasons extant in the
case. The amount of such damages is
addressed to the sound discretion of the court
and taking into account the relevant
circumstances, such as the failure of some
respondents to board the flight on schedule and
the slight breach in the legal obligations of the
airline company to comply with the terms of
the contract, i.e., the airplane ticket and of the
travel agency to make the correct bookings.
Cathay Pacific and Sampaguita Travel acted
together in creating the confusion in the
bookings which led to the erroneous
cancellation of respondents bookings. Their
negligence is the proximate cause of the
technical injury sustained by respondents.

Therefore, they have become joint tortfeasors,
whose responsibility for quasi-delict, under
Article 2194 of the Civil Code, is
solidary. Cathay Pacific Airways v. Juanita
Reyes, et al., G.R. No. 185891, June 26, 2013
Contract; contract of sale; disputable
presumptions; failure to pay the price; effect
of; double sale; effect; registration in good
faith; buyer in good faith; duty of a buyer
when a piece of land is in the actual possession
of third persons. Under Section 3, Rule 131 of
the Rules of Court, the following are
disputable presumptions: (1) private
transactions have been fair and regular; (2) the
ordinary course of business has been followed;
and (3) there was sufficient consideration for a
contract. These presumptions operate against
an adversary who has not introduced proof to
rebut them. They create the necessity of
presenting evidence to rebut the prima
facie case they created, and which, if no proof
to the contrary is presented and offered, will
prevail. The burden of proof remains where it
is but, by the presumption, the one who has
that burden is relieved for the time being from
introducing evidence in support of the
averment, because the presumption stands in
the place of evidence unless rebutted.
Granting that there was no delivery of the
consideration, the seller would have no right to
sell again what he no longer owned. His
remedy would be to rescind the sale for failure
on the part of the buyer to perform his part of
their obligation pursuant to Article 1191 of the
New Civil Code. In the case ofClara M.
Balatbat v. Court Of Appeals and Spouses Jose
Repuyan and Aurora Repuyan, it was written:
The failure of the buyer to make good the
price does not, in law, cause the ownership
to revest to the seller unless the bilateral
contract of sale is first rescinded or resolved
pursuant to Article 1191 of the New Civil
Code. Non-payment only creates a right to
demand the fulfillment of the obligation or
to rescind the contract. [Emphases supplied]

[O]wnership of an immovable property which
is the subject of a double sale shall be
transferred: (1) to the person acquiring it who
in good faith first recorded it in the Registry of
Property; (2) in default thereof, to the person
who in good faith was first in possession; and
(3) in default thereof, to the person who
presents the oldest title, provided there is good
faith. The requirement of the law then is twofold: acquisition in good faith and registration
in good faith. Good faith must concur with the
registration. If it would be shown that a buyer
was in bad faith, the alleged registration they
have made amounted to no registration at all.
When a piece of land is in the actual
possession of persons other than the seller, the
buyer must be wary and should investigate the
rights of those in possession. Without making
such inquiry, one cannot claim that he is a
buyer in good faith. When a man proposes to
buy or deal with realty, his duty is to read the
public manuscript, that is, to look and see who
is there upon it and what his rights are. A want
of caution and diligence, which an honest man
of ordinary prudence is accustomed to exercise
in making purchases, is in contemplation of
law, a want of good faith. The buyer who has
failed to know or discover that the land sold to
him is in adverse possession of another is a
buyer in bad faith.
[I]f a vendee in a double sale registers the sale
after he has acquired knowledge of a previous
sale, the registration constitutes a registration
in bad faith and does not confer upon him any
right. If the registration is done in bad faith, it
is as if there is no registration at all, and the
buyer who has first taken possession of the
property in good faith shall be preferred.
Hospicio D. Rosaroso, et al. v. Lucila Laborte
Soria, et al., G.R. No. 194846, June 19, 2013
Contract; contract of sale; elements; contract to
sell; elements; difference between a contract of
sale and a contract to sell; effect of nonpayment in a contract of sale; laches;
definition; Torrens system; exception to
general rule that action to recover registered
land covered by the Torrens System may not

be barred by laches. A contract of sale is
defined under Article 1458 of the Civil Code:
By the contract of sale, one of the contracting
parties obligates himself to transfer the
ownership of and to deliver a determinate
thing, and the other to pay therefore a price
certain in money or its equivalent.
The elements of a contract of sale are: (a)
consent or meeting of the minds, that is,
consent to transfer ownership in exchange for
the price; (b) determinate subject matter; and
(c) price certain in money or its equivalent.
A contract to sell, on the other hand, is defined
by Article 1479 of the Civil Code:
[A] bilateral contract whereby the prospective
of the subject property despite delivery thereof
to the prospective buyer, binds himself to sell
the said property exclusively to the prospective
buyer upon fulfillment of the condition agreed
upon, that is, full payment of the purchase
price.
In a contract of sale, the title to the property
passes to the buyer upon the delivery of the
thing sold, whereas in a contract to sell, the
ownership is, by agreement, retained by the
seller and is not to pass to the vendee until full
payment of the purchase price.
Even assuming, arguendo, that the petitioner
was not paid, such non payment is immaterial
and has no effect on the validity of the contract
of sale. A contract of sale is a consensual
contract and what is required is the meeting of
the minds on the object and the price for its
perfection and validity. In this case, the
contract was perfected the moment the
petitioner and the respondent agreed on the
object of the sale the two-hectare parcel of
land, and the price Three Thousand Pesos
(P3,000.00). Non-payment of the purchase
price merely gave rise to a right in favor of the
petitioner to either demand specific
performance or rescission of the contract of
sale.

Laches has been defined as the failure or
neglect, for an unreasonable and unexplained
length of time, to do that which, by exercising
due diligence could or should have been done
earlier. It should be stressed that laches is not
concerned only with the mere lapse of time. As
a general rule, an action to recover registered
land covered by the Torrens System may not
be barred by laches. Neither can laches be set
up to resist the enforcement of an
imprescriptible legal right. In exceptional
cases, however, the Court allowed laches as a
bar to recover a titled property. Thus,
in Romero v. Natividad, the Court ruled that
laches will bar recovery of the property even if
the mode of transfer was invalid. Likewise,
in Vda. de Cabrera v. CA, the Court ruled:
In our jurisdiction, it is an enshrined rule
that even registered owners of property may
be barred from recovering possession of
property by virtue of laches. Under the Land
Registration Act (now the Property
Registration Decree), no title to registered land
in derogation to that of the registered owner
shall be acquired by prescription or adverse
possession. The same is not true with regard to
laches.
More particularly, laches will bar recovery of a
property, even if the mode of transfer used by
an alleged member of a cultural minority lacks
executive approval. Thus, in Heirs of Dicman
v. Cario, the Court upheld the Deed of
Conveyance of Part Rights and Interests in
Agricultural Land executed by Ting-el Dicman
in favor of Sioco Cario despite lack of
executive approval. The Court stated that
despite the judicial pronouncement that the
sale of real property by illiterate ethnic
minorities is null and void for lack of approval
of competent authorities, the right to recover
possession has nonetheless been barred
through the operation of the equitable doctrine
of laches. Ali Akang v. Municipality of Isulan,
Sultan Kudarat Province, G.R. No. 186014,
June 26, 2013
Contract; contract of sale; disqualification of a

lawyer to buy under Article 1491; elements of
a contract; autonomous nature; obligatory
nature of contract; interpretation; courts have
no authority to alter a contract by construction
or to make a new contract for the parties;
penal clause; generally substitutes the
indemnity for damages and the payment of
interests in case of noncompliance. Admittedly, Article 1491 (5) of
the Civil Code prohibits lawyers from
acquiring by purchase or assignment the
property or rights involved which are the
object of the litigation in which they intervene
by virtue of their profession. The CA lost sight
of the fact, however, that the prohibition
applies only during the pendency of the suit
and generally does not cover contracts for
contingent fees where the transfer takes effect
only after the finality of a favorable judgment.
Defined as a meeting of the minds between
two persons whereby one binds himself, with
respect to the other to give something or to
render some service, a contract requires the
concurrence of the following requisites: (a)
consent of the contracting parties; (b) object
certain which is the subject matter of the
contract; and, (c) cause of the obligation which
is established.
Viewed in the light of the autonomous nature
of contracts enunciated under Article 1306 of
the Civil Code, on the other hand, we find that
the Kasunduan was correctly found by the
RTC to be a valid and binding contract
between the parties.
Obligations arising from contracts, after all,
have the force of law between the contracting
parties who are expected to abide in good faith
with their contractual commitments, not
weasel out of them. Moreover, when the terms
of the contract are clear and leave no doubt as
to the intention of the contracting parties, the
rule is settled that the literal meaning of its
stipulations should govern. In such cases,
courts have no authority to alter a contract by
construction or to make a new contract for the

parties. Since their duty is confined to the
interpretation of the one which the parties have
made for themselves without regard to its
wisdom or folly, it has been ruled that courts
cannot supply material stipulations or read into
the contract words it does not contain. Indeed,
courts will not relieve a party from the adverse
effects of an unwise or unfavorable contract
freely entered into.
An accessory undertaking to assume greater
liability on the part of the obligor in case of
breach of an obligation, the foregoing
stipulation is a penal clause which serves to
strengthen the coercive force of the obligation
and provides for liquidated damages for such
breach. The obligor would then be bound to
pay the stipulated indemnity without the
necessity of proof of the existence and the
measure of damages caused by the breach.
In obligations with a penal clause, the penalty
generally substitutes the indemnity for
damages and the payment of interests in case
of non-compliance. Usually incorporated to
create an effective deterrent against breach of
the obligation by making the consequences of
such breach as onerous as it may be possible,
the rule is settled that a penal clause is not
limited to actual and compensatory
damages.Heirs of Manuel Uy Ek Liong v.
Mauricia Meer Castillo, Heirs of Buenaflor C.
Umali, represented by Nancy Umali, et
al., G.R. No. 176425, June 5, 2013.
Contract; default of debtor; definition;
requisites; liquidated damages; stipulation
therefor; double function; penalty clause;
definition; function. Default or mora on the
part of the debtor is the delay in the fulfillment
of the prestation by reason of a cause
imputable to the former. It is the nonfulfillment
of an obligation with respect to time.
It is a general rule that one who contracts to
complete certain work within a certain time is
liable for the damage for not completing it
within such time, unless the delay is excused
or waived.
In this jurisdiction, the following requisites

must be present in order that the debtor may be
in default: (1) that the obligation be
demandable and already liquidated; (2) that the
debtor delays performance; and (3) that the
creditor requires the performance judicially or
extrajudicially.
Liability for liquidated damages is governed
by Articles 2226 to 2228 of the Civil Code. A
stipulation for liquidated damages is attached
to an obligation in order to ensure performance
and has a double function: (1) to provide for
liquidated damages, and (2) to strengthen the
coercive force of the obligation by the threat of
greater responsibility in the event of breach.
The amount agreed upon answers for damages
suffered by the owner due to delays in the
completion of the project. As a precondition to
such award, however, there must be proof of
the fact of delay in the performance of the
obligation.
A penalty clause, expressly recognized by law,
is an accessory undertaking to assume greater
liability on the part of the obligor in case of
breach of an obligation. It functions to
strengthen the coercive force of obligation and
to provide, in effect, for what could be the
liquidated damages resulting from such a
breach. The obligor would then be bound to
pay the stipulated indemnity without the
necessity of proof on the existence and on the
measure of damages caused by the breach. It is
well-settled that so long as such stipulation
does not contravene law, morals, or public
order, it is strictly binding upon the obligor. J
Plus Asia Development Corporation v. Utility
Assurance Corporation, G.R. No. 199650,
June 26, 2013
Contract; rescission under Article 1191; mutual
restitution; contracts; definition. Mutual
restitution is required in cases involving
rescission under Article 1191 of the Civil
Code; such restitution is necessary to bring
back the parties to their original situation prior
to the inception of the contract.

As a general rule, a contract is a meeting of
minds between two persons. The Civil Code
upholds the spirit over the form; thus, it deems
an agreement to exist, provided the essential
requisites are present. A contract is upheld as
long as there is proof of consent, subject
matter and cause. Moreover, it is generally
obligatory in whatever form it may have been
entered into. From the moment there is a
meeting of minds between the parties, [the
contract] is perfected. Fil-Estate Gold and
Development, Inc., et al. v. Vertex Sales and
Trading, Inc., G.R. No. 202079, June 10, 2013.
Contract; void contracts; effect. A void
contract is equivalent to nothing; it produces
no civil effect; and it does not create, modify
or extinguish a juridical relation. Joselito C.
Borromeo v. Juan T. Mina, G.R. No. 193747,
June 5, 2013.
Credit; concurrence and preference of credit;
tax clearance is not required for the approval
of a project of partition. The position of the
BIR, insisting on prior compliance with the tax
clearance requirement as a condition for the
approval of the project of distribution of the
assets of a bank under liquidation, is contrary
to both the letter and intent of the law on
liquidation of banks by the PDIC.
The law expressly provides that debts and
liabilities of the bank under liquidation are to
be paid in accordance with the rules on
concurrence and preference of credit under the
Civil Code. Duties, taxes, and fees due the
Government enjoy priority only when they are
with reference to a specific movable property,
under Article 2241(1) of the Civil Code, or
immovable property, under Article 2242(1) of
the same Code. However, with reference to the
other real and personal property of the debtor,
sometimes referred to as free property, the
taxes and assessments due the National
Government, other than those in Articles
2241(1) and 2242(1) of the Civil Code, such as
the corporate income tax, will come only in
ninth place in the order of preference. On the
other hand, if the BIRs contention that a tax
clearance be secured first before the project of

distribution of the assets of a bank under
liquidation may be approved, then the tax
liabilities will be given absolute preference in
all instances, including those that do not fall
under Articles 2241(1) and 2242(1) of the
Civil Code. In order to secure a tax clearance
which will serve as proof that the taxpayer had
completely paid off his tax liabilities, PDIC
will be compelled to settle and pay first all tax
liabilities and deficiencies of the bank,
regardless of the order of preference under the
pertinent provisions of the Civil Code.
Following the BIRs stance, therefore, only
then may the project of distribution of the
banks assets be approved and the other debts
and claims thereafter settled, even though
under Article 2244 of the Civil Code such
debts and claims enjoy preference over taxes
and assessments due the National
Government. Philippine Deposit Insurance
Corporation v. Bureau of Internal
Revenue, G.R. No. 172892, June 13, 2013
Damages; Attorneys fees; dual concept of
attorneys fees; an award of attorneys fees
under Article 2208 demands factual, legal, and
equitable justification. Article 2208 of the New
Civil Code of the Philippines states the policy
that should guide the courts when awarding
attorneys fees to a litigant. As a general rule,
the parties may stipulate the recovery of
attorneys fees. In the absence of such
stipulation, this article restrictively enumerates
the instances when these fees may be
recovered.
In ABS-CBN Broadcasting Corp. v. CA, this
Court had the occasion to expound on the
policy behind the grant of attorneys fees as
actual or compensatory damages:
(T)he law is clear that in the absence of
stipulation, attorneys fees may be recovered
as actual or compensatory damages under any
of the circumstances provided for in Article
2208 of the Civil Code. The general rule is that
attorneys fees cannot be recovered as part of
damages because of the policy that no

premium should be placed on the right to
litigate. They are not to be awarded every time
a party wins a suit.
The power of the court to award attorneys fees
under Article 2208 demands factual, legal, and
equitable justification. Even when a claimant
is compelled to litigate with third persons or to
incur expenses to protect his rights, still
attorneys fees may not be awarded where no
sufficient showing of bad faith could be
reflected in a partys persistence in a case other
than an erroneous conviction of the
righteousness of his cause.
We have consistently held that an award of
attorneys fees under Article 2208 demands
factual, legal, and equitable justification to
avoid speculation and conjecture surrounding
the grant thereof. Due to the special nature of
the award of attorneys fees, a rigid standard is
imposed on the courts before these fees could
be granted. Hence, it is imperative that they
clearly and distinctly set forth in their
decisions the basis for the award thereof. It is
not enough that they merely state the amount
of the grant in the dispositive portion of their
decisions. It bears reiteration that the award of
attorneys fees is an exception rather than the
general rule; thus, there must be compelling
legal reason to bring the case within the
exceptions provided under Article 2208 of the
Civil Code to justify the award. Philippine
National Construction Corporation v. Apac
Marketing Corporation, represented by Cesar
M. Ong, Jr., G.R. No. 190957, June 5, 2013.
Damages; nominal damages; when warranted
in labor cases. [W]hile Van Doorn has a just
and valid cause to terminate the respondents
employment, it failed to meet the requisite
procedural safeguards provided under Article
283 of the Labor Code. In the termination of
employment under Article 283, Van Doorn, as
the employer, is required to serve a written
notice to the respondents and to the DOLE of
the intended termination of employment at
least one month prior to the cessation of its
fishing operations. Poseidon could have easily
filed this notice, in the way it represented Van

Doorn in its dealings in the Philippines. While
this omission does not affect the validity of the
termination of employment, it subjects the
employer to the payment of indemnity in the
form of nominal damages.Poseidon
International Maritime Services, Inc. v. Tito R.
Tamala, et al., G.R. No. 186475, June 26, 2013
Damages; temperate damages; when
warranted. Article 2224 of the New Civil Code
provides that (t)emperate 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,
proved with certainty. People of the
Philippines v. Reggie Bernardo, G.R. No.
198789, June 3, 2013.
Interest rates; a stipulated interest of 24% per
annum is not unconscionable; surcharge on
principal loan; a surcharge of 1% per month on
the principal loan is valid; surcharge or penalty
partakes of the nature of liquidated damages;
different from interest payment. In Villanueva
v. Court of Appeals, where the issue raised was
whether the 24% p.a. stipulated interest rate is
unreasonable under the circumstances, we
answered in the negative and held:
In Spouses Zacarias Bacolor and Catherine
Bacolor v. Banco Filipino Savings and
Mortgage Bank, Dagupan City Branch, this
Court held that the interest rate of 24% per
annum on a loan of P244,000.00, agreed upon
by the parties, may not be considered as
unconscionable and excessive. As such, the
Court ruled that the borrowers cannot renege
on their obligation to comply with what is
incumbent upon them under the contract of
loan as the said contract is the law between the
parties and they are bound by its stipulations.
Also, in Garcia v. Court of Appeals, this Court
sustained the agreement of the parties to a
24% per annum interest on an P8,649,250.00
loan finding the same to be reasonable and
clearly evidenced by the amended credit line

agreement entered into by the parties as well as
two promissory notes executed by the
borrower in favor of the lender.
Based on the above jurisprudence, the Court
finds that the 24% per annum interest rate,
provided for in the subject mortgage contracts
for a loan of P225,000.00, may not be
considered unconscionable. Moreover,
considering that the mortgage agreement was
freely entered into by both parties, the same is
the law between them and they are bound to
comply with the provisions contained therein.
In Ruiz v. CA, we held:
The 1% surcharge on the principal loan for
every month of default is valid. This surcharge
or penalty stipulated in a loan agreement in
case of default partakes of the nature of
liquidated damages under Art. 2227 of the
New Civil Code, and is separate and distinct
from interest payment. Also referred to as a
penalty clause, it is expressly recognized by
law. It is an accessory undertaking to assume
greater liability on the part of an obligor in
case of breach of an obligation. The obligor
would then be bound to pay the stipulated
amount of indemnity without the necessity of
proof on the existence and on the measure of
damages caused by the breach.
Spouses Florentino T. Mallari and Aurea V.
Mallari v. Prudential Bank of the
Philippines, G.R. No. 197861, June 5, 2013
Tort; collateral source rule; unjust enrichment;
elements. As part of American personal injury
law, the collateral source rule was originally
applied to tort cases wherein the defendant is
prevented from benefiting from the plaintiffs
receipt of money from other sources. Under
this rule, if an injured person receives
compensation for his injuries from a source
wholly independent of the tortfeasor, the
payment should not be deducted from the
damages which he would otherwise collect
from the tortfeasor. In a recent Decision by the
Illinois Supreme Court, the rule has been
described as an established exception to the
general rule that damages in negligence actions
must be compensatory. The Court went on to

explain that although the rule appears to allow
a double recovery, the collateral source will
have a lien or subrogation right to prevent such
a double recovery. In Mitchell v. Haldar, the
collateral source rule was rationalized by the
Supreme Court of Delaware:
The collateral source rule is predicated on the
theory that a tortfeasor has no interest in, and
therefore no right to benefit from monies
received by the injured person from sources
unconnected with the defendant. According to
the collateral source rule, a tortfeasor has no
right to any mitigation of damages because of
payments or compensation received by the
injured person from an independent source.
The rationale for the collateral source rule is
based upon the quasi-punitive nature of tort
law liability. It has been explained as follows:
The collateral source rule is designed to strike
a balance between two competing principles of
tort law: (1) a plaintiff is entitled to
compensation sufficient to make him whole,
but no more; and (2) a defendant is liable for
all damages that proximately result from his
wrong. A plaintiff who receives a double
recovery for a single tort enjoys a windfall; a
defendant who escapes, in whole or in part,
liability for his wrong enjoys a windfall.
Because the law must sanction one windfall
and deny the other, it favors the victim of the
wrong rather than the wrongdoer.
Thus, the tortfeasor is required to bear the cost
for the full value of his or her negligent
conduct even if it results in a windfall for the
innocent plaintiff. (Citations omitted)
As seen, the collateral source rule applies in
order to place the responsibility for losses on
the party causing them. Its application is
justified so that the wrongdoer should not
benefit from the expenditures made by the
injured party or take advantage of contracts or
other relations that may exist between the
injured party and third persons. Thus, it finds
no application to cases involving no-fault
insurances under which the insured is

indemnified for losses by insurance
companies, regardless of who was at fault in
the incident generating the losses.
To constitute unjust enrichment, it must be
shown that a party was unjustly enriched in the
sense that the term unjustly could mean
illegally or unlawfully. A claim for unjust
enrichment fails when the person who will
benefit has a valid claim to such
benefit. Mitsubishi Motors Philippines
Salaried Employees Union v. Mitsubishi
Motors Philippines Corporation, G.R. No.
175773, June 17, 2013.
Unjust enrichment; definition;
elements. Unjust enrichment is a term used to
depict result or effect of failure to make
remuneration of or for property or benefits
received under circumstances that give rise to
legal or equitable obligation to account for
them. To be entitled to remuneration, one must
confer benefit by mistake, fraud, coercion, or
request. Unjust enrichment is not itself a
theory of reconveyance. Rather, it is a
prerequisite for the enforcement of the doctrine
of restitution. There is unjust enrichment
when:
1. A person is unjustly benefited; and
2. Such benefit is derived at the expense of or
with damages to another.
Philippine Transmarine Carriers, Inc. v.
Leandro Legaspi, G.R. No. 202791, June 10,
2013.
Special Laws
Family Code; support; in proportion to the
resources or means of the giver and to the
needs of the recipient; support pendente lite in
cases of legal separation and petitions for
declaration of nullity or annulment of
marriage; judicial determination is guided by
the Rule on Provisional Orders; support in
arrears; deductions from accrued
support pendente lite; judgment for support
does not become final.As a matter of law, the
amount of support which those related by
marriage and family relationship is generally
obliged to give each other shall be in
proportion to the resources or means of the

giver and to the needs of the recipient. Such
support comprises everything indispensable for
sustenance, dwelling, clothing, medical
attendance, education and transportation, in
keeping with the financial capacity of the
family.
Upon receipt of a verified petition for
declaration of absolute nullity of void marriage
or for annulment of voidable marriage, or for
legal separation, and at any time during the
proceeding, the court, motu proprio or upon
verified application of any of the parties,
guardian or designated custodian, may
temporarily grant support pendente lite prior to
the rendition of judgment or final order.
Because of its provisional nature, a court does
not need to delve fully into the merits of the
case before it can settle an application for this
relief. All that a court is tasked to do is
determine the kind and amount of evidence
which may suffice to enable it to justly resolve
the application. It is enough that the facts be
established by affidavits or other documentary
evidence appearing in the record.
Judicial determination of support pendente
lite in cases of legal separation and petitions
for declaration of nullity or annulment of
marriage are guided by the provisions of the
Rule on Provisional Orders.
On the issue of crediting of money payments
or expenses against accrued support, we find
as relevant the following rulings by US courts.
In Bradford v. Futrell, appellant sought review
of the decision of the Circuit Court which
found him in arrears with his child support
payments and entered a decree in favor of
appellee wife. He complained that in
determining the arrearage figure, he should
have been allowed full credit for all money and
items of personal property given by him to the
children themselves, even though he referred
to them as gifts. The Court of Appeals of
Maryland ruled that in the suit to determine
amount of arrears due the divorced wife under
decree for support of minor children, the

husband (appellant) was not entitled to credit
for checks which he had clearly designated as
gifts, nor was he entitled to credit for an
automobile given to the oldest son or a
television set given to the children. Thus, if the
children remain in the custody of the mother,
the father is not entitled to credit for money
paid directly to the children if such was paid
without any relation to the decree.
In Martin, Jr. v. Martin, the Supreme Court of
Washington held that a father, who is required
by a divorce decree to make child support
payments directly to the mother, cannot claim
credit for payments voluntarily made directly
to the children. However, special
considerations of an equitable nature may
justify a court in crediting such payments on
his indebtedness to the mother, when such can
be done without injustice to her.
Suffice it to state that the matter of increase or
reduction of support should be submitted to the
trial court in which the action for declaration
for nullity of marriage was filed, as this Court
is not a trier of facts. The amount of support
may be reduced or increased proportionately
according to the reduction or increase of the
necessities of the recipient and the resources or
means of the person obliged to support. As we
held in Advincula v. Advincula:
Judgment for support does not become final.
The right to support is of such nature that its
allowance is essentially provisional; for during
the entire period that a needy party is entitled
to support, his or her alimony may be modified
or altered, in accordance with his increased or
decreased needs, and with the means of the
giver. It cannot be regarded as subject to final
determination.
Susan Lim-Lua v. Danilo Y. Lua, G.R. Nos.
175279-80, June 5, 2013.
Family Code; Rule on Declaration of Absolute
Nullity of Void Marriages and Annulment of
Voidable Marriages; not applicable in an action
for recognition of foreign judgment; foreign
judgment relating to the marital status of a
person; special proceeding for cancellation or
correction of entries in the civil registry under

Rule 108 of the Rules of Court; the first
husband has a right to file the petition; effect
of a foreign divorce decree to a Filipino
spouse; Article 26 of the Family Code. The
Rule on Declaration of Absolute Nullity of
Void Marriages and Annulment of Voidable
Marriages (A.M. No. 02-11-10-SC) does not
apply in a petition to recognize a foreign
judgment relating to the status of a marriage
where one of the parties is a citizen of a
foreign country. Moreover, in Juliano-Llave v.
Republic, this Court held that the rule in A.M.
No. 02-11-10-SC that only the husband or wife
can file a declaration of nullity or annulment of
marriage does not apply if the reason behind
the petition is bigamy.
A foreign judgment relating to the status of a
marriage affects the civil status, condition and
legal capacity of its parties. However, the
effect of a foreign judgment is not automatic.
To extend the effect of a foreign judgment in
the Philippines, Philippine courts must
determine if the foreign judgment is consistent
with domestic public policy and other
mandatory laws. Article 15 of the Civil Code
provides that [l]aws relating to family rights
and duties, or to the status, condition and legal
capacity of persons are binding upon citizens
of the Philippines, even though living abroad.
This is the rule of lex nationaliiin private
international law. Thus, the Philippine State
may require, for effectivity in the Philippines,
recognition by Philippine courts of a foreign
judgment affecting its citizen, over whom it
exercises personal jurisdiction relating to the
status, condition and legal capacity of such
citizen.
A petition to recognize a foreign judgment
declaring a marriage void does not require
relitigation under a Philippine court of the case
as if it were a new petition for declaration of
nullity of marriage. Philippine courts cannot
presume to know the foreign laws under which
the foreign judgment was rendered. They
cannot substitute their judgment on the status,

condition and legal capacity of the foreign
citizen who is under the jurisdiction of another
state. Thus, Philippine courts can only
recognize the foreign judgment as a
fact according to the rules of evidence.
Since the recognition of a foreign judgment
only requires proof of fact of the judgment, it
may be made in a special proceeding for
cancellation or correction of entries in the civil
registry under Rule 108 of the Rules of Court.
Rule 1, Section 3 of the Rules of Court
provides that [a] special proceeding is a
remedy by which a party seeks to establish a
status, a right, or a particular fact. Rule 108
creates a remedy to rectify facts of a persons
life which are recorded by the State pursuant to
the Civil Register Law or Act No. 3753. These
are facts of public consequence such as birth,
death or marriage, which the State has an
interest in recording. There is no doubt that the
prior spouse has a personal and material
interest in maintaining the integrity of the
marriage he contracted and the property
relations arising from it. There is also no doubt
that he is interested in the cancellation of an
entry of a bigamous marriage in the civil
registry, which compromises the public record
of his marriage. The interest derives from the
substantive right of the spouse not only to
preserve (or dissolve, in limited instances) his
most intimate human relation, but also to
protect his property interests that arise by
operation of law the moment he contracts
marriage. These property interests in marriage
include the right to be supported in keeping
with the financial capacity of the family and
preserving the property regime of the
marriage.
Section 2(a) of A.M. No. 02-11-10-SC does
not preclude a spouse of a subsisting marriage
to question the validity of a subsequent
marriage on the ground of bigamy. On the
contrary, when Section 2(a) states that [a]
petition for declaration of absolute nullity of
void marriage may be filed solely by the
husband or the wife it refers to the
husband or the wife of the subsisting marriage.

Under Article 35(4) of the Family Code,
bigamous marriages are void from the
beginning. Thus, the parties in a bigamous
marriage are neither the husband nor the wife
under the law. The husband or the wife of the
prior subsisting marriage is the one who has
the personality to file a petition for declaration
of absolute nullity of void marriage under
Section 2(a) of A.M. No. 02-11-10-SC.
[A] Filipino citizen cannot dissolve his
marriage by the mere expedient of changing
his entry of marriage in the civil registry.
However, this does not apply in a petition for
correction or cancellation of a civil registry
entry based on the recognition of a foreign
judgment annulling a marriage where one of
the parties is a citizen of the foreign country.
There is neither circumvention of the
substantive and procedural safeguards of
marriage under Philippine law, nor of the
jurisdiction of Family Courts under R.A. No.
8369. A recognition of a foreign judgment is
not an action to nullify a marriage. It is an
action for Philippine courts to recognize the
effectivity of a foreign judgment, which
presupposes a case which was already tried
and decided under foreign law. The
procedure in A.M. No. 02-11-10-SC does not
apply in a petition to recognize a foreign
judgment annulling a bigamous marriage
where one of the parties is a citizen of the
foreign country. Neither can R.A. No. 8369
define the jurisdiction of the foreign court.
Article 26 of the Family Code confers
jurisdiction on Philippine courts to extend the
effect of a foreign divorce decree to a Filipino
spouse without undergoing trial to determine
the validity of the dissolution of the marriage.
The second paragraph of Article 26 of the
Family Code provides that [w]here a marriage
between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter
validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino
spouse shall have capacity to remarry under

Philippine law. The second paragraph of
Article 26 of the Family Code only authorizes
Philippine courts to adopt the effects of a
foreign divorce decree precisely because the
Philippines does not allow divorce. Philippine
courts cannot try the case on the merits
because it is tantamount to trying a case for
divorce. Minoru Fujiki v. Maria Paz Galela
Marinay, et al., G.R. No. 196049, June 26,
2013.
Family Courts Act of 1997; Violence Against
Women and Children Act of 2004; Family
Courts; jurisdiction; a special court of the same
level as RTC; RTCs designated as family
courts remain possessed of authority as courts
of general original jurisdiction. At the outset, it
must be stressed that Family Courts are special
courts, of the same level as Regional Trial
Courts. Under R.A. 8369, otherwise known as
the Family Courts Act of 1997, family courts
have exclusive original jurisdiction to hear and
decide cases of domestic violence against
women and children. In accordance with said
law, the Supreme Court designated from
among the branches of the Regional Trial
Courts at least one Family Court in each of
several key cities identified. To achieve
harmony with the first mentioned law, Section
7 of R.A. 9262 now provides that Regional
Trial Courts designated as Family Courts shall
have original and exclusive jurisdiction over
cases of VAWC defined under the latter law.
Inspite of its designation as a family court, the
RTC of Bacolod City remains possessed of
authority as a court of general original
jurisdiction to pass upon all kinds of cases
whether civil, criminal, special proceedings,
land registration, guardianship, naturalization,
admiralty or insolvency. It is settled that RTCs
have jurisdiction to resolve the
constitutionality of a statute, this authority
being embraced in the general definition of the
judicial power to determine what are the valid
and binding laws by the criterion of their
conformity to the fundamental law. The
Constitution vests the power of judicial review
or the power to declare the constitutionality or

validity of a law, treaty, international or
executive agreement, presidential decree,
order, instruction, ordinance, or regulation not
only in this Court, but in all RTCs. Jesus C.
Garcia v. The Hon. Ray Alan T. Drilon, et
al., G.R. No. 179267, June 25, 2013
Torrens system; purpose. Torrens title;
generally conclusive evidence of the
ownership of the land; not subject to collateral
attack; Land Registration Authority;
functions. The real purpose of the Torrens
system is to quiet title to land and to stop
forever any question as to its legality. Once a
title is registered, the owner may rest secure,
without the necessity of waiting in the portals
of the court, or sitting on the mirador su
casa, to avoid the possibility of losing his
land. A Torrens title is generally a conclusive
evidence of the ownership of the land referred
to therein. A strong presumption exists that
Torrens titles are regularly issued and that they
are valid.
Section 48 of Presidential Decree No. 1529,
otherwise known as the Property Registration
Decree, explicitly provides that [a] certificate
of title shall not be subject to collateral attack.
It cannot be altered, modified, or cancelled
except in a direct proceeding in accordance
with law.
The duty of LRA officials to issue decrees of
registration is ministerial in the sense that they
act under the orders of the court and the decree
must be in conformity with the decision of the
court and with the data found in the record.
They have no discretion in the matter.
However, if they are in doubt upon any point
in relation to the preparation and issuance of
the decree, these officials ought to seek
clarification from the court. They act, in this
respect, as officials of the court and not as
administrative officials, and their act is the act
of the court. They are specifically called upon
to extend assistance to courts in ordinary and
cadastral land registration
proceedings. Deogenes O. Rodriguez v. Hon.

Court of Appeals and Philippine Chinese
Charitable Association, Inc., G.R. No. 184589,
June 13, 2013
April 2013 rulings of the Supreme Court of the
Contract; Rescission; effect. Rescission entails
a mutual restitution of benefits received. An
injured party who has chosen rescission is also
entitled to the payment of damages. Sandoval
Shipyards, Inc. v. Philippine Merchant Marine
Academy (PMMA); G.R. No. 188633. April
10, 2013
Obligation; Extinguishment of obligations;
consignation; when tender of payment not
necessary; judicial in character; difference
between consignation and tender of
payment. Under Article 1256 of the Civil
Code, the debtor shall be released from
responsibility by the consignation of the thing
or sum due, without need of prior tender of
payment, when the creditor is absent or
unknown, or when he is incapacitated to
receive the payment at the time it is due, or
when two or more persons claim the same
right to collect, or when the title to the
obligation has been lost.
Consignation is necessarily judicial. Article
1258 of the Civil Code specifically provides
that consignation shall be made by depositing
the thing or things due at the disposal
of judicial authority. The said provision clearly
precludes consignation in venues other than
the courts.
Elsewhere, what may be made is a valid tender
of payment, but not consignation. The two,
however, are to be distinguished.
Tender of payment must be distinguished from
consignation. Tender is the antecedent of
consignation, that is, an act preparatory to the
consignation, which is the principal, and from
which are derived the immediate consequences
which the debtor desires or seeks to obtain.
Tender of payment may be extrajudicial, while
consignation is necessarily judicial, and the
priority of the first is the attempt to make a
private settlement before proceeding to the

solemnities of consignation. (8 Manresa 325).
Sps. Cacayorin v. Armed Forces and Police
Mutual Benefit Association, Inc.; G.R. No.
171298. April 15, 2013
Property; Ejectment; only issue is who is
entitled to physical possession; forcible entry;
prior physical possession is vital; judgment
conclusive between the parties and their
successors-in-interest; effects if prevailing
party is a usufructuary; usufruct; death of
usufructuary extinguishes usufruct. Ejectment
cases forcible entry and unlawful detainer
are summary proceedings designed to provide
expeditious means to protect actual possession
or the right to possession of the property
involved. The only question that the courts
resolve in ejectment proceedings is: who is
entitled to the physical possession of the
premises, that is, to the possession de facto and
not to the possession de jure. It does not even
matter if a partys title to the property is
questionable. Thus, an ejectment case will not
necessarily be decided in favor of one who has
presented proof of ownership of the subject
property.
Indeed, possession in ejectment cases means
nothing more than actual physical possession,
not legal possession in the sense contemplated
in civil law. In a forcible entry case, prior
physical possession is the primary
consideration[.] A party who can prove prior
possession can recover such possession even
against the owner himself. Whatever may be
the character of his possession, if he has in his
favor prior possession in time, he has the
security that entitles him to remain on the
property until a person with a better right
lawfully ejects him. [T]he party in
peaceable, quiet possession shall not be thrown
out by a strong hand, violence, or terror.
The judgment in an ejectment case is
successors-in interest by title subsequent to the
commencement of the action; hence, it is
enforceable by or against the heirs of the

deceased. This judgment entitles the winning
party to: (a) the restitution of the premises, (b)
the sum justly due as arrears of rent or as
reasonable compensation for the use and
occupation of the premises, and (c) attorneys
fees and costs.
[T]he right to the usufruct is now rendered
moot by the death of Wilfredo since death
extinguishes a usufruct under Article 603(1) of
the Civil Code. This development deprives the
heirs of the usufructuary the right to retain or
to reacquire possession of the property even if
the ejectment judgment directs its restitution.
Thus, what actually survives under the
circumstances is the award of damages, by
way of compensation. Rivera-Calingasan v.
Rivera; G.R. No. 171555. April 17, 2013
Property; Public property; public plaza forms
part of the public dominion; cannot be the
object of appropriation, lease, any other
contractual undertaking; void contracts.
[Public plaza is for] public use and thereby,
forming part of the public dominion.
Accordingly, it cannot be the object of
appropriation either by the State or by private
persons. Nor can it be the subject of lease or
any other contractual undertaking.
In Villanueva v. Castaeda, Jr., citing Espiritu
v. Municipal Council of Pozorrubio, the Court
pronounced that:
x x x Town plazas are properties of public
dominion, to be devoted to public use and to
be made available to the public in general.
They are outside the commerce of man and
cannot be disposed of or even leased by the
municipality to private parties.
In this relation, Article 1409(1) of the Civil
Code provides that a contract whose purpose is
contrary to law, morals, good customs, public
order or public policy is considered void and
as such, creates no rights or obligations or any
juridical relations. Land Bank of the
Philippines v. Cacayurin; G.R. No. 191667.
April 17, 2013
Special Laws
Foreclosure of Mortgage pursuant to P.D. No.

385; when its purpose is served; when hearing
is necessary before issuance of writ of
possession; foreclosure of mortgage under
Section 33, Rule 39 of the Rules on Civil
Procedure; when issuance of writ of possession
is not ministerial. While the Supreme Court
had already declared in Philippine National
Bank v. Adil that once the property of a debtor
is foreclosed and sold to a GFI, it would be
mandatory for the court to place the GFI in the
possession and control of the property
pursuant to Section 4 of P.D. No.
385 (Requiring Government Financial
Institutions to Foreclose Mandatorily All
Loans with Arrearages, Including Interest and
Charges Amounting to at Least Twenty (20%)
of the Total Outstanding Obligation) this
rule should not be construed as absolute or
without exception.
The evident purpose underlying P.D. 385 is
sufficiently served by allowing foreclosure
proceedings initiated by GFIs to continue until
a judgment therein becomes final and
executory, without a restraining order,
temporary or permanent injunction against it
being issued. But if a parcel of land is
occupied by a party other than the judgment
debtor, the proper procedure is for the court to
order a hearing to determine the nature of said
adverse possession before it issues a writ of
possession. This is because a third party, who
is not privy to the debtor, is protected by the
law. Such third party may be ejected from the
premises only after he has been given an
opportunity to be heard, to comply with the
time honored principle of due process.
In the same vein, under Section 33 of Rule 39
of the Rules on Civil Procedure, the possession
of a mortgaged property may be awarded to a
purchaser in the extrajudicial foreclosure,
unless a third party is actually holding the
property adversely vis--vis the judgment
debtor.
[T]he obligation of a court to issue a writ of
possession in favor of the purchaser in an

extrajudicial foreclosure sale ceases to be
ministerial, once it appears that there is a third
party who is in possession of the property and
is claiming a right adverse to that of the
debtor/mortgagor. We explained in Philippine
National Bank v. Austria that the foregoing
doctrinal pronouncements are not without
support in substantive law, to wit:
x x x. Notably, the Civil Code protects the
actual possessor of a property, to wit:
Art. 433. Actual possession under claim of
ownership raises a disputable presumption of
ownership. The true owner must resort to
judicial process for the recovery of the
property.
Under the aforequoted provision, one who
claims to be the owner of a property possessed
by another must bring the appropriate judicial
action for its physical recovery. The term
judicial process could mean no less than an
ejectment suit or reivindicatory action, in
which the ownership claims of the contending
parties may be properly heard and adjudicated.
Royal Savings Bank v. Asia, et al.; G.R. No.
183658. April 10, 2013
Family Code; Declaration of Presumptive
Death; judgment is immediately final and
executory; proper remedy is a special civil
action for certiorari filed in the Court of
Appeals; decision of Court of Appeals
reviewable by the Supreme Court via certiorari
under Rule 45. [It is improper to avail of] an
ordinary appeal as a vehicle for questioning a
trial courts decision in a summary proceeding
for the declaration of presumptive death under
Article 41 of the Family Code.
As explained in Republic v. Tango, the remedy
of a losing party in a summary proceeding is
not an ordinary appeal, but a petition
for certiorari, to wit:
By express provision of law, the judgment of
the court in a summary proceeding shall be
immediately final and executory. As a matter
of course, it follows that no appeal can be had
of the trial courts judgment in a summary
proceeding for the declaration of presumptive
death of an absent spouse under Article 41 of

the Family Code. It goes without saying,
however, that an aggrieved party may file a
petition for certiorari to question abuse of
discretion amounting to lack of jurisdiction.
Such petition should be filed in the Court of
Appeals in accordance with the Doctrine of
Hierarchy of Courts. To be sure, even if the
Courts original jurisdiction to issue a writ
of certiorari is concurrent with the RTCs and
the Court of Appeals in certain cases, such
concurrence does not sanction an unrestricted
freedom of choice of court forum. From the
decision of the Court of Appeals, the losing
party may then file a petition for review
on certiorariunder Rule 45 of the Rules of
Court with the Supreme Court. This is because
the errors which the court may commit in the
exercise of jurisdiction are merely errors of
judgment which are the proper subject of an
appeal.
When the OSG filed its notice of appeal under
Rule 42, it availed itself of the wrong remedy.
As a result, the running of the period for filing
of a Petition for Certiorari continued to run
and was not tolled. Upon lapse of that period,
the Decision of the RTC could no longer be
questioned. Republic of the Philippines v.
Narceda; G.R. No. 182760. April 10, 2013
The Subdivision and Condominium Buyers
Protective Decree; contract to sell; validity is
not affected by lack of certificate of
registration of subdivision developer and
failure to register the contract before the
Register of Deeds; Maceda Law. In Spouses
Co Chien v. Sta. Lucia Realty and
Development Corporation, Inc. this Court has
already ruled that the lack of a certificate of
registration and a license to sell on the part of a
subdivision developer does not result to the
nullification or invalidation of the contract to
sell it entered into with a buyer. The contract to
sell remains valid and subsisting. In said case,
the Court upheld the validity of the contract to
sell notwithstanding violations by the
developer of the provisions of PD 957. We

held that nothing in PD 957 provides for the
nullity of a contract validly entered into in
cases of violation of any of its provisions such
as the lack of a license to sell.
Moreover, Flora claims that the contract she
entered into with Moldex is void because of
the latters failure to register the contract to
sell/document of conveyance with the Register
of Deeds, in violation of Section 1730 of PD
957. However, just like in Section 5 which did
not penalize the lack of a license to sell with
the nullification of the contract, Section 17
similarly did not mention that the developers
or Moldexs failure to register the contract to
sell or deed of conveyance with the Register of
Deeds resulted to the nullification or invalidity
of the said contract or deed [T]hus, nonregistration of an instrument of conveyance
will not affect the validity of a contract to sell.
It will remain valid and effective between the
parties thereto as under PD 1529 or The
Property Registration Decree, registration
merely serves as a constructive notice to the
whole world to bind third parties.
Under the Maceda Law, the defaulting buyer
who has paid at least two years of installments
has the right of either to avail of the grace
period to pay or, the cash surrender value of
the payments made:
Section 3. In all transactions or contracts
involving the sale or financing of real estate on
installment payments, including residential
condominium apartments but excluding
industrial lots, commercial buildings and sales
to tenants under Republic Act Numbered
Thirty-eight Hundred Forty-four, as amended
by Republic Act Numbered Sixty-three
Hundred Eighty-nine, where the buyer has
paid at least two years of installments, the
buyer is entitled to the following rights in case
he defaults in the payment of succeeding
installments:
(a) To pay, without additional interest, the
unpaid installments due within the total grace
period earned by him which is hereby fixed at
the rate of one month grace period for every
one year of installment payments made:

Provided, That this right shall be exercised by
the buyer only once in every five years of the
life of the contract and its extensions, if any.
(b) If the contract is canceled, the seller shall
refund to the buyer the cash surrender value of
the payments on the property equivalent to
fifty per cent of the total payments made, and,
after five years of installments, an additional
five per cent every year but not to exceed
ninety per cent of the total payments made:
Provided, That the actual cancellation of the
contract shall take place after thirty days from
receipt by the buyer of the notice of
cancellation or the demand for rescission of
the contract by a notarial act and upon full
payment of the cash surrender value to the
buyer.
Down payments, deposits or options on the
contract shall be included in the computation
of the total number of installment payments
made.
Moldex Realty, Inc. v. Saberon; G.R. No.
176289. April 8, 2013
April 2013 rulings of the Supreme Court of the
Civil Code
Contract; Rescission; effect. Rescission entails
a mutual restitution of benefits received. An
injured party who has chosen rescission is also
entitled to the payment of damages. Sandoval
Shipyards, Inc. v. Philippine Merchant Marine
Academy (PMMA); G.R. No. 188633. April
10, 2013
Obligation; Extinguishment of obligations;
consignation; when tender of payment not
necessary; judicial in character; difference
between consignation and tender of
payment. Under Article 1256 of the Civil
Code, the debtor shall be released from
responsibility by the consignation of the thing
or sum due, without need of prior tender of
payment, when the creditor is absent or
unknown, or when he is incapacitated to
receive the payment at the time it is due, or
when two or more persons claim the same

right to collect, or when the title to the
obligation has been lost.
Consignation is necessarily judicial. Article
1258 of the Civil Code specifically provides
that consignation shall be made by depositing
the thing or things due at the disposal
of judicial authority. The said provision clearly
precludes consignation in venues other than
the courts.
Elsewhere, what may be made is a valid tender
of payment, but not consignation. The two,
however, must be distinguished.
Tender of payment must be distinguished from
consignation. Tender is the antecedent of
consignation, that is, an act preparatory to the
consignation, which is the principal, and from
which are derived the immediate consequences
which the debtor desires or seeks to obtain.
Tender of payment may be extrajudicial, while
consignation is necessarily judicial, and the
priority of the first is the attempt to make a
private settlement before proceeding to the
solemnities of consignation. (8 Manresa 325).
Sps. Cacayorin v. Armed Forces and Police
Mutual Benefit Association, Inc.; G.R. No.
171298. April 15, 2013
Property; Ejectment; only issue is who is
entitled to physical possession; forcible entry;
prior physical possession is vital; judgment
successors-in-interest; effects if prevailing
party is a usufructuary; usufruct; death of
usufructuary extinguishes usufruct. Ejectment
cases forcible entry and unlawful detainer
are summary proceedings designed to provide
expeditious means to protect actual possession
or the right to possession of the property
involved. The only question that the courts
questionable. Thus, an ejectment case will not
necessarily be decided in favor of one who has
presented proof of ownership of the subject

property.
Indeed, possession in ejectment cases means
nothing more than actual physical possession,
not legal possession in the sense contemplated
in civil law. In a forcible entry case, prior
physical possession is the primary
consideration[.] A party who can prove prior
possession can recover such possession even
against the owner himself. Whatever may be
the character of his possession, if he has in his
favor prior possession in time, he has the
security that entitles him to remain on the
property until a person with a better right
lawfully ejects him. [T]he party in
peaceable, quiet possession shall not be thrown
out by a strong hand, violence, or terror.
The judgment in an ejectment case is
successors-in interest by title subsequent to the
commencement of the action; hence, it is
enforceable by or against the heirs of the
deceased. This judgment entitles the winning
party to: (a) the restitution of the premises, (b)
the sum justly due as arrears of rent or as
reasonable compensation for the use and
occupation of the premises, and (c) attorneys
fees and costs.
[T]he right to the usufruct is now rendered
moot by the death of Wilfredo since death
extinguishes a usufruct under Article 603(1) of
the Civil Code. This development deprives the
heirs of the usufructuary the right to retain or
to reacquire possession of the property even if
the ejectment judgment directs its restitution.
Thus, what actually survives under the
circumstances is the award of damages, by
way of compensation. Rivera-Calingasan v.
Rivera; G.R. No. 171555. April 17, 2013
Property; Public property; public plaza forms
part of the public dominion; cannot be the
object of appropriation, lease, any other
contractual undertaking; void contracts. A
pPublic plaza is for public use and therefore
forms part of the public dominion.
Accordingly, it cannot be the object of

appropriation either by the State or by private
persons. Nor can it be the subject of lease or
any other contractual undertaking.
In Villanueva v. Castaeda, Jr., citing Espiritu
v. Municipal Council of Pozorrubio, the Court
pronounced that:
x x x Town plazas are properties of public
dominion, to be devoted to public use and to
be made available to the public in general.
They are outside the commerce of man and
cannot be disposed of or even leased by the
municipality to private parties.
In this relation, Article 1409(1) of the Civil
Code provides that a contract whose purpose is
contrary to law, morals, good customs, public
order or public policy is considered void and
as such, creates no rights or obligations or any
juridical relations. Land Bank of the
Philippines v. Cacayurin; G.R. No. 191667.
April 17, 2013
Special Laws
Foreclosure of Mortgage pursuant to P.D. No.
385; when its purpose is served; when hearing
is necessary before issuance of writ of
possession; foreclosure of mortgage under
Section 33, Rule 39 of the Rules on Civil
Procedure; when issuance of writ of possession
is not ministerial. Indeed, while the Court had
already declared in Philippine National Bank
v. Adil that once the property of a debtor is
foreclosed and sold to a GFI, it would be
mandatory for the court to place the GFI in the
possession and control of the property
pursuant to Section 4 of P.D. No.
385 (Requiring Government Financial
Institutions to Foreclose Mandatorily All
Loans with Arrearages, Including Interest and
Charges Amounting to at Least Twenty (20%)
of the Total Outstanding Obligation) this
rule should not be construed as absolute or
without exception.
The evident purpose underlying P.D. 385 is
sufficiently served by allowing foreclosure
proceedings initiated by GFIs to continue until
a judgment therein becomes final and
executory, without a restraining order,
temporary or permanent injunction against it

being issued. But if a parcel of land is
occupied by a party other than the judgment
debtor, the proper procedure is for the court to
order a hearing to determine the nature of said
adverse possession before it issues a writ of
possession. This is because a third party, who
is not privy to the debtor, is protected by the
law. Such third party may be ejected from the
premises only after he has been given an
opportunity to be heard, to comply with the
time honored principle of due process.
In the same vein, under Section 33 of Rule 39
of the Rules on Civil Procedure, the possession
of a mortgaged property may be awarded to a
purchaser in the extrajudicial foreclosure,
unless a third party is actually holding the
property adversely vis--vis the judgment
debtor.
The obligation of a court to issue a writ of
possession in favor of the purchaser in an
extrajudicial foreclosure sale ceases to be
ministerial, once it appears that there is a third
party who is in possession of the property and
is claiming a right adverse to that of the
debtor/mortgagor. The Supreme Court
explained in Philippine National Bank v.
Austria that the foregoing doctrinal
pronouncements are not without support in
substantive law:
x x x. Notably, the Civil Code protects the
actual possessor of a property, to wit:
Art. 433. Actual possession under claim of
ownership raises a disputable presumption of
ownership. The true owner must resort to
judicial process for the recovery of the
property.
Under the aforequoted provision, one who
claims to be the owner of a property possessed
by another must bring the appropriate judicial
action for its physical recovery. The term
judicial process could mean no less than an
ejectment suit or reivindicatory action, in
which the ownership claims of the contending
parties may be properly heard and adjudicated.

Royal Savings Bank v. Asia, et al.; G.R. No.
183658. April 10, 2013
Family Code; Declaration of Presumptive
Death; judgment is immediately final and
executory; proper remedy is a special civil
action for certiorari filed in the Court of
Appeals; decision of Court of Appeals
reviewable by the Supreme Court via certiorari
under Rule 45. It is improper to avail of an
ordinary appeal as a vehicle for questioning a
trial courts decision in a summary proceeding
for the declaration of presumptive death under
Article 41 of the Family Code.
As explained in Republic v. Tango, the remedy
of a losing party in a summary proceeding is
not an ordinary appeal, but a petition
for certiorari, to wit:
By express provision of law, the judgment of
the court in a summary proceeding shall be
immediately final and executory. As a matter
of course, it follows that no appeal can be had
of the trial courts judgment in a summary
proceeding for the declaration of presumptive
death of an absent spouse under Article 41 of
the Family Code. It goes without saying,
however, that an aggrieved party may file a
petition for certiorari to question abuse of
Such petition should be filed in the Court of
Courts original jurisdiction to issue a writ
of certiorari is concurrent with the RTCs and
the Court of Appeals in certain cases, such
party may then file a petition for review
on certiorariunder Rule 45 of the Rules of
Court with the Supreme Court. This is because
the errors which the court may commit in the
appeal.
When the OSG filed its notice of appeal under
Rule 42, it availed itself of the wrong remedy.
As a result, the running of the period for filing

of a Petition for Certiorari continued to run
and was not tolled. Upon lapse of that period,
the Decision of the RTC could no longer be
questioned. Republic of the Philippines v.
Narceda; G.R. No. 182760. April 10, 2013.
March 2013 rulings of the Supreme Court of
Civil Code
Contracts; contract of sale; perfection;
essential elements; stages. A contract of sale is
perfected at the moment there is a meeting of
minds upon the thing which is the object of the
contract and upon the price. Thus, for a
contract of sale to be valid, all of the following
essential elements must concur: a) consent or
meeting of the minds; b) determinate subject
matter; and c) price certain in money or its
equivalent.
As for the price, fixing it can never be left to
the decision of only one of the contracting
parties. But a price fixed by one of the
contracting parties, if accepted by the other,
gives rise to a perfected sale.
As regards consent, when there is merely an
offer by one party without acceptance of the
other, there is no contract. The decision to
accept a bidders proposal must be
communicated to the bidder. However, a
binding contract may exist between the parties
whose minds have met, although they did not
affix their signatures to any written document,
as acceptance may be expressed or implied. It
can be inferred from the contemporaneous and
subsequent acts of the contracting parties.
Thus, the Supreme Court has held:
x x x The rule is that except where a formal
acceptance is so required, although the
acceptance must be affirmatively and clearly
made and must be evidenced by some acts or
conduct communicated to the offeror, it may
be made either in a formal or an informal
manner, and may be shown by acts, conduct,
or words of the accepting party that clearly
manifest a present intention or determination
to accept the offer to buy or sell. Thus,

acceptance may be shown by the acts, conduct,
or words of a party recognizing the existence
of the contract of sale.
Contracts undergo three stages: (a) negotiation
that begins from the time the prospective
contracting parties indicate interest in the
contract and ends at the moment of their
agreement; (b) perfection or birth that which
takes place when the parties agree upon all the
essential elements of the contract; and (c)
consummation that occurs when the parties
fulfill or perform the terms agreed upon,
culminating in the extinguishment
thereof. Robern Development Corporation, et
al. vs. Peoples Landless Association
represented by Florida Ramos, et al.; G.R. No.
173622. March 11, 2013
Contracts; obligatory nature of contracts;
interpretation; Joint Affidavit of Undertaking
may be a contract in itself; due execution;
default, elements; judicial demand;
computation of interest. Contracts are
obligatory no matter what their forms may be,
whenever the essential requisites for their
validity are present. In determining whether a
document is an affidavit or a contract, the
Court looks beyond the title of the document,
since the denomination or title given by the
parties in their document is not conclusive of
the nature of its contents. In the construction or
interpretation of an instrument, the intention of
the parties is primordial and is to be pursued. If
the terms of the document are clear and leave
no doubt on the intention of the contracting
parties, the literal meaning of its stipulations
shall control. If the words appear to be
contrary to the parties evident intention, the
latter shall prevail over the former.
A simple reading of the terms of the Joint
Affidavit of Undertaking readily discloses
that it contains stipulations characteristic of
a contract. The Joint Affidavit of Undertaking
contained a stipulation where Cruz and
Leonardo promised to replace the damaged car
of Gruspe, 20 days from October 25, 1999 or
up to November 15, 1999, of the same model
and of at least the same quality. In the event

that they cannot replace the car within the
same period, they would pay the cost of
Gruspes car in the total amount of P350,000,
with interest at 12% per month for any delayed
payment after November 15, 1999, until fully
paid.
An allegation of vitiated consent must be
proven by preponderance of
evidence. Although the undertaking in the
affidavit appears to be onerous and lopsided,
this does not necessarily prove the alleged
vitiation of consent. They, in fact, admitted the
genuineness and due execution of the Joint
Affidavit and Undertaking when they said that
they signed the same to secure possession of
their vehicle.
In order that the debtor may be in default, it is
necessary that the following requisites be
present: (1) that the obligation be demandable
and already liquidated; (2) that the debtor
delays performance; and (3) that the creditor
requires the performance judicially and
extrajudicially. Default generally begins from
the moment the creditor demands the
performance of the obligation. Rodolfo G.
Cruz and Esperanza Ibias vs. Atty. Delfin
Gruspe; G.R. No. 191431. March 13, 2013
Contracts; parties may establish any
agreement, term, and condition they may deem
advisable, provided they are not contrary to
law, morals or public policy; if the language
used is clear, there is no need for construction;
mortgage; courts duty, merely to interpret the
intent of the parties; even if not expressly so
stated, the mortgage extends to the
improvements; machineries and equipment are
considered real properties. As held in Gateway
Electronics Corp. v. Land Bank of the
Philippines, the rule in this jurisdiction is that
the contracting parties may establish any
agreement, term, and condition they may deem
advisable, provided they are not contrary to
law, morals or public policy. The right to enter
into lawful contracts constitutes one of the
liberties guaranteed by the Constitution.

It has been explained by the Supreme Court
in Norton Resources and Development
Corporation v. All Asia Bank Corporation in
reiteration of the ruling in Benguet
Corporation v. Cabildo that:
A courts purpose in examining a contract is to
interpret the intent of the contracting parties, as
objectively manifested by them. The process
of interpreting a contract requires the court to
make a preliminary inquiry as to whether the
contract before it is ambiguous. A contract
provision is ambiguous if it is susceptible of
two reasonable alternative interpretations.
Where the written terms of the contract are not
ambiguous and can only be read one way, the
court will interpret the contract as a matter of
law.
Then till now the pronouncement has been that
if the language used is as clear as day and
readily understandable by any ordinary reader,
there is no need for construction.
Law and jurisprudence provide and guide that
even if not expressly so stated, the mortgage
extends to the improvements.
Article 2127 of the Civil Code provides:
Art. 2127. The mortgage extends to the natural
accessions, to the improvements, growing
fruits, and the rents or income not yet received
when the obligation becomes due, and to the
amount of the indemnity granted or owing to
the proprietor from the insurers of the property
mortgaged, or in virtue of expropriation for
public use, with the declarations,
amplifications and limitations established by
law, whether the estate remains in the
possession of the mortgagor, or it passes into
the hands of a third person.
In the early case of Bischoff v. Pomar and Cia.
General de Tabacos, the Court ruled that even
if the machinery in question was not included
in the mortgage expressly, Article 111 of the
[old] Mortgage Law provides that chattels
permanently located in a building, either useful
or ornamental, or for the service of some
industry even though they were placed there
after the creation of the mortgage shall be
considered as mortgaged with the estate,

provided they belong to the owner of said
estate.
The real estate mortgage over the machineries
and equipment is even in full accord with the
classification of such properties by the Civil
Code of the Philippines as immovable
property. Thus:
Article 415. The following are immovable
property:
(1) Land, buildings, roads and constructions of
all kinds adhered to the soil;
xxxx
(5) Machinery, receptacles, instruments or
implements intended by the owner of the
tenement for an industry or works which may
be carried on in a building or on a piece of
land, and which tend directly to meet the needs
of the said industry or works.
Star Two (SPV-AMC), Inc. vs. Paper City
Corporation of the Philippines; G.R. No.
169211. March 6, 2013
Property; encroachment on property; builder in
bad faith; options available to owner of the
land; rules in the determining the reckoning
period for valuing the property. Under Article
448 pertaining to encroachments in good faith,
as well as Article 450 referring to
encroachments in bad faith, the owner of the
land encroached upon petitioner herein has
the option to require respondent builder to pay
the price of the land.
Although these provisions of the Civil Code do
not explicitly state the reckoning period for
valuing the property, Ballatan v. Court of
Appeals already specifies that in the event that
the seller elects to sell the lot, the price must
be fixed at the prevailing market value at the
time of payment.
More recently, Tuatis v. Spouses
Escol illustrates that the present or current fair
value of the land is to be reckoned at the time
that the landowner elected the choice, and not
at the time that the property was purchased.
In Sarmiento v. Agana, we reckoned the
valuation of the property at the time that the

real owner of the land asked the builder to
vacate the property encroached upon.
Moreover, the oft-cited case Depra v.
Dumlao likewise ordered the courts of origin
to compute the current fair price of the land in
cases of encroachment on real properties. Vda.
de Roxas v. Our Ladys Foundation, Inc.; G.R.
No. 182378. March 6, 2013
Special Laws
Agrarian Reform; land ownership; mere
issuance of the Certificate of Land Transfer
does not vest full ownership on the holder and
does not automatically operate to divest the
land owner of all of his rights over the
landholding; requirements to effect a transfer
of ownership; agricultural lands; any sale or
disposition of agricultural lands made after the
effectivity of R.A. No. 6657 which has been
found contrary to its provisions shall be null
and void; procedures for the reallocation of
farmholdings covered by P.D. No. 27 by
reason of abandonment or the refusal to
become a beneficiary; requisites of
abandonment. The mere issuance of the
Certificate of Land Transfer (CLT) does not
vest full ownership on the holder and does not
automatically operate to divest the landowner
of all of his rights over the landholding. The
holder must first comply with certain
mandatory requirements to effect a transfer of
ownership. Under R.A. No.
6657 (Comprehensive Agrarian Reform Law
of 1988) in relation with P.D. No.
27 (Decreeing the Emancipation of Tenants
from the Bondage of the Soil, Transferring to
Them the Ownership of the Land they Till and
Providing the Instruments and Mechanism
Therefor) and E.O. No. 228 (Declaring Full
Land Ownership to Qualified Farmer
Beneficiaries Covered by P.D. No. 27:
Determining the Value of Remaining Unvalued
Rice and Corn Lands Subject to P.D. No. 27;
and Providing for the Manner of Payment by
the Farmer Beneficiary and Mode of
Compensation to the Landowner), the title to
the landholding shall be issued to the tenant-
farmer only upon the satisfaction of the

following requirements: (1) payment in full of
the just compensation for the landholding, duly
determined by final judgment of the proper
court; (2) possession of the qualifications of a
farmer-beneficiary under the law; (3) fullpledged membership of the farmer-beneficiary
in a duly recognized farmers cooperative; and
(4) actual cultivation of the landholding. We
explained in several cases that while a tenant
with a CLT is deemed the owner of a
landholding, the CLT does not vest full
ownership on him. The tenant-holder of a
CLT merely possesses an inchoate right that is
subject to compliance with certain legal
preconditions for perfecting title and acquiring
full ownership.
Pursuant to R.A. No. 6657 (Comprehensive
Agrarian Reform Law of 1988) in relation with
P.D. No. 27(Decreeing the Emancipation of
Tenants from the Bondage of the Soil,
Transferring to Them the Ownership of the
Land they Till and Providing the Instruments
and Mechanism Therefor), any sale or
disposition of agricultural lands made after the
effectivity of R.A. No. 6657 which has been
found contrary to its provisions shall be null
and void. The proper procedure for the
reallocation of the disputed lot must be
followed to ensure that there indeed exist
grounds for the cancellation of the CLT or for
forfeiture of rights under it, and that the lot is
subsequently awarded to a qualified farmertenant pursuant to the law.
Under Ministry Memorandum Circular No. 0483 (Supplemental Guidelines to Govern
Transfer Action of Areas Covered by P.D. 27
by Reason of Abandonment, Waiver of Rights
and Illegal Transactions) in relation with
Ministry Memorandum Circular No. 0880 (Guidelines in the Disposition and
Reallocation of Farmholdings of TenantFarmers who Refuses to Become Beneficiaries
of P.D. No. 27) and Ministry Memorandum
Circular No. 07-79 (Rules and Regulations
Governing Transactions Involving Lands

Covered by P.D. No. 27), the following
procedures must be observed for the
reallocation of farmholdings covered by P.D.
No. 27 by reason of abandonment or the
refusal to become a beneficiary, among others:
I.
Investigation Procedure
1. The conduct of verification by the
concerned Agrarian Reform Team
Leader (ARTL) to ascertain the reasons for the
refusal. All efforts shall be exerted to convince
the tenant-farmer to become a beneficiary and
to comply with his obligations as such
beneficiary.
2. If the tenant-farmer still refuses, the ARTL
shall determine the substitute. The ARTL
shall first consider the immediate member of
the tenant-farmers family who assisted in the
cultivation of the land, and who is willing to be
substituted to all the rights and obligations of
the tenant-farmer. In the absence or refusal of
such member, the ARTL shall choose one from
a list of at least three qualified tenants
recommended by the President of the
Samahang Nayon or, in default, any organized
farmer association, subject to the award limits
under P.D. No. 27.
3. Formal notice of the report shall be given
to the concerned farmer-beneficiary together
with all the pertinent documents and
evidences.
4. The ARTL shall submit the records of the
case with his report and recommendation to
the District Officer within 5 days from the
ARTLs determination of the substitute. The
District Officer shall likewise submit his report
and recommendation to the Regional Director
and the latter to the Bureau of Agrarian Legal
Assistance, for review, evaluation, and
preparation of the final draft decision for final
approval.
5. The decision shall declare the cancellation
of the CLT if issued.
In the event of the farmer-beneficiarys death,
the transfer or reallocation of his landholding
to his heirs shall be governed by Ministry
Memorandum Circular No. 19-78 (Rules and
Regulations In Case of Death of a TenantBeneficiary).

For abandonment to exist, the following
requisites must concur: (1) a clear intent to
abandon; and (2) an external act showing such
intent. The term is defined as the willful
failure of the ARB, together with his farm
household, to cultivate, till, or develop his land
to produce any crop, or to use the land for any
specific economic purpose continuously for a
period of two calendar years. It entails,
among others, the relinquishment of
possession of the lot for at least two (2)
calendar years and the failure to pay the
amortization for the same period. What is
critical in abandonment is intent which must
be shown to be deliberate and clear. The intent
must be established by the factual failure to
work on the landholding absent any valid
reason as well as a clear intent, which is shown
as a separate element. Heirs of Lorenzo
Buensuceso vs. Perez; G.R. No.
173926. March 6, 2013
General Banking Law and Act No. 3135; right
of redemption; period; juridical entities;
General Banking Law of 2000 merely
modified the time for the exercise of such right
by reducing the one-year period originally
provided in Act No. 3135; right of redemption,
being statutory, it must be exercised in the
manner prescribed by the statute, and within
the prescribed time limit to make it
effective. The law governing cases of
extrajudicial foreclosure of mortgage is Act
No. 3135 (An Act to Regulate the Sale of
Property Under Special Powers Inserted In or
Annexed to Real-Estate Mortgages), as
amended by Act No. 4118 (An Act to Amend
Act No. 3135). Section 6 thereof provides:
SEC. 6. In all cases in which an extrajudicial
sale is made under the special power
hereinbefore referred to, the debtor, his
successors-in interest or any judicial creditor
or judgment creditor of said debtor, or any
person having a lien on the property
subsequent to the mortgage or deed of trust

under which the property is sold, may redeem
the same at any time within the term of one
year from and after the date of the sale; and
such redemption shall be governed by the
provisions of sections four hundred and sixtyfour to four hundred and sixty-six, inclusive,
of the Code of Civil Procedure, in so far as
these are not inconsistent with the provisions
of this Act.
The one-year period of redemption is counted
from the date of the registration of the
certificate of sale. In this case, the parties
provided in their real estate mortgage contract
that upon petitioners default and the latters
entire loan obligation becoming due,
respondent may immediately foreclose the
mortgage judicially in accordance with the
Rules of Court, or extrajudicially in
accordance with Act No. 3135, as
amended (An Act to Regulate the Sale of
Property Under Special Powers Inserted In or
Annexed to Real-Estate Mortgages).
However, Section 47 of R.A. No. 8791
otherwise known as The General Banking
Law of 2000 which took effect on June 13,
2000, amended Act No. 3135. Said provision
reads:
SECTION 47. Foreclosure of Real Estate
Mortgage. In the event of foreclosure,
whether judicially or extrajudicially, of any
mortgage on real estate which is security for
any loan or other credit accommodation
granted, the mortgagor or debtor whose real
property has been sold for the full or partial
payment of his obligation shall have the right
within one year after the sale of the real estate,
to redeem the property by paying the amount
due under the mortgage deed, with interest
thereon at the rate specified in the mortgage,
and all the costs and expenses incurred by the
bank or institution from the sale and custody of
said property less the income derived
therefrom. However, the purchaser at the
auction sale concerned whether in a judicial or
extrajudicial foreclosure shall have the right to
enter upon and take possession of such
property immediately after the date of the

confirmation of the auction sale and administer
the same in accordance with law. Any petition
in court to enjoin or restrain the conduct of
foreclosure proceedings instituted pursuant to
this provision shall be given due course only
upon the filing by the petitioner of a bond in an
amount fixed by the court conditioned that he
will pay all the damages which the bank may
suffer by the enjoining or the restraint of the
foreclosure proceeding.
Notwithstanding Act 3135, juridical
persons whose property is being sold pursuant
to an extrajudicial foreclosure, shall have the
right to redeem the property in accordance
with this provision until, but not after, the
registration of the certificate of foreclosure
sale with the applicable Register of
Deeds which in no case shall be more than
three (3) months after foreclosure,
whichever is earlier. Owners of property that
has been sold in a foreclosure saleprior to the
effectivity of this Act shall retain their
redemption rights until their expiration.
(Emphasis supplied.)
Under the new law, an exception is thus made
in the case of juridical persons which are
allowed to exercise the right of redemption
only until, but not after, the registration of the
certificate of foreclosure sale and in no case
more than three (3) months after foreclosure,
whichever comes first.
Section 47 (of the General Banking Law of
2000) did not divest juridical persons of the
right to redeem their foreclosed properties but
only modified the time for the exercise of such
right by reducing the one-year period
originally provided in Act No. 3135 (An Act to
Regulate the Sale of Property Under Special
Powers Inserted In or Annexed to Real-Estate
Mortgages). The new redemption period
commences from the date of foreclosure sale,
and expires upon registration of the certificate
of sale or three months after foreclosure,
whichever is earlier. There is likewise no
retroactive application of the new redemption

period because Section 47 (of the General
Banking Law of 2000) exempts from its
operation those properties foreclosed prior to
its effectivity and whose owners shall retain
their redemption rights under Act No.
3135 (An Act to Regulate the Sale of Property
Under Special Powers Inserted In or Annexed
to Real-Estate Mortgages).
The right of redemption being statutory, it
must be exercised in the manner prescribed by
the statute, and within the prescribed time
limit, to make it effective. Furthermore, as
with other individual rights to contract and to
property, it has to give way to police power
exercised for public welfare. Goldenway
Merchandising Corporation vs. Equitable PCI
Bank; G.R. No. 195540. March 13, 2013
February 2013 rulings of the Supreme Court of
Civil Code
Common Carrier; requisite before presumption
of negligence arises; bill of lading;
interpretation thereof; inherent nature of the
subject shipment or its packaging as ground
for exempting common carrier from liability;
failure to prove negligence does not entitle
claimant for damages. Though it is true that
common carriers are presumed to have been at
fault or to have acted negligently if the goods
transported by them are lost, destroyed, or
deteriorated, and that the common carrier must
prove that it exercised extraordinary diligence
in order to overcome the presumption, the
plaintiff must still, before the burden is shifted
to the defendant, prove that the subject
shipment suffered actual shortage. This can
only be done if the weight of the shipment at
the port of origin and its subsequent weight at
the port of arrival have been proven by a
preponderance of evidence, and it can be seen
that the former weight is considerably greater
than the latter weight, taking into consideration
the exceptions provided in Article 1734 of the
Civil Code.
The Berth Term Grain Bill of Lading states

that the subject shipment was carried with the
qualification Shippers weight, quantity and
quality unknown, meaning that it was
transported with the carrier having been
oblivious of the weight, quantity, and quality
of the cargo. This interpretation of the quoted
qualification is supported by Wallem
Philippines Shipping, Inc. v. Prudential
Guarantee & Assurance, Inc., a case involving
an analogous stipulation in a bill of lading,
wherein the Supreme Court held that:
Indeed, as the bill of lading indicated that the
contract of carriage was under a said to
weigh clause, the shipper is solely
responsible for the loading while the carrier
is oblivious of the contents of the
shipment. (Emphasis supplied)
Hence, the weight of the shipment as indicated
in the bill of lading is not conclusive as to the
actual weight of the goods. Consequently, the
respondent must still prove the actual weight
of the subject shipment at the time it was
loaded at the port of origin so that a conclusion
may be made as to whether there was indeed a
shortage for which petitioner must be liable.
The shortage, if any, may have been due to the
inherent nature of the subject shipment or its
packaging since the subject cargo was shipped
in bulk and had a moisture content of 12.5%.
Considering that respondent was not able to
establish conclusively that the subject
shipment weighed 3,300 metric tons at the port
of loading, and that it cannot therefore be
concluded that there was a shortage for which
petitioner should be responsible; bearing in
mind that the subject shipment most likely lost
weight in transit due to the inherent nature of
Soya Bean Meal; assuming that the shipment
lost weight in transit due to desorption, the
shortage of 199.863 metric tons that
respondent alleges is a minimal 6.05% of the
weight of the entire shipment, which is within
the allowable 10% allowance for loss; and
noting that the respondent was not able to
show negligence on the part of the petitioner

and that the weighing methods which
respondent relied upon to establish the
shortage it alleges is inaccurate, respondent
cannot fairly claim damages against petitioner
for the subject shipments alleged
shortage. Asian Terminals, Inc. vs. Simon
Enterprises, Inc.; G.R. No. 177116. February
27, 2013
Contract; contract to sell; sellers obligation to
deliver the corresponding certificates of title is
simultaneous and reciprocal to the buyers full
payment of the purchase price; rescission;
effects; requires mutual restitution;
Subdivision and Condominium Buyers
Protective Decree (PD 957); intent of PD 957
to protect the buyer against unscrupulous
developers, operators and/or sellers; damages;
when moral damages may be awarded; when
exemplary damages may be awarded;
propriety of award of attorneys fees. It is
settled that in a contract to sell, the sellers
obligation to deliver the corresponding
certificates of title is simultaneous and
reciprocal to the buyers full payment of the
purchase price. In this relation, Section 25 of
PD 957 (Regulating the Sale of Subdivision
Lots and Condominiums, Providing Penalties
for Violations Thereof), which regulates the
subject transaction, imposes on the subdivision
owner or developer the obligation to cause the
transfer of the corresponding certificate of title
to the buyer upon full payment, to wit:
Sec. 25. Issuance of Title. The owner or
developer shall deliver the title of the lot or
unit to the buyer upon full payment of the
lot or unit. No fee, except those required for
the registration of the deed of sale in the
Registry of Deeds, shall be collected for the
issuance of such title. In the event a mortgage
over the lot or unit is outstanding at the time of
the issuance of the title to the buyer, the owner
or developer shall redeem the mortgage or the
corresponding portion thereof within six
months from such issuance in order that the
title over any fully paid lot or unit may be
secured and delivered to the buyer in

accordance herewith. (Emphasis supplied.)
The long delay in the performance of GPIs
obligation from date of demand on September
16, 2002 was unreasonable and unjustified. It
cannot therefore be denied that GPI
substantially breached its contract to sell with
Sps. Fajardo which thereby accords the latter
the right to rescind the same pursuant to
Article 1191 of the Code, viz:
ART. 1191. The power to rescind obligations
is implied in reciprocal ones, in case one of the
obligors should not comply with what is
incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the obligation,
with the payment of damages in either case.
He may also seek rescission, even after he has
chosen fulfillment, if the latter should become
impossible.
The court shall decree the rescission claimed,
unless there be just cause authorizing the
fixing of a period.
This is understood to be without prejudice to
the rights of third persons who have acquired
the thing, in accordance with articles 1385 and
1388 and the Mortgage Law.
Rescission does not merely terminate the
contract and release the parties from further
obligations to each other, but abrogates the
contract from its inception and restores the
parties to their original positions as if no
contract has been made. Consequently, mutual
restitution, which entails the return of the
benefits that each party may have received as a
result of the contract, is thus required.
To be sure, it has been settled that the effects
of rescission as provided for in Article 1385 of
the Code are equally applicable to cases under
Article 1191, to wit:
x x x Mutual restitution is required in cases
involving rescission under Article 1191. This
means bringing the parties back to their
original status prior to the inception of the
contract. Article 1385 of the Civil Code
provides, thus:

ART. 1385. Rescission creates the obligation
to return the things which were the object of
the contract, together with their fruits, and
the price with its interest; consequently, it
can be carried out only when he who
demands rescission can return whatever he
may be obligated to restore.
Neither shall rescission take place when the
things which are the object of the contract are
legally in the possession of third persons who
did not act in bad faith.
In this case, indemnity for damages may be
demanded from the person causing the loss.
The Court has consistently ruled that this
provision applies to rescission under Article
1191:
[S]ince Article 1385 of the Civil Code
expressly and clearly states that rescission
creates the obligation to return the things
which were the object of the contract, together
with their fruits, and the price with its
interest, the Court finds no justification to
sustain petitioners position that said Article
1385 does not apply to rescission under Article
1191. x x x (Emphasis supplied; citations
omitted.)
As a necessary consequence, considering the
propriety of the rescission as earlier discussed,
Sps. Fajardo must be able to recover the price
of the property pegged at its prevailing market
value consistent with the Courts
pronouncement in Solid Homes, viz:
Indeed, there would be unjust enrichment if
respondents Solid Homes, Inc. & Purita
Soliven are made to pay only the purchase
price plus interest. It is definite that the value
of the subject property already escalated after
almost two decades from the time the
petitioner paid for it.Equity and justice
dictate that the injured party should be paid
the market value of the lot, otherwise,
respondents Solid Homes, Inc. & Purita
Soliven would enrich themselves at the
expense of herein lot owners when they sell
the same lot at the present market value.
Surely, such a situation should not be
countenanced for to do so would be contrary to

reason and therefore, unconscionable. Over
time, courts have recognized with almost
pedantic adherence that what is inconvenient
or contrary to reason is not allowed in law.
(Emphasis supplied.)
On this score, it is apt to mention that it is the
intent of PD 957 (Regulating the Sale of
Subdivision Lots and Condominiums,
Providing Penalties for Violations Thereof) to
protect the buyer against unscrupulous
developers, operators and/or sellers who
reneged on their obligations. Thus, in order to
achieve this purpose, equity and justice dictate
that the injured party should be afforded full
recompense and as such, be allowed to recover
the prevailing market value of the undelivered
lot which had been fully paid for.
Furthermore, the Court finds that there is
proper legal basis to accord moral and
exemplary damages and attorneys fees,
including costs of suit. Verily, GPIs
unjustified failure to comply with its
obligations as above discussed caused Sps.
Fajardo serious anxiety, mental anguish and
sleepless nights, thereby justifying the award
of moral damages. In the same vein, the
payment of exemplary damages remains in
order so as to prevent similarly minded
subdivision developers to commit the same
transgression. And finally, considering that
Sps. Fajardo were constrained to engage the
services of counsel to file this suit, the award
of attorneys fees must be likewise
sustained. Gotesco Properties, Inc., et al. vs.
Sps. Eugenio and Angelina Fajardo; G.R. No.
201167. February 27, 2013
Contracts; interpretation thereof; intention of
the parties; relativity of contracts; credit line;
definition; trust receipt; characteristics;
coverage; contract of adhesion; generally not a
one-sided document; interest rate; parties have
the right to agree on rate of interest; interest
rate must not be excessive, iniquitous,
unconscionable and exorbitant; attorneys fees;
award must rest on a factual basis and legal

justification stated in the body of the decision
under review. 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 determining
their intention, their contemporaneous and
subsequent acts shall be principally
considered.
Under the notion of relativity of contracts
embodied in Article 1311 of the Civil Code,
contracts take effect only between the parties,
their assigns and heirs. Hence, the farmerparticipants, not being themselves parties to
the contractual documents signed by Gloria,
were not to be thereby liable.
A credit line is really a loan agreement
between the parties. According to Rosario
Textile Mills Corporation v. Home Bankers
Savings and Trust Co.:
x x x [A] credit line is that amount of money
or merchandise which a banker, a merchant, or
supplier agrees to supply to a person on credit
and generally agreed to in advance. It is a
fixed limit of credit granted by a bank, retailer,
or credit card issuer to a customer, to the full
extent of which the latter may avail himself of
his dealings with the former but which he must
not exceed and is usually intended to cover a
series of transactions in which case, when the
customers line of credit is nearly exhausted,
he is expected to reduce his indebtedness by
payments before making any further drawings.
A trust receipt is a security transaction
intended to aid in financing importers and
retail dealers who do not have sufficient funds
or resources to finance the importation or
purchase of merchandise, and who may not be
able to acquire credit except through
utilization, as collateral, of the merchandise
imported or purchased. It is a security
agreement that secures an indebtedness and
there can be no such thing as security interest
that secures no obligation.
The contract, its label notwithstanding, was not
a trust receipt transaction in legal
contemplation or within the purview of
the Trust Receipts Law (Presidential Decree

No. 115) such that its breach would render
Gloria criminally liable for estafa.
Under Section 4 of the Trust Receipts Law, the
sale of goods by a person in the business of
selling goods for profit who, at the outset of
the transaction, has, as against the buyer,
general property rights in such goods, or who
sells the goods to the buyer on credit, retaining
title or other interest as security for the
payment of the purchase price, does not
constitute a trust receipt transaction and is
outside the purview and coverage of the law.
In Land Bank v. Perez, the Court has
elucidated on the coverage of Section 4 (of the
Trust Receipts Law), to wit:
There are two obligations in a trust receipt
transaction. The first is covered by the
provision that refers to money under the
obligation to deliver it (entregarla) to the
owner of the merchandise sold. The second is
covered by the provision referring to
merchandise received under the obligation to
return it (devolverla) to the owner. Thus, under
the Trust Receipts Law, intent to defraud is
presumed when (1) the entrustee fails to turn
over the proceeds of the sale of goods covered
by the trust receipt to the entruster; or (2) when
the entrustee fails to return the goods under
trust, if they are not disposed of in accordance
with the terms of the trust receipts.
In all trust receipt transactions, both
obligations on the part of the trustee exist in
the alternative the return of the proceeds of
the sale or the return or recovery of the goods,
whether raw or processed. When both parties
enter into an agreement knowing that the
return of the goods subject of the trust
receipt is not possible even without any fault
on the part of the trustee, it is not a trust
receipt transaction penalized under Section
13 of P.D. 115; the only obligation actually
agreed upon by the parties would be the
return of the proceeds of the sale
transaction. This transaction becomes a
mere loan, where the borrower is obligated

to pay the bank the amount spent for the
purchase of the goods. (Bold emphasis
supplied)
A contract of adhesion prepared by one party,
usually a corporation, is generally not a onesided document as long as the signatory is not
prevented from studying it before signing.
At any rate, the social stature of the parties, the
nature of the transaction, and the amount
involved were also factors to be considered in
determining whether the aggrieved party
exercised adequate care and diligence in
studying the contract prior to its execution.
Thus, [u]nless a contracting party cannot read
or does not understand the language in which
the agreement is written, he is presumed to
know the import of his contract and is bound
thereby.
The Usury Law allowed the parties in a loan
agreement to exercise discretion on the interest
rate to be charged. Once a judicial demand for
payment has been made, however, Article
2212 of the Civil Codeshould apply, that is:
Interest due shall earn legal interest from the
time it is judicially demanded, although the
obligation may be silent upon this point.
The Central Bank circulars on interest rates
granted to the parties leeway on the rate of
interest agreed upon. In this regard, the Court
has said:
The Usury Law had been rendered legally
ineffective by Resolution No. 224 dated 3
December 1982 of the Monetary Board of the
Central Bank, and later by Central Bank
Circular No. 905(Amendment of Books I to IV
of the Manual of Regulations for Banks and
Other Financial Intermediaries) which took
effect on 1 January 1983. These circulars
removed the ceiling on interest rates for
secured and unsecured loans regardless of
maturity. The effect of these circulars is to
allow the parties to agree on any interest that
may be charged on a loan. The virtual repeal of
the Usury Law is within the range of judicial
notice which courts are bound to take into
account. Although interest rates are no longer
subject to a ceiling, the lender does not have an

unbridled license to impose increased interest
rates. The lender and the borrower should
agree on the imposed rate, and such imposed
rate should be in writing.
Accordingly, the interest rate agreed upon
should not be excessive, iniquitous,
unconscionable and exorbitant; otherwise, the
Court may declare the rate illegal.
The award of attorneys fees must rest on a
factual basis and legal justification stated in
the body of the decision under review. Absent
the statement of factual basis and legal
justification, attorneys fees are to be
disallowed. In Abobon v. Abobon, the Court
has expounded on the requirement for factual
basis and legal justification in order to warrant
the grant of attorneys fees to the winning
party, viz:
As to attorneys fees, the general rule is that
such fees cannot be recovered by a successful
litigant as part of the damages to be assessed
against the losing party because of the policy
that no premium should be placed on the right
to litigate. Indeed, prior to the effectivity of the
present Civil Code, such fees could be
recovered only when there was a stipulation to
that effect. It was only under the present Civil
Code that the right to collect attorneys fees in
the cases mentioned in Article 2208 of
the Civil Code came to be recognized. Such
fees are now included in the concept of actual
damages.
Even so, whenever attorneys fees are proper
in a case, the decision rendered therein should
still expressly state the factual basis
and legal justification for granting them.
Granting them in the dispositive portion of the
judgment is not enough; a discussion of
the factual basis and legaljustification for them
must be laid out in the body of the decision.
Sps. Dela Cruz vs. Planters Products,
Inc.; G.R. No. 158649. February 18, 2013
Contract; rescission under Article 1191;
recognizes an implied resolutory condition in
reciprocal obligations; effects thereof. The

action for the rescission of the deed of sale on
the ground that Advanced Foundation did not
comply with its obligation actually seeks one
of the alternative remedies available to a
contracting party under Article 1191 of
the Civil Code, to wit:
Article 1191. The power to rescind obligations
is implied in reciprocal ones, in case one of the
obligors should not comply with what is
incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the obligation,
with the payment of damages in either case.
He may also seek rescission, even after he has
chosen fulfillment, if the latter should become
impossible.
The court shall decree the rescission claimed,
unless there be just cause authorizing the
fixing of a period.
This is understood to be without prejudice to
the rights of third persons who have acquired
the thing, in accordance with Articles 1385 and
1388 and the Mortgage Law.
Article 1191 of the Civil Code recognizes an
implied or tacit resolutory condition in
reciprocal obligations. The condition is
imposed by law, and applies even if there is no
corresponding agreement thereon between the
parties. The explanation for this is that in
reciprocal obligations a party incurs in delay
once the other party has performed his part of
the contract; hence, the party who has
performed or is ready and willing to perform
may rescind the obligation if the other does not
perform, or is not ready and willing to
perform.
It is true that the rescission of a contract results
in the extinguishment of the obligatory relation
as if it was never created, the extinguishment
having a retroactive effect. The rescission is
equivalent to invalidating and unmaking the
juridical tie, leaving things in their status
before the celebration of the contract.
However, until the contract is rescinded, the
juridical tie and the concomitant obligations
subsist. Teodoro A. Reyes vs. Ettore

Rossi; G.R. No. 159823. February 18, 2013.
Ejectment; distinction between a summary
action of ejectment and a plenary action for
recovery of possession and/or ownership of the
land; power of the inferior courts to rule on the
question of ownership in ejectment suits;
partition; validity of oral partition; actual
possession and exercise of dominion over
definite portions of the property are considered
strong proof of an oral partition; ownership;
tax declarations and tax receipts alone are not
conclusive evidence. It is well to be reminded
of the settled distinction between a summary
action of ejectment and a plenary action for
recovery of possession and/or ownership of the
land. What really distinguishes an action for
unlawful detainer from a possessory action
(accion publiciana) and from a reinvindicatory
action (accion reinvindicatoria) is that the first
is limited to the question of possession de
facto. Unlawful detainer suits
(accion interdictal) together with forcible entry
are the two forms of ejectment suit that may be
filed to recover possession of real property.
Aside from the summary action of
ejectment, accion publiciana or the plenary
action to recover the right of possession
and accion reinvindicatoria or the action to
recover ownership which also includes
recovery of possession, make up the three
kinds of actions to judicially recover
possession.
Under Section 3 of Rule 70 of the Rules of
Court, the Summary Procedure governs the
two forms of ejectment suit, the purpose being
to provide an expeditious means of protecting
actual possession or right to possession of the
property. They are not processes to determine
the actual title to an estate. If at all, inferior
courts are empowered to rule on the question
of ownership raised by the defendant in such
suits, only to resolve the issue of possession
and its determination on the ownership issue is
not conclusive.

The validity of an oral partition is well-settled
in our jurisdiction. In Vda. de Espina v.
Abaya, this Court declared that an oral
partition is valid:
Anent the issue of oral partition, We sustain
the validity of said partition. An agreement of
partition may be made orally or in writing. An
oral agreement for the partition of the property
owned in common is valid and enforceable
upon the parties. The Statute of Frauds has no
operation in this kind of agreements, for
partition is not a conveyance of property but
simply a segregation and designation of the
part of the property which belong to the coowners.
In Maestrado v. CA, the Supreme Court upheld
the partition after it found that it conformed to
the alleged oral partition of the heirs, and that
the oral partition was confirmed by the
notarized quitclaims executed by the heirs
subsequently. In Maglucot-Aw v. Maglucot, the
Supreme Court elaborated on the validity of
parol partition:
On general principle, independent and in spite
of the statute of frauds, courts of equity have
enforce [sic] oral partition when it has been
completely or partly performed.
Regardless of whether a parol partition or
agreement to partition is valid and enforceable
at law, equity will [in] proper cases[,] where
the parol partition has actually been
consummated by the taking of possession in
severalty and the exercise of ownership by the
parties of the respective portions set off to
each, recognize and enforce such parol
partition and the rights of the parties
thereunder. Thus, it has been held or stated in a
number of cases involving an oral partition
under which the parties went into possession,
exercised acts of ownership, or otherwise
partly performed the partition agreement, that
equity will confirm such partition and in a
proper case decree title in accordance with the
possession in severalty.
In numerous cases it has been held or stated
that parol partition may be sustained on the
ground of estoppel of the parties to assert the

rights of a tenant in common as to parts of land
divided by parol partition as to which
possession in severalty was taken and acts of
individual ownership were exercised. And a
court of equity will recognize the agreement
and decree it to be valid and effectual for the
purpose of concluding the right of the parties
as between each other to hold their respective
parts in severalty.
A parol partition may also be sustained on the
ground that the parties thereto have acquiesced
in and ratified the partition by taking
possession in severalty, exercising acts of
ownership with respect thereto, or otherwise
recognizing the existence of the partition.
A number of cases have specifically applied
the doctrine of part performance, or have
stated that a part performance is necessary, to
take a parol partition out of the operation of
the statute of frauds. It has been held that
where there was a partition in fact between
tenants in common, and a part performance, a
court of equity would have regard to and
enforce such partition agreed to by the parties.
It is settled that tax declarations and tax
receipts alone are not conclusive evidence of
ownership. They are merely indicia of a claim
of ownership,61 but when coupled with proof
of actual possession of the property, they can
be the basis of claim of ownership through
prescription. In the absence of actual, public
and adverse possession, the declaration of the
land for tax purposes does not prove
ownership.Casilang vs. Casilang-Dizon, et
al.; G.R. No. 180269. February 20, 2013
Mortgage; accommodation mortgage;
sanctioned under Article 2085 of the Civil
Code; accommodation mortgagor is ordinarily
not the recipient of the loan; reasonable
promptness in attacking the validity of a
mortgage; unreasonable delay may delay may
amount to ratification. The validity of an
accommodation mortgage is allowed under
Article 2085 of the Civil Code which provides
that [t]hird persons who are not parties to the

principal obligation may secure the latter by
pledging or mortgaging their own property.
An accommodation mortgagor, ordinarily, is
not himself a recipient of the loan, otherwise
that would be contrary to his designation as
such.
It bears stressing that an accommodation
mortgagor, ordinarily, is not himself a recipient
of the loan, otherwise that would be contrary
to his designation as such. We have held that it
is not always necessary that the
accommodation mortgagor be apprised
beforehand of the entire amount of the loan nor
should it first be determined before the
execution of the Special Power of Attorney in
favor of the debtor. This is especially true
when the words used by the parties indicate
that the mortgage serves as a continuing
security for credit obtained as well as future
loan availments.
Mortgagors desiring to attack a mortgage as
invalid should act with reasonable promptness,
and unreasonable delay may amount to
ratification. Spouses Ramos vs. Raul Obispo
and Far East Bank and Trust Co.; G.R. No.
193804. February 27, 2013
Tort; Doctrine of Last Clear Chance; definition
and characteristics; contributory negligence;
definition; effect; apportionment of damages
between parties who are both negligent
involving banking transactions; highest degree
of diligence is required for banks. The doctrine
of last clear chance, stated broadly, is that the
negligence of the plaintiff does not preclude a
recovery for the negligence of the defendant
where it appears that the defendant, by
exercising reasonable care and prudence,
might have avoided injurious consequences to
the plaintiff notwithstanding the plaintiffs
negligence. The doctrine necessarily assumes
negligence on the part of the defendant and
contributory negligence on the part of the
plaintiff, and does not apply except upon that
assumption. Stated differently, the antecedent
negligence of the plaintiff does not preclude
him from recovering damages caused by the
supervening negligence of the defendant, who

had the last fair chance to prevent the
impending harm by the exercise of due
diligence. Moreover, in situations where the
doctrine has been applied, it was defendants
failure to exercise such ordinary care, having
the last clear chance to avoid loss or injury,
which was the proximate cause of the
occurrence of such loss or injury.
A collecting bank is guilty of contributory
negligence when it accepted for deposit a postdated check notwithstanding that said check
had been cleared by the drawee bank which
failed to return the check within the 24-hour
reglementary period.
In the cited case of Philippine Bank of
Commerce v. Court of Appeals, while the
Court found petitioner bank as the culpable
party under the doctrine of last clear chance
since it had, thru its teller, the last opportunity
to avert the injury incurred
by its client simply by faithfully observing its
own validation procedure, it nevertheless ruled
that the plaintiff depositor (private respondent)
must share in the loss on account of
its contributory negligence.Thus:
The foregoing notwithstanding, it cannot be
denied that, indeed, private respondent was
likewise negligent in not checking its monthly
statements of account. Had it done so, the
company would have been alerted to the series
of frauds being committed against RMC by its
secretary. The damage would definitely not
have ballooned to such an amount if only
RMC, particularly Romeo Lipana, had
exercised even a little vigilance in their
financial affairs. This omission by RMC
amounts to contributory negligence which
shall mitigate the damages that may be
awarded to the private respondent under
Article 2179 of the New Civil Code, to wit:
x x x. When the plaintiffs own negligence
was the immediate and proximate cause of his
injury, he cannot recover damages. But if his
negligence was only contributory, the
immediate and proximate cause of the injury

being the defendants lack of due care, the
plaintiff may recover damages, but the courts
shall mitigate the damages to be awarded.
In view of this, we believe that the demands of
substantial justice are satisfied by allocating
the damage on a 60-40 ratio. Thus, 40% of
the damage awarded by the respondent
appellate court, except the award of
P25,000.00 attorneys fees, shall be borne by
private respondent RMC; only the balance of
60% needs to be paid by the petitioners. The
award of attorneys fees shall be borne
exclusively by the petitioners. (Italics in the
original; emphasis supplied)
Contributory negligence is conduct on the
part of the injured party, contributing as a legal
cause to the harm he has suffered, which falls
below the standard to which he is required to
conform for his own protection. Admittedly,
petitioners acceptance of the subject check for
deposit despite the one year postdate written
on its face was a clear violation of established
banking regulations and practices. In such
instances, payment should be refused by the
drawee bank and returned through the PCHC
within the 24-hour reglementary period. As
aptly observed by the CA, petitioners failure
to comply with this basic policy regarding
post-dated checks was a telling sign of its
lack of due diligence in handling checks
coursed through it.
It bears stressing that the diligence required
of banks is more than that of a
Roman paterfamilias or a good father of a
family. The highest degree of diligence is
expected, considering the nature of the
banking business that is imbued with public
interest. While it is true that respondents
liability for its negligent clearing of the check
is greater, petitioner cannot take lightly its own
violation of the long-standing rule against
encashment of post-dated checks and the
injurious consequences of allowing such
checks into the clearing system. Allied
Banking Corporation vs. Bank of the
Philippine Islands; G.R. No. 188363. February

27, 2013
Special Laws
Torrens system; curtain principle; right to rely
on the Torrens certificate of title; exception,
when the party has actual knowledge of facts
and circumstances that would impel a
reasonably cautious man to make such inquiry;
purchaser in good faith; definition. Under the
Torrens system of land registration, the
registered owner of realty cannot be deprived
of her property through fraud, unless a
transferee acquires the property as an innocent
purchaser for value. A transferee who acquires
the property covered by a reissued owners
copy of the certificate of title without taking
the ordinary precautions of honest persons in
doing business and examining the records of
the proper Registry of Deeds, or who fails to
pay the full market value of the property is not
considered an innocent purchaser for value.
Under the Torrens system of land registration,
the State is required to maintain a register of
landholdings that guarantees indefeasible title
to those included in the register. The system
has been instituted to combat the problems of
uncertainty, complexity and cost associated
with old title systems that depended upon
proof of an unbroken chain of title back to a
good root of title. The State issues an official
certificate of title to attest to the fact that the
person named is the owner of the property
described therein, subject to such liens and
encumbrances as thereon noted or what the
law warrants or reserves.
One of the guiding tenets underlying the
Torrens system is the curtain principle, in that
one does not need to go behind the certificate
of title because it contains all the information
about the title of its holder. This principle
dispenses with the need of proving ownership
by long complicated documents kept by the
registered owner, which may be necessary
under a private conveyancing system, and
assures that all the necessary information
regarding ownership is on the certificate of

title. Consequently, the avowed objective of
the Torrens system is to obviate possible
conflicts of title by giving the public the right
to rely upon the face of the Torrens certificate
and, as a rule, to dispense with the necessity of
inquiring further; on the part of the registered
owner, the system gives him complete peace of
mind that he would be secured in his
ownership as long as he has not voluntarily
disposed of any right over the covered land.
The Philippines adopted the Torrens system
through Act No. 496, also known as the Land
Registration Act, which was approved on
November 6, 1902 and took effect on February
1, 1903. In this jurisdiction, therefore, a
person dealing in registered land has the right
to rely on the Torrens certificate of title and to
dispense with the need of inquiring
further, except when the party has actual
knowledge of facts and circumstances that
would impel a reasonably cautious man to
make such inquiry.
Good faith is the honest intention to abstain
from taking unconscientious advantage of
another. It means the freedom from
knowledge and circumstances which ought to
put a person on inquiry. Given this notion of
good faith, therefore, a purchaser in good faith
is one who buys the property of another
without notice that some other person has a
right to, or interest in, such property and pays
full and fair price for the same. Spouses
Cusi vs. Lilia V. De Vera, et al.; G.R. Nos.
195825/195871. February 27, 2013
Torrens System; right to rely on Torrens
title. [It is a] settled principle that one who
deals with property registered under the
Torrens System need not go beyond the same,
but only has to rely on the title. Moreover,
since the subject property was already covered
by a Torrens title at the time that respondents
bought the same, the law does not require them
to go beyond what appears on the face of the
title. The lot has, thus, passed to respondents,
who are presumed innocent purchasers for
value, in the absence of any allegation to the
contrary. Mercado, et al. vs. Sps. Espina; G.R.

No. 173987. February 25, 2013
January 2013 rulings of the Supreme Court of
Civil Code
Compromise Agreement; definition and nature;
distinction between judicial and
extrajudicial. Under Article 2028 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. Accordingly, a compromise is
either judicial, if the objective is to put an end
to a pending litigation, or extrajudicial, if the
objective is to avoid a litigation. As a contract,
a compromise is perfected by mutual consent.
However, a judicial compromise, while
immediately binding between the parties upon
its execution, is not executory until it is
approved by the court and reduced to a
judgment. The validity of a compromise is
dependent upon its compliance with the
requisites and principles of contracts dictated
by law. Also, the terms and conditions of a
compromise must not be contrary to law,
morals, good customs, public policy and public
order. Land Bank of the Philippines vs. Heirs
of Spouses Jorja Rigor Soriano and Magin
Soriano; G.R. No. 178312. January 30, 2013
Contract; contract of suretyship;
definition; nature of liability of surety; suretys
liability is direct, primary and absolute as well
as joint and several. A contract of suretyship is
defined as an agreement whereby a party,
called the surety, guarantees the performance
by another party, called the principal or
obligor, of an obligation or undertaking in
favor of a third party, called the obligee. It
includes official recognizances, stipulations,
bonds or undertakings issued by any company
by virtue of and under the provisions of Act
No. 536, as amended by Act No. 2206 (An Act
Relative to Recognizances, Stipulations, Bonds
and Undertakings, and to Allow Certain
Corporations to be Accepted as Surety
Thereon). We have consistently held that a

suretys liability is joint and several, limited to
the amount of the bond, and determined
strictly by the terms of contract of suretyship
in relation to the principal contract between the
obligor and the obligee. It bears stressing,
however, that although the contract of
suretyship is secondary to the principal
contract, the suretys liability to the obligee is
nevertheless direct, primary, and absolute. The
Manila Insurance Company, Inc. vs. Spouses
Roberto and Aida Amurao; G.R. No. 179628.
January 16, 2013
Contract; law between the parties; rules on
interpretation; easement of right of way; just
compensation; attorneys fees; exception rather
than the general rule. Indeed, the rule is settled
that a contract constitutes the law between the
parties who are bound by its stipulations
which, when couched in clear and plain
language, should be applied according to their
literal tenor. Courts cannot supply material
stipulations, read into the contract words it
does not contain or, for that matter, read into it
any other intention that would contradict its
plain import. Neither can they rewrite
contracts because they operate harshly or
inequitably as to one of the parties, or alter
them for the benefit of one party and to the
detriment of the other, or by construction,
relieve one of the parties from the terms which
he voluntarily consented to, or impose on him
those which he did not.
Where the right of way easement, as in this
case, similarly involves transmission lines
which not only endangers life and limb but
restricts as well the owners use of the land
traversed thereby, the ruling
inGutierrez remains doctrinal and should be
applied. It has been ruled that the owner
should be compensated for the monetary
equivalent of the land if, as here, the easement
is intended
toperpetually or indefinitely deprive the owner
of his proprietary rights through the imposition
of conditions that affect the ordinary use, free
enjoyment and disposal of the property or
through restrictions and limitations that are

inconsistent with the exercise of the attributes
of ownership, or when the introduction of
structures or objects which, by their nature,
create or increase the probability of injury,
death upon or destruction of life and property
found on the land is necessary. Measured not
by the takers gain but the owners loss, just
compensation is defined as the full and fair
equivalent of the property taken from its owner
by the expropriator.
The determination of just compensation in
eminent domain proceedings is a judicial
function and no statute, decree, or executive
order can mandate that its own determination
shall prevail over the courts findings. Any
valuation for just compensation laid down in
the statutes may serve only as a guiding
principle or one of the factors in determining
just compensation, but it may not substitute the
courts own judgment as to what amount
should be awarded and how to arrive at such
amount. Hence, Section 3A of R.A. No. 6395,
as amended (An Act Revising the Charter of
the National Power Corporation), is not
binding upon this Court.
For want of a statement of the rationale for the
award in the body of the RTCs 14 March 2000
Decision, we are constrained, however, to
disallow the grant of attorneys fees in favor of
the Spouses Cabahug in an amount equivalent
to 5% of the just compensation due as well as
the legal interest thereon. Considered the
exception rather than the general rule, the
award of attorneys fees is not due every time a
party prevails in a suit because of the policy
that no premium should be set on the right to
litigate. Jesus L. Cabahug and Coronacion M.
Cabahug vs. National Power
Corporation; G.R. No. 186069. January 30,
2013
Contract; perfection of contracts; consent;
offer and acceptance; contract of sale;
consensual in nature.Contracts are perfected by
mere consent, which is manifested by the
meeting of the offer and the acceptance upon

the thing and the cause which are to constitute
the contract. The requisite acceptance of the
offer is expressed in Article 1319 of the Civil
Code which states:
ART. 1319. Consent is manifested by the
meeting of the offer and the acceptance upon
the thing and the cause which are to constitute
the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance
constitutes a counter-offer.
In Palattao v. Court of Appeals, this Court held
that if the acceptance of the offer was not
absolute, such acceptance is insufficient to
generate consent that would perfect a contract.
Thus:
Contracts that are consensual in nature, like a
contract of sale, are perfected upon mere
meeting of the minds. Once there is
concurrence between the offer and the
acceptance upon the subject matter,
consideration, and terms of payment, a
contract is produced. The offer must be certain.
To convert the offer into a contract, the
acceptance must be absolute and must not
qualify the terms of the offer; it must be plain,
unequivocal, unconditional, and without
variance of any sort from the proposal. A
qualified acceptance, or one that involves a
new proposal, constitutes a counter-offer and is
a rejection of the original offer. Consequently,
when something is desired which is not exactly
what is proposed in the offer, such acceptance
is not sufficient to generate consent because
any modification or variation from the terms of
the offer annuls the offer.
The acceptance must be identical in all
respects with that of the offer so as to produce
consent or meeting of the minds. Where a
party sets a different purchase price than the
amount of the offer, such acceptance was
qualified which can be at most considered as a
counter-offer; a perfected contract would have
arisen only if the other party had accepted this
counteroffer. In Villanueva v. Philippine
National Bank this Court further elucidated on
the meaning of unqualified acceptance, as

follows:
While it is impossible to expect the
acceptance to echo every nuance of the offer, it
is imperative that it assents to those points in
the offer which, under the operative facts of
each contract, are not only material but
motivating as well. Anything short of that level
of mutuality produces not a contract but a mere
counter-offer awaiting acceptance. More
particularly on the matter of the
consideration of the contract, the offer and
its acceptance must be unanimous both on
the rate of the payment and on its term. An
acceptance of an offer which agrees to the rate
but varies the term is ineffective. (Emphasis
supplied)
A contract of sale is consensual in nature and
is perfected upon mere meeting of the minds.
When there is merely an offer by one party
without acceptance of the other, there is no
contract. When the contract of sale is not
perfected, it cannot, as an independent source
of obligation, serve as a binding juridical
relation between the parties. Heirs of Fausto
C. Ignacio vs. Home Bankers Savings and
Trust Co., et al.; G.R. No. 177783. January 23,
2013
Damages; moral damages; requisites; granted
when rights of individuals are violated;
exemplary damages; actual damages; nature;
in the absence of proof, temperate damages
may be awarded; attorneys fees; exception
rather than the general rule. Moral damages are
awarded to compensate the claimant for
physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation,
wounded feelings, moral shock, social
humiliation and similar injury. Jurisprudence
has established the following requisites for the
award of moral damages: (1) there is an injury
whether physical, mental or psychological,
which was clearly sustained by the claimant;
(2) there is a culpable act or omission factually
established; (3) the wrongful act or omission
of the defendant is the proximate cause of the

injury sustained by the claimant; and (4) the
award of damages is predicated on any of the
cases stated in Article 2219 of the Civil Code.
Pertinent to the case at hand, Article 32 of the
Civil Code provides for the award of moral
damages in cases where the rights of
individuals, including the right against
deprivation of property without due process of
law, are violated. In Quisumbing v. Manila
Electric Company, this Court treated the
immediate disconnection of electricity without
notice as a form of deprivation of property
without due process of law, which entitles the
subscriber aggrieved to moral damages. We
stressed:
More seriously, the action of the defendant in
maliciously disconnecting the electric service
constitutes a breach of public policy. For
public utilities, broad as their powers are, have
a clear duty to see to it that they do not violate
nor transgress the rights of the consumers. Any
act on their part that militates against the
ordinary norms of justice and fair play is
considered an infraction that gives rise to an
action for damages. Such is the case at bar.
In addition to moral damages, exemplary
damages are imposed by way of example or
correction for the public good. In this case, to
serve as an example that before
disconnection of electric supply can be
effected by a public utility, the requisites of
law must be complied with we sustain the
award of exemplary damages to respondents.
Actual damages are compensation for an injury
that will put the injured party in the position
where it was before the injury. They pertain to
such injuries or losses that are actually
sustained and susceptible of measurement.
Except as provided by law or by stipulation, a
party is entitled to adequate compensation only
for such pecuniary loss as is duly proven.
Basic is the rule that to recover actual
damages, not only must the amount of loss be
capable of proof; it must also be actually
proven with a reasonable degree of certainty
premised upon competent proof or the best

evidence obtainable.
Actual or compensatory damages cannot be
presumed, but must be duly proved with a
reasonable degree of certainty. The award is
dependent upon competent proof of the
damage suffered and the actual amount
thereof. The award must be based on the
evidence presented, not on the personal
knowledge of the court; and certainly not on
flimsy, remote, speculative and unsubstantial
proof.
Nonetheless, in the absence of competent
proof on the amount of actual damages
suffered, a party is entitled to 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 amount thereof is usually left to the
discretion of the courts but the same should be
reasonable, bearing in mind that temperate
damages should be more than nominal but less
than compensatory.
An award of attorneys fees has always been
the exception rather than the rule. Attorneys
fees are not awarded every time a party
prevails in a suit. The policy of the Court is
that no premium should be placed on the right
to litigate. The trial court must make express
findings of fact and law that bring the suit
within the exception. What this demands is
that factual, legal or equitable justifications for
the award must be set forth not only in
the fallo but also in the text of the decision, or
else, the award should be thrown out for being
speculative and conjectural. Manila Electric
Company (MERALCO) vs. Atty. P.M. Castillo,
doing business under the trade name and style
of Permanent Light Manufacturing
Enterprises, et al.; G.R. No. 182976. January
14, 2013
Damages; moral damages; when awarded. The
Court has awarded moral damages in

termination cases when bad faith, malice or
fraud attend the employees dismissal or where
the act oppresses labor, or where it was done in
a manner contrary to morals, good customs or
public policy. General Milling
Corporation vs. Violeta L. Viajar; G.R. No.
181738. January 30, 2013
Effectivity of laws; generally, no retroactive
effect; exception, when law is procedural. As a
general rule, laws shall have no retroactive
effect. However, exceptions exist, and one
such exception concerns a law that is
procedural in nature. The reason is that a
remedial statute or a statute relating to
remedies or modes of procedure does not
create new rights or take away vested rights
but only operates in furtherance of the remedy
or the confirmation of already existing rights.
A statute or rule regulating the procedure of
the courts will be construed as applicable to
actions pending and undetermined at the time
of its passage. All procedural laws are
retroactive in that sense and to that extent. The
retroactive application is not violative of any
right of a person who may feel adversely
affected, for, verily, no vested right generally
attaches to or arises from procedural
laws. Spouses Augusto G. Dacudao and Ofelia
R. Dacudao vs. Secretary of Justice Raul M.
Gonzales of the Department of Justice; G.R.
No. 188056. January 8, 2013
Ejectment; unlawful detainer; estoppel against
tenants; conclusive presumption; foreclosure
of mortgage; title to land remains in the
mortgagor until expiration of redemption
period; inchoate character of purchasers
right. [T]he only question that the courts
questionable.
In an unlawful detainer case, the sole issue for
resolution is the physical or material
possession of the property involved,
independent of any claim of ownership by any

of the party litigants. Where the issue of
ownership is raised by any of the parties, the
courts may pass upon the same in order to
determine who has the right to possess the
property. The adjudication is, however, merely
provisional and would not bar or prejudice an
action between the same parties involving title
to the property.
[I]n unlawful detainer, one unlawfully
withholds possession thereof after the
expiration or termination of his right to hold
possession under any contract, express or
implied. In such case, the possession was
originally lawful but became unlawful by the
expiration or termination of the right to
possess; hence, the issue of rightful possession
is decisive for, in such action, the defendant is
in actual possession and the plaintiffs cause of
action is the termination of the defendants
right to continue in possession.
The conclusive presumption found in Section 2
(b), Rule 131 of the Rules of Court, known
as estoppelagainst tenants, provides as follows:
Sec. 2. Conclusive presumptions. The
following are instances of conclusive
presumptions:
(b) The tenant is not permitted to deny the title
of his landlord at the time of the
commencement of the relation of landlord and
tenant between them. (Emphasis supplied).
It is clear from the abovequoted provision that
what a tenant is estopped from denying is the
title of his landlord at the time of the
commencement of the landlord-tenant relation.
If the title asserted is one that is alleged to
have been acquired subsequent to the
commencement of that relation, the
presumption will not apply. Hence, the tenant
may show that the landlords title has expired
or been conveyed to another or himself; and he
is not estopped to deny a claim for rent, if he
has been ousted or evicted by title paramount.
It is settled that during the period of
redemption, it cannot be said that the
mortgagor is no longer the owner of the

foreclosed property, since the rule up to now is
that the right of a purchaser at a foreclosure
sale is merely inchoate until after the period of
redemption has expired without the right being
exercised. The title to land sold under
mortgage foreclosure remains in the mortgagor
or his grantee until the expiration of the
redemption period and conveyance by the
masters deed. Indeed, the rule has always
been that it is only upon the expiration of the
redemption period, without the judgment
debtor having made use of his right of
redemption, that the ownership of the land sold
becomes consolidated in the purchaser.
Stated differently, under Act. No. 3135 (An Act
to Regulate the Sale of Property Under Special
Powers Inserted in or Annexed to Real Estate
Mortgages), the purchaser in a foreclosure sale
has, during the redemption period, only an
inchoate right and not the absolute right to the
property with all the accompanying incidents.
He only becomes an absolute owner of the
property if it is not redeemed during
the redemption period. Juanita Ermitao,
represented by her Attorney-in-fact, Isabelo
Ermitao vs.Lailanie M. Paglas; G.R. No.
174436. January 23, 2013
Interest; 12% interest rate doctrine in Eastern
Shipping Lines vs. CA. [T]he imposition of
12% interest is still warranted in the case at
bar, not from the date of sale on November 9,
1994, as the respondents insist; but from the
finality of the decision up to the satisfaction of
judgment in line with the doctrine laid down
in Eastern Shipping Lines, Inc. v. Court of
Appeals. [T]he payment of 12% interest
from the finality of judgment is in order
pursuant to Eastern Shippings Lines, Inc.
where the Court held that:
When an obligation, not constituting a loan or
forbearance of money, is breached, an interest
on the amount of damages awarded may be
imposed at the discretion of the court at the
rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or
damages except when or until the demand can
be established with reasonable certainty.

Accordingly, where the demand is established
with reasonable certainty, the interest shall
begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil
Code) but when such certainty cannot be so
reasonably established at the time the demand
is made, the interest shall begin to run only
from the date the judgment of the court is
made (at which time the quantification of
damages may be deemed to have been
reasonably ascertained). The actual base for
the computation of legal interest shall, in any
case, be on the amount finally adjudged.
When the judgment of the court awarding a
sum of money becomes final and executory,
the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall
be 12% per annum from such finality until its
satisfaction, this interim period being deemed
to be by then an equivalent to a forbearance of
credit.
Spouses Ricardo and Elena Golez vs. Spouses
Carlos and Amelita Navarro; G.R. No.
192532. January 30, 2013
Legal Compensation; mode of extinguishing
obligations; difference with conventional
compensation; requisites. Compensation is a
mode of extinguishing to the concurrent
amount the obligations of persons who in their
own right and as principals are reciprocally
debtors and creditors of each other. Legal
compensation takes place by operation of law
when all the requisites are present, as opposed
to conventional compensation which takes
place when the parties agree to compensate
their mutual obligations even in the absence of
some requisites. Legal compensation requires
the concurrence of the following conditions:
(1) That each one of the obligors be bound
(2) That both debts consist in a sum of money,

debtor.
Mondragon Personal Sales, Inc. vs. Victoriano
S. Sola, Jr.; G.R. No. 174882. January 21,
2013
Marriage; essential and formal requisites;
marriage license; certification of non-issuance
by civil registrar; diligent search requirement
compared to presumption of regularity in
performance of official duties; effect of
absence of marriage license. As the marriage
of Gloria and Syed was solemnized on January
9, 1993, Executive Order No. 209, or the
Family Code of the Philippines, is the
applicable law. The pertinent provisions that
would apply to this particular case are Articles
3, 4 and 35(3), which read as follows:
Art. 3. The formal requisites of marriage are:
(1) Authority of the solemnizing officer;
(2) A valid marriage license except in the cases
provided for in Chapter 2 of this Title; and
(3) A marriage ceremony which takes place
with the appearance of the contracting parties
before the solemnizing officer and their
personal declaration that they take each other
as husband and wife in the presence of not less
than two witnesses of legal age.
Art. 4. The absence of any of the essential or
formal requisites shall render the marriage
void ab initio, except as stated in Article 35(2).
A defect in any of the essential requisites shall
render the marriage voidable as provided in
Article 45.
An irregularity in the formal requisites shall
not affect the validity of the marriage but the
party or parties responsible for the irregularity
shall be civilly, criminally and administratively
liable.
Art. 35. The following marriages shall be void
from the beginning:
xxxx
(3) Those solemnized without a license, except

those covered by the preceding Chapter.
Under Sec. 3(m), Rule 131 of the Rules of
Court, it is a disputable presumption that an
official duty has been regularly performed,
absent contradiction or other evidence to the
contrary. We held, The presumption of
regularity of official acts may be rebutted by
affirmative evidence of irregularity or failure
to perform a duty. No such affirmative
evidence was shown that the Municipal Civil
Registrar was lax in performing her duty of
checking the records of their office, thus the
presumption must stand. In fact, proof does
exist of a diligent search having been
conducted, as Marriage License No. 996967
was indeed located and submitted to the court.
The fact that the names in said license do not
correspond to those of Gloria and Syed does
not overturn the presumption that the registrar
conducted a diligent search of the records of
her office.
In the case of Cario v. Cario, following the
case of Republic, it was held that the
certification of the Local Civil Registrar that
their office had no record of a marriage license
was adequate to prove the non-issuance of said
license. The case of Cario further held that
the presumed validity of the marriage of the
parties had been overcome, and that it became
the burden of the party alleging a valid
marriage to prove that the marriage was valid,
and that the required marriage license had been
secured.
Article 4 of the Family Code is clear when it
says, The absence of any of the essential or
formal requisites shall render the marriage
void ab initio, except as stated in Article
35(2). Article 35(3) of the Family Code also
provides that a marriage solemnized without a
license is void from the beginning, except
those exempt from the license requirement
under Articles 27 to 34, Chapter 2, Title I of
the same Code. Syed Azhar Abbas vs. Gloria
Goo Abbas; G.R. No. 183896. January 30,
2013

Marriage; psychological incapacity; definition;
burden of proof; sexual infidelity and
abandonment do not necessarily constitute
psychological incapacity; psychological fitness
as a wife not equated with professional
relationship; doubts are resolved in favor of
marriage. Article 36 of the Family Code
governs psychological incapacity as a ground
for declaration of nullity of marriage. It
provides that [a] marriage contracted by any
party who, at the time of the celebration, was
psychologically incapacitated to comply with
the essential marital obligations of marriage,
shall likewise be void even if such incapacity
becomes manifest only after its
solemnization. In interpreting this provision,
we have repeatedly stressed that psychological
incapacity contemplates downright
incapacity or inability to take cognizance of
and to assume the basic marital
obligations; not merely the refusal, neglect or
difficulty, much less ill will, on the part of the
errant spouse. The plaintiff bears the burden of
proving the juridical antecedence (i.e., the
existence at the time of the celebration of
marriage), gravity and incurability of the
condition of the errant spouse.
In any event, sexual infidelity and
abandonment of the conjugal dwelling, even if
true, do not necessarily constitute
psychological incapacity; these are simply
grounds for legal separation. To constitute
psychological incapacity, it must be shown that
the unfaithfulness and abandonment are
manifestations of a disordered personality that
completely prevented the erring spouse from
discharging the essential marital obligations.
Aside from the time element involved, a wifes
psychological fitness as a spouse cannot
simply be equated with her professional/work
relationship; workplace obligations and
responsibilities are poles apart from their
marital counterparts. While both spring from
human relationship, their relatedness and
relevance to one another should be fully
established for them to be compared or to
serve as measures of comparison with one

another.
Once again, we stress that marriage is an
inviolable social institution protected by the
State. Any doubt should be resolved in favor of
its existence its existence and continuation and
against its dissolution and nullity. It cannot be
dissolved at the whim of the parties nor by
transgressions made by one party to the other
during the marriage. Republic of the
Philippines vs. Cesar Encelan; G.R. No.
170022. January 9, 2013
Possession; de jure vs. de facto nature of
possession; elements of forcible
entry. Ownership carries the right of
possession, but the possession contemplated by
the concept of ownership is not exactly the
same as the possession in issue in a forcible
entry case. Possession in forcible entry suits
refers only to possession de facto, or actual or
material possession, and not possession
flowing out of ownership;these are different
legal concepts for which the law provides
different remedies for recovery of possession.
As the court explained in Pajuyo v. Court of
Appeals, and again in the more recent cases
ofGonzaga v. Court of Appeals, De Grano v.
Lacaba, and Lagazo v. Soriano, the word
possession in forcible entry suits refers to
nothing more than prior physical possession or
possession de facto, not possession de jure or
legal possession in the sense contemplated in
civil law. Title is not the issue, and its absence
is not a ground for the courts to withhold
relief from the parties in an ejectment case.
Thus, in a forcible entry case, a party who can
prove prior possession can recover such
possession even against the owner himself.
Whatever may be the character of his
possession, if he has in his favor prior
possession in time, he has the security that
entitles him to remain on the property until a
person with a better right lawfully ejects him.
He cannot be ejected by force, violence or
terror not even by its owners. For these
reasons, an action for forcible entry is

summary in nature aimed only at providing an
expeditious means of protecting actual
possession. Ejectment suits are intended to
prevent breach of x x x peace and criminal
disorder and to compel the party out of
possession to respect and resort to the law
alone to obtain what he claims is his. Thus,
lest the purpose of these summary proceedings
be defeated, any discussion or issue of
ownership is avoided unless it is necessary to
resolve the issue of de factopossession.
Under Section 1, Rule 70 of the Rules of
Court, for a forcible entry suit to prosper, the
plaintiff must allege and prove: (1) prior
physical possession of the property; and (2)
unlawful deprivation of it by the defendant
through force, intimidation, strategy, threat or
stealth. As in any civil case, the burden of
proof lies with the complainants (the
respondents in this case) who must establish
their case by preponderance of
evidence. Nenita Quality Foods Corporation
vs. Crisostomo Galabo, et al.; G.R. No.
174191. January 30, 2013
Quasi-contracts; definition; requisites
of solutio indebiti. A quasi-contract involves a
juridical relation that the law creates on the
basis of certain voluntary, unilateral and lawful
acts of a person, to avoid unjust enrichment.
The Civil Code provides an enumeration of
quasi-contracts, but the list is not exhaustive
and merely provides examples.
Article 2154 embodies the concept solutio
indebiti which arises when something is
delivered through mistake to a person who has
no right to demand it. It obligates the latter to
return what has been received through
mistake. Solutio indebiti, as defined in Article
2154 of the Civil Code, has two indispensable
requisites: first, that something has been
unduly delivered through mistake; and second,
that something was received when there was
no right to demand it. Metropolitan Bank &
Trust Company vs. Absolute Management
Corporation; G.R. No. 170498. January 9,
2013
Torts; abuse of rights; elements; award of

damages. While the Court mindfully notes that
damages may be recoverable due to an abuse
of right under Article 21 in conjunction with
Article 19 of the Civil Code of the Philippines,
the following elements must, however, obtain:
(1) there is a legal right or duty; (2) exercised
in bad faith; and (3) for the sole intent of
prejudicing or injuring another. Records reveal
that none of these elements exists in the case at
bar and thus, no damages on account of abuse
of right may he recovered. Eleazar S. Padillo
vs. Rural Bank of Nabunturan, Inc., et
al.; G.R. No. 199338. January 21, 2013
Torts; proximate cause; vicarious liability is
not applicable in the absence of employeremployee or principal-agent relationship;
contracts; requisites of stipulation pour autrui;
Lease; act of parking a vehicle in a garage
upon payment of a fixed amount, is a lease;
obligations of lessor; contracts of adhesion;
actual damages must be proved with
reasonable degree of certainty. Proximate
cause has been defined as that cause, which, in
natural and continuous sequence, unbroken by
any efficient intervening cause, produces the
injury or loss, and without which the result
would not have occurred.
Neither will the vicarious liability of an
employer under Article 2180 of the Civil Code
apply in this case. It is uncontested that Pea
and Gaddi were assigned as security guards by
AIB to BSP pursuant to the Guard Service
Contract. Clearly, therefore, no employeremployee relationship existed between BSP
and the security guards assigned in its
premises. Consequently, the latters negligence
cannot be imputed against BSP but should be
attributed to AIB, the true employer of Pea
and Gaddi. In the case of Soliman, Jr. v.
Tuazon, the Court enunciated thus:
It is settled that where the security agency, as
here, recruits, hires and assigns the work of its
watchmen or security guards, the agency is the
employer of such guards and watchmen.
Liability for illegal or harmful acts committed

by the security guards attaches to the employer
agency, and not to the clients or customers of
such agency. As a general rule, a client or
customer of a security agency has no hand in
selecting who among the pool of security
guards or watchmen employed by the agency
shall be assigned to it; the duty to observe the
diligence of a good father of a family in the
selection of the guards cannot, in the ordinary
course of events, be demanded from the client
whose premises or property are instructions or
directions to the security guards assigned to it,
does not, by itself, render the client responsible
as an employer of the security guards
concerned and liable for their wrongful acts or
omissions. Those instructions or directions are
ordinarily no more than requests commonly
envisaged in the contract for services entered
into with the security agency.
Nor can it be said that a principal-agent
relationship existed between BSP and the
security guards Pea and Gaddi as to make the
former liable for the latters complained act.
Article 1868 of the Civil Code states that [b]y
the contract of agency, a person binds himself
to render some service or to do something in
representation or on behalf of another, with the
consent or authority of the latter. The basis
for agency therefore is representation, which
element is absent in the instant case. Records
show that BSP merely hired the services of
AIB, which, in turn, assigned security guards,
solely for the protection of its properties and
premises. Nowhere can it be inferred in the
Guard Service Contract that AIB was
appointed as an agent of BSP. Instead, what the
parties intended was a pure principal-client
relationship whereby for a consideration, AIB
rendered its security services to BSP.
[I]n order that a third person benefited by the
second paragraph of Article 1311, referred to
as a stipulation pour autrui, may demand its
fulfillment, the following requisites must
concur: (1) There is a stipulation in favor of a
third person; (2) The stipulation is a part, not
the whole, of the contract; (3) The contracting
parties clearly and deliberately conferred a

favor to the third person the favor is not
merely incidental; (4) The favor is
unconditional and uncompensated; (5) The
third person communicated his or her
acceptance of the favor before its revocation;
and (6) The contracting parties do not
represent, or are not authorized, by the third
party.
It has been held that the act of parking a
vehicle in a garage, upon payment of a fixed
amount, is a lease. Even in a majority of
American cases, it has been ruled that where a
customer simply pays a fee, parks his car in
any available space in the lot, locks the car and
takes the key with him, the possession and
control of the car, necessary elements in
bailment, do not pass to the parking lot
operator, hence, the contractual relationship
between the parties is one of lease.
[t]he lessor (BSP) is obliged: (1) to deliver
the thing which is the object of the contract in
such a condition as to render it fit for the use
intended; (2) to make on the same during the
lease all the necessary repairs in order to keep
it suitable for the use to which it has been
devoted, unless there is a stipulation to the
contrary; and (3) to maintain the lessee in the
peaceful and adequate enjoyment of the lease
for the entire duration of the contract. In
relation thereto, Article 1664 of the same Code
states that [t]he lessor is not obliged to answer
for a mere act of trespass which a third person
may cause on the use of the thing leased; but
the lessee shall have a direct action against the
intruder.
[C]ontracts of adhesion are not void per se. It
is binding as any other ordinary contract and a
party who enters into it is free to reject the
stipulations in its entirety. If the terms thereof
are accepted without objection, as in this case,
where plaintiffs-appellants have been leasing
BSPs parking space for more or less 20 years,
then the contract serves as the law between
them.

It is axiomatic that actual damages must be
proved with reasonable degree of certainty and
a party is entitled only to such compensation
for the pecuniary loss that was duly proven.
Thus, absent any competent proof of the
amount of damages sustained, the CA properly
deleted the said awards.Spouses Benjamin C.
Mamaril and Sonia P. Mamaril vs. The Boy
Scout of the Philippines, et al.; G.R. No.
179382. January 14, 2013
Special laws
Usury Law; CB Circular No. 905; suspension
of ceilings for interest rates does not authorize
excessive and unconscionable interest rates;
effect of void stipulation of usurious
interest. The power of the Central Bank to
effectively suspend the Usury Law pursuant to
P.D. No. 1684 (Amending Further Act No.
2655, as amended, Otherwise Known As The
Usury Law) has long been recognized and
upheld in many cases. As the Court explained
in the landmark case of Medel v. CA, citing
several cases, CB Circular No.
905 (Amendment of Books I to IV of the
Manual of Regulations for Banks and Other
Financial Intermediaries) did not repeal nor
in anyway amend the Usury Law but simply
suspended the latters effectivity; that a [CB]
Circular cannot repeal a law, [for] only a law
can repeal another law; that by virtue of CB
Circular No. 905, the Usury Law has been
rendered ineffective; and Usury has been
legally non-existent in our jurisdiction. Interest
can now be charged as lender and borrower
may agree upon. [B]y lifting the interest
ceiling, CB Circular No. 905 merely upheld
the parties freedom of contract to agree freely
on the rate of interest. It cited Article 1306 of
the New Civil Code, under which the
contracting parties may establish such
stipulations, clauses, terms and conditions as
they may deem convenient, provided they are
not contrary to law, morals, good customs,
public order, or public policy.
It is settled that nothing in CB Circular No.
905 grants lenders a carte blanche authority to
raise interest rates to levels which will either

enslave their borrowers or lead to a
hemorrhaging of their assets. As held
in Castro v. Tan:
The imposition of an unconscionable rate of
interest on a money debt, even if knowingly
and voluntarily assumed, is immoral and
unjust. It is tantamount to a repugnant
spoliation and an iniquitous deprivation of
property, repulsive to the common sense of
man. It has no support in law, in principles of
justice, or in the human conscience nor is there
any reason whatsoever which may justify such
imposition as righteous and as one that may be
sustained within the sphere of public or private
morals.
Stipulations authorizing iniquitous or
unconscionable interests have been invariably
struck down for being contrary to morals, if
not against the law. Indeed, under Article 1409
of the Civil Code, these contracts are deemed
inexistent and void ab initio, and therefore
cannot be ratified, nor may the right to set up
their illegality as a defense be waived.
Nonetheless, the nullity of the stipulation of
usurious interest does not affect the lenders
right to recover the principal of a loan, nor
affect the other terms thereof. Thus, in a
usurious loan with mortgage, the right to
foreclose the mortgage subsists, and this right
can be exercised by the creditor upon failure
by the debtor to pay the debt due. The debt due
is considered as without the stipulated
excessive interest, and a legal interest of
12% per annum will be added in place of the
excessive interest formerly imposed, following
the guidelines laid down in the landmark case
of Eastern Shipping Lines, Inc. v. Court of
Appeals, regarding the manner of computing
legal interest. Advocates for Truth in Lending,
Inc. vs. Bangko Sentral Monetary Board,
Represented by its Chairman, Governor
Armando M. Tatangco, Jr., etc.; G.R. No.
192986. January 15, 2013
December 2012 rulings of the Supreme Court

Civil Code
Damages; When Applicable. It is essential that
for damages to be awarded, a claimant must
satisfactorily prove during the trial that they
have a factual basis, and that the defendants
acts have a causal connection to them. Article
2229 of the Civil Code provides that
exemplary damages may be imposed by way
of example or correction for the public good,
in addition to the moral, temperate, liquidated
or compensatory damages. They are,
however, not recoverable as a matter of right.
They are awarded only if the guilty party acted
in a wanton, fraudulent, reckless, oppressive or
malevolent manner. Albert M. Ching, et al. vs.
Felix M. Bantolo, et al.; G.R. No. 177086.
December 5, 2012
Sale of Real Property; Must be in a Public
Document; requirement only for convenience.
acts and contracts which have for their object
the transmission of real rights over immovable
property or the sale of real property must
appear in a public document. If the law
requires a document or other special form, the
contracting parties may compel each other to
observe that form, once the contract has been
perfected. In Fule v. Court of Appeals, the
Court held that Article 1358 of the Civil Code,
which requires the embodiment of certain
contracts in a public instrument, is only for
convenience, and registration of the instrument
only adversely affects third parties. Formal
requirements are, therefore, for the benefit of
third parties. Non-compliance therewith does
not adversely affect the validity of the contract
nor the contractual rights and obligations of
the parties thereunder. Lagrimas de Jesus
Zamora v. Spouses Beatriz Zamora et al., G.R.
No. 162930. December 5, 2012.
Unjust enrichment; reimbursement. It is wellestablished that equity as a rule will follow the
law and will not permit that to be done
indirectly which, because of public policy,
cannot be done directly. Surely, a contract that
violates the Constitution and the law is null
and void, vests no rights, creates no

obligations and produces no legal effect at all.
Corollary thereto, under Article 1412 of the
Civil Code, petitioner cannot have the subject
properties deeded to him or allow him to
recover the money he had spent for the
purchase thereof. The law will not aid either
party to an illegal contract or agreement; it
leaves the parties where it finds them. Indeed,
one cannot salvage any rights from an
unconstitutional transaction knowingly entered
into. Neither can the Court grant petitioners
claim for reimbursement on the basis of unjust
enrichment. As held in Frenzel v. Catito, a case
also involving a foreigner seeking monetary
reimbursement for money spent on purchase of
Philippine land, the provision on unjust
enrichment does not apply if the action is
proscribed by the Constitution. Willem Beumer
v. Avelina Amores, G.R. No. 195670.
December 3, 2012.
Special Laws
Public Land Act; Five-year Prohibition for
Alienation of Homestead Patent; Sale; Void
Contract. To reiterate, Section 118 of the
Public Land Act, as amended, reads that
[e]xcept in favor of the Government or any of
its branches, units, or institutions, or legally
constituted banking corporations, lands
acquired under free patent or homestead
provisions shall not be subject to encumbrance
or alienation from the date of the approval of
the application and for a term of five years
from and after the date of issuance of the
patent or grant x x x. The provisions of law
are clear and explicit. A contract which
purports to alienate, transfer, convey, or
encumber any homestead within the
prohibitory period of five years from the date
of the issuance of the patent is void from its
execution. In a number of cases, this Court has
held that such provision is
mandatory. Alejandro Binayug and Ana
Binayug vs. Eugenio Ugaddan, et al. G.R. No.
181623. December 5, 2012.

November 2012 rulings of the Supreme Court
Civil Code
Co-ownership; validity of partition
contracts. Contrary to the finding of the Court
of Appeals, the subdivision agreements forged
by Mendoza and her alleged co-owners were
not for the partition ofpro-indiviso shares of
co-owners of Lot 733 but were actually
conveyances, disguised as partitions, of
portions of Lot 733 specifically Lots 733-A
and 733-B, and portions of the subsequent
subdivision of Lot 733-C. It cannot be
overemphasized enough that the two deeds of
absolute sale over portions of substantially the
same parcel of land antedated the subdivision
agreements in question and their execution
acknowledged too before a notary
public. Rupeta Cano Vda. De Viray and Jesus
Carlo Gerard Viray v. Spouses Jose Usi and
Amelita Usi, G.R.No.192486. November
21,2012.
Constructive delivery; execution of public
instrument only prima facie presumption of
delivery. Article 1477 of the Civil Code
recognizes that the ownership of the thing
sold shall be transferred to the vendee upon the
actual or constructive delivery thereof.
Related to this article is Article 1497 which
provides that [t]he thing sold shall be
understood as delivered, when it is placed in
the control and possession of the vendee.
With respect to incorporeal property, Article
1498 of the Civil Code lays down the general
rule: the execution of a public instrument
shall be equivalent to the delivery of the thing
which is the object of the contract, if from the
deed the contrary does not appear or cannot
clearly be inferred. However, the execution of
a public instrument gives rise only to a prima
faciepresumption of delivery, which is negated
by the failure of the vendee to take actual
possession of the land sold. [A] person who
does not have actual possession of the thing
sold cannot transfer constructive possession by
the execution and delivery of a public
instrument. In this case, no constructive

delivery of the land transpired upon the
execution of the deed of sale since it was not
the spouses Villamor, Sr. but the respondents
who had actual possession of the land. The
presumption of constructive delivery is
inapplicable and must yield to the reality that
the petitioners were not placed in possession
and control of the land. Sps. Erosto Santiago
and Nelsi Santiago v. Mancer Villamor, et
al.; G.R. No. 168499. November 26,2012
Contracts; inadequacy of consideration does
not render the contract void; need not be
monetary.Inadequacy of consideration does not
vitiate a contract unless it is proven which in
the case at bar was not, that there was fraud,
mistake or undue influence. While
consideration is usually in the form of money
or property, it need not be monetary. Eduardo
M. Cojuangco, Jr. vs. Republic of the
Philippines;G.R. No. 180705. November 27,
2012.
Contracts; requisites; disputable presumption
that there is sufficient consideration for a
Contract. Under Art. 1318 of the Civil Code,
there is no contract unless the following
requisites concur: (1) consent of the
contracting parties;(2) object certain which is
the subject matter of the contract;(3) cause of
the obligation which is established. The
following contract is inexistent and void from
the beginning: those whose cause or object did
not exist at the time of the transaction. There is
a disputable presumption that there was a
sufficient consideration for a contract. The rule
then is that the party who stands to profit from
a declaration of the nullity of a contract on the
ground of insufficiency of consideration
which would necessarily refer to one who
asserts such nullityhas the burden of
overthrowing the presumption offered by the
Rules of Court. Eduardo M. Cojuangco, Jr. vs.
Republic of the Philippines; G.R. No. 180705.
November 27, 2012.
Damages; entitlement; when death results
from delict. Anent the award of damages,

when death occurs due to a crime, the
following may be recovered: (1) civil
indemnity ex delicto for the death of the
victim; (2) actual or compensatory damages;
(3) moral damages; (4) exemplary damages;
(5) attorneys fees and expenses of litigation;
and (6) interest, in proper cases. People of the
Philippines v. Marcial M. Malicdem; G.R. No.
184601. November 12, 2012.
Damages; exemplary damages in delict;
awarded when there is an aggravating
circumstance, whether ordinary or qualifying.
Unlike the criminal liability which is basically
a State concern, the award of damages,
however, is likewise, if not primarily, intended
for the offended party who suffers thereby. It
would make little sense for an award of
exemplary damages to be due the private
offended party when the aggravating
circumstance is ordinary but to be withheld
when it is qualifying. Withal, the ordinary or
qualifying nature of an aggravating
circumstance is a distinction that should only
be of consequence to the criminal, rather than
to the civil, liability of the offender. In fine,
relative to the civil aspect of the case, an
aggravating circumstance, whether ordinary or
qualifying, should entitle the offended party to
an award of exemplary damages within the
unbridled meaning of Article 2230 of the Civil
Code. People of the Philippines v. Marcial M.
Malicdem; G.R. No. 184601. November 12,
2012.
Damages for violation of right to privacy;
inviolability of diplomatic residence. As
already exhaustively discussed by both the
RTC and the CA, Nestor himself admitted that
he caused the taking of the pictures of Lavinas
residence without the latters knowledge and
consent. Nestor reiterates that he did
so sans bad faith or malice. However, Nestors
surreptitious acts negate his allegation of
good faith. If it were true that Lavina kept
ivories in his diplomatic residence, then, his
behavior deserves condemnation. However,
that is not the issue in the case at bar. Nestor
violated the New Civil Code prescriptions

concerning the privacy of ones residence and
he cannot hide behind the cloak of his
supposed benevolent intentions to justify the
invasion. Hence, the award of damages and
attorneys fees in Lavinas favor is
proper. Nestor N. Padalhin, et al. Vs. Nelson
D. Lavia. G.R. No. 183026. November
14,2012.
Filiation; support; entitlement; clear and
convincing proof of filiation. Time and again,
this Court has ruled that a high standard of
proof is required to establish paternity and
filiation. An order for support may create an
unwholesome situation or may be an irritant to
the family or the lives of the parties so that it
must be issued only if paternity or filiation is
established by clear and convincing
evidence.Antonio Perla v. Mirasol Baring and
Randy B. Perla; G.R. No. 172471, November
12, 2012.
Filiation; open and continuous possession of
status. To prove open and continuous
possession of the status of an illegitimate child,
there must be evidence of the manifestation of
the permanent intention of the supposed father
to consider the child as his, by continuous and
clear manifestations of parental affection and
care, which cannot be attributed to pure
charity. Such acts must be of such a nature that
they reveal not only the conviction of
paternity, but also the apparent desire to have
and treat the child as such in all relations in
society and in life, not accidentally, but
continuously. Here, the single instance that
Antonio allegedly hugged Randy and promised
to support him cannot be considered as proof
of continuous possession of the status of a
child. To emphasize, [t]he fathers conduct
towards his son must be spontaneous and
uninterrupted for this ground to
exist. Antonio Perla v. Mirasol Baring and
12, 2012.
Filiation; proof; Certificate of Live Birth; not
competent proof of paternity when putative

father had no hand in preparation; Baptismal
Certificate; per se not a competent proof of
filiation or circumstantial evidence to prove
filiation. Just like in a birth certificate, the lack
of participation of the supposed father in the
preparation of a baptismal certificate renders
this document incompetent to prove paternity.
And while a baptismal certificate may be
considered a public document, it can only
serve as evidence of the administration of the
sacrament on the date specified but not the
veracity of the entries with respect to the
childs paternity. Thus, baptismal certificates
are per se inadmissible in evidence as proof of
filiation and they cannot be admitted indirectly
as circumstantial evidence to prove the
same.Antonio Perla v. Mirasol Baring and
12, 2012.
Laches; elements. The elements of laches must
be proven positively. Laches is evidentiary in
nature, a fact that cannot be established by
mere allegations in the pleadings. Evidence is
of utmost importance in establishing the
existence of laches because there is no
absolute rule as to what constitutes laches or
staleness of demand; each case is to be
determined according to the particular
circumstances. Verily, the application of laches
is addressed to the sound discretion of the
court as its application is controlled by
equitable considerations.
Laches is not concerned only with the mere
lapse of time. The following elements must be
present in order to constitute laches: (1)
conduct on the part of the defendant, or of one
under whom he claims, giving rise to the
situation of which complaint is made for which
the complaint seeks a remedy; (2) delay in
asserting the complainants rights, the
complainant having had knowledge or notice,
of the defendants conduct and having been
afforded an opportunity to institute a suit; (3)
lack of knowledge or notice on the part of the
defendant that the complaint would assert the
right on which he bases his suit; and (4) injury
or prejudice to the defendant in the event the

relief is accorded to the complainant, or the
suit is not held to be barred. Jack Arroyo v.
Bocago Inland Devt Corp. (BIDECO), G.R.
No. 167880 November 14,2012
Lease; rescission in reciprocal obligation.
the power to rescind obligations is implied in
reciprocal ones, in case one of the obligors
should not comply with what is incumbent
upon him. A lease contract is a reciprocal
contract. By signing the lease agreement, the
lessor grants possession over his/her property
to the lessee for a period of time in exchange
for rental payment. Indeed, rescission is
statutorily recognized in a contract of lease.
The aggrieved party is given the option to the
aggrieved party to ask for: (1) the rescission of
the contract; (2) rescission and indemnification
for damages; or (3) only indemnification for
damages, allowing the contract to remain in
force. Sps. Socrates Sy and Cely Sy v. Andoks
Litson Corporation. G.R. No. 192108.
November 21, 2012.
Marriage; petition for nullity of marriage; AM
No. 02-11-10; appearance by the Office of the
Solicitor General still required. The Resolution
nowhere stated that appeals by the OSG were
no longer required. On the contrary, the
Resolution explicitly required the OSG to
actively participate in all stages of the
proceedings. Arabelle Mendoza v. Republic of
the Philippines and Dominic Mendoza, G.R.
No. 157649. November 12, 2012.
Marriage; psychological incapacity;
elements. Psychological incapacity under
Article 36 of the Family Code contemplates an
incapacity or inability to take cognizance of
and to assume basic marital obligations, and is
not merely the difficulty, refusal, or neglect in
the performance of marital obligations or ill
will. It consists of: (a) a true inability to
commit oneself to the essentials of marriage;
(b) the inability must refer to the essential
obligations of marriage, that is, the conjugal
act, the community of life and love, the

rendering of mutual help, and the procreation
and education of offspring; and (c) the
inability must be tantamount to a
psychological abnormality. Proving that a
spouse failed to meet his or her responsibility
and duty as a married person is not enough; it
is essential that he or she must be shown to be
incapable of doing so due to some
psychological illness.Republic v. Court of
Appeals and Eduardo de Quintos, Jr., G.R. No.
159594. November 12, 2012.
Marriage; psychological incapacity; expert
evidence; thorough and in-depth assessment
required. The expert evidence presented in
cases of declaration of nullity of marriage
based on psychological incapacity presupposes
a thorough and in-depth assessment of the
parties by the psychologist or expert to make a
conclusive diagnosis of a grave, severe and
incurable presence of psychological
incapacity. Republic v. Court of Appeals and
Eduardo de Quintos, Jr., G.R. No. 159594.
November 12, 2012.
Marriage; psychological incapacity; proof of
natal or disabling supervening factor
required. It is not enough that the respondent,
alleged to be psychologically incapacitated,
had difficulty in complying with his marital
obligations, or was unwilling to perform these
obligations. Proof of a natal or supervening
disabling factor an adverse integral element
in the respondents personality structure that
effectively incapacitated him from complying
with his essential marital obligations must be
shown. Republic v. Court of Appeals and
November 12, 2012.
Marriage; psychological
incapacity; Santos and Molina guidelines. The
pronouncements in Santos andMolina have
remained as the precedential guides in
deciding cases grounded on the psychological
incapacity of a spouse. But the Court has
declared the existence or absence of the
psychological incapacity based strictly on the
facts of each case and not on a
priori assumptions, predilections or

generalizations. Indeed, the incapacity should
be established by the totality of evidence
presented during trial, making it incumbent
upon the petitioner to sufficiently prove the
existence of the psychological
incapacity. Republic v. Court of Appeals and
November 12, 2012.
Marriage; psychological incapacity; three basic
requirements. To entitle petitioner spouse to a
declaration of the nullity of his or her
marriage, the totality of the evidence must
sufficiently prove that respondent spouses
psychological incapacity was grave, incurable
and existing prior to the time of the
marriage. Arabelle Mendoza v. Republic of the
Philippines and Dominic Mendoza, G.R. No.
157649. November 12, 2012.
Marriage; psychological incapacity; totality of
evidence proving incapacity required. Even if
the expert opinions of psychologists are not
conditions sine qua non in the granting of
petitions for declaration of nullity of marriage,
the actual medical examination was to be
dispensed with only if the totality of evidence
presented was enough to support a finding of
his psychological incapacity. This did not
mean that the presentation of any form of
medical or psychological evidence to show the
psychological incapacity would have
automatically ensured the granting of petition
for declaration of nullity of marriage. What
was essential, we should emphasize herein,
was the presence of evidence that can
adequately establish the partys psychological
condition. But where, like here, the parties
had full opportunity to present the professional
and expert opinions of psychiatrists tracing the
root cause, gravity and incurability of the
alleged psychological incapacity, then the
opinions should be represented and be weighed
by the trial courts in order to determine and
decide whether or not to declare the nullity of
the marriages. It bears repeating that the trial
courts, as in all other cases they try, must

always base their judgments not solely on the
expert opinions presented by the parties but on
the totality of evidence adduced in the course
of their proceedings. Arabelle Mendoza v.
Republic of the Philippines and Dominic
Mendoza, G.R. No. 157649. November 12,
2012.
Mortgage; mortgagee in good faith relying on
Torrens Certificate of Title;
Indefeasibility. Primarily, it bears noting that
the doctrine of mortgagee in good faith is
based on the rule that all persons dealing with
property covered by a Torrens Certificate of
Title are not required to go beyond what
appears on the face of the title. This is in
deference to the public interest in upholding
the indefeasibility of a certificate of title as
evidence of lawful ownership of the land or of
any encumbrance thereon. In the case of banks
and other financial institutions, however,
greater care and due diligence are required
since they are imbued with public interest,
failing which renders the mortgagees in bad
faith. Thus, before approving a loan
application, it is a standard operating practice
for these institutions to conduct an ocular
inspection of the property offered for mortgage
and to verify the genuineness of the title to
determine the real owner(s) thereof. The
apparent purpose of an ocular inspection is to
protect the true owner of the property as well
as innocent third parties with a right, interest
or claim thereon from a usurper who may have
acquired a fraudulent certificate of title
thereto. Philippine Banking Corporation v.
Arturo Dy, et al., G.R. No. 183774. November
14, 2012
Property; accretion; elements; By law,
accretion the gradual and imperceptible
deposit made through the effects if the current
of the water belongs to the owner if the land
adjacent to the banks of rivers where it forms.
The drying up of the river is not accretion.
Hence, the dried-up riverbed belongs to the
State as property of public dominion, not to the
riparian owner, unless a law vests the
ownership in some other person. Republic of

the Philippines v. Arcadio Ivan Santos III and
Arcadio Santos, Jr. G.R. No. 160453.
November 12, 2012
Property; builder in good faith; not limited to
those claiming ownership over property;
builder in good faith; landowners
options. Article 448 of the Civil Code applies
when the builder believes that he is the owner
of the land or that by some title he has the right
to build thereon, or that, at least, he has a claim
of title thereto. In Tuatis, we ruled that the
seller (the owner of the land) has two options
under Article 448: (1) he may appropriate the
improvements for himself after reimbursing
the buyer (the builder in good faith) the
necessary and useful expenses under Articles
546 and 548 of the Civil Code; or (2) he may
sell the land to the buyer, unless its value is
considerably more than that of the
improvements, in which case, the buyer shall
pay reasonable rent. Communities Cagayan,
Inc. v. Sps. Arsenio (deceased) and Angeles
Nanol, et al. G.R. No. 176791. November 14,
2012
Quieting of title. The issues in a case for
quieting of title are fairly simple; the plaintiff
need to prove only two things, namely: (1)
the plaintiff or complainant has a legal or an
equitable title to or interest in the real property
subject of the action; and (2) that the deed,
claim, encumbrance or proceeding claimed to
be casting a cloud on his title must be shown to
be in fact invalid or inoperative despite
itsprima facie appearance of validity or legal
efficacy. Stated differently, the plaintiff must
show that he has a legal or at least an equitable
title over the real property in dispute, and that
some deed or proceeding beclouds its validity
or efficacy. Joaquin G. Chung, Jr., et al. Vs.
Jack Daniel Mondragon, et al.;G.R. No.
179754. November 21, 2012.
Quieting of title; legal or equitable title in
quieting of title. An action for quieting of title
is essentially a common law remedy grounded
on equity. The competent court is tasked to

determine the respective rights of the
complainant and other claimants, not only to
place things in their proper place, to make the
one who has no rights to said immovable
respect and not disturb the other, but also for
the benefit of both, so that he who has the right
would see every cloud of doubt over the
property dissipated, and he could afterwards
without fear introduce the improvements he
may desire, to use, and even to abuse the
property as he deems best. But for an action
to quiet title to prosper, two indispensable
requisites must concur, namely: (1) the
plaintiff or complainant has a legal or an
equitable title to or interest in the real property
subject of the action; and (2) the deed, claim,
encumbrance, or proceeding claimed to be
casting cloud on his title must be shown to be
in fact invalid or inoperative despite its prima
facie appearance of validity or legal
efficacy. Dionisio Mananquil, et al. v.
Roberto Moico; G.R. No. 180076. November
20, 2012.
Sales; Art 1544; elements of double sale. A
double sale situation, which would call, if
necessary, the application of Art. 1544 of the
Civil Code, arises when, as jurisprudence
teaches, the following requisites concur: (a)
The two (or more) sales transactions must
constitute valid sales; (b) The two (or more)
sales transactions must pertain to exactly the
same subject matter; (c) The two (or more)
buyers at odds over the rightful ownership of
the subject matter must each represent
conflicting interests; and (d) The two (or
more) buyers at odds over the rightful
ownership of the subject matter must each
have bought from the very same seller. Rupeta
Cano Vda. De Viray and Jesus Carlo Gerard
Viray v. Spouses Jose Usi and Amelita
Usi, G.R.No.192486. November 21,2012.
Sales; contract of sale; purchasers in good
faith. A purchaser in good faith is one who
buys property without notice that some other
person has a right to or interest in such
property and pays its fair price before he has
notice of the adverse claims and interest of

another person in the same property. However,
where the land sold is in the possession of a
person other than the vendor, the purchaser
must be wary and must investigate the rights of
the actual possessor; without such inquiry, the
buyer cannot be said to be in good faith and
cannot have any right over the property. Sps.
Erosto Santiago and Nelsi Santiago v. Mancer
Villamor, et al.; G.R. No. 168499. November
26,2012.
Succession; will; attestation clause; statement
of number of pages; mandatory requirement;
substantial compliance only when
evidence aliunde is not necessary.The law is
clear that the attestation must state the number
of pages used upon which the will is written.
The purpose of the law is to safeguard against
possible interpolation or omission of one or
some of its pages and prevent any increase or
decrease in the pages. While Article 809
allows substantial compliance for defects in
the form of the attestation clause, Richard
likewise failed in this respect. The statement in
the Acknowledgment portion of the subject last
will and testament that it consists of 7 pages
including the page on which the ratification
and acknowledgment are written cannot be
deemed substantial compliance. The will
actually consists of 8 pages including its
acknowledgment which discrepancy cannot be
explained by mereexamination of the will itself
but through the presentation of
evidence.Richard B. Lopez v. Diana Jeanne
Lopez, et al., G.R. No. 189984. November 12,
2012.
Special Laws
Family Code; abandonment not a ground for
declaration of nullity.Abandonment was not
one of the grounds for the nullity of marriage
under the Family Code. It did not also
constitute psychological incapacity, it being
instead a ground for legal separation under
Article 55(10) of the Family Code.Republic v.
Court of Appeals and Eduardo de Quintos,
Jr., G.R. No. 159594. November 12, 2012.

Land Titles and Deeds; confirmation of
imperfect title; requirements. Under Section
14(1) of Presidential Decree No. 1529
(Property Registration Decree), then,
applicants for confirmation of imperfect title
must prove the following, namely: (a) that the
land forms part of the disposable and alienable
agricultural lands of the public domain; and (b)
that they have been in open, continuous,
occupation of the land under a bona fide claim
of ownership either since time immemorial or
since June 12, 1945. Republic of the
Philippines v. Arcadio Ivan Santos III and
Arcadio Santos, Jr. G.R. No. 160453.
November 12, 2012
Land Titles and Deeds; property of public
dominion; proof of alienability and
disposability; not subject to acquisitive
prescription. The principle that the riparian
owner whose land receives the gradual
deposits of soil does not need to make an
express act of possession, and that no acts of
possession are necessary in that instance
because it is the law itself that pronounces the
alluvium to belong to the riparian owner from
the time that the deposit created by the current
of the water becomes manifest has no
applicability herein. This is simply because the
lot was not formed through accretion. Hence
the ownership of the land adjacent to the river
bank by respondents predecessor-in-interest
did not translate to possession of the subject lot
that would ripen to acquisitive prescription.
Yet, even conceding, for the sake of argument
that respondents possessed the subject lot for
more than thirty years in the character they
claimed, they did not thereby acquire the land
by prescription or by other means without any
competent proof that the land was already
declared as alienable and disposable by the
government. Absent that declaration, the land
still belonged to the State as part of its public
dominion. Republic of the Philippines v.
Arcadio Ivan Santos III and Arcadio Santos,
Jr. G.R. No. 160453. November 12, 2012
Maceda Law; entitlement to cash surrender

value; requisites; cancellation of contract;
requisites. In this connection, we deem it
necessary to point out that, under the Maceda
Law, the actual cancellation of a contract to
sell takes place after 30 days from receipt by
the buyer of the notarized notice of
cancellation, and upon full payment of the cash
surrender value to the buyer. In other words,
before a contract to sell can be validly and
effectively cancelled, the seller has (1) to send
a notarized notice of cancellation to the buyer
and (2) to refund the cash surrender value.
Until and unless the seller complies with these
twin mandatory requirements, the contract to
sell between the parties remains valid and
subsisting. Thus, the buyer has the right to
continue occupying the property subject of the
contract to sell, and may still reinstate the
contract by updating the account during the
grace period and before the actual
cancellation of the contract. Communities
Cagayan, Inc. v. Sps. Arsenio (deceased) and
Angeles Nanol, et al. G.R. No. 176791.
November 14, 2012.
October 2012 rulings of the Supreme Court of
Civil Code
Assignment of credit; dation in payment. An
assignment of credit is an agreement by virtue
of which the owner of a credit, known as the
assignor, by a legal cause, such as
sale, dation in payment, exchange or donation,
and without the consent of the debtor, transfers
his credit and accessory rights to another,
known as the assignee, who acquires the power
to enforce it to the same extent as the assignor
could enforce it against the debtor. It may be in
the form of sale, but at times it may constitute
a dation in payment, such as when a debtor, in
order to obtain a release from his debt, assigns
to his creditor a credit he has against a third
person. As a dation in payment, the assignment
of credit operates as a mode of extinguishing
the obligation; the delivery and transmission of
ownership of a thing (in this case, the credit

due from a third person) by the debtor to the
creditor is accepted as the equivalent of the
performance of the obligation.
The terms of the compromise judgment of the
parties, however, did not convey an intent to
equate the assignment of Magdalenas
retirement benefits as the equivalent of the
payment of the debt due the spouses Serfino.
There was actually no assignment of credit; if
at all, the compromise judgment merely
identified the fund from which payment for the
judgment debt would be sourced. Only when
Magdalena has received and turned over to the
spouses Serfino the portion of her retirement
benefits corresponding to the debt due would
the debt be deemed paid. Since no valid
assignment of credit took place, the spouses
Serfino cannot validly claim ownership of the
retirement benefits that were deposited with
FEBTC. Without ownership rights over the
amount, they suffered no pecuniary loss that
has to be compensated by actual damages. Sps.
Godfrey and Gerardina Serfino vs. Far East
Bank and Trust Company, Inc., now Bank of
the Philippine Islands.G.R. No. 171845.
October 10, 2012
Compromise agreement; relation to original
agreement; interest. Petitioner argues that the
compromise agreement created an obligation
separate from the original loan, for which
respondent is now liable. By stating that the
compromise agreement and the original loan
transaction are distinct, petitioner would now
attempt to exact payment on both. This goes
against the very purpose of the parties entering
into a compromise agreement, which was to
extinguish the obligation under the loan.
Petitioner may not seek the enforcement of
both the compromise agreement and payment
of the loan, even in the event that the
compromise agreement remains unfulfilled.
The Court had previously tagged a 5%
monthly interest rate agreed upon as
excessive, iniquitous, unconscionable and
exorbitant, contrary to morals, and the law.
We need not unsettle the principle we had
affirmed in a plethora of cases that stipulated

interest rates of 3% per month and higher are
excessive, iniquitous, unconscionable, and
exorbitant. Arthur F. Mechavez vs. Marlyn M,
Bermudez G.R. No. 185368. October 11, 2012
Construction contract; progress billing; unjust
enrichment. The owners approval of progress
billing is merely provisional. Progress billings
are but preliminary estimates of the value of
the periodic accomplishments of the
contractor. It is the right of every owner to
reevaluate or re-measure the work of its
contractor during the progress of the work.
The rationale underlying the owners right to
seek an evaluation of the contractors work is
the right to pay only the true value of the work
as may be reasonably determined under the
circumstances. This is consistent with the law
against unjust enrichment under Article 22 of
the Civil Code which states that every person
who through an act of performance by another,
or any other means, acquires or comes into
the same to him. R.V. Santos Company, Inc. vs.
Belle Corporation G.R. Nos. 159561-62.
October 3, 2012.
Contracts; extension; performance security;
public bidding. The extension of the option
period means that the Comelec had more time
to determine the propriety of exercising the
option. With the extension, the Comelec could
acquire the subject PCOS machines under the
same terms and conditions as earlier agreed
upon. The end result is that the Comelec
acquired the subject PCOS machines with its
meager budget and was able to utilize the
rentals paid for the 2010 elections as part of
the purchase price.
It must be pointed out that public biddings are
held for the best protection of the public and to
give the public the best possible advantages by
means of open competition between the
bidders. What are prohibited are modifications
or amendments which give the winning bidder
an edge or advantage over the other bidders

who took part in the bidding, or which make
the signed contract unfavorable to the
government. In this case, the extension of the
option period and the eventual purchase of the
subject goods resulted in more benefits and
advantages to the government and to the public
in general. The advantage to the
government, time and budget constraints, the
application of the rules on valid amendment of
government contracts, and the successful
conduct of the May 2010 elections are among
the factors looked into in arriving at the
conclusion that the assailed Resolutions issued
by the Comelec and the agreement and deed
entered into between the Comelec and
Smartmatic-TIM, are valid. Archbishop
Fernando R. Capalla, et al. vs. The Hon.
Commission on Elections/Solidarity for
Sovereignty etc. G.R. No. 201112/G.R. No.
201121/G.R. No. 201127/G.R. No. 201413.
October 23, 2012
Contracts; freedom to stipulate. Art. 1306 of
the Civil Code guarantees the freedom of
parties to stipulate the terms of their contract
provided that they are not contrary to law,
morals, good customs, public order, or public
policy. Here, both parties knew for a fact that
the property subject of their contract was
occupied by informal settlers, whose eviction
would entail court actions that in turn, would
require some amount of time. They also knew
that the length of time that would take to
conclude such court actions was not within
their power to determine. Despite such
knowledge, both parties still agreed to the
stipulation that the payment of the balance of
the purchase price will be deferred until the
informal settlers are ejected. Thus, PLU cannot
be allowed to renege on its agreement. The
parties intended the performance of the
obligation until the squatters are duly
evicted. P.L. Uy Realty Corporation vs. ALS
Management and Development Corporation
and Antonio K. Litonjua G.R. No. 166642.
October 24, 2012
Contracts; simulation. In a contract of sale, its

perfection is consummated at the moment
there is a meeting of the minds upon the thing
that is the object of the contract and upon the
price. If the parties state a false cause in the
contract to conceal their real agreement, the
contract is only relatively simulated and the
parties are still bound by their real agreement.
In absolute simulation, there is a colorable
contract but it has no substance as the parties
have no intention to be bound by it. The main
characteristic of an absolute simulation is that
the apparent contract is not really desired or
intended to produce legal effect or in any way
alter the juridical situation of the parties. As a
result, an absolutely simulated or fictitious
contract is void, and the parties may recover
from each other what they may have given
under the contract.
In the case at bench, no valid sale of the
subject property actually took place between
the alleged vendors, Ireneo and Salvacion; and
the alleged vendees, Spouses Intac. There was
simply no consideration and no intent to sell it.
Marietto, a witness to the execution of the
absolute deed of sale, testified that Ireneo
personally told him that he was going to
execute a document of sale because Spouses
Intac needed to borrow the title to the property
and use it as collateral for their loan
application. Aside from the plain denial,
petitioners could not show any tangible
evidence of any payment therefor. Their failure
to prove their payment only strengthened
Mariettos story that there was no payment
made because Ireneo had no intention to
sell. Heirs of Dr. Mario S. Intac and Angelina
Mendoza-Intac vs. Court of Appeals and
Spouses Marcelo Roy, Jr. and Josefina
Mendoza-Roy, et al. G.R. No. 173211. October
11, 2012
Co-ownership; action for ejectment. Article
487 of the Civil Code provides that anyone of
the co-owners may bring an action for
ejectment without joining the others. The
action is not limited to ejectment cases but

includes all kinds of suits for recovery of
possession because the suit is presumed to
have been instituted for the benefit of all. A coowner is not even a necessary party to an
action for ejectment, for complete relief could
be afforded even in his absence, Hence,
Exequiel, a co-owner, may bring the action for
unlawful detainer even without the special
power of attorney of his coheirs. Heirs of
Albina G. Ampil, namely Precious A. Zavalla,
Eduardo Ampil, et al. vs. Teresa Manahan and
Mario Manahan G.R. No. 175990. October 11,
2012
Damages; proof of pecuniary loss. The spouses
Serfino invoke American common law that
imposes a duty upon a bank receiving a notice
of adverse claim to the fund in a depositors
account to freeze the account for a reasonable
length of time, sufficient to allow the adverse
claimant to institute legal proceedings to
enforce his right to the fund. To adopt the
foreign rule, however, goes beyond the power
of this Court to promulgate rules governing
pleading, practice and procedure in all courts.
The rule reflects a matter of policy that is
better addressed to the Bangko Sentral ng
Pilipinas. Essentially, these statutes do not
impose a duty on banks to freeze the deposit
upon a mere notice of adverse claim; they first
require either a court order or an indemnity
bond. The banks contractual relations are with
its depositor, not with the third party. In the
absence of any positive duty of the bank to an
adverse claimant, there could be no breach that
entitles the latter to moral damages. Sps.
Godfrey and Gerardina Serfino vs. Far East
Bank and Trust Company, Inc., now Bank of
the Philippine Islands. G.R. No. 171845.
October 10, 2012
Damages; temperate, moderate,
exemplary. Petitioner assails the award of
P50,000 as moral damages granted to the heirs
of Henry Go despite the fact that neither Henry
Go nor any of his heirs testified on matters that
could be the basis for such monetary award.
Indeed, in this case, since respondent Henry
Go was not able to testify, there is then no

evidence on record to prove that he suffered
mental anguish, besmirched reputation,
sleepless nights, wounded feelings or similar
injury by reason of petitioners conduct.
However, there was no error committed by the
lower courts with regard to the award of
temperate or moderate damages of P100,000 to
respondents Lao Lim and Go. The purpose for
respondents trip to Hong Kong was to conduct
business negotiations, but respondents were
not able to meet their counterparts as they were
not allowed to board the PR300 flight.
Understandably, it is difficult, if not
impossible, to adduce solid proof of the losses
suffered by respondents due to their failure to
make it to their business meetings. Thus, it is
only just that respondents be awarded
temperate or moderate damages. Since
respondent is entitled to temperate damages,
then the court may also award exemplary
damages. Philippine Airlines, Inc. vs.
Francisco Lao Lim, The Heirs of Henry Go,
Manuel Limtiong and Rainbow Tours and
Travel, Inc. G.R. No. 168987. October 17,
2012
Land ownership. The bare allegation of
respondents that they had been in peaceful and
continuous possession of the lot in question
because their predecessor-in-interest had been
in possession thereof in the concept of an
owner from time immemorial, cannot prevail
over the tax declarations and other
documentary evidence presented by
petitioners. In the absence of any supporting
evidence, that of the petitioners deserves more
probative value. A perusal of the records shows
that respondents occupation of the lot in
question was by mere tolerance. From the
minutes of the meeting in the Barangay Lupon,
Perfecto admitted that in Albina permitted
them to use the lots on the condition that they
would vacate the same should Albina need
it. Heirs of Albina G. Ampil, namely Precious
A. Zavalla, Eduardo Ampil, et al. vs. Teresa

Manahan and Mario Manahan G.R. No.
175990. October 11, 2012
Mortgage; escalation clause. We consider to be
unsubstantiated the petitioners claim of their
lack of consent to the escalation clauses. They
did not adduce evidence to show that they did
not assent to the increases in the interest rates.
The records reveal instead that they requested
only the reduction of the interest rate or the
restructuring of their loans. Escalation clauses
are valid and do not contravene public policy.
These clauses are common in credit
agreements as means of maintaining fiscal
stability and retaining the value of money on
long-term contracts. Any increase in the rate of
interest made pursuant to an escalation clause
must be the result of an agreement between the
parties. Thus, any change must be mutually
agreed upon, otherwise, the change carries no
binding effect. Spouses Humberto Delos
Santos and Carmencita Delos Santos vs.
Metropolitan Bank and Trust Company G.R.
No. 153852. October 24, 2012
Novation; lease agreement; default. Article
1292 of the Civil Code provides that in
novation, it is imperative that it be so
declared in unequivocal terms, or that the old
and the new obligations be on every point
incompatible with each other. In this case, the
cause in a contract of lease is the enjoyment of
the thing; in a contract of deposit, it is the
safekeeping of the thing. They thus create
essentially distinct obligations that would
result in a novation only if the parties entered
into one after the other concerning the same
subject matter.
The turning point in this case is whether or not
the parties subsequently entered into an
agreement for the storage of the buses that
superseded their prior lease agreement
involving the same buses. RCJ failed to
present any clear proof that it agreed with
Master Tours to abandon the lease of the buses
and in its place constitute RCJ as depositary of
the same, providing storage service to Master
Tours for a fee. The only evidence RCJ relied
on is Master Tours letter in which it demanded

the return of the four buses which were placed
in RCJs garage for safekeeping. For one
thing, the letter does not on its face constitute
an agreement. It contains no contractual
stipulations respecting some warehousing
arrangement between the parties concerning
the buses. The idea of RCJ safekeeping the
buses for Master Tours is actually consistent
with their lease agreement. In fact, the lessee
of a movable property has an obligation to
return the thing leased, upon the termination
of the lease, just as he received it. Apart from
delivering the buses to RCJ, the agreement did
not require any further act from Master Tours
as a condition to the exercise of its right to
collect the lease fee. RCJ Bus Lines,
Incorporated vs. Master Tours and Travel
Corporation G.R. No. 177232. October 11,
2012
Novation; loan; restructuring. Article 1292 of
the Civil Code contemplates two kinds of
novation. Novation is never presumed, and
the animus novandi, whether totally or
partially, must appear by express agreement of
the parties, or by their acts that are too clear
and unmistakable. The contracting parties must
incontrovertibly disclose that their object in
executing the new contract is to extinguish the
old one. Upon the other hand, no specific form
is required for an implied novation, and all that
is prescribed by law would be an
incompatibility between the two contracts.
Nonetheless, both kinds of novation must still
be clearly proven.
Without a written contract stating in
unequivocal terms that the parties were
novating the original loan agreement,
eliminating an express novation, the Court
looks to whether there is an incompatibility
between the Floor Stock Line secured by Trust
receipts and the subsequent restructured
Omnibus Line which was supposedly
approved by PNB. The test of incompatibility
is whether the two obligations can stand
together, each one having its independent

existence. The obligation is not novated by an
instrument that expressly recognizes the old,
changes only the terms of payment, adds other
obligations not incompatible with the old ones,
or the new contract merely supplements the
old one. Besides, novation does not extinguish
criminal liability. Philippine National Bank
Vs. Lilian S. Soriano G.R. No. 164051,
October 3, 2012.
Obligations; default in performance; liquidated
damages. The parties to a contract are allowed
to stipulate on liquidated damages to be paid in
case of breach. A perusal of the significant
provisions of the Construction Contract and
the relevant construction documents would
show that the rights to liquidated damages and
to terminate the contract are distinct remedies
that are available to respondent. As long as the
contractor fails to finish the works within the
period agreed upon by the parties without
justifiable reason and after the owner makes a
demand, then liability for damages as a
consequence of such default arises.
With the modification of the contract period,
petitioner was obliged to perform the works
and deliver the units. Yet it still reneged on its
obligation. Assuming that the reasons for valid
extension indeed exist, still, petitioner should
bear the consequences for the delay when
petitioner failed to meet its new deadline.
While the Court has reduced the amount of
liquidated damages in some cases because of
partial fulfillment of the contract and/or the
amount is unconscionable, the Court does not
find the same to be applicable in this case. As
of the last certified billing, petitioners
percentage accomplishment was only 62.57%.
Hence, the Court applied the general rule not
to ignore the freedom of the parties to agree on
such terms and conditions as they see fit as
long as they are not contrary to law, morals,
good customs, public order or public
policy. Atlantic Erectors, Inc. vs. Court of
Appeals and Herbal Cove Realty
Corporation. G.R. No. 170732. October 11,
2012
Obligations; delay; additional works and

change order; principle of quantum
meruit. Petitioner insists that respondent
should pay the remaining balance on the
contract price, that it was respondents
additional works and change orders which
caused the delay in the completion of the
proposed project. Respondent anchors its nonpayment of the remaining balance primarily on
the defects and delays incurred by petitioner in
the completion of the construction project.
Testimonial and documentary proof strongly
show that the delay was caused by the
additional works and change order works
required by respondent which were not part of
the original Agreement. Pursuant to the
aforementioned contractual obligations,
petitioner completed the construction of the
four-storey commercial building and twostorey kitchen with dining hall. Thus, this
Court finds no legal basis for respondent to not
comply with its obligation to pay the balance
of the contract price due the petitioner. Under
the principle of quantum meruit, a contractor is
allowed to recover the reasonable value of the
thing or service rendered in order to avoid
unjust enrichment. Robert Pascua, doing
business under the name and style Tri-Web
Construction vs. G & G Realty
Corporation G.R. No. 196383. October 15,
2012
Obligations; payment; extinguishment of
obligation. Respondents obligation consists of
payment of a sum of money. In order to
extinguish said obligation, payment should be
made to the proper person as set forth in
Article 1240 of the Civil Code. Admittedly,
payment of the remaining balance of P200,000
was not made to the creditors themselves.
Respondent claims that Losloso was the
authorized agent of petitioners, but the latter
dispute it. Loslosos authority to receive
payment was embodied in petitioners letter
addressed to respondent where they informed
respondent of the amounts they advanced for
the payment of the 1997 real estate taxes. In

said letter, petitioners reminded respondent of
her remaining balance, together with the
amount of taxes paid. Taking into
consideration the busy schedule of respondent,
petitioners advised the latter to leave the
payment to a certain Dori who admittedly is
Losloso, or to her trusted helper. This is an
express authority given to Losloso to receive
payment. Spouses Miniano B. Dela Cruz and
Leta L. Dela Cruz vs. Ana Marie
Concepcion G.R. No. 172825. October 11,
2012
Regalian doctrine; public land. Under
the Regalian doctrine, land that has not
been acquired from the government, either by
purchase, grant, or any other mode recognized
by law, belongs to the State as part of the
public domain. Thus, it is indispensable for a
person claiming title to a public land to show
that his title was acquired through such means.
To prove that the subject property is alienable
and disposable land of the public domain,
respondents presented the CENRO Certificate.
However, a CENRO or PENRO Certification
is not enough to certify that a land is alienable
and disposable. The applicant for land
registration must prove that the DENR
Secretary had approved the land classification
and released the land of the public domain as
alienable and disposable, and that the land
subject of the application for registration falls
within the approved area per verification
through survey by the PENRO or CENRO. In
addition, the applicant for land registration
must present a copy of the original
classification approved by the DENR
Secretary and certified as a true copy by the
legal custodian of the official records.
Although the survey and certification were
done declaring certain portions of the public
domain situated in Cebu City as alienable and
disposable, an actual copy of such
classification, certified as true by the legal
custodian of the official records, was not
presented in evidence. Unfortunately,
respondents were not able to discharge the
burden of overcoming the presumption that the

land they sought to be registered forms part of
the public domain. Republic of the Philippines
vs. Gloria Jaralve (deceased), substituted by
Alan Jess Jaralve-Document, Jr., et al. G.R.
No. 175177. October 24, 2012
Succession; extra-judicial settlement of estate;
grounds for nullity. Upon the death of
Anunciacion, her children and Enrique
acquired their respective inheritances, entitling
them to their pro indiviso shares in her whole
estate. In the execution of the Extra-Judicial
Settlement of the Estate with Absolute Deed of
Sale in favor of spouses Uy, all the heirs of
Anunciacion should have participated.
Considering that Eutropia and Victoria were
admittedly excluded and that then minors Rosa
and Douglas were not properly represented
therein, the settlement was not valid and
binding upon them and consequently, a total
nullity.
However, while the settlement of the estate is
null and void, the subsequent sale of the
subject properties made by Enrique and his
children, Napoleon, Alicia and Visminda, in
favor of the respondents is valid but only with
respect to their proportionate shares. With
respect to Rosa and Douglas who were minors
at the time of the execution of the settlement
and sale, their natural guardian and
father, Enrique, represented them in the
transaction. However, on the basis of the laws
prevailing at that time, Enrique was merely
clothed with powers of administration and
bereft of any authority to dispose of their 2/16
shares in the estate of their mother,
Anunciacion.
A father or mother, as the natural guardian of
the minor under parental authority, does not
have the power to dispose or encumber the
property of the latter. Such power is granted by
law only to a judicial guardian of the wards
property and even then only with courts prior
approval. Napoleon D. Neri, et al. vs Heirs of
Hadji Yusop Uy and Julpha Ibrahim Uy. G.R.
No. 194366. October 10, 2012

SPECIAL LAWS
BOT Law; water rights; appropriation. Foreign
ownership of a hydropower facility is not
prohibited under existing laws. The
construction, rehabilitation and development
of hydropower plants are among those
infrastructure projects which even whollyowned foreign corporations are allowed to
undertake under the Amended Build-OperateTransfer (Amended BOT) Law (R.A. No.
7718). Executive Order No. 215 allowed the
entry of private sector the Independent
Power Producers (IPPs) to participate in the
power generation activities in the country.
Further, water right is defined in the Water
Code as the privilege granted by the
government to appropriate and use
water. Under the Water Code concept of
appropriation, a foreign company may not be
said to be appropriating our natural
resources if it utilizes the waters collected in
the dam and converts the same into electricity
through artificial devices. Since the National
Power Corporation (NPC) remains in control
of the operation of the dam by virtue of water
rights granted to it, there is no legal
impediment to foreign-owned companies
undertaking the generation of electric power
using waters already appropriated by NPC, the
holder of water permit. Initiative For Dialoque
and Emprovement Through Alternative Legal
Services, Inc., Et Al. vs. Power Sector Assets
and Liabilities Management Corpotation Etc.,
et aAl. G.R. No. 192088. October 9, 2012
Homestead patent; five-year prohibitory
period; no distinction between consummated
and executory sale; unjust enrichment. The
five-year prohibitory period following the
issuance of the homestead patent is provided
under Section 118 of the Public Land Act. It
bears stressing that the law was enacted to give
the homesteader or patentee every chance to
preserve for himself and his family the land
that the State had gratuitously given to him as
a reward for his labour in cleaning and
cultivating it.
In the present case, the negotiations for the

purchase of the properties covered by the
patents issued in 1991 were made in 1995 and,
eventually, an undated Deed of Conditional
Sale was executed. Petitioner raises the issue
whether by a deed of conditional sale there
was alienation or encumbrance within the
contemplation of the law. The prohibition does
not distinguish between consummated and
executory sale. The conditional sale entered
into by the parties is still a conveyance of the
homestead patent; that the formal deed of sale
was executed after the expiration of the staid
period did not and could not legalize a contract
that was void from its inception. Nevertheless,
petitioner does not err in seeking the return of
the down payment as a consequence of the sale
having been declared void. The rule is settled
that the declaration of nullity of a contract
which is void ab initiooperates to restore
things to the state and condition in which they
were found before the execution
thereof. Filinvest Land, Inc., Efren C.
Gutierrer vs. Abdul Backy, Abehera, Baiya,
Edris, et al. G.R. No. 174715. October 11,
2012
Republic Act (RA) No. 26; certificate of title;
reconstitution; sources. The Office of the
Solicitor General raised the issue that the
Domingos did not comply with Sections 12
and 13 of RA No. 26 because they failed to
notify the heirs of the Spouses Ramoso and a
certain Senen Gabaldon of the reconstitution
proceedings for an original certificate of title.
Respondents argue that the names of the heirs
of the Spouses Ramoso and Gabaldon do not
appear in the owners duplicate, hence need
not be notified.
RA No. 26 provides two procedures and sets of
requirements in the reconstitution of lost or
destroyed certificates of title depending on the
source of the petition for reconstitution.
Section 10 in relation to Section 9, and on the
other, Sections 12 and 13. Section 10 of RA
No. 26 applies if the source is the owners
duplicate certificate, which shall be published

in the manner stated in section nine. Section 9
of RA No. 26 states that the notice shall
specify the number of the certificate of title,
the name of the registered owner, the names of
the interested parties appearing in the
reconstituted certificate of title, the location of
the property, and the date on which all persons
having an interest in the property must appear
and file such claim as they may have. The
respondents complied with these requirements
and thus the RTC validly acquired jurisdiction
to hear and decide the petition for
reconstitution. Republic of the Philippines vs.
Angel T. Domingo and Benjamin T.
Domingo. G.R. No. 197315. October 10, 2012
Realty Installment Buyer Protection Act;
contract to sell. A contract is what the law
defines it to be, and not what it is called by the
contracting parties. A contract to sell is defined
as a bilateral contract whereby the prospective
of the subject property despite delivery thereof
to the prospective buyer, binds itself to sell the
said property exclusively to the prospective
buyer upon fulfillment of the condition agreed
upon, that is, full payment of the purchase
price.
The Shelter Contract Award granted to
respondent expressly stipulates that upon
completion of payment of the amount
representing the full value of the House and
Lot subject of the Contract Award, the Union
shall execute a Deed of Transfer and shall
cause the issuance of the corresponding
Transfer Certificate of Title in favor of and in
the name of the Awardee. It cannot be denied,
therefore, that the parties entered into a
contract to sell in the guise of a reimbursement
scheme requiring respondent to make monthly
reimbursement payments which are, in
actuality, installment payments for the value of
the subject house and lot.
While the Court agreed that the cancellation of
a contract to sell may be done outside of court,
however, the cancellation by the seller must be
in accordance with Sec. 3(b) of R.A. No. 6552,
which requires a notarial act of rescission and

the refund to the buyer of the full payment of
the cash surrender value of the payments on
the property. In the present case, petitioner
failed to prove that the Shelter Contract Award
had been cancelled in accordance with R.A.
No. 6552, which would have been the basis for
the illegality of respondents continuous
possession of the subject premises. Hence, the
action for ejectment must fail. Associated
Marine Office and Seamens Union Of The
Philippines vs. Noriel Decena G.R. No.
178584. October 8, 2012.
September 2012 rulings of the Supreme Court
Civil Code
Contracts; capacity. Contracting parties must
be juristic entities at the time of the
consummation of the contract. Stated
otherwise, to form a valid and legal agreement
it is necessary that there be a party capable of
contracting and a party capable of being
contracted with. Hence, if any one party to a
supposed contract was already dead at the time
of its execution, such contract is undoubtedly
simulated and false and, therefore, null and
void by reason of its having been made after
the death of the party who appears as one of
the contracting parties therein. The death of a
person terminates contractual capacity. De
Belen Vda. de Cabalu, et al. v. Tabu, et
al.; G.R. No. 188417. September 24, 2012
Contracts; future inheritance; contractual
capacity Under Article 1347 of the Civil
Code, no contract may be entered into upon
future inheritance except in cases expressly
authorized by law. Paragraph 2 of Article 1347
characterizes a contract entered into upon
future inheritance as void. The law applies
when the following requisites concur: (1) the
succession has not yet been opened; (2) the
object of the contract forms part of the
inheritance; and (3) the promissor has, with
respect to the object, an expectancy of a right
which is purely hereditary in nature. De Belen

Vda. de Cabalu, et al. v. Tabu, et al.;G.R. No.
188417. September 24, 2012
Lease; implied new lease An implied new
lease will set in if it is shown that: (1) the term
of the original contract of lease has expired;
(2) the lessor has not given the lessee a notice
to vacate; and (3) the lessee continued
enjoying the thing leased for 15 days with the
acquiescence of the lessor. This acquiescence
may be inferred from the failure of the lessor
to serve notice to vacate upon the lessee. This
principle is provided for under Article 1670 of
the Civil Code. Thus, after the expiration of
the contract of lease, the implied new lease
should have only been in a monthly
basis. Zosima Inc. v. Salimbagat; G.R. No.
174376. September 12, 2012
Mortgage; requisites for validity Article 2085
of the Civil Code provides that a mortgage
contract, to be valid, must have the following
requisites: (a) that it be constituted to secure
the fulfillment of a principal obligation; (b)
that the mortgagor be the absolute owner of the
thing mortgaged; and (c) that the persons
constituting the mortgage have free disposal of
their property, and in the absence of free
disposal, that they be legally authorized for the
purpose. Philippine National Bank v. Sps.
Reblando; G.R. No. 194014. September 12,
2012
Obligations; solidary obligations; surety not an
indispensable party Records show that when
DMI secured the surety and performance
bonds from respondent in compliance with
petitioners requirement, respondent bound
itself jointly and severally with DMI for the
damages and actual loss that petitioner may
suffer should DMI fail to perform its
obligations under the Agreement. The term
jointly and severally expresses a solidary
obligation granting petitioner, as creditor, the
right to proceed against its
debtors, i.e., respondent or DMI.
The nature of the solidary obligation under the
surety does not make one an indispensable
party. An indispensable party is a party-in-
interest without whom no final determination

can be had of an action, and who shall be
joined mandatorily either as plaintiffs or
defendants. The presence of indispensable
parties is necessary to vest the court with
jurisdiction, thus, without their presence to a
suit or proceeding, the judgment of a court
cannot attain real finality. The absence of an
indispensable party renders all subsequent
actions of the court null and void for want of
authority to act, not only as to the absent
parties but even as to those
present. Living@Sense, Inc. v. Malayan
Insurance Company, Inc.; G.R. No. 193753.
September 26, 2012
Prescription; actions; attorneys fees We
agree with the trial and appellate courts, for as
the records bear, that the ten (10)-year
prescriptive period to file an action based on
the subject promissory notes was interrupted
by the several letters exchanged between the
parties. This is in conformity with the second
and third circumstances under Article 1155 of
the New Civil Code (NCC) which provides
that the prescription of actions is interrupted
when: (1) they are filed before the court; (2)
there is a written extrajudicial demand by the
creditors; and (3) there is any written
acknowledgment of the debt by the debtor.
Regarding the award of attorneys fees, the
applicable provision is Article 2208(2) of the
NCC which allows the grant thereof when the
defendants act or omission compelled the
plaintiff to litigate or to incur expenses to
protect its interest. Considering the
circumstances that led to the filing of the
complaint in court, and the clear refusal of the
petitioners to satisfy their existing debt to the
bank despite the long period of time and the
accommodations granted to it by the
respondent to enable them to satisfy their
obligations, we agree that the respondent was
compelled by the petitioners acts to litigate for
the protection of the banks interests, making
the award of attorneys fees
proper.Magdiwang Realty Corp., et al. v.

Manila Banking Corp.; G.R. No. 195592.
September 5, 2012
Publication requirement; laws The
publication requirement covers not only
statutes but administrative regulations and
issuances, as clearly outlined in Taada
v.Tuvera. As opposed toHonasan II v. The
Panel of Investigating Prosecutors of the
Department of Justice, where the Court held
that OMB-DOJ Joint Circular No. 95-001 is
only an internal arrangement between the DOJ
and the Office of the Ombudsman outlining
the authority and responsibilities among
prosecutors of both offices in the conduct of
preliminary investigation, the assailed Joint
Committees Rules of Procedure regulate not
only the prosecutors of the DOJ and the
Comelec but also the conduct and rights of
persons, or the public in general. The
publication requirement should, therefore, not
be ignored.
Publication is a necessary component of
procedural due process to give as wide
publicity as possible so that all persons having
an interest in the proceedings may be notified
thereof. The requirement of publication is
intended to satisfy the basic requirements of
due process. It is imperative for it will be the
height of injustice to punish or otherwise
burden a citizen for the transgressions of a law
or rule of which he had no notice
whatsoever. Arroyo v. Dept of Justice; G.R.
No. 199082/G.R. No. 199085/G.R. No.
199118. September 18, 2012
Publication requirement; regulations
Publication is a basic postulate of procedural
due process. The purpose of publication is to
duly inform the public of the contents of the
laws which govern them and regulate their
activities. Article 2 of the Civil Code, as
amended by Section 1 of Executive Order No.
200, states that [l]aws shall take effect after
fifteen days following the completion of their
publication either in the Official Gazette or in
a newspaper of general circulation in the
Philippines, unless it is otherwise provided.
Section 18, Chapter 5, Book I of Executive

Order No. 292 or the Administrative Code of
1987 similarly provides that [l]aws shall take
effect after fifteen (15) days following the
completion of their publication in the Official
Gazette or in a newspaper of general
circulation, unless it is otherwise provided.
Procedural due process demands that
administrative rules and regulations be
published in order to be effective. There are,
however, several exceptions to the requirement
of publication. First, an interpretative
regulation does not require publication in order
to be effective. The applicability of an
interpretative regulation needs nothing further
than its bare issuance for it gives no real
consequence more than what the law itself has
already prescribed. It add[s] nothing to the
law and do[es] not affect the substantial
rights of any person. Second, a regulation that
is merely internal in nature does not require
publication for its effectivity. It seeks to
regulate only the personnel of the
administrative agency and not the general
public. Third, a letter of instruction issued by
an administrative agency concerning rules or
guidelines to be followed by subordinates in
the performance of their duties does not
require publication in order to be
effective. Asociation of Southern Tagalog
Electric Cooperatives, Inc., et al. v. Energy
Regulatory Commission; G.R. No.
192117/G.R. No. 192118. September 18, 2012
Tort; medical negligence; requisites; doctors
not guarantors of care The type of lawsuit
which has been called medical malpractice or,
more appropriately, medical negligence, is that
type of claim which a victim has available to
him or her to redress a wrong committed by a
medical professional which has caused bodily
harm. In order to successfully pursue such a
claim, a patient must prove that a health care
provider, in most cases a physician, either
failed to do something which a reasonably
prudent health care provider would have done,
or that he or she did something that a

reasonably prudent provider would not have
done; and that the failure or action caused
injury to the patient. Stated otherwise, the
complainant must prove: (1) that the health
care provider, either by his act or omission,
had been negligent, and (2) that such act or
omission proximately caused the injury
complained of.
In medical negligence cases, it is settled that
the complainant has the burden of establishing
breach of duty on the part of the doctors or
surgeons. It must be proven that such breach of
duty has a causal connection to the resulting
death of the patient. A verdict in malpractice
action cannot be based on speculation or
conjecture. Causation must be proven within a
reasonable medical probability based upon
competent expert testimony.
Doctors are protected by a special law. They
are not guarantors of care. They do not even
warrant a good result. They are not insurers
against mishaps or unusual consequences.
Furthermore, they are not liable for honest
mistake of judgment. Cereno v. Court of
Appeal,s et al.; G.R. No. 167366. September
26, 2012
Unjust enrichment; implied trusts The
statutory basis for unjust enrichment is found
in Article 22 of the Civil Code, which
provides:
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.
Under the foregoing provision, there is unjust
enrichment when: (1) a person is unjustly
benefited; and (2) such benefit is derived at the
expense of or with damages to another. GSIS,
et al. v. COA, et al.; G.R. No. 162372.
September 11, 2012
Special Laws
Contracts; rescission R.A. No. 6552 (or the
Realty Installment Buyer Act) recognizes the
right of the seller to cancel the contract but any
such cancellation must be done in conformity

with the requirements therein prescribed. In
addition to the notarial act of rescission, the
seller is required to refund to the buyer the
cash surrender value of the payments on the
property. The actual cancellation of the
contract can only be deemed to take place
upon the expiry of a 30-day period following
the receipt by the buyer of the notice of
cancellation or demand for rescission by a
notarial act and the full payment of the cash
surrender value. Planters Devt Bank v.
Chandumal; G.R. No. 195619. September 5,
2012.
SURVEY OF 2010-2012 SC DECISIONS IN

CIVIL LAW - DEAN ED VINCENT S.
ALBANO
SURVEY OF 2010-2012 SC DECISIONS

IN
CIVIL LAW
Dean ED VINCENT S. ALBANO
Note: These questions are patterned from the
sample questions by the SC in this years Bar
Examination. The answers were intended to
be lengthen inorder that the reason behind
the law and the decision may be reflected to
guide the Bar Candidates. The candidates
can shorten the answers to make it
convenient for the examiners to correct.
FAMILY LAW
178741, January 17, 2011).
Adultery of a woman.
Refusal to have sex with husband.
Q Is the adultery of the woman a ground to

declare the marriage void on the ground of
psychological incapacity? Explain.
Q A and B are married. The man

contended that the wife refused to
consummate their marriage by refusing to
have sexual intercourse with him during the
marriage. He alleged that their last
intercourse was prior to their marriage. He
contended that the wife was suffering from
psychological incapacity. Is the contention
correct? Explain.
Answer: No. The adulterous acts of a woman

do not even rise to the level of the
psychological incapacity that the law
requires. Her act of living an adulterous life
cannot automatically be equated with a
psychological disorder, especially when no
specific evidence was shown that promiscuity
was a trait already existing at the inception of
marriage. The husband must be able to
establish that the wife's unfaithfulness is a
manifestation of a disordered personality,
which makes her completely unable to
discharge the essential obligations of the
marital state. The root cause of the
psychological incapacity must be identified as
a psychological illness, its incapacitating
nature fully explained and established by the
totality of the evidence presented during trial.
Doubtless, the woman was far from being a
perfect wife and a good mother. She certainly
had some character flaws. But these
imperfections do not warrant a conclusion that
she had a psychological malady at the time of
the marriage that rendered her incapable of
fulfilling her marital and family duties and
obligations. (Navales v. Navales, G.R. No.
167523, June 27, 2008, 556 SCRA 272;
Silvino A. Ligeralde v. May Ascension A.
Patalinhug, et al., G.R. No. 168796, April 15,
2010; Ochocoso v. Alano, et al., G.R. No.
167459, January 26, 2011; Villalon v. Villalon;
Rosalino Marable v. Myrna Marable, G.R. No.
Answer: No. The husbands evidence merely

established that the wife refused to have
sexual intercourse with him after their
marriage, and that she left him after their
quarrel when he confronted her about her
alleged miscarriage. He failed to prove the
root cause of the alleged psychological
incapacity and establish the requirements of
gravity, juridical antecedence, and
incurability. There must be proof that the
psychological disorder renders her truly
incognitive of the basic marital covenants that
concomitantly must be assumed and
discharged by the parties to the
marriage. Psychological incapacity must be
more than just a difficulty, a refusal, or a
neglect in the performance of some marital
obligations. An unsatisfactory marriage is not
a null and void marriage. In Marcos v.
Marcos, it was ruled that Article 36 of the
Family Code, we stress, is not to be confused
with a divorce law that cuts the marital bond
at the time the causes therefor manifest
themselves. It refers to a serious
psychological illness afflicting a party even
before the celebration of the marriage. It is a
malady so grave and so permanent as to
deprive one of awareness of the duties and
responsibilities of the matrimonial bond one is

about to assume. (Noel Baccay v. Maribel
Baccay, et al., G.R. No. 173138, December 1,
2010).
Effect of a foreign divorce.
Q A former Filipino citizen got married to
a Filipina. Due to work and other personal
commitments, the man returned to Canada
after the wedding. He returned to the
Philippines to surprise his wife, but he was
shocked to discover that his wife was having
an affair with another man. He filed a
petition for divorce in Canada which was
granted. Wanting to marry his girlfriend, he
registered the Canadian divorce with the
Civil Registry of Pasig but despite the
registration of the same, the Local Civil
Registrar refused to issue a license for him to
remarry. He filed a petition for judicial
recognition of the foreign judgment which
was denied by the RTC, holding that he was
not the proper party to file the petition as he
is a naturalized Canadian citizen. It ruled
that only Filipinos can avail of the remedy
under the second paragraph of Article 26,
Family Codeand in accordance with the
legislative intent as determined by the Court
in Republic v. Orbecido III, 472 SCRA 114
(2005), to avoid the absurd situation where
the Filipino spouse remains married to the
alien spouse who, after obtaining a divorce,
is no longer married to the Filipino spouse.
He contended that the second paragraph of
Article 26 of the Family Code extends to
aliens the right to petition a court of this
jurisdiction for the recognition of a foreign
divorce decree. Is the contention correct?
Explain.
Answer: No. The alien spouse can claim no
right under the second paragraph of Article 26
of the Family Code as the substantive right
established is in favor of the Filipino spouse.
As held in Van Dorn v. Romillo, G.R. No. L68470, October 8, 1985, 139 SCRA 139 and
Pilapil v. Somera, G.R. No. 80116, June 30,
1989, 74 SCRA 653:
To maintain x x x that, under our laws,
[the Filipino spouse] has to be considered
still married to [the alien spouse] and still
subject to a wife's obligations x x x cannot
be just. [The Filipino spouse] should not be
obliged to live together with, observe respect
and fidelity, and render support to [the alien
spouse]. The latter should not continue to be
one of her heirs with possible rights to
conjugal property. She should not be
discriminated against in her own country if
the ends of justice are to be served.
The provision was included in the law to
avoid the absurd situation where the Filipino
spouse remains married to the alien spouse
who, after obtaining a divorce, is no longer
married to the Filipino spouse. The
legislative intent is for the benefit of the
Filipino spouse, by clarifying his or her
marital status, settling the doubts created by
the divorce decree. Essentially, the second
paragraph of Article 26 of the Family Code
provided the Filipino spouse a substantive
right to have his or her marriage to the
alien spouse considered as dissolved,
capacitating him or her to remarry. The
capacity of the Filipino spouse to remarry,
however, depends on whether the foreign
divorce decree capacitated the alien spouse to
do so. Without the second paragraph of Article
26 of the Family Code, the judicial recognition

of the foreign decree of divorce, whether in a
proceeding instituted precisely for that
purpose or as a related issue in another
proceeding, would be of no significance to the
Filipino spouse since our laws do not
recognize divorce as a mode of severing the
marital bond; (Art. 17, NCC) Article 17 of the
Civil Code provides that the policy against
absolute divorces cannot be subverted by
judgments promulgated in a foreign
country. The inclusion of the second
paragraph in Article 26 of the Family Code
provides the direct exception to this rule and
serves as basis for recognizing the dissolution
of the marriage between the Filipino spouse
and his or her alien spouse. (Gilbert B. Corpus
v. Daisylyn Tirol Sto. Tomas, et al., G.R. No.
186571, August 11, 2010).
Judgment declaring a spouse presumptively
dead is immediately final and executory;
remedy is Rule 65, not Rule 45.
Q Yolanda Granada and Cyrus Granada
got married in 1991. In 1994, Cyrus went to
Taiwan to seek employment but since then,
he never communicated with Yolanda. After
nine (9) years of waiting, she filed a Petition
to have Cyrus declared presumptively dead
which the RTC granted. The Republic of the
Philippines appealed from the decision
contending that Yolanda failed to prove
earnest efforts to locate Cyrus and thus,
failed to prove well-founded belief that he
was already dead. Yolanda moved to dismiss
the appeal contending that the Petition for
Declaration of Presumptive Death based
under Art. 41, Family Code was a summary
judicial proceedings in which the judgment
is immediately final and executory and, thus,
not appealable. The CA granted the motion.
Is the dismissal of the appeal correct?

Explain.
Answer: The CA is correct. The RTC decision
is immediately final and executory and not
subject to ordinary appeal.
Since a petition for declaration of presumptive
death is a summary proceeding, the judgment
of the court therein shall be immediately final
and executory. The appropriate remedy is a
special civil action for certiorari if there is a
showing of grave abuse of discretion
amounting to lack or excess of jurisdiction.
(Rep. v. Yolanda Granada, G.R. No. 187512,
July 13, 2012).
By express provision of law, (Art. 247, F.C.),
the judgment of the court in a summary
proceeding shall be immediately final and
executory. As a matter of course, it follows
that no appeal can be had of the trial court's
judgment in a summary proceeding for the
declaration of presumptive death of an absent
spouse under Article 41 of the Family Code. It
goes without saying, however, that an
aggrieved party may file a petition for
certiorari to question abuse of discretion
amounting to lack of jurisdiction. Such
petition should be filed in the Court of
Court's original jurisdiction to issue a writ of
certiorari is concurrent with the RTCs and the
Court of Appeals in certain cases, such
party may then file a petition for review on
certiorari under Rule 45 of the Rules of Court
with the Supreme Court. This is because the
errors which the court may commit in the

appeal.
In sum, under Article 41 of the Family Code,
the losing party in a summary proceeding for
the declaration of presumptive death may file
a petition for certiorari with the CA on the
ground that, in rendering judgment thereon,
the trial court committed grave abuse of
From the decision of the CA, the aggrieved
party may elevate the matter to this Court via
a petition for review on certiorari under Rule
45 of the Rules of Court. (Rep. v. Yolanda C.
Granada, G.R. No. 187512, July 13, 2012,
Sereno, J).
Mortgage of conjugal property without
consent of spouse is void; subsequent
execution of SPA perfects the contract.
Q - On October 31, 1995, the woman
obtained a loan secured by a Real Estate
Mortgage over a real proper under their
names but without the consent of the
husband. She issued checks as partial
payments but the same were dishonoured,
hence, the creditor filed a complaint for
Foreclosure of the Mortgage with damages.
The RTC dismissed the case as the mortgage
was executed without the consent of the
husband even as it noted that he executed a
Special Power of Attorney for the wife to
execute the mortgage on November 4, 1995.
The RTC however ruled that the subsequent
execution of the SPA cannot be made to
retroact to the date of the execution of the
real estate mortgage. Is the ruling correct?
Why?
Answer: No, because the execution of the SPA

can be considered as acceptance of the
mortgage by the other spouse that perfected
the contract or continuing offer.
Both Article 96 and Article 124 of the Family
Code provide that the powers of the
administration do not include disposition or
encumbrance without the written consent of
the other spouse. Any disposition or
encumbrance without the written consent shall
be void. However, both provisions also state
that the transaction shall be construed as a
continuing offer on the part of the consenting
spouse and the third person, and may be
perfected as a binding contract upon the
acceptance by the other spouse x x x before
the offer is withdrawn by either or
both offerors. (Arturo Sarte Flores v. Sps.
Enrico & Edna Lindo, G.R. No. 183984, April
13, 2011).
Note: This is an example of a void contract
that can be ratified. (See: Art. 5, NCC).
Sale of conjugal property by a spouse
without consent of the other; void, even if
separated in fact.
Q In a case, there was an action for legal
separation. It was ruled by the CA that the
undivided share of the offending spouse in
the property was already forfeited in favor of
their daughter based on the ruling of the
RTC that the offending spouse in an action
for legal separation is deprived of his share
in the net profits of the conjugal properties.
Is the ruling correct? Why?
Answer: No. If there is a decree of legal
separation, under Article 63 of the Family
Code, the absolute community or the conjugal

partnership shall be dissolved and liquidated
but the offending spouse shall have no right to
any share of the net profits earned by the
absolute community or the conjugal
partnership, which shall be forfeited in
accordance with the provisions of Article
43(2).
Thus, among the effects of the decree of legal
separation is that the conjugal partnership is
dissolved and liquidated and the offending
spouse would have no right to any share of the
net profits earned by the conjugal partnership.
It is only the share in the net profits which is
forfeited in favor of their daughter. Article
102(4) of the Family Code provides that [f]or
purposes of computing the net profits subject
to forfeiture in accordance with Article
43, No. (2) and 63, No. (2), the said profits
shall be the increase in value between the
market value of the community property at the
time of the celebration of the marriage and the
market value at the time of its dissolution.
Clearly, what is forfeited in favor of their
daughter is not his share in the conjugal
partnership property but merely in the net
profits of the conjugal partnership property.
(Siochi v. Gozon, et al., G.R. No. 169900;
Interdimensional Realty, Inc. v. Siochi, et al.,
G.R. No. 169977, March 18, 2010).
The family homes exemption from
execution must be set up and proved to the
Sheriff before the sale of the property at
public auction.
Q A and B are married. They have a family
home, A issued a check which was
dishonored. He was convicted with civil
indemnity. The family home was levied upon
and sold where C, the judgment creditor was
the purchaser in sheriffs sale. They did not

invoked the exemption from levy of the
family home. They however renamed as
lessees but for failure to pay the rentals, they
were sued for ejectment where judgment was
rendered. In the execution, they invoked the
exemption of the family home from levy but
the plaintiff contended that the spouses did
not assert and prove that their house and lot
was a family home prior to the public
auction conducted by the sheriff. State the
effect of such failure. Explain.
Answer: Their failure to invoke and prove that
the house and lot was a family home is a
waiver of such defense or right. In Honrado v.
CA, 512 Phil. 657 (2005), it was said that at no
other time can the status of a residential house
as a family home can be set up and proved and
its exemption from execution be claimed but
before the sale thereof at public auction:
While it is true that the family home is
constituted on a house and lot from the time it
is occupied as a family residence and is
exempt from execution or forced sale under
Article 153 of the Family Code, such claim for
exemption should be set up and proved to the
Sheriff before the sale of the property at public
auction. Failure to do so would estop the party
from later claiming the exemption.
The settled rule is that the right to exemption
or forced sale under Article 153 of the Family
Code is a personal privilege granted to the
judgment debtor and as such, it must be
claimed not by the sheriff, but by the debtor
himself before the sale of the property at
public auction. It is not sufficient that the
person claiming exemption merely alleges that
such property is a family home. This claim for
exemption must be set up and proved to the
Sheriff.
Having failed to set up and prove to the sheriff
the supposed exemption of the subject
property before the sale thereof at public
action, they now are barred from raising the
same. Failure to do so estop them from later
claiming the said exemption. (De Mesa v.
Acero, et al., G.R. No. 185064, January 16,
2012, Reyes, J).
A child must establish filiation before
support may be granted.
Q Petitioner filed a petition with prayer for
the issuance of a temporary protection order
against the respondent for alleged woman
and child abuse under RA 9262 and asked
for financial support. She alleged that
respondent is the father of her child. He
denied being the father of the child and that
the signature appearing in the child
Certificate of Live Birth is not his signature.
The RTC dismissed the petition on the
ground that there is no prior judgment
establishing the filiation of the child hence,
there is no basis to order support. Is the
dismissal correct? Why?
child an action against Vallecera for

compulsory recognition in order to establish
filiation and then demand support.
Alternatively, she may directly file an action
for support, where the issue of compulsory
recognition may be integrated and resolved.
To be entitled to legal support, petitioner must,
in proper action, first establish the filiation of
the child, if the same is not admitted or
acknowledged. Since Dolinas demand for
support for her son is based on her claim that
he is Valleceras illegitimate child, the latter is
not entitled to such support if he had not
acknowledged him, until Dolina shall have
proved his relation to him. (Art. 195, Family
Code). The childs remedy is to file through
her mother a judicial action for compulsory
recognition. (Tayag v. Tayag-Gallor, G.R. No.
174680, March 24, 2008, 549 SCRA 68). If
filiation is beyond question, support follows as
matter of obligation. (Montefalcon v. Vasquez,
G.R. No. 165016, June 17, 2008, 554 SCRA
513). In short, illegitimate children are entitled
to support and successional rights but their
filiation must be duly proved. (De la Puerta v.
CA, G.R. No. 77867, February 6, 1990, 181
SCRA 861; Dolina v. Vallecera, G.R. No.
182367, December 15, 2010).
Answer: Yes. Dolina evidently filed the wrong

action to obtain support for her child. The
object of RA 9262 under which she filed the
case is the protection and safety of women and
children who are victims of abuse or violence.
Although the issuance of a protection order
against the respondent in the case can include
the grant of legal support for the wife and the
child, this assumes that both are entitled to a
protection order and to legal support.
Q In a complaint for support alleging that

a child is an illegitimate child of the alleged
father, the bases were the record of birth
although unsigned by the alleged father and
the baptismal certificate identifying the
alleged father, as the father of the child
without the signature of the alleged father.
The RTC granted the support based on those
documents. Is the decision correct? Why?
Dolinas remedy is to file for the benefit of her
Answer: No, because the two (2) documents

are not proofs of filiation. Before a child may
be entitled to support, he must be recognized

by the alleged father. Time and again, this
Court has ruled that a high standard of proof is
required to establish paternity and filiation. An
order for x x x support may create an
unwholesome situation or may be an irritant to
the family or the lives of the parties so that it
must be issued only if paternity or filiation is
established by clear and convincing evidence.
The Rules for establishing filiation are found
in Articles 172 and 175 of the Family Code.
One such proof is the record of birth appearing
in the civil register, Article 172(1) and any
other means allowed by the Rules of Court
and special laws, (Art. 172(2)(2), Family
Code.
It is settled that [a] certificate of live birth
purportedly identifying the putative father is
not competent evidence of paternity when
there is no showing that the putative father had
a hand in the preparation of said certificate.
The baptismal certificate is not a good proof
paternity. Just like in a birth certificate, the
lack of participation of the supposed father in
the preparation of a baptismal certificate
renders this document incompetent to prove
paternity. And while a baptismal certificate
may be considered a public document, it can
only serve as evidence of the administration of
the sacrament on the date specified but not the
veracity of the entries with respect to the
childs paternity. Thus, x x x baptismal
certificates are per se inadmissible in evidence
as proof of filiation and they cannot be
admitted indirectly as circumstantial
evidence. (Antonio Perla v. Mirasol Baring,
et al., G.R. No. 172471, November 12, 2012,
Brion, J; See: Gotardo v. Buling, G.R. No.
165166, August 15, 2010, Brion, J).

PROPERTY
Oral partition is invalid.
Q A, B, and C are the co-owners of a real
property having inherited from their parents.
They orally partitioned the same. Is the
agreement valid? Explain.
Answer: Yes. The validity of an oral partition
is already well-settled. It is not required that
the partition agreement be registered or
annotated in the title to be valid. After
exercising acts of ownership over their
respective portions of the contested estate,
they are estopped from denying the existence
of an oral partition.
Regardless of whether a parol partition or
agreement to partition is valid or enforceable
at law, equity will in proper cases, where the
parol partition has actually been consummated
by the taking of possession in severalty and
the exercise of ownership by the parties of
their respective portions set off to each other,
recognize and enforce such parol partition and
the rights of the parties thereunder.
(Hernandez v. Andal, 78 Phil. 196 (1947); Tan
v. Lim, G.R. No. 128004, September 25, 1998,
296 SCRA 445; Notarte, et al. v. Notarte, G.R.
No. 180614, August 29, 2012).
Existence of partnership necessary in cases
of partition.
Q Parties lived together as husband and
wife without the benefit of marriage despite
the fact that respondent was legally married.
During their coverture, they were able to
organize a manpower services company

where petitioner owned 3.33%. Five (5)
properties were acquired by them and
registered under their names ostensibly as
husband and wife. But the relationship did
not last long, hence, they agreed to divide the
properties. Petitioner demanded for some
more, but respondent refused, hence, an
action for partition was filed. Respondent
contended that the properties were acquired
out of his personal funds. At the trial,
petitioner admitted that the properties were
acquired from the income of the manpower
services company, hence, the RTC ruled that
respondent was the sole owner. On appeal,
she contended that she was a pro indiviso
owner of one-half of the properties and that
the courts decision subjected the certificates
of title to collateral attack. She further
contended that it is improper to thresh out
the issue on ownership in an action for
partition. Decide.
Answer: The contentions are not correct. The
determination as to the existence of coownership is necessary in the resolution of an
action for partition. (Municipality of Bian v.
Garcia, G.R. No. 69260, December 22, 1989,
180 SCRA 576).
While it is true that the complaint involved
here is one for partition, the same is premised
on the existence or non-existence of coownership between the parties. Petitioner
insists she is a co-owner pro indiviso of the
five real estate properties based on the transfer
certificates of title (TCTs) covering the subject
properties. Respondent maintains otherwise.
Indubitably, therefore, until and unless this
issue of co-ownership is definitely and finally
resolved, it would be premature to effect a
partition of the disputed properties. (Fabrica v.
CA, 146 SCRA 250 (1986). More

importantly, the complaint will not even lie if
the claimant, or petitioner in this case, does
not even have any rightful interest over the
subject properties. (Catapusan v. CA, G.R. No.
109262, November 21, 1996, 264 SCRA 534;
Betty Lacbayan v. Bayani Samoy, Jr., G.R.
No. 165427, March 21, 2011).
Action publiciana or reinvindicatoria is the
remedy if a property is encroached upon.
Q In a case, there was a complaint for a
writ of demolition filed by the owners of a
property alleging that they discovered that
their lot was encroached upon by the
structures built by the adjacent owner
without their knowledge and consent. Such
encroachment was confirmed by the
relocation survey of the property. Despite
demands, the other party refused to remove
the structures hence, the complaint was filed.
The trial court rendered a judgment in favor
of the plaintiff directing the removal of the
structures. The CA reversed holding that a
complaint for recovery of possession should
have been filed. The writ of demolition can
be granted only as an effect of a final
judgment or order hence, dismissed the
same. Is the dismissal correct? Why?
Answer: No. While inaccurately captioned as
an action for a Writ of Demolition with
Damages is in reality an action to recover a
parcel of land or an accion
reivindicatoria under Article 434 of the Civil
Code which provides that in an action to
recover, the property must be identified, and
the plaintiff must rely on the strength of his
title and not on the weakness of the
defendants claim. Accion
reivindicatoria seeks the recovery of
ownership and includes the jus utendi and

the jus fruendi brought in the proper regional
trial court. Accion reivindicatoria is an action
whereby plaintiff alleges ownership over a
parcel of land and seeks recovery of its full
possession. (Javier v. Veridiano II, G.R. No.
48050, 10 October 1994, 237 SCRA 565; Sps.
Elegio and Dolia Caezo v. Sps. Bautista,
G.R. No. 170189, September 1, 2010).
revocability is precisely the essence of the

act. A donation mortis causa has the
following characteristics:
DONATION
2. That before his death, the transfer should be

revocable by the transferor at will, ad nutum;
but revocability may be provided for indirectly
by means of a reserved power in the donor to
dispose of the properties conveyed; and
Designation of donation as mortis causa is

not controlling.
Q There was a donation by the spouses to
their children and granddaughter
denominated as Donation Mortis Causa
stating that it is irrevocable. It had no
attestation clause, and had only two (2)
witnesses. The donees accepted the donation.
After the death of one of the donors, the
donation was submitted to probate but the
RTC ruled it to be a donation inter vivos due
to its irrevocability. The CA, on appeal, ruled
it to be one of mortis causa and since it did
not comply with the formalities of a will, it is
void. Is the ruling of the CA correct? Why?
Answer: No. The designation that it is a
Donation Mortis Causa is not controlling. If a
donation by its terms is inter vivos, this
character is not altered by the fact that the
donor styles it mortis causa. (Concepcion v.
Concepcion, 91 Phil. 823 (1952)).
In Austria-Magat v. Court of Appeals, 426
SCRA 263 (2002), it was held that
irrevocability is a quality absolutely
incompatible with the idea of
conveyances mortis causa, where
1. It conveys no title or ownership to the

transferee before the death of the transferor;
or, what amounts to the same thing, that the
transferor should retain the ownership (full or
naked) and control of the property while alive;
3. That the transfer should be void if the

transferor should survive the transferee.
(Aluad v. Aluad, G.R. No. 176943, October
17, 2008, 569 SCRA 697; Del Rosario v.
Ferrer, et al., G.R. No. 187056, September 20,
2010).
Since the donation in this case was one
made inter vivos, it was immediately operative
and final. The reason is that such kind of
donation is deemed perfected from the
moment the donor learned of the donees
acceptance of the donation. The acceptance
makes the donee the absolute owner of the
property donated. (Heirs of Sevilla v. Sevilla,
450 SCRA 598 (2003)).
Donation inter vivos; when is it one.
Q The petitioner filed an action to recover
a property claiming that they purchased it
from Casimiro Vere in July 1971, who
bought it from Alvegia Rodrigo in August
1970. The respondents answered and
claimed that they purchased the property
from Eufracia Rodriguez to whom Rodrigo

donated in May 1965. The deed of donation
stated among others:
(1) a property was given to the done, his
heirs and successors;
(2) the Deed of Donation or that
ownership be vested on her upon my demise.
(3) if the Donee predeceases me, the same
land will not be reverted to the Donor, but
will be inherited by the heirs of EUFRACIA
RODRIGUEZ;
(4)
The done accepted the land donated;
What is the nature of the donation? Explain.

Answer: It is immediately apparent that
Rodrigo passed naked title to Rodriguez under
a perfected
donation inter vivos. First. Rodrigo stipulated
that if the Donee predeceases me, the
[Property] will not be reverted to the Donor,
but will be inherited by the heirs of
x x x Rodriguez, signaling the irrevocability
of the passage of title to Rodriguezs estate,
waiving Rodrigos right to reclaim title. This
transfer of title was perfected the moment
Rodrigo learned of Rodriguezs acceptance of
the disposition (Art. 734, NCC) which, being
reflected in the Deed, took place on the day of
its execution on 3 May 1965. Rodrigos
acceptance of the transfer underscores its
essence as a gift in presenti, not in futuro, as
only donations inter vivos need acceptance by
the recipient. (Alejandro v. Geraldez, 168 Phil
404; Concepcion v. Concepcion, 91 Phil. 823;
Laureta v. Mata, 44 Phil. 668). Indeed, had
Rodrigo wished to retain full title over the
property, she could have easily stipulated, as

the testator did in another case, that the
donor, may transfer, sell, or encumber to any
person or entity the properties here donated
x x x (Puig v. Peaflorida) or used words to
that effect. Instead, Rodrigo expressly waived
title over the Property in case Rodriguez
predeceases her. (Gonzalo Villanueva
represented by his heirs v. Sps. Branoco, G.R.
No. 172804, January 24, 2011).
NUISANCE
A structure if declared illegal does not mean
it is a nuisance per se.
Q MMDA claimed that the wing walls of a
building constructed by Justice Gancayco on
his property was a nuisance per se. In 1996
the City Council gave him an exemption
from constructing an arcade. Is it a nuisance
per se? Why?
Answer: No. The fact that he was given an
exemption from constructing an arcade is an
indication that the wing walls of the building
are not nuisance per se. The wing walls do not
per se immediately and adversely affect the
safety of persons and property. The fact that an
ordinance may declare a structure illegal does
not necessarily make that structure a nuisance.
Article 694 of the Civil Code defines nuisance
as any act, omission, establishment, business,
condition or property, or anything else that (1)
injures or endangers the health or safety of
others; (2) annoys or offends the senses; (3)
shocks, defies or disregards decency or
morality; (4) obstructs or interferes with the
free passage of any public highway or street,
or any body of water; or, (5) hinders or
impairs the use of property. A nuisance may

be per se or per accidens. A nuisance per se is
that which affects the immediate safety of
persons and property and may summarily be
abated under the undefined law of necessity.
(Tolentino v. Bustamante, G.R. No. 182567,
July 13, 2009, 592 SCRA 552; Tayabas v.
People, 517 SCRA 448 (2007)).
Clearly, when Justice Gancayco was given a
permit to construct the building, the city
council or the city engineer did not consider
the building, or its demolished portion, to be a
threat to the safety of persons and property.
This fact alone should have warned the
MMDA against summarily demolishing the
structure. (Emilio Gancayco v. City Govt. of
Quezon City, et al., G.R. No. 177807; MMDA
v. Gancayco, G.R. No. 177933, October 11,
2011).
SUCCESSION
Effect if will provides for indivision of
property among heirs; contrary to public
policy.
Q The will of Basilio Santiago stated that a
house and lot in the City of Manila shall be
transferred in the names of Maria Pilar and
Clemente, the children, for purposes of
administration only but no one shall be the
owner of the same. Is the condition in the
will valid? Why?
Answer: No, it is contrary to law and public
policy. When a will provides for indivision of
a property, it is subject to statutory limitation
as the law provides that the prohibition to
divide a property in a co-ownership can only
last for twenty (20) years. (Arts. 494, 870 and
1083, NCC). While the Civil Code is silent as

to the effect of the indivision of a property for
more than 20 years, it would be contrary to
public policy to sanction co-ownership beyond
the period expressly mandated by the Civil
Code. (In Re: Petition for Probate of Last Will
& Testament of Basilio Santiago, Ma. Pilar
Santiago, et al. v. Zoilo Santiago, et al., G.R.
No. 179859, August 9, 2010).
Forgetfulness is not equivalent to being
unsound mind.
Q After the will was admitted to probate,
petitioners appealed and contended that the
testator was magulyan or forgetful, so
much so that it effectively stripped her of her
testamentary capacity. She was likewise
suffering from paranoia. Petitioners,
however, did not present medical evidence to
show that she was of unsound mind. There
was no showing that she was one month or
less, before making the will, she was publicly
known to be insane. Is the admission of the
will to probate correct? Explain.
Answer: Yes. The state of being forgetful does
not necessarily make a person mentally
unsound so as to render him unfit to execute a
will. (Torres & Lopez de Bueno v. Lopez, 48
Phil. 772 (1926); Sancho v. Abella, 728 Phil.
728 (1933)). Forgetfulness is not equivalent to
being of unsound mind. Besides, Article 799
of the New Civil Code states that to be of
sound mind, it is not necessary that the testator
be in full possession of all his reasoning
faculties, or that his mind be wholly unbroken,
unimpaired, or unshattered by disease, injury
or other cause. It shall be sufficient if the
testator was able at the time of making the will
to know the nature of the estate to be disposed
of, the proper objects of his bounty, and the
character of the testamentary act.

The testimony of subscribing witnesses to a
will concerning the testators mental condition
is entitled to great weight where they are
truthful and intelligent. More importantly, a
testator is presumed to be of sound mind at the
time of the execution of the will (Art. 800,
NCC) and the burden to prove otherwise lies
on the oppositor. Article 800 of the New Civil
Code states:
The burden of proof to show that the testator
was of unsound mind at the time of the
execution of the will lies in the oppositors.
(Baltazar, et al. v. Laxa, G.R. No. 174489,
April 11, 2012, Del Castillo, J).
PRESCRIPTION
10-year prescriptive period for
reconveyance does not apply if the contract
is void.
Q - There was an application for a renewal
and increase in their loan using a title but
the bank disapproved it without returning the
title. Yet, there was foreclosure and sale of
the property. Title was issued. The owner
filed an action for reconveyance. The bank
contended that it has already prescribed
since 30 years have already lapsed. Is the
contention correct? Why?
Answer: No. The prescriptive period for the
reconveyance of fraudulently registered real
property is ten (10) years from the date of the
issuance of the certificate of title. But while
this is true, the 10-year prescriptive period
applies only when the reconveyance is based
on fraud which makes a contract voidable (and
that the aggrieved party is not in possession of

the land whose title is to be actually
reconveyed). It does not apply to an action to
nullify a contract which is void ab initio.
Article 1410 of the Civil Code categorically
states that an action for the declaration of the
inexistence of a contract does not prescribe.
(Abalos, et al. v. Sps. Darapa, G.R. No.
164693, March 23, 2011).
In this case, the action was an action for
Annulment of Tile, Recovery of Possession
and Damages, grounded on the theory that
the DBP foreclosed their land covered by TCT
No. T-1,997 without any legal right to do so,
rendering the sale and the subsequent issuance
of TCT in DBPs name void ab initio and
subject to attack at any time conformably to
the rule in Article 1410 of the Civil Code.
OBLIGATIONS AND CONTRACTS
Rescission is the remedy for reparation of
the damage done.
Q After the death of their predecessor-ininterest, the heirs became the co-owners of
several parcels of land. Some of them took
possession of the properties hence, there was
a complaint for partition filed by one of the
heirs as the other refused to partition the
properties. While the action was pending,
one of them donated a property belonging to
the co-ownership to one of her nephews,
without approval of the court, hence, after
learning that there was a Donation Inter
Vivos, they filed a Supplemental Pleading
praying that the donation be rescinded in
accordance with Article 1381(4) of the Civil
Code. The donee opposed the Supplemental
Pleading contending that rescission under
Article 1384(1), NCC applies only when

there is already a prior judicial decree on
who between the contending parties actually
owned the properties under litigation. The
RTC ordered the rescission of the deed of
donation as it was done without the
knowledge and approval of the other parties
or plaintiffs or the Court. On appeal, the CA
reversed the judgment on the ground that
before an action for rescission may be filed
there must first be a judicial determination
that the same actually belonged to the estate
of the donor. Hence, the petition raising such
issue. Decide.
Answer: Rescission is a remedy granted by
law to the contracting parties and even to third
persons, to secure the reparation of damages
caused to them by a contract, even if it should
be valid, by means of the restoration of things
to their condition at the moment prior to the
celebration of said contract. It is a remedy to
make ineffective a contract, validly entered
into and therefore obligatory under normal
conditions, by reason of external causes
resulting in a pecuniary prejudice to one of the
contracting parties or their creditors. Contracts
which are rescissible are valid contracts
having all the essential requisites of a contract,
but by reason of injury or damage caused to
either of the parties therein or to third persons
are considered defective and, thus, may be
rescinded.
The assertion that rescission may only be had
after the RTC had finally determined that the
parcels of land belonged to the estate of
Spouses Baylon does not intrinsically amiss.
The petitioners right to institute the action for
rescission pursuant to Article 1381(4) of the
Civil Code is not preconditioned upon the
RTCs determination as to the ownership of
the said parcels of land.

The right to ask for the rescission of a contract
under Article 1381(4) of the Civil Code is not
contingent upon the final determination of the
ownership of the thing subject of litigation.
The primordial purpose of Article 1381(4) of
the Civil Code is to secure the possible
effectivity of the impending judgment by a
court with respect to the thing subject of
litigation. It seeks to protect the binding effect
of a courts impending adjudication vis--vis
the thing subject of litigation regardless of
which among the contending claims therein
would subsequently be upheld. Accordingly, a
definitive judicial determination with respect
to the thing subject of litigation is not a
condition sine qua non before the rescissory
action contemplated under Article 1381(4) of
the Civil Code may be instituted.
Moreover, conceding that the right to bring the
rescissory action pursuant to Article 1381(4)
of the Civil Code is preconditioned upon a
judicial determination with regard to the thing
subject litigation, this would only bring about
the very predicament that the said provision of
law seeks to obviate. Assuming arguendo that
a rescissory action under Article 1381(4) of
the Civil Code could only be instituted after
the dispute with respect to the thing subject of
litigation is judicially determined, there is the
possibility that the same may had already been
conveyed to third persons acting in good faith,
rendering any judicial determination with
regard to the thing subject of litigation
illusory. Surely, this paradoxical eventuality is
not what the law had envisioned. (Lilia Ada, et
al. v. Florante Baylon, G.R. No. 182435,
August 13, 2012, Reyes, J).
Provision in contract of lease granting the
lessee exclusive right to renew; valid;

principle of mutuality of contracts.
Q The parties entered into a lease contract
over a parcel of land granting unto the lessee
the exclusive option to renew the contract
subject to the condition that it should comply
with a 60-day notice of the intention to
exercise the option to renew the contract
which the lessee did. The lessor refused to
renew the contract, hence, a complaint to
compel the lessor to renew it was filed. The
lessor argued that the renewal of the
contract cannot be made to depend upon the
sole will of the lessee, otherwise, the same
would be void for being a potestative
condition. Will the action prosper? Why?
Answer: Yes, because of the principle of
mutuality of contracts.
An express agreement which gives the lessee
the sole option to renew the lease is frequent
and subject to statutory restrictions, valid and
binding on the parties. This option, which is
provided in the same lease agreement, is
fundamentally part of the consideration in the
contract and is no different from any other
provision of the lease carrying an undertaking
on the part of the lessor to act conditioned on
the performance by the lessee. It is a purely
executory contract and at most confers a right
to obtain a renewal if there is compliance with
the conditions on which the right is made to
depend. The right of renewal constitutes a
part of the lessee's interest in the land and
forms a substantial and integral part of the
agreement.
The fact that such option is binding only on
the lessor and can be exercised only by the
lessee does not render it void for lack of

mutuality. After all, the lessor is free to give
or not to give the option to the lessee. And
while the lessee has a right to elect whether to
continue with the lease or not, once he
exercises his option to continue and the lessor
accepts, both parties are thereafter bound by
the new lease agreement. Their rights and
obligations become mutually fixed, and the
lessee is entitled to retain possession of the
property for the duration of the new lease, and
the lessor may hold him liable for the rent
therefor. The lessee cannot thereafter escape
liability even if he should subsequently decide
to abandon the premises. Mutuality obtains in
such a contract and equality exists between the
lessor and the lessee since they remain with
the same faculties in respect to fulfillment.
(MIAA v. Ding Velayo Sports Center, Inc.,
G.R. No. 161718, December 14, 2011).
Foreclosure of mortgage void for lack of
demand; no default.
Q An obligation was contracted secured by
a mortgage, but it was foreclosed even as
there was no demand for payment. What was
done was for GMC to request the debtors to
go to their office and discuss the settlement
of their account. Thereafter, GMC proceeded
to foreclose the mortgage. There was no
provision on extrajudicial foreclosure of the
mortgage without need of demand. When it
was foreclosed, the mortgagor contended
that it was void. Is the foreclosure valid?
Why?
Answer: No, because there was no delay.
There are three requisites necessary for a
finding of default. First, the obligation is
demandable and liquidated; second, the debtor
delays performance; and third, the creditor
judicially or extrajudicially requires the

debtors performance.
they have the right to dispose of the same. Is

the sale valid? Why?
As the contract carries no such provision on

demand not being necessary for delay to exist,
GMC should have first made a demand on the
spouses before proceeding to foreclose the real
estate mortgage. The act of asking to go to the
office for a possible settlement of the account
is not the demand required.
Answer: No. The resale without the NHAs

consent is a substantial breach, hence, void.
In Development Bank of the Philippines v.

Licuanan it was ruled that demand made
before the foreclosure is effected is essential.
If demand was made and duly received by the
respondents and the latter still did not pay,
then they were already in default and
foreclosure was proper. However, if demand
was not made, then the loans had not yet
become due and demandable. This meant that
respondents had not defaulted in their
payments and the foreclosure by petitioner
was premature. Foreclosure is valid only
when the debtor is in default in the
payment of his obligation. (G.R. No. 150097,
February 26, 2007, 516 SCRA 644; General
Milling Corp. v. Sps. Ramos, G.R. No.
193723, July 20, 2011).
Substantial breach, like sale of property
within the prohibitory period is a ground
for rescission.
Q NHA sought to rescind the sale made by
housing beneficiaries of a property they
bought from it within the prohibited period
of five (5) years from the date of release of
the mortgage without prior written consent
of the NHA. The beneficiaries sold the same
to their son, within the prohibitory period.
The beneficiaries contended that as owners,
The restriction clause is more of a condition

on the sale of the property to the beneficiaries
rather than a condition on the mortgage
constituted on it. Indeed, the prohibition
against resale remained even after the land had
been released from the mortgage. The fiveyear restriction against resale, counted from
the release of the property from the NHA
mortgage, measures out the desired hold that
the government felt it needed to ensure that its
objective of providing cheap housing for the
homeless is not defeated by wily
entrepreneurs.
The essence of the governments socialized
housing program is to preserve the
beneficiarys ownerships for a reasonable
length of time, here at least within five years
from the time he acquired it free from any
encumbrance. (Lalicon, et al. V. NHA, G.R.
No. 185440, July 1, 2011).
Period to file action for rescission under
Article 1191, NCC.
Q It was claimed that under Article 1389 of
the Civil Code the action to claim rescission
must be commenced within four years from
the time of the commission of the cause for
it. The NHA filed the action after four (4)
years, hence, the contention is that it has
already prescribed. Is the contention correct?
Why?
Answer: No. NHA sought
annulment/rescission of the sale because they

violated the five-year restriction against such
sale provided in their contract. Such violation
comes under Article 1191 where the
applicable prescriptive period is that provided
in Article 1144 which is 10 years from the
time the right of action accrues. The NHAs
right of action accrued on February 18, 1992
when it learned of the forbidden sale of the
property. Since the NHA filed its action for
annulment of sale on April 10, 1998, it did so
well within the 10-year prescriptive
period. (Lalicon, et al. V. NHA, G.R. No.
185440, July 1, 2011).
field for fraud because unless they be in

writing there is no palpable evidence of the
intention of the contracting parties. The
statute has precisely been enacted to prevent
fraud. However, if a contract has been totally
or partially performed, the exclusion of parol
evidence would promote fraud or bad faith, for
it would enable the defendant to keep the
benefits already delivered by him from the
transaction in litigation, and, at the same time,
evade the obligations, responsibilities or
liabilities assumed or contracted by him
thereby. (Mactan-Cebu International Airport
Authority v. Tudtud, G.R. No. 174012,
November 14, 2008, 571 SCRA 165).
STATUTE OF FRAUDS
Statute of frauds is inapplicable if oral
compromise has been performed.
Q The property of the respondent was
declared condemned for public use to expand
the Lahug International Airport. On appeal,
there was a compromise to stop the
respondent from pursuing with the appeal,
but with an oral assurance that if the
purpose would not be pursued, the property
would be resold to him. The public use was
not pursued, hence, there was a demand for
the resale of the property, especially so that it
has been converted to a commercial area, but
the petitioner contended that it is not bound
by the oral assurance that it would be resold,
using the Statute of Frauds as defense. Is the
defense proper? Why?
Answer: No. The Statute of Frauds operates
only with respect to executory contracts, and
does not apply to contracts which have been
completely or partially performed. The reason
is that, in executory contracts there is a wide
The Statute of Frauds cannot apply, the oral

compromise settlement having been partially
performed. By reason of such assurance made
in their favor, respondents relied on the same
by not pursuing their appeal before the CA.
(Mactan-Cebu International Airport Authority,
et al. v. Lozada, Sr., et al., G.R.No. 176625,
February 25, 2010).
Effect if document states that there was
consideration, but no money was involved.
Q The contract provided for a
consideration of P2,000.00 in the sale of 6
parcels of land, but no money was involved.
Is the sale valid? Why?
Answer: No, it is void, for, while it appears to
be supported by a valuable consideration,
there was no money involved in the sale,
hence, a simulated contract, which is void.
It is well-settled that where a deed of sale
states that the purchase price has been paid but
in fact has never been paid, the deed of sale is
null and void for lack of consideration.

(Montecillo v. Reyes, 434 Phil. 456 (2002)).
Thus, although the contract states that the
purchase price of P2,000.00 was paid to the
seller for the subject properties, it has been
proven that such was never in fact paid as
there was no money involved. It must,
therefore, follow that the Deed of Sale is void
for lack of consideration. (Heirs of Policronio
Ureta, Sr., et al. v. Heirs of Liberato Ureta, et
al., G.R. No. 165748).
third persons who may be prejudiced thereby

may set up its inexistent. (Arsenal v. IAC, 227
Phil. 36 (1986)). In this case, the parties are
not strangers to the parties to the contract, but
heirs, hence, they have the right to question
the same. (Heirs of Ureta, Sr., et al. v. Heirs of
Ureta, et al., G.R. No. 165748, and other
cases, September 14, 2011).
Even third persons may file an action for

nullity if they directly affected.
Q In a case, the heirs of a decedent sought

the annulment or nullity of a deed of
extrajudicial settlement and sale upon a
claim that the signatures of some of the heirs
had been falsified and that the remaining
signatories could not have signed the deed as
they were already dead. May the action
prosper? Why?
Q In a case, the heirs of an owner of a

property whose signature was forged in a
contract of sale filed an action to declare it
void. It was contended that since the heirs of
a party were not privies to the contract of
sale, they have no personality to question its
validity. It was further contended that
defense of illegality of a contract is not
available to third persons whose interests are
not directly affected (Art. 1421, NCC). Is the
Answer: No. Article 1311 and Article 1421 of
the Civil Code provide that contracts take
effect only between the parties, their assigns
and heirs, x x x and the defense of illegality of
contracts is not available to third persons
whose interests are not directly affected,
respectively.
The right to set up the nullity of a void or nonexistent contract is not limited to the parties,
as in the case of annullable or voidable
contracts; it is extended to third persons who
are directly affected by the contract. Thus,
where a contract is absolutely simulated, even
A forged deed is a nullity; it passes no right;

it is held in trust.
Answer: Yes, because the deed is void, for

lack of consent, hence, subject to attack
anytime. It is recognized in our jurisprudence
that a forged deed is a nullity and conveys no
title. An action to declare the inexistence of a
void contract does not prescribe.
When there is a showing of such illegality, the
property registered is deemed to be simply
held in trust for the real owner by the person
in whose name it is registered, and the former
then has the right to sue for the reconveyance
of the property. The action for the purpose is
also imprescriptible, and as long as the land
wrongfully registered under
the Torrens system is still in the name of the
person who caused such registration, an action
in personam will lie to compel him to
reconvey the property to the real owner.
While a certificate of title was issued in

respondents favor, such title could not vest
upon them ownership of the entire property;
neither could it validate a deed which is null
and void. Registration does not vest title; it is
merely the evidence of such title. Our land
registration laws do not give the holder any
better title than what he actually has. (Sps.
Fernando, et al. v. Fernando, G.R. No.
191889, January 31, 2011)
is the title of his landlord at the time of the

commencement of the landlord-tenant
relation. If the title asserted is one that is
alleged to have been acquired subsequent to
the commencement of that relation, the
presumption will not apply. Hence, the
tenant may show that the landlords title has
expired or been conveyed to another or
himself; and he is not estopped to deny a
claim for rent, if he has been ousted or evicted
by title paramount.
ESTOPPEL
Tenant cannot deny the title of the lessor
due to estoppel; exception.
Q There was a contract of lease over a
property but the lessor did not inform the
lessee that there was a mortgage over the
property subject of the lease contract. For
failure of the lessor to pay the loan, the bank
foreclosed the mortgage and eventually the
property was transferred to the bank. For
failure to pay the rentals, demand was made
to pay and vacate, but the lessee contended
that since the lessor was no longer the
owner, he had not right to sue for ejectment.
The lessor contended that the lessee is
stopped from questioning the title of the
lessor. Is the contention of the lessee correct?
Explain.
Answer: Yes. The conclusive presumption
found in Sec. 2(b), Rule 131 of the Rules of
Court known as estoppel against tenants
provides the tenant is not permitted to deny
the title of his landlord at the time of the
commencement of the relation of landlord and
tenant between them. The rule is not absolute.
What a tenant is estopped from denying x x x
It is true that the tenant cannot assert

ownership of the property by a third person.
However, a tenant in proper cases such as this,
may show that the landlords title has been
conveyed to another. In order to do this, the
tenant must essentially assert that title to the
leased premises already belongs to a third
person who need not be a party to the
ejectment case, as what the tenant did in this
case. (Enrico Santos v. National Statistic
Office, G.R. No. 171129, April 6, 2011).
TRUST
Fraudulent acquisition of property; same
held in trust; action for reconveyance;
except if passed to an innocent purchaser
for value.
Q A property was wrongfully included in
the title of another. The titled owner even
acknowledged such error. The owner filed an
action to recover the erroneously included
property. He alleged that he was in
possession of the property all the time even if
registered under the name of the other party,
who contended that the action has already
prescribed. Will the action prosper? Why?
Answer: Yes, because he is holding it under

the rule of implied trust for the benefit of the
true owner. Under Article 1456, NCC, if
property is acquired through mistake or fraud,
the person obtaining it is, by force of law,
considered a trustee of an implied trust for the
benefit of the person from whom the property
comes.
The party thus aggrieved has the right to
recover his or their title over the property by
way of reconveyance while the same has not
yet passed to an innocent purchaser for value.
(Huang v. A, 236 SCRA 420 (1994)).
The contention that he action has already
prescribed because of the lapse of ten (10)
years is not correct. An action for
reconveyance of registered land based on
implied trust prescribes in ten (10) years, the
point of reference being the date of
registration of the deed or the date of the
issuance of the certificate of title over the
property. The ten-year prescriptive period
applies only when the person enforcing the
trust is not in possession of the property, the
right to seek reconveyance, which in effect
seeks to quiet title to the property, does not
prescribe. The reason is that the one who is in
actual possession of the land claiming to be its
owner may wait until his possession is
disturbed or his title is attacked before taking
steps to vindicate his right. (Fernando, Jr., et
al. v. Acua, et al., G.R. No. 161030,
September 30, 2010).
SALES
Q In a foreclosure sale of a property worth
P5M, it was sold for only P900,000.00. It was
contended that the sale is void. is the

Answer: No. Unlike in an ordinary sale,
inadequacy of the price at a forced sale is
immaterial and does not nullify a sale since, in
a forced sale, a low price is more beneficial to
the mortgage debtor for it makes redemption
of the property easier. (New Sampaguita
Builders Construction, Inc. v. PNB, 479 Phil.
453 (2004); The National Loan and
Investment Board v. Meneses, 67 Phil. 498
(1939)). The fact that a property is sold at
public auction for a price lower than its
alleged value, is not of itself sufficient to
annul said sale, where there has been strict
compliance with all the requisites marked
out by law to obtain the highest possible
price, and where there is no showing that a
better price is obtainable. (Government of
the Philippines vs. De Asis, G. R. No. 45483,
April 12, 1939; Guerrero vs. Guerrero, 57
Phil., 442; La Urbana vs. Belando, 54 Phil.,
930; Bank of the Philippine Islands v . Green,
52 Phil., 491; Hulst v. PR Builders, Inc., G.R.
No. 156364, September 3, 2007, 532 SCRA
747; Bank of PI v. Reyes, G.R. No. 182769,
February 1, 2012).
Written notice to prospective redemption is
mandatory.
Q The owner of a real property offered the
sale to the adjoining owners and one of them
agreed to the sale to take place after the
harvest season. But he later sold the same to
another. The heirs of one of the adjoining
owners learned about the sale a day after it
was sold and conveyed their intention to
redeem the property but the seller answered,
saying that there was already a contract of
sale executed with the buyer and that they
never tendered the redemption amount. A
complaint for legal redemption was filed but

it was opposed on the ground that he
complied with the requirement of notice
under Article 1623, NCC but they failed to
exercise the right of redemption. There was
likewise no need to comply with the written
notice requirement since they already knew
of the sale. Is the contention correct? Why?
Answer: No, because of the lack of written
notice to the prospective redemption. (Art.
1623, NCC). Such written notice is
mandatory. Without a written notice, the
period of thirty days within which the right of
legal pre-emption may be exercised, does not
start.
The indispensability of a written notice had
long been discussed in the early case
of Conejero v. Court of Appeals, 123 Phil. 695
(1966) where the SC said that such notice is
indispensable, and that, in view of the terms in
which Article of the Philippine Civil Code is
couched, mere knowledge of the sale, acquired
in some other manner by the redemptioner,
does not satisfy the statute. The written notice
was obviously exacted by the Code to remove
all uncertainty as to the sale, its terms and its
validity, and to quiet any doubts that the
alienation is not definitive. The statute not
having provided for any alternative, the
method of notification prescribed remains
exclusive. (Barcellano v. Banas, et al., G.R.
No. 165287, September 14, 2011).
Obligation of seller to transfer ownership.
Q There was contract of sale where the
seller sold properties in a manner absolute
and irrevocable requiring the buyer to pay
P415,000.00 upon the execution of the deed
of sale with the balance payable directly to

the mortgagee bank within a reasonable
time. Nothing in the contract showed that the
seller reserved the right of ownership. There
was a conflict between the buyer and seller
since the seller sold it again on the
contention that the first contract was a
contract to sell. The buyer contended that it
was a contract of absolute sale. Whose
contention is correct? Why?
Answer: The contention of the buyer is correct
that it is a contract of absolute sale. The terms
and conditions of the contract only affected
the manner of payment, not the immediate
transfer of ownership upon the execution of
the notarized contract. The terms and
conditions pertained to the performance of the
contract and not the perfection therefore or the
transfer of ownership.
Settled is the rule that the seller is obliged to
transfer title over the properties and deliver
the same to the buyer. In this regard, Article
1498 of the Civil Code provides that, as a rule,
the execution of a notarized deed of sale is
equivalent to the delivery of a thing sold. (De
Leon v. Ong, G.R. No. 170405, February 2,
2010).
Mirror doctrine once again applied.
Q Real properties were sold by Ines Ouano
to Salvador Cobarde although the same was
never registered and titles were never
obtained by the latter. Cobarde made
representations that he owned the lots and
sold the same to Cabigas, although no title
was shown to him. Ouano sold the lots to
National Airport Authority for the use of the
Cebu-Lahug Airport but when the use fell,
Ouanos heirs were able to get back the

properties. After obtaining titles, they sold
the same to several buyers. The heirs of
Cabigas sought to recover the properties,
alleging that their predecessor bought the
properties from Cobarde. They never alleged
that NAA was in bad faith in purchasing the
same from Ouano. Are the heirs of Cabigas
entitled to recover the properties from the
buyers from NAA? Why?
Answer: No, because their predecessors ininterest are not buyers in good faith and for
value.
At the time of the sale to the Cabigas spouses,
however, the land was registered not in
Cobardes name, but in Ouanos name. By
itself, this fact should have put the Cabigas
spouses on guard and prompted them to check
with the Registry of Deeds as to the most
recent certificates of title to discover if there
were any liens, encumbrances, or other
attachments covering the lots in question.
In Abad v. Sps. Guimba, it was said that the
law protects to a greater degree a purchaser
who buys from the registered owner himself.
Corollarily, its requires a higher degree of
prudence from one who buys from a person
who is not the registered owner, although the
land object of the transaction is registered.
While one who buys from the registered
owner does not need to look behind the
certificate of title, one who buys from one
who is not the registered owner is expected
to examine not only the certificate of title
but all factual circumstances necessary for
one to determine if there are any flaws in
the title of the transferor, or in the capacity
to transfer the land. (503 Phi. 321, (2005);
Revilla v. Galindez, 07 Phil. 480 (1960)).
Instead, the Cabigas spouses relied completely

on Cobardes representation that he owned the
properties in question, and did not even bother
to perform the most perfunctory of
investigations by checking the properties
titles with the Registry of Deeds. Had the
Cabigas spouses only done so, they would
easily have learned that Cobarde had no legal
right to the properties they were acquiring
since the lots had already been registered in
the name of the National Airports Corporation
in 1952. Their failure to exercise the plain
common sense expected of real estate buyers
bound them to the consequences of their own
inaction. (Heirs of Nicolas Cabigas, et al. v.
Limbaco, et al., G.R. No. 175291, July 27,
2011).
Execution of public instrument is
equivalent to delivery.
Q The owner of a titled property sold it
twice to different buyers. There was no
inscription of both documents, but
respondent took possession of the property,
but petitioner did not because of the presence
of tenants. Petitioner however, contended
that upon execution of the public instrument,
she already acquired possession and thus,
considering that the execution thereof took
place ahead of the actual possession by the
respondent, she has a better right. Is
petitioner correct? Why?
Answer: No. Indeed, the execution of a public
instrument shall be equivalent to the delivery
of the thing that is the object of the contract.
However, the execution of a public instrument
gives rise only to a prima facie presumption of
delivery. It is deemed negated by the failure of
the vendee to take actual possession of the
land sold. (Ten Forty Realty & Dev. Corp. v.
Cruz, 457 Phil. 603 (2003)).

Admittedly, the two sales were not registered
with the Registry of Property. Since there was
no inscription, the next question is who,
between petitioner and respondent, first took
possession of the subject property in good
faith. As aptly held by the trial court, it was
respondent who took possession of the subject
property and, therefore, has a better right.
(Beatingo v. Gasis, G.R. No. 179641,
February 9, 2011).
LEASE
Extension of lease cannot be done if lessee
committed grounds for ejectment;
extension is a matter of equity.
Q The lessee failed to pay the rentals for
fourteen (14) months. Yet, it was asking the
court to extend the lease. Is the contention
correct? Why?
Answer: No. In asking for an extension of
lease under Article 1687, the lessee lost sight
of the restriction provided in Article 1675 of
the Civil Code. It states that a lessee that
commits any of the grounds for ejectment
cited in Article 1673, including non-payment
of lease rentals and devoting the leased
premises to uses other than those stipulated,
cannot avail of the periods established in
Article 1687. (LL & Co. Dev. & AgroIndustrial Corp. v. Huang Chao Chun. 428
Phil. 665 (2002)
Moreover, the extension in Article 1687 is
granted only as a matter of equity. The law
simply recognizes that there are instances
when it would be unfair to abruptly end the
lease contract causing the eviction of the

lessee. It is only for these clearly unjust
situations that Article 1687 grants the court the
discretion to extend the lease. An extension
will only benefit the wrongdoer and punish the
long-suffering property owner. (Lo Chua v.
CA, 408 Phil. 877 (2001); Guiang v. Samano,
G.R. No. 50501, April 22, 1991, 196 SCRA
114; Umale, et al. v. ASB Realty Corp., G.R.
No. 181126, June 15, 2011).
Lease with option to buy.
Q There was a contract of lease with option
to buy, the price to be negotiated and
determined at the time the option to purchase
is exercised. The property was however sold
to PUP by NDC upon order of the President.
Before however the sale was made, the lessee
wrote a letter to the lessor manifesting the
exercise of the option to buy. There was,
however, no action on the offer to buy,
hence, the contract expired without
exercising the right. The lessee contended
that NDC, the lessor violated its right of first
refusal by the sale of the property to PUP. It
was contended on the other hand by the
lessor that since the contract has already
expired, with the right of first refusal not
being carried over into the impliedly renewed
contract, there was no violation. Is the
Answer: No, because the right of first refusal
was exercised before the contract of lease
expired and before it was sold to PUP by the
lessor.
An option is a contract by which the owner of
the property agrees with another person that
the latter shall have the right to buy the
formers property at a fixed price within a

certain time. It is a condition offered or
contract by which the owner stipulates with
another that the latter shall have the right to
buy the property at a fixed price within a
certain time, or under, or in compliance with
certain terms and conditions; or which gives to
the owner of the property the right to sell or
demand a sale. (Eulogio v. Apeles, G.R. No.
167884, January 20, 2009, 576 SCRA 561,
citing Tayag v. Lacson, G.R. No. 134971,
March 25, 2004, 426 SCRA 282, 304). It binds
the party, who has given the option, not to
enter into the principal contract with any other
person during the period designated, and,
within that period, to enter into such contract
with the one to whom the option was granted,
if the latter should decide to use the option.
(Carcellar v. Court of Appeals, G.R. No.
124791, February 10, 1999, 302 SCRA 718,
724; Polytechnic Univ. of the Phils. v. Golden
Horizon Realty Corp., G.R. No. 183612;
National Dev. Co. v. Golden Horizon Realty
Corp., G.R. No. 184260, March 15, 2010).
Q It was contended that the right of first
refusal was not impliedly renewed when the
lease contract expired. Is the contention
correct? Why?
Answer: No, because the right was exercised
before the contract of lease expired. Hence,
whether it was carried over into the impliedly
renewed contract is irrelevant. As the right
was still existing when it was exercised and
when the property was sold to PUP, the lessor
violated the right of first refusal.
When a lease contract contains
a right of first refusal, the lessor has the legal
duty to the lessee not to sell the leased
property to anyone at any price until after
the lessor has made an offer to sell the

property to the lessee and the lessee has failed
to accept it. Only after the lessee has failed to
exercise his right of first priority could
the lessor sell the property to other buyers
under the same terms and conditions offered to
the lessee, or under terms and conditions more
favorable to the lessor. (Polytechnic Univ. of
the Phils. v. Golden Horizon Realty Corp.,
G.R. No. 183612; National Dev. Co. v. Golden
Horizon Realty Corp., G.R. No. 184260,
March 15, 2010).
Q There was a contract of lease with right
of first refusal. The lessor however sold the
property to another without offering the
property first to the lessee. Sued, he
contended that the right of first refusal
provision is not binding upon him as there
was no consideration. Is there a
consideration in the grant of a right of first
refusal such that it cannot be withdrawn at
any time? Explain.
Answer: Yes. Basic is the rule that a party to a
contract cannot unilaterally withdraw a right
of first refusal that stands upon valuable
consideration. It is not correct to say that there
is no consideration for the grant of the right of
first refusal if such grant is embodied in the
same contract of lease. Since the stipulation
forms part of the entire lease contract, the
consideration for the lease includes the
consideration for the grant of the right of first
refusal. In entering into the contract, the
lessee is in effect stating that it consents to
lease the premises and to pay the price agreed
upon provided the lessor also consents that,
should it sell the leased property, then, the
lessee shall be given the right to match the
offered purchase price and to buy the property
at that price.
Not even the avowed public welfare or the
constitutional priority accorded to education,
invoked by petitioner PUP in
the Firestone case, would serve as license for
the Court, and any party for that matter, to
destroy the sanctity of binding obligations.
While education may be prioritized for
legislative and budgetary purposes, it is
doubtful if such importance can be used to
confiscate private property such as the right of
first refusal granted to a lessee. (Polytechnic
Univ. of the Phils. v. Golden Horizon Realty
Corp., G.R. No. 183612; National Dev. Co. v.
Golden Horizon Realty Corp., G.R. No.
184260, March 15, 2010).
Prohibition against subleasing of land does
not include the building constructed by the
lessee.
Q In a lease contract over a parcel of land,
the agreement was that the lessee shall
establish a sports center and parking area to
ease the parking congestion at the Domestic
Airport. There was an exclusive option to
renew the contract of lease granted to the
lessee, but the lessor refused to renew on the
ground that it violated the prohibition
against subleasing of the premises. Is the
Answer: No, because the prohibition against
subleasing the premises refers only to the
subject property, the land. Being the builder of
the improvements on the subject property, said
improvements are owned by it until the turn
over to the lessor at the end of the contract.
The lessee was not leasing the improvements
from the lessor, thus; then it is not subleasing
the same to third persons. (MIAA v. Ding

Velayo Sports Center, Inc., supra.)
When there is implied renewal of a contract
of lease.
Q The contract of lease between the parties
commenced on January 1, 1997 and expired
on December 31, 1997. The lessor did not
give a notice to vacate the premises upon the
expiration of the lease and the lessee
continued to possess the same for more than
15 days without objection from the lessor.
The notice to vacate was given only on
August 5, 1998. What is the effect of the
inaction of the lessor? Explain.
Answer: By the inaction of the lessor, there
can be no inference that it intended to
discontinue the lease contract (Bowe v. CA,
G.R. No. 95771, March 19, 1993, 220 SCRA
158). There was an impliedly renewed
contract. An implied new lease or tacita
reconcluccion will set in when the following
requisites are found to exist: (a) the term of
the original contract of lease has expired; (b)
the lessor has not given the lessee a notice to
vacate; (c) the lessee continued enjoying the
thing leased for fifteen days with the
acquiescence of the lessor. (Paterno v. CA,
339 Phil. 154 (1997); Samelo v. Manotok
Services, Inc., G.R. No. 170509, June 27,
2012, Brion, J).
Q In case of an impliedly renewed
contract, the lessee contended that the period
is the same as that of the original. It was
contended otherwise by the lessor. Whose
contention is correct? Explain.
Answer: The contention of the lessor is
correct. Since the rent is paid on a monthly

basis, the period of lease is considered to be
from month to month, in accordance with
Article 1687 of the Civil Code. A lease from
month to month is considered to be one with a
definite period which expires at the end of
each month upon a demand to vacate by the
lessor. (Arquelda v. Phil. Veterans Bank, 385
Phil. 1200 (2000)). When the lessor sent a
notice to vacate to the lessee on August 5,
1998, the tacita reconduccion was aborted,
and the contract is deemed to have expired at
the end of that month. A notice to vacate
constitutes an express act on the part of the
lessor that it no longer consents to the
continued occupation by the lessee of its
property. (Tagbilaran Integrated Sellers Assn.
v. CA, 486 Phil. 386 (2004)). After such
notice, the lessees right to continue in
possession ceases and her possession becomes
one of detainer. (Lim v. CA, G.R. Nos. 8415455, July 20, 2010; Samelo v. Manotok
Services, Inc., G.R. No. 170509, June 27,
2012, Brion, J).
In a complaint for ejectment, the lessor may
simultaneously eject the lessee and demand
for rescission of the contracts.
Q General Milling Corporation is the
owner of a property which was leased to
Cebu Autometic Motors, Inc. It was
stipulated that it shall be used as garage and
repair shop for vehicles, but allegedly, it was
subleased without the consent of the lessor.
The lessor contended that the lessee violated
the contract by subleasing and for failure to
deliver the required advance rental and
deposit. This was denied by the lessee. The
lessor sent a letter to the lessee terminating
the contract and demanding the vacation of
the premises and settlement of unpaid
accounts. Later, it filed a complaint for

unlawful detainer alleging that it terminated
the contract for violation of the terms of the
same and continued to do so despite repeated
demands and reminders for compliance that
the lessee refused to vacate the premises. The
MTC rendered a judgment ordering the
lessee to vacate, but the RTC reversed the
judgment holding that the lessor failed to
comply with the requisite demand under
Rule 70, Sec. 2. The CA ruled that the claim
of failure to comply with Sec. 2, Rule 70 is
belated, hence, it cannot be entertained
anymore. Before the SC, it was contended
that there was no proper demand since the
letter merely stated that the lessor expected
the lessee to vacate the premises and pay the
unsettled accounts. The letter did not
demand compliance with the terms of the
contract, hence, the lessee cannot be
considered in default and the lessor had no
cause to terminate the lease. It contended
that since the lessor never sent a proper
demand letter, it cannot be considered in
delay invoking Article 1169, NCC. Rule on
the contention of the lessee. Explain.
Answer: The lessee is correct. The lessor did
not send the proper demand letter.
The lessee, in invoking Article 1169,
apparently overlooked that what is involved is
not a mere mora or delay in the performance
of a generic obligation to give or to do that
would eventually lead to the remedy of
rescission or specific performance. What is
involved in the case is a contract of lease and
the twin remedies of rescission and judicial
ejectment after either the failure to pay rent or
to comply with the conditions of the
lease. This situation calls for the application,
not of Article 1169 of the Civil Code but, of
Article 1673 in relation to Section 2, Rule 70

of the Rules of Court. Article 1673 states that
the lessor may judicially eject the lessee for
any violation of any of the conditions agreed
upon in the contract.
Based on this provision, a lessor may
judicially eject (and thereby likewise rescind
the contract of lease) the lessee if the latter
violates any of the conditions agreed upon in
the lease contract. Implemented in accordance
with Section 2, Rule 70, the lessor is not
required to first bring an action for rescission,
but may ask the court to do so and
simultaneously seek the ejecment of the lessee
in a single action for unlawful detainer.
(Abaya Investments Corp. v. Merit Phils., Inc.,
G.R. No. 176324, April 14, 2008, 551 SCRA
646). Section 2, Rule 70 of the Rules of Court
provides that unless otherwise stipulated, such
action by the lessor shall be commenced
only after demand to pay or comply with the
conditions of the lease and to vacate is made
upon the lessee, or by serving written notice of
such demand upon the person found on the
premises, or by posting such notice on the
premises if no person be found thereon, and
the lessee fails to comply therewith after
fifteen (15) days in the case of land or five (5)
days in the case of buildings. (Cebu Autometic
Motors, Inc., et al. v. General Milling Corp.,
G.R. No. 151168, August 25, 2012, Brion, J).
DEPOSIT
Nature of liability of banks; one imbued
with public interest.
Q Petitioner had a credit line with the
bank. Due to failure to pay the interest on
the loan, the bank terminated the credit line
but without notice to petitioner. Hence, a

check was dishonoured resulting in great
embarrassment and humiliation especially
that he had a heated argument with a friend
and their falling out. He sued for damages
for the unjust dishonour of the check but the
RTC found no fault of the bank in the
termination of the credit line as the
dishonour of the check was proper
considering that the credit line had already
been terminated or revoked before the
presentment of the check. Was the
termination of the credit line proper? Why?
Answer: No. It was not enough to apprise
petitioner of his default and outstanding dues.
It must inform the client of the aggregate
amount due and the dates they became due.
The business of banking is impressed with
public interest and great reliance is made on
the banks sworn profession of diligence and
meticulousness in giving irreproachable
service. Like a common carrier whose
business is imbued with public interest, a bank
should exercise extraordinary diligence to
negate its liability to the depositors.
(Solidbank Corporation/Metropolitan Bank
and Trust Company v. Tan, G.R. No. 167346,
April 2, 2007, 520 SCRA 123, 129-130). In
this instance, the bank is sorely remiss in the
diligence required in treating with its client,
Gonzales. It may not wantonly exercise its
rights without respecting and honoring the
rights of its clients.
Art. 19 of the New Civil Code clearly
provides that [e]very person must, in the
exercise of his rights and in the performance
of his duties, act with justice, give everyone
his due, and observe honesty and good faith.
This is the basis of the principle of abuse of
right which, in turn, is based upon the

maxim suum jus summa injuria (the abuse of
right is the greatest possible wrong). (Arlegui
v. CA, 378 SCRA 322 (2002); Gonzales v.
PCIB, et al., G.R. No. 180257, February 23,
2011).
Deposit in hotels.
Q Upon arrival of guest at City Garden
Hotel, the guest gave notice to the doorman
and parking attendant of the hotel when he
entrusted the ignition of his car to the latter.
The attendant issued a valet parking
customer claim stab and parked the car at
the Equitable PCI Bank parking area which
the latter allowed as parking space for
vehicles of the hotel guests in the evening
after banking hours. Is the hotel
management is liable for damages for the
loss of the car? Explain.
Answer: Yes, because there was a contract of
deposit with the hotelkeeper. The contract of
deposit was perfected from the owners
delivery, when he handed over the keys to his
vehicle with the parking attendant with the
obligation of safely keeping and returning it.
Hence, it is liable for damages for the loss of
the car. (Durban Apartments Corp. v. Pioneer
Insurance & Surety Corp., G.R. No. 179419,
January 12, 2011, (Abad, J)).
A deposit is constituted from the moment a
person receives a thing belonging to another,
with the obligation of safety keeping it and
returning the same. If the safekeeping of the
thing delivered is not the principal purpose of
the contract, there is no deposit but some other
contract. (Art. 1962, NCC).
The deposit of effects made by travellers in

hotels or inns shall also be regarded as
necessary. The keepers of hotels or inns shall
be responsible for them as depositaries,
provided that notice was given to them, or to
their employees, of the effects brought by the
guests and that, on the part of the latter, they
take the precautions which said hotel-keepers
or their substitutes advised relative to the care
and vigilance of their effects. (Art. 1998,
NCC).
GUARANTY/MORTGAGE
Indivisibility of mortgage does not apply
after it is extinguished by complete
foreclosure; there can be piecemeal
redemption.
Q After the foreclosure of a mortgage,
where the amount of the auction sale was
P216,040.93 there was tender of P40,000.00
to redeem a property. The mortgagee
contended that there must be complete tender
of the amount of the price since mortgage is
indivisible, hence, the entire auction price
must be paid. Is the contention correct?
Why?
Answer: No. As held in the case of Philippine
National Bank v. De los Reyes, G.R. No.
46898-99, November 28, 1989, 179 SCRA
619, the doctrine of indivisibility of mortgage
does not apply once the mortgage is
extinguished by a complete foreclosure
thereof. It provides that a pledge or mortgage
is indivisible, even though the debt may be
divided among the successors in interest of the
debtor or of the creditor. (Art. 2089, NCC;
Sps. Yap v. Sps. Dy, Sr., G.R. No. 171868;
Dumaguete Rural Bank, Inc. v. Sps. Dy, Sr.,
G.R. No. 171991, July 27, 2011).

Q - What is the meaning of the indivisibility
of a mortgage? Explain.
Answer: What the law proscribes is the
foreclosure of only a portion of the property or
a number of the several properties mortgaged
corresponding to the unpaid portion of the
debt where before foreclosure proceedings
partial payment was made by the debtor on his
total outstanding loan or obligation. This also
means that the debtor cannot ask for the
release of any portion of the mortgaged
property or of one or some of the several lots
mortgaged unless and until the loan thus,
secured has been fully paid, notwithstanding
the fact that there has been a partial fulfillment
of the obligation. Hence, it is provided that the
debtor who has paid a part of the debt cannot
ask for the proportionate extinguishment of
the mortgage as long as the debt is not
completely satisfied. (Sps. Yap v. Sps. Dy, Sr.,
G.R. No. 171868; Dumaguete Rural Bank,
Inc. v. Sps. Dy, Sr., G.R. No. 171991, July 27,
2011).
Q May the mortgagor sell the property
mortgaged without the consent of the
mortgage? Explain.
Answer: Yes, but, when a mortgagor sells the
mortgaged property to a third person, the
creditor may demand from such third person
the payment of the principal obligation. The
reason for this is that the mortgage credit is a
real right, which follows the property
wherever it goes, even if its ownership
changes. Article 2129 of the Civil Code gives
the mortgagee, the option of collecting from
the third person in possession of the
mortgaged property in the concept of owner.

(Teoco v. Metrobank, G.R. No. 162333,
December 23, 2008, 575 SCRA 82) More, the
mortgagor-owners sale of the property does
not affect the right of the registered mortgagee
to foreclose on the same even if its ownership
had been transferred to another person. The
latter is bound by the registered mortgage on
the title he acquired.
The contract cannot absolutely forbid the
mortgagor, as owner of the mortgaged
property, from selling the same while her loan
remained unpaid. Such stipulation
contravenes public policy, being an undue
impediment or interference on the
transmission of property. (Cinco v. CA, G.R.
No. 151903, October 9, 2009, 603 SCRA 108;
Sps. Antonio & Leticia Vega v. SSS, et al.,
G.R. No. 181672, September 20, 2010; Pablo
Garcia v. Yolanda Villar, G.R. No. 158891,
June 27, 2012).
Pactum commissorium
Q In a mortgage contract there was a
stipulation appointing the mortgagee as the
mortgagors attorney-in-fact, to sell the
property in case of default in the payment of
the loan. It was contended that there was a
violation of the prohibition on pactum
commissorium. Is the contention correct?
Why?
Answer: No, as there was no automatic
appropriation of the thing mortgaged. Instead,
it was sold to her.
The following are the elements of pactum
commissorium:
(1) There should be a property mortgaged by

way of security for the payment of the
principal obligation; and
the shipment. A sued B for damages, but B

contended that the employees alone are
liable. Rule on the contention. Explain.
(2) There should be a stipulation for automatic

appropriation by the creditor of the thing
mortgaged in case of non-payment of the
principal obligation within the stipulated
period. (DBP v. CA, 348 Phil. 15 (1998)).
Answer: Bs contention is not correct. The

employer should be made answerable for
damages. Whenever an employees negligence
causes damage or injury to another, there
instantly arises a presumption juris tantum that
the employer failed to exercise diligentissimi
patris families in the selection (culpa in
eligiendo) or supervision (culpa in
vigilando) of its employees. (Tan v. Jam
Transit, Inc., G.R. No. 183198, November 25,
2009, 605 SCRA 659, 675, citing Delsan
Transport Lines, Inc. v. C &
A Construction, Inc., 459 Phil. 156
(2003)). To avoid liability for a quasi-delict
committed by its employee, an employer must
overcome the presumption by presenting
convincing proof that he exercised the care
and diligence of a good father of a family in
the selection and supervision of his
employee. In this regard, Loadmasters failed.
(Loadmasters Customs Services, Inc. v. Glodel
Brokerage Corp., et al., G.R. No. 179446,
January 10, 2011).
Mortgagees purchased of the subject property

did not violate the prohibition on pactum
commissorium. The power of attorney
provision did not provide that the ownership
over the subject property would automatically
pass to mortgagee upon the mortgagors
failure to pay the loan on time. What it granted
was the mere appointment of Villar as
attorney-in-fact, with authority to sell or
otherwise dispose of the subject property, and
to apply the proceeds to the payment of the
loan. This provision is customary in mortgage
contracts, and is in conformity with Article
2087 of the Civil Code, which reads:
Art. 2087. It is also of the essence of these
contracts that when the principal obligation
becomes due, the things in which the pledge
or mortgage consists may be alienated for the
payment to the creditor. (Garcia v. Villar, G.R.
No. 158891, June 27, 2012, Del Castillo, J).
QUASI-DELICT and DAMAGES
Employer is liable for the loss of cargo due
to acts of its employees.
Q A and B entered into a contract for the
delivery of cargo, but there was failure to
deliver because the employees were
instrumental in the hijacking or robbery of
Effect if there are several causes for the

resulting damages.
Q There was a head-on collision of two (2)
vehicles belonging to A and B resulting in
the injuries to C who sued both A and B. A
contended that B was negligent, hence, he
alone should be liable. The RTC ruled in
favor of B. What is the extent of the
respective liabilities of several parties if the
cause of loss is due to their
negligence? Explain.
Answer: Each wrongdoer is liable for the total

damage suffered. Where there are several
causes for the resulting damages, a party is not
relieved from liability, even partially. It is
sufficient that the negligence of a party is an
efficient cause without which the damage
would not have resulted. It is no defense to
one of the concurrent tortfeasors that the
damage would not have resulted from his
negligence alone, without the negligence or
wrongful acts of the other concurrent
tortfeasor. As stated in the case of Far
Eastern Shipping v. Court of Appeals, 357 Phil
703 (1998):
x x x. Where several causes producing an
injury are concurrent and each is an efficient
cause without which the injury would not have
happened, the injury may be attributed to all
or any of the causes and recovery may be had
against any or all of the responsible persons
although under the circumstances of the case,
it may appear that one of them was more
culpable, and that the duty owed by them to
the injured person was not the same. No
actor's negligence ceases to be a proximate
cause merely because it does not exceed the
negligence of other actors. Each wrongdoer is
responsible for the entire result and is liable as
though his acts were the sole cause of the
injury.
There is no contribution between joint
tortfeasors whose liability is solidary since
both of them are liable for the total damage.
Where the concurrent or successive negligent
acts or omissions of two or more persons,
although acting independently, are in
combination the direct and proximate cause of
a single injury to a third person, it is
impossible to determine in what proportion
each contributed to the injury and either of
them is responsible for the whole

injury. Where their concurring negligence
resulted in injury or damage to a third party,
they become joint tortfeasors and are
solidarily liable for the resulting damage under
Article 2194 of the Civil Code. (Loadmasters
Customs Services, Inc. v. Glodel Brokerage
Corp., et al., G.R. No. 179446, January 10,
2011).
The operator on record of a vehicle is
primarily responsible to third persons for
the deaths or injuries consequent to its
operation, regardless of whether the
employee drove the registered owners
vehicle in connection with his employment.
Q A is the owner of a motor vehicle which
met an accident resulting in injuries to B.
Sued for damages, the owner of the vehicle
contended that Allan drove the jeep in his
private capacity and thus, an employers
vicarious liability for the employees fault
under Article 2180 of the Civil Code cannot
apply to him. Is the contention correct?
Why?
Answer: No. The contention is no longer
novel. In Aguilar Sr. v. Commercial Savings
Bank, 412 Phil. 834 (2001), where the car of
the bank caused the death of a victim while
being driven by its assistant vice
president. The bank was made liable for
damages for the accident as said provision
should defer to the settled doctrine concerning
accidents involving registered motor
vehicles, i.e., that the registered owner of any
vehicle, even if not used for public service,
would primarily be responsible to the public
or to third persons for injuries caused the latter
while the vehicle was being driven on the
highways or streets. (St. Marys Academy v.
Carpetanos, 426 Phil. 878 (2002); Aguilar v.

Commercial Savings Bank, 412 Phil. 834
(2001); Erezo v. Jepte, 102 Phil. 103
(1957)). The court had already ratiocinated
that:
The main aim of motor vehicle registration is
to identify the owner so that if any accident
happens, or that any damage or injury is
caused by the vehicle on the public highways,
responsibility therefor can be fixed on a
definite individual, the registered owner.
Instances are numerous where vehicles
running on public highways caused accidents
or injuries to pedestrians or other vehicles
without positive identification of the owner or
drivers, or with very scant means of
identification. It is to forestall these
circumstances, so inconvenient or prejudicial
to the public, that the motor vehicle
registration is primarily ordained, in the
interest of the determination of persons
responsible for damages or injuries caused on
public highways. (Erezo v. Jepte, 102 Phil.
103 (1957)).
Absent the circumstance of unauthorized use
(Doquillo v. Bayot, 67 Phil. 121 (1939)) or
that the subject vehicle was stolen (Duavit v.
CA, 255 Phil. 470 (1989)) which are valid
defenses available to a registered owner, the
vehicle owner cannot escape liability
for quasi-delict resulting from his jeeps use.
(Oscar Del Carmen, Jr. V. Geronimo Bacoy, et
al., G.R. No. 173870, April 25, 2012).
Liability of hotel for the death of a guest.
Q A hotel guest of Makati Shangri-La
Hotel & Resort, Inc. was murdered inside his
room. When sued for damages, it contended
that it was the guests fault for having

allowed other people to enter his room,
hence, his own negligence was the proximate
cause of his own death as the hotel is not an
insurer of the safety of its guests. The
evidence shows that the management
practice before the murder had been to
deploy one security or roving guard every
three or four floors of the building which its
witness admitted to be inadequate
considering the L-shape configuration of the
hotel that rendered the hallways not visible
from one or the other end and that despite
his recommendation, the management did
not approve it because the hotel was not
doing well at that time as it was only halfbooked. Is the contention of the defendanthotel correct? Why?
Answer: No. The hotel business is imbued
with public interest. Catering to the public,
hotelkeepers are bound to provide not only
lodging for their guests but also security to the
persons and belongings of their guests. The
twin duty constitutes the essence of the
business. (YHT Realty Corp. v. CA, G.R. No.
126780, February 17, 2005, 451 SCRA 638).
Applying by analogy Article 2000, Article
2001, and Article 2002 of the Civil Code (all
of which concerned the hotelkeepers degree
of care and responsibility as to the personal
effects of their guests), it was held that there is
much greater reason to apply the same if not
greater degree of care and responsibility when
the lives and personal safety of their guests are
involved. Otherwise, the hotelkeepers would
simply stand idly by as strangers have
unrestricted access to all the hotel rooms on
the pretense of being visitors of the guests,
without being held liable should anything
untoward befall the unwary guests. That
would be absurd, something that no good law
would ever envision. (Makati Shang-ri La

Hotel & Resort, Inc. v. Harper, et al., G.R. No.
189998, August 29, 2012, Bersamin, J).
Driving beyond required speed limit is
negligence.
Q There was a collision of a car and a
shuttle bus along Katipunan Road (White
Plains) in Quezon City resulting in the
dragging of the car about 12 meters from the
point of impact. The car burst into flames
and burned the passengers to death beyond
recognition. Actions for damages were filed
against the defendants where the defendant
employer proved that it exercised the
selection and supervision of the employee. It
showed the drivers proficiency and physical
examinations as well as NBI Clearances as
well as daily operational briefings. At the
time of the accident the vehicle belonging to
the petitioner was travelling at the speed of
70 kilometers per hour. After trial, judgment
was rendered holding the defendants liable
for damages, for failure to exercise the
selection and supervision of the employee. Is
the employer liable? Explain.
Answer: Yes. It was well established that the
driver was driving at a speed beyond the rate
of speed required by law, (Section 35 of
Republic Act No. (RA) 4136)). The allowed
rate of speed for the vehicle was
50 kilometers per hour, he was driving at the
speed of 70 kilometers per hour. Under the
New Civil Code, unless there is proof to the
contrary, it is presumed that a person driving a
motor vehicle has been negligent if at the time
of the mishap, he was violating any traffic
regulation. (Art. 2185, NCC) Apparently, the
driver's violation of the traffic rules does not

erase the presumption that he was the one
negligent at the time of the collision. Even
apart from statutory regulations as to speed, a
motorist is nevertheless expected to exercise
ordinary care and drive at a reasonable rate of
speed commensurate with all the conditions
encountered (Caminos, Jr. v. People, G.R. No.
147437, May 8, 2009, 587 SCRA 348, 361,
citing Foster v. ConAgra Poultry Co., 670
So.2d 471) which will enable him to keep the
vehicle under control and, whenever
necessary, to put the vehicle to a full stop to
avoid injury to others using the highway.
(Nunn v. Financial Indem. Co., 694 So.2d 630;
Filipinas Synthetic Fiber Corp. v. Wilfredo
delos Santos, et al., G.R. No. 152033, March
16, 2011).
Banks are required to exercise higher
degree of diligence in dealing with the
accounts of clients.
Q Respondent issued PCIB check dated
5/3/0/92 in the amount of P34,588.72 in
favour of Sulpicio Lines, Inc., hence, the
bank debited the amount from the account of
respondent leaving a balance of only
P558.87. He subsequently issued two (2)
checks but were dishonored because of
insufficient funds. The respondent sued
petitioner for damages contending that the
check was postdated hence, it should not
have debited the amount immediately.
Petitioner contended that it was not
postdated and in fact, he created confusion
on the true date of the check by writing the
date of the check as 5/3/0/92. Is the
Answer: No. The proximate cause of the
damage done was the banks negligence in
debiting the account prior to the date as

appearing in the check which resulted in the
subsequent dishonour of several checks.
If, indeed, petitioner was confused on whether
the check was dated May 3 or May 30 because
of the / which allegedly separated the
number 3 from the 0, petitioner should
have required respondent drawer to
countersign the said / in order to ascertain
the true intent of the drawer before honoring
the check. As a matter of practice, bank tellers
would not receive nor honor such checks
which they believe to be unclear, without the
counter-signature of its drawer. Petitioner
should have exercised the highest degree of
diligence required of it by ascertaining from
the respondent the accuracy of the entries
therein, in order to settle the confusion,
instead of proceeding to honor and receive the
check.
The diligence required of banks, therefore, is
more than that of a good father of a family.
(Samsung Construction Company Philippines,
Inc. v. Far East Bank and Trust
Company, G.R. No. 129015, August 13, 2004,
436 SCRA 402, 421) In every case, the
depositor expects the bank to treat his account
with the utmost fidelity, whether such account
consists only of a few hundred pesos or of
millions. The bank must record every single
transaction accurately, down to the last
centavo, and as promptly as possible. This has
to be done if the account is to reflect at any
given time the amount of money the depositor
can dispose of as he sees fit, confident that the
bank will deliver it as and to whomever he
directs. (Metropolitan Bank and Trust
Company v. Cabilzo, G.R. No. 154469,
December 6, 2006, 510 SCRA 259, 270) From
the foregoing, it is clear that petitioner bank
did not exercise the degree of diligence that it

ought to have exercised in dealing with its
client. (Equitable Bank v. Tan, G.R. No.
165339, August 23, 2010).
In the absence of a positive duty there could
be no breach; no liability for damages.
Q The spouses Serfino invoke American
common law that imposes a duty upon a
bank receiving a notice of adverse claim to
the fund in a depositors account to freeze
the account for a reasonable length of time,
sufficient to allow the adverse claimant to
institute legal proceedings to enforce his
right to the fund. In other words, the bank
has a duty not to release the deposits
unreasonably early after a third party makes
known his adverse claim to the bank deposit.
Acknowledging that no such duty is imposed
by law in this jurisdiction, the spouses
Serfino asked the Court to adopt this foreign
rule. Is the contention correct? Why?
Answer: No. To adopt the foreign rule,
however, goes beyond the power of the Court
to promulgate rules governing pleading,
practice and procedure in all courts. (Art. VIII,
Sec. 5(5), Constitution)). The rule reflects a
matter of policy that is better addressed by
the other branches of government,
particularly, the Bangko Sentral ng Pilipinas,
which is the agency that supervises the
operations and activities of banks, and which
has the power to issue rules of conduct or the
establishment of standards of operation for
uniform application to all institutions or
functions covered. (Sec. 4.1, A 8791, The
General Banking Act of 2000). To adopt this
rule will have significant implications on the
banking industry and practices, as the
American experience has shown. Recognizing
that the rule imposing duty on banks to freeze

the deposit upon notice of adverse claim
adopts a policy adverse to the bank and its
functions, and opens it to liability to both the
depositor and the adverse claimant, many
American states have since adopted adverse
claim statutes that shifted or, at least,
equalized the burden. Essentially, these
statutes do not impose a duty on banks to
freeze the deposit upon a mere notice of
adverse claim; they first require either a court
order or an indemnity bond.
In the absence of a law or a rule binding on
the Court, it has no option but to uphold the
existing policy that recognizes the fiduciary
nature of banking. It likewise rejects the
adoption of a judicially-imposed rule giving
third parties with unverified claims against the

deposit of another a better right over the
deposit. As current laws provide, the banks
contractual relations are with its depositor, not
with the third party; (Gendler v. Sibley State
Bank, 62 F. Supp. 805 (1945) a bank is under
obligation to treat the accounts of its
depositors with meticulous care and always to
have in mind the fiduciary nature of its
relationship with them. (Prudential Bank v.
Lim, G.R. No. 136371, November 11, 2005,
511 SCRA 100). In the absence of any positive
duty of the bank to an adverse claimant, there
could be no breach that entitles the latter to
moral damages. (Serfino v. FEBTC, et al.,
G.R. No. 171845, October 10, 2012, Brion, J).

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LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 1

March 2014 rulings of the Supreme Court of

land where stale or unenforceable claims or

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certainty, premised upon competent proof or

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 3

produced no actual present loss of any kind or

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 4

Prosperity Credit Resources, Inc. et al., G.R.

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 5

person suffers injury. In order that

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 6

particular case exists. Because most medical

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 7

or implied. The two are distinguished from

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 8

as to the statements and acts of physicians and

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circumstances, may permit an inference or

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 10

that does not ordinarily occur unless someone

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being the same party asthe debtor in

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 12

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 13

applications. As mentioned, the Public Land

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 14

was published in Vol. 73, No. 19 of the

LucenaMEnotes (jurisprudence2011-2014) CIVIL LAW 15

ANCF Superintendent v. Heirs of Maxima

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purposes. Since respondents failed to do so,

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heirs, subject to the payment of debts of the

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property of the public dominion if when it is

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Art. 1403. The following contracts are

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vintage at that, illustrates this rule.

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debtor by the creditor without the consent of

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and on behalf of, are vital in order for the

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In their appellants brief, the Spouses Manalo

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CA: The prevailing jurisprudence is that a

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where the appellant was declared as the

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interest have been in open, continuous,

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infidelity do not rise to the level of

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or to the volume of the produce harvested from

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carrier lasts from the time the goods are

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Contracts; Hold-out clause; applies only if

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inspection of the document will not do; the

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