Significant Rulings in Civil Law

Based on Latest Jurisprudence and

Decisions penned by Justice Perlas-Bernabe
2019 Bar Examinations
Prepared by Atty. Victoria V. Loanzon
(U.P. College of Law)
with the assistance of Atty. Zarah Suarez
(U.S.T. Faculty of Civil Law)

HUMAN RELATIONS AND GENERAL PRINCIPLES

Locsin v. Mekeni, G.R. NO. 192105, December 9, 2013
Q. X, an employee of Y Company, obtained a car plan where it was agreed that half of the cost of the vehicle
shall be paid by Y company while the other half shall be deducted from X's salary. X was able to pay his 50%
share and thereafter, he resigned from work. He offered to purchase the vehicle from Y Company but the latter
refused, saying that the deductions made from X's salary will be treated as rentals for the use of the car and shall
not be refunded.
Is Y Company guilty of unjust enrichment?
Answer: Yes, Y Company is guilty of unjust enrichment. There is unjust enrichment ''when a person unjustly
retains a benefit to the loss of another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience." The principle of unjust enrichment requires two
conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit is derived
at the expense of another. The main objective of the principle against unjust enrichment is to prevent one from
enriching himself at the expense of another without just cause or consideration.

HUMAN RELATIONS: ABUSE OF RIGHT PRINCIPLE

Elizabeth L. Diaz v. Georgina R. Encanto, et. al., (G.R. No. 171303, 20 January 2016)
Q. Diaz applied for a sabbatical leave and she was only allowed to go on leave based on her accumulated leave
credits. She had hoped that the higher authorities of the University of the Philippines would approve of her leave
and she expressed her unwillingness to take any teaching assignments. When her sabbatical leave was
disapproved she accepted her new teaching assignments; but failed to comply with the Duty Form so her salaries
were withheld.
She instituted an action against the respondents before the RTC of Pasig City praying that the respondents be
adjudged, jointly and severally to pay her damages. Aside from her claim of her salaries, she also prayed for
moral and exemplary damages and attorney's fees. The trial court ruled in favor of Diaz holding that the delay in
the resolution of her application was unreasonable and unconscionable. The Court of Appeals reversed the
decision of the trial court having found neither negligence nor bad faith on the part of the respondents in their
denial of petitioner Diaz's sabbatical leave application and in withholding her salaries. Diaz appealed the
decision to the Supreme Court. Resolve the appeal of Diaz.
Answer: The appeal of Diaz must be dismissed. The decision of the Court of Appeals must be sustained.
Evidently, Diaz failed to prove bad faith on the part of the respondents. Article 19 of the Civil Code "prescribes
a 'primordial limitation on all rights' by setting certain standards that must be observed in the exercise thereof."
Abuse of right under Article 19 exists when the following elements are present: (1) there is a legal right or duty;
(2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another.
This Court, expounding on the concept of bad faith under Article 19, held:
“Malice or bad faith is at the core of Article 19 of the Civil Code. Good faith refers to the state of mind which
is manifested by the acts of the individual concerned. It consists of the intention to abstain from taking an
unconscionable and unscrupulous advantage of another. It is presumed. Thus, he who alleges bad faith has the
duty to prove the same. Bad faith does not simply connote bad judgment or simple negligence; it involves a
dishonest purpose or some moral obloquy and conscious doing of a wrong, a breach of known duty due to some

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motives or interest or ill will that partakes of the nature of fraud. Malice connotes ill will or spite and speaks not
in response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad
motive.” (Citations omitted.)

St. Martin Polyclinic, Inc., v. LWV Construction Corporation, G.R. No. 217426, December 4, 2017, J. Perlas-
Bernabe
Q. LWV Construction Corporation recruits Filipino workers for deployment to Saudi Arabia. St. Martin
Polyclinic, Inc. (SMPI) is an entity authorized to conduct medical examinations of prospective applicants for
overseas employment.
Jonathan Raguindin, a prospective applicant was referred to SMPI for a pre-deployment
medical examination. Raguindin was found “fit for employment.” Raguindin was eventually deployed to Saudi
Arabia. Raguindin underwent another medical examination with the General Care Dispensary of Saudi Arabia
and he tested positive for Hepatitis C Virus. May LMV institute an action against SMPI based on Articles 19, 20
and 21?
Answer: The action for damages should be anchored on Art. Art. 2176 and not based on Articles 19, 20 and 21
of the Civil Code. An action for damages due to the negligence of another may be instituted on the basis of Art.
2176 of the Civil Code which defines a quasi-delict.
Art. 2176 applies when the negligent act causing damage to another does not constitute “a breach of an existing
law or a pre-existing contractual obligation.”

PERSONS AND FAMILY RELATIONS: GOOD FAITH

Heirs of Jose Ochoa v. G & S Transport Corporation (G.R. No. 170071, July 16, 2012)
Q. Jose Marcial K. Ochoa boarded a taxicab operated by G & S Transport and driven by Bibiano Padilla, Jr.
While going up the Santolan fly-over, he overtook another vehicle which was trying to overtake another vehicle,
a ten-wheeler cargo truck. Bibiano tried to avoid the collision but was unsuccessful and his taxi cab fell in the
middle of EDSA. Ochoa was declared dead on arrival from the accident. Bibiano was acquitted in the reckless
imprudence case but the heirs of Ochoa filed the present Breach of Contract case. Will the case prosper?
Answer: Yes, the case will prosper. The acquittal of Bibiano in the criminal case is immaterial to the
instant case for breach of contract. Article 31 of the Civil Code provides, “when the civil action is
based on an obligation not arising from the act or omission complained of as a felony, such civil action
may proceed independently of the criminal proceedings and regardless of the result of the latter. A
common carrier is required to observe extraordinary diligence.

ESSENTIALS OF MARRIAGE
Alcantara vs. Alcantara, G.R. No. 167746, August 28, 2007)
Q. Is the marriage void on the ground of absence of a marriage license?
Answer: To be considered void on the ground of absence of a marriage license, the law requires that
the absence of such marriage license must be apparent on the marriage contract, or at the very least,
supported by a certification from the local civil registrar that no such marriage license was issued to
the parties.
The Certification moreover is precise in that it specifically identified the parties to whom the marriage
license was issued, further validating the fact that a license was in fact issued to the parties herein. This
Certification enjoys the presumption that official duty has been regularly performed and the issuance
of the marriage license was done in the regular conduct of official business.
Q. Is it material that the party must be a resident of the place where the license was applied?
Answer: Issuance of a marriage license in a city or municipality, not the residence of either of the
contracting parties, and issuance of a marriage license despite the absence of publication or prior to the
completion of the

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10-day period for publication are considered mere irregularities that do not affect the validity of the
marriage. An irregularity in any of the formal requisites of marriage does not affect its validity but the
party or parties responsible for the irregularity are civilly, criminally and administratively liable.

Q. What are the instances when marriage license is not required?

Answer: The requirement of marriage license may be dispensed with in the following instances:
(1) Marriage in articulo mortis (at the point of death) even if the ailing party subsequently
survives;
(2) If the residence of either party is so located that there is no means of transportation to
enable such party to personally appear before the local civil registrar;
(3) Marriage among Muslims or among members of the ethnic cultural communities, provided
they are solemnized in accordance with their customs, rites or practices;
(4) Marriage between a man and a woman who have lived together as husband and wife for at
least five years and without impediment to marry each other; (Art. 27, 28, 33, and 34, Family
Code)
(5) Marriages celebrated abroad and in accordance with the laws of the place of celebration
which do not require a valid marriage license (Art. 26, and 35, Family Code)

Q. Can consul-generals, consuls, or vice-consuls solemnize a marriage abroad between a Filipino and an
alien?
Answer: No, consul-generals, consults, or vice-consuls cannot solemnize mixed marriages. Only marriages
between Filipino citizens abroad may be solemnized by a consul-general, consul or vice-consul of the
Philippines. With this, their authority is limited to marriages of both Filipinos residing abroad. (Art. 10, Family
Code)

Q. As a rule, all marriages solemnized outside the Philippines, in accordance with the laws
in force in the country where they were solemnized, and valid there as such, shall also be
valid in the Philippines. What are the exceptions to this rule?
Answer: Marriages under Arts. 35 (1), (4), (5) and (6), 36, 37 and 38 of the Family Code shall be void from the
beginning even if solemnized outside the Philippines, and valid there as such. More specifically:
(1) Marriages contracted by any party below 18 years of age even with the consent of parents or
guardians;
(2) Bigamous or polygamous marriages not failing under Art. 41 which provides that where
before the celebration of a subsequent marriage, a prior spouse had been absent for four
consecutive years (or four years in case of disappearance where there is danger of death)
and the spouse present has a well-founded belief that the absent spouse was already dead,
and the spouse present will institute a summary proceeding for the declaration of
presumptive death of the absentee;
(3) Marriages contracted through mistake of one contracting party as to the identity of the
other;
(4) Subsequent marriages that are void under Art. 53, i.e., when there is non-compliance with
the requirement of recording in the appropriate civil registry and registries of property the
judgment of annulment or of absolute nullity of the marriage, the partition and distribution of
the properties of the spouses and the delivery of the children’s presumptive legitimes, and
either of the former spouses marry again;
(5) 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, even if such
incapacity becomes manifest only after its solemnization;
(6) Incestuous marriages, whether relationship between the parties be legitimate or illegitimate:

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a. between ascendants and descendants of any degree; or
b. between brothers and sisters, whether of the full or half blood; and
(7) Void marriages for reasons of public policy:
a. Between collateral blood relatives whether legitimate or illegitimate, up to the fourth
civil degree;
b. Between step-parents and step-children;
c. Between parents-in-law and children-in-law;
d. Between the adopting parent and the adopted child;
e. Between the surviving spouse of the adopting parent and the adopted child;
f. Between the surviving spouse of the adopted child and the adopter;
g. Between an adopted child and a legitimate child of the adopter;
h. Between adopted children of the same adopter; and
i. Between parties where one, with the intention to marry the other, killed that other
person's spouse, or his or her own spouse.

PROOF IN PETITION FOR DECLARATION OF NULLITY

Matudan v. Republic (G.R. No. 203284, November 14, 2016)
Q. Spouses Nicolas and Marilyn have been married for nine years when the latter decided to work abroad. She
has not communicated with her family and this prompted Nicolas to file an action for Petition for Declaration of
Nullity on the ground of psychological incapacity. The trial court found no sufficient ground to grant the petition
because the testimony of the child cannot be given credence as she was only two years old when Marilyn left for
abroad and the testimony of the expert witness was based on a one-sided account.

(a) Does abandonment constitute incapacity that will merit annulment of marriage?
Answer: No, abandonment does not indicate one’s incapacity. Psychological incapacity refers to no less than
mental- not 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, as expressed in Article 68 of the
Family Code.

(b) What will indicate incapacity to perform one’s marital duties?

Answer: In the landmark case of Santos v. Court of Appeals, the Court taught us that psychological incapacity
under Article 36 of the Family Code must be characterized by (a) gravity, (b) juridical antecedence, and (c)
incurability. Thus, the incapacity "must be grave or serious such that the party would be incapable of carrying
out the ordinary duties required in marriage; it must be rooted in the history of the party antedating the marriage,
although the overt manifestations may emerge only after marriage; and it must be incurable or, even if it were
otherwise, the cure would be beyond the means of the party involved."

(c) Who has the burden of proving psychological incapacity?

Answer: The burden is on the petitioner, pursuant to Republic v. Court of Appeals or the Molina case. The
existence or absence of the psychological incapacity is 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. Indeed, what is important is the presence of evidence that can adequately establish
the party's psychological condition. The complete facts should allege the physical manifestations, if any, as are
indicative of psychological incapacity at the time of the celebration of the marriage. Petitioner's judicial affidavit
and testimony during trial, however, fail to show gravity and juridical antecedence.
(d) Was the dismissal of the petition proper?
Answer: Yes, the child was not a competent witness to prove psychological incapacity of his mother since he
was barely two years old when his parents separated and for the court to consider incapacity as a ground for
annulment, the expert witness must have examined both spouses.

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Republic v. Reghis M. Romero II (GR No. 209180, FIRST DIVISION, February 24, 2016, PERLAS-
BERNABE, J.)
Q. Reghis and Olivia were married and were blessed with two (2) children. After having been married for more
than a decade, the couple parted ways in 1986. Reghis then filed a petition for declaration of nullity of marriage
citing his psychological incapacity to comply with his essential marital obligations. The clinical psychologist
submitted a report and testified that Reghis suffered from Obsessive Compulsive Personality Disorder (OCPD).
This gave him a strong obsession for whatever endeavour he chooses, such as his work, to the exclusion of other
responsibilities and duties such as those pertaining to his roles as father and husband. Dr. Basilio surmised that
Reghis’ OCPD was the root of the couple’s disagreements and that the same is incurable. The Office of the
Solicitor General (OSG), representing the Republic, opposed the petition. Rule on the petition.
Answer: I will deny the petition for nullity of Reghis. It has consistently been held that psychological
incapacity, as a ground to nullify a marriage under Article 36 of the Family Code, should refer to the most
serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning
and significance to the marriage.
Article 36 of the Family Code must not be confused with a divorce law that cuts the marital bond at the time the
grounds for divorce manifest themselves; rather, it must be limited to cases where there is a downright
incapacity or inability to assume and fulfill the basic marital obligations, not a mere refusal, neglect or difficulty,
much less, ill will, on the part of the errant spouse.

Rachel A. Del Rosario v. Jose O. Del Rosario and Court of Appeals (G.R. No. 222541, FIRST DIVISION,
February 15, 2017, PERLAS-BERNABE, J.)
Q. Rachel worked as a domestic helper in Hong Kong. She married Jose and settled in a house they
acquired. The married life ran smoothly up until Rachel filed a petition for declaration of nullity of
marriage. Her petition was anchored on the ground that Jose was psychologically incapacitated to fulfill his
essential marital obligations. Rachel presented the testimony of Dr. Tayag who prepared the psychological report
stating that Jose suffered from Antisocial Personality Disorder (APD). The RTC declared the marriage between
Jose and Rachel void on the ground of psychological incapacity relying mainly on the testimony of Dr. Tayag,
declaring that Jose's APD interferes with his capacity to perform his marital and paternal duties, as he in fact
even refused to take responsibility for his actions, notwithstanding the overwhelming evidence against him. The
Republic appealed the decision of the trial court. Rule on the appeal of the Republic.
Answer: The declaration of nullity of marriage of the trial court must be reversed.
Following the case of Republic v. Molina, the totality of evidence must show that psychological incapacity exists
and its gravity, juridical antecedence, and incurability must be duly established.
There must be proof of a natal or supervening disabling factor in the person - an adverse integral element in the
personality structure that effectively incapacitates the person from really accepting and thereby complying with
the obligations essential to marriage - which must be linked with the manifestations of the psychological
incapacity.

Republic v. Gina P. Tecag, (G.R. No. 229272, SECOND DIVISION, November 19, 2018, PERLAS-
BERNABE, J.)
Q. After living together as husband and wife for two years, Gina and Marjune formalized their marital union
through civil rites. As a means of livelihood, they engaged in vegetable farming until Gina found employment in
Macau, where she likewise searched for job opportunities for Marjune but was not successful. The marriage was
marred with animosities between the spouses.
Thus, Gina filed a petition to declare her marriage with Marjune null and void on the basis of the latter's
psychological incapacity. During trial, Gina presented the findings of Professor Emma Astudillo-Sanchez (Prof.
Sanchez), the psychologist who conducted a psychological examination of the parties. Was the testimony of
Prof. Sanchez sufficient to establish the incapacity of the spouses?
Answer: Under Article 36 of the Family Code, as amended, psychological incapacity is a valid ground to nullify
a marriage. However, in deference to the State's policy on marriage, psychological incapacity does not merely

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pertain to any psychological condition; otherwise, it would be fairly easy to circumvent our laws on marriage so
much so that we would be practically condoning a legal
subterfuge for divorce. Psychological incapacity has a specific and peculiar denotation.
The requirements for proving psychological incapacity can be traced in a long line of cases.
In Santos v. CA, the SC emphasized "that psychological incapacity must be characterized by:
(a) gravity (i.e., it must be grave and serious such that the party would be incapable of carrying out
the ordinary duties required in a marriage); (b) juridical antecedence (i.e., it must be rooted in the
history of the party antedating the marriage, although the overt manifestations may emerge only
after the marriage); and (c) incurability (i.e., it must be incurable, or even if it were otherwise, the
cure would be beyond the means of the party involved)."

PRESUMPTIVE DEATH OF ABSENT SPOUSE UNDER THE FAMILY CODE

Republic v. Nilda B . Tampus (G.R. No. 214243, FIRST DIVISION, March 16, 2016, PERLAS-BERNABE,
J.)
Q. Nilda B. Tampus and Dante L. Del Mundo got married on November 29, 1975. The last time Nilda saw
Dante, a member of the Armed Forces of the Philippines, was on December 2, 1975. After all efforts of making
inquiries with his parents, relatives, and neighbors as to Dante’s whereabouts, Nilda filed before the RTC a
petition to declare Dante as presumptively dead for the purpose of remarriage, alleging that after the lapse of
thirty-three (33) years without any kind of communication from him, she firmly believes that he is already dead.
Will the petition of Nilda prosper?
Answer: No, Nilda’s petition will not prosper. Before a judicial declaration of presumptive death can be
obtained, it must be shown that the prior spouse had been absent for four consecutive years and the present
spouse had a well-founded belief that the prior spouse was already dead.
The "well-founded belief in the absentee's death requires the present spouse to prove that his/her belief was the
result of diligent and reasonable efforts to locate the absent spouse and that based on these efforts and inquiries,
he/she believes that under the circumstances, the absent spouse is already dead. It necessitates exertion of active
effort, not a passive one. As such, the mere absence of the spouse for such periods prescribed under the law, lack
of any news that such absentee spouse is still alive, failure to communicate, or general presumption of absence
under the Civil Code would not suffice.
Nilda made no further efforts to find her husband. She could have called or proceeded to the AFP headquarters
to request information about her husband, but failed to do so. She did not even seek the help of the authorities or
the AFP itself in finding him.

Q. What are the requisites to institute an action to declare a spouse to be presumptively dead? Answer:
Art. 41 of the Family Code requires that:
(1) The absent spouse has been missing for four consecutive years, or two consecutive years if
the disappearance occurred where there is danger of death under the circumstances laid
down in Art. 391 of the Civil Code;
(2) The present spouse wishes to remarry;
(3) The present spouse has a well-founded belief that the absentee is dead; and
(4) The present spouse files a summary proceeding for the declaration of presumptive death of
the absentee.

Tadeo-Matias v. Republic, G.R. No. 230751, April 25, 2018

Q. Is it proper to institute an action to solely declare person presumptively dead?
Answer: A petition whose sole objective is to have a person declared presumptively dead under the Civil Code
is not regarded as a valid suit and no court has any authority to take cognizance of the same. A rule creating a
presumption of death is merely one of evidence that cannot be the lone subject of an independent action or
proceeding. Such petition presents no actual controversy that a court could decide. In such action, there would
be no actual rights to be enforced, no wrong to be remedied nor any status to be established. Moreover, a court

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action to declare a person presumptively dead under Arts. 390 and 391 of the Civil Code would be unnecessary.
The presumption in the said articles is already established by law.

CONFLICT OF LAWS
Norma A. Del Socorro for and in behalf of her minor child Rodrigo Norjo Van Wilsem v. Ernst Johan
Brinkman Van Willem (G.R. No. 193707, 10 December 2014)
Q. Petitioner Norma married Ernst, a Dutch national. Wilhelm was born out their marriage. The spouses were
divorced when Wilhelm was only 8 years old. After the divorce, Norma decided to return to the Philippines with
Wilhelm. Ernst agreed to support Wilhelm but he never made good his promise.
When Ernst returned to the Philippines, he remarried another Filipina. Norma filed an action against Ernst to
obtain support from him. She hinged her claim based on Article 195 of the Family Code which provides the
parent’s obligation to support his child. Petitioner contends that notwithstanding the existence of a divorce
decree issued in relation to Article 26 of the Family Code, respondent is not excused from complying with his
obligation to support his minor child with petitioner. On the other hand, respondent contends that there is no
sufficient and clear basis presented by petitioner that she, as well as her minor son, are entitled to financial
support. Respondent also added that by reason of the Divorce Decree, he is not obligated to petitioner for any
financial support. Norma also instituted a criminal action against Ernst for violation of VAWC Act.

(a) Does Ernst have an obligation to support his minor child under Philippine law?
Answer: No, petitioner cannot rely on Article 195 of the New Civil Code in demanding support from
respondent, who is a foreign citizen, since Article 15 of the New Civil Code stresses the principle of nationality.
In other words, insofar as Philippine laws are concerned, specifically the provisions of the Family Code on
support, the same only applies to Filipino citizens. By analogy, the same principle applies to foreigners such that
they are governed by their national law with respect to family rights and duties.
Under the Doctrine of Processual Presumption, if the foreign law involved is not properly pleaded and proved,
our courts will presume that the foreign law is the same as our local or domestic or internal law. For Ernst’s
failure to prove a foreign law, it will bar its application in the Philippines. Applying the foregoing, even if the
laws of the Netherlands does not enforce a parent’s obligation to support his child, such obligation is still duly
enforceable in the Philippines because it would be of great injustice to the child to be denied of financial support
when the latter is entitled thereto.

(b) Can Ernst be held criminally liable under R.A. No. 9262 for his unjustified failure to support his
minor child?
Answer: Respondent may be made liable under Section 5(e) and (i) of R.A. No. 9262 for unjustly refusing or
failing to give support to petitioner’s son. The deprivation or denial of financial support to the child is
considered an act of violence against women and children. The act of denying support to a child under Section
5(e)(2) and (i) of R.A. No. 9262 is a continuing offense and will not prescribe for as long as respondent has not
provided support to his son.

PROOF OF FOREIGN JUDGMENT

DAVID A. NOVERAS vs. LETICIA T. NOVERAS (G.R. No. 188289, August 20, 2014, J. Perez)
Q. Spouses Noveras were former Filipinos who became naturalized American citizens. When they suffered
financial reverses, David decided to return in the Philippines. The spouses obtained a divorce from the State of
California wherein the court awarded all the properties in the USA to Leticia.
Leticia sought for the Judicial Separation of Conjugal Property before the RTC of Baler, Aurora. Without
authentication, David opposed the petition alleging that a judgment for the dissolution of their marriage was
rendered by the Superior Court of California. He demanded that the conjugal partnership properties, which also
include the USA properties, be liquidated and that all expenses of liquidation, including attorney’s fees of both
parties be charged against the conjugal partnership. The RTC considered the petition filed by Leticia as one for
liquidation of the absolute community of property regime instead of an action for judicial separation of conjugal

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property. The trial court ruled that in accordance with the doctrine of processual presumption, Philippine law
should apply. It held that the absolute community properties cannot be forfeited in favor of Leticia and her
children.
On appeal, the Court of Appeals modified the trial court’s Decision by directing the equal division of the
Philippine properties between the spouses.

(a) Is the divorce decree issued by the California Court binding to the trial court?
Answer: No, the divorce decree should not be judicially recognized for the requisites were not complied with.
The requirements of presenting the foreign divorce decree and the national law of the foreigner must comply
with our Rules of Evidence. Specifically, for Philippine courts to recognize a foreign judgment relating to the
status of a marriage, a copy of the foreign judgment may be admitted in evidence and proven as a fact under
Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48(b) of the Rules of Court.

(b) Was the petition for judicial separation of the absolute community of property of the spouses proper?
Answer: Yes, having established that Leticia and David had actually separated for at least one year, the petition
for judicial separation of absolute community of property should be granted.
Separation in fact for one year as a ground to grant a judicial separation of property was not tackled in the trial
court’s decision because, the trial court erroneously treated the petition as liquidation of the absolute community
of properties.

NULLITY OF MARRIAGE AND FOREIGN JUDGMENT

Luzviminda Dela Cruz Morisono v. Ryoji Morisono and Local Civil Registrar of Quezon
City, G.R. No. 226013, SECOND DIVISION, July 02, 2018, PERLAS-BERNABE, J.
Q. Luzviminda was married to Ryoji Morisono in Quezon City on December 8, 2009. Thereafter, they lived
together in Japan but the relationship was filled with animosities so the two of them submitted a “Divorce by
Agreement” before the City Hall of Mizuho-ku in Nagoya, Japan, which was approved and duly recorded. In
view of this, Luzviminda filed a petition for recognition of foreign divorce decree obtained by her and Ryoji
before the RTC so that she could cancel the surname of her husband and be able to marry again. The RTC
denied Luzviminda’s petition, holding that while a divorce decree held that while a divorce obtained abroad by
an alien spouse may be recognized in the Philippines – provided that such decree is valid according to the
national law of the alien – the same does not find application when it was the Filipino spouse, i.e., petitioner,
who procured the same. Invoking the nationality principle provided under Article 15 of the Civil Code, in
relation to Article 26 (2) of the Family Code, the RTC opined that since petitioner is a Filipino citizen whose
national laws do not allow divorce, the foreign divorce decree she herself obtained in Japan is not binding in the
Philippines. Luzviminda filed an appeal to reverse the decision of the trial court. Rule of the appeal of
Luzviminda.
Answer: I will grant the appeal and reverse the decision of the trial court. It had been ruled in Republic vs.
Manalo that foreign divorce decrees obtained to nullify marriages between a Filipino and an alien citizen may
already be recognized in this jurisdiction, regardless of who between the spouses initiated the divorce; provided,
of course, that the party petitioning for the recognition of such foreign divorce decree – presumably the Filipino
citizen – must prove the divorce as a fact and demonstrate its conformity to the foreign law allowing it. In this
case, a plain reading of the RTC ruling shows that the denial of Luzviminda's petition to have her foreign
divorce decree recognized in this jurisdiction was anchored on the sole ground that she admittedly initiated the
divorce proceedings which she, as a Filipino citizen, was not allowed to do. In light of the doctrine laid down in
Manalo, such ground relied upon by the RTC had been rendered nugatory. However, the Court cannot just order
the grant of Luzviminda's petition for recognition of the foreign divorce decree, as Luzviminda has yet to prove
the fact of her "Divorce by Agreement" obtained in Nagoya City, Japan and its conformity with prevailing
Japanese laws on divorce. Notably, the RTC did not rule on such issues. Since these are questions which require
an examination of various factual matters, a remand to the trial court is warranted.

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PERSONS AND FAMILY RELATIONS: THE FAMILY HOME
Willem Beumer v Avelina Amores, G.R. No. 195670. SECOND DIVISION. December 3, 2012. PERLAS-
BERNABE, J.
Q. Beumer, a Dutch National, and Amores, a Filipina, were married. After several years of marriage, the RTC
of Negros Oriental, declared the nullity of their marriage on the basis of the former’s psychological incapacity.
Beumer filed a Petition for Dissolution of Conjugal Partnership praying for the
distribution of the properties claimed to have been acquired during the subsistence of their
marriage. The RTC of Negros Oriental rendered its Decision, dissolving the parties’ conjugal partnership,
awarding all the parcels of land to respondent as her paraphernal properties; the tools and equipment in favor of
Beumer as his exclusive properties; the two (2) houses standing on Lots 1 and 2142 as co-owned by the parties
holding that he used his personal funds to purchase the subject parcels of land. The CA affirmed the Decision of
RTC.
(a) Can Beumer legally own land in the Philippines?
Answer: No, Beumer, being a Dutch national, cannot legally acquire land in the Philippines. He acquired no
right whatsoever over the subject properties by virtue of its unconstitutional purchase. It is well-established 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.

(b) Can Beumer claim reimbursement of the funds he used to purchase the subject parcels of land?
Answer: No, Beumer cannot claim reimbursement of the funds he used to purchase the subject parcels of land.
A claim for reimbursement of the value of purchased parcels of Philippine land instituted by a foreigner against
his former Filipina spouse cannot prosper on the ground of equity where it is clear that he willingly and
knowingly bought the property despite the prohibition against foreign ownership of Philippine land enshrined
under Section 7, Article XII of the 1987 Philippine Constitution. Corollary thereto, under Article 1412 of the
Civil Code, petitioner cannot have the subject
properties titled 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.

VALIDITY OF MARRIAGE UNDER MUSLIM PERSONAL LAWS (P.D. 1803)

Juliano-Llave vs. Republic, et al. (G.R. No. 169766, March 30, 2011)
Q. Before he died, Senator Tamano married Estrellita twice once under the Islamic laws and, subsequently,
under civil ceremonies. In their marriage contracts, Sen. Tamano's civil status was indicated as divorced.
Estrellita represented herself to the whole world as Sen. Tamano's wife, and upon his death, his widow.
In 1994, Haja Putri Zorayda A. Tamano (Zorayda) and her son Adib Ahmad A. Tamano (Adib), in their own
behalf and in behalf of the rest of Sen. Tamano's legitimate children with Zorayda, filed a complaint with the
RTC of Quezon City for the declaration of nullity of marriage between Estrellita and Sen. Tamano for being
bigamous. The complaint alleged that Sen. Tamano married Zorayda on May 31, 1958 under civil rites, and that
this marriage remained subsisting when he married Estrellita in 1993. RTC-QC ruled that Tamano’s marriage to
Estrellita is void ab initio. The Court of Appeals affirmed the RTC decision. Estrellita assailed the decision as
being both Muslims, the marriage of Tamano and Zorayda must be governed by the provision of P.D. 1083,
otherwise known as the Code of Muslim Personal Laws. Thus, the declaration of Tamano as being divorced
must be given credence.
(a) What is the effect of P.D. 1083 on the marriages of Tamano and Estrellita and Tamano and Zorayda?
Answer: P.D. No. 1083 cannot benefit Estrellita. Firstly, Article 13 (1) thereof provides that the law applies to
"marriage and divorce wherein both parties are Muslims or wherein only the male party is a Muslim and the
marriage is solemnized in accordance with Muslim law or this Code in any part of the Philippines." Article 13 of
PD 1083 does not provide for a situation where the parties were married both in civil and Muslim rites."

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(b) Can the Muslim Code be applied retroactively as to affect provisions of the Civil Code which govern
the marriage of Tamano and Zorayda?
Answer: The Muslim Code took effect only on February 4, 1977, and this law cannot retroactively override the
Civil Code which already bestowed certain rights on the marriage of Sen. Tamano and Zorayda. The marriage of
the two was still subsisting when Tamano contracted his second marriage.
(c) Do Zorayda and Adib have locus standi to file the Petition?
Answer: Zorayda and Adib, as the injured parties, have the legal personalities to file the declaration of nullity of
marriage. A.M. No. 02-11-10-SC, which limits to only the husband or the wife the filing of a petition for nullity
is prospective in application and does not shut out the prior spouse from filing suit if the ground is a bigamous
subsequent marriage.

SALE OF CONJUGAL PROPERTY

Titan Construction Corporation, vs. Spouses David (G.R. No. 169548, March 15, 2010)
Q. Manuel and Martha own a 602- meter lot in White Plains. They separated in 1978 and lost communication.
In 1995, Manuel learned that Martha sold to Titan Construction Corporation the White Plains property.
Manuel filed a complaint for Annulment of Contract and Reconveyance. He alleged that the sale was without his
knowledge. Titan Construction Corporation claimed it is a buyer in good faith. Is the Deed of Sale executed by
Martha to Titan Construction valid?
Answer: The sale is not valid. In the absence of Manuel's consent, the Deed of Sale is void. Article 165 of the
Civil Code expressly provides that "the husband is the administrator of the conjugal partnership." Article 172 of
the Civil Code ordains that "(t) he wife cannot bind the conjugal partnership without the husband's consent,
except in cases provided by law." Similarly, Article 124 of the Family Code requires that any disposition or
encumbrance of conjugal property must have the written consent of the other spouse, otherwise, such disposition
is void.
Article 116 of the Family Code is unequivocal in that "all property acquired during the marriage, whether the
acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed
to be conjugal unless the contrary is proved.” The presumption being in favor of the conjugal nature of the
property, the burden to prove otherwise rested with Titan Construction Corporation.

EFFECT OF NULLITY OF MARRIAGE ON CONJUGAL PROPERTY

Marietta N. Barrido v. Leonardo V. Nonato (G.R. No. 176492, 20 October 2014)
Q: Is the property still owned in common after the marriage was declared void on the GROUND of
psychological incapacity.
Answer: Yes, the property is still owned in common after the marriage was declared void on the GROUND of
psychological incapacity. During their marriage, however, the conjugal partnership regime governed their
property relations. Although Article 129 provides for the procedure in case of dissolution of the conjugal
partnership regime, Article 147 specifically covers the effects of void marriages on the spouses’ property
relations.
This particular kind of co-ownership applies when a man and a woman, suffering no illegal impediment to
marry each other, exclusively live together as husband and wife under a void marriage or without the benefit of
marriage.
It is clear, therefore, that for Article 147 to operate, the man and the woman: (1) must be capacitated to marry
each other; (2) live exclusively with each other as husband and wife; and (3) their union is without the benefit of
marriage or their marriage is void.

PARENTAL AUTHORITY
Q. May grandparents be granted temporary custody of a grandchild?
Answer: A full trial is required. In the case of Bagtas v. Santos, which was a tug-of-war between the maternal
grandparents of the illegitimate minor child and the actual custodians of the latter, the Court faulted the trial
court for hastily dismissing the petition for habeas corpus and awarding the custody of the minor to the

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grandparents without conducting any trial. The import of such decision is that the preference accorded by Article
216 of the Family Code does not automatically attach to the grandparents, and is conditioned upon the
determination of their fitness to take care of their grandchild. In ruling as it did, the Court ratiocinated that the
child's welfare being the most important consideration, it is not bound by any legal right of a person over the
child.

Renalyn A. Masbate and Spouses Renato Masbate and Marlyn Masbate v. Ricky James Relucio
(G.R. No. 235498, SECOND DIVISION, July 30, 2018, PERLAS-BERNABE, J.)
Q. May the court grant “limited and temporary custody” to a parent who is deprived of the
care and custody of a child below 7 years old pending final determination of who has the right to custody?
Answer: No, it is not proper to grant temporary custody of child because Sec. 15 of A.M. No. 03-04-04-SC
(Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors) provides for
temporary visitation rights, not temporary custody. It is only after trial, when the court renders its judgment
awarding the custody of the minor to the proper party, that the court may likewise issue “any order that is just
and reasonable permitting the parent who is deprived of the care and custody of the minor to visit or have
temporary custody.” By granting temporary albeit limited custody ahead of trial, the trial court will overturn the
tender-age presumption with nothing but bare allegations, to which the Court cannot give its imprimatur. Even
way back, Article 363 of the Civil Code provides that in all questions relating to the care, custody, education and
property of the children, the latter's welfare is paramount. Under present rules, A.M. No. 03-04-04-SC explicitly
states that "[i]n awarding custody, the court shall consider the best interests of the minor and shall give
paramount consideration to [her] material and moral welfare. The best interests of the minor refer to the totality
of the circumstances and conditions as are most congenial to the survival, protection, and feelings of security of
the minor encouraging to [her] physical, psychological and emotional development. It also means the least
detrimental available alternative for safeguarding the growth and development of the minor."

Aguilar v. Siasat, G.R. No. 200169, January 28, 2015

Q. What proof may be adduced to establish filiation under the Family Code?
Answer: The filiation of illegitimate children, like legitimate children, is established by (1) the record of birth
appearing in the civil register or a final judgment; or (2) an admission of legitimate filiation in a public
document or a private handwritten instrument and signed by the parent concerned. In the absence thereof,
filiation shall be proved by (1) the open and continuous possession of the status of a legitimate child; or (2) any
other means allowed by the Rules of Court and special laws. The due recognition of an illegitimate child in a
record of birth, a will, a statement before a court of record, or in any authentic writing is, in itself, a
consummated act of acknowledgment of the child, and no further court action is required. In fact, any authentic
writing is treated not just a ground for compulsory recognition; it is in itself a voluntary recognition that does
not require a separate action for judicial approval. Where, instead, a claim for recognition is predicated on other
evidence merely tending to prove paternity, i.e., outside of a record of birth, a will, a statement before a court of
record or an authentic writing, judicial action within the applicable statute of limitations is essential in order to
establish the child’s acknowledgment.

ADOPTION
Q. Who are qualified to adopt under R.A. No. 8552 (Domestic Adoption Act of 1998)?
Answer: The following may adopt:
(1) Any Filipino citizen –
a. of legal age,
b. in possession of full civil capacity and legal rights,
c. of good moral character,
d. has not been convicted of any crime involving moral turpitude,
e. emotionally and psychologically capable of caring for children,
f. at least 16 years older than the adoptee, and
g. who is in a position to support and care for his children in keeping with the means of

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 the family; or
(2) Any alien possessing the same qualifications as above stated for Filipino nationals, provided –
a. His country has diplomatic relations with the Republic of the Philippines,
b. He has been living in the Philippines for at least three (3) continuous years prior to
the filing of the application for adoption and maintains such residence until the
adoption decree is entered,
c. He has been certified by his diplomatic or consular office or any appropriate
government agency that he has the legal capacity to adopt in his country, and
d. His government allows the adoptee to enter his country as his adopted child.
(3) The guardian with respect to the ward after the termination of the guardianship and
clearance of his financial accountabilities. (Sec. 7, RA 855)

Q. May an alien claim exemption from the requirements of residency and certification of the alien’s
qualification to adopt?
Answer: The requirements on residency and certification of the alien’s qualification to adopt in his country
may be waived for the following:
(1) A former Filipino citizen who seeks to adopt a relative within the fourth (4th) degree of
consanguinity or affinity;
(2) One who seeks to adopt the legitimate child of his Filipino spouse; or
(3) One who is married to a Filipino citizen and seeks to adopt jointly with his spouse a relative
within the fourth degree of consanguinity or affinity of the Filipino spouse. (Sec. 7, RA 855)

Q. Who may be adopted under RA 8552?

Answer: The following may be adopted:
(1) Any person below 18 years of age who has been administratively or judicially declared
available for adoption;
(2) The legitimate son/daughter of one spouse by the other spouse;
(3) An illegitimate son/daughter by a qualified adopter to improve his/her status to that of
legitimacy;
(4) A person of legal age if, prior to the adoption, said person has been consistently considered
and treated by the adopter/s as his/her own child since minority;
(5) A child whose adoption has been previously rescinded; or
(6) A child whose biological or adoptive parent/s has died (provided that no proceedings shall be
initiated within 6 months from the time of death of said parent/s).

Q. Under what circumstances may spouses need not adopt jointly?

Answer: Husband and wife are not required to adopt jointly:
(1) If one spouse seeks to adopt the legitimate son/daughter of the other;
(2) If one spouse seeks to adopt his/her own illegitimate son/daughter; provided, however, that
the other spouse has signified his/her consent thereto; or
(3) If the spouses are legally separated from each other. (Sec. 7, RA 8552)

Bartolome v. Social Security System, G.R. No. 192531 November 12, 2014
Q. A was employed in Katta Shipping Company and was enrolled under the government’s
Employees’ Compensation Program (ECP). He died while on board a vessel of Katta.
A was, at the time of his death, childless and unmarried.
B, A’s biological mother filed a claim for death benefits. SSS denied the claim on the ground that B was no
longer considered as the parent of A since the latter was legally adopted by a certain C. According to the records,
C died during A’s minority. Can B claim the death benefits of A?

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Answer: Yes, B can claim A’s death benefits. The death of an adopting parent during the minority of the
adopted child automatically revives the filial relationship of the child to his/her biological parents. State policies
behind RA 8552 wherein the paramount consideration is the best interest of the child justify such disposition. It
is, after all, for the best interest of the child that someone will remain charged for his welfare and upbringing
should his or her adopter fail or is rendered incapacitated to perform his duties as a parent at a time the adoptee
is still in his formative years, and in the absence or, as in this case, death of the adopter, no one else could
reasonably be expected to perform the role of a parent other than the adoptee’s biological one.

RULES ON ACCESSION
Heirs of Francisco I. Narvasa, Sr. et al. v. Emiliana Imbornal et al., G.R. No. 182908, August 6, 2014,
SECOND DIVISION, PERLAS-BERNABE, J
Q. Who has the right over alluvial deposits?
Answer: Alluvial deposits along the banks of a creek or a river do not form part of the public domain as the
alluvial property automatically belongs to the owner of the estate to which it may have been added. The only
restriction provided for by law is that the owner of the adjoining property must register the same under the
Torrens system; otherwise, the alluvial property may be subject to acquisition through prescription by third
persons.

QUIETING OF TITLE
Bilag v. Ay Ay et al., G.R. No. 189950, FIRST DIVISION, April 24, 2017, PERLAS-BERNABE, J.
Q. May parties claim registration of parcels of land covered the Baguio Townsite Reservation after July
31, 1973?
Answer: In a catena of cases, and more importantly, in PD 1271, it was expressly declared that all orders and
decisions issued by the Court of First Instance of Baguio and Benguet in connection with the proceedings for the
reopening of Civil Reservation Case No. 1, GLRO Record 211, covering lands within the Baguio Townsite
Reservation are null and void and without force and effect. While PD 1271 provides for a means to validate
ownership over lands forming part of the Baguio Townsite Reservation, it requires, among others, that a
Certificate of Title be issued on such lands on or before July 31, 1973. In this case, records reveal that the
subject lands are unregistered and untitled, as petitioners' assertion to that effect was not seriously disputed by
respondents. In view of the foregoing, it is only reasonable to conclude that the subject lands should be properly
classified as lands of the public domain as well.

LAND TITLES AND DEEDS TORRENS SYSTEM (GENERAL PRINCIPLES)

Republic of the Philippines v. Heirs of Julio Ramos (G.R. No. 169481, 22 February 2010)
Q: What are the jurisdictional requirements for reconstitution of a lost title?
Answer: In petitions for reconstitution of a lost or destroyed Torrens certificate of title, trial courts are duty
bound to examine the records of the case to determine whether the jurisdictional requirements have been strictly
complied with.
Sections 12 and 13 of RA No. 26 laid down the specific procedure for the reconstitution of lost or destroyed
Torrens certificates of title. Section 12 provides for the facts that a petition must contain while Section 13
requires notice of the petition to be published twice and to be posted on the main entrance of the provincial and
municipal building. Copy of the notice should also be sent, by registered mail, to every person named therein.
The notice shall state the number of the lost or destroyed certificate of title, name of registered owner, and
names of occupants.

EVIDENTIARY VALUE OF A TITLE ON LAND: INDEFEASIBILTIY OF TITLE

Spouses Federico Valenzuela and Luz Buena-Valenzuela v. Spouses Jose Mano Jr. and Rosanna Reyes-
Mano (G.R. No. 172611, 9 July 2010)
Q: Is a certificate of title sufficient to prove ownership to a parcel of land?
Answer: No, settled is the rule that a person, whose certificate of title included by mistake or oversight the land
owned by another, does not become the owner of such land by virtue of the certificate alone. The Torrens

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System is intended to guarantee the integrity and conclusiveness of the certificate of registration but is not
intended to perpetrate fraud against the real owner of the land. The certificate of title cannot be used to protect a
usurper from the true owner.

Augusto Ong Trinidad II et. al. v. Spouses Bonifacio Palad and Felicidad Kausapin (G.R. No. 203397, 9
December 2015)
Q: What are the purposes or effects of Transfer of Certificate of Title?
Answer: Transfer Certificate of Title constitutes as evidence of ownership over the subject property, which lies
within the area covered by said title; it serves as evidence of indefeasible and incontrovertible title to the
property in favor of whose names appear therein; and that as registered owners, they are entitled to possession of
the subject property.

INDEFEASIBILITY OF TITLE; RESOLVING EXISTENCE OF TWO TITLES OVER A PARCEL OF

LAND
Leoncio C. Oliveros, represented by his heirs, Moises Dela Cruz, and the Heirs of Lucio Dela Cruz,
represented by Felix Dela Cruz v. San Miguel Corporation, the Register of Deeds of Caloocan City, and the
Register of Deeds of Valenzuela (G.R. No. 173531, 1 February 2012)
Q. What is the rule in resolving existence of two titles over a parcel of land?
Answer: The principle that the earlier title prevails over a subsequent one applies when there are two apparently
valid titles over a single property. The existence of the earlier valid title renders the subsequent title void because
a single property cannot be registered twice. As stated in Metropolitan Waterworks and Sewerage Systems v.
Court of Appeals, "a certificate is not conclusive evidence of title if it is shown that the same land had already
been registered and an earlier certificate for the same is in existence.

EVIDENTIARY VALUE OF TRANSFER CERTIFICATE OF TITLE

Gina Endaya v. Ernesto V. Villaos (G.R. No. 202426, 27 January 2016)
Q: Should a Transfer Certificate of Title be given more probative weight than unregistered deed of sale?
Answer: Yes, in resolving the issue of possession in an ejectment case, the registered owner of the property is
preferred over the transferee under an unregistered deed of sale. In the present case, there is no dispute that
petitioner is the holder of a Torrens title over the entire lot. Respondents have only their notarized but
unregistered Kasulatan sa Bilihan to support their claim of ownership. Thus, even if respondents’ proof of
ownership has in its favor a juris tantum presumption of authenticity and due execution, the same cannot prevail
over petitioner’s Torrens title. It remains true that the registered owner is preferred to possess the property
subject of the unlawful detainer case. The age-old rule is that the person who has a Torrens Title over a land is
entitled to possession thereof.

RESTORATION OF TITLES – ERASURE, ALTERATION OR AMENDMENT

Rosario Banguis-Tambuyat v. Wenifreda Balcom-Tambuyat (G.R. No. 202805, 23 March 2015)
Q: What are the instances where the erasure, alteration or amendment of a certificate of title may be
restored?
Answer: Under Section 108 of PD 1529, the proceeding for the erasure, alteration, or amendment of a
certificate of title may be resorted to in seven instances: (1) when registered interests of any description, whether
vested, contingent, expectant, or inchoate, have terminated and ceased; (2) when new interests have arisen or
been created which do not appear upon the certificate; (3) when any error, omission or mistake was made in
entering a certificate or any memorandum thereon or on any duplicate certificate; (4) when the name of any
person on the certificate has been changed; (5) when the registered owner has been married, or, registered as
married, the marriage has been terminated and no right or interest of heirs or creditors will thereby be affected;
(6) when a corporation, which owned registered land and has been dissolved, has not conveyed the same within
three years after its dissolution; and (7) when there is reasonable ground for the amendment or alteration of title.

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EVIDENTIARY PROOFS IN REGISTRATION OF ORIGINAL LAND TITLES
Republic of the Philippines v. Spouses Dante and Lolita Benigno (G.R. No. 205492, 11 March 2015)
Q: What must an applicant prove for registration of title under PD 1529?
Answer: Applicants for registration of title under PD 152950 must prove: (1) that the subject land forms part of
the disposable and alienable lands of the public domain; and (2) that they have been in open, continuous,
exclusive and notorious possession and occupation of the land under a bona fide claim of ownership since 12
June 1945 or earlier.

GOOD FAITH UNDER A REAL ESTATE MORTGAGE

Evelyn B. Ruiz v. Bernardo F. Dimailig (G.R. No. 204280, 9 November 2016)
Q: BD owned a parcel of and. He entrusted the owner’s copy of the said TCT to JD, his brother, who in turn
gave the title to ES, a broker, for the intended sale. Without the knowledge and consent of BD, ES mortgaged
the property to ER. Upon discovery, BD filed a complaint for annulment of the Deed of REM arguing that his
signature was forged. In opposition, ER argued that she met JD when she inspected the property and was given
assurance that BD owned the property and the title is genuine. ER claimed that she is a mortgagee in good faith
and the deed of REM cannot be annulled unless the loan was paid. Is being a mortgagee in good faith be a
defense?
Answer: No, as a rule, no valid mortgage will arise unless the mortgagor has a valid title or ownership over the
mortgaged property. By way of exception, a mortgagee can invoke that he or she derived title even if the
mortgagor's title on the property is defective, if he or she acted in good faith. In such instance, the mortgagee
must prove that no circumstance that should have aroused her suspicion on the veracity of the mortgagor's title
on the property was disregarded. Where the mortgagor is an impostor who only pretended to be the registered
owner, and acting on such pretense, mortgaged the property to another, the mortgagor evidently did not succeed
in having the property titled in his or her name, and the mortgagee cannot rely on such pretense as what appears
on the title is not the impostor's name but that of the registered owner.

LAND OF PUBLIC DOMAIN

Republic of the Philippines v. Angeline L. Dayaoen, Agustina Tauel, and Lawana T. Batcagan (G.R. No.
200773, 8 July 2015)
Q. What is the evidence required to register a title of a parcel of land alleged to have been declared
available for disposition by the government?
Answer: Under the Regalian doctrine, all lands of the public domain belong to the State. The classification and
reclassification of such lands are the prerogative of the Executive Department. The President may at any time
transfer these public lands from one class to another.
In Republic v. Cortez, the Court stressed that incontrovertible evidence must be presented to establish that the
land subject of the application is alienable or disposable. 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 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 must also secure a certification from the
Government that the lands applied for are alienable and disposable. The well-entrenched rule is that all lands not
appearing to be clearly of private dominion presumably belong to the State. The onus to overturn, by
incontrovertible evidence, the presumption that the land subject of an application for registration is alienable and
disposable rests with the applicant.

CONCEPT OF AN EQUITABLE TITLE

Q. Distinguish legal from equitable title.
Answer: Legal title denotes registered ownership, while equitable title means beneficial ownership. In the
absence of such legal or equitable title, or interest, there is no cloud to be prevented or removed. (Macalino, Jr.
v. Pis-An, G.R. No. 204056, June 1, 2016)

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ENCROACHMENT OVER PROPERTY OF ANOTHER; BUILDER IN BAD FAITH
Q. An RTC Decision reconveying to X a portion of Lot 123 which was erroneously included in Y's free patent
application became final and executory. In so ruling, the RTC acknowledged X's actual and exclusive
possession, cultivation, and claim of ownership. The Deed of Conveyance issued in favor of X, however, could
not be annotated on the OCT of Lot 123 because said title had been cancelled because the area over by the title
of his property was included in homestead title of Y. X’s title was cancelled because Y previously mortgaged the
lot to the bank as security for series of loans, and the mortgage was eventually foreclosed. Thus, title to the lot
was transferred to PNB. X filed a complaint against PNB and Y for Declaration of Nullity of Mortgage,
Foreclosure Sale, Reconveyance and Damages. According to X, PNB was not an innocent purchaser/mortgagee
for value. According to the bank, the action of X had prescribed. Rule on the respective party's contentions.
Answer: (1) Ruling on PNB’s contention: PNB is not an innocent purchaser for value or "one who buys the
property of another, without notice that some other person has a right or interest in such property and pays the
full price for the same, at the time of such purchase or before he has notice of the claims or interest of some
other person in the property. PNB has the burden of evidence that it acted in good faith from the time the land
was offered as collateral. However, PNB miserably failed to overcome this burden. There was no showing at all
that it conducted an investigation; that it observed due diligence and prudence by checking for flaws in the title;
that it verified the identity of the true owner and possessor of the land; and, that it visited subject premises to
determine its actual condition before accepting the same as collateral. A banking institution is expected to
exercise due diligence before entering into a mortgage contract. The ascertainment of the status or condition of a
property offered to it as security for a loan must be a standard and indispensable part of its operations.

(2) Ruling X’s Action for Reconveyance: An action for reconveyance filed by a person claiming to be the owner
and who is in actual possession of the property does not prescribe. The reason for this is that one who is in
actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed
or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed
possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature
of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who
is in possession. In X’s case, as it has been judicially established that he is in actual possession of the property
he claims as his and that he has a better right to the disputed portion, his suit for reconveyance is in effect an
action for quieting of title. Hence, PNB’s defense of prescription against X does not lie.

(3) Ruling on Y’s defense: 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. An
action for reconveyance based on implied trust prescribes in 10 years as it is an obligation created by law, to be
counted from the date of issuance of the Torrens title over the property. This rule, however, applies only when
the plaintiff or the person enforcing the trust is not in possession of the property. (PNB v. Jumamoy, G.R. No.
169901, August 3, 2011)

EASEMENTS
Q. What are the requisites for entitlement to a right of way?
Answer: To be entitled to an easement of right of way, the following requisites should be met: (1) An
immovable is surrounded by other immovables belonging to other persons, and is without adequate outlet to a
public highway;
(2) Payment of proper indemnity by the owner of the surrounded immovable;
(3) The isolation of the immovable is not due to its owner’s acts; and
(4) The proposed easement of right of way is established at the point least prejudicial to the servient estate, and
insofar as consistent with this rule, where the distance of the dominant estate to a public highway may be the
shortest. (Naga Centrum v. Sps. Orzals, G.R. No. 203576, September 14, 2016)

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Andres et. Al. v. Sta. Lucia Realty and Development Inc. (G.R. No. 201405, August 24, 2015)
Q. Can the petitioners demand an easement of right-of-way from respondent despite the fact that they
have not acquired ownership over the supposed dominant estate?
Answer: Under Article 649 of the Civil Code, an easement of right-of-way may be demanded by the owner of
an immovable or by any person who by virtue of a real right may cultivate or use the same.
It appears that the subject property is an unregistered public agricultural land. Thus, being a land of the public
domain, petitioners, in order to validly claim acquisition thereof through prescription, must first be able to show
that the State has -expressly declared through either a law enacted by Congress or a proclamation issued by the
President that the subject [property] is no longer retained for public service or the development of the national
wealth or that the property has been converted into patrimonial.
Consequently, without an express declaration by the State, the land remains to be a property of public dominion
and hence, not susceptible to acquisition by virtue of prescription.
In the absence of such proof of declaration in this case, petitioners' claim of ownership over the subject property
based on prescription necessarily crumbles. Conversely, they cannot demand an easement of right-of-way from
respondent for lack of personality.

HEIRS OF VICTOR AMISTOSO v. ELMER T. VALLECER, REPRESENTED BY EDGAR VALLECER,

G.R. No. 227124, SECOND DIVISION, December 06, 2017, PERLAS-BERNABE, J.
Q. What is accion reivindicatoria?
Answer: Accion reivindicatoria is a suit which has for its object the recovery of possession of real property as
owner and that it involves recovery of ownership and possession based on the said ownership.
Q. What is accion publiciana?
Answer: Accion publiciana is a plenary action to recover the right of possession of land.

BUILDER IN BAD FAITH

Pen Development Corp, et al., v. Martinez Leyba, Inc.(G.R. No. 211845, August 9, 2017)
Q. Martinez Leyba, Inc. is the owner of three parcels of contiguous lands. Pen Development Corp. and Las
Brisas Resorts Corp., which merged into one corporate entity, likewise owns a land adjacent to Leyba’s
properties.
Las Brisas fenced its land which encroached on Leyba’s property. Leyba sent a letter to Las Brisas informing it
of the encroachment and requested it to refrain from performing other acts that would impair Leyba’s property.
Despite several notices, Las Brisas continued on developing the property.Martinez filed a Complaint for
Quieting of Title, Cancellation of Title and Recovery of Ownership with Damages. Las Brisas denied the
encroachment.
(a) Is Las Brisas a possessor/builder in good faith.
Answer: Las Brisas is a builder in bad faith because of its obstinate refusal to abide with Martinez’s repeated
demands to cease and desist from encroaching on their area.
The Civil Code provides:
Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is
built, planted or sown without right to indemnity.
Art. 450. The owner of the land on which anything has been built, planted or sown in bad
faith may demand the demolition of the work, or that the planting or sowing be removed, in
order to replace things in their former condition at the expense of the person who built, planted
or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the
proper rent.
Art. 451. In the cases of the two preceding articles, the landowner is entitled to damages
from the builder, planter or sower.

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(b) Was Leyba guilty of laches in enforcing its putative rights?
Answer: Leyba is not guilty of laches because as owner of the land, it has an imprescriptible right to recover
possession thereof from any person illegally occupying its lands. “prescription and laches cannot apply to
registered land covered by the Torrens system” pursuant to Section 47 of the Property Registration Decree 1529,
which states that “no title to registered land in derogation of the title of the registered owner shall be acquired by
prescription or adverse possession.”

(c) May the trial court grant indemnity in favor of Leyba?

Answer: Yes. Leyba has the right to recover damages. As a builder in bad faith, Las Brisas is not entitled to
indemnity and Martinez may demand the demolition of the developments in the property.

CO-OWNERSHIP
Neri et. al v Heirs of Hadji Yusop Uy, G.R. No. 194366. SECOND DIVISION. October 10, 2012,
PERLAS-BERNABE, J.
Q. What are rights of a co-owner?
Answer: Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with
respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership.
Q. What is the effect of the execution of the Extra-Judicial Settlement of the Estate with Absolute Deed of
Sale when not all the co-owners participated in the transaction?
Answer: Where in the execution of the Extra-Judicial Settlement of the Estate with Absolute Deed was
executed without the participation of the other co-owners, the settlement was not valid and binding upon them
and consequently, a total nullity.

Antipolo Ining (deceased), survived by Manuel Villanueva, et. al. v. Leonardo R. Vega, substituted by
Lourdes Vega, et. al. (G.R. No. 174727, 12 August 2013)
Q: What are the requisites in order that the title may prescribe in favor of a co-owner?
Answer: The requisites in order that the title may prescribe in favor of a co-owner are: (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.

CO-OWNERS, NOT INDISPENSABLE PARTIES TO A CASE

Rey Castigador Catedrilla v. Mario and Margie Lauron (G.R. No. 179011, 15 April 2013)
Q: Are all co-owners indispensable parties even if only one of them filed a case covering the property they
co-own?
Answer: No, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to
Article 487 of the Civil Code and the relevant jurisprudence, any one of them may bring an action, any kind of
action for the recovery of co-owned properties. Therefore, only one of the co-owners, namely the co-owner who
filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners
are not indispensable parties. They are not even necessary parties, for a complete relief can be afforded in the
suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-
owners.

SALE OF REAL PROPERTY ON INSTALLMENT

Q. For failure to pay the monthly amortization of a house and lot which was the subject of a Contract to
Sell, the seller sent the buyer a notarized Notice of Delinquency and Cancellation of Contract to Sell. The
seller likewise file an action for unlawful detainer against the buyer.

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(a) In case the sale should be cancelled, is the seller required to refund all the monthly installments paid
by the buyer?
Answer: No, the sale should not canceled since the buyer paid at least two (2) years of installment, he is only
entitled to receive the cash surrender value of the payments he made which, under Section 3(b) of the Maceda
Law, is equivalent to 50% of the total payments made. 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. In this case, the seller complied only
with the first condition by sending a notarized notice of cancellation to the buyer. It failed, however, to refund
the cash surrender value to him. Thus, the Contract to Sell remains valid and subsisting and supposedly, the
buyer has the right to continue occupying the subject property.

(b) Is the seller required to pay the buyer the value of the house erected on the subject lot?
Answer: Yes, the buyer is entitled to reimbursement of the improvements made on the property. In view of the
special circumstances obtaining in this case, the Court is constrained to rely on the presumption of good faith on
the part of the buyer. Thus, the buyer is presumed builder in good faith.

RECISSION OF A CONTRACT BASED ON FAILURE TO FULFILL SUSPENSIVE CONDITION;

APPLICATION OF MACEDA LAW ON SALE OF REAL PROPERTY ON INSTALLMENT
Q. Spouses Bonrostro v. Spouses Luna (G.R. No. 172346, July 24, 2013)
Constancia Luna entered into a Contract to Sell over a house and lot with Bliss Development Corp.(“BDC”), a
government-owned and control corporation. Luna sold to Spouses Bonrostro the house for the price of
P1,250,000, payable on four (4) installments. It was stipulated that should Spouses Bonrostro fail to pay, the
Contract to Sell shall be deemed cancelled and rescinded and 5% of the total price shall be forfeited. After the
execution of the contract, Spouses Bonrostro took possession of the property but failed to pay the three other
installments. Luna was compelled to pay the unpaid amortization so that her Contract to Sell would not be
cancelled and she would not be liable for interest.
Luna then filed a Complaint for Rescission against Spouses Bonrostro. Luna instructed BDC not to receive
payment from the Spouses Bonrostro anymore. Meanwhile, the Spouses Bonrostro claimed that they made a
tender of payment.

(a) Is rescission the proper remedy for failure to pay the installments in a Contract to Sell real property?
Answer: No, rescission is not the property remedy. 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 the title to the
supposed buyer.

(b) What is the proper remedy under the foregoing facts?

Answer: Maceda law shall apply. Section 4 thereof provides that “in case where less than two years of
installment were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the
installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the
seller may cancel the contract 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.”

(c) Was there a valid tender of payment of Spouses Bonrostro?

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Answer: There was no valid tender of payment. Tender of payment, without money, produces no effect. To 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.

(d) Can the court impose interest payment on Spouses Bonrostro?

Answer: Spouses Bonrostro are liable for the payment of interest. Contancia and her spouse suffered damages
brought about by the failure of the Spouses Bonrostro to comply with their obligation on time. " Under Article
2209 of the Civil Code, "[i]f 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.

ACCESSION AND SALE OF REAL PROPERTY ON INSTALLMENT

Q. What is the applicable rule on improvements made a seller on a property sold on installment?
Answer: While Article 448 on builders in good faith as a general rule does not apply where there is a
contractual relation between the parties such as in the instant case, it can still be applied if the parties failed to
attach a copy of the contract in the records of the case.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord with
the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the
option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner cannot refuse to
exercise either option and compel instead the owner of the building to remove it from the land. The raison d’être
for this provision has been enunciated thus: Where the builder, planter or sower has acted in good faith, a
conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements
without causing injustice to the owner of the land. In view of the impracticability of creating a state of forced
co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the
improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for the land and
the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land who is
authorized to exercise the option, because his right is older, and because, by the principle of accession, he is
entitled to the ownership of the accessory thing. (Communities Cagayan v. Sps. Nanoy, G.R. No. 17679,
November 14, 2012)

Q. What are the options of the landowner as seller under the foregoing situation?
Answer: The seller, as landowner, has two options. It may appropriate the new house by reimbursing buyer the
current market value thereof minus the cost of the old house. Under this option, buyer would have "a right of
retention which negates the obligation to pay rent." In the alternative, seller may sell the lots to buyer at a price
equivalent to the current fair value thereof. However, if the value of the lots is considerably more than the value
of the improvement, buyer cannot be compelled to purchase the lots. He can only be obliged to pay reasonable
rent. (Communities Cagayan v. Sps. Nanoy, G.R. No. 17679, November 14, 2012)

Q. Petitioners are co-owners for more than 50 years of an unregistered agricultural land in Rizal.
Respondent owns the lands surrounding the petitioner’s property. Respondent developed the lands, built
a concrete perimeter fence around it. As a result, petitioners were denied access from their property to the
nearest public road and vice versa. Petitioners filed a Complaint for Easement or Right of Way before the
RTC to gain access to the public road. Should the Complaint be granted?

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Answer: No. Under Article 649 of the Civil Code, an easement of right of way may be demanded by the owner
or an immovable or by any person who by virtue of a real right may cultivate or use the same. Only lands of the
public domain subsequently declared as such and no longer intended for public use or for development of
national wealth, or removed from the sphere of public dominion are considered converted into patrimonial lands
or lands of private ownership. The property in this case, being an unregistered agricultural land, is a land of
public domain. Petitioners, in order to validly claim acquisition thereof through prescription must first be able to
show that the state has expressly declared through either a law enacted by Congress or a proclamation issued by
the President that the subject property is no longer retained for public service or development of national wealth
or that the property has been converted into patrimonial. Thus, no right of way may be granted to petitioners.
(Andres v. Realty & Development Inc., GR No. 201405, August 24, 2015)

SALE OF PROPERTY GOVERNED BY CO-OWNERSHIP; QUIETING OF TITLE

Gil Macalino, Jr., Teresita Macalino, et. al. v. Artemio Pis-An, (G.R. No. 204056, 1 June 2016)
Q. What is Quieting of Title?
Answer: Quieting of title is a common law remedy for the removal of any cloud upon or doubt or uncertainty
with respect to title to real property. In order that an action for quieting of title may prosper, it is essential that the
plaintiff must have legal or equitable title to, or interest in, the property which is the subject-matter of the action.
Legal title denotes registered ownership, while equitable title means beneficial ownership. In the absence of such
legal or equitable title, or interest, there is no cloud to be prevented or removed.

Q. What are indispensable requisites for an action to quiet title?

Answer: The indispensable requisites are: (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.

SALES: SUSPENSIVE CONDITION IN A CONTRACT OF SALE

Spouses Domingo vs. Spouses Manzano (G.R. No. 201883, Nov. 16, 2016)
Q. Spouses Manzano and Spouses Domingo executed a Contract of Sale which allowed Spouses Domingo to
pay in installments Spouses Manzano’s property. Spouses Domingo failed to pay the property in full. The land
remained in possession of the Spouses Manzano.
It took Spouses Domingo a while to pay the balance and by that time, Spouses Manzano no longer accepted
their payment. Spouses Domingo caused the annotation of an affidavit of adverse claim.
Spouses Manzano sold the property to a certain Carmelita Aquino. This prompted Spouses Domingo file a
Complaint for Specific Performance and Damages, with prayer that the new titled issued to Carmelita be
cancelled.
(a) Under the foregoing facts, who will the Spouses Domingo have a better right than Carmelita?
Answer: Spouses Domingo will not have a better right than Carmelita.

(b) Is there a double sale under the foregoing facts?

There is no double sale. In a contract to sell, the full payment of the purchase price partakes of a suspensive
condition, the non-fulfillment of which prevents that obligation to sell from arising and thus ownership is
retained by the seller. Without that sale, Article 1544 shall not apply as there is no case of double sale. There is
here only one sale and that is to Carmelita.

(c) What reliefs may the trail court grant to Spouses Domingo?
Answer: The court may order Spouses Manzano to reimburse Spouses Domingo of the amount they paid in
installments plus nominal damages and interests.

SALE OF REAL PROPERTY: BAD FAITH ON THE PART OF THE SELLER; MORTGAGE
WITHOUT THE CONSENT OF SPOUSE
Bignay EX-IM Phils. Inc. v. Union Bank of the Phil. (G.R. No. 171590, February 12, 2014)
Page 21 of 35
Q. Bignay bought from Union Banka a foreclosed property subject of a pending case between Union Bank and
Rosario De Leon, the mortgagor. De Leon had filed an action for annulment of mortgage as the foreclosed
property was mortgaged by her husband without her consent. The trial court annulled the mortgage and ruled
that Rosario was the owner of the undivided half of the property. Bignay filed a case against Union Bank for
breach of warranty against eviction under Article 1547 and 1548 of the Civil Code. The RTC held that Union
Bank acted in bad faith in selling the property to Bignay. The CA made Union Bank liable for the amount of the
land and building constructed on it by Bignay. Was the judgment against Union Bank making it liable to pay
Bignay the cost of the land and building correct?

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Answer: The judgment is correct. Union Bank is liable to Bignay. It appears that Union Bank did not inform
Bignay of the pending case between Union Bank and Rosario. Under the law, Bignay shall have the right to
demand of Union Bank the return of the value which the thing sold had at the time of the eviction, be it greater
or less than the price of the sale as well as the expenses of the contract, if the vendee has paid them and the
damages and interests, and ornamental expenses, if the same was made in bad faith.

PERFECTION OF A CONTRACT OF SALE

First Optima Realty Corp. v. Securitron Security Services, Inc. (G.R. No. 199648, January 28, 2015)
Q. Mr. Antonio Eleazar, the General Manager of Securitron sent a letter to First Optima offering to purchase a
property. A series of telephone negotiations ensued between Eleazar and First Optima’s employees. Eleazar also
went to the office of First Optima and offered to pay in cash but Carolina Young, Executive Vice President of
First Optima refused to accept it.
Securitron made a formal offer in a letter accompanied by a check in the amount of P100,000.00. The check was
deposited and credited to First Optima. Securitron then demanded to proceed with the sale.
Securitron filed a complaint for specific performance with damages since First Optima refused to honor the
agreement between them. First Optima claimed that it did not agree to sell the property.
(a) Was the contract of sale between First Optima and Securitron perfected?
Answer: The contract of sale was never perfected. Nothing shows that the parties had agreed on any final
arrangement containing the essential elements of a contract of sale, namely (1) consent or the meeting of the
minds; (2) object or subject matter of the contract; and (3) the price or consideration of the sale.

(b) Can the P100,000.00 deposited to the account of First Optima be considered earnest money?
Answer: Earnest money applies to a perfected sale. Article 1482 states that “there must be first a perfected
contract of sale before we can speak of earnest money.”

FORBEARANCE
Hermojina Estores v. Spouses Arturo and Laura Supangan (G.R. No. 175139, 18 April 2012)
Q. What is forbearance?
Answer: In Crismina Garments, Inc. v. Court of Appeals, "forbearance" was defined as a "contractual obligation
of lender or creditor to refrain during a given period of time, from requiring the borrower or debtor to repay a
loan or debt then due and payable." In such case, "forbearance of money, goods or credits" will have no distinct
definition from a loan. Forbearance of money, goods or credits refers to arrangements other than loan
agreements, where a person acquiesces to the temporary use of his money, goods or credits pending happening
of certain events or fulfillment of certain conditions.

Q. What is an Option Contract?

Answer: Option Contract is an agreement in writing to give a person the 'option' to purchase lands within a
given time at a named price. It is neither a sale nor an agreement to sell. In a right of first refusal, while the
object might be made determinate, the exercise of the right, however, would be dependent not only on the
grantor's eventual intention to enter into a binding juridical relation with another but also on terms, including the
price, that obviously are yet to be later firmed up.

PUBLICATION OF EXTRAJUDICIAL SETTLEMENT OF ESTATE

Noli Alfonso and Erlinda Fundialan v. Spouses Henry and Liwanag Andres (G.R. No. 166236, 29 July 2010)
Q: Is publication of the Deed of Extrajudicial Settlement of the Estate required before validly entering
into a Contract of Sale?
Answer: No, in Alejandrino v. Court of Appeals, the Court upheld the effectivity of a deed of extrajudicial
settlement that was neither notarized nor published.
Significantly, the title of the property owned by a person who dies intestate passes at once to his heirs. Such
transmission is subject to the claims of administration and the property may be taken from the heirs for the

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purpose of paying debts and expenses, but this does not prevent an immediate passage of the title, upon the
death of the intestate, from himself to his heirs. The deed of extrajudicial settlement executed evidences their
intention to partition the inherited property.

SUCCESSION: GENERAL PROVISIONS

Morales vs. Olondriz, G.R. No. 198994, February 3, 2016
Q. What is preterition?
Answer: Preterition consists in the omission of a compulsory heir in the direct line from the will, either
because he is not named or, although he is named, he is neither instituted as an heir nor assigned any part of the
estate without expressly being disinherited – tacitly depriving the heir of his legitime.
Q. What are the requisites for a valid preterition?
Answer: Preterition requires that the omission is total, meaning the heir did not also receive any
legacies,devises, or advances on his legitime. Preterition annuls the institution of heir, but the devises and
legacies shall be valid insofar as they are not inofficious, i.e., impairs or diminishes the legitime of the
compulsory heirs. It applies when:
(1) There is omission of one, some, or all of the compulsory heirs in the direct line, whether
living at the time of the execution of the will or born after the death of the testator;
(2) The omission must be total; and
(3) The omitted compulsory heirs should survive the testator. (Art. 854 and 907, Civil Code)

Mendoza v. Delos Santos, G.R. No. 176422, March 20, 2013; Chua vs. CFI, G.R. No. L-29901 August 31,
1977
Q. What is reserva troncal?
Answer: Reserva troncal is a special rule designed primarily to assure the return of a reservable property to the
third degree relatives belonging to the line from which the property originally came, and avoid its being
dissipated into and by the relatives of the inheriting ascendant. The principle of reserva troncal is provided in
Art. 891 of the Civil Code.

Q. What are the requisites for reserva troncal to apply?

Answer: Pursuant to the said provision, in order that a property may be impressed with a reservable character
the following requisites must exist, to wit:
(1) That the property was acquired by a descendant from an ascendant or from a brother or
sister by gratuitous title;
(2) That said descendant died without an issue;
(3) That the property is inherited by another ascendant by operation of law; and
(4) That there are relatives within the third degree belonging to the line from which said
property originated.

Q. Who are the persons involved in reserva troncal?

Answer: The persons involved in reserva troncal are:
(1) Origin. The ascendant or brother or sister from whom the property was received by the
descendant by lucrative or gratuitous title;
(2) Prepositus. The descendant or prepositus who received the property;
(3) Reservista. The reservor, the other ascendant who obtained the property from the prepositus
by operation of law; and
(4) Reservatario. The reservee who is within the third degree from the prepositus and who
belongs to the linea o tronco from which the property came and for whom the property
should be reserved by the reservor.

Q. Enumerate the lines of transmission in reserva troncal.

Answer: There are three (3) lines of transmission in reserva troncal:

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(1) First transmission is by gratuitous title, whether by inheritance or donation, from an
ascendant/brother/sister to a descendant called the prepositus;
(2) Second transmission is by operation of law from the prepositus to the other ascendant or
reservor, also called the reservista.
(3) Third and last transmission is from the reservista to the reservees or reservatarios who must
be relatives within the third degree from which the property came.

Q. What is the right of representation in succession?

Answer: Right of representation takes place:
(1) In testamentary succession, in case some, but not all, of the compulsory heir in the direct
descending line (a) dies before the testator; (b) becomes incapacitated to succeed from the
testator; or (c) is disinherited, and he is survived by his children or descendants. But not when
the compulsory heir repudiates his share. (Art. 856, 923, and 1035, Civil Code)
(2) In intestate succession, in case some, but not all, of the legal heir in the direct descending line
(a) dies before; or (b) becomes incapacitated to succeed from, the decedent, and he is survived
by his children or descendant, or in the absence of other heirs which can exclude them from the
succession, a brother or sister dies before the decedent survived by his or her own children.
(Arts. 972, 975, 981, 982, and 1035; Civil Code)

Arado vs. Alcoran, G.R. No. 163362, July 8, 2015

Q. Do illegitimate children of legitimate child have the right of representation in the inheritance of a
legitimate grandparent?
Answer: As provided under Art. 992 of the Civil Code, an illegitimate child has no right to inherit ab intestate
from the legitimate children and relatives of his father or mother; nor shall such children or relatives inherit in
the same manner from the illegitimate child. This is otherwise known as the “Iron Curtain Rule.” The right of
representation is not available to illegitimate descendants of legitimate children in the inheritance of a legitimate
grandparent.

Q. Under what circumstances may a person waive inheritance?

Answer: Pursuant to the second paragraph of Art. 1347 of the Civil Code, no contract may be entered into upon
a future inheritance except in cases expressly authorized by law. For the inheritance to be considered “future,”
the succession must not have been opened at the time of the contract. A contract may be classified as a contract
upon future inheritance, prohibited under the second paragraph of Art. 1347, where the following requisites
concur:
(1) That the succession has not yet been opened.
(2) That the object of the contract forms part of the inheritance; and
(3) That the promissor has, with respect to the object, an expectancy of a right which is
purely hereditary in nature.

Arellano vs. Pascual, G.R. No. 189776, December 15, 2010

Q. What are the types of compulsory heirs?
Answer: The three kinds of compulsory heirs are:
(1) Primary: Those who have precedence over and exclude other compulsory heirs.
(2) Secondary: Those who succeed only in the absence of the primary heirs.
(3) Concurring: Those who succeed together with the primary or secondary compulsory heirs.

Antonio B. Baltazar, Sebastian M. Baltazar, Antonio L. Mangalindan, Rosie M. Mateo, Nenita A. Pacheco,
Virgilio Regala, Jr., and Rafael Titco v. Lorenzo Laxa (G.R. No. 174489, 11 April 2012)
Q: Is the state of being forgetful will make an individual mentally unsound to render him unfit to execute
a will?

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Answer: No, the state of being forgetful does not necessarily make a person mentally unsound so as to render
him unfit to execute a Will. Forgetfulness is not equivalent to being of unsound mind. Besides, Article 799 of the
New Civil Code states:
Art. 799. 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 testator’s 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 and the burden to prove otherwise lies on the oppositor. Article 800 of the
New Civil Code states:
Art. 800. The law presumes that every person is of sound mind, in the absence of proof to
the contrary.
The burden of proof that the testator was not of sound mind at the time of making his
dispositions is on the person who opposes the probate of the will; but if the testator, one
month, or less, before making his will was publicly known to be insane, the person who
maintains the validity of the will must prove that the testator made it during a lucid
interval.

LEGAL STANDING OF HEIRS TO SUE

Lazaro Pasco and Lauro Pasco v. Heirs of Filomena De Guzman, represented by Cresencia De Guzman-
Principe (G.R. No. 165554, 26 July 2010)
Q: Do heirs have the capacity to sue for collection of the proceeds of the loan on behalf of the estate of the
deceased?
Answer: Yes, heirs have the capacity to sue for collection of the proceeds of the loan on behalf of the estate of
the deceased. Unpaid loans are considered assets of the estate of the creditor-decedent. In this case, while it is
true that Filomena’s estate has a different juridical personality that that of the heirs, the latter certainly have an
interest in the preservation of the estate and the recovery of its properties for at the moment of Filomena’s death,
the heirs start to own the property, subject to the decedent’s liabilities. In this connection, Article 777 of the
Civil Code states that the rights to the succession are transmitted from the moment of the death of the decedent.

DONATIONS
Q. X is the registered owner of a parcel of land issued in 1986 pursuant to an emancipation patent. X filed a case
for Forcible Entry against Y who, with violence, ousted X from the land. Y filed a Motion to Dismiss claiming
that the land was agricultural land which allegedly rendered the dispute an agrarian matter within the jurisdiction
of the DAR. Y also claimed that he obtained title through Z whose claim to the property is by virtue of an
unregistered Deed of Donation executed prior to 1972.
(a) Is the case an agrarian dispute which divests the regular court of jurisdiction?
Answer: No. A case involving an agricultural land does not immediately qualify as an agrarian dispute. For the
DAR to acquire jurisdiction over the case, there must be a tenancy relationship between the parties. It is
necessary to establish the indispensable elements of tenancy:
(1) that the parties are the landowner and tenant or agricultural lessee;
(2) the subject matter of the relationship is an agricultural land;
(3)there is consent between the parties to the relationship; 4)that the purpose of the relationship is bring about
agricultural production;
(5) that there is personal cultivation on the part of the tenant or agricultural lessee; and
(6) that the harvest is shared between the parties. In this case, not all the conditions are present.

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(b) Is X bound by the unregistered deed of donation?
Answer: No, in order that the donation of an immovable may be valid, it must be made in a public document.
Article 709 explicitly states that “the titles of ownership, or other rights over immovable property, which are not
duly inscribed or annotated in the Registry of Property shall not prejudice third persons.” Although the non-
registration of a deed of donation shall not affect its validity, the necessity of registration comes into play when
the rights of third persons are affected, as in the case at bar. The donation executed in this case, although in
writing and duly notarized, has not been registered in accordance with law. When X’s title was issued in 1986, it
became indefeasible and incontrovertible. Certificates of title issued pursuant to emancipation patents acquire
the same protection accorded to other titles, and become indefeasible upon expiration of one year from the date
of the issuance of the order for the issuance of the patent. Land so titled may no longer be the subject matter of a
cadastral proceeding; nor can they be decreed to other individuals. (Bumagat, et al. v.Arribay, GR No. 194818,
June 9, 2014)

RIGHT TO INHERIT OF A RELATIVE BY AFFINITY

Antipolo Ining, et. al v. Leonardo Vega, et al. (G.R. No. 174727, August 12, 2013)
Q: R and G are siblings. In 1997, L, the grandson of R, filed an Action for Partition claiming that he was
entitled to one-half of the property, being R’s heir. G’s heirs claimed that he has no cause of action as they have
become the land’s sole owners through Lucimo Sr. who executed an Affidavit of Ownership of the Land in
1979, having acquired it through sale as early as 1943. From then on, Lucimo Sr. enjoyed possession of the
property. This resulted to the repudiation of the co-ownership. Lucimo Sr. appeared to be the husband of
Teodora, Antipolo’s daughter. Antipolo is one of the children of G.
(a) Did L’s right prescribe because 30 years had already lapsed?
Answer: No, Leonardo’s right did not prescribe. Since Leon died without issue, his heirs are his siblings, R and
G, who thus inherited the property in equal shares. In turn, R’s and G’s 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.For prescription to set in, the repudiation must be done
by a co-owner. 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 co-ownership. 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."

(b) Is Lucimo, Jr. a co-owner of the heirs of R and G?

Answer: Lucimo, Jr. cannot be considered as a co-owner as he was just the son-in law of Antipolo, being
married to his daughter Teodora. Lucimo is not an heir of Gregoria hence not a co-owner.
A family relation under Article 150 of the Family Code is confined to husband and wife, parents and children,
ascendants and descendants and brothers and sisters. It was Teodora who is the co-owner, not Lucimo as he is
merely related by affinity to the decedent. The Court concluded that one who is merely related by affinity to the
decedent does not inherit from the latter and cannot become a co-owner of the decedent’s property.
Consequently, he cannot effect a repudiation of the co-ownership of the estate that was formed among the
decedent’s heirs.

RESCRIPTION: ACQUISITIVE AND EXTINCTIVE PRESCRIPTION

Q. May X’s possession of Y’s land, which possession was tolerated by Y for 25 years, ripen into X’s full
ownership over the said land?
Answer. No, acts that might have been merely tolerated by the owner do not constitute possession to commence
the running of the prescriptive period. (Olegario v. Mari, GR No. 147951, December 14, 2009)

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 CREDIT TRANSACTION
Bankard v. Alarte (G.R. No. 202573, April 19, 2017)
Q: Petitioner Bankard, Inc. (Bankard, now RCBC Bankard Services Corporation) is a duly constituted domestic
corporation doing business as a credit card provider, extending credit accommodations to its member-
cardholders for the purchase of goods and services obtained from Bankard-accredited business establishments,
to be paid later on by the member-cardholders following billing.

What is the nature of a credit card transaction?

Answer: Credit card transactions are simple loan arrangements between the card issuer and the card holder. It
actually involves three (3) contracts:
(a) the sales contract between the credit card holder and the merchant;
(b) the loan agreement between the credit card issuer and the credit card holder; and
(c) the promise to pay between the credit card issuer and the merchant.

CREDIT TRANSACTIONS: LOAN

Jocelyn M. Toledo v. Marilou M. Hyden (G.R. No. 172139, 8 December 2010)
Q: Is the stipulated interest of 6%-7% monthly interest excessive, iniquitous, unconscionable and
exorbitant?
Answer: The disputed 6% to 7% monthly interest rate is not iniquitous or unconscionable where there was no
urgency of the need for money on the part of the debtor which compelled her to enter into the loan transactions.
rebate on her sales. This is the reason why she did not mind the 6% to 7% monthly interest.
It was clearly shown that before the debtor availed of said loans, she knew full well that the same carried with it
an interest rate of 6% to 7% per month, yet she did not complain. The debtor cannot now go to court to have the
said interest rate be annulled on the ground that it is excessive, iniquitous, unconscionable, exorbitant, and
absolutely revolting to the conscience of man. This is so because among the maxims of equity are (1) he who
seeks equity must do equity, and (2) he who comes into equity must come with clean hands. It signifies that a
litigant may be denied relief by a court of equity on the ground that his conduct has been inequitable, unfair and
dishonest, or fraudulent, or deceitful as to the controversy in issue.

CREDIT TRANSACTIONS: “HOLD-OUT STATUS OF A BANK ACCOUNT

Metropolitan Bank and Trust Company v. Ana Grace Rosales and Yo Yuk To (G.R. No. 183204, 13 January
2014)
Q: AR and YT attempted several times to withdraw their deposits but MBTC refused stating that their bank
accounts were placed under “Hold Out” status. No explanation was given to them. Thus, they filed a complaint
for Breach of Obligation and Contract with Damages and prayed that the Hold Out status be lifted and be
allowed to withdraw their deposits. Is the Hold Out status bank account of proper?
Answer: No. Bank deposits, which are in the nature of a simple loan or mutuum, must be paid upon demand by
the depositor. 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 quasi-delict. In this case, MBTC failed to show that AR and YT have an obligation to it under any
law, contract, quasi-contract, delict, or quasi-delict. And although a criminal case was filed by MBTC against
AR, 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 AR. In fact, it is significant to note that at the time MBTC
issued the "Hold Out" order, the criminal complaint had not yet been filed. Thus, considering that AR is not
liable under any of the five sources of obligation, there was no legal basis for MBTC to issue the "Hold Out"
order. In view of the foregoing, we find that MBTC is guilty of breach of contract when it unjustifiably refused
to release AR’s and YT’s deposit despite demand. Having breached its contract with AR and YT, MBTC is liable
for damages.

EFFECT OF RESCISSION OF CONTRACT

Goldloop Properties Inc. v. Government Service Insurance System (G.R. No. 171076, 1 August 2012)

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Q: What is the effect of rescission of contract?
Answer: In cases involving rescission under Article 1191, mutual restitution is required. The parties should be
brought back to their original position prior to the inception of the contract. "Accordingly, when a decree of
rescission is handed down, it is the duty of the court to require both parties to surrender that which they have
respectively received and to place each other as far as practicable in [their] original situation.” If both parties
failed to comply with their respective obligations, Article 1192 will be applied which reads, “In case both parties
have committed a breach of the obligation, the liability of the first infractor shall be equitably tempered by the
courts. If it cannot be determined which of the parties first violated the contract, the same shall be deemed
extinguished, and each shall bear his own damages.”

ENFORCMENT OF A CONDITION UNDER A CONTRACT

REFORMATION OF INSTRUMENTS
Salun-At Marquez and Nestor Dela Cruz v. Eloisa Espejo, et. al. (G.R. No. 168387, 25 August 2010)
Q: What is the rule in case there is doubt as to the contents of the contract?
Answer: When the parties admit the contents of written documents but put in issue whether these documents
adequately and correctly express the true intention of the parties, the deciding body is authorized to look beyond
these instruments and into the contemporaneous and subsequent actions of the parties in order to determine such
intent.
Well-settled is the rule that in case of doubt, it is the intention of the contracting parties that prevails, for the
intention is the soul of a contract, not its wording which is prone to mistakes, inadequacies, or ambiguities. To
hold otherwise would give life, validity, and precedence to mere typographical errors and defeat the very
purpose of agreements.

UNENFORCEABLE CONTRACTS
Elena Jane Duarte v. Miguel Samuel A.E. Duran (G.R. No. 173038, 14 September 2011)
Q: When may a party seek the application of the Statute of Frauds?
Answer: The Statute of Frauds applies only to executory, and not to completed, executed or partially executed
contracts.

VOID AND INEXISTENT CONTRACTS

Luz S. Nicolas v. Leonora C. Mariano (G.R. No. 201070, 1 August 2016)
Q: What is effect if both parties are in pari delicto?
Answer: When both parties are in pari delicto or in equal fault, none of them may expect positive relief from the
courts in the interpretation of their agreement; instead, they shall be left as they were at the time the case was
filed.

AGENCY: NATURE, FORM AND KINDS OF AGENCY

William Angidan Siy v. Alvin Tomlin (G.R. No. 205998, 24 April 2017)
Q: What are the kinds of agency?
Answer: Articles 1869 provides that: Agency 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. Agency may be oral, unless the law requires a specific form.
Article 1870 provides that: Acceptance by the agent may also be express or implied from his acts which carry
out the agency, or from his silence or inaction according to the circumstances.

OBLIGATIONS OF THE AGENT

Nicanora G. Bucton (deceased), substituted by Requilda B. Yray (Petitioner) v. Rural bank of El Salvador, Inc.,
Misamis Oriental, and Reynaldo Cuyong (Respondents) v. Erlinda Concepcion and her husband and Agnes
Bucton Lugod (Third-Party Defendants) (G.R. No. 179625, 24 February 2014)
Q: NB filed a complaint for Annulment of Mortgage, Foreclosure and Special Power of Attorney against EC
and RBES Bank. NB alleged that she is the owner of a parcel of land. She gave EC the TCT of the parcel of land

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thinking that the latter will just show it to a possible buyer. Unfortunately, EC obtained a loan from RBES Bank
and as security, she mortgaged the property. Due to failure to settle the loan, the property was foreclosed and
sold in favor of RBES Bank. NB claimed that she did not allow EC to mortgage the property. Is there an agency
relationship between NB and EC?
Answer: No, in order to bind the principal by a deed executed by an agent, the deed must upon its face purport
to be made, signed and sealed in the name of the principal. In other words, the mere fact that the agent was
authorized to mortgage the property is not sufficient to bind the principal, unless the deed was executed and
signed by the agent for and on behalf of his principal. 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 EC 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 NB. Thus, consistent with the law on agency
and established jurisprudence, NB cannot be bound by the acts of EC.
EC acted beyond the scope of his authority.

JOINT AND SOLIDARY OBLIGATIONS

Q. What is a solidary obligation?
Answer There is a solidary liability only when the obligation expressly so states, when the law so provides or
when the nature of the obligation so requires.

EXTINGUISHMENT OF OBLIGATIONS: PAYMENT OR PERFORMANCE

Q. A dacion en pago was executed between a bank and its debtor and it was worded as follows:
“THAT, the ASSIGNOR acknowledges to be justly indebted to the ASSIGNEE in the sum of ELEVEN
MILLION EIGHT HUNDRED SEVENTY-EIGHT THOUSAND EIGHT HUNDRED PESOS
(P11,878,800.00), Philippine Currency as of August 25, 1998. Therefore, by virtue of this instrument,
ASSIGNOR hereby ASSIGNS, TRANSFERS, and CONVEYS AND SETS OVER [TO] the
ASSIGNEE that real estate with the building and improvements existing thereon, more particularly
described as follows:
x x x x of which the ASSIGNOR is the registered owner being evidenced by TCT No. x x x issued by
the Registry of Deeds of Trece Martires City. THAT, the ASSIGNEE does hereby accept this
ASSIGNMENT IN PAYMENT OF THE TOTAL OBLIGATION owing to him by the ASSIGNOR as
above-stated”
The debtor claimed that the bank's acceptance of the assignment, without any reservation or exception, resulted
in the extinguishment of the entire loan obligation. Is the debtor correct?
Answer: Yes, like in all contracts, the intention of the parties to the dation in payment is paramount and
controlling. The contractual intention determines whether the property subject of the dation will be considered
as the full equivalent of the debt and will therefore serve as full satisfaction for the debt. The 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. In the case at bar, the dacion
en pago executed by DELTA and the BANK indicates a clear intention by the parties that the assigned properties
would serve as full payment for DELTA's entire obligation without any reservation or condition, the dacion
stated that the assigned properties served as full payment of DELTA's total obligation to the BANK. (Luzon
Dev't Bank v. Enriquez, G.R. No. 168646, January 12, 2011)

VALID CONSIGNATION
Q. What are the requirements for a valid consignation?
Answer: For consignation to be valid, the debtor must comply with the following requirements under the law:
1) there was a debt due; 2) valid prior tender of payment, unless the consignation was made because of some
legal cause provided in Article 1256; 3) previous notice of the consignation has been given to the persons
interested in the performance of the obligation; 4) the amount or thing due was placed at the disposal of the
court; and, 5) after the consignation had been made, the persons interested were notified thereof:

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 "Failure in any of the requirements is enough ground to render a consignation ineffective.” (PNB v.
Chan, G.R. No. 206037, March 13, 2017)
COMPENSATION
Q. What are the requirements in order for legal compensation to take place and extingusih an obligation?
Answer: For legal compensation to take place, the requirements set forth in 1279 of the Civil Code must be
present, namely: (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.

OFFSETTING AS A WAY TO EXTINGUISH OBLIGATION

Q. What is offsetting as a way of extinguishing obligation?
Answer: Offsetting may be made on the two obligations. A debt is considered liquidated, not only when it is
expressed already in definite figures which do not require verification, but also when the determination of the
exact amount depends only on a simple arithmetical operation. When the defendant, who has an unliquidated
claim, sets it up by way of counterclaim, and a judgment is rendered liquidating such claim, it can be
compensated against the plaintiff’s claim from the moment it is liquidated by judgment. In the instant case, both
obligations are liquidated. (Montemayor v. Millora, G.R. No. 168251, July 27, 2011)

CONTRACTS: ESSENTIAL REQUISITES

Q. What are the essential elements of a contract of sale?
Answer: The essential elements of a contract of sale are: a) consent or meeting of the minds; b) determinate
subject matter; and c) price certain in money or its equivalent. (Robern Development Corp. vs. Bernardo, G.R.
No. 173622, March 11, 2013)

CONTRACTS: CONSTRUCTIVE DELIVERY

Q. Q purchased a parcel of land through a notarized Deed of Absolute Sale. Q agreed that his brother R will
have possession of the subject land. In exchange, S, the son of R will deliver to Q the produce of said land.
Unfortunately, S and R continuously refused to deliver the produce of the land or vacate the same despite his
repeated demands. Hence, Q filed an action for recovery of possession of the land. S and R contend that Q
failed to establish legal and equitable title over the land, observing that the notarized deed executed in Q’s favor
did not transfer the land’s ownership to him given that he was never placed in possession and control thereof. Is
the contention correct?
Answer: No, Art. 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. Art. 1498 lays down the general rule that 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 facie presumption 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, the prima facie presumption of constructive delivery to Jose was not successfully negated by proof
that the land was not actually placed in the latter’s control and possession. Jose exercised possession of the
subject land through Manuel and eventually, his son, Marlon whom he allowed to stay and care for the land in
exchange for the delivery of the produce thereof.

STIPULATION ON RESCISSION
Q. May the parties to a contract validly stipulate its rescission?
Answer: Yes, parties may validly stipulate the unilateral rescission of a contract. Such is the case here since the
parties conferred upon GSIS the right to unilaterally rescind the MOA. It is basic that a contract is the law

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between the parties, and the stipulations therein – provided that they are not contrary to law, morals, good
customs, public order or public policy – shall be binding as between the parties. (Goodloop Properties vs.
GSIS, G.R. No. 171076, August 1, 2012)

THE CONCEPTS AND DOCTRINES OF RES IPSA LOQUITUR, LAST CLEAR CHANCE,
PROXIMATE CAUSE, DAMNUM ABSQUE INJURIA, PRESUMPTION OF NEGLIGENCE,
VICARIOUS LIABILITY

Q. What are the requisites of the Doctrine of Res Ipsa Loquitur?

Answer: The requisites of the doctrine of res ipsa loquitur as established by jurisprudence are as follows: (1) the
accident is of a kind which does not ordinarily occur unless someone is negligent; (2) the cause of the injury was
under the exclusive control of the person in charge and (3) the injury suffered must not have been due to any
voluntary action or contribution on the part of the person injured. The above requisites are all present in this
case. (Del Carmen, Jr., vs. Bacoy, G.R. No. 173870, April 25, 2012)

EMERGENCY RULE
Q. Explain the “Emergency Rule.”
Answer: The Emergency Rule states that one who suddenly finds himself in a place of danger, and is required to
act without time to consider the best means that may be adopted to avoid the impending danger, is not guilty of
negligence, if he fails to adopt what subsequently and upon reflection may appear to have been a better method,
unless the emergency in which he finds himself is brought about by his own negligence. (Orix Metro Lising vs.
Mangalinao, G.R. No. 174089, January 25, 2012)

DAMAGES (ARTICLES 2195-2235, CIVIL CODE)

ACTUAL AND COMPENSATORY DAMAGES
MORAL DAMAGES
Q. May the registered owner of a parcel of land be awarded moral damages for the defendant's
unjustified retention of the title over the land?
Answer: Yes, as for the land titles surrendered by Sps. Mateo, the Court determines that Swift has no basis for
retaining the same as collateral for feeds warehousing. In the absence of such bond agreement or security
instrument, it cannot be said that a bond has actually been posted or constituted. Besides, even assuming that the
real properties served as collateral, Swift cannot just appropriate them in view of the prohibition against pactum
commissorium. Considering the wrongful retention of titles, moral damages should be awarded to Sps. Mateo.
They were able to prove that Swift acted in bad faith in keeping the titles despite its knowledge that there was no
bond or real estate mortgage to justify its retention thereof. (Swift Foods vs. Sps. Mateo, G.R. No. 170486,
September 12, 2011)

ACTUAL DAMAGES
Q. May actual damages be awarded sans proof of the actual amount lost?
Answer: Article 2199 of the Civil Code provides that "one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved." In Ong v. Court of Appeals, we held that "actual damages
are such compensation or damages for an injury that will put the injured party in the position in which he had
been before he was injured. They pertain to such injuries or losses that are actually sustained and susceptible of
measurement." To be recoverable, actual damages must not only be capable of proof, but must actually be
proved with reasonable degree of certainty. We cannot simply rely on speculation, conjecture or guesswork in
determining the amount of damages. Thus, it was held that before actual damages can be awarded, there must be
competent proof of the actual amount of loss, and credence can be given only to claims which are duly
supported by receipts. Here, respondent did not present documentary proof to support the claimed necessary
expenses for the repair and completion of the house. (Dueñas vs. Africa, G.R. No. 165679, October 5, 2009 )

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MORAL DAMAGES
Q. What constitutes bad faith?
Answer: Bad faith means breach of a known duty through some motive or interest or ill will. By refusing to
honor her solemn obligations under the lease, and instead unduly profiting from these violations, Z is guilty of
bad faith. Moral damages may be awarded when the breach of contract is attended with bad faith. Exemplary
damages may also be awarded when a wrongful act is accompanied by bad faith or when the defendant acted in
a wanton, fraudulent, reckless, oppressive, or malevolent manner. And since the award of exemplary damages is
proper in this case, attorney's fees and costs of the suit may also be recovered as stipulated in the lease
agreement. (Sps. Castro vs. Palenzuela, G.R. No. 184698, January 21, 2013)

DAMAGES FOR MALICIOUS PROSECUTION

Q. What must the plaintiff prove in order to be successfully claim for damages for malicious prosecution?
Answer: The plaintiff must prove (1) the prosecution did occur, and the defendant was himself the prosecutor or
that he instigated its commencement; (2) the criminal action finally ended with an acquittal; (3) in bringing the
action, the prosecutor acted without probable cause; and (4) the prosecution was impelled by legal malice -- an
improper or a sinister motive. The gravamen of malicious prosecution is not the filing of a complaint based on
the wrong provision of law, but the deliberate initiation of an action with the knowledge that the charges were
false and groundless. The statutory basis for a civil action for damages for malicious prosecution are found in
the provisions of the New Civil Code on Human Relations and on damages particularly Articles 19, 20, 21, 26,
29, 32, 33, 35, 2217 and 2219 (8). (Marsman and Company v. Ligo, G.R. No. 198643, August 19, 2015)

TEMPERATE OR MODERATE DAMAGES

Q. May the court award damages even if the injury suffered was not proven with certainty?
Answer: A claimant is entitled to be compensated reasonably and commensurately for what he or she has lost as
a result of another’s act or omission, and the amount of damages to be awarded shall be equivalent to what have
been pleaded and adequately proven. Should the claimant fail to prove with exactitude the extent of injury he or
she sustained, the court will still allow redress if it finds that the claimant has suffered due to another’s fault.
(Adrian Wilson vs. TMX, G.R. No. 162608, July 26, 2010)

EXEMPLARY OR CORRECTIVE DAMAGES

Q. A executed an SPA in favor of B authorizing B to obtain a loan using A's property as collateral. Without
notice to B, A revoked the SPA effective at the end of business hours of July 17, 2000. On July 18, 2000, the X
Bank approved the loan application of B in the amount of P25 million. On July 31, 2000, B, thru a letter,
notified A of the approval of the loan. Sometime in the first week of August 2000, B learned about the
revocation of the SPA. B filed before the RTC a Complaint for Annulment of Revocation of SPA, Enforcement
of SPA and/or interest in the properties covered by said SPA and damages against A.

(a) May the SPA be revoked upon the sole will of A?

Answer: NO. There is no question that the SPA executed by A in favor of B is a contract of agency coupled with
interest. This is because their bilateral contract depends upon the agency. Hence, it cannot be revoked at the sole
will of the principal.

(b) When may the court award exemplary damages?

Answer: NO. 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. In this case, although the revocation
was done in bad faith, respondents did not act in a wanton, fraudulent, reckless, oppressive or malevolent
manner. They revoked the SPA because they were not satisfied with the amount of the loan approved. Thus,

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petitioners are not entitled to exemplary damages. (Ching vs. Bantolo, et al., G.R. No. 17708, December 5,
2012)

COMPROMISE AGREEMENT
Sonley v. Anchor Savings Bank/Equicom Savings Bank (G.R. No. 205623, August 10, 2016)
Q: Conchita Sonley entered into a Contract to Sell with Anchor for the purchase of the foreclosed property.
Sonley defaulted hence Anchor rescinded the Contract. Sonley filed an action for the court to declare the
rescission as null and void. They however entered into a Compromise Agreement. To settle the matter, the
parties agreed to enter into a Compromise Agreement. Under the Judgment based on the Compromise
Agreement, Sonley would repurchase the property from Anchor. Sonley again defaulted prompting Anchor to
move for execution. It prayed that (a) the Compromise Agreement be rescinded; (b) it be allowed to apply the
payments as rentals; and (c) Sonley be evicted from the property.
Can Anchor ask for execution of the judgment based on a compromise agreement?
Answer: Yes, Anchor may move for execution of judgment based on the Compromise Agreement executed by
the party-litigants and duly approved by the trial court. A compromise agreement is the law between the parties.
Its purpose is to put an end to litigation because of the uncertainty that may arise from it. Once the compromise
is perfected, the parties are bound to abide by it in good faith. Should a party fail or refuse to comply with the
terms, the other party could either enforce the compromise by a writ of execution A compromise agreement is
equivalent to a ruling on the merits.

(b) Is there a need to file a separate civil action for rescission?

Answer: No, there is no need to file a separate action for rescission. A breach of any of the conditions of the
compromise agreement will give any of the parties to rescind the same without filing a separate civil action.

Compromise Agreement and Injunction

Cathay Land, Inc. et al. v. Ayala Land, Inc. (G.R. No. 210209, August 9, 2017)
Q: Cathay filed a Complaint for easement of right of way against Ayala, claiming it denied passage to its
personnel. Before trial ensued, parties entered into a Compromise Agreement.
Ayala granted easement of right of way in favor of Cathay, subject to faithful compliance with its undertaking
under the Compromise, such as not to develop “high-rise buildings.” It was further agreed that Ayala has the
right “to withdraw or suspend the grant of easement of right of way” from Cathay if it “would fail to rectify its
breach within a period of 30 days from receipt of a notice.” The trial court approved the Compromise
Agreement. After the execution of the judgment based on the Compromise Agreement, Ayala noticed from
Cathay’s flyers that it intended to construct high rise building. Ayala made verbal and written demand to Cathay
to abide with the Compromise. Cathay did not heed Ayala’s demand forcing it to file a Motion for Execution
with Prayer for Injunction and TRO. The trial court granted the execution. What are the limitations when the
trial executes a judgment based on a compromise agreement?
Answer: Courts cannot modify, impose terms different from the term of the agreement or set aside the
compromise and reciprocal concessions made in good faith by the parties without gravely abusing their
discretion. Under the Compromise Agreement, the remedies of Ayala are: first to notify Cathay of the breach and
second to withdraw or suspend the easement if Cathay failed to rectify such breach within 30 days.
Ayala has no right to seek injunctive relief. Ayala also prematurely moved for the execution.

GUARANTY AND SURETYSHIP

Manila Insurance Company, Inc. v. Spouses Roberto and Aida Amurao (G.R. No. 179628, 16 January 2013)
Q: What is the liability of a surety?
Answer: The Court have consistently held that a surety’s 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. However, that although the contract of suretyship is secondary to the
principal contract, the surety’s liability to the obligee is nevertheless direct, primary, and absolute.

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PLEDGE, MORTGAGE AND ANTICHRESIS, CHATTEL MORTGAGE (INLCUDE ACT NO. 1508
AND SECTION 47 OF R.A. NO. 8791 OR THE GENERAL BANKING ACT OF 2000)
Q: Union Bank of the Philippines v. Alain Juniat, Winwood Apparel, Inc., Wingyan Apparel, Inc., Nonwoven
Fabric Philippines (G.R. No. 171569, 1 August 2011)
Question: AJ obtained a loan from UB which was secured by a Chattel Mortgage over the motorized sewing
machines. When AJ failed to pay, UB filed an action for Sum of Money with Issuance of a Writ of Preliminary
Attachment. At the time of issuance of the writ, the possession of the machines is with NF. The latter argued that
it has a better title considering that the Chattel Mortgage was not notarized. Will the argument of NF prevail?
Answer: No, NF’s argument will not prevail. Indeed, the unnotarized Chattel Mortgage executed by AJ in favor of UB
does not bind NF. However, it must be pointed out that UB’s primary cause of action is for a sum of money with prayer for
the issuance of ex-parte writs of attachment and replevin against AJ and the person in possession of the motorized sewing
machines and equipment. Thus, the fact that the Chattel Mortgage executed in favor of UB was not notarized does not
affect UB’s cause of action. UB only needed to show that the loan of AJ remains unpaid and that it is entitled to the
issuance of the writs prayed for. Considering that writs of attachment and replevin were issued by the RTC. NF had to
prove that it has a better right of possession or ownership over the attached properties. This it failed to do.

TORTS AND DAMAGES: CLASSIFICATION OF TORTS - NEGLIGENT TORTS

Equitable Banking Corporation v. Special Steel Products, Inc. and Augusto Pardo
(G.R. No. 175350, 13 June 2012)
Q: ICEC purchased welding electrodes from SSPI. As payment, ICEC issued three crossed checks payable to
the order of SSPI with the notation account payee only and was drawn against EBC.
JU demanded the deposit of the checks in his personal account and EBC allowed such thinking that JU being the
son-in-law of the ICEC majority stockholder had the authority to make such demand..
Later, SSPI demanded payment from ICEC. SSPI denied receipt of the checks. The two companies discovered
that JU received the proceeds of the checks. Due to the denial of ICEC of the obligation to pay SSPI, the latter
filed a complaint for damages against JU and EBC. Does SSPI have a cause of action against EBC for quasi-
delict?
Answer: Yes. SSPIs cause of action is not based on the three checks. SSPI does not ask EBC or JU to deliver to
it the proceeds of the checks as the rightful payee. SSPI does not assert a right based on the undelivered checks
or for breach of contract. Instead, it asserts a cause of action based on quasi-delict.
A quasi-delict is an act or omission, there being fault or negligence, which causes damage to another. Quasi-
delicts exist even without a contractual relation between the parties.
Equitable did not observe the required degree of diligence expected of a banking institution under the existing
factual circumstances. It should have verified if the payee (SSPI) authorized the holder (JU) to present the same
in its behalf, or indorsed it to him. Such misplaced reliance on empty words is tantamount to gross negligence,
which is the absence of or failure to exercise even slight care or diligence, or the entire absence of care, evincing
a thoughtless disregard of consequences without exerting any effort to avoid them.

LIABILITY UNDER ARTICLE 2180, CIVIL CODE

Greenstart Express, Inc. and Fruto L. Sayson, Jr. v. Universal Robina Corporation and Nissin Universal
Robina Corporation(G.R. No. 205090, 17 October 2016)
Q: How may a respondent prove that he has no liability under Article 2180?
Answer: This may be done by proof of any of the following: (1) That there is no employee-employer
relationship; or (2) That the employee-driver acted outside the scope of his assigned tasks; or (3) That employer
exercised the diligence of a good father of a family in the selection and supervision of his employee.

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