3 Civil Law Justice Del Castillo Digests

DE LA SALLE UNIVERSITY COLLEGE OF LAW Lasallian Commission on Bar Operations 2018

CIVIL LAW Justice Del Castillo Castillo Digests

Chel Sy

Tet Valeza

Alice De La Cruz

LCBO Chairperson

Academic Affairs Chairperson

Persons and Family Relations Subject Head

LCBO Vice Chair for Internals

Janine Tutanes Rod Zantua

Khristel Calantoc

Steph Griar

Academic Affairs Deputy Chairpersons

LCBO Vice Chair for Externals

Janine Sta. Ana

Nico Garcia

Pat Costales

Leigh Domingo Sales Subject Head

Civil Law Chairperson

Francisco Banguis

LCBO Executive Secretary

Abby Martinez

Ces Naga

Civil Law Deputy Chairperson

LCBO Executive Treasurer

Obligations and Contracts Subject Head

Agency Trust and Parntership Subject Head

Janlo Fevidal Property Subject Head

Nath Tolentino Credit Transactions Subject Head

Natasha Flores Land Titles and Deeds Subject Head

Carissa Bonifacio Wills and Succession Subject Head

Jonas Manao Torts and Damages Subject Head

Chel Sy

Tet Valeza

Alice De La Cruz

LCBO Chairperson

Academic Affairs Chairperson

Persons and Family Relations Subject Head

LCBO Vice Chair for Internals

Janine Tutanes Rod Zantua

Khristel Calantoc

Steph Griar

Academic Affairs Deputy Chairpersons

LCBO Vice Chair for Externals

Janine Sta. Ana

Nico Garcia

Pat Costales

Leigh Domingo Sales Subject Head

Civil Law Chairperson

Francisco Banguis

LCBO Executive Secretary

Abby Martinez

Ces Naga

Civil Law Deputy Chairperson

LCBO Executive Treasurer

Obligations and Contracts Subject Head

Agency Trust and Parntership Subject Head

Janlo Fevidal Property Subject Head

Nath Tolentino Credit Transactions Subject Head

Natasha Flores Land Titles and Deeds Subject Head

Carissa Bonifacio Wills and Succession Subject Head

Jonas Manao Torts and Damages Subject Head

Civil Law

Justice Del Castillo Dig ests

PERSONS AND FAMILY RELATIONS HING v. CHOACHUY G.R. No. 179736|26 June 2013 Persons and Personality DOCTRINE: An individual's right to privacy under Article 26 (1) of the Civil Code should not be confined to his house or residence as it may extend to places where he has the right to exclude the public or deny them access.

FACTS: • •

•

Respondents Respondents filed a case against petitioner for constructing a fence without a valid permit. In order to get evidence to support the case, respondents illegally set-up and installed on the building of Aldo Goodyear Servitec two video surveillance cameras facing petitioners' property; respondents, respondents, through their employees and without the consent co nsent of petitioners, also took pictures of petitioners' on-going construction; and that the acts of respondents violate petitioners' right to privacy. Thus, petitioners prayed that respondents be ordered to remove the video surveillance cameras and enjoined from conducting illegal surveillance.

ISSUE: Whether or not there is a violation of petitioners’ right to privacy HELD: Yes, petitioners have a "reasonable expectation of privacy" in their property, whether they use it as a business office or as a residence and that the installation of video surveillance cameras directly facing petitioners' property or covering a significant portion thereof, without their consent, is a clear violation of their right to privacy. An individual's right to privacy under Article 26 (1) of the Civil Code should not be confined to his house or residence as it may extend to places where he has the right to exclude the public or deny them access. The phrase "prying into the privacy of another's residence," therefore, covers places, locations, or even situations which an individual considers as private. And as long as his right is recognized by society, other individuals may not infringe on his right to privacy. The CA, therefore, therefore, erred in limiting the application of Article 26 (1) of the Civil Code only to residences. The reasonableness of a person's expectation of privacy depends on a two-part test: (1) whether, by his conduct, the individual has exhibited an expectation of privacy; and (2) this expectation is one that society recognizes as reasonable. •

•

JULIANO-LLAVE v. REPUBLIC REPUBLIC G.R. No. 169766 |30 March 2011 Marriage DOCTRINE: The law in effect at the time of marriage shall be applied in determining the validity of marriage.

FACTS: •

• •

Senator Tamano married petitioner Estrellita Juliano-Llave Juliano- Llave (“Estrellita”) twice: The first marriage was performed under the Islamic laws and tradition in 1993; and o The second marriage was performed under a civil ceremony also in 1993. o In their marriage contracts, Tamano indicated his civil status as “divorced”. Zorayda Tamano (“Zorayda”) filed a complaint for declaration of nullity of marriage of Tamano and Estrellita for being bigamous with the following allegations:

3

Civil Law

Justice Del Castillo Digests

At the time of Tamano’s marriage with Estrellita in 1993, his marriage with Zorayda in 1958 remained subsisting. Tamano did not and could not have divorced Zorayda by invoking the Code of Muslim o Personal Laws on the ground that his marriage with Zorayda was never deemed legally and factually contracted under Muslim law. Estrellita, on the other hand, alleged that: The Muslim law automatically applies to Tamano’s marriage with Zorayda without need o of registering their consent since they are both Muslims; and that Zorayda and Adib have no legal standing because under the law, only the husband or wife o can file a complaint for declaration of nullity of marriage. o

•

ISSUE: Whether or not Tamano and Estrellita’s marriage was bigamous HELD: Yes, since the marriage of Tamano and Zorayda was celebrated in 1958, the applicable law that shall govern marriages of a Muslim and non-Muslim is the Civil Code of 1950 and not the Muslim Law of 1977. Under the Civil Code, only one marriage can exist at any given time and divorce is not recognized except during the effectivity of R.A. 394 (An Act Authorizing for a Period of Twenty Years Divorce Among Moslems Residing in Non-Christian Provinces), however, this was not availed of by the parties. •

ISSUE: Whether or not Zorayda and Adib have legal standing to file the complaint HELD: Yes. While the Family Code is silent with respect to the proper party who can file a complaint for nullity of marriage prior to A.M. No. 02-11-10-SC, it has been held that in a void marriage, in which no marriage has taken place and cannot be the source of rights, any interested party may attack the marriage directly or collaterally without prescription, and which may be filed even beyond the lifetime of the contracting parties. Since A.M. No. 02-11-10 SC does not apply, Adib as one of the children of the deceased who has property rights as an heir, is likewise considered to be the real party in interest in the suit he and his mother has filed since both of them stand to be benefited or injured by the judgment in the suit. •

KALAW v. FERNANDEZ G.R. No. 166357 | 19 September 2011 Marriage DOCTRINE: •

•

It is the plaintiff that has the burden of proving the existence of facts that would establish psychological incapacity. Sexual infidelity per se is a ground for legal separation, the same does not necessarily constitute psychological incapacity.

FACTS: •

•

•

Petitioner is married to respondent. Years later, he filed a petition to declare their marriage void under article 36 of the Family Code. In support of his allegations, Kalaw presented a psychologist and a Catholic canon law expert who testified that such acts complained of reflected a narcissistic personality disorder (NPD). Petitioner also alleges the sexual infidelity of respondent.

ISSUE: Whether or not Kalaw has sufficiently proved that Fernandez suffers from psychological incapacity

4

Civil Law


HELD: No, the burden of proving psychological incapacity is on the plaintiff who must prove that the incapacitated party, based on his or her actions or behavior, suffers a serious or psychological disorder that completely disables him or her from understanding and discharging the essential obligations of the marital state. The psychological problem must be grave, must have existed at the time of marriage, and must be incurable. The testimonies of the supposed expert witnesses that he relied upon were mere conclusions premised on the alleged acts or behavior of Fernandez, which had not been sufficiently proven. As to the allegation that Fernandez committed adultery, the SC ruled that although sexual infidelity per se is a ground for legal separation, the same does not necessarily constitute psychological incapacity. •

•

•

MATUDAN v. REPUBLIC OF THE PHILIPPINES G.R. No. 203284 | 14 November 2016 Marriage DOCTRINE: Psychological Incapacity must be characterized by gravity, juridical antecedence and incurability.

FACTS: •

•

•

Nicolas filed a petition for Declaration of Nullity of Marriage against his wife, Marilyn, on grounds of psychologically incapacity. He alleged that Marilyn failed to fulfill her obligations as a wife and mother, and provide them necessary emotional and financial care, and support even after leaving for word abroad Doctor found that Marilyn has a Narcissistic Personality Disorder with Antisocial Traits, but this was only fed solely based on Nicolas’ allegations. They also failed to identify the root cause and provide it existed at the inception of their marriage

ISSUE: Whether or not Marilyn is psychologically incapacitated under Article 36 of the Family Code HELD: No, psychological Incapacity must be characterized by (a) gravity, (b) juridical antecedence and (c) incurability. 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 the marriage; and it must be incurable or even if it were otherwise, the cure would be beyond the means of the party involved. •

TITAN CONSTRUCTION CORPORATION v. DAVID G.R. No. 169548| 15 March 2010 Property Relations of the Spouses DOCTRINE: 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.

FACTS: •

•

Spouses Manuel and Martha David, acquired a lot, which was registered in the name of Martha. The spouses separated de facto, and no longer communicated with each other. Manuel discovered that Martha had previously sold the property to Titan Corp.

5

Civil Law

•


Manuel filed a Complaint for Annulment of Contract and Reconveyance against Titan. Manuel alleged that the sale executed by Martha in favor of Titan was without his knowledge and consent, and therefore void.

ISSUE: Whether or not the Deed of Sale is void by reason of the absence of Manuel’s consent. HELD: Yes, the property is part of the spouses’ conjugal partnership, even if it is registered only to Martha’s name. •

Absence any proof that it is not part of the conjugal property, it must be deemed to be part of it. Since the property is part of the conjugal partnership, the sale to Titan required the consent of both spouses and in the absence of the other spouse’s consent, the Deed of Sale is void.

FRANCISCO LIM v. EQUITABLE PCI BANK G.R. No. 183918 | 15 January 2014 Property Relations of the Spouses DOCTRINE: The presumption in Article 160 that “all property of the marriage is presumed to belong to the conjugal partnership” applies to property acquired during the lifetime of the husband and wife. When the property is registered in the name of a spouse only and there is no showing as to when the property was acquired by said spouse, this is an indication that the property belongs exclusively to said spouse.

FACTS: •

•

• •

Francisco Lim executed an Irrevocable SPA in favor of his brother, Franco Lim, authorizing latter to mortgage his share in the property, which they co-owned. Franco, and their mother from the Bank a loan and to secure the loan, Francisco and Franco executed in favor of the Bank a REM over the property. But, when the loan was not paid, the Bank foreclosed the mortgaged property. Francisco filed before the RTC a complaint against the Bank, Franco, and Victoria. Francisco alleged that he did not authorize Franco to mortgage the subject property and same should be avoided because the mortgage contract was executed without the consent of his wife.

ISSUE: Whether or not the lack of signiture of Francisco’s wife is a ground to invalidate the contract. HELD: No, the presumption that a property registered to one spouse is part of the conjugal property applies only to properties acquired during marriage the marriage. In this case, the property was acquired before the marriage so the presumption does not apply and the signiture of the wife is not required. •

PERLA v. BARING G.R. No. 172471 | 12 November 2012 Paternity and Filiation DOCTRINE: •

•

A certificate of live birth purportedly identifying the putative father is not competent evidence of paternity when there is no showing that the putative father had a hand in the preparation of said certificate. To prove open and continuous possession of the status of an illegitimate child, there must be evidence of the manifestation of the permanent intention of the supposed father to consider the

6

Civil Law


child as his, by continuous and clear manifestations of parental affection and care, which cannot be attributed to pure charity.

FACTS: • •

• •

Respondent Mirasol and her then minor son, Randy filed a Complaint for support against Antonio. They alleged in said Complaint that Mirasol and Antonio lived together as commonlaw spouses for two years. As a result of said cohabitation, Randy was born. As evidence respondents presented a birth certificate, which was not signed by Antonio. In his testimony, Randy alleges that he was treated by Antonio as his son and would kiss and hug him. When Randy asked him for support, Antonio promised that he would support him.

ISSUE: Whether or not the evidence is sufficient to establish filiation HELD: No, a certificate of live birth purportedly identifying the putative father is not competent evidence of paternity when there is no showing that the putative father had a hand in the preparation of said certificate. To prove open and continuous possession of the status of an illegitimate child, there must be evidence of the manifestation of the permanent intention of the supposed father to consider the child as his, by continuous and clear manifestations of parental affection and care, which cannot be attributed to pure charity. •

RODOLFO S. AGUILAR v. EDNA G. SIASAT G.R. No. 200169 | 28 January 2015 Paternity and Filiation DOCTRINE: The filiation of illegitimate children can be established by an admission of legitimate filiation in a public document and signed by the parent concerned.

FACTS: •

•

•

Rodolfo Aguilar claimed that he is the only son and sole surviving heir of the Aguilar spouses who died intestate. Rodolfo, to prove filiation, presented several documents and one of which is his father’s, Alfredo Aguilar’s, SSS Form E-1. This is a public document subscribed and made under oath by Alfredo during his employment with BMMC, which bears his signature and thumb marks and indicates that Rodolfo, born on 5 March 1945, is his son and dependent. Rodolfo argued that he cannot present his Certificate of Live Birth because all the records of the Local Civil Registry covering the period of 1945-1946 were destroyed.

ISSUE: Whether or not SSS Form E-1 satisfies the requirement in the establishment of legitimate filiation HELD: Yes. The filiation of illegitimate children is, like legitimate children, under Art. 172 of the Family Code, 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. SSS Form E-1, a public document, acknowledged and notarized before a notary public executed by Alfredo Aguilar, recognizing Rodolfo as his son, satisfies the requirement of proof of filiation. Such due recognition in any authentic writing is treated not just a ground for compulsory recognition but it is in itself a voluntary recognition that does not require a separate action for judicial approval. •

•

7

Civil Law


REPUBLIC OF THE PHILIPPINES v. SARENOGON G.R. No. 199194 | 10 February 2016 Absence DOCTRINE: Under Art. 41 of the Family Code, “well -founded” belief must be established by honest -togoodness efforts to ascertain whether the absent spouse is still alive or is already dead.

FACTS: • • •

•

•

Jose filed filed a Petition for declaration of presumptive death of his wife. No one opposed the petition so trial ensued. Jose testified that Netchie was employed as a domestic helper in Hong Kong. They did not communicate for 3 months, and he could not contact her relatives. He filed the petition before the RTC so he could contract another marriage under Art. 41 of the Family Code, which was granted. The Republic claims that Jose’s alleged efforts in locating Netchie did not engender or generate a well-founded belief that the latter is probably dead. It maintains that even as Jose exerted efforts to locate Netchie, Jose inexplicably failed to enlist the assistance of the relevant government agencies such as the PNP, NBI, and POEA.

ISSUE: Whether or not the effo efforts rts of Jose in locating his missing wife support a “well -founded belief” that Netchie is probably dead

HELD: No, in a petition for a declaration of presumptive death under Article 41 of the Family Code, the claim must be based on a “well“well -founded belief” that t hat the spouse is dead. Jose’s effort is clearly insufficient as he did not even sought the help of appropriate government government authorities in finding the whereabouts of his missing wife. •

PROPERTY PUDADERA v. MAGALLANES G.R. No. 170073 | 18 October 2010 Ownership DOCTRINE: In case of a double sale of immovables, ownership shall belong to "(1) the first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in good faith presents the oldest title .

FACTS: • • •

• •

Lazaro was the owner of a parcel of land, Lot 11-E, covered by TCT. Lazaro sold a 400 sq. m. portion of Lot 11-E to Magallanes under a Contract To Sale Upon full payment of the monthly installments, Lazaro executed a "Deed of Definite Sale" in favor of Magallanes. Thereafter, Magallanes had the lot fenced and had a nipa hut constructed thereon. o The other portions of Lot 11-E were, likewise, sold by Lazaro to several buyers Lazaro executed a "Partition Agreement" in favor of Magallanes and the aforesaid buyers delineating the portions to be owned by each buyer. Under this agreement, Magallanes and Mario Gonzales were assigned an 800 sq. m. o portion of Lot 11-E, with each owning 400 sq. m. thereof, denominated as Lot No. 11-E-8

8

Civil Law

•

• • •

•

• • • •


in a Subdivision Plan which was approved by the Director of Lands. Lazaro refused to turn over the mother title to the aforesaid buyers, thus, preventing them from titling in their names the subdivided portions thereof. Magallanes, along with the other buyers, filed an adverse claim with the Register of Deeds. Magallanes and Gonzales filed a motion to surrender title. Lazaro sold Lot 11-E-8, i.e., the lot previously assigned to Magallanes and Mario Gonzales under the aforesaid "Partition Agreement," to Spouses Natividad. A new title was issued in the name of Spouses Natividad. o Magallanes filing a complaint for specific performance, injunction and damages against Spouses Natividad. The civil case filed by Magallanes was later dismissed by the trial court for lack of jurisdiction Spouses Natividad sold the subject lot to Pudadera Magallanes caused the construction of two houses of strong materials on the subject lot. Pudadera filed an action for forcible entry against Magallanes.

ISSUE: Whether or not Pudadera has a better right to the lot HELD: No, following Art 1544 NCC, in case of a double sale of immovables, ownership ownership shall belong to:

•

•

•

(1) The first registrant in good faith (2) The first possessor in good faith (3) The buyer who in good faith presents the oldest title The law requires that the second buyer must have acquired and registered the immovable property in good faith. In order for the second buyer to displace the first buyer, the following must be shown: "(1) the second buyer must show that he acted in good faith ( i.e., in ignorance of the first sale and of the first buyer’s rights) from the time of acquisition until title is transferred to him by registration or failing registration, by delivery of possession; and (2) the second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law. In the case at bar, both the trial court and CA found that petitioners were not buyers and registrants in good faith owing to the fact t hat Magallanes constructed a fence and small hut on the subject lot and has been in actual physical possession possession since 1979. Hence, petitioners petitioners were aware or should have been aware of Magallanes’ prior physical possession and claim of ownership over the subject lot when they visited the lot on several occasions prior to the sale thereof.

COMMUNITIES CAGAYAN v. NANOL G.R. No. 176791 | 14 November 2012 Ownership DOCTRINE: In case of a builder in good faith, the seller (the owner of the land) has two options options under Article 448: (1) He may appropriate the improvements improvements for himself after reimbursing reimbursing the buyer (the builder in good faith) the necessary and useful; or (2) He may sell the land to the buyer, unless its value is considerably more than that of the improvements, improvements, in which case, the buyer shall pay reasonable rent.

FACTS: •

Respondentspouses Arsenio and Angeles Nanol entered into a Contract to Sell with petitioner Communities Communities Cagayan, Inc., whereby the latter agreed to sell to responde r espondentspouse ntspousess a house and Lots.

9

Civil Law

•

•

• •


Respondent-spouses espondent-spouses availed of petitioner’s in-house financing16 thus, undertaking to pay the loan over four years Respondent Respondent Arsenio demolished the original house and c onstructed a threestory house allegedly valued at P3.5 million, more or less. Respondents Respondents defaulted which prompted petitioner to file a case for unlawful detainer. Respondent spouses’ demands for the reimbursement of the improvements made which petitione r denies alleging that the respondents were builders in bad faith.

ISSUE: Whether or not respondents is entitled to reimbursement of the improvements made HELD: Yes, the presumption remains remains that the respondents are builders in good faith. •

•

Article 448 of the Civil Code applies when the builder believes that he is the owner of the land or that by some title he has the right to build thereon, or that, at least, he has a claim of title thereto. The seller (the owner of the land) has two t wo options under Article 448: (1) He may appropriate the improvements improvements for himself after reimbursing reimbursing the buyer (the builder in good faith) the necessary and useful expenses; or (2) He may sell the land to the buyer, unless its value is considerably more than that of the improvements, improvements, in which case, the buyer shall pay reasonable rent.

GUYAMIN v. FLORES G.R. No. 202189 | April 25, 2017 Ownership DOCTRINE: Occupants by mere tolerance must vacate upon the demand of the registered owner. FACTS: • • •

Flores is the registered owner of a parcel of land occupied by Guyamin. Guyamin occupied the property by mere tolerance and liberality of Flores. Despite demand, Guyamin Guyamin refused to vacate the property. This prompted Flores to file a complaint for recovery of possession for said property.

ISSUE: Whether or not Guyamin should vacate the property HELD: Yes, as occupants by mere tolerance of the owner, Guyamin has no right to the property whatsoever, and his presence is merely tolerated and under the good graces of the owners. Gayumin is bound by an implied promise to vacate the premises upon demand. demand.

CHUNG JR. V MANDRAGON G.R. No. 179754 | 21 November 2012 Ownership DOCTRINE: •

In a case for quieting of title, the plaintiff must show that he has a legal or at least an equitable title over the real property in dispute, and that some deed or proceeding beclouds its validity or efficacy.

FACTS: • •

Petitioners and respondents are children of Rafael from his first and second wife respectively. The subject land in this case was owned by the second wife of Rafael, as reflected in the TCT.

10

Civil Law

• •


One of the respondents sold the subject land to third persons. By reason thereof, petitioner filed a case for quieting of title raising as issue the authority of respondent to dispose the property.

ISSUE: Whether or not petitioner possess the required title to file a case for quieting of title. HELD: No, the property is clearly owned by the second wife of Rafael and hence they have no equitable title over the property. In a case for quieting of title are fairly simple, the plaintiff need to prove only two things, namely: (1) The plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2) That the deed, claim, encumbrance or proceeding claimed to be casting a cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. Stated differently, the plaintiff must show that he has a l egal or at least an equitable title over the real property in dispute, and that some deed or proceeding beclouds its validity or efficacy. •

•

REPUBLIC v. AFP RSBS G.R. No. 180463 | 16 January 2013 Ownership DOCTRINE: The failure of a party to avail of the proper remedy to acquire or perfect one’s title to land cannot justify a resort to other remedies which are otherwise improper and do not provide for the full opportunity to prove his title, but instead require him to concede it before availment.

FACTS: •

•

• •

•

Lots X, Y-1, and Y-2 were reserved for recreation and health purposes by virtue of Proclamation No. 168 but it was later on amended to remove Lots Y-1 and Y-2 lots from reservation and declared them open for disposition to qualified applicants. The heirs of Kusop (Kusop) applied for issuances of individual miscellaneous sales patents over the whole of Lot X which was approved. The titles were issued in the names of Kusop but were simultaneously conveyed to AFP-RSBS. The Republic instituted a complaint for reversion, cancellation and annulment of the AFP-RSBS titles on the thesis that they were issued over a public park which is classified as inalienable and non-disposable public land. Kusop argued that they acquired vested interests over Lot X before Proc. 168 having occupied the same for more than 30 years.

ISSUE: Whether or not the “vested rights” of the heirs of Kusop over Lot X can prevail against government ownership of public land under the Regalian doctrine

HELD: No. Respondents-intervenors did not question Proc. 2273, precisely because they were the beneficiaries thereof; nor did they object to the retention of Lot X as part of the park reserve. Instead, in 1997, they applied for, and were granted, sales patents over Lot X. Evidently, the sales patents over Lot X are null and void, for at the time the sales patents were applied for and granted, the land had lost its alienable and disposable character. It was set aside and was being utilized for a public purpose, that is, as a recreational park. Kusop no longer had any right to Lot X — not by acquisitive prescription, and certainly not by sales patent. In fact, their act of applying for the issuance of miscellaneous sales patents operates •

•

11

Civil Law

•


as an express acknowledgment that the State, and not respondents-intervenors, is the owner of Lot X. It is erroneous to suppose that respondents-intervenors possessed title to Lot X when they applied for miscellaneous sales patents, for the premise of such grant or privilege is precisely that the State is the owner of the land, and that the applicant acknowledges this and surrenders to State ownership.

MANANQUIL v. MOICO G.R. No. 180076 | 21 November 2012 Quieting of Title to or Interest in and Removal or Prevention of Cloud over Title or Interest in Real Property DOCTRINE: 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.

FACTS: • •

•

•

• •

Lots 18 & 19 formed part of the land previously expropriated by the NHA. Lot 18 was awarded to Spouses Mananquil under a Conditional Contract to Sell while Lot 19 was sold to Prescilla. When the spouses died, the Mananquil heirs (brothers and sisters of the husband Mananquil) executed an extrajudicial settlement and adjudicated ownership over Lots 18 & 19 in favor of Dianita. They took possession and leased them out to third parties. Eulegio and two others (claiming to be the surviving heirs of the spouses) executed an Extrajudicial Settlement and a Deed of Absolute Sale in favor of Moico. Moico evicted the Mananquil tenants and demolished the structure they built on Lots 18 & 19. The Mananquils instituted a civil case for quieting of title

ISSUE: Whether or not the Mananquils had legal or equitable title over the lots for their action to prosper HELD: No, petitioners failed to show their qualifications or right to succeed the husband in his rights under the NHA program/project. They failed to present any title, award, grant, document or certification from the NHA or proper government agency which would show that the spouses Mananquil have become the registered owners/beneficiaries/awardees of Lots 18 and 19, or that petitioners are qualified successors or beneficiaries taking over Iluminardo's rights after his death. An action for quieting of title is essentially a common law remedy grounded on equity. The competent court is tasked to determine the respective rights of the complainant and other claimants, not only to place things in their proper place, to make the one who has no r ights to said immovable respect and not disturb the other, but also for the benefit of both, so that he who has the right would see every cloud of doubt over the property dissipated, and he could afterwards without fear introduce the improvements he may desire, to use, and even to abuse the property as he deems best. But for an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) The plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; (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. •

•

12

Civil Law


GIL MACALINO, JR., et. al. v. ARTEMIO PIS-AN G.R. No. 204056 | 1 June 2016 Quieting of Title to or Interest in and Removal or Prevention of Cloud over T itle or Interest in Real Property DOCTRINE: In cases of quieting of title, it is essential that the plaintiff has a legal or equitable title or interest in the subject property.

FACTS: •

•

•

•

•

•

•

Emeterio Jumento was the owner of the half portion of Lot 3154 consisting of 469 square meters and his children, the other half in equal shares. Emeterio inherited his children’s portion when they died, thus becoming the owner of the whole lot. Subsequently, Emeterio passed away. Meanwhile, the City of Dumaguete built a barangay road which cut acr oss the said lot, dividing it into three portions. Artemio, a grandson-in-law of Emeterio and one of the latter’s heirs, had the lot surveyed, divided into three (Lot 3154 A, B, and C) Artemio and his co-heirs executed an Extrajudicial Settlement of Estate and Absolute Sale adjudicating among themselves Lot 3154. The document did not identify which portion of the three was being sold to the Silleros, who simply bought 207-sqm of Lot 3154. They then put up a house and sold it to Gil Macalino. Macalino had the lot surveyed and discovered that the portion occupied by him was only 140sqm, not 207sqm. He, along with his children, filed a Complaint for Quieting of Title and Damages to RTC Artemio argues that the lot fenced by the Silleros was exactly the portion that they sold to Gil, the latter not having execerised the diligence required of a buyer. The deed of sale from the Silleros, particularly state that they were selling a 207-sqm o portion “known as Sub-lot 3154-A” and that due to this phrase, the sale was for a lump sum, presuming that Gil only intended to buy Lot 3154 -A (and not the other lots)

ISSUE: Whether or not Gil is entitled to Lot 3154-C for the remainder of the 207sqm portion he bought? HELD: No, 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 that is the subject matter of the action. Legal title denotes registered ownership, while equitable title means beneficial ownership. Since what the Silleros bought from Artemio was Lot 3154-A, which was only 140-sqm, it logically follows that what they sold to Macalino was the same and exact property. As such, no confusion exists as to the extent of what the Spouses Silleros owned. Thus, what Macalino bought from the Silleros was Lot 3154-A only, and in the absence of a legal or equitable title, or interest, in favor of Macalino there is no cloud to be prevented or removed. • •

MODESTO PALALI v. JULIET AWISAN G.R. No. 158385 | 12 February 2010 Quieting of Title to or Interest in and Removal or Prevention of Cloud over T itle or Interest in Real Property DOCTRINE: One claiming to be in open, continuous, exclusive, notorious possession of a land in the concept of an owner must be able to prove his claim through substantial evidence.

FACTS:

13

Civil Law

•

•


Respondent filed an action to quiet title over a portion of a 6 hectare property against the petitioner, claiming that petitioner is encroaching upon the said 6 hectare property which she owns. Respondent prays that she be declared the rightful owner of the encroached property, using as basis the following: She inherited the property from her father who had declared the same in his taxes. o Additionally, she also claims that her father introduced sev eral improvements over the lot o proving his continued possession over the subject property. Petitioner, on the other hand, claims a superior right over the property. Petitioner stated that he and his ancestors and predecessors-in-interest had been in open, continuous, exclusive, notorious possession over the subject property in the concept of an owner since time immemorial. They introduced several improvements over the lot, and planted vegetation therein, which was backed by testimonies from neighbors.

ISSUE: Whether or not petitioner has a better right over the subject property HELD: Yes, the petitioner was able to substantiate his claim of open, continuous, notorious, exclusive possession over the subject property in the concept of an owner through him and his predecessors-ininterest. First, respondent’s presentation of tax declarations cannot overcome the evidence presented by the petitioner who adequately proved his open, continuous possession over the property supported by the testimonies of long-time residents/neighbors. Second, the ocular inspection of the trial court found that the improvements mentioned by respondent were not found on the subject property, while those mentioned by petitioner were present. Thus, the petitioner has a better right to the property. •

•

OLEGARIO v. MARI G.R. No. 147951 | 14 December 2009 Possession DOCTRINE: Possession, to constitute the foundation of acquisitive prescription, must be possession under a claim of title or must be adverse.

FACTS: •

•

•

•

•

•

•

As early as 1916 Juan Mari (father of respondent) declared his ownership over a parcel of land in Nancasalan, Mangatarem for tax purposes. He took possession by delineating the limits with a bamboo fence, planted fruit bearing trees and bamboos and constructed a 2 story house. After a survey was made, and a tax declaration specified the property as residential land with an area of 897 sqm. By virtue of a deed of sale it was transferred to respondent, Pedro Mari (Mari). Wenceslao Olegario (husband of Magdalena Fernandez and father of petitioner Arsenio Olegario) filed a new tax declaration, for a 50 sqm parcel of land in the same property. In May 14, 1961, Wenceslao executed a "Deed of Quit-Claim of Unregistered Property in favor of Arsenio Olegario. Transferring the 50 sqm property to him. Wenceslao then disputed Mari’s claim over the land. Mari filed with DENR regional office in Pangasinan a protest against petitioners because of their encroachment into the disputed property. The office decided in favor of respondent and found that he is the owner. Arsenio caused an amendment of his tax declaration of the 50 sqm property, increasing the area of the lot to 341-sqm. After discovering the amendments of Arsenio, respondent filed a complaint with RTC of Lingayen, Pangasinan for Recovery of Possession and Annulment of Tax Declaration.

14

Civil Law


Mari alleged that Juan Mari, and subsequently his successor, was deprived by the Olegarios of the possession of portions of subject realty which Mari owned. Olegario asserts that they have been in possession of the disputed lots since 1948 or for more than 30 yrs already. Hence they acquired ownership by vi rtue of prescription. Mari asserts that petitioner can only claim ownership over 50 sqm and not 341 sqm. o

•

•

ISSUE: Whether the Olegarios have acquired the property through claim of title/adverse possession? HELD: No, the ownership of Juan Mari (respondent’s father) clearly shows that he was in the possession of the lot in the concept of owner, publicly and peacefully since 1916 when he declared the lot for tax purposes, planted trees and bamboos, constructed a 2 story house and bamboo fence. Compared to petitioner when they entered the disputed lot much later, in 1965. According to Article 538 of the Civil Code, respondent is the preferred possessor since 1916. Despite the Olegarios occupying the lots for 25 years, they cannot acquire ownership because there was no evidence the disputed lots were transferred to them by their predecessors. Hence, the Olegarios cannot acquire the lots by ordinary p rescription of 10 yrs. and ownership cannot be acquired by mere occupation. The Olegarios were only tolerated by the owner and no matter how long they were tolerated it cannot start the prescriptive period. Material possession of land is not adverse possession and it’s insufficient to vest title. •

•

DELA CRUZ v. CAPCO G.R. No. 176055 | 17 March 2014 Possession DOCTRINE: The only issue in an ejectment case is the physical possession of real property — possession de facto and not possession de jure.

FACTS: •

•

•

•

Sps. Dela Cruz filed a complaint for unlawful detainer against Sps. Capco, alleging that Teodora, mother of petitioner Amelia Dela Cruz, acquired a parcel of land by virtue of a land registration case. The said property was eventually registered in her name. Teodora, out of neighborliness and blood relationship, tolerated the Sps. Capco’s occupat ion thereof. Eventually, the title to the property was conveyed to Sps. Dela Cruz. Intending to construct a house and utilize the space for b alut and salted egg business, they asked Sps. Capco to vacate the property. As Sps. Capco refused, the matter was brought to the Barangay Lupon for conciliation but to no avail. Hence this complaint.

ISSUE: Whether or not Sps. Dela Cruz has a better right to possess such property HELD: Yes, the only issue in an ejectment case is the physical possession of real property — possession de facto and not possession de jure but where the parties to an ejectment case raise the issue of ownership, the courts may pass upon that issue to determine who between the parties has the better right to possess the property.” Here, both parties anchor their right to possess based on ownership, i.e., the spouses Dela Cruz by their own ownership while the spouses Capco by the ownership of Rufino as one of the heirs of the alleged true owner of the property. Thus, the MTC and the RTC co rrectly passed upon the issue of ownership in this case to determine the issue of possession. However, it must be emphasized that “[t]he adjudication of the issue of ownership is only provisional, and not a bar to an action between the same parties involvi ng title to the property.” •

15

Civil Law


Sps. Dela Cruz was able to prove that they are owners of the lot. Their allegation that the subject property was adjudicated to Teodora and was later conveyed in their favor was supported by: (1) A copy of the Decision of the land r egistration case; (2) Title of the land issued to Teodora (3) The Deed of Extrajudicial Settlement of the Estate of Teodora wherein the latter’s heir agreed to convey the said property to Amelia. On the other hand, aside from Sps Capco’s bare allegation that respondent Rufino is an heir of the true owners thereof, presented nothing to support their claim. All told, the Court agrees with the MeTC’s conclusion, as affirmed by the RTC, that the spouses Dela Cruz are better entitled to the material possession of the subject property. As its present owners, they have a right to the possession of the property which is one of the attributes of ownership.

•

•

REPUBLIC v. CORTEZ G.R. No. 201405. | 24 August 2015 Possession DOCTRINE: Possession, no matter how long, cannot produce any legal effect if the property cannot be lawfully possessed in the first place.

FACTS: •

•

•

•

Rev. Claudio R. Cortez, Sr., a missionary, established an orphanage and school in Punta Verde, Palaui Island, Cagayan. He claimed that since 1962, he has been in peaceful possession of about 50 hectares of land located in the western portion of Palaui Island where with the help of Aetas and other people under his care, cleared and developed for agricultural purposes in order to support his charitable, humanitarian and missionary works. May 22, 1967: Pres. Marcos issued Proc. No. 201 which reserved 2,000 hectares of the southern half portion of the Palaui Island for the use of the Philippine Navy, subject, to private r ights if there be any. Aug. 16, 1994: Pres. Ramos issued Proc. No. 447 declaring Palaui Island and the surrounding waters as marine reserve, subject to any private rights. The entire Palaui Island consisting of an aggregate area of 7,415.48 hectares was accordingly reserved as a marine protected area. as Jun. 13, 2000: Rev. Cortez filed a Petition for Injunction against Rogelio C. Bi n ̃ in his capacity as Commanding Officer of the Philippine Naval Command in Port San Vicente, Sta. Ana, Cagayan. as, According to Rev. Cortez, some members of the Philippine Navy, upon orders of Bi n disturbed ̃ his peaceful and lawful possession of the said 50hectare portion of Palaui Island when they commanded him and his men, through the use of force and intimidation, to vacate the area.

ISSUE: Whether or not Rev. Cortez is entitled to possess the land HELD: No, only things and rights which are susceptible of being appropriated may be the object of possession and thus, property of the public dominion, common things and things specifically prohibited by law cannot be appropriated and hence, cannot be possessed. The Court notes that while Rev. Cortez relies heavily on his asserted right of possession, he failed to show that the subject area over which he has a claim, is not part of the public domain and therefore can be the proper object of possession. To prove that a land is alienable, the existence of a positive act of the government, such as presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute declaring the land as alienable and disposable must be established. In this case, there is no such proof showing that the subject portion •

•

16

Civil Law

•


of Palaui Island has been declared alienable and disposable when Rev. Cortez started to occupy the same. Hence, it must be considered as still inalienable public domain. Being such, it cannot be appropriated and therefore not a proper subject of possession under Article 530 of the Civil Code. Possession, even if the same be in the concept of an owner or no matter how long, cannot produce any legal effect since the property cannot be lawfully possessed in the first place.

SIY v. TOMLIN G.R. No. 205998 | 24 April 2017 Possession DOCTRINE: In a complaint for replevin, the claimant must convincingly show that he is either the owner or clearly entitled to the possession of the object sought to be recovered.

FACTS: •

•

• •

•

Siy filed a complaint for recovery of possession with prayer for replevin agai nst Ong. Siy alleged that he owns a Range Rover which he purchased from Lopez. Siy admitted that he did not register the sale in his favor, and that the vehicle remained in the name of Lopez. Siy entrusted the vehicle to Ong under an arrangement that the latter would sell the vehicle for him. Siy stated that Ong failed to remit the proceeds of the purported sale nor return the vehicle. Among the evidence presented by Siy were: a manager’s check and cash voucher as proof of payment, and the affidavit of Lopez attesting to the sale. Tomlin, on the other hand, claimed to be the lawful and registered owner of the vehicle. Tomlin presented the Official Receipt and Certificate of Registration. Tomlin argued that he is the true owner of the subject vehicle. He said that Ong sold to vehicle to Chua, and that the same vehicle was later on sold to him by the latter.

ISSUE: Whether or not Siy is entitled to possession of the car HELD: No, in a complaint for replevin, the claimant must convincingly show that he is either t he owner or clearly entitled to the possession of the object sought to be recovered. From Siy’s own account, he appointed Ong as his agent to sell the vehicle. Since Ong was able to sell the vehicle, Siy ceased to be the owner thereof. Considering that he was no longer the owner or rightful possessor of the subject vehicle at the time he filed the case, he is not entitled to possession over the property. •

REGALADO v. DE LA PENA G.R. No. 202448 | 13 December 2017 Possession DOCTRINE: In an action to recover possession of property, the assessed value of the subject property is jurisdictional.

FACTS:

17

Civil Law

•

•

• •


Emma, Jesusa, Johnny, Johanna, Jose, Jessica, and Jaime (all surnamed De La Pena) are the registered owners of two parcels of land with a total area of 44 hectares. Regalado, without knowledge and consent of the De La Penas, entered, took possession of, and planted sugar cane on the subject properties without paying rent. They filed a complaint for recovery of possession of the property with the RTC against Regalado. Regalado moved for the dismissal of the complaint on the ground that the assessed values of the subject properties were not alleged.

ISSUE: Whether or not an allegation as to the assessed value of the property is necessary for an action to recover possession of property

HELD: Yes, in this case, the RTC took cognizance of the complaint only on the presumption that the assessed values of the properties exceed Php 20,000. However, jurisdiction is conferred by law, it cannot be presumed nor implied. In the absence of any allegation as to the assessed value of the subject properties, it cannot be determined which court has exclusive jurisdiction over the complaint. MeTC, MTC, or MCTC has exclusive original jurisdiction over civil actions involving title to or possession of real property, or any interest therein where the assessed value does not exceed Php 20,000 (or Php 50,000 in Metro Manila). If it exceeds such value, RTC has jurisdiction. •

•

DE GUZMAN v. FILINVEST DEVELOPMENT CORPORATION G.R. No. 191710 | 14 January 2015 Easements DOCTRINE: The need of the dominant estate is the one which governs the determination of the width of the easement of right of way. The grant of the easement should not be excessive that would be prejudicial to the dominant estate.

FACTS: •

• •

• •

The Petitioners Demetria de Guzman, Lolita de Guzman, Esther Milan, Banaag de Guzman, Amor Apolo, Herminio de Guzman, Leonor Vivencio, Norma de Guzman, and Josefina Hernandez (petitioners) were co-owners of a parcel of land (15,063 sqm) in Cainta, Rizal. Said land was then subdivided among them and individual titles were issued to them. The property was enclosed and surrounded by other properties belonging to various owners. One of the owners is the respondent Filinvest, which has a potential direct access to Marcos highway. The petitioners then filed a complaint for easement of right of way against t he respondent. The respondent answered that the petitioners have an access to Sumulong Highway through another adjoining property. And they also alleged that Su mulong Highway is nearer than Marcos Highway from the petitioners’ property.

ISSUE: Whether or not the 10-meters of right of way grant is proper for the petitioners HELD: No, what governs the width of the easement is the needs of the dominant estate. •

•

•

Under Art. 651 of the Civil Code, the width of the easement of right of way shall be that which is sufficient for the needs of the dominant estate an d may accordingly be changed from time to time. According to Senator Tolentino, it is the needs of the dominant tenement which determines the width of the passage In this case, the grant of the RTC of 10 meters width of the easement was surely not proper since if that was the case, the indemnity that the petitioners would be giving is around P38M. That amount

18

Civil Law

•


would be iniquitous since the need of the petitioner was just an adequate vehicular access to the highway. The right of way of 3 meters would already suffice to meet the needs of the petitioners. Therefore the indemnification must be computed using the 3-meter right of way and not the excessive 10meter one.

ANDRES. v. STA. LUCIA DEV’T CO. G.R. No. 201405. | 24 August 2015 Easements DOCTRINE: 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.

FACTS: •

•

•

Petitioners filed a Complaint for Easement of RightofWay against Sta. Lucia Dev’t Co. Before RTC, alleging that they are coowners and possessors for more than 50 years of 3 parcels of unregistered agricultural land in Rizal with a total area of more or less 10,500 sqm. A few years back, however, Sta. Lucia Dev’t Co. acquired the lands surrounding the subject property and developed the same into a residential subdivision known as the Binangonan Metropolis East, and built a concrete perimeter fence around it such that petitioners were denied access from subject property to the nearest public road and vice versa. They thus prayed for a rightofway within Binangonan Metropolis East in order for them to have access to Col. Guido Street, a public road. This is considering that their possession became adverse when their predecessor-in-interest with regard to the land allegedly formally registered his claim of ownership with the DENR.

ISSUE: Whether or not petitioners are entitled to demand an easement of rightofway from respondent HELD: No, the petition has no merit. 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. Contrary to petitioners' allegations, there is no showing that there was a claim of ownership over the subject property by their predecessor-in-interest. His letter to the DENR is actually just a request for the issuance of certain documents and nothing more. •

NAGA CENTRUM, INC. v. ORZALES G.R. No. 203576 | 14 September 2016 Easements DOCTRINE: The owner of a landlocked property has a right to demand a right-of-way through neighboring estates provided that it is least prejudicial to the servient estate and shortest to the highway

FACTS: • •

•

•

Sps. Orzales owns a house and lot situated in Valentin Street, Sabang Naga City Their property was surrounded by different property owners and eventually lost passageway to public highway To access the public road, they can only pass through Rizal Street, which is in Naga Centrum’s property, on a limited time from 9:00am to 2:00pm dail Burdened by it, Sps. Orzales demands for a right-of-way from Naga Centrum but the later declined

19

Civil Law

•


Naga Centum intentionally blocked the passageway and landlocked Sps. Orzales’

ISSUE: Whether or not Sps. Orzales has the right to demand right-of-way HELD: Yes, to be entitled to an easement of right of way, the following requisites should be met: (1) (2) (3) (4) •

The estate is surrounded by other immovable and is without adequate outlet to public highway Payment of proper indemnity Isolation of the immovable is not due to its owner’s acts Right-of-way claimed is at a point least prejudicial to the servient estate All the four requisites were present in this case which justifies Sps. Orzales demand for right of way. Also with the interest of justice as enshrined under Art. 19 and 26 of the Civil Code, Naga Centrum should have exercised its right with justice and respect to i ts neighbors

HIPOLITO, JR. v. CINCO G.R. No. 174143 | 28 November 2011 Nuisance DOCTRINE: The mere fact that the building is considered as a nuisance under the Civil Code does not deprive the Building Official the authority to order its condemnation and demolition.

FACTS: •

•

•

Edeltrudis Hipolity y Marciano (Edeltrudis) entered into a lease agreement with Francisco Villena (Villena) over a parcel of land located at San Andres Bukind, Manila for 20 years. Edeltrudis was obliged to build an apartment-style building adjacent to the existing house in the property. After 13 years, the heir of Edeltrudis, Spouses Ricardo Hipolito, Jr. and Liza Hipolito (Sps. Hipolito), and the heirs of Villena were informed that the property was acquired by Atty. Carlos D. Cinco (Cinco) via a deed of sale. Cinco then filed with the OBO a verified request for structural inspection of the structures in the lot. The Office of the Building Official eventually declared the buildings dangerous and ruinous, and recommended their demolition.

ISSUE: Whether or not the Building Official could order the condemnation and demolition of the buildings even though the building falls under the concept of a nuisance under the Civil Code

HELD: Yes, the Building Official has authority.The fact that the buildings in question could also constitute nuisances under the Civil Code does not preclude the Building Official form issuing the assailed Demolition Order. As provided by P.D. No. 1096, the authority of the Building Official to order the repair, vacation or demolition, as the case may be, is without prejudice to further action that may be undertaken under the relevant provisions of the Civil Code. •

PHILIPPINE NATIONAL BANK v. JUMAMOY G.R. No. 168164 | 3 August 2011 Prescription DOCTRINE: The 10-year prescriptive period for an action for reconveyance based on an implied trust applies when the plaintiff or the person enforcing the trust is not in possession of the property.

20

Civil Law


FACTS: •

•

•

•

In an earlier case for reconveyance, the RTC rendered a decision ordering the exclusion of 2.5 hectares of property from the coverage of an OCT registered in the na me of Pace. It was established that the said lot was owned by the predecessor of Jumamoy, hence, should be reconveyed in favor respondent Jumamoy. However, the RTC decision could not be annotated on the OCT of Pace. It was found that the OCT had already been cancelled by reason of an unpaid mortgage o executed by Pace with the PNB, and t hat TCT had already been issued in favor of PNB. Jumamoy filed a case for Declaration of Nullity of Mortgage, Foreclosure Sale, Reconveyance and Damages against PNB and Pace. He argued that: Pace could not validly mortgage the entire Lot to PNB as a portion thereof consisting of 2.5 o hectares belongs to him; and PNB is not an innocent mortgagee or purchaser for value since it had been notified that the o said lot was subject to litigation. The PNB, on the other hand, contends that Jumamoy’s action for reconveyance had already prescribed.

ISSUE: Whether or not Jumamoy’s action for reconveyance had prescribed HELD: No, 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. In this case, it has been established that Jumamoy is in actual possession of the property, hence, the action for reconveyance is imprescriptible. 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. •

•

•

ANDRES. v. STA. LUCIA DEV’T CO. G.R. No. 201405. | 24 August 2015 Prescription DOCTRINE: If the mode of acquisition is prescription, it must first be shown that the land has already been converted to private ownership prior to the requisite acquisitive prescriptive period.

FACTS: •

•

•

Petitioners filed a Complaint for Easement of RightofWay against Sta. Lucia Dev’t Co. Before RTC, alleging that they are coowners and possessors for more than 50 years of 3 parcels of unregistered agricultural land in Rizal with a total area of more or less 10,500 sqm. A few years back, however, Sta. Lucia Dev’t Co. Acquired the lands surrounding the subject property and developed the same into a residential subdivision known as the Binangonan Metropolis East, and built a concrete perimeter fence around it such that petitioners were denied access from subject property to the nearest public road and vice versa. Petitioners assert that they have already become owners of the subject property through extraordinary acquisitive prescription since they have been in open, continuous and peaceful possession thereof for more than 50 yrs.

ISSUE: Whether or not petitioners acquired the property through acquisitive prescription

21

Civil Law


HELD: No, the petition has no merit. Even if timely raised, such argument of petitioners, as well as with respect to extraordinary acquisitive prescription, fails. Prescription is one of the modes of acquiring ownership under the Civil Code. However, only lands of the public domain subsequently classified or declared as no longer intended for public use or for the development of national wealth, or removed from the sphere of public dominion and are considered converted into patrimonial lands or lands of private ownership, may be alienated or disposed through any of the modes of acquiring ownership under the Civil Code. And if the mode of acquisition is prescription, whether ordinary or extraordinary, it must first be shown that the land has already been converted to private ownership prior to the requisite acquisitive prescriptive period. • •

•

OBLIGATIONS AND CONTRACTS METROBANK v. ROSALES G.R. No. 183204| 13 January 2014 Sources of Obligations DOCTRINE: Obligations arise from law, contracts, quasi-contracts, delicts and quasi-delicts. FACTS: •

•

• •

•

•

Respondent Rosales is the owner of China Golden Bridge Travel Services, while respondent Yo Yuk To is the mother of Rosales. They opened a Joint Peso Account with Metrobank. Rosales accompanied her client Fang, a Taiwanese national, to open a savings account with Metrobank. Since Fang could only speak Mandarin, Rosales acted as the former’s interpreter. Later, respondents opened a Joint Dollar Account with Metrobank. Metrobank issued a “Hold Out” order against respondents’ accounts and filed before the Office of the Prosecutor a criminal case for estafa. Metrobank accused respondents as the ones responsible for the unauthorized and o fraudulent withdrawal of 75,000 USD from Fang’s dollar account. Respondents filed before the RTC a Complaint for Breach of Obligation and Contract against Metrobank, alleging that they attempted several times to withdraw their deposits but were una ble to because their accounts were placed under “Hold Out” status without any explanation. Metrobank claims that it did not breach its contract with respondents because it has a valid reason for issuing the “Hold Out” order. It anchors its right to withhold respondents’ deposits on the Application and Agreement o for Deposit Account, which reads “the Bank is hereby authorized to withhold as security for any and all obligations with the Bank, all monies xxx of the Depositor xxx for so much as will be sufficient to pay any or all obligations incurred by the latter.”

ISSUE: Whether or not Metrobank is guilty of breach of contract despite the “Hold Out” clause HELD: Yes, the “Hold Out” clause applies only if there is a valid and existing obligation ari sing from any of the sources of obligations enumerated in Article 1157 of the Civil Code, to wit: law, contracts, quasicontracts, delict and quasi-delict.

22

Civil Law

•

•


In this case, petitioner failed to show that respondents had an obligation to it under any of the aforementioned sources of obligations, thus, the “Hold Out” clause cannot apply. Although a criminal case was filed against respondent, this is not enough reason for Metrobank to issue a “Hold Out” order as the case was still pending and no final judgment of conviction has been rendered against them. In fact, at the time the “Hold Out” order was issued, the criminal complaint had not yet been filed.

MANLAR RICE MILL, INC. v. DEYTO G.R. No. 191189 | 29 January 2014 Kinds of Obligations DOCTRINE: 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.

FACTS: •

• • •

•

Respondent Ang entered into a rice supply contract with Petitioner Manlar Rice Mill Inc. (Manlar) where the former purchased rice from the latter. This transaction was covered by nine (9) postdated checks issued by Ang from her personal bank/checking account. Upon presentment, all nine (9) checks were dishonored. Manlar made oral and written demands upon respondents Deyto and Ang, which went unheeded. Manlar filed a Complaint for Sum of Money against Deyto and Ang before the RTC seeking to hold respondents solidarily liable on the rice supply contract. Deyto filed her Answer claiming that she did not contract with Malar or any of its representatives regarding the purchase and delivery of rice. She further argued that Manlar’s claim has no factual and legal basis, and that Manlar’s impleading her is simply a desperate str ategy or attempt to recover its losses from her, considering that Janet Ang can no longer be located.

ISSUE: Whether or not Deyto can be held solidarily liable with Ang for what the latter owes to Manlar HELD: No, well-entrenched is the rule that solidary obligations cannot be lightly inferred. 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. A contract affects only the parties to it, and cannot be enforced by or against a person who is not a party thereto. In the present case, the preponderance of evidence indicates that it was Janet Ang alone who entered into the rice supply agreement with Manlar. Whenever Manlar made rice deliveries, Deyto was not around. Also, it was Ang alone who issued the subject checks and delivered them to Manlar. •

GOLDLOOP v. GSIS G.R. No. 171076 | 1 August 2012 Kinds of Obligations DOCTRINE: Parties may validly stipulate the unilateral rescission of a contract. FACTS: •

•

GSIS and Goldloop executed a Memorandum of Agreement (MOA) whereby Goldloop, at its own expense and account, would renovate the facade of the Philcomcen Building as well as construct a condominium building on a portion of the said land. The MOA provided for a unilateral rescission in case of failure to perform the contract.

23

Civil Law


The projects, however, were not completed because the Mayor did not act on Goldloop’s application for building permits. By reason thereof, GSIS rescinded the contract. Goldloop asserted that the rescission was without basis and clearly made in bad faith.

•

• •

ISSUE: Whether or not the rescission was valid HELD: Yes, parties may validly stipulate the unilateral r escission of a contract. Such is the case here since the parties conferred upon GSIS the right to unilaterally rescind the MOA. In this case, both Goldloop and GSIS failed to comply with their reciprocal obligations. Goldloop’s obligation failed to construct and develop the condominium building. o GSIS failed to deliver to Goldloop the property free from all liens and encumbrances. o In view of the rescissory action taken by GSIS pursuant to Article 1191 of the Civil Code, mutual restitution is required. Goldloop should return to GSIS the possession and control of the property subject of their agreements while GSIS should reimburse Goldloop whatever amount it had received from the latter by reason of the MOA. •

•

CONTINENTAL CEMENT CORPORATION v. ASEA BROWN BOVERI G.R. No. 171660 | 17 October 2011 Kinds of Obligations DOCTRINE: The penalty clause takes the place of indemnity for damages a nd the payment of interests in case of non-compliance with the obligation, unless there is a stipulation to the contrary.

FACTS: •

•

•

Petitioner Continental Cement Corporation (CCC) obtained the services of respondents Asea Brown Boveri (ABB) and BCC Brown Boveri to repair its kiln drive motor. Due to the repeated failure of ABB to repair the kiln drive motor, CCC file a complaint for sum of money and damages. It claimed that due to the consequence of the failure to comply with their contractual obligation, ABB must pay the production and opportunity losses, labor cost and rental of crane, penalties, cost of money interest, and attorney’s fees. ABB, however, claimed that under Clause 7 of the General Conditions attached to CCC’s letter of offer issued to the former, the liability of ABB should not extend to consequential damages either direct or indirect.

ISSUE: Whether or not ABB is liable for payment of penalties HELD: Yes, CCC is entitled to penalties since under Art. 1226 of the Civil Code, the penalty clause takes the place of indemnity for damages and the payment of interests in case of non-compliance with the obligation, unless there is a stipulation to the contrary. In this case, since there is no stipulation to the contrary, the penalty shall cover all other damages claimed by CCC (i.e. production loss, labor cost, and rental of crane). •

SPOUSES BONROSTRO v. SPOUSES LUNA G.R. No. 172346 | 24 July 2013 Kinds of Obligations and Extinguishment of Obligations DOCTRINE: Tender of payment takes effect only if accompanied by actual payment or followed by consignation.

24

Civil Law


FACTS: •

•

•

•

•

•

In 1992, respondent Constancia Luna, as buyer, entered into a Contract to Sell with Bliss Development Corporation involving a house and lot in Diliman, Quezon City. A year after, Constancia this time as the seller, entered into another Contract to Sell with petitioner Lourdes Bonrostro concerning the same property to be paid in installments. The Spouses Bonrostro took possession of the property immediately after the execution of the contract. However, Lourdes failed to pay the stipulated subsequent amortization payments. The Spouses Luna filed before the RTC a Complaint for Rescission of Contract and Damages against the Spouses Bonrostro praying for the rescission of the contract, delivery of possession of the subject property, and payment by the Spouses Bonrostro of their unpaid obligation. The RTC ruled that the delay could not be considered a substantial breach considering that the Spouses Bonrostro were ready and willing to pay as evidenced by a letter they sent to the Spouses Luna, hence, rescission is not proper. It further ordered the Spouses Bonrostro to pay the Spouses Luna the balance plus interest. The Spouses Bonrostro now questions the order with regard to the payment of interest, alleging that they should not be assessed any interest subsequent to the date of the letter as this constitutes a valid tender of payment.

ISSUE: Whether or not nonpayment of the purchase price in a Contract to Sell constitutes a substantial breach warranting a rescission

HELD: No, in a contract to sell, payment of the price is a positive suspension condition, the failure of which is not a breach of contract warranting rescission under Article 1911 of the Civil Code but rather just an event that prevents the supposed seller from being bound to convey title to the supposed buyer. Article 1911 cannot be applied to sales of real property on installment since these are governed by the Maceda Law. •

ISSUE: Whether or not Lourdes’ letter to Atty. Carbon a mounts to tender of payment HELD: No, the Spouses Bonrostro erroneously assumed that the letter amounts to tender of payment of the remaining balance which would suspend the accrual of interest. Their claimed tender of payment did not produce any effect because it was not accompanied by actual payment or followed by consignation. 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. Tender of payment is the manifestation by the debtor of a desire to comply with or pay an obligation. If refused without just cause, the tender of payment will discharge the debtor of the obligation to pay but only after a valid consignation of the sum due shall have b een made with the proper court. Consignation is the deposit of the proper amount with a judicial authority in accordance with rules prescribed by law, after the tender of payment has been refused or because of circumstances which render direct payment to the creditor impossible or inadvisable. •

•

•

LAO v. SPECIAL PLANS, INC. G.R. No. 164791| 29 June 2010 Extinguishment of Obligations DOCTRINE: Compensation takes place only if both obligations are liquidated and demandable. FACTS:

25

Civil Law

•

• • •


Petitioners Lao, Manansala and Jim, entered into a Contract of Lease with Special Plans, Inc. (SPI) over the latter’s building. SPI sent a Demand Letter to the petitioners asking for full payment of rentals in arrears. Receiving no payment, SPI filed a complaint for sum of money. Petitioners, in their Answer with Counterclaim, admitted their nonpayment of rentals but alleged that SPI did not deliver the leased premises in a condition fit for petitioners’ intended use and thus, they incurred expenses for repairs done on the property. Petitioners claim that the amount spent for repairs should be judicially compensated o against the said unpaid rentals.

ISSUE: Whether or not compensation is proper HELD: No, compensation can take place only when both debts are liquidated and demandable. •

• •

The Civil Code provides that compensation shall take place when the following requisites are present: (1) Each one of the obligors be bound principally and that he be at the same time a principal creditor of the other; (2) Both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if the latter has been stated; (3) The two debts are due: (4) The debts are liquidated and demandable; (5) Over neither of them be any retention or controversy, commenced by third parties and communicated in due time to the debtor. A claim is considered liquidated when the amount and time of payment is fixed. In this case, petitioners failed to properly discharge their burden to show that the debts are liquidated and demandable. They did not present any convincing evidence or proof which could support their allegation that there were actual expenses made for the alleged repairs. Consequently, legal compensation is inapplicable.

LUZON DEVELOPMENT BANK v. ENRIQUEZ G.R. Nos. 168646 and 168666 | 12 January 2011 Extinguishment of Obligations DOCTRINE: 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.

FACTS: •

•

•

•

Delta Development Management Services, Inc. (Delta) is owned by Ricardo De Leon (De Leon), who in turn owns Lot 4 of Delta Homes I. Delta obtained a P4 million loan from petitioner Luzon Development Bank (LDB) which is secured by a Real Estate Mortgage including Lot 4. Delta then executed a Contract to Sell with respondent Enriquez over the house and lot in Lot 4. The Contract provides that a final Deed of Sale will only be issued upon full payment of the consideration. Delta then defaulted on its loan obligation. LDB, instead of foreclosing the REM, agreed to a dation in payment wherein Delta would assign real estate properties to LDB in payment of the total obligation. One of the properties included was Lot 4.

26

Civil Law


ISSUE: Whether or not the dacion en pago extinguished the loan obligation HELD: Yes, the dacion en pago extinguished the loan obligation notwithstanding the existence of the Contract to Sell over Lot 4 in favor of Enriquez. As a rule, 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 . It is the intention of the parties in the dation in payment which 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 of the said debt. In this case, the Dacion stated that the assigned properties served as full payment of Delta ’s total obligation to LDB without any reservation or condition. Since LDB already accepted the said properties as equivalent to the loaned amount and as full satisfaction of Delta’s debt, it cannot now complain that some of the assigned properties are covered by existing Contracts to Sell. •

•

•

MONTEMAYOR v. MILLORA G.R. No. 168251 | 27 July 2011 Extinguishment of Obligations DOCTRINE: A debt is considered liquidated, not only when it is expressed in definite figures which do not require verification, but also when the determination of the exact amount depends only on a simple arithmetical operation.

FACTS: •

•

•

•

•

Respondent Atty. Millora obtained a P400,000 loan from petitioner Montemayor with a stipulated monthly interest of 2%. Atty. Millora was only able to pay P100,000 of the loan, hence, a complaint for sum of money was filed by Montemayor. Atty. Millora answered with a counterclaim for payment of the legal service he rendered in favor of Montemayor. The trial court found merit in both the collection of money and the counterclaim, ruling that: Atty. Millora is liable to Montemayor in the amount of P300,000. o Montemayor is liable to Atty. Millora for attorney’s fees “which is equivalent to the amount o of Atty. Milllora’s monetary liability.” Both the amounts being equivalent, the trial court ordered for its offsetting. o Montemayor now questions the validity of the “offsetting” of the monetary claims awarded. He points out that offsetting cannot be made because the judgment of the RTC failed to specify the amount of attorney’s fees, and that for offsetting to apply, the two debts must be liquidated or ascertainable.

ISSUE: Whether or not both claims could be validly offset despite the RTC not specifying numerically the amount to be paid for the counterclaim

HELD: Yes, a debt is considered liquidated, not only when it is expressed in definite figures which do not require verification, but also when the determination of the exact amount depends only on a simple arithmetical operation.

27

Civil Law

•

•


For legal compensation to take place, the requirements set forth in Arts. 1278 and 1279 of the Civil Code must be present. It must be established that both parties have monetary obligations to each other, that both obligations are already due, that they be liquated and demandable, and that no third parties must be involved. In the instant case, both obligations are liquidated. Millora has the obligation to pay his debt in the amount of P300,000 with interest counted from the filing of the complaint. Montemayor, on the other hand, has the obligation to pay attorney’s fees which the RTC had already determined to be equivalent to whatever amount recoverable from Millora.

CACAYORIN v. AFPMBAI G.R. No. 171298 | 15 April 2013 Extinguishment of Obligations DOCTRINE: Article 1256 of the Civil Code authorizes consignation alone, without need of prior tender of payment, when the creditor is unknown or when two or more persons claim the same right to collect.

FACTS: •

• •

•

•

•

Petitioner Cacayorin filed an application with respondent AFPMBAI to purchase a piece of property which the latter owned, through a loan facility. Cacayorin and the Rural Bank executed a Loan and Mortgage Agreement. The Rural Bank issued a letter of guaranty informing AFPMBAI that the proceeds of the approved loan will be released to them after AFPMBAI transfers the title of the property to Cacayorin. AFPMBAI complied. The Rural Bank was closed and was placed under receivership by the Philippine Deposit Insurance Corporation (PDIC). AFPMBAI, on the other hand, made oral and written demands for petitioners to pay the loan/consideration for the property. Petitioners filed a complaint before the RTC for consignation of loan payment against AFPMBAI and PDIC alleging that as a result of Rural Bank’s closure and PDIC’s claim that their loan papers could not be located, they were left in a quandary as to where they should tender full payment of the loan. AFPMBAI filed a Motion to Dismiss claiming that: The complaint falls within the jurisdiction of the HLURB and not the RTC since Cacayorin o filed the case in his capacity as a buyer of a subdivision lot; Since no prior valid tender of payment was made by Cacayorin, the consignation case was o fatally defective and susceptible to dismissal.

ISSUE: Whether or not the lack of prior tender of payment is fatal to the consignation case HELD: No, Article 1256 of the Civil Code authorizes consignation alone, without need of prior tender of payment, when the creditor is unknown or when two or more persons claim the same right to collect. As can be seen from the records, two entities may possibly be the creditors of the loan: (1) the Rural Bank (through PDIC), which is the apparent creditor under the earlier Loan and Mortgage Agreement; and (2) AFPMBAI, which is currently in possession of the loan documents and the certificate of title, and the one making demands upon petitioners to pay. Whatever transpired between PDIC and AFPMBAI in respect of Cacayorin’s loan account, if any, such that AFPMBAI came into possession of the loan documents and the TCT, it appears that Cacayorin was not informed nor made privy thereto. As such, the consignation case must proceed. •

•

ISSUE: Whether or not the RTC has jurisdiction

28

Civil Law


HELD: Yes, consignation is necessarily judicial, as the Civil Code itself pro vides that consignation shall be made by depositing the thing or things due at the disposal of judicial authority. While tender of payment can be made in venues other than courts, consignation must be made only before the courts. While it may be true that petitioners' claim relates to the terms and conditions of the sale of AFPMBAI's subdivision lot, this is overshadowed by the fact that since the complaint pleads a case for consignation, the HLURB is without jurisdiction to try it, as such case may only be tried by the regular courts. •

ROSETE v. BRIONES G.R. No. 176121 | 22 September 2014 Extinguishment of Obligations DOCTRINE: Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.

FACTS: • •

•

•

•

•

The NHA awarded a lot to petitioner Teodorico Rosete. Respondents Jose and Remedios Rosete, Neorimse and Felicitas Corpuz, and Felix and Marietta Briones objected, claiming that the award of the entire lot of Teodorico was erroneous. The property was eventually awarded to Teodorico, who subsequently made full payment of the value of the subject lot and likewise paid the real property taxes thereon. However, the NHA later withdrew its decision and subsequently cancelled the award made in favor of Teodorico. The subject property was then subdivided among both petitioner and respondents. The NHA informed Teodorico that his payments shall be adjusted accordingly, but that his excess payments will not be refunded; instead, they will be applied to his co- awardees’ amortizations and his co-awardees shall in turn pay him. Teodorico now demands that his co-awardees be required to reimburse his property tax payments as failure to do so would result to unjust enrichment.

ISSUE: Whether or not Rosete is entitled to reimbursement HELD: No, the SC cannot order respondents to refund Rosete’s overpayments since the specific amount of overpayment is not fixed or determinable from the record. Also, the Court is not a trier of facts, hence, it cannot receive evidence on the matter. Had Rosete proven the actual overpaid amounts, the Court could have ordered the reimbursement pursuant to Article 1236 of the Civil Code which states , “Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.” Rosete may however recover from NHA – the actual recipient of the overpayment – applying the principle of solution indebiti. •

•

PSHS-CAGAYAN v. PIRRA CONSTRUCTION ENTERPRISES G.R. No. 204423 | 14 September 2016 Extinguishment of Obligations DOCTRINE: if the obligation is substantially performed in good faith, the obligor, may recover as if it had strictly and completely fulfilled its obligation, less damages suffered by the obligee.

29

Civil Law


FACTS: •

•

•

•

PIRRA Construction Enterprise (PIRRA) entered into construction contracts with the Philippine Science High School-Cagayan Valley Campus (PSHS) for the construction of an academic buildings, dormitories and a school canteen (Project A and Project C). Project A PIRRA requested for its payment and sent a letter to PSHS requesting for substantial o acceptance and completion of the Project, as the accomplishment for Project A was already 94.09%. PSHS replied without any objection, and merely stated that payment could not be made because of certain defects found on the Project pursuant to a COA report. Project C PIRRA requested the suspension of the construction of the canteen because of certain o difficulties, which PSHS granted. Another request for suspension was made because of affected footings, columns, and time beams. The request was left unheeded. PSHS found out that PIRRA suspended work on Project C without its approval, hence, it o informed PIRRA that it was terminating the Project C contract because of the latter’s delay, default, and abandonment. PIRRA demanded from PSHS payment for the constructions made on Project A and C.

ISSUE: Whether or not PIRRA can validly demand for the construction payment of Project A HELD: Yes, it is provided under Article 1234 of the Civil Code that if the obligation is substantially performed in good faith, the obligor, may recover as if it had strictly and completely fulfilled its obligation, less damages suffered by the obligee. In this case, PSHS acknowledged the substantial compliance of PIRRA on Project A. In fact, PSHS initially expressed its willingness to pay only to put it on hold because of a COA report which found the existence of defects and undelivered items. Such report , however, cannot affect PSHS’ obligation to pay because the payment was due on the performed items that were completed or were otherwise already performed, save for the d efects. •

ISSUE: Whether or not PIRRA is entitled to payment despite the non-completion of Project C HELD: Yes. Although PIRRA was guilty of delay, suspension of work without any approval from PSHS, and abandonment of the project, PSHS should still pay PIRRA for the value of the work done as it was found there had already been a 25.5% accomplishment on Project C. To deny payment thereof would result in unjust enrichment of PSHS at the expense of PIRRA.

SPOUSES CASTRO v. TAN G.R. No. 168940 | 24 November 2009 Essential Requisites of a Contract DOCTRINE: The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy.

FACTS: •

Respondent Tan entered into an agreement with petitioners spouses Castro denominated as Kasulatan ng Sanglaan ng Lupa at Bahay (Kasulatan) to secure a P30,000 loan. Under the Kasulatan, Tan undertook to pay the mortgage debt within six (6) months or o until August 17, 1994, with an interest rate of 60% per annum, compounded monthly.

30

Civil Law

•

•

•


Tan failed to pay the same upon maturity, hence, petitioners caused the extrajudicial foreclosure of the real estate mortgage and emerged as t he only bidder in the auction sale that ensued. The period of redemption expired without Tan having redeemed the property; thus, title over th e same was consolidated in favor of the Spouses Castro. Tan, in filing a complaint against respondents, alleges that the interest rate on the principal amount of the loan is unconscionable.

ISSUE: Whether or not the 60% interest rate is iniquitious and unconscionable HELD: Yes, Article 1306 of the Civil Code allows the contracting parties to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. While parties to a loan agreement have wide latitude to stipulate on any interest rate in view of Central Bank Circular No. 905, which suspended the Usury Law ceiling on interest, it is worth stressing that interest rates whenever unconscionable may still be declared illegal. In this case, the 60% interest rate per annum, even if knowingly and voluntarily assumed, is considered iniquitous and unconscionable. Being a void stipulation, the same is deemed inexistent from the beginning. Accordingly, the legal interest of 12% per annum must be imposed in lieu of the excessive interest rate stipulated in the agreement. •

•

HEIRS OF MARIO PACRES v. HEIRS OF CECILIA YGOÑA G.R. No. 174719 | 5 May 2010 Essential Requisites of a Contract DOCTRINE: Only parties to a contract can maintain an action to enforce the obligations arising under said contract.

FACTS: •

•

•

• •

•

Pastor Pacres originally owned Lot 9 in Cebu which he left intestate to his heirs Margarita, Simplicia, Rodrigo, Francisco, Mario (petitioners’ predecessor -in-interest) and Veñarada (petitioner). On this lot stood the co-owned Pacres ancestral home. Four of the Pacres siblings (Rodrigo, Francisco, Simplicia and Margarita) sold their shares in the ancestral home and its lot to Ramirez, who at that time, was leasing the ground floor thereof. With the sale, Ramirez’s possession as lessee turned into a co -ownership with petitioners Mario and Veñarada, who did not sell their shares in the ancestral home. Rodrigo, Francisco, Simplicia and Margarita sold their remaining shares in Lot 9 to Ygoña. The Republic of the Philippines expropriated the front portion of Lot 9 for the expansion of the Cebu south road. Veñaranda and Mario prayed that the expropriation payments be made to them, and consequently, they filed a complaint for specific performance against Ygoa and Ramirez. Petitioners alleged that an agreement was entered into by Ygoa and Ramirez with their o siblings-vendees. Such agreement allegedly provided that Ygoa and Ramirez shall partition the property, and that they shall survey and title the same.

ISSUE: Whether or not petitioners may demand compliance of the alleged oral agreements for the partition and additional obligations of surveying and titling

31

Civil Law


HELD: No, under Article 1311 of the Civil Code, contracts take effect only between the parties, their assigns and heirs (subject to exceptions not applicable here). Thus, only a party to the contract can maintain an action to enforce the obligations arising under said contract. Petitioners, not being parties to the contracts of sale between Ygoña and the petitioners’ siblings, cannot demand compliance from respondents for the partition and additional obligations of surveying and titling. Petitioners cannot invoke the second paragraph of Article 1311 of the Civil Code which provides that if a contract should contain some stipulation in favor of a third person, he may demand its fulfillment. This refers to stipulations pour autrui or stipulation for the benefit of third parties. In the present case, the written contracts of sale contain no such stipulation in favor of the petitioners. •

•

TOLEDO v. HYDEN G.R. No. 172139 | 8 December 2010 Essential Requisites of a Contract DOCTRINE: A threat to enforce one’s claim through competent authority, if the claim is just or legal, does not vitiate consent.

FACTS: • •

• •

•

Petitioner Toledo obtained several loans from respondent Hyden. Toledo had an unpaid balance, thus Jocelyn with two of her subordinates as witnesses signed a document entitled Acknowledgment of Debt. Toledo issued five (5) checks to Hyden representing renewal payment of her five (5) previous loans. Later, Toledo asked Hyden for the recall of one of the checks in the amount of P30,000.00 and replaced the same with six (6) checks. After honoring three of these checks, Jocelyn ordered the stop payment on the remaining checks and filed a complaint against Hyden for Declaration of Nullity and Payment, Annulment, Sum of Money, Injunction and Damages. Toledo averred that Hyden forced, threatened and intimidated her into signing the o Acknowledgment of Debt and at the same time forced her to issue the seven (7) postdated checks.

ISSUE: Whether or not document Acknowledgment of Debt is valid HELD: Yes, Toledo failed to prove her claim that she was made to sign the Acknowledgment of Debt and draw the seven (7) postdated checks through force, threat and intimidation. Even if Toledo was able to prove the existence of such threats, the same is not considered as threat that would vitiate consent. Article 1335 of the Civil Code provides that “a threat to enforce one’s claim through competent authority, if the claim is just or legal, does not vitiate consent. ” As can be seen from the records of the case, Toledo in fact signed the document in her office and in the presence of two witnesses. Furthermore, after the execution of the said document, Toledo honored the first three checks before filing the present complaint. If indeed she was forced as she claims to be, she would never have made good on the first three checks. •

•

SWIFT FOODS, INC. v. SPOUSES MATEO G.R. No. 170486 | 12 September 2011 Essential Requisites of a Contract

32

Civil Law


DOCTRINE: A contract is the law between the parties and those who are guilty of negligence in the performance of their obligations are liable for damages.

FACTS: •

•

•

•

The respondent spouses Mateo entered into a Warehousing Agreement with Buhain, Swift Food’s Sales Supervisor, regarding the lease of the former’s warehouse for the storage of Swift’s feeds products. Swift began delivering feeds to the spouses’ warehouse. To properly document the movement of the stocks, Swift through its sales personnel, Enfestan, gave the spouses two kinds of warehouse documents that would be presented before every release of stocks: (1) the Daily Warehouse Stock Report (DWSR), and the (2) Warehouse Issue Slip (WIS). According to the Agreement, the WIS should contain the signature of the sales personnel o as proof that the latter received the released stocks. A few months later, Swift informed the spouses that it was terminating the contract due to violation of the Warehousing Agreement. It explained that such violations were made when stocks were released to unauthorized persons and which caused them a cash shortage of around P2 Million. The spouses denied violating the terms of the Agreement and explained that they merely followed the instructions of Buhain and Enfestan to release the stocks directly to customers.

ISSUE: Whether or not the spouses committed a breach o f the warehousing agreement HELD: Yes, records show that there has been a clear breach of the terms of the Warehouse Agreement and as such, they shall be held accountable for all the stocks released by them without proper authority. The Warehouse Agreement expressly provided that the spouses should only release stocks to Swift’s sales personnel upon presentation of the properly signed documents. However, records reveal that, contrary to this provision, the spouses released stocks without the necessary clearance. The spouses likewise failed to exercise ordinary diligence in inquiring with the head office whether the instructions of Buhain or Enfestan were proper or authorized. Their reliance on the word of Swift’s sales personnel, contrary to the written contract, is a clear act of negligence. •

•

MOVERTRADE CORP. v. COA and DPWH G.R. No. 204835 | 22 September 2015 Essential Requisites of a Contract DOCTRINE: It is a basic principle in law that contracts have the force of law between the parties and should be complied with in good faith.

FACTS: •

•

•

• •

•

Petitioner Movertrade and the Commission on Audit (COA) with the Department of Public Works and Highways (DPWH) entered into a contract for dredging in Pampanga Bay. Project Supervisor, Director Soriquez, issued two letters reminding Movertrade that side dumping is not allowed and that dredge spoils should be pumped in the provided spoil sites. Engineer Bustos of DPWH issued another letter reiterating the prohibition of side dumping and the availability of the spoil sites. Despite these letters, Movertrade continued to side dump. In the final phase of completion, the president of Movertrade issued a letter asking for payment for the work rendered, and provided and explanation as to why it side dumped. Director Soriquez denied the request for payment for the reason that the side dumping done was not authorized.

33

Civil Law


DPWH still paid Movertrade, however, the amount of P7,354,897.10 representing the cubic meters of the dredging work rendered remained unpaid.

•

ISSUE: Whether or not petitioner is entitled to payment HELD: No, contracts have the force of law between the parties and should be complied with in good faith. A breach occurs where the contractor inexcusably fails to perform substantially in accordance with the terms of the contract. In this case, the contract specifically provides the manner of disposing dredge spoils. As such, Movertrade cannot unilaterally change the manner of disposal without first amending the contract or obtaining the express consent or approval of DPWH. To do otherwise would result to a breach of the contract. Without a doubt, Movertrade's failure to dump the dredge spoils at the designated spoil sites constitutes a breach. Thus, petitioner is not entitled to its money claim for the 165,576.27 cubic meters dredging work as it was done in contravention of paragraph 11 of the Contract Agreement.

•

•

•

MANZANILLA v. WATERFIELDS G.R. No. 177484 | 18 July 2014 Interpretation of Contracts DOCTRINE: Even without proper admission, the contemporaneous and subsequent acts of the parties reveal their intention to amend the Original Contract of Lease.

FACTS: • •

•

• •

•

The Spouses Manzanilla entered into a Contract of Lease over its property with Waterfields. The parties later amended the contract with r egard to the commencement of the lease, which they reckoned on the date of the execution of the amendment, and the undertaking of the spouses to register the agreements. All other terms and conditions in the original contract remained in full force and effect. Waterfields failed to pay the monthly rental fee and instead sent a letter seeking to amend the Amended Contract of Lease. In the letter, Waterfields promised to pay the rentals by way of check, and promising to give an advance rental. It likewise stipulated that the rental deposit shall be used exclusively for the payment of unpaid utilities and other incidental expenses. Waterfield still failed to pay, hence, the spouses filed a Complaint for Ejectment. In its Answer, Waterfields claimed that it did not fail or refuse to pay the monthly rentals but was just utilizing the rental deposit (which was equivalent to one year rentals) as rental payment in accordance with the provisions of the original Contract of Lease. The spouses, in turn, argued that the rental deposit cannot be applied as payment for the monthly rentals pursuant to the Amended Contract of Lease and the Letter-Amendment.

ISSUE: Whether or not there was a valid amendment to the Contract of Lease HELD: Yes, the contemporaneous and subsequent acts of the parties reveal their intention to amend the original Contract of Lease. Article 1371 of the Civil Code provides that, “I n order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered.” The intention of Waterfields in coming up with the letter was to r epress its violation of the contract since at that time, it was already in default in the payment of rent. The spouses, in fact, agreed to the provisions of the letter, believing that it would receive payment of the advance rental. Waterfields likewise benefited from the letter since it was not ejected from the premises. •

•

34

Civil Law

•


Since the Letter-Amendment is valid, Waterfields is considered to have defaulted in the payment of rentals.

SONLEY v. ANCHOR SAVINGS BANK G.R. No. 205623 | 10 August 2016 Rescissible Contracts DOCTRINE: The party aggrieved by the breach of a compromise agreement may, if he chooses, bring the suit contemplated or involved in his original demand as if there had never been any compromise agreement, and without bringing an action for rescission thereof.

FACTS: •

• • •

•

Petitioner Sonley agreed to purchase a real property from r espondent Anchor Savings Bank. Pursuant to the Agreement, the parties entered into a Contract to Sell whereby petitioner o agreed to pay a downpayment and the remaining balance will be payable on monthly installments. Sonley defaulted in her obligation, hence, Anchor Savings Bank rescinded the contract. Sonley filed a Complaint for Declaration of Nullity of Rescission of Contract. The parties agreed to an amicable settlement and entered into a Compromise Agreement whereby Sonley would be given the right to repurchase the subject property, and which the latter exercised in 2010. Anchor filed a Manifestation and Motion for Execution claiming that Sonley had not been paying the agreed monthly installments. It prayed that a writ of execution be issued in its favor ordering that the Contract to Sell be rescinded.

ISSUE: Whether or not the Compromise Agreement can be rescinded? HELD: Yes, the language of Article 2041 of the Civil Code denotes that the party aggrieved by the breach of a compromise agreement may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had never been any compromise agreement, without bringing an action for rescission thereof. He need not seek a judicial declaration of rescission, for he may regard the compromise agreement already rescinded. Under Article 2041 of the Civil Code, “if one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand.” The parties’ Compromise Agreement provides that “the defendant shall have a right to rescind this Compromise Agreement as provided under the Contract to Sell”. The Contract to Sell likewise provides that “the SELLER shall be entitled, as a matter of right, to rescind this Contract upon the failure of the BUYER to pay on due date any monthly installment.” Sonley’s failure to abide by the agreement should result in execution, cancellation and rescission of the Compromise Agreement and Contract to Sell, and her eviction from the property. •

•

•

CAMPOS v. PASTRANA G.R. No. 175994| 8 December 2009 Void and Inexistent Contracts DOCTRINE: Contracts which are absolutely simulated or fictitious are inexistent and void from the beginning.

FACTS:

35

Civil Law

•

•

•

•

•


This case arose from the refusal of Carlito, the father of herein petitioners, to surrender the possession of a fishpond he leased from respondents’ mother, Salvacion, despite the expiration of the Contract of Lease. Respondents filed a Complaint for Recovery of Possession and Damages (Possession Case) against Carlito, in which the RTC issued a Writ of Execution which was returned unsatisfied. When respondents were about to levy certain properties registered in the name of Carlito to satisfy the judgment in the Possession Case, they discovered that Carlito already transferred the same to their children, herein petitioners, by virtue of a Deed of Absolute Sale. Respondents filed a complaint seeking to declare as null the Deeds of Sale and TCTs issued pursuant thereto (Nullity of Sale Case), and alleged that the said contracts of sale were simulated for the sole purpose of evading the levy in satisfaction of the money judgment that might be rendered in the Possession Case. Petitioners, on the other hand, alleged that the lots were acquired in good faith and for value because the properties were sold to them before they had any notice of the claims or interests of other persons thereover.

ISSUE: Whether or not the Deeds of Absolute Sale were s imulated HELD: Yes, the Deeds of Absolute Sale are simulated and were executed for the purpose of putting the lots in question beyond the reach of creditors, hence, void. Based on the records, there were clear badges of simulation that renders the whole transaction void and without force and effect, pursuant to Article 1409 of the Civil Code. The Deeds of Absolute Sale were antedated a nd were executed when the Possession case o was already pending. There was a wide disparity in the alleged consideration specified in the Deeds of Absolute o Sale and the actual zonal valuation of the subject properties. The spouses continue to be in actual possession of the properties and their children, who o are the alleged transferees of the property, have not in fact exercised complete dominion over the same. Neither have the spouses been paying rent for the use of the properties which they allegedly sold to their children. •

ISSUE: Whether or not the action for the declaration of the inexistence of the Deeds of Absolute Sale already prescribed

HELD: No, pursuant to Article 1410 of the Civil Code, an action or defense for the declaration of the inexistence of a contract is imprescriptible.

ISSUE: Whether or not an action for rescission is proper HELD: No, an action to rescind is founded upon and presupposes the existence of a contract. A contract which is null and void is no contract at all and hence, could not be the subject of rescission.

SALES TUAZON v. DEL ROSARIO-SUAREZ G.R. No. 168325 | 8 December 2010 Nature and Form of Contract DOCTRINE: An option contract is a contract by which the owner of property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time.

36

Civil Law


FACTS: • •

•

• •

Roberto and Lourdes executed a Contract of Lease over a parcel of land for a period of three years. During the effectivity of the lease, Lourdes offered to sell to Roberto the subject parcel of land. She pegged the price at P37,541,000.00 and gave him t wo years to decide on the said offer. More than four months after the expiration of the Contract of Lease, Lourdes sold subject parcel of land to her only child, her son-in-law, and her two grandsons. The new owners notified Roberto to vacate the premises but Roberto refused. Roberto claims that Lourdes violated his right to buy subject property under the principle of right of first refusal by not giving him notice and the opportunity to buy the property under the same terms and conditions or specifically based on the much lower price paid by the De Leons.

ISSUE: Whether or not Roberto had the right of first refusal HELD: No, what is involved here is an option contract. An option contract is entirely different and distinct from a right of first refusal in that in the former, the option granted to the offeree is for a fixed period and at a determined price; Lacking these two essential requisites, what is involved is only a right of first refusal. Letter of Lourdes embodies an option contract as it grants Roberto a fixed period of only two years to buy the subject property at a price certain of P37,541,000.00. It being an option contract, the unilateral promise to buy or sell is a mere offer, which is not converted into a contract except at the moment it is accepted. Before the promise is accepted, the promissor may withdraw it at any time. Even if the promise was accepted, private respondent was not bound thereby in the absence of a distinct consideration. In this case, it is undisputed that Roberto did not accept the terms stated in the letter of Lourdes. There is therefore no contract that was perfected between them. Roberto, thus, does not have any right to demand that the property be sold to him at the price for which it was sold to the De Leons neither does he have the right to demand that said sale to the De Leons be annulled. •

•

•

LUZON DEVELOPMENT BANK v. ENRIQUEZ G.R. Nos. 168646 and 168666 | 12 January 2011 Nature and Form of Contract DOCTRINE: Contract to Sell does not transfer ownership until there is full payment of the consideration. FACTS: •

•

•

•

Delta Development Management Services, Inc. (Delta) is owned by Ricardo De Leon (De Leon) who owns Lot 4 of Delta Homes I. Delta obtained a P 4 million loan from Luzon Development Bank (LDB) which is secured by a Real Estate Mortgage including Lot 4. Delta then executed a Contract to Sell with Angeles Catherine Enriquez (Enriquez) over the house and lot in Lot 4. The Contract provides that a final deed of sale will only be issued upon full payment of the consideration. Delta then defaulted on its loan obligation. LDB, however, agreed to a dation in payment wherein Delta would give real estate properties to LDB in payment of the total obligation. One of the properties included was Lot 4.

ISSUES: Whether or not the Contract to Sell transferred ownership to Enriquez HELD: No, the Contract to Sell did not transfer ownership over Lot 4 to Enriquez because a contract to sell is one where the prospective seller reserves the transfer of title to the prospective buyer until the happening

37

Civil Law


of an event, such as full payment of the purchase price. It does not, by itself, transfer ownership to the buyer. In the instant case, there is nothing in the provisions of the contract entered into by DELTA and Enriquez that would exempt it from the general definition of a contract to sell. The terms thereof provide for the reservation of DELTAs ownership until full payment of the purchase price; such that DELTA even reserved the right to unilaterally void the contract should Enriquez fail to pay three successive monthly amortizations. •

DUARTE v. DURAN G.R. No. 173038 | 14 September 2011 Nature and Form of Contracts DOCTRINE: A contract of sale is perfected the moment the parties agree upon the object of the sale, the price, and the terms of payment. Once perfected, the parties are bound by it whether the contract is verbal or in writing because no form is required.

FACTS: •

•

•

•

Respondent Duran offered to sell a laptop computer to petitioner Duarte through the help of a common friend, Dy. Since Duarte was undecided, Duran left the laptop with the former for two days and later, Duarte expressed her willingness to buy the laptop on installment. Duarte made partial payments through two installments, and which was evidenced by a handwritten receipt signed by Duarte. However, when Duran requested for payment of the remaining balance of P7,000, Duarte offered to pay only P2,000. Hence, a demand letter was sent to Duarte. Duarte, on the other hand, denies the existence of a contract of sale by calling attention to Duran’s failure to present a written contract of sale. She claims that under the Statute of Frauds, a contract of sale to be enforceable must be in writing.

ISSUE: Whether there was a contract of sale between the parties HELD: Yes, a contract of sale is perfected the moment the parties agree upon the object of t he sale, the price, and the terms of payment. Once perfected, the parties are bound by it whether the contract is verbal or in writing because no form is required. Contrary to the view of Duarte, the Statute of Frauds does not apply in the present case as this provision applies only to executory, and not to completed, executed or partially executed contracts. In this case, the contract of sale had been partially executed because the possession of the laptop was already transferred to Duarte and the partial payments had been made by her. •

•

•

REPUBLIC v. HEIRS OF SPS. BAUTISTA G.R. No. 181218| 30 January 2013 Nature and Form of Contract DOCTRINE: The market value of a piece of property is the price that may be agreed upon by parties willing but not compelled to enter into a sale. A seller in dire need of funds will accept less, and a buyer desperate to acquire naturally agrees to pay more than what the property is truly worth.

FACTS:

38

Civil Law

•

•

•


Republic offered to purchase 1,155 sqm of lot at P100.00 per square meter for the Balete-Lipa City Interchange Ramp, but the Spouses Bautista refused to sell. Republic filed a complaint for expropriation of the said lot. Petitioner alleged that the zonal valuation of the lot as determined by the BIR is P100.00 per square meter. When the case reached the CA, the court adjudged that it be sold at P 1,960.00 per square meter.

ISSUE: Whether or not the CA erred in fixing the just compensation at P 1,960.00 per square meter. HELD: Yes, it must be remembered that the market value of the property is the price that may be agreed upon by parties willing but not compelled to enter into a sale. Not unlikely, a buyer desperate to acquire it, such as petitioner, would agree to pay more, and a seller in urgent need of funds would agree to accept less, than what it is actually worth. It needs the property for the Balete-Lipa City Interchange Ramp B, and no property other than the subject portion could answer this need. Having purchased a portion of respondents' property in 2000 at P1,300.00 per square meter — by negotiated sale at that — there appears to be no reason why it should not be made to pay just compensation at a premium four years later. •

•

DIEGO v. DIEGO G.R. No. 179965 | 20 February 2013 Nature and Form of Contract DOCTRINE: An agreement which stipulates that the seller shall execute a deed of sale only upon or after full payment of the purchase price is a contract to sell, not a contract of sale.

FACTS: •

•

•

•

Petitioner Nicolas and respondent Rodolfo entered into an oral contract to sell covering Nicolas’s share of the family’s building at P 500,000.00. Rodolfo made a down payment of P 250,000.00 and was agreed that the deed of sale shall be executed upon payment of the remaining balance of P 250,000.00. However, Rodolfo failed to pay the balance. The building was leased out to third parties but the building’s designated administrator did not remit Nicolas’s share in the rents to him. Instead, the share was remitted to Rodolfo. Nicolas filed a complaint against the respondents to order them to deliver to him his share in the rents.

ISSUE: Whether or not the contract between the parties was that of a Contract to Sell HELD: Yes, the stipulation to execute a deed of absolute sale upon full payment of the purchase price, is a unique and distinguishing characteristic of a contract to sell. The agreement to execute a deed of sale upon full payment of the purchase price shows that the vendors reserved title to the subject property until full payment of the purchase price. The remedy of rescission is not available in contracts to sell. Since the agreement is a mere contract to sell, the full payment of the purchase price partakes of a suspensive condition. The nonfulfillment of the condition prevents the obligation to sell from arising and ownership is retained by the seller without further remedies by the buyer. •

•

ROBERN DEVELOPMENT v. PEOPLE’S LANDLESS ASSOCIATION

G.R. No. 173622| 11 March 2013

39

Civil Law


Nature and Form of Contract DOCTRINE: When there is merely an offer by one party without acceptance of the other, there is no contract.

FACTS: •

• •

•

•

The informal settlers with members of PELA offered to purchase the lot owned by Al-Amanah for P 300,000.00, half of which would be paid as down payment and the remaining paid within one year. Al-Amanah informed PELA the disapproval of PELA’s offer to buy the said lot. PELA replied that it had already reached an agreement with Al -Amanah regarding the sale of the subject lot based on their offered price. Meanwhile, the petitioner Robern manifested that it was interested to buy the lot for P 400,000.00 and was informed of the acceptance of Al-Amanah. Robern paid the purchase price and a title was issued in Robern’s name. PELA consigned P150,000.00 in the RTC.

ISSUE: Whether there was a perfected contract of sale between PELA and Al-Amanah HELD: No, the transaction between Al-Amanah and PELA remained in the negotiation stage. •

•

The offer never materialized into a perfected sale, for no oral or documentary evidence categorically proves that Al-Amanah expressed amenability to the offered P300,000.00 purchase price. Before the lapse of the 1- year period PELA had set t o pay the remaining balance, Al-Amanah expressly rejected its offered purchase price. A contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. Thus, for a contract of sale to be valid, all of the following essential elements must concur: a) consent or meeting of the minds; b) determinate subject matter; and c) price certain in money or its equivalent.

TUMIBAY v. LOPEZ G.R. No. 171692 | 16 June 2013 Nature and Form of Contract DOCTRINE: In a contract to sell, the seller retains ownership of the property until the buyer has paid the price in full. A buyer who covertly usurps the seller's ownership of the property prior to the full payment of the price is in breach of the contract and the seller is entitled to rescission because the breach is substantial and fundamental as it defeats the very object of the parties in entering into the contract to sell.

FACTS: •

•

•

On December 12, 1990, petitioners, as principals and sellers, executed an SPA in favor of Reynalda, as agent, to offer for sale the subject land provided that the purchase price thereof should be approved by the former. Petitioners and respondent Rowena agreed to enter into an oral contract to sell over the subject land for the price of P800,000.00 to be paid in 10 years through monthly installments. After having paid a total of $10,000.00, respondent Rowena called her mother, Reynalda, claiming that she had already bought the subject land from petitioners. Using the aforesaid SPA, Reynalda

40

Civil Law


then transferred the title to the subject land in respondent Rowena's name through a deed of sale without the knowledge and consent of petitioners

ISSUE: Whether or not Rowena was in breach of the contract to sell HELD: Yes, Respondent Respondent Rowena was in breach thereof because, at the time the t he aforesaid deed of sale was executed, the full price of the subject subject land was yet to be paid. The SPA could not have amended or novated the contract to sell to allow respondent Rowena to acquire the title over the subject land despite non-payment of the price in full for the reason that the SPA was executed four years prior to the contract to sell. In fine, the tenor of her testimony indicates that respondent Rowena made a unilateral determination that she had substantially paid the purchase price and that she is entitled to the transfer of title as a form of security for the installments she had already paid, reasons, we previously noted, as unjustified. •

•

LOCSIN v. MEKENI FOOD CORP. G.R. No. 192105| 9 December 2013 Nature and Form of Contracts DOCTRINE: Express stipulation is needed to consider payment installments as rentals. FACTS: • •

•

•

•

•

Mekeni offered Locsin a car plan. The vehicle was a used Honda Civic valued at P280,000. ½ of the cost of the vehicle will be paid by the company and the other half to be deducted o from the salary of Locsin. The deduction would be P5,000 each from his salary. o 2 years after, Locsin resigned. A total of P112,500 has been deducted and applied as his share in the car plain. Locsin filed a complaint for recovery of monthly salary deductions which were earmarked for his cost-sharing in the car plan. Mekeni asserts further further that the service vehicle was merely a loan which had to be paid through the monthly salary deductions. CA considered such payments as rentals for the use of his service and installments paid.

ISSUE: Whether or not the payments by Locsin may be considered rentals HELD: No. installments made on the car plan may be treated as rentals only when there is an express stipulation in the car plan agreement to such effect. •

Under a typical car plan, there are also stipulations in car plan agreements to the effect that should the employment of the employee concerned be terminated before all installments are fully paid, the vehicle will be taken by the employer and all installments paid shall be considered rentals per agreement.

FIRST OPTIMA REALTY CORPORATION v. SECURITRON SECURITY SERVICES, INC. G.R. No. 199648 | 28 January 2015 Nature and Form of Contract

41

Civil Law


DOCTRINE: The payment of earnest money before the property owner agrees to sell his property cannot bind the owner to the obligations of a seller.

FACTS: • •

•

First Optima is the registered owner of a parcel of land that Securitron wanted to buy. Sometime thereafter, Securitron sent a Letter to First Optima accompanied by a check for P100,000.00, which was coursed through an ordinary receiving clerk/receptionist. clerk /receptionist. The Letter states that it is depositing the said amount as earnest money for the property. o The check was eventually deposited and credited to First Optima’s bank account. o Subsequently, Subsequently, Securitron demanded that First Optima proceed with the sale of the property, which the latter refused. First Optima contended that no contract for the earnest money or contract to sell existed. o

ISSUE: Whether or not there is a perfected contract of sale HELD: No, Securitron’s offer to purchase the property was w as never accepted by First Optima. •

•

Since there is no perfected sale between the parties, Securitron had no obligation to make payment through check, nor did it possess the right to deliver earnest money to First Optima to bind the latter to a sale. As contemplated contemplated under Art. 1482 of the Civil Civ il Code, “there must first be a perfected contract of sale before we can speak of earnest money.” The prior payment of earnest money even before the property owner can agree to sell his property is irregular, and cannot be used to bind the owner to the obligations of a seller under a perfected contract of sale, because it prevents the owner from freely giving his consent to the transaction. This constitutes constitutes a palpable transgression of the property owner’s rights of ownership over his property.

DOMINGO v. MANZANO G.R. No. 201883 | 16 November 2016 Nature and Form of Contract DOCTRINE: Non-fulfillment of the condition of full payment renders the contract to sell ineffective and without force and effect.

FACTS: •

• •

•

•

•

A notarized agreement was entered into between the Manzanos and Domingo, which provided, among others that Domingo will purchase the property, and that the title will be transferred once Domingo pays the full amount of Php 900,000. After 5 months, Domingo had made payment in the amount of Php 350,000. A month after, he tendered the remaining balance amounting to Php 555,000. However, the Manzanos refused refused to accept it, and an d told Domingo that the property was no longer for sale and t hat they were forfeiting the payments made. Domingo discovered that the property was transferred to Aquino by virtue of a sale, which was duly registered. Domingo, alleging the applicability on the Civil Code provision on double sale, filed a complaint for specific performance (execution for the contract of sale). The provision states that: “Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good faith, if it should be movable property.”

ISSUE: Whether or not the rule on double sale applies

42

Civil Law


HELD: No, in a contract to sell, the payment of the price is a positive suspensive condition. •

For this reason, Art. 1544 of the civil code does not apply. Since failure to pay the price in full in a contract to sell renders the same ineffective, and without force and effect, then there is no sale to speak of.

SIY v. TOMLIN G.R. No. 205998 | 24 April 2017 Nature and Form of Contract DOCTRINE: A sale made by the agent binds the principal to such sale. FACTS: •

•

• •

•

Siy filed a complaint for recovery of possession with prayer for replevin against Ong. Siy alleged that he owns a Range Rover, which he purchased from Lopez. Siy admitted that he did not register the sale in his favor, and that the vehicle remained in the name of Lopez. Siy entrusted the vehicle to Ong under an arrangement that the latter would sell the vehicle for him. Siy stated that Ong failed to remit r emit the proceeds of the purported sale nor return the vehicle. Among the evidence presented by Siy were: a manager’s check and cash voucher as proof of payment, and the affidavit of Lopez attesting to the sale. Tomlin, on the other hand, claimed to be the lawful and registered owner of the vehicle. Tomlin presented the Official Receipt and Certificate of Registration. Tomlin argued that he is the true owner of the subject vehicle. He said that Ong sold to vehicle to Chua, and that the same vehicle was later on sold to him by the latter.

ISSUE: Whether or not the sale between Ong and Chua is valid HELD: Yes, from from Siy’s own account, he appointed Ong as his agent to sell the vehicle. Since Ong was able to sell the vehicle, Siy ceased to be the owner thereof. Siy cannot be allowed to go against Tomlin to recover the property in lieu of the proceeds which Ong failed t o remit.

MOLDEX REALTY v. SABERON G.R. No. 176289 | 8 April 2013 Capacity to Buy or Sell DOCTRINE: The lack of a license to sell or the failure on t he part of a subdivision developer to register the contract to sell or deed of conveyance with the Register of Deeds does not result to the nullification or invalidation of the contract to sell it entered into with a buyer.

FACTS: •

•

Interested in acquiring a 180-square meter lot respondent Saberon asked Moldex, the developer, to reserve the lot for her as shown by a Reservation Application dated. While the cash purchase price for the land is P396,000.00, the price if payment is made on installment basis is P583,498.20. Moldex computed Flora's unpaid account at P576,569.89. It then sent Flora a Notarized Notice of Cancellation of Reservation Application and/or Contract to Sell.

43

Civil Law

•


Aside from imputing bad faith on the part of Moldex in bloating her unpaid balance, Flora alleged that the contract to sell between her and Moldex is void from its inception. She alleged that it sold the subject lot before it was issued a license to sell.

ISSUE: Whether or not the contract to sell is valid HELD: Yes, the lack of a certificate of registration and a license to sell on the part of a subdivision developer does not result to the nullification or invalidation of the contract to sell it entered into with a buyer. The contract to sell remains valid and subsisting. In said case, the Court upheld the validity of the contract to sell notwithstanding violations by the developer of the provisions of PD 957. We held that nothing in PD 957 provides for the nullity of a contract validly entered into in cases of violation of any of its provisions such as the lack of a license to sell. A review of the relevant provisions of P.D. 957 reveals that while the law penalizes the selling of subdivision lots and condominium units without prior issuance of a Certificate of Registration and License to Sell by the HLURB, it does not provide that the absence thereof will automatically render a contract, otherwise validly entered, void. •

•

BIGNAY EX-INN v. UNION BANK G.R. No. 171598 & 171590 |12 February 2014 Capacity to Buy or Sell DOCTRINE: The sale of conjugal property without the consent of the wife is void.

FACTS: •

•

Alfonso mortgaged in favor of respondent Union Bank r eal property, which was registered in his and his wife Rosario’s name. Rosario filed against Alfonso and Union Bank for annulment of the mortgage, claiming that Alfonso mortgaged the property without her consent, an d for r econveyance.

ISSUE: Whether or not the deed of sale between Bignay and Union Bank is valid HELD: No, the court finds that Alfonso had alone executed the mortgage on their conjugal property upon a forged signature of his wife Rosario therefore declaring the mortgage contract null and void.

TAINA MANIGQUE-STONE v. CATTLEYA LAND, INC. G.R. No. 195975 | 5 September 2016 Capacity to Buy or Sell DOCTRINE: The rules on double sales only applies when the sales involved are valid. FACTS: •

Tecson spouses owned land in Bohol registered in their name. Respondent, Cattleya entered into an Absolute contract of sale with Tecson spouses over o the subject property. The Registry of Deeds of Bohol refused to annotate the contract of sale, at first; for failure o of respondent to present the owner’s copy of the TCT over the subject property as the Tecson spouses claimed that it was lost in a fire (which was entirely false)

44

Civil Law

•

•


In the meantime, the subject property was later sold to Mike, the petitioner’s then common -law husband. Mike is an alien; after the sale, Taina and Mike got married and a new TCT over the subject o was registered in the name of Taina. After the discovery of the sale and subsequent registration, Respondent filed a complaint for Quieting of title against Taina over the subject property.

ISSUE: Whether or not the rules on double sales applies in the present case HELD: No, in order for the rules on double sales to apply, the sales involved must be valid. In the present case, the sale, which was found to be actually in favor of Mike, was constitutionally infirm. There being only a single valid sale in the present case, there was no double sale since the rules on double sale presupposes a situation where the same property is validly sold to different vendees by the same vendor therefore the contention of petitioner that she was the first to register the sale is untenable in light of the fact that the sale in favor of her husband was void. There being only one actual vendee in the present case, respondent is the proper owner. •

•

PUDADERA v. MAGALLANES G.R. No. 170073 | 18 October 2010 Obligations of the Vendor DOCTRINE: One who buys a property with knowledge of facts which should put him upon inquiry or investigation as to a possible defect in the title of the seller acts in bad faith.

FACTS: •

•

•

•

• • •

Lazaro was the owner of a parcel of land, Lot 11-E, covered by TCT. Lazaro sold a 400 sq. m. portion of Lot 11-E to Magallanes under a “Contract To Sale” Lazaro refused to turn over the mother title to the aforesaid buyers, thus, preventing them from titling in their names the subdivided portions thereof. Lazaro sold Lot 11-E-8, i.e., the lot previously assigned to Magallanes and Mario Gonzales under the aforesaid "Partition Agreement," to Spouses Natividad. A new title was issued in the name of Spouses Natividad. o Magallanes filed a complaint for specific performance, injunction and damages against Spouses Natividad which was dismissed for lack of jurisdiction. Spouses Natividad sold the subject lot to Pudadera Magallanes caused the construction of two houses of strong materials on the subject lot. Pudadera filed an action for forcible entry against Magallanes.

ISSUE: Whether or not Pudadera is a buyer in bad faith HELD: Yes, one who buys a property with knowledge of facts which should put him upon inquiry or investigation as to a possible defect in the title of the seller acts in bad faith. In this case, petitioners cannot be considered buyers in good faith because they were aware of other circumstances pointing to a possible flaw in the title of Spouses Natividad prior to the sale of the subject lot. Despite these circumstances, petitioners did not take steps to ascertain the status of the subject lot but instead proceeded with the purchase of the same. •

•

ASIAN CONSTRUCTION and DEVELOPMENT CORPORATION v. CAPASCO 45

Civil Law


G.R. No. 167942 | 29 June 2010 Obligations of the Vendee DOCTRINE: Copies of delivery receipts, where there is sufficient uncontroverted evidence showing loss of the originals despite the diligence exerted to find the same, are admissible.

FACTS: •

•

• •

Asian Construction and Development Corp. purchased from Cathay Pacific Steel Corp. various reinforcing steel bars covered by a total of 12 invoices. Petitioner made partial payments but failed to pay the full amount despite demand letters sent by respondent. Respondent filed a complaint for a sum of money and damages with the RTC. Petitioner argued that respondent failed to prove the affirmative allegations in the complaint. photocopies of the delivery receipts were not admissible in evidence o the witness Chua was incompetent to establish the admissibility of secondary evidence o

ISSUE: Whether or not photocopies of the delivery receipts duly established the obligation HELD: Yes, copies of delivery receipts, where there is sufficient uncontroverted evidence showing loss of the originals despite the diligence exerted to find the same, ar e admissible. With regard to the testimony of Chua, the fact that he is the head of Marketing and Finance proves that he is competent to testify on t he sale of the reinforcing steel bars to petitioner and its unpaid balance. The notations addressed to him on the purchase orders and his signature on the demand letters further support the finding that he has personal knowledge of the transactions he testified on. Mere allegations of his incompetence to testify on such matters, are not proof and these cannot prevail over evidence to the contrary. The orders by, deliveries to, and pick-ups by, petitioner of reinforcing steel bars having a total value of P2,650,916.40 were evidenced by the testimony of Chua and the invoices. •

•

•

UNION BANK OF THE PHILIPPINES v. PHILIPPINE RABBIT BUS LINES, INC. G.R. No. 205951 | 4 July 2016 Breach of Contract DOCTRINE: The nonpayment of the purchase price renders the contract to sell ineffective not breach of contract.

FACTS: •

• • • • • •

Petitioner and Respondent executed a Contract to Sell covering the subject property payable within 7 years in quarterly installments. Respondent failed to fully pay the stipulated price Petitioner sent a notarized demand letter to pay with rescission of the contracts to sell. Respondent failed to pay during such period and thus, petitioner rescinded the contract to sell. Petitioner sent another demand letter to vacate for failure to pay the amount due. Petitioner filed an ejectment case in MTCC MTCC: dismissed the case for lac k of jurisdiction; petitioner’s case is one for rescission and enforcement of the stipulations in the contract to sell

ISSUE: Whether or not there was compliance of the requirement of notice of demand

46

Civil Law


HELD: Yes, Petitioner was able to comply with the requirements of law. •

•

•

It was incorrect to require a demand to pay prior to filing of the ejectment case, as this is not one of the requisites in an ejectment case based on the petitioner’s contract to sell with respondent. The full payment of the purchase price in a contract to sell is a positive suspensive condition whose nonfulfillment is not a breach of contract, but merely an event that prevents the seller from conveying title to the purchase. Respondent’s failure and refusal to pay the monthly amortizat ions as agreed upon rendered the contract to sell without force and effect. It therefore lost its right to continue occupying the subject property. Thus, petitioner was correct in its action to file an ejectment case against respondent.

LEASE JOSE YUKI, JR. v. WELLINGTON CO G.R. No. 178527 | 27 November 2009 Rights and Obligations of Lessor and Lessee DOCTRINE: The right of first refusal is available to lessees only if there is a stipulation thereto in the contract of lease or where there is a law granting such right to them.

FACTS: •

•

•

• •

Yuki and Mr. Chua had a verbal contract of lease which had a term of 5 years. This lease was renewed every now and then until the last written contract of lease at monthly rental of P7K was made. Subsequently, Mr. Chua informed petitioner that he sold the property to respondent Wellington Co and instructed petitioner to thenceforth pay the rent t o the new owner. After the expiration of the lease contract, petitioner refused to vacate and surrender the leased premises. Thus, respondent filed a Complaint for unlawful detainer before the MeTC of Manila. It is argued by petitioner that he was was deprived of his preemptive rights. Further, petitioner argued that there was an implied renewal of lease.

ISSUE: Whether or not petitioner had basis to the preferential right to buy the property HELD: No, the right of first refusal, also referred to as the preferential right to buy, is available to lessees only if there is a stipulation thereto in the contract of lease or where there is a law granting such right to them. Unlike co-owners and adjacent lot owners, there is no provision in the Civil Code which grants to lessees preemptive rights. Nonetheless, the parties to a contract of lease may provide in their contract that the lessee has the right of first refusal. There is nothing in the Contract of Lease which grants petitioner preferential right to buy the subject premises. We are likewise unaware of any applicable law which vests upon him priority right to buy the commercial building subject matter of this c ase. •

•

AGENCY BUCTON v. RURAL BANK OF EL SALVADOR G.R. No. 179625 | 24 February 2014 Nature Form and Kinds of Agency

47

Civil Law


DOCTRINE: For the principal to be bound by a deed executed by an agent, the deed must be signed by the agent for and in behalf of his principal.

FACTS: •

•

• •

•

Bucton is the owner of land located in Cagayan de Oro. Concepcion borrowed the title of the land on the pretext that she is going to show it to an interested buyer. Concepcion obtained a loan from Rural Bank of El Salvador and as a security for the loan, she mortgaged the property of Bucton using a SPA which was allegedly executed in favor of Concepcion. When Concepcion failed to pay the loan, the house and lot of Bucton were foreclosed. Bucton insisted that she did not obtain any loan from the bank and that Concepcion forged her signature. The bank on the other hand maintains that it was not negligent in inspecting the properties and relied on presumption of regularity of the notarized SPA.

ISSUE: Whether or not the Real Estate Mortgage was entered into by Concepcion in her personal capacity HELD: Yes, this is a void and unenforceable Real Estate Mortgage against Bucton. The authorized agent failed to indicate in the mortgage that she was acting for and on behalf of her principal. Moreover, the Real Estate Mortgage, explicitly shows on its face, that it was signed by Concepcion in her own name and in her own personal capacity. In fact, there is nothing in the document to show that she was acting or signing as an agent of Bucton and as a consequence, the same cannot be bound by the acts of Concepcion. Even if the SPA was valid, the Real Estate Mortgage would still not bind petitioner as it was signed by Concepcion in her personal capacity and not as an agent . Furthermore, Rural Bank of El Salvador was negligent and acted with undue haste when it granted and released the loan in less than three days, it also acted negligently in preparing the Real Estate Mortgage as it failed to indicate that Concepcion was signing it for and on behalf of Bucton. •

•

•

CREDIT TRANSACTIONS SPOUSES PALADA v. SOLIDBANK CORPORATION G.R. No. 172227| 29 June 2011 Loan and Mortgage DOCTRINE: A mortgagor is allowed to take a second or subsequent mortgage on a property already mortgaged, subject to the prior rights of the previous mortgages.

FACTS: •

•

•

The petitioner spouses Palada obtained a loan from respondent Solidbank Corporation secured by a real estate mortgage over certain properties. Due to the failure of the spouses to pay the loan, the bank foreclosed the mortgage and sold the properties at public auction . As a recourse, the spouses Palada filed a complaint for nullity of the real estate mortgage alleging that: The bank, without the knowledge and consent of the spouses, included two (2) other o properties not among the list of properties mortgages. Furthermore, that these two (2) properties were not intended to be included since they o were still mortgaged to PNB at the time of the execution of the real estate mortgage.

48

Civil Law


ISSUE: Whether or not the contract of loan was perfected HELD: Yes. Under Art. 1934 of the Civil Code, a contract of loan is perfected upon delivery of the object of the contract. In this case, upon receipt of the approved loan, the spouses Palada immediately executed the real estate mortgage over their properties as security. As such, the loan is deemed perfected when spouses Palada received the loan from Solidbank.

ISSUE: Whether or not the properties previously mortgaged to PNB can be subsequently mortgaged to another

HELD: Yes. As a rule, a mortgagor is allowed to take a second or subsequent mortgage on a property already mortgaged, subject to the prior rights of the previous mortgages. In this case, although the subject properties were previously mortgaged to PNB, such does not constitute a bar for it to be subsequently mortgaged in favor of Solidbank. However, the mortgage in favor of Solidbank shall be subject to the prior rights of PNB.

ESTORES v. SUPANGAN G.R. No. 175139 | 18 April 2018 Loan DOCTRINE: Absent any stipulation, the applicable rate of interest shall be 12% per annum when the obligation arises out of a loan or a forbearance of money, goods or credits.

FACTS: •

•

•

•

Petitioner and respondent entered into a Conditional Deed of Sale whereby petitioner offered to sell a parcel of land. Respondent paid 3.5M as downpayment but petitioner was not able to comply with her obligations provided in the contract. Respondent demanded the return of the amount of P3.5 million. When petitioner still failed to return the amount despite demand, respondent spouses were constrained to file a Complaint for sum of money. Petitioner does not deny the obligation to pay the 3.5M but denies liability to pay for the interest. They argued that since the Conditional Deed of Sale provided only for the return of the down payment in case of breach, they cannot be held liable to pay legal interest as well since it is neither a loan or forbearance.

ISSUE: Whether or not the petitioner is liable for interest HELD: Yes, stipulation is not required in order to be liable for interest. The general rule is that the applicable rate of interest shall be computed in accordance with the stipulation of the parties. Absent any stipulation, the applicable rate of interest shall be 12% per annum when the obligation arises out of a loan or a forbearance of money, goods or credits. In other cases, it shall be six percent (6%).

ISSUE: Whether or not the stipulation may be considered as forbearance HELD: Yes, the stipulation as to the return of the down payment in case of non-fulfillment of obligation is in the nature of a forbearance. 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. In this case, the respondentspouses parted

49

Civil Law


with their money even before the conditions were fulfilled. They have therefore allowed or granted forbearance to the seller (petitioner) to use their money pending fulfillment of the conditions. Even if the transaction involved a Conditional Deed of Sale, the stipulation governing the return of the money may be considered as a forbearance of money which required payment of interest at the rate of 12%. •

SUN LIFE OF CANADA v. TAN KIT G.R. No. 183272 | 15 October 2014 Loan DOCTRINE: Monetary interest refers to the compensation set by the parties for the use or forbearance of money while compensatory interest refers to the penalty or indemnity for damages imposed by law or by the courts.

FACTS: • •

• •

•

• •

•

Respondent was the widow of Norberto Tan Kit, a client of Sun Life Canda, h erein Petitioner. Norberto applied for a life insurance policy with a face value of Php 300,000, which was granted by petitioner. Within the two-year contestability period, Norberto died of disseminated gastric carcinoma Respondent tried to claim the whole amount of the insurance premium but was denied by Petitioner due to the fact that Norberto lied in his insurance application when he answered “No” in his application regarding whether he had smoked cigarettes or cigars within the last 12 months prior to the filling out of the said application. The Petitioner gave Respondent the premium to be refunded instead of the face value of the premium which is Php 300,000 The RTC ruled in favor of Respondent (awarded them Php 300,000) and imposed 6% interest. The CA reversed the said decision (awarded them Php 13,080.93) but imposed a 12% interest on the premium to be paid by petitioner (from the time of the death of Norberto until the insured is fully paid). The petitioner argued that no interest should be imposed because the CA decision does not provide any legal or factual basis therefor; petitioner directly and timely tendered to respondents an amount representing the premium refund but they rejected it since they opted to pursue their claim for the proceeds of the insurance policy.

ISSUE: Whether or not petitioner should be made to pay interest HELD: No, petitioner did not incur delay or unjustifiably deny the claim of respondents. With this, the Court held that petitioner should not be held liable to pay compensatory interest because it properly complied with its obligations under the law and contract when it gave the amount due to the respondent despite the latter’s refusal to accept the said payment.

LIM v. DBP G.R. No. 177050 | 1 July 2013 Loan DOCTRINE: Art. 1956 of the NCC provides that penalties and interest rates should be expressly stipulated in writing.

50

Civil Law


FACTS: •

•

•

Petitioner Lim (Lim & Diamond L Ranch accounts) obtained a loan from Development Bank of the Philippines (DBP) to finance their cattle raising business. Petitioner Lim executed a promissory note to pay annual amortization with an interest of 9% pa and penalty charge of 11% pa. Petitioner Lim’s business collapsed and they failed to pay the amortizations due to violent confrontations between the government and the Muslim Rebels in Mindanao. DBP, in the course of negotiations with the petitioner for their restructuring agreement, imposed additional interests and penalties not stipulated in the promissory note.

ISSUE: Whether or not the imposition of additional interests and penalties is valid HELD: No, the petitioners never agreed to pay additional in terest and penalties, hence, the court declared the same to be illegal and thus void. Thus, the payment of interest and penalties in loans is allowed only if the parties agreed to it and reduced their agreement in writing.

DELA PAZ v. L&J DEVELOPMENT COMPANY G.R. No. 183360 | 8 September 2014 Loan DOCTRINE: No interest shall be due unless it has been expressly stipulated in writing. FACTS: • •

•

•

De La Paz lent L&J Development Php350,000 with no security. The loan, with no maturity date, carried 6% interest. As L&J failed to pay despite repeated demands, De La Paz filed a Complaint for Collection of Sum of Money with Damages. In their Answer, L&J and Atty. Salonga (President and General Manager of L&J) denied De La Paz’s allegations. While they acknowledged the loan as a corporate debt, they claimed that the failure to pay the same was due to a fortuitous event, that is, the financial difficulties brought about by the economic crisis. They further argued that De La Paz cannot enforce the 6% monthly interest for being unconscionable and shocking to the morals.

ISSUE: Whether or not the interest is valid HELD: No, the lack of a written stipulation to pay interest on the loaned amount disallows a creditor from charging monetary interest. Under Article 1956 of the Civil Code, no interest shall be due unless it has been expressly stipulated in writing. Jurisprudence on the matter also holds that for interest to be due and payable, two conditions must concur: a) express stipulation for the payment of interest; and b) the agreement to pay interest is reduced in writing. Here, it is undisputed that the parties did not put down in writing their agreement. Thus, no interest is due. The collection of interest without any stipulation in writing is prohibited by law. Even if the payment of interest has been reduced in writing, a 6% monthly interest rate on a loan is unconscionable, regardless of who between the parties proposed the r ate. Indeed at present, usury has been legally non-existent in view of the suspension of the Usury Law by Central Bank Circular No. 905 s. 1982. Even so, not all interest rates levied upon loans are permitted by the courts as they have the power to equitably reduce unreasonable interest rates. •

•

•

51

Civil Law


SILOS v. PNB G.R. No. 181045 | 2 July 2014 Loan DOCTRINE: Any modification in the contract, such as the interest rates, must be made with the consent of the contracting parties.

FACTS: •

•

•

•

•

•

•

•

•

•

Sps. Silos have been in business for about 2 decades, operating a department store and buying and selling of ready-to-wear apparel. In 1987, Sps Silos obtained a one-year revolving credit line (loan) from PNB amounting to P150,000. They executed a REM to secure the credit line. The loan was increased to P1.8 million and the mortgage was correspondingly increased to the same amount. A Supplement to the Existing Real Estate Mortgage was executed to cover the same credit line which was increased to P2.5 million. In addition, petitioners issued 8 PNs and signed a Credit Agreement. The Credit Agreement stipulated a 19.5% interest per annum and that PNB, without the need of notice, may increase or decrease the interest rate any time depending on their policy. The 8 PNs, on the other hand, contained a stipulation granting PNB the right to increase or reduce interest rates “ within the limits allowed by law or by the Monetary Board .” The Real Estate Mortgage agreement provided the same right to increase or reduce interest rates “at any time depending on whatever policy PNB may adopt in the future.” In 1991, an Amendment to the Credit Agreement was executed by the parties stipulating the following: Interest rate will be determined by PNB and was secured by 18 PNs. PNB regularly renewed the credit line from 1990 to 1997, and Sps. Silos made good on the PNs, despite the different interest rates. But in 1997, Sps. Silos faltered when the interest rates soared due to the Asian financial crisis. The 18th PN from the Amendment to the Credit Agreement became due and demandable. PNB prepared a Statement of Account detailing the amount due and demandable from Sps. Silos with a total amount of P3,620,541 which Sps. Silos failed to pay despite demand. Thus, PNB foreclosed said property. More than a year later, Sps. Silos filed a complaint for annulment of the foreclosure sale and an accounting of the PNB credit alleging that the payment of the interest rates in the PNs, the determination of which was solely left to PNB’s discretion making it null and void.

ISSUE: Whether or not the interest rates determined solely by PNB should be nullified HELD: Yes, the Credit Agreements are in violation of Art. 1308 of the Civil Code. In making the unilateral increases in the interest rates, PNB relied on the Usury Law and PD 1684. The Court in several cases, however ruled that contrary to the stubborn PNB, the said law and circular did not authorize either party to unilaterally raise the interest rate without the other’s consent. It is basic that there can be no contract in the true sense in the absence of the element of agreement, or of mutual assent of the parties. If this assent is wanting on the part of the one who contracts, his act has no more efficacy than if it had been done under duress or by a person of unsound mind. Similarly, contract changes must be made with the consent of the contracting parties. The minds of all the parties must meet as to the proposed modification, especially when it affects an important aspect of the agreement. In the case of loan contracts, it cannot be gainsaid that the rate of interest is always a vital component, for it can make or break a capital venture. Thus, any change must be mutually agreed upon, otherwise, it is bereft of any binding effect. The common denominator in prior cases is the lack of agreement of the parties to the imposed interest rates. For this case, this lack of consent by the petitioners has been made obvious by the fact that they signed the promissory notes in blank for the respondent to fill. •

•

•

52

Civil Law


METROBANK v ROSALES G.R. No. 183204| 13 January 2014 Deposit DOCTRINE: It is not enough that the complaint was filed for a “Hold out” order to be issued, there must be final judgment of conviction.

FACTS: •

•

• • •

•

•

Rosales and her mother (respondents) opened a joint peso account with Metrobank with a reflected balance of Php2,515,693.52. Rosales accompanied her client Liu Chiu Fang (Fang ) a Taiwanese national applying for a retiree’s visa from the PLRA to open a savings account where Rosales acted as an interpreter. Respondents opened a Joint dollar account with an initial deposit of $14,000. Metrobank issued a “Hold Out” order against the joint peso and dollar accounts of respondents. Metrobank filed criminal case for Estafa through False Pretences against Rosales. Alleged that Rosales and an unidentified woman did an unauthorized withdrawal of o $75,000 from Fang’s account. That the woman pretended to be Fang o Rosales then opened a dollar account with the same dollar notes based on serial notes in o her account. Rosales attempted several times to withdraw their deposits but was unable to because Metrobank had placed the accounts under “Hold Out” status. Respondents filed a Complaint for Breach of Obligation and Contract with damages

ISSUE: WON the “Hold Out” order was valid HELD: No, Metrobank issued the "Hold Out" order in bad faith. First of all, the order was issued without any legal basis. Second, petitioner did not inform respondents of the reason for the "Hold Out." Third, the case was still pending and no final judgment of conviction has been rendered against respondent Rosales. In fact, it is significant to note that at the time petitioner issued the "Hold Out" order, the criminal complaint had not yet been filed. 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, quasicontracts, delict, and quasi-delict. In this case, petitioner failed to show that respondents have an obligation to it under any law, contract, quasi-contract, delict, or quasi-delict. •

LANDBANK v. ONATE G.R. No. 192371 | 15 January 2014 Deposit DOCTRINE: The unwarranted withholding of the money which rightfully pertains to another, amounts to forbearance of money which can be considered as an in voluntary loan.

FACTS:

53

Civil Law

•

•

•

•

•

•


Oñate opened and maintained seven trust accounts with Land Bank covered by an Investment Management Account (IMA) with Full Discretion and has a corresponding passbook where deposits and withdrawals were recorded. In a letter dated October 8, 1981, Land Bank demanded from Oñate the return of P4 million it claimed to have been inadvertently deposited to one of his trust accounts. What was deposited was actually the total amount of the checks issued to Land Bank by o its corporate borrowers as payment for their pre-terminated loans. Oñate refused, which compelled Landbank to unilaterally apply the outstanding balance in all of Oñate’s trust accounts against his resulting indebtedness by r eason of the “miscrediting” of funds. Only around P1.5 million was paid for. To recoup the remaining balance of Oñate’s indebtedness, Land Bank filed a Complaint for Sum of Money seeking to recover the amount due plus interest at the legal rate of 12% per annum computed from May 15, 1992 until fully paid. Oñate claims that through the compounding of interest of the amounts due to him by Landbank, the latter actually owes him money and that such is enough to cover the amount claimed by Landbank. The RTC and CA ruled in favor of Oñate. Landbank was ordered to pay Oñate the balance withdrawn from the latter’s trust accounts with an interest rate of twelve percent (12%) per annum compounded yearly.

ISSUE: Whether or not the award of interest to Oñate at the rate of twelve percent (12%) per annum as well as the compounding of interest is valid

HELD: Yes, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made. Following Eastern Shipping Lines, Inc. v. Court of Appeals, the applicable rate of interest in this case is 12% per annum. Land Bank is estopped from assailing the award of 12% per annum rate of interest. In its Complaint, Land Bank arrived at the amount due by using the same 12% per annum rate of interest. It was only after the lower court rendered unfavorable decisions that Land Bank started to insist that the applicable rate of interest is 6% per annum. The compounding of interest, on the other hand, was based on the provision of the IMAs granting Land Bank “to hold, invest and reinvest the Fund and keep the same invested, in your sole discretion, without distinction between principal and income.” •

•

•

MANILA INSURANCE v. AMURAO G.R. No. 179628 | 16 January 2013 Guaranty And Suretyship DOCTRINE: 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.

54

Civil Law


FACTS: •

•

•

•

Respondent spouses entered into a Construction Contract Agreement (CCA) with Aegean for the construction of a commercial building. To guarantee its full and faithful compliance with the terms and conditions of the CCA, Aegean posted performance bonds secured by petitioner Manila Insurance and Intra Strata Assurance Corporation. Due to the failure of Aegean to complete the project, respondent spouses filed with the RTC a complaint against petitioner and Intra Strata to collect on the performance bonds they issued. Petitioner filed a motion to dismiss on the grounds that th e Complaint states no cause of action and that it was premature for their failure to implead Aegean.

ISSUE: Whether or not the surety can b e sued without impleading the principal HELD: Yes, a surety’s liability to the obligee is direct, primary, and absolute. •

A contract of suretyship is defined as an agreement whereby a party, called the surety, guarantees the performance by another party, called the principal or obligor, of an obligation or undertaking in favor of a third party, called the obligee. It includes official recognizances, stipulations, bonds or undertakings issued by any company by virtue of and under the provisions of Act No. 536, as amended by Act No. 2206. We 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. It bears stressing, 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.

SPS. EDRALIN v. PHILIPPINE VETERANS BANK G.R. No. 168523 | 9 March 2011 Mortgage DOCTRINE: Once the title has been consolidated upon the purchaser, he becomes entitled to a writ of possession and the trial court has the ministerial duty to issue such writ of possession.

FACTS: •

•

•

Philippine Veterans Bank (Veterans) granted a loan of P270,000 to Spouses Fernando and Angelina Edralin (Edralin) which is secured by a Real Estate Mortgage over a property in Paranaque. Since Edralin defaulted on their obligation, Veterans filed a Petition for Extrajudicial Foreclosure and the property was sold at a public auction with Veterans as the highest bidder. Since Edralin failed to redeem the property, Veterans became the absolute owner. However, Edralin refused to vacate and surrender the property to Veterans which prompted Veterans to file for an Ex-Parte Petition for the Issuance of the Writ of Possession before the RTC.

ISSUE: Whether or not a petition of mandamus could be used to compel the RTC to issue a writ of possession

HELD: Yes, the issuance of a writ of possession is ministerial once the purchaser has acquired absolute ownership. During the period of redemption, the mortgagee is entitled to a writ of possession upon depositing the approved bond. When the redemption period expires without the mortgagor exercising his right of redemption, the mortgagor is deemed to have lost all interest over the foreclosed property, and the purchaser acquires absolute ownership of the property.

55

Civil Law


With the consolidated title, the purchaser becomes entitled to a writ of possession and the trial court has the ministerial duty to issue such writ of possession. Thus, the remedy of mandamus lies to compel the performance of this ministerial duty.

•

ISSUE: Whether or not there was pactum commisorium HELD: No, there was no pactum commisorium because there was no automatic appropriation. Veterans did not automatically acquire or appropriate the mortgaged property for itself. On the contrary, Veterans resorted to the extrajudicial foreclosure and was issued a Certificate of Sale by the sheriff as proof of its purchase of the subject property during the foreclosure sale. That Veterans Bank went through all the stages of extrajudicial foreclosure indicates that there was no pactum commissorium.

• •

•

ISSUE: Whether or not the right to a writ of possession has already prescribed HELD: No, the purchaser’s right for the issuance of a writ of possession is imprescriptible. The purchaser’s right to request for the issuance of the writ of possession of the land never prescribes. The right to possess a property merely follows the right of ownership, and it would be illogical to hold that a person having ownership of a parcel of land Is barred from seeking possession thereof.

PHILIPPINE NATIONAL BANK v. JUMAMOY G.R. No. 169901 | 3 August 2011 Mortgage DOCTRINE: The general rule that a mortgagee need not look beyond the title, does not apply to banks and other financial institutions as greater care and due diligence is required of them.

FACTS: •

•

•

• •

In an earlier case for reconveyance, the RTC rendered a decision ordering the exclusion of 2.5 hectares of property from the coverage of an OCT registered in the name of Pace. It was established that the said lot was owned by the predecessor of Jumamoy, hence, should be reconveyed in favor respondent Jumamoy. However, the RTC decision could not be annotated on the OCT of Pace. It was found that the OCT had already been cancelled by reason of an unpaid mortgage o executed by Pace with the PNB, and t hat TCT had already been issued in favor of PNB. Jumamoy filed a case for Declaration of Nullity of Mortgage, Foreclosure Sale, Reconveyance and Damages against PNB and Pace. Jumamoy argued that Pace could not validly mortgage the entire Lot to PNB as a portion o thereof consisting of 2.5 hectares belongs to him. Plus, Jumamoy claimed that PNB is not an innocent mortgagee/purchaser for value since o it had been notified that the said lot was subject to litigation. The RTC and CA ruled in favor of Jumamoy. In PNB’s petition for review with the SC, it contends that: It is an innocent mortgagee for value, making the mortgage valid. o Jumamoy’s action for reconveyance had already prescribed. o

ISSUE: Whether or not PNB is an innocent mortgagee for value

56

Civil Law


HELD: No, a banking institution is expected to exercise due diligence before entering into a mortgage contract. The general rule that a mortgagee need not look beyond the title does not apply to banks and other financial institutions as greater care and due diligence is required of them. In this case, it has been established that the said lot was adjudicated in favor of Jumamoy. Hence, PNB has the burden of proof in proving that it is a mortgagee in good faith. However, 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; t hat it verified the identity of t he true owner and possessor of the land; and, that it visited subject premises to determine its actual condition before accepting the same as collateral. •

ALANO v. PLANTER’S DEVELOPMENT BANK G.R. No. 171628|13 June 2011 Mortgage DOCTRINE: The general rule that a mortgagee need not look beyond the title does not apply to banks and other financial institutions as greater care and due diligence is required of them.

FACTS: •

•

•

•

•

•

•

•

Armando Alano (“Armando”) and his brother Agapito Alano (“Agapito”) inherited from their father a parcel of land in Manila (“Manila property”). A Special Power of Attorney was executed by Armando authorizing his brother, Agapito, to sell the Manila property that they have inherited. The proceeds of the sale of the Manila property was used to purchase a residential house in Quezon City (“QC property”). The dispute started when Lydia Alano ( “Lydia”), wife of Agapito, adjudicated to themselves the QC property despite not being an owner thereof. Consequently, the title to the QC property was reconstituted and registered solely in the o names of Lydia and her four children. Later on, by virtue of a Deed of Absolute Sale allegedly executed by Lydia’s children in her favor, a new title over the QC property was issued solely under Lydia’s name. The dispute further aggravated when Slumberworld Inc., represented by a certain Javier and Lydia obtained a loan from respondent Planter’s Development Bank using the QC Property as security. Armando filed a complaint seeking for the cancellation of the TCT, the issuance of a new title in his name for his one-half share of the QC property, and for the nullification of the real estate mortgage insofar as his one-half share is concerned. Planter’s Development argued that it was mo rtgagee in good faith and that it had no obligation to look beyond the title considering that there was no adverse claim annotated thereto.

ISSUE: Whether or not Planter’s Development Bank was an innocent mortgagee in good faith HELD: No, a banking institution is expected to exercise due diligence before entering into a mortgage contract. The general rule that a mortgagee need not look beyond the title does not apply to banks and other financial institutions as greater care and due diligence is required of them. Before approving a loan, the standard practice for banks and other financial institutions is to conduct an ocular inspection of the property offered to be mortgaged and verify the genuineness of the title to determine the real owner or o wners thereof. Failure to do so makes them mortgagees in bad faith. In this case, although an ocular inspection was conducted by the credit investigator, he failed to ascertain whether the property was occupied by persons other than the mortgagor. Had he done •

•

57

Civil Law


so, he would have discovered that the subject property is co-owned by Armando and the heirs of Agapito. Since Planter’s Development was remiss in its duty in ascertaining the status of the property to be mortgaged and verifying the ownership thereof, it is deemed a mortgagee in bad faith. Consequently, the real estate mortgage executed in its favor is valid only insofar as Lydia’s share in the property is concerned.

•

MAHINAY v. GAKO G.R. No. 165338 | 28 November 2011 Mortgage DOCTRINE: An innocent mortgagee-for-value’s right or lien upon the land mortgaged must be respected and protected.

FACTS: •

•

•

•

•

•

•

Sanchez, Lopez and Honoridez are the registered owners (“the owners”) of a parcel of land covered by a TCT. Mahinay filed a complaint for specific performance against the owners and one Suarez to compel them to convey the said lot to him. He alleged that in an earlier case he filed against the owners, the parties therein arrived at a Compromise Agreement wherein the owners would give him a preferential right to buy the subject lot on the condition that he will withdraw the said case. However, the owners sold the lot to Suarez without first offering the same to Mahinay, hence in violation of his preferential right. The owners asserted that they did not violate Mahinay’s preferential right to buy as the transaction between them and Suarez was actually an equitable mortgage, and not a sale. That in fact, they remained the occupants and registered owners of the lot. Judgment was rendered in favor of Mahinay and t hus, he filed a motion to compel the owners to vacate the property and turn over to him the owner’s copy of the TCT. The branch sheriff placed Mahinay in actual and physical possession of the lot, however, the TCT could not be surrendered to him as the same was already in possession a certain Sorensen by virtue of a real estate mortgage executed by the owners subsequent to the filing of Mahinay’s complaint. Sorensen claims that when she agreed to extend a loan to the owners and when a real estate mortgage was executed in her favor, she acted in utmost good faith as there was no adverse annotation at the back of the owner’s duplicate original copy of the TCT.

ISSUE: Whether or not the Sorensen’s real estate mortgage takes precedence over over Mahinay’s notic e of lis pendens

HELD: No, having registered his instrument ahead of Sorensen’s real estate mortgage, Mahinay’s notice of lis pendens shall take precedence over the said real estate mortgage. Sorensen claims that as an innocent mortgagee for value, she has the superior right to remain in custody of the owner’s copy of the TCT. She insists that she merely relied on the four corners of said TCT which at the time of the transaction did not contain any annotation of lis pendens. The SC does not agree. True, when a mortgagee relies upon what appears on the face of a Torrens title and lends money in all good faith on th e basis of the title in the name of the mortgagor, only thereafter to learn that the latter’s title was defective, being thus an innocent mortgagee for value, his or her right or lien upon the land mortgaged must be respected and protected. Such is not the case in the present controversy since as borne out by the records, the notice of lis pendens was duly annotated on the original copy of the TCT on file with the Registry of Deeds which is in fact, sufficient to bind third parties. •

•

•

58

Civil Law


RUIZ v. DIMAILIG G.R. No. 204280 | 9 November 2016 Mortgage DOCTRINE: Doctrine of Mortgagee in Good Faith can be invoked when the title of the property had already been registered in the name of the impostor mortgaging the property.

FACTS: •

•

• •

•

Bernardo, the registered owner of the land, entrusted the TCT to his brother Jovannie. They intended to sell the property. Jovannie gave the TCT to Editha, who, without Jovannie’s knowledge, pretended to be B ernardo and mortgaged the property to Evelyn. Bernardo instituted this suit for annulment of the Deed of REM. When Bernardo inquired, Evelyn confirmed said mortgage and told him that she would not return the owner's copy of TCT unless Editha pay the loan. Jovannie also alleged that he told Evelyn that Bernardo's alleged signature in the REM was not genuine since he was abroad at the time of its execution. Evelyn insists that she is a mortgagee in good faith.

ISSUE: Whether or not Evelyn is a mortgagee in good faith HELD: No, a valid mortgage will not 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. For the Doctrine of Mortgagee in Good Faith to apply, the mortgagor, who is not the rightful owner, must have succeeded in obtaining a Torrens title in his name thereafter in mortgaging the property. In this case, the title of the property is still under Bernardo’s name and Evelyn did not bother to inquire and verify Editha’s identity. •

IBM PHILIPPINES, INC. v. PRIME SYSTEMS PLUS, INC. G.R. No. 203192 | 15th August 2016 Loan DOCTRINE: Interest rates must be agreed upon by the creditor and debtor through an express stipulation in writing in order to be due and demandable.

FACTS: •

•

Prime Systems bought 45 ATM from IBM for a total price of 24 Million Prime Systems failed to pay for the balance o IBM filed a collection suit against Prime systems praying for payment of the balance; Amount prayed for by IBM is pegged at 46 Million with 3% per month interest; o IBM argues that the 3% per month interest is provided for in a letter they sent to Prime o Systems dated December 29, 1997 which was duly received by respondent’s employee and therefore assented to by respondent. IBM also argues that respondent failed to object to the 3% per month interest rate and even o asked for a possible reduction, this then, according to petitioner, resulted to concurrence by respondent to the 3% per month interest rate.

59

Civil Law


RTC agrees with IBM; CA Reversed stating that a 6% per annum is the proper interest r ate since the 3% interest rate being imposed by IBM was not stipulated in writing and agreed upon by petitioner and respondent. IBM now questions the decision of CA in rejecting their claim for 3% per month interest o

•

ISSUE: Whether or not the 3% per month interest rate was properly agreed upon by the parties HELD: No, the 3% per month interest rate was not agreed by the parties. Article 1956 states that interest rates should be expressly stipulated in writing in order to be due. Stated differently, interest rates should be (1) expressly stipulated and (2) in writing in order for said rate to be due and demandable. In the present case, the Supreme Court found that the petitioner failed to comply with the above mentioned requisites. Petitioner’s contention that respondent’s employee’s acceptance and failure to object to the letter equates to consent to the 3% interest rate is untenable; The Supreme Court stated that the letter was not even accepted and assented to by an authorized representative of the respondent therefore no consent was actually acquired from respondent. Additionally, petitioner’s contention that the respondent’s act of continuing with the transaction a year after receiving the letter amounted to consent is also untenable in light of the fact that interest rates should be in writing and expressly stipulated there being no actual and clear agreement as to the applicable interest rate. Considering that there is no proper interest rate agreed upon by the parties, the Supreme Court found the imposition of the CA of the 6% per annum legal interest rate in lieu of the supposed 3% per month interest rate as proper. •

•

SUCCESSION PASCO v. HEIRS OF DE GUZMAN G.R. No. 165554 | 26 July 2010 General Provisions of Succession DOCTRINE: The heirs of a decedent have ownership over the property upon the death of the decedent, however, distribution of the property is subject to the settlement of the estate’s liabilities.

FACTS: •

•

•

Lazaro Pasco and Lauro Pasco (Pasco) obtained a loan in the amount P140,000 from Filomena de Guzman (Filomena) and secured by a chattel mortgage on Pasco’s Isuzu Jeep. Upon the death of Filomena, the heirs of Filomena (heirs) sought to collect from Pasco but they refused to pay. This prompted the heirs, represented by Cresencia de Guzman-Principe (Cresencia), to file a collection case against Pasco.

ISSUE: Whether or not the proceeds of the loan should be released to the heirs HELD: No, the proceeds should not be released to the heirs because there is no indication that the estate of Filomena has already been settled. Filomena’s heirs 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. Unfortunately, the records before us do not show the status of the proceedings for the settlement of the estate of Filomena, if any. But to allow the release of the funds directly to the heirs would amount to a distribution of the estate; which distribution and delivery should be made only after, not before, the payment of all debts, charges, expenses, and taxes of the estate have been paid. As •

60

Civil Law


such, the amount should be deposited with the MTC until after the estate of Filomena has been settled.

ENDAYA v. VILLAOS G.R. No. 202426 | 27 January 2016 General Provisions of Succession DOCTRINE: The rights of succession are transmitted from the moment of death of the decedent. FACTS: •

•

• •

•

Gina Endaya, and other heirs of Atilano Villaos (petitioners) filed before the RTC, a complaint for declaration of nullity of deeds of sale, recovery of titles, and accounting of income of the Palawan Village Hotel (PVH) against Ernesto Villaos (respondent). Petitioners claim that the purported sale by Atilano to r espondent was spurios. o Subsequently, respondent filed an ejectment case against petitioners in the MTCC. Respondent claims that he bought the properties where PVH was located and asked o those residing in said properties (petitioners) to vacate. Petitioners refused to vacate assailing that the deeds of sale were forged and not properly notarized in the correct venue. The MTCC ruled in favor of respondent. The petitioners appealed before the RTC, which affirmed the ruling of the MTCC. The RTC said that the questioned deeds of sale, being notarized, are public documents o afforded the presumption of regularity. No litis pendentia because the asserted rights and prayed reliefs in the first RTC case filed o were contrasting. Petitioner files an MR, but it was denied. o The petitioners filed a petition for review before the CA, which was also denied. The only issue for resolution in an ejectment case is who is entitled to possession o independent of any claim of ownership. No litis pendentia because first RTC case was an action for declaration of nullity of the deeds o of sale and the case in the MTCC was about possession.

ISSUE: Whether or not petitioners are entitled to possession HELD: Yes, under Article 777 of the Civil Code, the rights to the succession are transmitted from the moment of the death of the decedent. Thus, petitioner and her coheirs should have been favored on the question of possession, being heirs who succeeded the registered owner of the properties in dispute. Clearly, the MTCC, RTC, and CA erred in ruling in favor of respondent. 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. While respondent has in his favor deeds of sale over the eight parcels of land, these deeds were not registered; thus, title remained in the name of the owner and seller Atilano. When he died, title passed to petitioner, who is his illegitimate child. This relationship does not appear to be contested by respondent in these proceedings, at least. •

INING v. VEGA 61

Civil Law


G.R. No. 174727 | 12 August 2013 General Principles of Succession DOCTRINE: 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.

FACTS: •

•

•

Leon Roldan, married to Rafaela Menez, is the owner of a parcel of land in Kalibo, Aklan. Leon and Rafaela died, the former was survived by two siblings; Romana, and Gregoria. Romana’s grandson Leonardo filed a case for partition of property against Gregoria’s heirs. Antipolo, one of the heirs, claims that they have become the sole owners of the subject property through Lucimo Sr. who acquired it in good faith from Juan Enriquez, who got it from Leon. Lucimo Sr. was the husband of Teodora, the daughter of Antipolo, thus related only by o affinity to the family of Leon. Lucimo Sr. claims that he repudiated the co-ownership upon execution of the Affidavit of Ownership of Land, and that Leonardo can no longer have the property partitioned, based on prescription through adverse possession.

ISSUE: Whether or not Lucimo Sr. can effect a repudiation of the co-ownership HELD: No, one who is merely related by a ffinity to the decedent does not inherit from the latter and cannot become a co-owner of the decedent’s property. He is merely Antipolo’s son-in-law, being married to Antipolo’s daughter Teodora. Under the Family Code, family relations, which is the primary basis for succession, exclude relations by affinity. Thus, since none of the co-owners made a valid repudiation of the existing co-ownership, Leonardo could seek partition of the property at any time. •

LAND TITLES AND DEEDS VILBAR v. OPINION G.R. No. 176043 | 15 January 2014 Torrens System (General Principles) DOCTRINE: Possession without registration will not confer indefeasible and incontrovertible title over a parcel of land.

FACTS: •

•

•

Spouses Vilbar acquired from Dulos Realty (Dulos) lots 20 and 21 under a contract to sell. They took possession, but were not able to have the lots registered. Angelito Opinion subsequently acquired the same lots through an extrajudicial foreclosure of mortgage from the Gorospes (owners of Dulos). Opinion previously filed a collection suit against the Gorospes. The lots were levied upon, o and when the Gorospes failed to redeem, a foreclosure sale was made with Opinion as the highest bidder. The evidence adduced by Spouses Vilbar was the Deed of Absolute Sale between them and Dulos, was well as the Real Estate Mortgage covering one of the lots. Opinion’s claim is based on tacking from the Gorospes, the sale through public auction, and valid registration.

ISSUE: Whether or not a prior unregistered sale defeats a subsequent levy on attachment duly registered

62

Civil Law


HELD: No, registration is the operative act which gives validity to the transfer or creates a lien upon the land. Spouses Vilbar cannot claim a greater right over Opinion, who acquired the property by going through the legally required procedure of registration.

NICOLAS v. MARIANO G.R. No. 201070 | 1 August 2016 Torrens System (General Principles) DOCTRINE: Torrens System only confirms ownership; It does not create ownership. FACTS: •

•

• •

• • •

Mariano (Respondent) filed with the NHA an application for a land grant. NHA approved the application. o The grant, however, is subject to a mortgage. o NHA withheld the conveyance of the original TCT to Mariano. Mariano was only given a photocopy of the TCT; Issuance of the original TCT in her name o is conditioned upon her full payment of the mortgage loan. Mariano defaulted in payment of her obligation with NHA. Mariano obtained a loan from Nicolas (Petitioner); To secure the loan, she mortgaged the subject property. A second mortgage deed was executed in favor of Nicolas. o Since Mariano defaulted on the second obligation, Deed of Absolute Sale of Real Propety o was executed in favor of Nicolas. Mariano filed a case for Specific Performance with Damages against Nicolas. RTC ruled in favor of Mariano. CA affirmed. Hence, this petition. Nicolas argued that Mariano had the right to mortgage and sell the property as she is the o owner of the subject property, even though NHA withheld the original and TCT and merely gave a photocopy to Mariano.

ISSUE: Whether or not Mariano is the owner of the subject property and thus has the right to mortgage the said property

HELD: No, while title to TCT is in the name of Mariano, she has not completed her installment payments to NHA; this fact is not disputed, and as a matter of fact, Mariano admits it. Indeed, Mariano even goes so far as to concede, in her Comments and Opposition to the Petition, that she is not the owner of the subject property. Thus, if she never became the owner of the subject property, then she could not validly mortgage and sell the same to Nicolas. The principle nemo dat quod non habet certainly applies. Torrens system of land registration merely confirms ownership and does not create it. It cannot be used to divest lawful owners of their title for the purpose of transferring it to another one who has not acquired it by any of the modes allowed or recognized by law. Placing a parcel of land under the mantle of the Torrens system does not mean that ownership thereof can no longer be disputed. Ownership is different from a certificate of title . The TCT is only the best proof of ownership of a piece of land. Besides, the certificate cannot always be considered as conclusive evidence of ownership. •

•

63

Civil Law


URIETA v. ALFARO G.R. No. 164402 | 5 July 2010 Torrens System (General Principles) DOCTRINE: The person who has a Torrens title over a land is entitled to possession thereof. FACTS: Ignacio was issued an OCT over a 606-square meter parcel of land. Ignacio allowed Anastacia and, mother of respondent Ederlina, to construct a house on the southern portion of said land and to stay t herein temporarily. Ignacio died and his heirs decided to partition Lot 83. Petitioner thus asked the respondents, who took possession of the premises after the death of Anastacia, to vacate Lot 83. They did not heed her demand. Petitioner filed a case for accion publiciana praying that respondents be ordered to vacate subject property. Respondents asserted that Ignacio and petitioner sold to their mother Anastacia the southern portion of Lot 83 as shown by the Kasulatan sa Bilihan which bears the signatures of petitioner and Ignacio. Since then, they and their mother have been in possession thereof. Respondents also presented several Tax Declarations in support of their allegations. o

• •

•

•

•

ISSUE: Whether or not respondents have a better right to the possession of the property HELD: No, as against petitioners Torrens title, respondents Kasulatan sa Bilihan cannot confer better right to possess. A Torrens title is evidence of indefeasible title to property in favor of the person in whose name the title appears. It is conclusive evidence with respect to the ownership of the land d escribed therein. It is also settled that the titleholder is entitled to all the attributes of ownership of the property, including possession. In the present case, there is no dispute that petitioner is the holder of a Torrens title over the entire Lot 83. Respondents have only their notarized but unregistered Kasulatan sa Bilihan to support their claim of ownership. Thus, even if respondents’ proof of owne rship has in its favor a juris tantum presumption of authenticity and due execution, the same cannot prevail over petitioners Torrens title. •

•

DELA MERCED v. GSIS G.R. No. 167140 | 23 November 2011 Torrens System (General Principles ) DOCTRINE:

A transferee pendente lite of registered land, is bound by the outcome of the litigation, whether it be for or against his transferor.

FACTS: •

•

•

Jose C. Zulueta (Zulueta) owns 5 parcels of land which was mortgaged to the GSIS and was eventually foreclosed and TCTs were issued in GSIS’ name. However, Francisco Dela Merced (Dela Merced) filed a complaint praying ofr the nullity of the GSIS foreclosure on the subject properties. Dela Merced alleged that he is the owner of the properties and not Zulueta at the time of the foreclosure. Dela Merced then caused the annotation of lis pendens on GSIS’ TCT.

64

Civil Law


The SC eventually nullified GSIS’ foreclosure of the subject properties because these lots were never part of its mortgage agreement with Zulueta. The SC ordered t he cancellation of the GSIS’ title over the lots. The Register of Deeds then claimed that he cannot comply with the order of execution because GSIS no longer had title over two of the lots because GSIS has already conveyed them to Antonio Dimaguila and Diogenes Bartolome. This prompted Dela Merced to file before the trial court a Motion for Supplemental Writ of Execution seeking to include Dimaguila and Bartolome in the writ of execution.

•

•

•

ISSUE: Whether or not the order against GSIS could be enforced against their successors-in-interest (Bartolome and Dimaguila)

HELD: Yes, the order against GSIS may be enforced against Bartolome and Dimaguila. Dela Merced had caused the annotation of lis pendens on the TCT. When new individual titles were issued to Bartolome and Dimaguila, both titles had the notice of lis pendens. As such, both Bartolome and Dimaguila had notice of the litigation involving GSIS’ ownership over the subject properties, and were bo und by the outcome of the litigation. When a transferee pendente lite takes property with notice of lis pendens, such transferee undertakes to respect the outcome of the litigation. An order to cancel the transferor’s title may be enforced against his tra nsferee, whose title is expressly subject to the outcome of the litigation by the fact of the annotation of lis pendens. The title obtained by the transferee pendente lite affords him no special protection; he cannot invoke the rights of a purchaser in good faith a nd cannot acquire better rights than those of his predecessorin- interest. •

JAKOSALEM v. BARANGAN G.R. No. 175025 | 15 February 2012 Torrens System (General Principles) DOCTRINE:

Prescription and laches does not apply to registered lands covered by the Torrens System.

FACTS: •

•

Col. Roberto S. Barangan (Barangan) purchased a piece of land from Ireneo S. Labsilica of Citadel Realty Corporation on 13 August 1966. Barangan found out that the property was being occupied by Godofredo Dulfo and Rogelio J. Jakosalem which prompted Barangan to file a Complaint for Recovery of Possession on 17, November 1994.

ISSUE: Whether or not the action to recover the property has already prescribed HELD: No, prescription and laches cannot apply to registered land covered by t he Torrens system because under the Property Registration Decree, no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.

OLIVEROS v. SAN MIGUEL CORPORATION G.R. No. 173531 | 1 February 2012 Torrens System (General Principles)

65

Civil Law


DOCTRINE:

The principle that the earlier title prevails over a subsequent one applies when there are two apparently valid titles over a single property. Mere allegation of an earlier title will not suffice. Spurious or non-existent titles may be subject to collateral attack because they do not enjoy indefeasibility.

FACTS: Ramitex bought Lot 1131 from Soriano and Lozada and a TCT was issued in his name. Ramitex then found out that Oliveros filed a petition before the RTC for reconstitution of TCT No. T-17186 in Oliveros’ name which covers Lot 1131. This prompted Ramitex to file an opposition claiming that the TCT cannot be reconstituted because it never existed in the first place. Oliveros then filed a complaint for the declaration of nullity of Ramitex’ title over Lot 1131. Oliveros is now arguing that since his title existed before Ramitex, his title should enjoy presumptive conclusiveness of ownership and indefeasibility. Oliveros also argued that the ruling of the courts allowed a collateral attack on his title.

• •

• •

ISSUE: Whether or not the mere allegation of an earlier title would warrant the application of the presumption that the later title is invalid

HELD: No, mere allegation of an earlier title will not suffice. The earlier title must also be proved. 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. 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." Clearly, a mere allegation of an earlier title will not suffice. The nullification of Oliveros’ title did not constitute a collateral attack. The prohibition against collateral attack does not apply to spurious or non-existent titles since such titles do not enjoy indefeasibility. Furhter, the attack itself was not collateral because it was raised in a counterclaim which stands on the same footing as an independent action.

•

•

REPUBLIC v. HEIRS OF RAMOS G.R. No. 169481 | 22 February 2010 Torrens System (General Principles) DOCTRINE: Section 2 of RA 26 enumerates the sources from which reconstitution of lost or destroyed original certificates of title may be based: (1) Owner’s duplicate of the certificate of title; (2) Co-owner’s, mortgagee’s, or lessee’s duplicate of the certificate of title; (3) Certified copy of tile; (4) Authenticated copy of the decree of registration or patent; (5) A document, on file in the Registry of Deed by which the property, the description of which is given in said document; and (6) Any other document which, in the judgment of the court, is sufficient and proper basis for reconstitution the lost or destroyed certificate of title.

FACTS: •

•

Respondents filed a Petition for Reconstitution, stating that the late Julio Ramos, grandfather of herein petitioners, is the original claimant of Lot No. 54. That the Land Registration Authority issued a Certificate to such land. That the owner’s copy of OCT No. 3613 was lost and all efforts exerted to locate the same are in vain. RTC and CA granted the petition for reconstitution.

66

Civil Law

•


Petitioner contends that the CA erred in affirming the Order of the trial court granting respondent’s petition for reconstitution considering that respondents failed to present competent proof to establish their claim. Petitioner insists that respondents failed to present competent proof of loss of OCT No. 3613.

ISSUE: Whether or not the CA erred in granting the petition for reconstitution. HELD: Yes, RA 26 lays down the specific procedure for the reconstitution of lost or destroyed Torrens certificates of title. It confers jurisdiction upon trial courts to hear and decide petitions for judicial reconstitution. The petition did not contain an allegation that no co- owner’s mortgagee’s or lessees duplicate had been issued or, if any had been issued, the same

TRINIDAD v. PALAD G.R. No. 203397 | 9 December 2015 Torrens System (General Principles) DOCTRINE: Title to property, evidenced by a certificate of title, is indefeasible and incontrovertible. Those who hold such title of ownership is entitled to possession.

FACTS: •

•

•

•

•

• •

•

Ramos, Navarro and Loyola owned a 12 hectare Property (1). Genaro Kausapin (father of respondent Feliciana) was the tenant of the property. Genaro Kausapin availed of Joaquin Trinidad’s legal services, they then entered into a Kasulatan ng Pagbabahagi where they partitioned property 1 into lot A, B, and C, and Genaro then gave lot A to Joaquin. Who in turn gave it to his son, petitioner Agusto Trinidad. However, Agusto, instead of using lot A, occupied and converted 2 hectares of lot C into a fishpond. Genaro and Ramos didn’t question this entry. o 5 years later, Ramos sold 8 hectares of property 1 to Spouses which covers the 2 hectare property being encroached on by Agusto which was later registered as Transfer Certificate of Title No. (TCT) T-47318. They later surveyed the land and only then found out about the encroachment. Ramos claims he did not know about this encroachment. The spouses demanded for Agusto to vacate but he denied. The spouses filed a Complaint for recovery of possession with damages against Agusto. Claiming that as the registered owners, they are entitled to possession. RTC: ruled for Agusto. It is clear that they did not know the metes and bounds of the lots especially since the seller, o Ramos, wasn’t aware of the encroachment until the surveyance of the property.

ISSUE: Whether or not Spouses has right to possession of the property HELD: Yes, the 2 hectare property is within C which is registered in the name of spouses as TCT T-47318. As against possession claimed by the petitioners, respondents' certificate of title prevails. Mere possession cannot defeat the title of a holder of a registered Torrens title. TCT T-47318 constitutes evidence of respondents' ownership over the subject property, which lies within the area covered by said title; that TCT T-47318 serves as evidence of indefeasible and incontrovertible title to the property in favor of respondents, whose names appear therein; and that as registered owners, they are entitled to possession of the subject property. •

67

Civil Law


Agusto are mere intruders with respect to the subject property; they have no right to own or possess the same. On the other hand, as registered owners of the subject property, respondents have the right to exercise all attributes of ownership including possession which they cannot do while petitioners remain there.

•

REPUBLIC v. PASICOLAN G.R. No. 198543 | 15 April 2015 Torrens System (General Principles) DOCTRINE: Documentary evidence such as technical description and tax declarations are not sufficient evidence to grant a Petition for Reconstitution under Section 2(f) of R.A. No. 26.

FACTS: •

•

•

•

•

Cesar Pasicolan and Gregorio Pasicolan filed a Petition for Reconstitution of OCT No. 8450 in the name of Pedro Callueng, claiming that they are the legal and forced heirs of the latter. The respondents submitted pieces of evidence in support of their petition including a copy of Decree No. 339880, technical description, sepia film, and tax declarations. The RTC directed the RD of Cagayan to reconstitute the original copy of OCT No. 8450 in exactly the same words and figures as the destroyed original copy. Petitioner Republic of the Philippines, through the OSG appealed to the CA ascribing that the lower court erred: In not finding that the respondents failed to present competent evidence to show that o the alleged lost certificate of title was valid and subsisting at the time of the alleged loss; and A mere copy of Decree No. 339880 is not sufficient basis for reconstituting the OCT. o Petitioner contends that the CA erred in affirming the decision of the trial court considering that the decree which the LRA certified as a true copy did not previously form part of its records and that the respondents failed to present competent proof of the loss of the OCT.

ISSUE: Whether or not respondents failed to present competent evidence as basis for reconstituting the OCT

HELD: Yes, the survey plan and technical description are not competent and sufficient sources of reconstitution when the petition is based on Section 2(f) of RA 26. They are mere additional documentary requirements. Sec. 2 of R.A. No. 26 enumerates the sources from which reconstitution of lost or destroyed OCTs may be based, namely: (a) The owner’s duplicate of the certificate of title; (b) The co-owner’s, mortgagee’s, or lessee’s duplicate of the certificate of title; (c) A certified copy of the certificate of title, previously issued by the register of deeds or by a legal custodian thereof; (d) An authenticated copy of the decree of registration or patent, as the case may be, pursuant to which the original certificate of title was issued; (e) A document, on file in the registry of deeds by which the property, the description of which is given in said document, is mortgaged, leased or encumbered, or an authenticated copy of said document showing that its original had been registered; and (f) Any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title. In this case, the LRA made an admission only as to the existence of Decree No. 339880 but went on to state that a copy of the said decree was no longer available. This contradicts the testimony of Cesar that he has taken a copy of the said decree from the LRA. Further, the decree is without the signature of the Judge who supposedly ordered its issuance. •

•

68

Civil Law


PALOMATA v. COLMENARES G.R. No. 174251 | 15 Dec 2010 Torrens System (General Principles) DOCTRINE: The surveys of the Bureau of Lands carry with it when presumption of regular performance of official duty only when there is nothing on record that would arouse suspicions of irregularity.

FACTS: • •

•

•

Raul Palomatas’ house was situated on parcel of land along the Camambugan Creek. Letecia, claiming ownership over the said land, filed a criminal complaint for squatting against Raul. Such complaint was later dismissed o Raul, together with his father Alipio, filed a complaint for "maintenance and damages" against Letecia, her son Nestor Colmenares, and Teresa Gurrea on the ground that Alipio was the bona fide agricultural lessee of Letecia. Palomatas recognized the Colmenareses as the owners of the subject property, but o After the issuance of P.D. No. 27, an approximate two- hectare portion of Colmenares’ o landholding was awarded to Alipio, who was given a CLT. The subject property occupied by his house and talyer was part of Alipio’s farm lot. o Such was evidenced by two investigation reports of the DAR stated therein that the Bureau o of Lands surveyed the land and found that the subject property lies within Alipio’s farm lot. The Colmenareses admitted that Alipio was their agricultural lessee but denied any knowledge of the survey which led to the issuance of the CLT in Alipio’s favor. The Colmenareses countered that the property claimed by Raul is within their subdivision, not within the agricultural land tenanted by Alipio. They prayed that the subject property be excluded from Alipio’s CLT. o Should the property be included in Alipio’s CLT, they prayed that the same be declared o null and void because they were not informed of the survey conducted by the DAR.

ISSUE: Whether or not Palomatas is entitled to the subject property by virtue of Alipio’s CLT HELD: No, the CLT, tax declaration and investigation reports offered by the Palomatas as evidence of their right to the subject property are, at best, inconclusive and insufficient to prove their claim that the subject property is included in Alipio’s farm lot. There is a presumption of regular performance of official duty only when there is nothing on record that would arouse suspicions of irregularity. However, the refusal of the Bureau of Lands and DAR officials to affirm their written findings in open court indicates that the presumption should not apply in the evaluation of these reports. In addition, the ocular inspection made by order of the lower court revealed that the subject property lies on the other side of the Camambugan Creek which is physically separated from Alipio’s farm lot. •

69

Civil Law


MAHILUM v. ILANO G.R. No. 197923 | 22 June 2015 Torrens System (General Principles) DOCTRINE: The issue of good faith in the ac quisition of property only becomes relevant if a disputed title comes within the coverage and protection of the Torrens system.

FACTS: • •

•

•

•

•

•

Ruby Ruth Mahilum is the registered owner of a parcel of land. She entrusted the original owner's duplicate copy of the Transfer Certificate of Title (TCT) to the land to Teresa Perez. After several months, Mahilum demanded the return of the title, but Perez failed to produce the same. After much prodding, Perez admitted that the title was lost. Thus, Mahilum executed an Affidavit of Loss and caused the same to be annotated up on the original registry copy of the TCT. Mahilum then received a letter from the Registry of Deeds informing her that the owner's duplicate copy was not lost, but that it was presented to the registry by spouses Edilberto and Lourdes Ilano. The spouses claimed that the property was sold to them by Perez and a companion who o introduced herself as Mahilum. In this connection, the spouses — instead of registering the supposed sale in their favor o — executed an Affidavit of Non-Loss, which was entered on the original registry copy of the TCT. All this time, title to the property remained in Mahilum’s name, as the spouses have not registered the Deed of Absolute Sale in their favor. Mahilum filed an action for annulment of the sale, on the ground that her signature in the Deed of Absolute sale was forged. The spouses argue that they were innocent purchasers of the land for value, since there was no evidence that they acquired the property in bad faith. Such fact therefore warrants the dismissal of the annulment action on the ground of failure to state a cause of action.

ISSUE: Whether or not the annulment action should be dismissed HELD: No, it should not be dismissed. The issue of good faith only becomes relevant if a disputed title comes within the coverage and protection of the Torrens system and issue is central in cases of annulment of title. In this case, however, spouses Ilano failed to register their title to the land; what they merely did is annotate an affidavit of non-loss of the TCT pertaining to the land. Furthermore, the present action is an annulment of sale of the land, and not of the title to the land. In cases of annulment of sale, the issue of good faith is not central. Therefore, the annulment action cannot be dismissed for failure to state a cause of action. •

RESIDENTS OF LOWER ATAB TEACHER’S VILLAGE v. STA. MONICA

G.R. No. 198878 | 15 October 2014 Torrens System (General Principles) DOCTRINE: : For an action to quiet title to prosper, two indispensable requisites must be present, namely: (1) The plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and

70

Civil Law


(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.

FACTS: •

•

• •

In May 2001, residents of Lower Atab & Teachers’ Village, Sto. Tomas Proper Barangay, filed a civil case for quieting of title with damages against respondent Sta. Monica Industrial and Development Corporation. They alleged that they are successors and transferees-in-interest of Torres, the supposed owner of an unregistered parcel of land in Baguio City (the subject property, consisting of 177,778 square meters) which Torres possessed and declared for tax purposes in 1918; that they are in possession of the subject property in the concept of owner, declared their respective lots and homes for tax purposes, and paid the real estate taxes thereon; that in May 2000, respondent began to erect a fence on the subject property, claiming that it is the owner of the property. Petitioners thus prayed that respondent’s TCT No. T -63184 be surrendered and cancelled. On the other hand, respondent claimed that petitioners have no cause of action; that TCT No. T63184 is a valid and subsisting title; that the case for quieting of title constitutes a collateral attack upon TCT No. T-63184; and that petitioners have no title to the subject property and are mere illegal occupants thereof. Thus, it prayed for the dismissal of Civil Case No. 4946-R and an award of exemplary damages, attorney’s fees, litigation expenses, and costs in its favor.

ISSUE: Whether or not the quieting of title case should be granted HELD: No, in order to maintain such action, it is primarily required that the plaintiff must have legal or equitable title to the subject property — a condition which they could not satisfy. Legal title denotes registered ownership, while equitable title means beneficial ownership. Petitioners do not have legal or equitable title to the subject property. Evidently, there are no certificates of title in their respective names. And by their own admission in their pleadings, specifically in their pre-trial brief and memorandum before the trial court, they acknowledged that they applied for the purchase of the property from the government, through townsite sales applications coursed through the DENR. In their Petition before this Court, they particularly prayed that TCT No. T-63184 be nullified in order that the said title would not hinder the approval of their townsite sales applications pending with the DENR. Thus, petitioners admitted that they are not the owners of the subject property; the same constitutes state or government land which they would like to acquire by purchase. It would have been different if they were directly claiming the property as their own as a result of acquisitive prescription, which would then give them the requisite equitable title. By stating that they were in the process of applying to purchase the subject property from the government, they admitted that they had no such equitable title, at the very least, which should allow them to prosecute a case for quieting of title. In short, petitioners recognize that legal and equitable title to the subject property lies in the State. Thus, as to them, quieting of title is not an available remedy. • •

•

JULAO v. DE JESUS G.R. No. 176020 | 29 September 2014 Torrens System (General Principles) DOCTRINE: In an action for recovery of possession, the assessed value of the property sought to be recovered determines the court’s jurisdiction.

FACTS:

71

Civil Law

•

•

•

•

•


In 1960, Telesforo Julao filed before DENR two Townsite Sales Applications. Upon his death, his applications were transferred to his heirs. Solito Julao executed a Deed of Transfer of Rights, transferring his hereditary share in the property covered by TSA No. V-6667 to respondent spouses Alejandro and Morenita De Jesus. In 1983, respondent spouses constructed a house on the property they acquired from Solito. In 1986, Solito went missing. On December 21, 1998, Original Certificate of Title (OCT) No. P-2446, covering a 641-square meter property, was issued in favor of the heirs of Telesforo. On March 2, 1999, petitioners representing themselves to be the heirs of Telesforo, filed before the RTC of Baguio City, a Complaint or Recovery of Possession of Real Property against respondent spouses. Petitioners alleged that they are the true and lawful owners of a 641-square meter parcel of land located at Naguilian Road, Baguio City, covered by; that the subject property originated from TSA No. V-2132; that respondent spouses’ house encroached on 70 square meters of the subject property, among others.

ISSUE: Whether or not the RTC acquired jurisdiction over the complaint HELD: No, it did not acquire jurisdiction The Court held that in an action for recovery of possession, the .

assessed value of the property sought to be recovered determines the court’s jurisdiction. In this case, for the RTC to exercise jurisdiction, the assessed value of the subject property must exceed P20,000.00. Since petitioners failed to allege in their Complaint the assessed value of the subject property, the CA correctly dismissed the Complaint as petitioners failed to establish that the RTC had jurisdiction over it . In fact, since the assessed value of the property was not alleged, it cannot be determined which trial court had original and exclusive jurisdiction over the case.

REPUBLIC OF THE PHILIPPINES v. SPS. BENIGNO G.R. No. 205492 | 11 March 2015 Original Registration DOCTRINE: Unless a public land is shown to have been reclassified as alienable and disposable, it remains part of the inalienable public domain that cannot be subject for an application for registration of title.

FACTS: •

•

Sps. Benigno filed an application for registration of title under PD 1529 of a lot in Laguna, which the RTC granted. The Republic argues that: The RTC’s Decision granting Sps. Benigno’s application for registration is void for lack of o the required certification from the DENR Secretary declaring the land applied for as alienable and disposable land of the public domain. Mere testimony of a special investigator of CENRO cannot form the basis that the land o applied for is alienable and disposable.

ISSUE: Whether or not Sps. Benigno’s application for registration of title should prosper HELD: No. Applicants for registration of title under PD 1529 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.

72

Civil Law

•


In order to prove number (1), the general rule is that: all applications for original registration must include both (a) a CENRO or PENRO certification and (b) a certified true copy of the original classification made by the DENR Secretary. In this case, Sps. Benigno did not present any documentary evidence in the earlier LRC case to prove that the land is alienable and disposable. Hence, Sps. Benigno’s application for registration of title should not be allowed.

HEIRS OF GUIAMBANGAN V. MUNICIPALITY OF KALAMANSIG G.R. No. 204899 | 27 July 2016 Original Registration DOCTRINE: Judicial record shall be reconstituted to the extent that the parties agree. FACTS: •

•

•

•

•

• •

Eishmael, heir of Babai and ascendant and predecessor-in-interest of petitioners, filed a case against respondents for recovery of possession of real property (Civil Case No. 989), in connection with a lot which Eishmael claimed to be registered in Babai’s name as OCT 995 -A. 2002: Judgment was rendered in favor of Eishmael which became final and executory. Trial court issued a writ of execution. However, it was not enforced. o 2008: Fire gutted the Hall of Justice where the files of the said civil case were kept. The record was not reconstituted. o 2010: Another Sheriff’s partial return of service and a n otice of garnishment were sent to execute the judgment. Respondents filed an Urgent Motion to Issue an Order to the Sheriff prohibiting him from executing an alleged judgment on the ground that since the record was not reconstituted, there is no judgment to be enforced; that for failure to reconstitute, petitioner’s recourse is to file the case anew, as Act. No. 3110 requires. RTC granted the Urgent Motion. CA dismissed the petition for certiorari filed by Petitioners. Hence, this petition. Respondents argued that petitioner’s claim of ownership is based on the OCT which on its o face is patently fake as found by Land Registration Authority (LRA); that petitioners were able to secure title through defective reconstitution proceedings, in that the trial court hastily allowed reconstitution even without awaiting LRA’s report on the title;

ISSUE: Whether or not reconstitution of the record is still necessary HELD: No. Under Act No. 3110, the judicial record shall be reconstituted to the extent that the parties agree; thereafter, the court shall intervene and determine what proper action to take. It can reconstitute only that part of the record which can stand on its own, and then continue proceedings upon such record so reconstituted. As far as the trial court and parties are c oncerned, there is admittedly a Judgment rendered in favor of petitioners in Civil Case No. 989; indeed, the trial court even cited the dispositive portion of said Judgment in its December 2010 Order, and respondents did the same in their Memorandum before this Court; that said judgment became final and executory; and that the trial court directed the issuance of a writ of execution. All these facts need not be further proved, and reconstitution of the record is irrelevant and unnecessary on this score given the admission of all concerned. In t he present case, it can be said that the Judgment in Civil Case No. 989 and record of subsequent actions taken are deemed reconstituted by agreement of the parties and with the approval of the trial court. •

•

73

Civil Law


REPUBLIC v. DAYAOEN G.R. No. 200773 | 8 July 2015 Original Registration DOCTRINES: (1) The annotation in the survey plan that the land is alienable and disposable is not the kind of evidence required by law as proof that said land forms part of the alienable and disposable land of the public domain. (2) An applicant for registration of title based on an executive proclamation cannot present the proclamation itself as evidence of the alienable and disposable character of the land applied for.

FACTS: •

•

•

Angeline Dayaoen, Agustina Taule, and Lawana Batcagan filed an application for registration of 3 parcels of land. To prove the alienable and disposable character of the parcels of land, they presented in o evidence an annotation in the survey plan that said parcels of land are alienable and disposable. In addition to considering the annotation presented as evidence, the Regional Trial Court (RTC) also took judicial notice of Proclamation No. 209, which declared certain parcels of land in the Municipality of La Trinidad open to disposition. One of the parcels of land pertained to in this Proclamation is one of the parcels of land subject of the present application. Therefore, the RTC granted the application. The Office of the Solicitor General sought for reconsideration of the granting of the application, on the following grounds: The annotation in the survey plan that the subject land is alienable and disposable cannot o be substantial compliance of the required proof that the land is indeed alienable and disposable; and Proclamation 209 should not have been given judicial notice by the RTC, as the exact o boundaries of the lots covered by said law, as well as that of the subject land, are not a matter of judicial knowledge.

ISSUE: Whether or not the alienable and disposable character of the subject land was proven HELD: No, it was not proven. The pieces of evidence presented by the applicants do not meet the required proof of alienable and disposable character of the land, as provided for by law, in applications for land registration. As to whether or not the annotation may suffice as proof of alienable and disposable character, it was pronounced in the case of Republic v. Cortez that an annotation is not the kind of evidence required by law as proof that the subject property forms part of the alienable and disposable land of the public domain. These notations, at the very least, only establish that the land subject of the application for registration falls within the approved alienable and disposable area. What is required is a certification from the proper government agency (i.e., the Department of Environment and Natural Resources (DENR)) as to the classification of the subject property. As to whether or not judicial notice of Proclamation 209 may also suffice as proof of alienable and disposable character, the Supreme Court ruled that it cannot suffice as proof. Sec. 14 (1) of Presidential Decree No. 1529 requires that the property sought to be registered is alienable and disposable at the time the application for registration of title is filed. In this case, however, the Proclamation cannot be sufficient proof because the land classified therein may have been reclassified by the President thereafter. The applicants should have presented other evidence on the alienable and disposable character of the land, such as a certificate of land classification status from the DENR, which provides a more recent appraisal of the classification of the land. •

•

74

Civil Law


BANGUIS-TAMBUYAT v. BALCOM-TAMBUYAT G.R. No. 202805 | 23 March 2015 Original Registration DOCTRINE: Proceedings under Sec. 108 of PD 1529 contemplates corrections or insertions of mistakes which are only clerical but not controversial issues.

FACTS: •

•

•

•

•

During the marriage of Adriano Tambuyat and Wenifreda Balcom-Tambuyat, Adriano acquired a 700 sqm. parcel of land in Bulacan on November 17, 1991. Adriano signed the deed of sale over the property alone as vendee. Rosario Banguis-Tambuyat was one of the signing witnesses to the deed of sale. The TCT covering the property was made under the name of “ADRIANO M. TAMBUYAT married to ROSARIO E. BANGUIS.” After Adriano died, Wenifreda filed a petition for cancellation of the TCT covering the property alleging that the issuance of the title in Banguis’ name as Adriano’s spouse was due to “an insidious machination by her and the person who brokered the sale of the property.” Banguis denied that the property was acquired by Adriano and Wenifreda during their marriage. She claimed that she alone bought the property using her personal funds and that she an d Adriano were married and that their union produced a son.

ISSUE: Whether or not the cancellation of the TCT filed by Wenifreda be granted by the court HELD: Yes, under Sec. 108 of PD 1529, the proceeding for the erasure, alteration, or amendment of a certificate of title may be resorted to in seven instances including: (1) when any error, omission or mistake was made in entering a certificate or any memorandum thereon or on any duplicate certificate; and, (2) when there is reasonable ground for the annulment or alteration of title. The case falls under these two instances. Proceedings under Sec. 108 are “summary in nature, contemplating corrections or insertions of mistakes which are only clerical but certainly not controversial issues. Banguis’ opposition to the petition for cancellation raised controversial issues involving her claimed ownership and the hereditary rights of Adrian which she claims to be her son with Adriano. The Registry of Deeds of Bulacan erred in including Banguis in the TCT as Adriano’s spouse. •

•

JOSEPHINE WEE v. REPUBLIC OF THE PHILIPPINES G.R. No. 177384| 8 December 2009 Subsequent Registrations DOCTRINE: In registering land, the applicant must prove his/her claim with inc ontrovertible evidence. FACTS: •

•

Petitioner filed for registration of title for a parcel of land that she bought from a certain Julian Gonzalez by virtue of a Deed of Absolute Sale. Petitioner anchored her claim on the contention that her and her predecessor-in-interest had been in open, continuous, exclusive and notorious possession of the subject property. To support her claim, petitioner presented several pieces of evidence, including the actual deed of absolute sale in her favor, several tax declarations in her name and the vendor, Julian Gonzalez, and the testimony of Julian’s wife and son, to prove her claim that her predecessor -in-interest had

75

Civil Law


been in open, continuous possession of the subject property. Additionally, she claimed that she took possession of the property immediately after the sale evidenced by the fact that there are several coffee trees in said property. The respondent, on the other hand, contests petitioner’s claim by arguing that the petitioner failed to prove that she and her predecessor-in-interest had not been in open, continuous possession of the subject property since June 12, 1945 as required by the Property Registration Decree; the documents presented by petitioner, particularly the tax declaration and the deed of sale, were not sufficient to constitute a bona fide claim over the property. Furthermore, respondent argues that the existence of coffee trees in the subject property is not enough to be considered possession in the concept of an owner.

•

ISSUE: Whether or not the petitioner or her predecessor-in-interest had been in open, continuous possession of the subject property

HELD: No, the claims of petitioner are not enough to prove that she or her predecessor-in-interest, Julian had been in open, continuous possession of the property since June 12, 1945. The Supreme Court noted that the evidence presented by the petitioner failed to substantiate her claim; in particular, petitioner presented the testimony of Julian’s wife that her husband inherited the property from his parents and he had been in open possession of the property, however, as the SC found, this is still inadequate to comply with the quantum of proof required in land registration cases and even the other pieces of evidence presented by the petitioner actually contradicted the testimony of Julian’s wife since the earliest tax declaration in the name of Julian that was presented by the petitioner was years after the supposed inheritance of the property by Julian. Furthermore, petitioner merely presented five tax declarations which are intermittently spread out for only the span of 1957-1985 which was inconsistent with petitioner’s claim that the possession over the property in the span of 1945 to 1993, this then only weakened petitioner’s claim of open continuous possession of the property. The Supreme Court also noted that petitioner’s claim of immediate possession by virtue of the existence of coffee trees is still deficient proof to substantiate her claim of possession in the concept of an owner. It is noteworthy that petitioner did not even know who planted the coffee trees. Additionally, petitioner failed to point to other acts of improvement, development or cultivation of the subject property to constitute notorious and exclusive possession in the concept of an owner over the lot. •

•

•

MAHINAY v. GAKO G.R. No. 165338 | 28 November 2011 Subsequent Registrations DOCTRINE: The annotation of a notice of lis pendens at the back of the original copy of the certificate of title on file with the Register of Deeds is sufficient to constitute constructive notice to purchasers or other persons subsequently dealing with the same property, regardless of whether the said annotation is also inscribed upon the owner’s copy.

FACTS: •

•

Sanchez, Lopez and Honoridez are the registered owners (“the owners”) of a parcel of land covered by a TCT. Mahinay filed a complaint for specific performance against the owners and one Suarez to compel them to convey the said lot to him. He alleged that in an earlier case he filed against the owners, the parties therein arrived at a Compromise Agreement wherein the owners would give him a preferential right to buy the subject lot on the condition that he will withdraw the said case.

76

Civil Law

•

•

•

•

•


However, the owners sold the lot to Suarez without first offering the same to Mahinay, hence in violation of his preferential right. The owners asserted that they did not violate Mahinay’s preferential right to buy as the transaction between them and Suarez was actually an equitable mortgage, and not a sale. That in fact, they remained the occupants and registered owners of the lot. Judgment was rendered in favor of Mahinay and thus, he filed a motion to compel the owners to vacate the property and turn over to him the owner’s copy of the TCT. The branch sheriff placed Mahinay in actual and physical possession of the lot, however, the TCT could not be surrendered to him as the same was already in possession a certain Sorensen by virtue of a real estate mortgage executed by the owners subsequent to the filing of Mahinay’s complaint. Sorensen claims that when she agreed to extend a loan to the owners and when a real estate mortgage was executed in her favor, she acted in utmost good faith as there was no adverse annotation at the back of the owner’s duplicate original copy of the TCT.

ISSUE: Whether or not the notice of lis pendens duly annotated on the original copy of the TCT binds Sorensen

HELD: Yes, the claim of Sorensen that the owner’s copy of the TCT does not contain any adverse annotation at the time the owners transacted with her is of no moment. Being in the nature of involuntary registration, the annotation of the notice of lis pendens on the original copy of the TCT on file with the Registry of Deeds is sufficient to bind third parties. As borne out by the records of the case, Mahinay’s notice of lis pendens was duly annotated on the original copy of the TCT as early as August 17, 1994. On the other hand, the real estate mortgage upon which Sorensen based her alleged superior right was executed only on October 27, 1994 and inscribed at the back of said title only on the following day. The prior registration of Mahinay’s notice of lis pendens bound the whole world, including Sorensen. It charged her with notice that the land being offered to her as security for the loan is under litigation and that whatever rights she may acquire by virtue of the real estate mortgage are subject to the outcome of the case. •

•

GUNTALILIB v. DELA CRUZ G.R. No. 200042 | 7 July 2016 Dealings With Unregistered Lands DOCTRINE: The reliefs sought in an action for quieting of title and annulment of title are the same. FACTS: •

•

•

Respondents filed a Complaint for Quieting of Titles; Annulment and Cancellation of Unnumbered OCT/ Damages against petitioner. They claim the subject property by inheriting the same from their father (who inherited o the property from his father/respondents’ grandfather) Respondents likewise alleged that petitioner filed a petition for reconstitution or issuance of a new certificate of title in lieu of an allegedly lost unnumbered OCT. This was issued in the name of petitioner’s predecessor, Bernardo Tumaliuan, covering the o very same property which the respondents owned. Said unnumbered OCT constituted a cloud upon their titles that must necessarily be o removed. Petitioner filed a Motion to Dismiss arguing that the Complaint stated no cause of action; that the case constituted a collateral attack on their unnumbered OCT.

77

Civil Law


ISSUE: Whether or not the quieting of title case filed by respondents constitutes as a prohibited (collateral) attack on the unnumbered OCT

HELD: No, it is settled that a certificate of title is not subject to collateral attack. However, while respondents’ action is denominated as one for quieting of title, it is in reality an action to annul and cancel Bernardo Tumaliuan’s unnumbered OCT. . The allegations and prayer in their Amended Complaint make out a case for annulment and cancellation of title, and not merely quieting of title: they claim that their predecessor’s OCT 213, which was issued on August 7, 1916, should prevail over Bernardo Tumaliuan’s unnumbered OCT which was issued only on August 29, 1916; that petitioner and his codefendants have knowledge of OCT 213 and their existing titles; that through fraud, false misrepresentations, and irregularities in the proceedings for reconstitution, petitioner was able to secure a copy of his predecessor’s supposed unnumbered OCT; and for these reasons, Bernardo Tumaliuan’s unnumbered OCT should be cancelled. Besides, the case was denominated as one for “Quieting of Titles x x x; Cancellation of Unnumbered OCT/Damages.” It has been held that the underlying objectives or reliefs sou ght in both the quieting-of-title and the annulment-of-title cases are essentially the same: adjudication of the ownership of the disputed lot and nullification of one of the two certificates of title. Nonetheless, petitioner should not have been so simplistic as to think that the respondents’ complaint is merely a quieting of title case. It is more appropriate to suppose that one of the effects of cancelling Bernardo Tumaliuan’s unnumbered OCT would be to quiet title over the subject property; in this sense, quieting of title is subsumed in the annulment of title case. •

•

TORTS AND DAMAGES PNB v. CHEAH CHEE CHONG G.R. No. 170865 | 18 April 2012 Definition and Elements of Torts DOCTRINE: •

•

Proximate cause is ‘that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury and without which the result would not have occurred.’ Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection.

FACTS: •

•

• •

In doing a friend a favor to help the latter’s friend collect the proceeds of a foreign check amounting $300,000, Ofelia deposited the check in her and her husband’s dollar account. She trusted a friend’s friend whom she did not know. The local bank accepted the check for collection and immediately credited the proceeds thereof to said spouses’ account even before the lapse of the clearing period. PNB released the proceeds of the check prior to the lapse of the 15-day clearing period. After the money was withdrawn and distributed among different beneficiaries, it was discovered that she and her bank had dealt with a rubber check.

ISSUE: Whether or not the bank is the proximate cause of the injury

78

Civil Law


HELD: Yes, the bank’s gross negligence is the proximate cause of the injury. Proximate cause is ‘that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury and without which the result would not have occurred. To determine the proximate cause of a controversy, the question that needs to be asked is: If the event did not happen, would the injury have resulted? If the answer is no, then the event is the proximate cause. •

ISSUE: Whether or not respondents are guilty of contributory negligence. HELD: Yes, her credulousness qualifies as contributory negligence. Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection.” The SC found Ofelia’s credulousness blameworthy. Ofelia failed to observe caution in giving her full trust in accommodating a complete stranger and this led her and her husband to be swindled. •

MARSMAN & CO. v. LIGO G.R. No. 198643 | 19 August 2015 Definition and Elements of Torts DOCTRINE: For a malicious prosecution suit to prosper: (1) prosecution must have occurred, and the defendant either was the prosecutor or instigated its commencement; (2) the criminal action ended with an acquittal; (3) in bringing the action, the prosecutor acted without probable cause; and (4) the prosecution was impelled by legal malice.

FACTS: •

•

•

•

•

•

• •

Quirino Iledan (Marsman Warehouse Manager) supposedly received a telephone call from Isabelito Miguel, informing him that some of Marsman's bad order and expired drugs that were intended for destruction were not actually destroyed but were sold at the back of a church. This sought Manolette Pilapil (Marsman Assistant Vice-President for Human Resources) to seek the assistance of the National Bureau of Investigation (NBI) in the investigation of the matter. The NBI arrested several individuals who were supposedly caught in the act of distributing these medicines that should have been destroyed. The day after the arrest, Iledan asked Artemio Ligo (Marsman Warehouse Supervisor) to accompany him to the NBI office to visit one of the suspects arrested. At the NBI headquarters, however, Ligo was also arrested and placed in a detention cell. Thereafter, he and other individuals were presented to the media during a live conference as the suspects in the distribution and sale of bad order and expired medicines. Their photographs were taken, and later published, by news reporters. Ligo was detained for at least 10 days. Ligo was criminally charged with violation of Republic Act No. 3720. During trial, however, Miguel was not presented as a witness. The court acquitted Ligo of the charge due to lack of evidence. Ligo filed a complaint for damages against Marsman and Iledan. He alleged that the latter maliciously conspired to fabricate a criminal charge against him.

ISSUE: Whether or not there was malicious prosecution against Ligo HELD: Yes, there was malicious prosecution. All of the elements of malicious prosecution are present in this case, namely: (1) prosecution occurred, and the defendant either was the prosecutor or instigated its

79

Civil Law


commencement; (2) the criminal action ended with an acquittal; (3) in bringing the action, the prosecutor acted without probable cause; and (4) the prosecution was impelled by legal malice. For the first element, Ligo was charged for violation of Republic Act No. 3720. Furthermore, it was Pilapil who, in behalf of Marsman, requested the NBI to investigate a tip on a purported syndicate that sells Marsman's bad medicines. For the second element, Ligo was acquitted in the criminal case. For the third element, no probable cause existed to warrant Ligo’s prosecution. Firstly, Miguel was not presented in court to identify the alleged perpetrators of the illegal act — hence, the basis for the accusation is lacking. Secondly, Ligo was not even part of the group that was arrested by the NBI. His participation in any manner or degree has not been shown. And thirdly, the fact that Ligo was acquitted for lack of evidence places the prior finding of probable cause in issue. And for the fourth element, there was legal malice on the part of Iledan. Firstly, the Supreme Court noted Ligo’s complaint which specifically alleged that, when Iledan assumed his position as warehouse manager, he was arrogant and hostile toward the employees and even manifested his desire to replace Ligo and other employees of Ligo’s warehouse. And secondly, Ligo also testified that Iledan did not like it when the former attempted to establish a supervisors' union. Ligo, along with another witness, also testified, that Iledan was angry at union members. •

• •

•

GREENSTAR EXPRESS, INC. v. UNIVERSAL ROBINA CORP. G.R. No. 205090 | 17 October 2016 The Tortfeasor DOCTRINE: When by evidence of the ownership of vehicle and employment were proved, the presumption on negligence will be attached, as t he registered owner of the vehicle and employer

FACTS: •

• •

A bus and van owned by Greenstar and URC collided in Laguna, which resulted to the death of NURC Operations Manger Bicomong who drove the van. Bicomong used the URC van, which was original assigned to another officer, for his personal use Greenstar driver Sayson fled right after the incident happened and reported to his employer

ISSUE: Whether or not URC should be held liable for the negligence of its employee HELD: No, URC succeeded in overcoming the presumption of negligence, having shown that when the collision took place, Bicomong was not in the performance of his work. Under Article 2180 of the New Civil Code, employers shall be held primarily and solidarily liable for damages caused by their employees acting within the scope of their assigned tasks. To hold the employer liable under this provision, it must be shown that an employer-employee relationship exists, and that the employee was acting within the scope of his assigned task when the act complained of was committed. The burden of proof shifted to respondents to show that no liability under Article 2180 arose, which they were able to prove. This may be done by proof of any of the following: (1) That they had no employment relationship with Bicomong; (2) That Bicomong acted outside the scope of his assigned tasks; or (3) That they exercised the diligence of a good father of a family in the selection and supervision of Bicomong. •

•

ORIX METRO LEASING AND FINANCE CORPORATION v. MANGALINAO G.R. Nos. 174089 & 174266 | 25 January 2012

80

Civil Law


The Concepts and Doctrines of Res Ipsa Loquitur, Last Clear Chance, Proximate Cause, Damnum Absque Injuria, Presumption of Negligence, Vicarious Liability DOCTRINE: • •

The Emergency Rule is not applicable when the driver is also negligent The registered owner of a vehicle could be held liable for damages even though he is no longer the actual owner of the vehicle.

FACTS: • •

•

•

•

•

3 vehicles were traveling northbound along NLEX. The first is a Fuso 10-wheeler truck (Fuso) driven by Loreto Lucilo (Loreto). Behind it is a Pathfinder driven by Anacleto Edurese, Jr. (Edurese). Behind the Pathfinder is another 10-wheeler truck (Isuzu) driven by Antonio. The Pathfinder sought to overtake the Fuso and therefore took the fast lane. However, the Fuso suddenly swerved to the left which resulted to a collision. Even though Antonio applied the breaks, the Isuzu crashed into the rear of the Pathfinder leaving it a total wreck. As a result of the collision Edurese and the passengers of the Pathfinder (Sps. Mangalinao, Jebueza, and Marriane) died. Orix, the owner of the Fuso, argued that when the incident occurred he no longer was the owner of the Fuso because it was sold to MMO Trucking. Antonio, on the other hand, argued that the crash was the result of Loreto and that according to the Emergency Rule, he could not be held liable.

ISSUES: Whether or not the Emergency Rule is applicable to this case HELD: No, the emergency Rule is not applicable to the case because Antonio, himself, was also negligent. The emergency rule provides 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. In this case, Antonio was driving too closely to the Pathfinder. As such, Antonio was also negligent in driving thus making the emergency rule inapplicable. •

ISSUE: Whether or not Orix could be exculpated from liability because he is no longer the owner of the vehicle

HELD: No, the registered owner of a vehicle may also be held liable for damages. Orix cannot point fingers at the alleged real owner to exculpate itself from vicarious liability under Article 2180 of the Civil Code. Regardless of whoever Orix claims to be the actual owner of the Fuso by reason of a contract of sale, it is nevertheless primarily liable for the damages or injury the truck registered under it have caused.

SUBIC BAY LEGEND RESORTS v. FERNANDEZ G.R. No. 193426 | 29 September 2014 Actual and Compensatory Damages DOCTRINE: Attorney's fees may be recovered when the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim, or in any other case where the court deems it just and equitable that attorney's fees a nd expenses of litigation should be recovered.

FACTS:

81

Civil Law


Bernard Fernandez, a brother of Ludwig and Deoven, filed a complaint for recovery of sum of money and damages against the company According to him, he went to the casino where he handed to his brothe rs 6,000 dollars’ worth of chips belonging to him Thereat, the company personnel accosted his brother and confiscated his casino chips worth 5,900 dollars and failed to return them to him despite demand. The brothers of Fernandez was accused of stealing the casino chips. They were made to confess that the chips were supplied by a casino employee, Michael Cabrera

•

•

•

• •

ISSUE: Whether or not Fernandez was entitled to collect award of damages HELD: Yes, under Article 2208 of the Civil Code, attorney's fees may be recovered when the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim, or in any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. Petitioner's act of arbitrarily confiscating the casino chips and treating Ludwin and Deoven the way it did, and in refusing to satisfy respondent's claim despite the fact that it had no basis to withhold the chips, confirm its bad faith, and should entitle respondent to an award.

MCKAY v. CASWELL G.R. No. 183872 | 17 November 2014 Actual and Compensatory Damages DOCTRINE: To justify an award of actual damages, there must be competent proof of the actual amount of loss, credence can be given only to claims which are duly supported by receipts.

FACTS: •

•

•

Caswells hired Owen who offered to install electricity to Caswells’ new built home for P250,000 with Cesar Badua and Albert Galeng’s help. After the “completed” installation, Zambales II Electric Cooperative (Zameco II) inspected the work. Zameco II held that there are numerous defects on the installation. Because of the deficiencies and other incomplete requirements, Zameco II refused to provide energization to the Caswell home. The Caswells looked for Owen but he could not be found. Hence, they were constrained to ask Zameco II to correct all the problems it found.

ISSUE: Whether or not, Owen, if he failed his duty, must reimburse the rectification costs and shoulder Caswell’s actual damages.

HELD: Yes, to justify an award of actual damages, there must be competent proof of the actual amount of loss, credence can be given only to claims which are duly supported by receipts. In the case at bar, the Court give credence to the documents relied upon by the CA and the MTC in arriving at the rectification cost, i.e., a) Engr. Pulangco’s handwritten receipt of P15,400.00, to which he had testified before the court that he had indeed received such amount and b) the Sales Invoice No. 2029 issued by Peter A. Eduria Enterprises reflecting the total cost of P53,805.00. •

CONTINENTAL CEMENT CORPORATION v. ASEA BROWN BOVERI G.R. No. 171660 | 17 October 2011 Actual and Compensatory Damages

82

Civil Law


DOCTRINE: Damages claimed must be the natural and probable consequences of the breach, which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted.

FACTS: •

•

•

Petitioner Continental Cement Corporation (CCC) obtained the services of respondents Asea Brown Boveri (ABB) and BCC Brown Boveri to repair its kiln drive motor. Due to the repeated failure of ABB to repair the kiln drive motor, CCC file a complaint for sum of money and damages. It claimed that due to the consequence of the failure to comply with their contractual obligation, ABB must pay the production and opportunity losses, labor cost and rental of crane, penalties, cost of money interest, and attorney’s fees. ABB, however, claimed that under Clause 7 of the General Conditions attached to CCC’s letter of offer issued to the former, the liability of ABB should not extend to consequential damages either direct or indirect.

ISSUE: Whether or not ABB is liable for payment of production and opportunity losses, labor cost and rental of crane?

HELD: No, as the damages claimed are not the natural and probable consequences of the breach, which pertains to that which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. Considering the nature of the obligation in the instant case, ABB, at the time it agreed to repair the kiln drive motor, could not have reasonably foreseen that it would be made liable for production loss, labor cost and rental of the crane in case it fails to repair the motor or incurs delay in delivering the same, especially since the motor under repair was a spare motor. Furthermore, no sufficient evidence was presented by CCC to show that it had indeed rented a crane or that it incurred labor cost to install the motor. No sufficient evidence was likewise presented to prove its right to consequential damages arising from production losses. •

•

ISSUE: Whether or not ABB is liable to pay attorney’s fees HELD: No, jurisprudence requires that the factual basis for the award of attorney’s fees mus t be set forth in the body of the decision and not in the dispositive portion only. In this case, no such explanation was given by the RTC.

REPUBLIC v. SPS. SALVADOR G.R. No. 205428 | June 7, 2017 Actual and Compensatory Damages DOCTRINE: Consequential damages are only awarded if as a result of the expropriation, the remaining property of the owner suffers from an impairment or decrease in value.

FACTS: •

•

•

The Republic filed a verified complaint for the expropriation of a parcel of land belonging to Sps. Salvador. Sps. Salvador received two checks from the DPWH representing 100% of the zonal value of the subject property. They signified in open court that they are interposing no objection, and that they have received the total sum of Php 683,349.22, and are no longer intending to claim any just compensation. The RTC directed the Republic to pay consequential damages equivalent to the value of the capital gains tax and other taxes necessary for the transfer.

83

Civil Law


ISSUE: Whether or not consequential damages should be granted HELD: No, consequential damages are only awarded if as a result of the expropriation, the remaining property of the owner suffers from an impairment or decrease in value. In this case, no evidence was submitted to prove such impairment.

PEOPLE OF THE PHILIPPINES v. MARCELINO CAGA Y FABRE G.R. No. 206878| 22 August 2016 Moral Damages DOCTRINE: In rape cases, the victim is awarded civil indemnity, exemplary damages and moral damages.

FACTS: • •

Caga was charged with the crime of rape before the RTC of Manila, Branch 26. The RTC found Caga guilty of the crime and sentenced him to suffer the penalty of Reclusion Perpetua and ordered him to indemnify the victim, AAA, 50,000 pesos by way of Moral damages.

ISSUE: Whether or not the imposition of only moral damages in the amount of 50,000 pesos is proper HELD: No, the Supreme Court held that in rape cases there ar e 3 types of civil liabilities imposed upon the accused; Civil indemnity, Moral damages, and Exemplary damages, all of which are in the amount of 75,000 each. In the present case, the Supreme Court found, after affirming the conviction of the accused, that the ruling of the RTC lacks the other 2 civil liabilities and that the amount of moral damages imposed against the accused should be increased. Therefore, the SC added civil indemnity and exemplary damages over the criminal penalty and the moral damages already imposed against the accused with an amount of 75,000 pesos each along with an interest rate of 6% per annum. •

MEYR ENTERPRISES v. CORDERO G.R. No. 197336 | 3 September 2014 Moral Damages DOCTRINE: The recovery of moral damages for malicious prosecution is allowed under Article 2219 of the Civil Code, while attorney’s fees and expenses of litigation may be adjudged in malicious prosecution cases pursuant to Article 2208 of the same Code.

FACTS: •

•

Meyr Enterprise Corporation, plaintiff, filed a Complaint for Damages and Attorney’s Fees before the RTC of Cebu City against Rolando Cordero. Defendant, Rolando Cordero, constructed a dike in front of Myer’s land. The dike caused damages to Myer’s land due to the flow of waves of the sea. Cordero, in his answer to the complaint, argued that plaintiff-appellant has no personality to sue as the area in controversy is a foreshore land, owned by the State. Defendant further alleged that the area is covered under the Community Based Forest o Management Agreement (CBFMA), between the Department of Environment and Natural Resources and the Cantaan Centennial Multi-Purpose Cooperative (CCMPC). And that

84

Civil Law


under the CBFMA Agreement the holder has the exclusive responsibility of protecting the area, thus, only CCMPC has the personality to sue in court.

ISSUE: Whether or not there is legal and factual basis for the grant of moral damages in favor of respondent HELD: Yes, the recovery of moral damages for malicious prosecution is allowed under Article 2219 of the Civil Code, while attorney’s fees and expenses of litigation may be adjudged in malicious prosecution cases pursuant to Article 2208 of the same Code. Malicious prosecution has been defined as ‘an action for damages brought by one against whom a criminal prosecution, civil suit, or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such prosecution, suit, or other proceeding in favor of the defendant therein.’ Both tribunals held that petitioner had no probable cause to complain, since it had no personality to sue, given that the affected portion is foreshore or public land; that a previous case filed by petitioner against respondent, based on the same facts, was dismissed; and that petitioner’s baseless accusations were particularly intended to vex and humiliate the respondent, who openly objected to petitioner’s quarrying. The circumstances leading to the conclusion that petitioner is guilty of malicious prosecution are already present, as far as the tribunals below are concerned. •

•

ONE NETWORK RURAL BANK v. BARIC G.R. No. 193684 | 5 March 2014 Nominal Damages DOCTRINE: A third party who did not commit a violation of the plaintiff’s rights may not be held liable for nominal damages.

FACTS: •

•

•

Jaime Palado was the registered owner of a building containing commercial spaces. Danilo Baric was a lessee of one of the commercial spaces. Palado served a notice to Baric demanding the return of the space. One Network Rural Bank (Bank) purchased the propety from Palado, and constructed a building on the lot. Baric filed a case for forcible entry with a prayer for injunction relief against BOTH Palado and the Bank. The Bank claims that as a buyer in good faith and new owner of the subject property, it should not be made liable.

ISSUE: Whether or not One Network Rural Bank should be liable for nominal damages HELD: No, Network Bank did not violate any of Baric's rights; it was merely a purchaser or transferee of the property from the previous owner, Palado. Any invasion or violation of Baric's rights as lessee was committed solely by Palado, and Network Bank may not be implicated or found guilty unless it actually took part in the commission of illegal acts, thus the Bank cannot be held liable for nominal damages

SWIFT FOODS, INC. v. SPOUSES MATEO G.R. No. 170486 | 12 September 2011 Actual and Compensatory Damages; Moral Damages; Nominal Damages

85

Civil Law


DOCTRINE: Where there has been a breach of contract but actual damages have not been established, nominal damages may be awarded to vindicate the injured party’s rights.

FACTS: •

•

•

•

The respondent spouses Mateo entered into a Warehousing Agreement with Buhain, Swift Food’s Sales Supervisor, regarding the possible lease of the former’s warehouse for the storage of Swift’s feeds products. The signatory for Swift was its Vice-President, Acosta. Swift began delivering feeds to the spouses’ warehouse. To properly document the movement of the stocks, Swift through its sales personnel, Enfestan, gave the spouses two kinds of warehouse documents that would be presented before every release of stocks: (1) the Daily Warehouse Stock Report (DWSR), and the (2) Warehouse Issue Slip (WIS). The spouses later delivered three land titles to Swift in compliance with the bond requirement under the Agreement. A few months later, Swift found that upon inspection of the warehouse documents, there revealed one missing bag. Hence, Swift informed the spouses that it was terminating the contract due to violation of the Warehousing Agreement. It explained that such violations were made when stocks were released to unauthorized persons and which caused them a cash shortage of around P2 Million.

ISSUE: Whether or not Swift is entitled to actual damages HELD: No, although Swift was able to prove the existence of the breach, it failed to prove the pecuniary loss it suffered arising from the unauthorized stock releases. According to the Agreement, “claims against the operators shall be based on the prevailing price list at the time of loss.” The records show that Swift failed to prove the existence and extent of t he alleged shortages for which the spouses are being held liable. It likewise failed to provide the court with the prevailing price of the feeds that the spouses released. •

ISSUE: Whether or not the spouses Mateo are entitled to moral damages HELD: Yes, the spouses were able to prove that Swift acted in bad faith in keeping the land titles earlier delivered to constitute the bond despite its knowledge that there was no bond or real estate mortgage to justify its retention thereof. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. Bad faith is defined as a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purpose. However, the SC finds that the amount of moral damages awarded by the lower court should be lessened since moral damages are not punitive in nature and not intended to enrich the claimant at the expense of the defendant. •

•

•

ISSUE: Whether or not Swift is entitled to nominal damages HELD: Yes, in situations where there has been a breach of contract but actual damages have not been established, nominal damages may be awarded to vindicate the injured party’s rights.

ENGR. APOLINARIO DUEAS VS. ALICE GUCE-AFRICA G.R. No. 165679 | 5 October 2009 Temperate or Moderate Damages

86

Civil Law


DOCTRINE: Temperate or moderate damages may be recovered when some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty.

FACTS: ●

● ●

●

Respondent Alice entered into a Construction Construct with petitioner Engr. Dueas for the demolition of their ancestral house and the construction of a new four-bedroom residential house. This was the venue for her sister’s wedding ceremony and at the same time their temporary residence while in the Philippines. She paid petitioner P500K, who obliged himself to furnish the necessary materials and labor for the completion of the work and promised to finish the same before his sister’s wedding. However, the house remain unfinished. Because of this, the wedding was held at Club Victorina and they were forced to stay in a hotel. Hence, she filed a complaint for breach of contract and damages against petitioner. RTC awarded respondent Alice actual damages of P100K for necessary repair of the structure and P200K for the completion of the construction.

ISSUE: Whether respondent is entitled to temperate damages in lieu of actual damages HELD: Yes. in the absence of competent proof on the amount of actual damages suffered, a party is e ntitled to temperate damages. Temperate or moderate damages may be recovered when some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. In the case at bar, there is no doubt that respondent sustained damages due to the breach committed by the petitioner. The transfer of the venue of the wedding, the repair of the substandard work, and the completion of the house necessarily entailed expenses. However, as earlier discussed, respondent failed to present competent proof of the exact amount of such pecuniary loss. To our mind, and in view of the circumstances obtaining in this case, an award of temperate damages equivalent to 20% of t he original contract price of P500,000.00, or P100,000.00 (which, incidentally, is equivalent to 1/3 of the total amount claimed as actual damages), is just and reasonable. •

•

PEOPLE v. BERNARDINO PERALTA and MICHAEL AMBAS G.R. No. 208524 | 1 June 2016 Temperate or Moderate Damages DOCTRINE: Temperate damages are recovered when the court finds some pecuniary loss has been suffered but its amount cannot be proved with certainty.

FACTS: •

•

•

Bernardino Peralta and Michael Ambas were charged of the crime of robbery with homicide for shooting Supt. Joven Bocalbos in the head during an armed robbery commited inside Bocalbos’ own passenger van for hire According to the witnesses of the prosecution, Bocalbos was driving his van and transporting passengers as additional income. Along Commonwealth Avenue, one of the passengers announced a “holdup”. Bocalbos stopped the van near Fairview Market and was ordered by one of the armed passengers to vacate the driver’s seat . Peralta took over the van. Afterwards, he shot Bocalbos in the head. Peralta’s cohorts took the valuables of the passengers including Olitan’s belongings including: Cellphone, silver ring, sunglasses and cash money o

87

Civil Law

•

•

•


Olitan was then made to drive the van to Mandaluyong City where the assailants alighted. Olitan brought Bocalbos to M-tech Medical Center but it was already too late RTC: found both Peralta and Ambas guilty beyond reasonable doubt Heirs of the deceased Bocalbos were awarded civil indemnity, burial expenses, moral o damages, award for unearned income, Olitan was awarded P3,000 temperate damages in lieu of the actual damages caused by o the robbery CA: affirmed RTC

ISSUE: Whether or not the award for temperate damages awarded to Olitan was proper HELD: Yes, SC found it proper to award P3,000 to Olitan, as no receipts were presented during trial to prove the actual costs of the items taken from him. Under Article 2224 of the Civil Code, temperate damages may be recovered when the court finds that some pecuniary loss had been suffered but its amount, cannot, from the nature of the case, be proved with certainty.

PEOPLE v. BEDUYA G.R. No. 175315 | 9 Aug 2010 Actual or Compensatory Damages; Temperate or Moderate Damages DOCTRINE: In the absence of proof on the exact sum of actual damages, there was no basis for granting the same.

FACTS: •

•

•

Elizer Beduya (Elizer) and Ric Beduya (Ric) were convicted by final judgment for the crime of murder by the RTC of Oroquieta City, Misamis Occidental. The allegations provided that the accused attacked, boxed and then stabbed Dominador S. o Acope, Sr. with the use of a knife hitting him on the left h ypochondriac area which caused his death. Elizer & Ric were convicted with the qualifying circumstance of taking advantage of superior strength The RTC ordered Elizer & Ric to pay in solidum the heirs of Dominador Acope ₱50,000.00 as death indemnity, ₱6,000.00 as funeral expenses, ₱9,411.85 as medical expenses, and ₱264,000.00 as lost earnings.

ISSUE: Whether or not the heirs of Dominador Acope are entitled to actual damages HELD: No, in the absence of proof on the exact sum of actual damages, there was no basis for granting the same. "Credence can be given only to claims which are duly supported by receipts." In this case, award was not substantiated by any evidence. There was no competent proof on the specific amounts of actual damages allegedly incurred and this omission cannot be supplied by a broad and general stipulation during trial that the victim’s wife would testify on the damages brought about by the commission of the crime.

ISSUE: Whether or not the heirs of Dominador Acope are entitled to temperate damages HELD: Yes, as the heirs of the victim clearly incurred medical and funeral expenses, ₱25,000.00 by way of temperate damages should be awarded. They are also entitled to the amount of ₱50,000.00 as indemnity

88

Civil Law


for the death of the victim, as a consequence of the crime, without need of any evidence or proof of damages.

ADRIAN WILSON INT'L v. TMX PHILIPPINES G.R. No. 162608 | 26 July 2010 Actual and Compensatory Damages; Temperate or Moderate Damages DOCTRINE: One is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.

FACTS: •

•

•

•

•

Respondent TMX engaged the services of petitioner AWIA for the construction of its watch assembly plant located in the EPZA-run Mactan Export Processing Zone in Cebu. One of AWIA’s duties was construction administration. This is to ensure that the o contractor, P.G. Dakay, works in accordance with the directed specifications. Five years after the completion of the construction, TMX noticed numerous cracks and other defects in the building. TMX, opining that the problem may have been due to design errors, informed AWIA. TMX underwent major repairs and was forced to stop its operations for 18 days, putting its employees on forced leave with pay. TMX claimed for damages against AWIA, seeking for reimbursement of everything it had spent for the corrective work. In its Answer, AWIA insisted on the correctness of its design, which was approved by TMX, and further alleged that it was not responsible for whatever mistakes the contractor made.

ISSUE: Whether or not TMX is entitled to actual damages HELD: No, under the Civil Code, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. TMX's pieces of evidence do not substantiate such plea for the full reimbursement of the salaries. To prove that salaries have been paid, TMX has the burden to show that payments have actually been made to its employees. However, the documents it submitted were composed only of a master list of daily and monthly paid employees, summarized and itemized lists and computations of payroll costs during the covered period of shoring installation, salary structures, and vouchers prepared by the accounting department. These pieces of evidence, as well as the bare assertion of the TMX President, do not show a reasonable degree of certainty of actual payment to and actual receipt by its workers but only reflect the list of disbursements. Vouchers are not receipts. A receipt is a written and signed acknowledgment that money has been received or goods have been delivered, while a voucher is documentary record of a business transaction. •

•

ISSUE: Whether or not TMX is entitled to temperate damages HELD: Yes, while TMX failed to prove the exact amount of the salaries it had paid, TMX had to pay its employees during the shutdown and had suffered pecuniary loss for the structural problem. Moreover, the installation of only 11 shoring columns, instead of 118, would significantly reduce the number of days allotted for the repairs. As a matter of equity, therefore, a relief to TMX in the form of temperate damages is warranted.

89

Civil Law


SEGURITAN v. PEOPLE OF THE PHILIPPINES G.R. No. 172896 | 19 April 2010 Actual and Compensatory Damages; Moral Damages; Temperate or Moderate Damages DOCTRINE: When pecuniary loss has been suffered but the amount cannot, from the nature of the case, be proven with certainty, temperate damages may be recovered.

FACTS: ● ● ●

●

●

Petitioner was charged with Homicide in an Information for feloniously assaulting, attacking a nd boxing Lucrecio Seguritan, inflicting upon the latter head injuries which caused his death. Petitioner was having a drinking session with his uncles Lucrecio, Melchor and Baltazar. Petitioner seated beside Lucrecio claimed that Lucrecio’s carabao entered his farm and destroyed his crops. A heated discussion ensued. Petitioner punched Lucrecio twice landing on Lucrecio’s temple causing him to fall face-up to the ground and hit a hollow block used as a stove. Lucrecio lost consciousness but was revived and went home. Around 9PM, his wife noticed that his complexion has darkened and foamy substance was coming out of his mouth. He died that same night. o At the time of Lucrecio’s death, he was 51 years old, earning an annual income of P14,000 as a farmer. When Lucrecio’s wife learned of petitioner’s involvement in her husband’s death. She sought the assistance of the NBI whose examination concluded that Lucrecio died of traumatic head injury.

ISSUE: WON the heirs of Lucrecio are entitled to actual damages HELD: Yes, but only for loss of earning capacity. The award of P135,331.00 for the loss of earning capacity is in order. The prosecution satisfactorily proved that the victim was earning an annual income of P14,000.00 from the harvest of pineapples. It is, however, error for the lower courts to award actual damages of P30,000.00 for the expenses incurred for the death of the victim. The expenses incurred in connection with the death, wake and burial of Lucrecio cannot be sustained without any tangible document to support such claim. •

ISSUE: WON the heirs of Lucrecio are entitled to moral damages HELD: Yes, moral damages were correctly awarded to the heirs of the victim without need of proof other than the fact that a crime was committed resulting in the death of the victim and that the accused was responsible therefor. The award of P50,000.00 as moral damages conforms to existing jurisprudence.

ISSUE: WON the heirs of Lucrecio are entitled to temperate damages HELD: Yes, in lieu of actual damages, the heirs of the victim can still be awarded temperate damages. When pecuniary loss has been suffered but the amount cannot, from the nature of the case, be proven with certainty, temperate damages may be recovered.

CHING v. BANTOLO G.R. No. 177086 | 5 December 2012 Actual and Compensatory Damages; Exemplary or Corrective Damages DOCTRINE: It is essential that for damages to be awarded, a claimant must satisfactorily prove during the trial that they have a factual basis, and that the defendant’s acts have a causal connection to them.

90

Civil Law


FACTS: Respondents executed in favor of petitioners a Special Power of Attorney a uthorizing petitioners to obtain a loan using respondents’ properties as collateral. Without notice to petitioners, respondents executed a Revocation of Power of Attorney. The Philippine Veterans Bank approved the loan application of petitioner in the amount of 25 million. Petitioner learned about the revocation of the SPA and demanded the respondents to comply with the agreement by annulling the revocation of the SPA. Petitioners filed before the RTC a complaint for annulment of Revocation of SPA and Damages against respondents.

•

• •

•

•

ISSUE: Whether or not Petitioner Ching is entitled to actual damages HELD: Yes, considering that the loan application with PVB did not push through. In exchange for his possession of the titles, petitioner Ching advanced the amount of P500,000.00 to respondents. Considering that the loan application with PVB did not push through, respondents should return the said amount.

ISSUE: Whether or not exemplary damages should be awarded to the petitioners HELD: 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, petitioners are not entitled to exemplary damages. •

PEOPLE v. BUSTAMANTE G.R. No. 172357 | 19 March 2010 Moral Damages; Exemplary or Corrective Damages DOCTRINE: Exemplary damages may be awarded in criminal cases when the crime was committed with one or more aggravating circumstances.

FACTS: •

•

•

•

Romeleo and his friend, Ancirelli went to NAIA to fetch Rolando, brother of Romeleo, who was arriving from the United States. At the arrival extension area, Ancirelli alighted from the car to check if Rolando had already arrived but upon his return, he was surprised to see Romeleo arguing with a man in uniform later identified as Soriano who arrested Romeleo for expired license. Romeleo denied the charge causing a heated altercation, he then challenged Soriano to a gun duel. Reinforcement came and asked Romeleo to hand over his license but he refused to do so. Thereupon, he was brought to the Intelligence and Investigation Division of the NAIA (IID-NAIA) for questioning. He was brought to a hospital for examination where he was found positive for alcoholic breath, and later on brought back to IID-NAIA. He was then shoved into a cell. Rolando and the others went to IID-NAIA but there saw a lifeless body of Romeleo hanging with a cord around his neck. They brought the victim to a hospital but was declared dead on arrival. The trial court and the CA awarded the heirs of the victim only to the amount of P50K as civil indemnity.

91

Civil Law


ISSUE: Whether or not heirs should be given a higher amount as damages HELD: Yes, they should be given the amount of P50K as moral damages and P25K as exemplary damages based on Art. 2230 of the Civil Code, which states that, exemplary damages may be awarded in criminal cases when the crime was committed with one or more aggravating circumstances -- in this case, abuse of superior strength.

CASTRO v. PALENZUELA G.R. No. 184698 | 21 January 2013 Moral Damages; Exemplary or Corrective Damages DOCTRINE: A demand letter presented in evidence by a lessee to prove a lesser liability for unpaid rentals than that awarded by the trial court constitutes an admission of liability to the extent of such lesser amount.

FACTS: 72 hectares of fishpond were leased out by the respondents to the petitioners-Spouses Castro; the lease was to be for five years. The lease expired but petitioners did not vacate and continued to occupy and operate the fishponds for an additional 41 days. Respondents sent a letter declaring petitioners as trespassers and a settlement of an outstanding obligation in the amount of P 378,451.00 Subsequently, respondents filed a complaint for sum of money against the petitioners and prayed to be awarded moral and exemplary damages.

•

•

•

•

ISSUE: Whether or not moral and exemplary damages should be awarded. HELD: Yes. 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. Bad faith "means breach of a known duty through some motive or interest or ill will." By refusing to honor their solemn obligations under the lease, and instead unduly profiting from these violations, petitioners are guilty of bad faith. •

PEOPLE v. YANSON G.R. No. 179195 | 3 October 2011 Actual Damages; Moral Damages; Damages in Case of Death DOCTRINE: When death occurs due to a crime, the following damages may be awarded: (1) civil indemnity ex delicto for the death of the victim; (2) actual or compensatory damages; (3) moral damages; 94) exemplary damages; and (5) temperate damages.

FACTS: • •

•

An Information was filed charging Yanson with the crime of murder It was alleged that Galfo and the victim, Magan, were drinking whisky in a store when they were joined by Yanson. After their drinking session, Galfo and Magan walked home together. On their way home, Galfo noticed two persons following them, one of whom suddenly stabbed Magan at the back. This was positively identified as Yanson.

92

3 Civil Law Justice Del Castillo Digests

Recommend Documents