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ATTY.

RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings
SC RULINGS ON CIVIL LAW

March 2014 Philippine Supreme


Court Decisions on Civil Law
Posted on April 2, 2014 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

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

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Lexoterica: Compilation of SC Rulings

Action for quieting of title. In an action for quieting of title, the complainant
is seeking for an adjudication that a claim of title or interest in property
adverse to the claimant is invalid, to free him from the danger of hostile
claim, and to remove a cloud upon or quiet title to land where stale or
unenforceable claims or demands exist. Heirs of Pacifico Pocido, et al. v.
Arsenia Avila and Emelinda Chua, G.R. No. 199146, March 19, 2014.

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

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Lexoterica: Compilation of SC Rulings

thing owned in common insofar as his share is concerned. Raul V. Arambulo


and Teresita Dela Cruz v. Genaro Nolasco and Jeremy Spencer Nolasco,
G.R. No. 189420, March 26, 2014.
Co-ownership; Article 498 of the Civil Code; when this may be resorted to.
Article 498 of the Civil Code states that whenever the thing is essentially
indivisible and the co-owners cannot agree that it be allotted to one of them
who shall indemnify the others, it shall be sold and its proceeds accordingly
distributed. This is resorted to (a) when the right to partition the property is
invoked
by
any
of
the
co-owners
but
because of the nature of the property, it cannot be subdivided or its
subdivision would prejudice the interests of the co-owners, and (b) the coowners are not in agreement as to who among them shall be allotted or
assigned the entire property upon proper reimbursement of the co-owners.
Raul V. Arambulo and Teresita Dela Cruz v. Genaro Nolasco and Jeremy
Spencer Nolasco, G.R. No. 189420, March 26, 2014.
Damages; actual or compensatory damages. Article 2199 of the Civil Code
states that [e]xcept as provided by law or by stipulation, one is entitled to
an adequate compensation only for such pecuniary loss suffered by him a he
has duly proved. Such compensation is referred to as actual or compensatory
damages. Actual damages are compensation for an injury that will put the
injured party in the position where it was before the injury. They pertain to
such injuries or losses that are actually sustained and susceptible of
measurement. Except as provided by law or by stipulation, a party is entitled
to adequate compensation only for such pecuniary loss as is duly proven.
Basic is the rule that to recover actual damages, not only must the amount of
loss be capable of proof; it must also be actually proven with a reasonable
degree of certainty, premised upon competent proof or the best evidence
obtainable. International Container Terminal Services, Inc. v. Celeste M.
Chua, G.R. No. 195031, March 26, 2014.
Damages; Attorneys fees; when allowed. Article 2208 of the Civil Code
does not prohibit recovery of attorneys fees if there is a stipulation in the
contract for payment of the same. Thus, in Asian Construction and
Development Corporation v. Cathay Pacific SteelCorporation (CAPASCO),
the Court, citing Titan ConstructionCorporation v. Uni-Field Enterprises,
Inc., noted that the law allows a party to recover attorneys fees under a
written agreement. In Barons Marketing Corporation v. Court of Appeals,

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Lexoterica: Compilation of SC Rulings

the Court ruled that attorneys fees are in the nature of liquidated damages
and the stipulation therefor is aptly called a penal clause. It has been said
that so long as such stipulation does not contravene law, morals, or public
order, it is strictly binding upon defendant. The attorneys fees so provided
areawarded in favor of the litigant, not his counsel.On the other hand, the
law also allows parties to a contract tostipulate on liquidated damages to be
paid in case of breach. A stipulationon liquidated damages is a penalty
clause where the obligor assumes agreater liability in case of breach of an
obligation. The obligor is bound topay the stipulated amount without need
for proof on the existence and onthe measure of damages caused by the
breach. However, even if such attorneys fees are allowed by law, the courts
still have the power to reduce the same if it is unreasonable. Mariano Lim v.
Security Bank Corporation,G.R. No. 188539, March 12, 2014.
Damages; Attorneys fees; when proper. An award of attorneys fees has
always been the exception rather than the rule and there must be some
compelling legal reason to bring the case within the exception and justify the
award. In this case, none of the exceptions applies. Attorneys fees are not
awarded every time a party prevails in a suit. The policy of the Court is that
no premium should be placed on the right to litigate. Even when a
claimant is compelled to litigate with third persons or to incur expenses to
protect his rights, still, attorneys fees may not be awarded where no
sufficient showing of bad faith could be reflected in a partys persistence in a
case other than an erroneous conviction of the righteousness of his cause.
International Container Terminal Services, Inc. v. Celeste M. Chua, G.R.
No. 195031, March 26, 2014.
Damages; moral damages. Certainly, an award of moral damages must be
anchored on a clear showing that the party claiming the same
actually
experienced
mental
anguish, besmirched reputation, sleepless nights, wounded feelings, or
similar injury. In the case herein under consideration, the records are bereft
of any proof that respondent in fact suffered moral damages as contemplated
in the afore-quoted provision of the Civil Code. The ruling of the trial court
provides simply that: [Petitioners] outright denial and unjust refusal to
heed [respondents] claim for payment of the value of her lost/damaged
shipment caus[ed] the latter to suffer serious anxiety, mental anguish and
wounded feelings warranting the award of moral damages x x x. The
testimony of respondent, on the other hand, merely states that when she

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Lexoterica: Compilation of SC Rulings

failed to recover damages from petitioner, she was saddened, had sleepless
nights and anxiety without providing specific details of the suffering she
allegedly went through. Since an award of moral damages is predicated on
a categorical showing by the claimant that she actually experienced
emotional and mental sufferings, it must be disallowed absent any evidence
thereon. International Container Terminal Services, Inc. v. Celeste M.
Chua, G.R. No. 195031, March 26, 2014.
Damages; Nominal damages; when awarded; Network Bank did not violate
any of Barics rights.Nominal damages are recoverable where a legal right is
technically violated and must be vindicated against an invasion that has
produced no actual present loss of any kind or where there has been a breach
of contract and no substantial injury or actual damages whatsoever have
been or can be shown.
Under Article 2221 of the Civil Code, nominal damages may be awarded to
a plaintiff whose right has been violated or invaded by the defendant, for the
purpose of vindicating or recognizing that right, not for indemnifying the
plaintiff for any loss suffered. Nominal damages are not for indemnification
of loss suffered but for the vindication or recognition of a right violated or
invaded.
Network Bank did not violate any of Barics rights; it was merely a
purchaser or transferee of the property. Surely, it is not prohibited from
acquiring the property even while the forcible entry case was pending,
because as the registered owner of the subject property, Palado may transfer
his title at any time and the lease merely follows the property as a lien or
encumbrance. Any invasion or violation of Barics rights as lessee was
committed solely by Palado, and Network Bank may not be implicated or
found guilty unless it actually took part in the commission of illegal acts,
which does not appear to be so from the evidence on record. On the
contrary, it appears that Barie was ousted through Palados acts even before
Network Bank acquired the subject property or came into the picture. Thus,
it was error to hold the bank liable for nominal damages. One Network Rural
Bank, Inc. v. Danilo G. Baric,G.R. No. 193684, March 5, 2014.
Damages; Temperate damages. In the absence of competent proof on the
amount of actual damages suffered, a party is entitled to receive temperate

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Lexoterica: Compilation of SC Rulings

damages. Article 2224 of the New Civil Code provides that: Temperate or
moderate
damages,
which
are more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been suffered
but its amount cannot, from the nature of the case, be proved with certainty.
The amount thereof is usually left to the sound discretion of the courts but
the same should be reasonable, bearing in mind that temperate damages
should be more than nominal but less than compensatory. International
Container Terminal Services, Inc. v. Celeste M. Chua, G.R. No. 195031,
March 26, 2014.
Fraud; concept of; Article 1338 of the Civil Code. According to Article 1338
of the Civil Code, there is fraud when one of the contracting parties, through
insidious words or machinations, induces the other to enter into the contract
that, without the inducement, he would not have agreed to. Yet, fraud, to
vitiate consent, must be the causal (dolo causante), not merely the incidental
(dolo incidente), inducement to the making of the contract. In Samson v.
Court of Appeals (G.R. No. 108245, November 25, 1994, 238 SCRA 397),
causal fraud is defined as a deception employed by one party prior to or
simultaneous to the contract in order to secure the consent of the other.
Fraud cannot be presumed but must be proved by clear and convincing
evidence. Whoever alleges fraud affecting a transaction must substantiate his
allegation, because a person is always presumed to take ordinary care of his
concerns, and private transactions are similarly presumed to have been fair
and regular. To be remembered is that mere allegation is definitely not
evidence; hence, it must be proved by sufficient evidence. Metropolitan
Fabrics, Inc., et al. v. Prosperity Credit Resources, Inc. et al., G.R. No.
154390, March 17, 2014.
Fraud; Article 1390, in relation to Article 1391 of the Civil Code; consent
obtained through fraud; action for annulment; prescriptive period. Article
1390, in relation to Article 1391 of the Civil Code, provides that if the
consent of the contracting parties was obtained through fraud, the contract is
considered voidable and may be annulled within four years from the time of
the discovery of the fraud. Metropolitan Fabrics, Inc., et al. v. Prosperity
Credit Resources, Inc. et al., G.R. No. 154390, March 17, 2014.

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Lexoterica: Compilation of SC Rulings

Mortgage; a higher degree of prudence must be exercised by the mortgagee


in cases where he does not directly deal with the registered owner of real
property. In Bank of Commerce v. Spouses San Pablo, Jr. (550 Phil. 805,
821 (2007)), the court declared that a mortgagee has a right to rely in good
faith on the certificate of title of the mortgagor of the property offered as
security, and in the absence of any sign that might arouse suspicion, the
mortgagee has no obligation to undertake further investigation.
However, in Bank of Commerce v. Spouses San Pablo, Jr. (550 Phil. 805,
821 (2007)), the court also ruled that [i]n cases where the mortgagee does
not directly deal with the registered owner of real property, the law requires
that a higher degree of prudence be exercised by the mortgagee.
Specifically, the court cited Abad v. Sps. Guimba (503 Phil. 321, 331-332
(2005)), where it held,
x x x While one who buys from the registered owner does not need to look
behind the certificate of title, one who buys from one who is not the
registered owner is expected to examine not only the certificate of title but
all factual circumstances necessary for [one] to determine if there are any
flaws in the title of the transferor, or in [the] capacity to transfer the land.
Although the instant case does not involve a sale but only a mortgage, the
same rule applies inasmuch as the law itself includes a mortgagee in the term
purchaser.
Thus, where the mortgagor is not the registered owner of the property but is
merely an attorney-in-fact of the same, it is incumbent upon the mortgagee
to exercise greater care and a higher degree of prudence in dealing with such
mortgagor. Macaria Arguelles and the Heirs of the Deceased Petronio
Arguelles v. Malarayat Rural Bank, Inc., G.R. No. 200468, March 19, 2014.
Mortgage; banks are enjoined to exert a higher degree of diligence, care, and
prudence than individuals in handling real estate transactions; it cannot rely
merely on the certificate of title. In Ursal v. Court of Appeals (509 Phil. 628,
642 (2005)), the court held that where the mortgagee is a bank, it cannot rely
merely on the certificate of title offered by the mortgagor in ascertaining the
status of mortgaged properties. Since its business is impressed with public
interest, the mortgagee-bank is duty-bound to be more cautious even in

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Lexoterica: Compilation of SC Rulings

dealing with registered lands. Indeed, the rule that person dealing with
registered lands can rely solely on the certificate of title does not apply to
banks. Thus, before approving a loan application, it is a standard operating
practice for these institutions to conduct an ocular inspection of the property
offered for mortgage and to verify the genuineness of the title to determine
the real owners thereof. The apparent purpose of an ocular inspection is to
protect the true owner of the property as well as innocent third parties with
a right, interest or claim thereon from a usurper who may have acquired a
fraudulent certificate of title thereto. Macaria Arguelles and the Heirs of the
Deceased Petronio Arguelles v. Malarayat Rural Bank, Inc., G.R. No.
200468, March 19, 2014.
1. Negligence, the Court said in Layugan v. Intermediate Appellate Court
(G.R. No. L-73998, November 14, 1988), is the omission to do
something which a reasonable man, guided by those considerations
which ordinarily regulate the conduct of human affairs, would do, or
the doing of something which a prudent and reasonable man would
not do, or as Judge Cooley defines it, (t)he failure to observe for the
protection of the interests of another person, that degree of care,
precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury. In order that a party may
be held liable for damages for any injury brought about by the
negligence of another, the claimant must prove that the negligence
was the immediate and proximate cause of the injury. BJDC
Construction, represented by its Manager/Proprieto Janet S. Dela
Cruz v. Nena E. Lanuzo, et al., G.R. No. 161151, March 24, 2014.
Negligence; Medical negligence; four elements the plaintiff must prove by
competent evidence. An action upon medical negligence whether criminal,
civil or administrative calls for the plaintiff to prove by competent
evidence each of the following four elements, namely: (a) the duty owed by
the physician to the patient, as created by the physician-patient relationship,
to act in accordance with the specific norms or standards established by his
profession; (b) the breach of the duty by the physicians failing to act in
accordance with the applicable standard of care; (3) the causation, i.e., there
must be a reasonably close and causal connection between the negligent act
or omission and the resulting injury; and (4) the damages suffered by
thepatient. Dr. Fernando P. Solidum v. People of the Philippines,G.R. No.
192123, March 10, 2014.

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Lexoterica: Compilation of SC Rulings

Negligence; Medical Negligence; standard of care of the medical profession;


standard of care observed by other members of the profession in good
standing under similar circumstances. Negligence is defined as the failure to
observe for the protection of the interests of another person that degree of
care, precaution, and vigilance that the circumstances justly demand,
whereby such other person suffers injury. Reckless imprudence, on the other
hand, consists of voluntarily doing or failing to do, without malice, an act
from which material damage results by reason of an inexcusable lack of
precaution on the part of the person performing or failing to perform such
act.
The Court aptly explained in Cruz v. Court of Appeals that: Whether or not a
physician has committed an inexcusable lack of precaution in the
treatment of his patient is to be determined according to the standard of care
observed by other members of the profession in good standing under similar
circumstances bearing in mind the advanced state of the profession at the
time of treatment or the present state of medical science. In the recent case
of Leonila Garcia-Rueda v. Wilfred L. Pacasio,et. al., this Court stated that
in accepting a case, a doctor in effect represents that, having the needed
training and skill possessed by physicians and surgeons practicing in the
same field, he will employ such training, care and skill in the treatment of
his patients. He therefore has a duty to use at least the same level of care that
any other reasonably competent doctor would use to treat a condition under
the same circumstances. It is in this aspect of medical malpractice that expert
testimony is essential to establish not only the standard of care of the
profession but also that the physicians conduct in the treatment and care
falls below such standard. Further, inasmuch as the causes of the injuries
involved in malpractice actions are determinable only in the light of
scientific knowledge, it has been recognized that expert testimony is usually
necessary to support the conclusion as to causation. Dr. Fernando P.
Solidum v. People of the Philippines,G.R. No. 192123, March 10, 2014.
Negligence; Medical negligence; standard of care; an objective standard by
which the conduct of a physician sued for negligence or malpractice may be
measured.In the medical profession, specific norms or standards to protect
the patient against unreasonable risk, commonly referred to as standards of
care, set the duty of the physician to act in respect of the patient.
Unfortunately, no clear definition of the duty of a particular physician in a
particular case exists. Because most medical malpractice cases are highly

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Lexoterica: Compilation of SC Rulings

technical, witnesses with special medical qualifications must provide


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

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Lexoterica: Compilation of SC Rulings

foresee harm as a result of the course actually pursued? If so, it was the
duty of the actor to take precautions to guard against that harm.
Reasonable foresight of harm, followed by the ignoring of the suggestion
born of this prevision, is always necessary before negligence can be held to
exist. Stated in these terms, the proper criterion for determining the existence
of negligence in a given case is this: Conduct is said to be negligent when a
prudent man in the position of the tortfeasor would have foreseen that an
effect harmful to another was sufficiently probable to warrant his foregoing
the conduct or guarding against its consequences. BJDC Construction,
represented by its Manager/Proprieto Janet S. Dela Cruz v. Nena E.
Lanuzo, et al.,G.R. No. 161151, March 24, 2014.
Property; Recovery of possession of real property; three kinds of actions
available. In Sps. Bonifacio R. Valdez, Jr. et al. vs. Hon. Court of Appeals, et
al. (523 Phil. 39 (2006)), the Court is instructive anent the three kinds of
actions available to recover possession of real property, viz: (a) accion
interdictal; (b) accion publiciana; and (c) accion reivindicatoria.
Accion interdictal comprises two distinct causes of action, namely, forcible
entry (detentacion) and unlawful detainer (desahuico) [sic]. In forcible entry,
one is deprived of physical possession of real property by means of force,
intimidation, strategy, threats, or stealth whereas in unlawful detainer, one
illegally withholds possession after the expiration or termination of his right
to hold possession under any contract, express or implied. The two are
distinguished from each other in that in forcible entry, the possession of the
defendant is illegal from the beginning, and that the issue is which party has
prior de facto possession while in unlawful detainer, possession of the
defendant is originally legal but became illegal due to the expiration or
termination of the right to possess.
The jurisdiction of these two actions, which are summary in nature, lies in
the proper municipal trial court or metropolitan trial court. Both actions must
be brought within one year from the date of actual entry on the land, in case
of forcible entry, and from the date of last demand, in case of unlawful
detainer. The issue in said cases is the right to physical possession.
Accion publiciana is the plenary action to recover the right of possession
which should be brought in the proper regional trial court when

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Lexoterica: Compilation of SC Rulings

dispossession has lasted for more than one year. It is an ordinary civil
proceeding to determine the better right of possession of realty
independently of title. In other words, if at the time of the filing of the
complaint more than one year had elapsed since defendant had turned
plaintiff out of possession or defendants possession had become illegal, the
action will be, not one of the forcible entry or illegal detainer, but an accion
publiciana. On the other hand, accion reivindicatoria is an action to recover
ownership also brought in the proper regional trial court in an ordinary civil
proceeding. Carmencita Suarez v. Mr. and Mrs. Felix E. Emboy, Jr. and
Marilou P. Emboy-Delantar, G.R. No. 187944, March 12, 2014.
Res ipsa loquitor; a mode of proof or a mere procedural convenience.In
Jarcia, Jr. v. People, the court has underscored that the doctrine is not a rule
of substantive law, but merely a mode of proof or a mere procedural
convenience. The doctrine, when applicable to the facts and circumstances
of a given case, is not meant to and does not dispense with the requirement
of proof of culpable negligence against the party charged. It merely
determines and regulates what shall be prima facie evidence thereof, and
helps the plaintiff in proving a breach of the duty. The doctrine can be
invoked when and only when, under the circumstances involved, direct
evidence is absent and not readily available. Dr. Fernando P. Solidum v.
People of the Philippines,G.R. No. 192123, March 10, 2014.
Res ipsa loquitor; applicability in medical negligence cases. The
applicability of the doctrine of res ipsa loquitur in medical negligence cases
was significantly and exhaustively explained in Ramos v. Court of Appeals,
where the Court saidMedical malpractice cases do not escape the
application of this doctrine. Thus, res ipsa loquitur has been applied when
the circumstances attendant upon the harm are themselves of such a
character as to justify an inference of negligence as the cause of that harm.
The application of resipsa loquitur in medical negligence cases presents a
question of law since it is a judicial function to determine whether a certain
set of circumstances does, as a matter of law, permit a given inference.
Although generally, expert medical testimony is relied upon in malpractice
suits to prove that a physician has done a negligent act or that he has
deviated from the standard medical procedure, when the doctrine of res ipsa
loquitur is availed by the plaintiff, the need for expert medical testimony is
dispensed with because the injury itself provides the proof of negligence.
The reason is that the general rule on the necessity of expert testimony

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Lexoterica: Compilation of SC Rulings

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

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Lexoterica: Compilation of SC Rulings

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

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For the doctrine to apply, the following requirements must be shown to


exist, namely: (a) the accident is of a kind that ordinarily does not occur
in the absence of someones negligence; (b) it is caused by an
instrumentality within the exclusive control of the defendant or defendants;
and (c) the possibility of contributing conduct that would make the plaintiff
responsible is eliminated. BJDC Construction, represented by its
Manager/Proprieto Janet S. Dela Cruz v. Nena E. Lanuzo, et al., G.R. No.
161151, March 24, 2014.
Res ipsa loquitor; doctrine does not automatically apply to all cases of
medical negligence as to mechanically shift the burden of proof to the
defendant.Despite the fact that the scope of res ipsa loquitur has been
measurably enlarged, it does not automatically apply to all cases of medical
negligence as to mechanically shift the burden of proof to the defendant to
show that he is not guilty of the ascribed negligence. Res ipsa loquitur is not
a rigid or ordinary doctrine to be perfunctorily used but a rule to be
cautiously applied, depending upon the circumstances of each case. It is
generally restricted to situations in malpractice cases where a layman is able
to say, as a matter of common knowledge and observation, that the
consequences of professional care were not as such as would ordinarily have
followed if due care had been exercised. A distinction must be made
between the failure to secure results, and the occurrence of something more
unusual and not ordinarily found if the service or treatment rendered
followed the usual procedure of those skilled in that particular practice. It
must be conceded that the doctrine of res ipsa loquitur can have no
application in a suit against a physician or surgeon which involves the merits
of a diagnosis or of a scientific treatment. The physician or surgeon is not
required at his peril to explain why any particular diagnosis was not correct,
or why any particular scientific treatment did not produce the desired result.
Thus, res ipsa loquitur is not available in a malpractice suit if the only
showing is that the desired result of an operation or treatment was not
accomplished. The real question, therefore, is whether or not in the process
of the operation any extraordinary incident or unusual event outside of the
routine performance occurred which is beyond the regular scope of
customary professional activity in such operations, which, if unexplained
would themselves reasonably speak to the average man as the negligent
cause or causes of the untoward consequence. If there was such extraneous
intervention, the doctrine of res ipsa loquitur may be utilized and the
defendant is calledupon to explain the matter, by evidence of exculpation, if

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he could. Dr. Fernando P. Solidum v. People of the Philippines,G.R. No.


192123, March 10, 2014.
Res ipsa loquitor; essential requisites.In order to allow resort to the doctrine,
therefore, the following essential requisites must first be satisfied, to wit: (1)
the accident was of a kind that does not ordinarily occur unless someone is
negligent; (2) the instrumentality or agency that caused the injury was under
the exclusive control of the person charged; and (3) the injury suffered must
not have been due to any voluntary action or contribution of the person
injured. Dr. Fernando P. Solidum v. People of the Philippines,G.R. No.
192123, March 10, 2014.
Res ipsa loquitur; when may be invoked. The doctrine can be
invoked when and only when, under the circumstances involved, direct
evidence is absent and not readily available. Here, there was no evidence as
to how or why the fire in the container yard of petitioner started; hence, it
was up to petitioner to satisfactorily prove that it exercised the diligence
required to prevent the fire from happening. International Container
Terminal Services, Inc. v. Celeste M. Chua, G.R. No. 195031, March 26,
2014.
Suretyship; Continuing suretyship; nature of; example of.A Continuing
Suretyship, which the Court described in Saludo, Jr. v. Security Bank
Corporation as follows:
The essence of a continuing surety has been highlighted in the case of
Totanes v. China Banking Corporation in this wise: Comprehensive or
continuing surety agreements are, in fact, quite commonplace in present day
financial and commercial practice. A bank or financing companywhich
anticipates entering into a series of credit transactions with a particular
company, normallyrequires the projected principal debtor to execute
acontinuing surety agreement along with its sureties. Byexecuting such an
agreement, the principal places itselfin a position to enter into the projected
series oftransactions with its creditor; with such suretyshipagreement, there
would be no need to execute a separatesurety contract or bond for each
financing or creditaccommodation extended to the principal debtor.
The terms of the Continuing Suretyship executed by petitioner are very

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clear. It states that petitioner, as surety, shall, without need for any notice,
demand or any other act or deed, immediately become liable and shall pay
all credit accommodations extended by the Bank to the Debtor, including
increases, renewals, roll-overs, extensions, restructurings, amendments or
novations thereof, as well as (i) all obligations of theDebtor presently or
hereafter owing to the Bank, as appears in the accounts, books and
records of the Bank, whether direct or indirect, and (ii) any and all
expenses which the Bank may incur in enforcing any of its rights, powers
and remedies under the Credit Instruments as defined hereinbelow.
Mariano Lim v. Security Bank Corporation,G.R. No. 188539, March 12,
2014.
Suretyship. A contract of suretyship is an agreement whereby a party, called
the surety, guarantees the performance by another party, called the principal
or obligor, of an obligation or undertaking in favor of another party, called
the obligee. Although the contract of a surety is secondary only to a valid
principal obligation, the surety becomes liable for the debt or duty of another
although it possesses no direct or personal interest over the obligations nor
does it receive any benefit therefrom. This was explained in the case of
Stronghold Insurance Company, Inc. v. Republic-Asahi Glass Corporation,
where it was written: The suretys obligation is not an original and direct one
for the performance of his own act, but merely accessory or collateral to the
obligation contracted by the principal. Nevertheless, although the contract
of a suretyis in essence secondary only to a valid principalobligation, his
liability to the creditor or promisee of theprincipal is said to be direct,
primary and absolute; inother words, he is directly and equally bound
with theprincipal.
Thus, suretyship arises upon the solidary binding of a person deemed the
surety with the principal debtor for the purpose of fulfilling an obligation. A
surety is considered in law as being the same party asthe debtor in
relation to whatever is adjudged touching the obligationof the latter,
and their liabilities are interwoven as to be inseparable. Mariano Lim v.
Security Bank Corporation,G.R. No. 188539, March 12, 2014.
SPECIAL LAWS
Comprehensive Agrarian Reform Law (CARL); Section 65 of R.A. 6657;

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DAR
is
empowered
to
authorize, under certain conditions, the reclassification or conversion of
agricultural lands. Under Section 65 of R.A. No. 6657, the DAR is
empowered to authorize, under certain conditions, the reclassification or
conversion of agricultural lands. Pursuant to this authority and in the
exercise of its rulemaking power under Section 49 of R.A. No. 6657, the
DAR issued Administrative Order No. 12, series of 1994 (DAR A.O. 12-94)
(the then prevailing administrative order), providing the rules and procedure
governing agricultural land conversion. Item VII of DAR A.O. 12-94
enumerates the documentary requirements for approval of an application for
land conversion.35 Notably, Item VI-E provides that no application for
conversion shall be given due course if: (1) the DAR has issued a Notice of
Acquisition under the compulsory acquisition process; (2) a Voluntary Offer
to Sell covering the subject property has been received by the DAR; or (3)
there is already a perfected agreement between the landowner and the
beneficiaries under Voluntary Land Transfer. Heirs of Teresita Montoya, et
al. v. National Housing Authority, et al., G.R. No. 181055, March 19, 2014.
Comprehensive Agrarian Reform Law (CARL); Section 6 of R.A. 6657;
retention limits. Section 6 of R.A. No. 6657 specifically governs retention
limits. Under its last paragraph, any sale, disposition, lease, management,
contract or transfer of possession of private lands executed by the original
landowner in violation of [R.A. No. 6657] is considered null and void. A
plain reading of the last paragraph appears to imply that the CARL
absolutely prohibits sales or dispositions of private agricultural lands. The
interpretation or construction of this prohibitory clause, however, should be
made within the context of Section 6, following the basic rule in statutory
construction that every part of the statute be interpreted with reference to
the context, i.e., that every part of the statute must be considered together
with the other parts, and kept subservient to the general intent of the whole
enactment. Notably, nothing in this paragraph, when read with the entire
section, discloses any legislative intention to absolutely prohibit the sale or
other transfer agreements of private agricultural lands after the effectivity of
the Act.
In other words, therefore, the sale, disposition, etc. of private lands that
Section 6 of R.A. No. 6657 contextually prohibits and considers as null and
void are those which the original owner executes in violation of this
provision, i.e., sales or dispositions executed with the intention of

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circumventing the retention limits set by R.A. No. 6657. Consistent with this
interpretation, the proscription in Section 6 on sales or dispositions of
private agricultural lands does not apply to those that do not violate or were
not intended to circumvent the CARLs retention limits. Heirs of Teresita
Montoya, et al. v. National Housing Authority, et al., G.R. No. 181055,
March 19, 2014.
Emancipation of Tenants; P.D. 27; CLT; legal effects of issuance; tenantfarmer does not acquire full ownership of the covered landholding simply by
the issuance of a CLT. A CLT is a document that the government issues to a
tenant-farmer of an agricultural land primarily devoted to rice and corn
production placed under the coverage of the governments OLT program
pursuant to P.D. No. 27. It serves as the tenant-farmers (grantee of the
certificate) proof of inchoate right over the land covered thereby.
A CLT does not automatically grant a tenant-farmer absolute ownership of
the covered landholding. Under PD No. 27, land transfer is effected in two
stages: (1) issuance of the CLT to the tenant-farmer in recognition that said
person is a deemed owner; and (2) issuance of an Emancipation Patent
(EP) as proof of full ownership upon the tenant-farmers full payment of the
annual amortizations or lease rentals.
As a preliminary step, therefore, the issuance of a CLT merely evinces that
the grantee thereof is qualified to avail of the statutory mechanism for the
acquisition of ownership of the land tilled by him, as provided under P.D.
No. 27. The CLT is not a muniment of title that vests in the tenant-farmer
absolute ownership of his tillage. It is only after compliance with the
conditions which entitle the tenant-farmer to an EP that the tenant-farmer
acquires the vested right of absolute ownership in the landholding. Stated
otherwise, the tenant-farmer does not acquire full ownership of the covered
landholding simply by the issuance of a CLT. The tenant-farmer must first
comply with the prescribed conditions and procedures for acquiring full
ownership but until then, the title remains with the landowner. Heirs of
Teresita Montoya, et al. v. National Housing Authority, et al., G.R. No.
181055, March 19, 2014.
Land registration; Classification of land; evidence of a positive act from the
government reclassifying the lot as alienable and disposable agricultural land

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of the public domain. Accordingly, jurisprudence has required that an


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

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disposed of, among others, by judicial confirmation of imperfect or


incomplete title. This mode of acquisition of title is governed by Section
48(b) of the PLA, the original version of which states:
Sec. 48. The following-described citizens of the Philippines, occupying
lands of the public domain or claiming to own any such lands or an interest
therein, but whose titles have not been perfected or completed, may apply to
the Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title therefor,
under the Land Registration Act, to wit:
xxxx
(b) Those who by themselves or through their predecessors-in-interest have
been in open, continuous, exclusive, and notorious possession and
occupation of agricultural lands of the public domain, under a bona fide
claim of acquisition or ownership, except as against the Government, since
July twenty-sixth, eighteen hundred and ninety-four, except when
prevented by war or force majeure. These shall be conclusively presumed to
have performed all the conditions essential to a government grant and shall
be entitled to a certificate of title under the provisions of this chapter.
[emphasis supplied]
On June 22, 1957, the cut-off date of July 26, 1894 was replaced by a 30year period of possession under RA No. 1942. Section 48(b) of the PLA, as
amended by RA No. 1942, read:
(b) Those who by themselves or through their predecessors in interest have
been in open, continuous, exclusive and notorious possession and occupation
of agricultural lands of the public domain, under a bona fide claim of
acquisition of ownership, for at least thirty years immediately preceding
the filing of the application for confirmation of title, except when prevented
by war or force majeure.
On January 25, 1977, PD No. 1073 replaced the 30-year period of
possession by requiring possession since June 12, 1945. Section 4 of PD No.
1073 reads:

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SEC. 4. The provisions of Section 48(b) and Section 48(c), Chapter VIII of
the Public Land Act are hereby amended in the sense that these provisions
shall apply only to alienable and disposable lands of the public domain
which have been in open, continuous, exclusive and notorious possession
and occupation by the applicant himself or thru his predecessor-in-interest,
under a bona fide claim of acquisition of ownership, since June 12, 1945.
Under the P.D. No. 1073 amendment, possession of at least 32 years from
1945 up to its enactment in 1977 is required. This effectively impairs the
vested rights of applicants who had complied with the 30-year possession
required under the RA No. 1942 amendment, but whose possession
commenced only after the cut-off date of June 12, 1945 was established by
the PD No. 1073 amendment. To remedy this, the Court ruled in Abejaron v.
Nabasa that Filipino citizens who by themselves or their predecessors-ininterest have been, prior to the effectivity of P.D. 1073on January 25, 1977,
in open, continuous, exclusive and notorious possession and occupation of
agricultural lands of the public domain, under a bona fide claim of
acquisition of ownership, for at least 30 years, or atleast since January 24,
1947 may apply for judicial confirmation of their imperfect or incomplete
title under Sec. 48(b) of the [PLA]. January 24,1947 was considered as
the cut off date as this was exactly 30 yearscounted backward from
January 25, 1977 the effectivity date of PDNo. 1073.
It appears, however, that January 25, 1977 was the date PD No. 1073 was
enacted; based on the certification from the National PrintingOffice, PD No.
1073 was published in Vol. 73, No. 19 of the Official Gazette, months later
than its enactment or on May 9, 1977. Thisuncontroverted fact materially
affects the cut-off date for applications forjudicial confirmation of
incomplete title under Section 48(b) of the PLA.Although Section 6 of PD
No. 1073 states that [the] Decree shalltake effect upon its promulgation,
the Court has declared in Taada, et al.v. Hon. Tuvera, etc., et al. that the
publication of laws is an indispensablerequirement for its effectivity. [A]ll
statutes, including those of localapplication and private laws, shall be
published as a condition for theireffectivity, which shall begin fifteen days
after publication unless a differenteffectivity date is fixed by the legislature.
Accordingly, Section 6 of PDNo. 1073 should be understood to mean that
the decree took effect onlyupon its publication, or on May 9, 1977. This,
therefore, moves the cut-off date for applications for judicial
confirmation of imperfect or incomplete title under Section 48(b) of the

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PLA to May 8, 1947. In otherwords, applicants must prove that they have
been in open, continuous,exclusive and notorious possession and
occupation of agricultural lands ofthe public domain, under a bona fide
claim of acquisition of ownership,for at least 30 years, or at least since
May 8, 1947. Sps. Antonio Fortuna and Erlinda Fortuna v. Republic of the
Philippines,G.R. No. 173423, March 5, 2014.
Land registration; Possession; as a requirement for the application for
registration of title.--Notably, Section 48(b) of the PLA speaks of possession
and occupation. Since these words are separated by the conjunction and,
the clear intention of the law is not to make one synonymous with the other.
Possession is broader than occupation because it includes constructive
possession. When, therefore, the law adds the word occupation, it seeks to
delimit the all-encompassing effect of constructive possession. Taken
together with the words open, continuous, exclusive and notorious, the word
occupation serves to highlight the fact that for an applicant to qualify, his
possession must not be a mere fiction. Nothing in Tax Declaration No.
8366 shows that Pastora exercised acts of possession and occupation such as
cultivation of or fencing off the land. Indeed, the lot was described as
cogonal. Sps. Antonio Fortuna and Erlinda Fortuna v. Republic of the
Philippines,G.R. No. 173423, March 5, 2014.
Public Land Act; Sec 48(b), as amended by P.D. 1073; requirements for
judicial confirmation of title. The requirements for judicial confirmation of
imperfect title are found in Section 48(b) of the Public Land Act, as
amended by Presidential Decree No. 1073, as follows:
Sec. 48. The following described citizens of the Philippines, occupying
lands of the public domain or claiming to own any such lands or an interest
therein, but whose titles have not been perfected or completed, may apply to
the Court of First Instance of the province where the land is located for
confirmation of their claims and the issuance of a certificate of title therefor,
under the Land Registration Act, to wit:
xxxx
(b) Those who by themselves or through their predecessors in interest have
been in the open, continuous, exclusive, and notorious possession and

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occupation of alienable and disposable lands of the public domain, under a


bona fide claim of acquisition or ownership, since June 12, 1945, or earlier,
immediately preceding the filing of the application for confirmation of title
except when prevented by war or force majeure. These shall be conclusively
presumed to have performed all the conditions essential to a Government
grant and shall be entitled to a certificate of title under the provisions of this
chapter.
Republic of the Philippines represented by Aklan National Colleges of
Fisheries (ANCF) and Dr. Elenita R. Adrade, in her capacity as ANCF
Superintendent v. Heirs of Maxima Lachica Sin, namely: Salvacion L. Sin,
Rosario S. Enriquez, Francisco L. Sin, Maria S. Yuchintat, Manuel L. Sin,
Jaime Cardinal Sin, Ramon L. Sin, and Ceferina S. Vita,G.R. No. 157485,
March 26, 2014.
Regalian Doctrine; all lands of the public domain belong to the State and
that lands not appearing to be clearly within private ownership are presumed
to belong to the State. As this Court held in the fairly recent case of Valiao
v. Republic (G.R. No. 170757, November 28, 2011,): Under the Regalian
doctrine, which is embodied in our Constitution, all lands of the public
domain belong to the State, which is the source of any asserted right to any
ownership of land. All lands not appearing to be clearly within private
ownership are presumed to belong to the State. Accordingly, public lands
not shown to have been reclassified or released as alienable agricultural land
or alienated to a private person by the State remain part of the inalienable
public domain. Unless public land is shown to have been reclassified as
alienable or disposable to a private person by the State, it remains part of the
inalienable public domain. Property of the public domain is beyond the
commerce of man and not susceptible of private appropriation and
acquisitive prescription. Occupation thereof in the concept of owner no
matter how long cannot ripen into ownership and be registered as a title. The
burden of proof in overcoming the presumption of State ownership of the
lands of the public domain is on the person applying for registration (or
claiming ownership), who must prove that the land subject of the application
is alienable or disposable. To overcome this presumption, incontrovertible
evidence must be established that the land subject of the application (or
claim) is alienable or disposable. Republic of the Philippines represented
by Aklan National Colleges of Fisheries (ANCF) and Dr. Elenita R. Adrade,
in her capacity as ANCF Superintendent v. Heirs of Maxima Lachica Sin,

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Lexoterica: Compilation of SC Rulings

namely: Salvacion L. Sin, Rosario S. Enriquez, Francisco L. Sin, Maria S.


Yuchintat, Manuel L. Sin, Jaime Cardinal Sin, Ramon L. Sin, and Ceferina
S. Vita, G.R. No. 157485, March 26, 2014.
Public Land Act; two requisites for judicial confirmation of title. The two
requisites for judicial confirmation of imperfect or incomplete title under CA
No. 141, namely: (1) open, continuous, exclusive, and notorious possession
and occupation of the subject land by himself or through his predecessors-ininterest under a bona fide claim of ownership since time immemorial or
from June 12, 1945; and (2) the classification of the land as alienable and
disposable land of the public domain. Republic of the Philippines
represented by Aklan National Colleges of Fisheries (ANCF) and Dr.
Elenita R. Adrade, in her capacity as ANCF Superintendent v. Heirs of
Maxima Lachica Sin, namely: Salvacion L. Sin, Rosario S. Enriquez,
Francisco L. Sin, Maria S. Yuchintat, Manuel L. Sin, Jaime Cardinal Sin,
Ramon L. Sin, and Ceferina S. Vita, G.R. No. 157485, March 26, 2014.
Regalian Doctrine; failure of Republic to show competent evidence that the
subject land was declared a timberland before its formal classification as
such in 1960 does not lead to the presumption that said land was alienable
and disposable prior to said date. Accordingly, in the case at bar, the failure
of petitioner Republic to show competent evidence that the subject land was
declared
a
timberland
before its formal classification as such in 1960 does not lead to the
presumption that said land was alienable and disposable prior to said
date. On the contrary, the presumption is that unclassified lands are
inalienable public lands. It is therefore the respondents which have the
burden to identify a positive act of the government, such as an official
proclamation, declassifying inalienable public land into disposable land for
agricultural or other purposes. Since respondents failed to do so, the alleged
possession by them and by their predecessors-in-interest is inconsequential
and could never ripen into ownership. Republic of the Philippines
represented by Aklan National Colleges of Fisheries (ANCF) and Dr.
Elenita R. Adrade, in her capacity as ANCF Superintendent v. Heirs of
Maxima Lachica Sin, namely: Salvacion L. Sin, Rosario S. Enriquez,
Francisco L. Sin, Maria S. Yuchintat, Manuel L. Sin, Jaime Cardinal Sin,
Ramon L. Sin, and Ceferina S. Vita, G.R. No. 157485, March 26, 2014.

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February 2014 Philippine Supreme


Court Decisions on Civil Law
Posted on March 3, 2014 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

Here are select February 2014 rulings of the Supreme Court of the
Philippines on civil law:
Contract law; principle of relativity. The basic principle of relativity of
contracts is that contracts can only bind the parties who entered into it, and
cannot favor or prejudice a third person, even if he is aware of such contract
and has acted with knowledge thereof Where there is no privity of contract,
there is likewise no obligation or liability to speak about. Philippine
National Bank v. Teresita Tan Dee, et al., G.R. No. 182128, February 19,
2014.
Contract of sale; obligations of the parties; there is nothing in the decision of
the HLURB, as affirmed by the OP and the CA, which shows that the
petitioner is being ordered to assume the obligation of any of the
respondents.In a contract of sale, the parties obligations are plain and
simple. The law obliges the vendor to transfer the ownership of and to
deliver the thing that is the object of sale. On the other hand, the principal
obligation of a vendee is to pay the full purchase price at the agreed time.
Philippine National Bank v. Teresita Tan Dee, et al., G.R. No. 182128,
February 19, 2014.
Contract to sell; ownership; right to mortgage the property by the owner.
Note that at the time PEPI mortgaged the property to the petitioner, the
prevailing contract between respondents PEPI and Dee was still the Contract
to Sell, as Dee was yet to fully pay the purchase price of the property. On
this point, PEPI was acting fully well within its right when it mortgaged the
property to the petitioner, for in a contract to sell, ownership is retained by
the seller and is not to pass until full payment of the purchase price. In other
words, at the time of the mortgage, PEPI was still the owner of the property.
Thus, in China Banking Corporation v. Spouses Lozada the Court affirmed
the right of the owner/developer to mortgage the property subject of
development, to wit: [P.D.] No. 957 cannot totally prevent the owner or

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developer from mortgaging the subdivision lot or condominium unit when


the title thereto still resides in the owner or developer awaiting the full
payment of the purchase price by the installment buyer. Philippine National
Bank v. Teresita Tan Dee, et al., G.R. No. 182128, February 19, 2014.

Dacion en pago; concept of.Dacion en pago or dation in payment is the


delivery and transmission of ownership of a thing by the debtor to the
creditor as an accepted equivalent of the performance of the obligation. It is
a mode of extinguishing an existing obligation and partakes the nature of
sale as the creditor is really buying the thing or property of the debtor, the
payment for which is to be charged against the debtors debt. Dation in
payment extinguishes the obligation to the extent of the value of the thing
delivered, either as agreed upon by the parties or as may be proved, unless
the parties by agreement express or implied, or by their silence consider
the thing as equivalent to the obligation, in which case the obligation is
totally extinguished.Philippine National Bank v. Teresita Tan Dee, et al.,
G.R. No. 182128, February 19, 2014.
Co-ownership; when present.Art. 484. There is co-ownership whenever the
ownership of an undivided thing or right belongs to different persons. Art.
1078. When there are two or more heirs, the whole estate of the decedent is,
before its partition, owned in common by such heirs, subject to the payment
of debts of the deceased. Teodoro S. Teodoro, et al. v. Danilo Espino, et al.,
G.R. No. 189248, February 5, 2014.
Co-ownership; right of possession.Certainly, and as found by the trial courts,
the whole of Lot No. 2476 including the portion now litigated is, owing to
the fact that it has remained registered in the name of Genaro who is the
common ancestor of both parties herein, co-owned property. All, or both
Teodoro Teodoro and respondents are entitled to exercise the right of
possession as co-owners. Neither party can exclude the other from
possession. Although the property remains unpartitioned, the respondents in
fact possess specific areas. Teodoro Teodoro can likewise point to a specific
area, which is that which was possessed by Petra. Teodoro Teodoro cannot
be dispossessed of such area, not only by virtue of Petras bequeathal in his
favor but also because of his own right of possession that comes from his co-

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ownership of the property. Teodoro S. Teodoro, et al. v. Danilo Espino, et


al., G.R. No. 189248, February 5, 2014.
Alienable and disposable land; to prove that the land subject of an
application for registration is alienable, an applicant must establish the
existence of a positive act of the government; annotation in the survey plan
is not sufficient. However, Cortez reliance on the foregoing annotation in
the survey plan is amiss; it does not constitute incontrovertible evidence to
overcome the presumption that the subject property remains part of the
inalienable public domain. In Republic of the Philippines v. Tri-Plus
Corporation, the Court clarified that, the applicant must at the very least
submit a certification from the proper government agency stating that the
parcel of land subject of the application for registration is indeed alienable
and disposable, viz: It must be stressed that incontrovertible evidence must
be presented to establish that the land subject of the application is alienable
or disposable. In the present case, the only evidence to prove the character of
the subject lands as required by law is the notation appearing in the Advance
Plan stating in effect that the said properties are alienable and disposable.
However, this is hardly the kind of proof required by law. To prove that the
land subject of an application for registration is alienable, anapplicant must
establish the existence of a positive act of the government such as a
presidential proclamation or an executive order, an administrative action,
investigation reports of Bureau of Lands investigators, and a legislative act
or statute. The applicant may also secure a certification from the
Government that the lands applied for are alienable and disposable. Republic
of the Philippines v. Emmanuel C. Cortez, G.R. No. 186639. February 5,
2014.
Patrimonial property; susceptible to acquisitive prescription; start of the
running of the prescriptive period.The Civil Code makes it clear that
patrimonial property of the State may be acquired by private persons through
prescription. This is brought about by Article 1113, which states that [a]ll
things which are within the commerce of man are susceptible to
prescription, and that [p]roperty of the State or any of its subdivisions not
patrimonial in character shall not be the object of prescription.Nonetheless,
Article 422 of the Civil Code states that [p]roperty of public dominion,
when no longer intended for public use or for public service, shall form part
of the patrimonial property of the State. It is this provision that controls
how public dominion property may be converted into patrimonial property

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susceptible to acquisition by prescription. After all, Article 420(2) makes


clear that those property which belong to the State, without being for public
use, and are intended for some public service or for the development of the
national wealth are public dominion property. For as long as the property
belongs to the State, although already classified as alienable or disposable, it
remains property of the public dominion if when it is intended for some
public service or for the development of the national wealth. Accordingly,
there must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial.
Without such express declaration, the property, even if classified as
alienable or disposable, remains property of the public dominion, pursuant to
Article 420(2), and thus incapable of acquisition by prescription. It is only
when such alienable and disposable lands are expressly declared by the State
to be no longer intended for public service or for the development of the
national wealth that the period of acquisitive prescription can begin to run.
Such declaration shall be in the form of a law duly enacted by Congress or a
Presidential Proclamation in cases where the President is duly authorized by
law. Republic of the Philippines v. Emmanuel C. Cortez,G.R. No. 186639.
February 5, 2014.
Sale; warranties of sellers.Indeed, this Court is convinced from an
examination of the evidence and by the concurring opinions of the courts
below that Bignay purchased the property without knowledge of the
pending Civil Case No. Q-52702. Union Bank is therefore answerable for
its express undertaking under the December 20, 1989 deed of sale to defend
its title to the Parcel/s of Land with improvement thereon against the claims
of any person whatsoever. By this warranty, Union Bank represented to
Bignay that it had title to the property, and by assuming the obligation to
defend such title, it promised to do so at least in good faith and with
sufficient prudence, if not to the best of its abilities. Bignay EX-IM
Philippines, Inc. v. Union Bank of the Philippines / Union Bank of the
Philippines v. Bignay EX-IM Philippines, Inc., G.R. No. 171590 & G.R. No.
171598, February 12, 2014.
Breach of contract; gross negligence.The record reveals, however, that
Union Bank was grossly negligent in the handling and prosecution of Civil
Case No. Q-52702. Its appeal of the December 12, 1991 Decision in said
case was dismissed by the CA for failure to file the required appellants

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brief. Next, the ensuing Petition for Review on Certiorari filed with this
Court was likewise denied due to late filing and payment of legal fees.
Finally, the bank sought the annulment of the December 12, 1991 judgment,
yet again, the CA dismissed the petition for its failure to comply with
Supreme Court Circular No. 28-91. As a result, the December 12, 1991
Decision became final and executory, and Bignay was evicted from the
property. Such negligence in the handling of the case is far from
coincidental; it is decidedly glaring, and amounts to bad faith. [N]egligence
may be occasionally so gross as to amount tomalice [or bad faith]. Indeed,
in culpa contractual or breach of contract, gross negligence of a party
amounting to bad faith is a ground for the recovery of Damages by the
injured party.Bignay EX-IM Philippines, Inc. v. Union Bank of the
Philippines / Union Bank of the Philippines v. Bignay EX-IM Philippines,
Inc., G.R. No. 171590 & G.R. No. 171598, February 12, 2014.
Unenforceable contract; entering into a contract without or beyond authority;
sale of property despite objection of laymens committee.The Court finds it
erroneous for the CA to ignore the fact that the laymens committee objected
to the sale of the lot in question. The Canons require that ALL the church
entities listed in Article IV (a) thereof should give its approval to the
transaction. Thus, when the Supreme Bishop executed the contract of sale of
petitioners lot despite the opposition made by the laymens committee, he
acted beyond his powers. This case clearly falls under the category of
unenforceable contracts mentioned in Article 1403, paragraph (1) of the
Civil Code, which provides, thus: Art. 1403. The following contracts are
unenforceable, unless they are ratified: (1) Those entered into in the name of
another person by one who has been given no authority or legal
representation, or who has acted beyond his powers; In Mercado v. Allied
Banking Corporation, the Court explained that: x x x Unenforceable
contracts are those which cannot be enforced by a proper action in court,
unless they are ratified, because either they are entered into without or in
excess of authority or they do not comply with the statute of frauds or both
of the contracting parties do not possess the required legal capacity. x x x.
Iglesia Felipina Independiente v. Heirs of Bernardino Taeza,G.R. No.
179597, February 3, 2014.
Unenforceable contract; analogous cases. Closely analogous cases of
unenforceable contracts are those where a person signs a deed of
extrajudicial partition in behalf of co-heirs without the latters authority;

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where a mother as judicial guardian of her minor children, executes a deed


of extrajudicial partition wherein she favors one child by giving him more
than his share of the estate to the prejudice of her other children; and where a
person, holding a special power of attorney, sells a property of his principal
that is not included in said special power of attorney. Iglesia Felipina
Independiente v. Heirs of Bernardino Taeza,G.R. No. 179597, February 3,
2014.
Article 1456, Civil Code; implied trust; acquiring property through mistake.
In the present case, however, respondents predecessor-in-interest,
Bernardino Taeza, had already obtained a transfer certificate of title in his
name over the property in question. Since the person supposedly
transferring ownership was not authorized to do so, the property had
evidently been acquired by mistake. In Vda. de Esconde v. Court
ofAppeals, the Court affirmed the trial courts ruling that the applicable
provision of law in such cases is Article 1456 of the Civil Code which states
that [i]f property is acquired through mistake or fraud, the person obtaining
it is, by force of law, considered a trustee of an implied trust for the benefit
of the person from whom the property comes. Iglesia Felipina
Independiente v. Heirs of Bernardino Taeza,G.R. No. 179597, February 3,
2014.
Constructive trust; concept of. A deeper analysis of Article 1456 reveals that
it is not a trust in the technical sense for in a typical trust, confidence is
reposed in one person who is named a trustee for the benefit of another who
is called the cestui que trust, respecting property which is held by the trustee
for the benefit of the cestui que trust. A constructive trust, unlike an express
trust, does not emanate from, or generate a fiduciary relation. While in an
express trust, a beneficiary and a trustee are linked by confidential or
fiduciary relations, in a constructive trust, there is neither a promise nor any
fiduciary relation to speak of and the so-called trustee neither accepts any
trust nor intends holding the property for the beneficiary. Iglesia Felipina
Independiente v. Heirs of Bernardino Taeza,G.R. No. 179597, February 3,
2014.
Constructive trust; prescriptive period.A constructive trust having been
constituted by law between respondents as trustees and petitioner as
beneficiary of the subject property, may respondents acquire ownership over
the said property? The Court held in the same case of Aznar, that unlike in

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

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Development Corporation of the Philippines (Formerly Philippine Export


and Foreign Loan Guarantee Corporation) v. Asia Paces Corporation, et
al., G.R. No. 187403. February 12, 2014.
Surety; distinguished from guarantor. Comparing a suretys obligations with
that of a guarantor, the Court, in the case of Palmares v. CA, illumined that a
surety is responsible for the debts payment at once if the principal debtor
makes default, whereas a guarantor pays only if the principal debtor is
unable to pay, viz. : A surety is an insurer of the debt, whereas a guarantor is
an insurer of the solvency of the debtor. A suretyship is an undertaking that
the debt shall be paid; a guaranty, an undertaking that the debtor shall pay.
Stated differently, a surety promises to pay the principals debt if the
principal will not pay, while a guarantor agrees that the creditor, after
proceeding against the principal, may proceed against the guarantor if the
principal is unable to pay. A surety binds himself to perform if the principal
does not, without regard to his ability to do so. A guarantor, on the other
hand, does not contract that the principal will pay, but simply that he is able
to do so. In other words, a surety undertakes directly for the payment and is
so responsible at once if the principal debtor makes default, while a
guarantor contracts to pay if, by the use of due diligence, the debt cannot be
made out of the principal debtor. Trade and Investment Development
Corporation of the Philippines (Formerly Philippine Export and Foreign
Loan Guarantee Corporation) v. Asia Paces Corporation, et al., G.R. No.
187403. February 12, 2014.
Surety; extension given to debtor without consent of guarantor; effect of.
Despite these distinctions, the Court in Cochingyan, Jr. v. R&B Surety &
Insurance Co., Inc., and later in the case of Security Bank, held that Article
2079 of the Civil Code, which pertinently provides that [a]n extension
granted to the debtor by the creditor without the consent of the guarantor
extinguishes the guaranty, equally applies to bothcontracts of guaranty and
suretyship. The rationale therefor was explained by the Court as follows:
The theory behind Article 2079 is that an extension of time given to the
principal debtor by the creditor without the suretys consent would deprive
the surety of his right to pay the creditor and to be immediately subrogated
to the creditors remedies against the principal debtor upon the maturity
date. The surety is said to be entitled to protect himself against the
contingency of the principal debtor or the indemnitors becoming insolvent
during the extended period. Trade and Investment Development Corporation

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of the Philippines (Formerly Philippine Export and Foreign Loan Guarantee


Corporation) v. Asia Paces Corporation, et al., G.R. No. 187403. February
12, 2014.
Surety; extension given to debtor without consent of guarantor; the payment
extensions granted by Banque Indosuez and PCI Capital to TIDCORP under
the Restructuring Agreement did not have the effect of extinguishing the
bonding companies obligations to TIDCORP under the Surety Bonds,
notwithstanding the fact that said extensions were made without their
consent. This is because Article 2079 of the Civil Code refers to a payment
extension granted by the creditor to the principal debtor without the consent
of the guarantor or surety. In this case, the Surety Bonds are suretyship
contracts which secure the debt of ASPAC, the principal debtor, under the
Deeds of Undertaking to pay TIDCORP, the creditor, the damages and
liabilities it may incur under the Letters of Guarantee, within the bounds of
the bonds respective coverage periods and amounts. No payment extension
was, however, granted by TIDCORP in favor of ASPAC in this regard;
hence, Article 2079 of the Civil Code should not be applied with respect to
the bonding companies liabilities to TIDCORP under the Surety Bonds.
The payment extensions granted by Banque Indosuez and PCI Capital
pertain to TIDCORPs own debt under the Letters of Guarantee wherein it
(TIDCORP) irrevocably and unconditionally guaranteed full payment of
ASPACs loan obligations to the banks in the event of its (ASPAC) default.
In other words, the Letters of Guarantee secured ASPACs loan agreements
to the banks. Under this arrangement, TIDCORP therefore acted as a
guarantor, with ASPAC as the principal debtor, and the banks as creditors.
Trade and Investment Development Corporation of the Philippines
(Formerly Philippine Export and Foreign Loan Guarantee Corporation) v.
Asia Paces Corporation, et al., G.R. No. 187403. February 12, 2014.
Deed of mortgage; effect when the authorized agent failed to indicate in the
mortgage that she was acting for and on behalf of her principal. Similarly, in
this case, the authorized agent failed to indicate in the mortgage that she was
acting for and on behalf of her principal. The Real Estate Mortgage,
explicitly shows on its face, that it was signed by Concepcion in her own
name and in her own personal capacity. In fact, there is nothing in the
document to show that she was acting or signing as an agent of petitioner.
Thus, consistent with the law on agency and established jurisprudence,

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petitioner cannot be bound by the acts of Concepcion. Nicanora G. v. Rural


Bank of El Salvador, Inc. et al., G.R. No. 179625. February 24, 2014.
Bank; negligence of. At this point, we find it significant to mention that
respondent bank has no one to blame but itself. Not only did it act with
undue haste when it granted and released the loan in less than three days, it
also acted negligently in preparing the Real Estate Mortgage as it failed to
indicate that Concepcion was signing it for and on behalf of petitioner. We
need not belabor that the words as attorney-in-fact of, as agent of, or
for and on behalf of, are vital in order for the principal to be bound by the
acts of his agent. Without these words, any mortgage, although signed by the
agent, cannot bind the principal as it is considered to have been signed by
the agent in his personal capacity. Nicanora G. v. Rural Bank of El Salvador,
Inc. et al., G.R. No. 179625. February 24, 2014.
Agent; liability when deed of mortgage is signed in personal capacity.
Concepcion, on the other hand, is liable to pay respondent bank her unpaid
obligation under the Promissory Note dated June 11, 1982, with interest. As
we have said, Concepcion signed the Promissory Note in her own personal
capacity; thus, she cannot escape liability. She is also liable to reimburse
respondent bank for all damages, attorneys fees, and costs the latter is
adjudged to pay petitioner in this case. Nicanora G. v. Rural Bank of El
Salvador, Inc. et al., G.R. No. 179625. February 24, 2014.
Article 1308 of the Civil Code; principle of mutuality of contracts. The
credit agreement executed succinctly stipulated that the loan would be
subjected to interest at a rate determined by the Bank to be its prime rate
plus applicable spread, prevailing at the current month. This stipulation was
carried over to or adopted by the subsequent renewals of the credit
agreement. PNB thereby arrogated unto itself the sole prerogative to
determine and increase the interest rates imposed on the Spouses Manalo.
Such a unilateral determination of the interest rates contravened the principle
of mutuality of contracts embodied in Article 1308 of the Civil
Code.Philippine National Bank v. Sps. Enrique Manalo & Rosalinda
Jacinto, et al., G.R. No. 174433, February 24, 2014.
Contracts; a contract where there is no mutuality between the parties
partakes of the nature of a contract of adhesion. The Court has declared that

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a contract where there is no mutuality between the parties partakes of the


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

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interest to be computed from the finality of the judgment until the full refund
has been made.Philippine National Bank v. Sps. Enrique Manalo &
Rosalinda Jacinto, et al., G.R. No. 174433, February 24, 2014.
Interest; Monetary Board Circular No. 799 reduced the interest rates from
12% per annum to 6% per annum. Anent the correct rates of interest to be
applied on the amount to be refunded by PNB, the Court, in Nacar v. Gallery
Frames and S.C. Megaworld Construction v. Parada, already applied
Monetary Board Circular No. 799 by reducing the interest rates allowed in
judgments from 12% per annum to 6% per annum. Philippine National Bank
v. Sps. Enrique Manalo & Rosalinda Jacinto, et al., G.R. No. 174433,
February 24, 2014.
Interest; prospective application of Monetary Board Circular No. 799.
According to Nacar v. Gallery Frames, MB Circular No. 799 is applied
prospectively, and judgments that became final and executory prior to its
effectivity on July 1, 2013 are not to be disturbed but continue to be
implemented applying the old legal rate of 12% per annum. Hence, the old
legal rate of 12% per annum applied to judgments becoming final and
executory prior to July 1, 2013, but the new rate of 6% per annum applies to
judgments becoming final and executory after said date. Philippine National
Bank v. Sps. Enrique Manalo & Rosalinda Jacinto, et al., G.R. No. 174433,
February 24, 2014.
Mortgagee in good faith; doctrine of. In Bank of Commerce v. San Pablo,
Jr., the doctrine of mortgagee in good faith was explained:There is, however,
a situation where, despite the fact that the mortgagor is not the owner of the
mortgaged property, his title being fraudulent, the mortgage contract and any
foreclosure sale arising there from are given effect by reason of public
policy. This is the doctrine of the mortgagee in good faith based on the
rule that all persons dealing with property covered by the Torrens
Certificates of Title, as buyers or mortgagees, are not required to go beyond
what appears on the face of the title. The public interest in upholding
indefeasibility of a certificate of title, as evidence of lawful ownership of the
land or of any encumbrance thereon, protects a buyer or mortgagee who, in
good faith, relied upon what appears on the face of the certificate of title.
Homeowners Savings and Loan Bank v. Asuncion P. Felonia and Lydia C.
De Guzman, rep. by Maribel Frias, et al., G.R. No. 189477. February 26,
2014.

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Mortgagee in good faith; HSLB, as a mortgagee, had a right to rely in good


faith on Delgados title, and in the absence of any sign that might arouse
suspicion, HSLB had no obligation to undertake further investigation.When
the property was mortgaged to HSLB, the registered owner of the subject
property was Delgado who had in her name TCT No. 44848. Thus, HSLB
cannot be faulted in relying on the face of Delgados title. The records
indicate that Delgado was at the time of the mortgage in possession of the
subject property and Delgados title did not contain any annotation that
would arouse HSLBs suspicion. HSLB, as a mortgagee, had a right to rely
in good faith on Delgados title, and in the absence of any sign that might
arouse suspicion, HSLB had no obligation to undertake further investigation.
As held by this Court in Cebu International Finance Corp. v. CA: The
prevailing jurisprudence is that a mortgagee has a right to rely in good faith
on the certificate of title of the mortgagor of the property given as security
and in the absence of any sign that might arouse suspicion, has no obligation
to undertake further investigation. Hence, even if the mortgagor is not the
rightful owner of, or does not have a valid title to, the mortgaged property,
the mortgagee or transferee in good faith is nonetheless entitled to
protection. Homeowners Savings and Loan Bank v. Asuncion P. Felonia and
Lydia C. De Guzman, rep. by Maribel Frias, et al., G.R. No. 189477.
February 26, 2014.
Purchaser in good faith; doctrine of; duty of a prospective buyer. purchaser
in good faith is defined as one who buys a property without notice that some
other person has a right to, or interest in, the property and pays full and fair
price at the time of purchase or before he has notice of the claim or interest
of other persons in the property.When a prospective buyer is faced with facts
and circumstances as to arouse his suspicion, he must take precautionary
steps to qualify as a purchaser in good faith. In Spouses Mathay v. CA, we
determined the duty of a prospective buyer: Although it is a recognized
principle that a person dealing on a registered land need not go beyond its
certificate of title, it is also a firmly settled rule that where there are
circumstances which would put a party on guard and prompt him to
investigate or inspect the property being sold to him, such as the presence of
occupants/tenants thereon, it is of course, expected from the purchaser of a
valued piece of land to inquire first into the status or nature of possession of
the occupants, i.e., whether or not the occupants possess the land en
concepto de dueo, in the concept of the owner. As is the common practice
in the real estate industry, an ocular inspection of the premises involved is a

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safeguard a cautious a nd prudent purchaser usually takes. Should he find


out that the land he intends to buy is occupied by anybody else other than the
seller who, as in this case, is not in actual possession, it would then be
incumbent upon the purchaser to verify the extent of the occupants
possessory rights. The failure of a prospective buyer to take such
precautionary steps would mean negligence on his part and would thereby
preclude him from claiming or invoking the rights of a purchaser in good
faith. Homeowners Savings and Loan Bank v. Asuncion P. Felonia and
Lydia C. De Guzman, rep. by Maribel Frias, et al., G.R. No. 189477.
February 26, 2014.
Notice of lis pendens; definition of; purpose of. Lis pendens is a Latin term
which literally means, a pending suit or a pending litigation while a notice
of lis pendens is an announcement to the whole world that a real property is
in litigation, serving as a warning that anyone who acquires an interest over
the property does so at his/her own risk, or that he/she gambles on the result
of the litigation over the property. It is a warning to prospective buyers to
take precautions and investigate the pending litigation.
The purpose of a notice of lis pendens is to protect the rights of the registrant
while the case is pending resolution or decision. With the notice of lis
pendens duly recorded and remaining uncancelled, the registrant could rest
secure that he/she will not lose the property or any part thereof during
litigation. Homeowners Savings and Loan Bank v. Asuncion P. Felonia and
Lydia C. De Guzman, rep. by Maribel Frias, et al., G.R. No. 189477.
February 26, 2014.
Notice of lis pendens; effect of actual knowledge of the annotated Notice of
Lis Pendens. Indeed, at the time HSLB bought the subject property, HSLB
had actual knowledge of the annotated Notice of Lis Pendens. Instead of
heeding the same, HSLB continued with the purchase knowing the legal
repercussions a notice of lis pendens entails. HSLB took upon itself the risk
that the Notice of Lis Pendens leads to. As correctly found by the CA, the
notice of lis pendens was annotated on 14 September 1995, whereas the
foreclosure sale, where the appellant was declared as the highest bidder, took
place sometime in 1997. There is no doubt that at the time appellant
purchased the subject property, it was aware of the pending litigation
concerning the same property and thus, the title issued in its favor was
subject to the outcome of said litigation. Homeowners Savings and Loan

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Bank v. Asuncion P. Felonia and Lydia C. De Guzman, rep. by Maribel


Frias, et al., G.R. No. 189477. February 26, 2014.
Mortgage; mortgagor must be absolute owner of the thing mortgaged. That
the mortgagor be the absolute owner of the thing mortgaged is an essential
requisite of a contract of mortgage. Article 2085 (2) of the Civil Code
specifically says so: Art. 2085. The following requisites are essential to the
contracts of pledge and mortgage: x x x x (2) That the pledgor or mortagagor
be the absolute owner of the thing pledged or mortgaged. Succinctly, for a
valid mortgage to exist, ownership of the property is an essential requisite.
Reyes v. De Leon cited the case of Philippine National Bank v. Rocha where
it was pronounced that a mortgage of real property executed by one who is
not an owner thereof at the time of the execution of the mortgage is without
legal existence. Such that, according to DBP v. Prudential Bank, there
being no valid mortgage, there could also be no valid foreclosure or valid
auction sale. Homeowners Savings and Loan Bank v. Asuncion P. Felonia
and Lydia C. De Guzman, rep. by Maribel Frias, et al., G.R. No. 189477.
February 26, 2014.
SPECIAL LAWS
P.D. No. 957; subdivision lots; a bank dealing with a property that is
already subject of a contract to sell and is protected by the provisions of P.D.
No. 957, is bound by the contract to sell.Thus, in Luzon Development Bank
v. Enriquez, the Court reiterated the rule that a bank dealing with a property
that is already subject of a contract to sell and is protected by the provisions
of P.D. No. 957, is bound by the contract to sell. However, the transferee
BANK is bound by the Contract to Sell and has to respect Enriquezs rights
thereunder. This is because the Contract to Sell, involving a subdivision lot,
is covered and protected by PD 957. x x x. x x x x x x x Under these
circumstances, the BANK knew or should have known of the possibility and
risk that the assigned properties were already covered by existing contracts
to sell in favor of subdivision lot buyers. As observed by the Court in
another case involving a bank regarding a subdivision lot that was already
subject of a contract to sell with a third party:[The Bank] should have
considered that it was dealing with a property subject of a real estate
development project. A reasonable person, particularly a financial institution
x x x, should have been aware that, to finance the project, funds other than
those obtained from the loan could have been used to serve the purpose,

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albeit partially. Hence, there was a need to verify whether any part of the
property was already intended to be the subject of any other contract
involving buyers or potential buyers. In granting the loan, [the Bank] should
not have been content merely with a clean title, considering the presence of
circumstances indicating the need for a thorough investigation of the
existence of buyers x x x. Wanting in care and prudence, the [Bank] cannot
be deemed to be an innocent mortgagee. x x x Philippine National Bank v.
Teresita Tan Dee, et al., G.R. No. 182128, February 19, 2014.
Section 14 of P.D. No. 1529; original registration of title to land; who may
apply. Applicants for original registration of title to land must establish
compliance with the provisions of Section 14 of P.D. No. 1529, which
pertinently provides that: Sec.14. Who may apply. The following persons
may file in the proper Court of First Instance an application for registration
of title to land, whether personally or through their duly authorized
representatives:(1) Those who by themselves or through their predecessorsin interest have been in open, continuous, exclusive and notorious
possession and occupation of alienable and disposable lands of the public
domain under a bona fide claim of ownership since June 12, 1945, or earlier.
(2) Those who have acquired ownership of private lands by prescription
under the provision of existing laws.Republic of the Philippines v.
Emmanuel C. Cortez, G.R. No. 186639. February 5, 2014.
Section 14 of P.D. No. 1529; original registration of title to land;
requisites.Section 14(1) of P.D. No. 1529 refers to the judicial confirmation
of imperfect or incomplete titles to public land acquired under Section
48(b)of C.A. No.141, as amended by P.D. No. 1073. Under Section 14(1)
[of P.D. No. 1529], applicants for registration of title must sufficiently
establish first, that the subject land forms part of the disposable and alienable
lands of the public domain; second, that the applicant and his predecessorsin-interest have been in open, continuous, exclusive, and notorious
possession and occupation of the same; and third, that it is under a bona fide
claim of ownership since June 12, 1945, or earlier. Republic of the
Philippines v. Emmanuel C. Cortez, G.R. No. 186639. February 5, 2014.
Psychological incapacity; concept of; characterizations. Psychological
incapacity, as a ground to nullify a marriage under Article 36 of the Family
Code, should refer to no less than a mental not merely physical
incapacity that causes a party to be truly incognitive of the basic marital

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Lexoterica: Compilation of SC Rulings

covenants that concomitantly must be assumed and discharged by the parties


to the marriage which, as so expressed in Article 68 of the Family Code,
among others, include their mutual obligations to live together, observe love,
respect and fidelity and render help and support.There is hardly any doubt
that the intendment of the law has been to confine the meaning of
psychological incapacity to the most serious cases of personality disorders
clearly demonstrative of an utter insensitivity or inability to give meaning
and significance to the marriage. Republic of the Philippines v. Rodolfo O.
De Gracia, G.R. No. 171557. February 12, 2014.
Psychological incapacity; emotional immaturity, irresponsibility, or even
sexual
promiscuity,
cannot
be
equated
with
psychological
incapacity.Keeping with these principles, the Court, in Dedel v. CA, held
that therein respondents emotional immaturity and irresponsibility could not
be equated with psychological incapacity as it was not shown that these acts
are manifestations of a disordered personality which make her completely
unable to discharge the essential marital obligations of the marital state, not
merely due to her youth, immaturity or sexual promiscuity. Republic of the
Philippines v. Rodolfo O. De Gracia, G.R. No. 171557. February 12, 2014.
Psychological incapacity; although expert opinions furnished by
psychologists regarding the psychological temperament of parties are
usually given considerable weight by the courts, the existence of
psychological incapacity must still be proven by independent evidence.
Verily, although expert opinions furnished by psychologists regarding the
psychological temperament of parties are usually given considerable weight
by the courts, the existence of psychological incapacity must still be proven
by independent evidence. Republic of the Philippines v. Rodolfo O. De
Gracia, G.R. No. 171557. February 12, 2014.
Psychological incapacity; refusal to live with Rodolfo and to assume her
duties as wife and mother as well as her emotional immaturity,
irresponsibility and infidelity do not rise to the level of psychological
incapacity that would justify the nullification of the parties marriage. To the
Courts mind, Natividads refusal to live with Rodolfo and to assume her
duties as wife and mother as well as her emotional immaturity,
irresponsibility and infidelity do not rise to the level of psychological
incapacity that would justify the nullification of the parties marriage.
Indeed, to be declared clinically or medically incurable is one thing; to

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Lexoterica: Compilation of SC Rulings

refuse or be reluctant to perform ones duties is another. To hark back to


what has been earlier discussed, psychological incapacity refers only to the
most serious cases of personality disorders clearly demonstrative of an utter
insensitivity or inability to give meaning and significance to the marriage.
Republic of the Philippines v. Rodolfo O. De Gracia, G.R. No. 171557.
February 12, 2014.
Section 14 (1), Presidential Decree No. 1529; judicial confirmation of
imperfect or incomplete titles to public land; requisites. Section 14(1) of
P.D. No. 1529 refers to the judicial confirmation of imperfect or incomplete
titles to public land acquired under Section 48(b) of Commonwealth Act
(C.A.) No. 141, or the Public Land Act, as amended by P.D. No. 1073.
Under Section 14(1) of P.D. No. 1529, applicants for registration of title
must sufficiently establish: first, that the subject land forms part of the
disposable and alienable lands of the public domain; second, that the
applicant and his predecessors-in-interest have been in open, continuous,
exclusive, and notorious possession and occupation of the same; and third,
that it is under a bona fide claim of ownership since June 12, 1945, or
earlier. Republic of the Philippines v. Remman Enterprises, Inc. represented
by Ronnie P. Inocencio, G.R. No. 199310. February 19, 2014.
Proof that land is alienable and disposable; certifications insufficient.
However, the said certifications presented by the respondent are insufficient
to prove that the subject properties are alienable and disposable. In Republic
of the Philippines v. T.A.N. Properties, Inc., the Court clarified that, in
addition to the certification issued by the proper government agency that a
parcel of land is alienable and disposable, applicants for land registration
must prove that the DENR Secretary had approved the land classification
and released the land of public domain as alienable and disposable. They
must present a copy of the original classification approved by the DENR
Secretary and certified as true copy by the legal custodian of the records.
Republic of the Philippines v. Remman Enterprises, Inc. represented by
Ronnie P. Inocencio, G.R. No. 199310. February 19, 2014.
Possession and occupation; proof of specific acts of ownership must be
presented to substantiate the claim of open, continuous, exclusive, and
notorious possession and occupation of the land subject of the application.
For purposes of land registration under Section 14(1) of P.D. No. 1529,
proof of specific acts of ownership must be presented to substantiate the

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claim of open, continuous, exclusive, and notorious possession and


occupation of the land subject of the application. Applicants for land
registration cannot just offer general statements which are mere conclusions
of law rather than factual evidence of possession. Actual possession consists
in the manifestation of acts of dominion over it of such a nature as a party
would actually exercise over his own property. Republic of the Philippines v.
Remman Enterprises, Inc. represented by Ronnie P. Inocencio, G.R. No.
199310. February 19, 2014.
Possession and occupation; mere casual cultivation of portions of the land by
the claimant does not constitute possession under claim of ownership.
Although Cerquena testified that the respondent and its predecessors-ininterest cultivated the subject properties, by planting different crops thereon,
his testimony is bereft of any specificity as to the nature of such cultivation
as to warrant the conclusion that they have been indeed in possession and
occupation of the subject properties in the manner required by law. There
was no showing as to the number of crops that are planted in the subject
properties or to the volume of the produce harvested from the crops
supposedly planted thereon. Further, assuming ex gratia argumenti that the
respondent and its predecessors-in-interest have indeed planted crops on the
subject properties, it does not necessarily follow that the subject properties
have been possessed and occupied by them in the manner contemplated by
law. The supposed planting of crops in the subject properties may only have
amounted to mere casual cultivation, which is not the possession and
occupation required by law. A mere casual cultivation of portions of the
land by the claimant does not constitute possession under claim of
ownership. For him, possession is not exclusive and notorious so as to give
rise to a presumptive grant from the state. The possession of public land,
however long the period thereof may have extended, never confers title
thereto upon the possessor because the statute of limitations with regard to
public land does not operate against the state, unless the occupant can prove
possession and occupation of the same under claim of ownership for the
required number of years. Republic of the Philippines v. Remman
Enterprises, Inc. represented by Ronnie P. Inocencio, G.R. No. 199310.
February 19, 2014.

January 2014 Philippine Supreme

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Lexoterica: Compilation of SC Rulings

Court Decisions on Civil Law


Posted on February 19, 2014 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

Here are select January 2014 rulings of the Supreme Court of the Philippines
on civil law:
Civil Code
Bad faith cannot be presumed; it is a question of fact that must be proven by
clear and convincing evidence. It is worth stressing at this point that bad
faith cannot be presumed. It is a question of fact that must be proven by
clear and convincing evidence. [T]he burden of proving bad faith rests on
the one alleging it. Sadly, spouses Vilbar failed to adduce the necessary
evidence. Thus, this Court finds no error on the part of the CA when it did
not find bad faith on the part of Gorospe, Sr. Sps. Bernadette and Rodulfo
Vilbar v. Angelito L. Opinion, G.R. No. 176043. January 15, 2014.
Banks; exercise the highest degree of diligence, as well as to observe the
high standards of integrity and performance in all its transactions because its
business was imbued with public interest. Being a banking institution, DBP
owed it to Guaria Corporation to exercise the highest degree of diligence,
as well as to observe the high standards of integrity and performance in all
its transactions because its business was imbued with public interest. The
high standards were also necessary to ensure public confidence in the
banking system, for, according to Philippine National Bank v. Pike: The
stability of banks largely depends on the confidence of the people in the
honesty and efficiency of banks. Development Bank of the Philippines
(DBP) v. Guaria Agricultural and Realty Development Corporation, G.R.
No. 160758. January 15, 2014
Common carrier; cargoes while being unloaded generally remain under the
custody of the carrier. It is settled in maritime law jurisprudence that cargoes
while being unloaded generally remain under the custody of the carrier. As
hereinbefore found by the RTC and affirmed by the CA based on the
evidence presented, the goods were damaged even before they were turned
over to ATI. Such damage was even compounded by the negligent acts of
petitioner and ATI which both mishandled the goods during the discharging

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Lexoterica: Compilation of SC Rulings

operations. Eastern Shipping Lines, Inc. v. BPI/MS Insurance Corp., and


Mitsui Sumitomo Insurance Co., Ltd.,G.R. No. 193986, January 15, 2014.
Common carrier; extraordinary diligence.Common carriers, from the nature
of their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods transported by them.
Subject to certain exceptions enumerated under Article 1734 of the Civil
Code, common carriers are responsible for the loss, destruction, or
deterioration of the goods. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier to the consignee, or to
the person who has a right to receive them. Owing to this high degree of
diligence required of them, common carriers, as a general rule, are presumed
to have been at fault or negligent if the goods they transported deteriorated
or got lost or destroyed. That is, unless they prove that they exercised
extraordinary diligence in transporting the goods. In order to avoid
responsibility for any loss or damage, therefore, they have the burden of
proving that they observed such high level of diligence. Eastern Shipping
Lines, Inc. v. BPI/MS Insurance Corp., and Mitsui Sumitomo Insurance Co.,
Ltd.,G.R. No. 193986, January 15, 2014.

Contracts; breach of contract; petitioner is guilty of breach of contract when


it unjustifiably refused to release respondents deposit despite demand; liable
for damages. In cases of breach of contract, moral damages may be
recovered only if the defendant acted fraudulently or in bad faith, or is
guilty of gross negligence amounting to bad faith, or in wanton disregard of
his contractual obligations.
In this case, a review of the circumstances surrounding the issuance of the
Hold Out order reveals that petitioner issued the Hold Out order in bad
faith. First of all, the order was issued without any legal basis. Second,
petitioner did not inform respondents of the reason for the Hold Out.
Third, the order was issued prior to the filing of the criminal complaint.
Records show that the Hold Out order was issued on July 31, 2003, while
the criminal complaint was filed only on September 3, 2003. All these taken

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together lead us to conclude that petitioner acted in bad faith when it


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

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Lexoterica: Compilation of SC Rulings

Article 1157. Considering that respondent Rosales is not liable under any of
the five sources of obligation, there was no legal basis for petitioner to issue
the Hold Out order.
The Hold Out clause applies only if there is a valid and existing obligation
arising from any of the sources of obligation enumerated in Article 1157 of
the Civil Code, to wit: law, contracts, quasi-contracts, delict, and quasidelict. In this case, petitioner failed to show that respondents have an
obligation to it under any law, contract, quasi-contract, delict, or quasidelict. And although a criminal case was filed by petitioner against
respondent Rosales, this is not enough reason for petitioner to issue a Hold
Out order as the case is still pending and no final judgment of conviction
has been rendered against respondent Rosales. In fact, it is significant to note
that at the time petitioner issued the Hold Out order, the criminal
complaint had not yet been filed. Thus, considering that respondent Rosales
is not liable under any of the five sources of obligation, there was no legal
basis for petitioner to issue the Hold Out order. Metropolitan Bank &
Trust Company v. Ana Grace Rosales and Yo Yuk To, G.R. No. 183204,
January 13, 2014.
Contracts; Mortgage; nature of mortgage. It is true that loans are often
secured by a mortgage constituted on real or personal property to protect the
creditors interest in case of the default of the debtor. By its nature, however,
a mortgage remains an accessory contract dependent on the principal
obligation, such that enforcement of the mortgage contract will depend on
whether or not there has been a violation of the principal obligation. While a
creditor and a debtor could regulate the order in which they should comply
with their reciprocal obligations, it is presupposed that in a loan the lender
should perform its obligation the release of the full loan amount before it
could demand that the borrower repay the loaned amount. Development
Bank of the Philippines (DBP) v. Guaria Agricultural and Realty
Development Corporation, G.R. No. 160758. January 15, 2014.
Contracts; mortgagee in good faith. Assuming arguendo that the Gorospes
titles to the subject properties happened to be fraudulent, public policy
considers Opinion to still have acquired legal title as a mortgagee in good
faith. As held in Cavite Development Bank v. Spouses Lim:

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There is, however, a situation where, despite the fact that the mortgagor is
not the owner of the mortgaged property, his title being fraudulent, the
mortgage contract and any foreclosure sale arising therefrom are given effect
by reason of public policy. This is the doctrine of the mortgagee in good
faith based on the rule that all persons dealing with property covered by a
Torrens Certificate of Title, as buyers or mortgagees, are not required to go
beyond what appears on the face of the title. The public interest in upholding
the indefeasibility of a certificate of title, as evidence of the lawful
ownership of the land or of any encumbrance thereon, protects a buyer or
mortgagee who, in good faith, relied upon what appears on the face of the
certificate of title.
Sps. Bernadette and Rodulfo Vilbar v. Angelito L. Opinion, G.R. No.
176043. January 15, 2014.
Sales; proof capacity of seller; difference when there is a special power of
attorney and when there is none.The strength of the buyers inquiry on the
sellers capacity or legal authority to sell depends on the proof of capacity of
the seller. If the proof of capacity consists of a special power of attorney
duly notarized, mere inspection of the face of such public document already
constitutes sufficient inquiry. If no such special power of attorney is
provided or there is one but there appears to be flaws in its notarial
acknowledgment, mere inspection of the document will not do; the buyer
must show that his investigation went beyond the document and into the
circumstances of its execution. The Heirs of Victorino Sarili, namely, Isabel
A. Sarili, et al. v. Pedro F. Lagrosa, represented in this act by his Attorneyin-Fact, Lourdes Labios Mojica, G.R. No. 193517, January 15, 2014.
Contracts; Principle of quantum merit; when allowed. Case law instructs that
under this principle (quantum meruit), a contractor is allowed to recover the
reasonable value of the thing or services rendered despite the lack of a
written contract, in order to avoid unjust enrichment. Quantum meruit means
that, in an action for work and labor, payment shall be made in such amount
as the plaintiff reasonably deserves. The measure of recovery should relate
to the reasonable value of the services performed because the principle aims
to prevent undue enrichment based on the equitable postulate that it is unjust
for a person to retain any benefit without paying for it. Rivelisa Realty, Inc.,
represented by Ricardo P. Venturina v. First Sta. Clara Builders
Corporation, represented by Ramon A. Pangilinan, as President, G.R. No.

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Lexoterica: Compilation of SC Rulings

189618. January 15, 2014.


Contracts; rescission; proper when there is non-performance of
obligation. Article 1191. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him. The injured party may choose between the fulfillment
and the rescission of the obligation, with payment of damages in either case.
He may also seek rescission, even after he has chosen fulfillment, if the
latter should become impossible. Fil-Estate Properties, Inc. and Fil-Estate
Network, Inc. v. Spouses Conrado and Maria Victoria Ronquillo, G.R. No.
185798, January 13, 2014.
Contracts; void contract; effects. Under Article 1409 (1) of the Civil Code, a
contract whose cause, object or purpose is contrary to law is a void or
inexistent contract. As such, a void contract cannot produce a valid one. To
the same effect is Article 1422 of the Civil Code, which declares that a
contract, which is the direct result of a previous illegal contract, is also void
and inexistent. Domingo Gonzalo v. John Tarnate, Jr., G.R. No. 160600,
January 15, 2014.
Damages; moral damages; when awarded.[S]uffice it to say that the dispute
over the subject property had caused respondent serious anxiety, mental
anguish and sleepless nights, thereby justifying the aforesaid award.
Likewise, since respondent was constrained to engage the services of
counsel to file this suit and defend his interests, the awards of attorneys fees
and litigation expenses are also sustained. The Heirs of Victorino Sarili,
namely, Isabel A. Sarili, et al. v. Pedro F. Lagrosa, represented in this act by
his Attorney-in-Fact, Lourdes Labios Mojica, G.R. No. 193517, January 15,
2014.
Damages; moral damages; when awarded. Every person is entitled to the
physical integrity of his body. Although we have long advocated the view
that any physical injury, like the loss or diminution of the use of any part of
ones body, is not equatable to a pecuniary loss, and is not susceptible of
exact monetary estimation, civil damages should be assessed once that
integrity has been violated. The assessment is but an imperfect estimation of
the true value of ones body. The usual practice is to award moral damages
for the physical injuries sustained. Dr. Encarnacion C. Lumantas v. Hanz

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Lexoterica: Compilation of SC Rulings

Calapiz, represented by his parents, Hilario Calapiz, Jr. and Helita Calapiz,
G.R. No. 163753. January 15, 2014.
Foreclosure; premature foreclosure; order of restoration of possession and
payment of reasonable rentals. Having found and pronounced that the
extrajudicial foreclosure by DBP was premature, and that the ensuing
foreclosure sale was void and ineffectual, the Court affirms the order for the
restoration of possession to Guarifia Corporation and the payment of
reasonable rentals for the use of the resort. The CA properly held that the
premature and invalid foreclosure had unjustly dispossessed Guarifia
Corporation of its properties. Consequently, the restoration of possession
and the payment of reasonable rentals were in accordance with Article 561
of the Civil Code, which expressly states that one who recovers, according
to law, possession unjustly lost shall be deemed for all purposes which may
redound to his benefit to have enjoyed it without interruption. Development
Bank of the Philippines (DBP) v. Guaria Agricultural and Realty
Development Corporation, G.R. No. 160758. January 15, 2014.
Foreclosure; purchaser in foreclosure sale may take possession of the
property even before the expiration of the redemption period. A writ of
possession is a writ of execution employed to enforce a judgment to recover
the possession of land. It commands the sheriff to enter the land and give
possession of it to the person entitled under the judgment. It may be issued
in case of an extrajudicial foreclosure of a real estate mortgage under
Section 7 of Act No. 3135, as amended by Act No. 4118.
Under said provision, the writ of possession may be issued to the purchaser
in a foreclosure sale either within the one-year redemption period upon the
filing of a bond, or after the lapse of the redemption period, without need of
a bond.
We have consistently held that the duty of the trial court to grant a writ of
possession is ministerial. Such writ issues as a matter of course upon the
filing of the proper motion and the approval of the corresponding bond. No
discretion is left to the trial court. Any question regarding the regularity and
validity of the sale, as well as the consequent cancellation of the writ, is to
be determined in a subsequent proceeding as outlined in Section 8 of Act
No. 3135. Such question cannot be raised to oppose the issuance of the writ,

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since the proceeding is ex parte. The recourse is available even before the
expiration of the redemption period provided by law and the Rules of Court.
LZK Holdings and Development Corporation v. Planters Development
Bank, G.R. No. 187973, January 20, 2014.
Interest; legal interest; interest rate pegged at 6% regardless of the source of
obligation. The resulting modification of the award of legal interest is, also,
in line with our recent ruling in Nacar v. Gallery Frames, embodying the
amendment introduced by the Bangko Sentral ng Pilipinas Monetary Board
in BSP-MB Circular No. 799 which pegged the interest rate at 6% regardless
of the source of obligation. Fil-Estate Properties, Inc. and Fil-Estate
Network, Inc. v. Spouses Conrado and Maria Victoria Ronquillo, G.R. No.
185798, January 13, 2014.
Interest; legal interest; proper rate. In Eastern Shipping, it was observed that
the commencement of when the legal interest should start to run varies
depending on the factual circumstances obtaining in each case. As a rule of
thumb, it was suggested that where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is
made judicially or extrajudicially (Art. 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date the judgment of the
court is made (at which time the quantification of damages may be deemed
to have been reasonably ascertained).
During the pendency of this case, however, the Monetary Board issued
Resolution No. 796 dated May 16, 2013, stating that in the absence of
express stipulation between the parties, the rate of interest in loan or
forbearance of any money, goods or credits and the rate allowed in
judgments shall be 6% per annum. Said Resolution is embodied in Bangko
Sentral ng Pilipinas Circular No. 799, Series of2013, which took effect on
July 1, 2013. Hence, the 12% annual interest mentioned above shall apply
only up to June 30, 2013. Thereafter, or starting July 1, 2013, the applicable
rate of interest for both the debited amount and undocumented withdrawals
shall be 6% per annum compounded annually, until fully paid. Land Bank of
the Philippines v. Emmanuel C. Oate, G.R. No. 192371, January 15, 2014.
Interest; legal interest; rate. The legal interest rate to be imposed from

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February 11, 1993, the time of the extrajudicial demand by respondent,


should be 6% per annum in the absence of any stipulation in writing in
accordance with Article 2209 of the Civil Code, which provides:
Article 2209. If the obligation consists in the payment of a sum of money,
and the debtor incurs in delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of the interest agreed upon,
and in the absence of stipulation, the legal interest, which is six per cent per
annum. First United Constructors Corporation, et al. v. Bayanihan
Automotive Corporation, G.R. No. 164985, January 15, 2014.
Interest; legal interest; when awarded. Many years have gone by since Hanz
suffered the injury. Interest of 6% per annum should then be imposed on the
award as a sincere means of adjusting the value of the award to a level that is
not only reasonable but just and commensurate. Unless we make the
adjustment in the permissible manner by prescribing legal interest on the
award, his sufferings would be unduly compounded. For that purpose, the
reckoning of interest should be from the filing of the criminal information on
April 1 7, 1997, the making of the judicial demand for the liability of the
petitioner. Dr. Encarnacion C. Lumantas v. Hanz Calapiz, represented by
his parents, Hilario Calapiz, Jr. and Helita Calapiz, G.R. No. 163753.
January 15, 2014.
Obligations; default; borrower would not be in default without demand to
pay. Considering that it had yet to release the entire proceeds of the loan,
DBP could not yet make an effective demand for payment upon Guaria
Corporation to perform its obligation under the loan. According to
Development Bank of the Philippines v. Licuanan, it would only be when a
demand to pay had been made and was subsequently refused that a borrower
could be considered in default, and the lender could obtain the right to
collect the debt or to foreclose the mortgage. Development Bank of the
Philippines (DBP) v. Guaria Agricultural and Realty Development
Corporation, G.R. No. 160758. January 15, 2014.
Obligations; extinguishment of obligations; compensation; requisites.
Compensation is defined as a mode of extinguishing obligations whereby
two persons in their capacity as principals are mutual debtors and creditors
of each other with respect to equally liquidated and demandable obligations

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to which no retention or controversy has been timely commenced and


communicated by third parties.53 The requisites therefor are provided under
Article 1279 of the Civil Code which reads as follows:
Art. 1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.
The rule on legal compensation is stated in Article 1290 of the Civil Code
which provides that [w]hen all the requisites mentioned in Article 1279 are
present, compensation takes effect by operation of law, and extinguishes
both debts to the concurrent amount, even though the creditors and debtors
are not aware of the compensation. Union Bank of the Philippines v.
Development Bank of the Philippines, G.R. No. 191555, January 20, 2014.
Obligations; legal compensation; requisites. Legal compensation takes place
when the requirements set forth in Article 1278 and Article 1279 of the Civil
Code are present, to wit:
Article 1278. Compensation shall take place when two persons, in their own
right, are creditors and debtors of each other.
Article 1279. In order that compensation may be proper, it is necessary:
(1) That each of the obligors be bound principally, and that he be at the same

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time a principal creditor of the other;


(2) That both debts consists in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.
First United Constructors Corporation, et al. v. Bayanihan Automotive
Corporation, G.R. No. 164985, January 15, 2014.
Property; builder in good faith; concept of. To be deemed a builder in good
faith, it is essential that a person asserts title to the land on which he builds,
i.e. , that he be a possessor in concept of owner, and that he be unaware that
there exists in his title or mode of acquisition any flaw which invalidates
it. Good faith is an intangible and abstract quality with no technical meaning
or statutory definition, and it encompasses, among other things, an honest
belief, the absence of malice and the absence of design to defraud or to seek
an unconscionable advantage. It implies honesty of intention, and freedom
from knowledge of circumstances which ought to put the holder upon
inquiry. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v.
Pedro F. Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes
Labios Mojica, G.R. No. 193517, January 15, 2014.
Property; ownership; accession; accessory follows the principal; exception.
While it is a hornbook doctrine that the accessory follows the principal, that
is, the ownership of the property gives the right by accession to everything
which is produced thereby, or which is incorporated or attached thereto,
either naturally or artificially, such rule is not without exception. In cases
where there is a clear and convincing evidence to prove that the principal
and the accessory are not owned by one and the same person or entity, the
presumption shall not be applied and the actual ownership shall be upheld.
In a number of cases, we recognized the separate ownership of the land from

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the building and brushed aside the rule that accessory follows the principal.
Magdalena T. Villasi v. Filomena Garcia, substituted by his heirs, namely,
Ermelinda H. Garcia, et al., G.R. No. 190106, January 15, 2014.
Quasi-contracts; Unjust enrichment. Unjust enrichment exists, according to
Hulst v. PR Builders, Inc., when a person unjustly retains a benefit at the
loss of another, or when a person retains money or property of another
against the fundamental principles of justice, equity and good conscience.
The prevention of unjust enrichment is a recognized public policy of the
State, for Article 22 of the Civil Code explicitly provides that [e]very
person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him. Domingo
Gonzalo v. John Tarnate, Jr., G.R. No. 160600, January 15, 2014.
Sales; Article 1599 of the Civil Code; recoupment; definition of; when
entitled. Recoupment (reconvencion) is the act of rebating or recouping a
part of a claim upon which one is sued by means of a legal or equitable right
resulting from a counterclaim arising out of the same transaction. It is the
setting up of a demand arising from the same transaction as the plaintiffs
claim, to abate or reduce that claim.
The legal basis for recoupment by the buyer is the first paragraph of Article
1599 of the Civil Code, viz:
Article 1599. Where there is a breach of warranty by the seller, the buyer
may, at his election:
(1) Accept or keep the goods and set up against the seller, the breach of
warranty by way of recoupment in diminution or extinction of the price;
xxxx
First United Constructors Corporation, et al. v. Bayanihan Automotive
Corporation, G.R. No. 164985, January 15, 2014.
Sales; sale of a piece of land or any interest therein is through an agent;
authority of the agent shall be in writing; otherwise, the sale shall be void.

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The due execution and authenticity of the subject SPA are of great
significance in determining the validity of the sale entered into by Victorino
and Ramon since the latter only claims to be the agent of the purported seller
(i.e., respondent). Article 1874 of the Civil Code provides that [w]hen a
sale of a piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void.
In other words, if the subject SPA was not proven to be duly executed and
authentic, then it cannot be said that the foregoing requirement had been
complied with; hence, the sale would be void. The Heirs of Victorino Sarili,
namely, Isabel A. Sarili, et al. v. Pedro F. Lagrosa, represented in this act by
his Attorney-in-Fact, Lourdes Labios Mojica, G.R. No. 193517, January 15,
2014.
SPECIAL LAWS
Section 23 of Presidential Decree No. 957; non-forfeiture of payments.
Section 23 of Presidential Decree No. 957, the rule governing the sale of
condominiums, which provides: No installment payment made by a buyer in
a subdivision or condominium project for the lot or unit he contracted to buy
shall be forfeited in favor of the owner or developer when the buyer, after
due notice to the owner or developer, desists from further payment due to
the failure of the owner or developer to develop the subdivision or
condominium project according to the approved plans and within the time
limit for complying with the same. Such buyer may, at his option, be
reimbursed the total amount paid including amortization interests but
excluding delinquency interests, with interest thereon at the legal rate. FilEstate Properties, Inc. and Fil-Estate Network, Inc. v. Spouses Conrado and
Maria Victoria Ronquillo, G.R. No. 185798, January 13, 2014.
Section 6 of Presidential Decree No. 1594; right of assignment and
subcontract. There is no question that every contractor is prohibited from
subcontracting with or assigning to another person any contract or project
that he has with the DPWH unless the DPWH Secretary has approved the
subcontracting or assignment. This is pursuant to Section 6 of Presidential
Decree No. 1594, which provides that [T]he contractor shall not assign,
transfer, pledge, subcontract or make any other disposition of the contract or
any part or interest therein except with the approval of the Minister of Public
Works, Transportation and Communications, the Minister of Public
Highways, or the Minister of Energy, as the case may be. Approval of the

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subcontract shall not relieve the main contractor from any liability or
obligation under his contract with the Government nor shall it create any
contractual
relation
between
the
subcontractor
and
the
Government. Domingo Gonzalo v. John Tarnate, Jr., G.R. No. 160600,
January 15, 2014.
Family law; conjugal property; all property of the marriage is presumed to
be conjugal, unless it is shown that it is owned exclusively by the husband or
the wife. There is a presumption that all property of the marriage is
conjugal, unless it is shown that it is owned exclusively by the husband or
the wife; this presumption is not overcome by the fact that the property is
registered in the name of the husband or the wife alone; and the consent of
both spouses is required before a conjugal property may be mortgaged.
However, we find it iniquitous to apply the foregoing presumption especially
since the nature of the mortgaged property was never raised as an issue
before the RTC, the CA, and even before this Court. In fact, petitioner never
alleged in his Complaint that the said property was conjugal in nature.
Hence, respondent had no opportunity to rebut the said presumption.
Francisco Lim v. Equitable PCI Bank, now known as Banco De Oro
Unibank, Inc., G.R. No. 183918. January 15, 2014.
Family law; exclusive property of spouse; when the property is registered in
the name of a spouse only and there is no showing as to when the property
was acquired by said spouse, this is an indication that the property belongs
exclusively to said spouse. Article 160 of the Civil Code provides as
follows: All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband or
to the wife.
The presumption applies to property acquired during the lifetime of the
husband and wife. In this case, it appears on the face of the title that the
properties were acquired by Donata Montemayor when she was already a
widow. When the property is registered in the name of a spouse only and
there is no showing as to when the property was acquired by said spouse,
this is an indication that the property belongs exclusively to said spouse.
And this presumption under Article 160 of the Civil Code cannot prevail
when the title is in the name of only one spouse and the rights of innocent
third parties are involved. Francisco Lim v. Equitable PCI Bank, now known
as Banco De Oro Unibank, Inc., G.R. No. 183918. January 15, 2014.

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Torrens system; certificate of title; a certificate of title serves as evidence of


an indefeasible and incontrovertible title to the property in favor of the
person whose name appears therein. [A] certificate of title serves as
evidence of an indefeasible and incontrovertible title to the property in favor
of the person whose name appears therein. Having no certificate of title
issued in their names, spouses Vilbar have no indefeasible and
incontrovertible title over Lot 20 to support their claim. Further, it is an
established rule that registration is the operative act which gives validity to
the transfer or creates a lien upon the land. Any buyer or mortgagee of
realty covered by a Torrens certificate of title x x x is charged with notice
only of such burdens and claims as are annotated on the title. Failing to
annotate the deed for the eventual transfer of title over Lot 20 in their names,
the spouses Vilbar cannot claim a greater right over Opinion, who acquired
the property with clean title in good faith and registered the same in his
name by going through the legally required procedure. Sps. Bernadette and
Rodulfo Vilbar v. Angelito L. Opinion, G.R. No. 176043. January 15, 2014.
Torrens system; Torrens title; a person dealing with a registered land has a
right to rely upon the face of the Torrens certificate of title; exceptions. The
well-known rule in this jurisdiction is that a person dealing with a registered
land has a right to rely upon the face of the torrens certificate of title and to
dispense with the need of inquiring further, except when the party concerned
has actual knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry.
A torrens title concludes all controversy over ownership of the land covered
by a final decree of registration. Once the title is registered the owner may
rest assured without the necessity of stepping into the portals of the court or
sitting in the mirador de su casa to avoid the possibility of losing his land.
Francisco Lim v. Equitable PCI Bank, now known as Banco De Oro
Unibank, Inc., G.R. No. 183918. January 15, 2014.
Torrens title; a person dealing with a registered land has a right to rely upon
the face of the Torrens certificate of title; exception in the case of a person
who buys from a person who is not the registered owner.The general rule is
that every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no
way oblige him to go beyond the certificate to determine the condition of the
property. Where there is nothing in the certificate of title to indicate any

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cloud or vice in the ownership of the property, or any encumbrance thereon,


the purchaser is not required to explore further than what the Torrens Title
upon its face indicates in quest for any hidden defects or inchoate right that
may subsequently defeat his right thereto.
However, a higher degree of prudence is required from one who buys from a
person who is not the registered owner, although the land object of the
transaction is registered. In such a case, the buyer is expected to examine not
only the certificate of title but all factual circumstances necessary for him to
determine if there are any flaws in the title of the transferor. The buyer also
has the duty to ascertain the identity of the person with whom he is dealing
with and the latters legal authority to convey the property. The Heirs of
Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F. Lagrosa,
represented in this act by his Attorney-in-Fact, Lourdes Labios Mojica, G.R.
No. 193517, January 15, 2014.
Torrens system;even if the procurement of a certificate of title was tainted
with fraud and misrepresentation, such defective title may be the source of a
completely legal and valid title in the hands of an innocent purchaser for
value. It is well-settled that even if the procurement of a certificate of title
was tainted with fraud and misrepresentation, such defective title may be the
source of a completely legal and valid title in the hands of an innocent
purchaser for value. Where innocent third persons, relying on the correctness
of the certificate of title thus issued, acquire rights over the property, the
court cannot disregard such rights and order the total cancellation of the
certificate. The effect of such an outright cancellation would be to impair
public confidence in the certificate of title, for everyone dealing with
property registered under the Torrens system would have to inquire in every
instance whether the title has been regularly or irregularly issued. This is
contrary to the evident purpose of the law. The Heirs of Victorino Sarili,
namely, Isabel A. Sarili, et al. v. Pedro F. Lagrosa, represented in this act by
his Attorney-in-Fact, Lourdes Labios Mojica, G.R. No. 193517, January 15,
2014.
Torrens system; levy on attachment, duly registered, takes preference over a
prior unregistered sale.[T]he settled rule that levy on attachment, duly
registered, takes preference over a prior unregistered sale. This result is a
necessary consequence of the fact that the [properties] involved [were] duly
covered by the Torrens system which works under the fundamental principle

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that registration is the operative act which gives validity to the transfer or
creates a lien upon the land. Sps. Bernadette and Rodulfo Vilbar v. Angelito
L. Opinion, G.R. No. 176043. January 15, 2014.

December 2013 Philippine Supreme


Court Decisions on Civil Law
Posted on January 15, 2014 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

Here are seclect December 2013 rulings of the Supreme Court of the
Philippines on civil law:
Civil Code
Contracts; concept of contracts. A contract is what the law defines it to be,
taking into consideration its essential elements, and not what the contracting
parties call it. The real nature of a contract may be determined from the
express terms of the written agreement and from the contemporaneous and
subsequent acts of the contracting parties. However, in the construction or
interpretation of an instrument, the intention of the parties is primordial and
is to be pursued. The denomination or title given by the parties in their
contract is not conclusive of the nature of its contents. ACE Foods, Inc. v.
Micro Pacific Technologies Co., Ltd., G.R. No. 200602, December 11,
2013.
Contracts; contract of loan; interest stipulated; reduced for being iniquitous
and unconscionable. Parties to a loan contract have wide latitude to stipulate
on any interest rate in view of the Central Bank Circular No. 905 s. 1982
which suspended the Usury Law ceiling on interest effective January 1,
1983. It is, however, worth stressing that interest rates whenever
unconscionable may still be declared illegal. There is nothing in the circular
which grants lenders carte blanche authority to raise interest rates to levels
which will either enslave their borrowers or lead to a hemorrhaging of their
assets.In Menchavez v. Bermudez, the interest rate of 5% per month, which
when summed up would reach 60% per annum, is null and void for being
excessive, iniquitous, unconscionable and exorbitant, contrary to morals, and
the law. Florpina Benvidez v. Nestor Salvador, G.R. No. 173331, December

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11, 2013.

Damages; award of costs; when entitled. Costs shall be allowed to the


prevailing party as a matter of course unless otherwise provided in the Rules
of Court. The costs Ramirez may recover are those stated in Section 10, Rule
142 of the Rules of Court. For instance, Ramirez may recover the lawful fees
he paid in docketing his action for annulment of sale before the trial court.
The court adds thereto the amount of P3,530 or the amount of docket and
lawful fees paid by Ramirez for filing this petition before this Court. 35(35)
The court deleted the award of moral and exemplary damages; hence, the
restriction under Section 7, Rule 142 of the Rules of Courtwould have
prevented Ramirez to recover any cost of suit. But the court certifies, in
accordance with said Section 7, that Ramirezs action for annulment of sale
involved a substantial and important right such that he is entitled to an award
of costs of suit. Needless to stress, the purpose of paragraph N of the real
estate mortgage is to apprise the mortgagor, Ramirez, of any action that the
mortgagee-bank might take on the subject properties, thus according him the
opportunity to safeguard his rights. Jose T. Ramirez v. The Manila Banking
Corporation, G.R. No. 198800, December 11, 2013.
Damages; exemplary damages; when entitled. No exemplary damages can
be awarded since there is no basis for the award of moral damages and there
is no award of temperate, liquidated or compensatory damages.Exemplary
damages are imposed by way of example for the public good, in addition to
moral, temperate, liquidated or compensatory damages. Jose T. Ramirez v.
The Manila Banking Corporation, G.R. No. 198800, December 11, 2013.
Damages; moral damages; when entitled. Nothing supports the trial courts
award of moral damages. There was no testimony of any physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury suffered by
Ramirez. The award of moral damages must be anchored on a clear showing
that Ramirez actually experienced mental anguish, besmirched reputation,
sleepless nights, wounded feelings or similar injury. Ramirezs testimony is
also wanting as to the moral damages he suffered. Jose T. Ramirez v. The
Manila Banking Corporation, G.R. No. 198800, December 11, 2013.

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Foreclosure; extrajudicial foreclosure; notice of extrajudicial foreclosure


proceedings not necessary unless stipulated by the parties. In Carlos Lim, et
al. v. Development Bank of the Philippines, the court held that unless the
parties stipulate, personal notice to the mortgagor in extrajudicial foreclosure
proceedings is not necessary because Section 3 of Act No. 3135 only
requires the posting of the notice of sale in three public places and the
publication of that notice in a newspaper of general circulation. In this case,
the parties stipulated in paragraph N of the real estate mortgage that all
correspondence relative to the mortgage including notifications of
extrajudicial actions shall be sent to mortgagor Ramirez at his given address.
Respondent had no choice but to comply with this contractual provision it
has entered into with Ramirez. The contract is the law between them. Hence,
the court cannot agree with the bank that paragraph N of the real estate
mortgage does not impose an additional obligation upon it to provide
personal notice of the extrajudicial foreclosure sale to the mortgagor
Ramirez. Jose T. Ramirez v. The Manila Banking Corporation, G.R. No.
198800, December 11, 2013.
Foreclosure of mortgage; proceeds; obligations covered. The petitioner
contends that there was no excess or surplus that needs to be returned to the
respondent because her other outstanding obligations and those of her
attorney-in-fact were paid out of the proceeds.
The relevant provision, Section 4 of Rule 68 of the Rules of Civil Procedure,
mandates that:
Section 4. Disposition of proceeds of sale. The amount realized from the
foreclosure sale of the mortgaged property shall, after deducting the costs of
the sale, be paid to the person foreclosing the mortgage, and when there shall
be any balance or residue, after paying off the mortgage debt due, the same
shall be paid to junior encumbrancers in the order of their priority, to be
ascertained by the court, or if there be no such encumbrancers or there be a
balance or residue after payment to them, then to the mortgagor or his duly
authorized agent, or to the person entitled to it.
Thus, in the absence of any evidence showing that the mortgage also covers
the other obligations of the mortgagor, the proceeds from the sale should not
be applied to them. Philippine Bank of Communication v. Mary Ann O.

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Yeung, G.R. No. 179691, December 4, 2013.


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

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be such as to render it impossible for the debtor to fulfill obligations in a


normal manner; and, (d) the obligor must be free from any participation in
the aggravation of the injury or loss. Metro Concast Steel Corp., Spouses
Jose S. Dychiao and Tiu Oh Yan, et al. v. Allied Bank Corporation, G.R. No.
177921, December 4, 2013.
Obligations; modes of extinguishment. Article 1231 of the Civil Code states
that obligations are extinguished either by payment or performance, the loss
of the thing due, the condonation or remission of the debt, the confusion or
merger of the rights of creditor and debtor, compensation or novation. Metro
Concast Steel Corp., Spouses Jose S. Dychiao and Tiu Oh Yan, et al. v.
Allied Bank Corporation, G.R. No. 177921, December 4, 2013.
Obligations; novation; extinctive novation distinguished from modificatory
novation.To be sure, novation, in its broad concept, may either be extinctive
or modificatory. It is extinctive when an old obligation is terminated by the
creation of a new obligation that takes the place of the former; it is merely
modificatory when the old obligation subsists to the extent it remains
compatible with the amendatory agreement. In either case, however,
novation is never presumed, and the animus novandi, whether totally or
partially, must appear by express agreement of the parties, or by their acts
that are too clear and unequivocal to be mistaken. ACE Foods, Inc. v. Micro
Pacific Technologies Co., Ltd., G.R. No. 200602, December 11, 2013.
Property; action for reconveyance; prescriptive period; exception. The Court
likewise takes note that Paraguyas complaint is likewise in the nature of an
action for reconveyance because it also prayed for the trial court to order
Sps. Crucillo to surrender ownership and possession of the properties in
question to [Paraguya], vacating them altogether . . . . Despite this,
Paraguyas complaint remains dismissible on the same ground because the
prescriptive period for actions for reconveyance is ten (10) years reckoned
from the date of issuance of the certificate of title, except when the owner is
in possession of the property, in which case the action for reconveyance
becomes imprescriptible. Laura F. Paraguya v. Sps. Alma Escurel-Crucillo
and Emeterio Crucillo and the Register of Deeds of Sorsogon, G.R. No.
200265, December 2, 2013.
Property; possessor in good faith; reimbursement of necessary and useful

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expenses. Dionisio was well aware that this temporary arrangement may be
terminated at any time. Respondents cannot now refuse to vacate the
property or eventually demand reimbursement of necessary and useful
expenses under Articles 448 and 546 of the New Civil Code, because the
provisions apply only to a possessor in good faith, i.e., one who builds on
land with the belief that he is the owner thereof. Persons who occupy land by
virtue of tolerance of the owners are not possessors in good faith. Heirs of
Cipriano Trazona, et al. v. Heirs of Dionisio Caada, et al., G.R. No.
175874, December 11, 2013.
Property; Spanish titles can no longer be used as evidence of ownership after
six (6) months from the effectivity of PD 892. Based on Section 1 of PD
892, entitled Discontinuance of the Spanish Mortgage System of
Registration and of the Use of Spanish Titles as Evidence in Land
Registration Proceedings, Spanish titles can no longer be used as evidence
of ownership after six (6) months from the effectivity of the law, or starting
August 16, 1976. Laura F. Paraguya v. Sps. Alma Escurel-Crucillo and
Emeterio Crucillo and the Register of Deeds of Sorsogon, G.R. No. 200265,
December 2, 2013.
Property; waiver of interest; when absolute and unconditional.Lucila did not
say, to put everything in proper order, I promise to waive my right to the
property, which is a future undertaking, one that is demandable only when
everything is put in proper order. But she instead said, to put everything in
proper order, I hereby waive etc. The phrase hereby waive means that
Lucila was, by executing the affidavit, already waiving her right to the
property, irreversibly divesting herself of her existing right to the same.
After he and his co-owner Emelinda accepted the donation, Isabelo became
the owner of half of the subject property having the right to demand its
partition.Isabelo C. Dela Cruz v. Lucila C. Dela Cruz, G.R. No. 192383,
December 4, 2013.
Quasi-contract; unjust enrichment; concept of; elements.In light of the
foregoing, it is unfair to deny petitioner a refund of all his contributions to
the car plan. Under Article 22 of the Civil Code, [e]very person who
through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just
or legal ground, shall return the same to him. Antonio Locsin II v. Mekeni
Food Corporation, G.R. No. 192105, December 9, 2013.

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Quasi-contract; concept of quasi-contract. Article 2142 of the same Code


likewise clarifies that there are certain lawful, voluntary and unilateral acts
which give rise to the juridical relation of quasi-contract, to the end that no
one shall be unjustly enriched or benefited at the expense of another. In the
absence of specific terms and conditions governing the car plan arrangement
between the petitioner and Mekeni, a quasi-contractual relation was created
between them. Antonio Locsin II v. Mekeni Food Corporation, G.R. No.
192105, December 9, 2013.
Quasi-delict; elements. Article 2176 of the Civil Code provides that
[w]hoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence,
if there is no pre-existing contractual relation between the parties, is a quasidelict. Under this provision, the elements necessary to establish a quasidelict case are: (1) damages to the plaintiff; (2) negligence, by act or
omission, of the defendant or by some person for whose acts the defendant
must respond, was guilty; and (3) the connection of cause and effect between
such negligence and the damages. These elements show that the source of
obligation in a quasi-delict case is the breach or omission of mutual duties
that civilized society imposes upon its members, or which arise from noncontractual relations of certain members of society to others. Dra. Leila A.
Dela Llana v. Rebecca Biong, doing business under the name and style of
Pongkay Trading, G.R. No. 182356, December 4, 2013.
Quasi-delict; quantum of proof; preponderance of evidence. Based on these
requisites, Dra. dela Llana must first establish by preponderance of evidence
the three elements of quasi-delict before we determine Rebeccas liability as
Joels employer. She should show the chain of causation between Joels
reckless driving and her whiplash injury. Only after she has laid this
foundation can the presumption that Rebecca did not exercise the
diligence of a good father of a family in the selection and supervision of Joel
arise.Once negligence, the damages and the proximate causation are
established, this Court can then proceed with the application and the
interpretation of the fifth paragraph of Article 2180 of the Civil Code. Under
Article 2176 of the Civil Code, in relation with the fifth paragraph of Article
2180, an action predicated on an employees act or omission may be
instituted against the employer who is held liable for the negligent act or
omission committed by his employee.The rationale for these graduated
levels of analyses is that it is essentially the wrongful or negligent act or

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omission itself which creates the vinculum juris in extra-contractual


obligations. Dra. Leila A. Dela Llana v. Rebecca Biong, doing business
under the name and style of Pongkay Trading, G.R. No. 182356, December
4, 2013.
Sales; car plan benefit; contributions as installment payments distinguished
from rental payments. From the evidence on record, it is seen that the
Mekeni car plan offered to petitioner was subject to no other term or
condition than that Mekeni shall cover one-half of its value, and petitioner
shall in turn pay the other half through deductions from his monthly salary.
Mekeni has not shown, by documentary evidence or otherwise, that there are
other terms and conditions governing its car plan agreement with petitioner.
There is no evidence to suggest that if petitioner failed to completely cover
one-half of the cost of the vehicle, then all the deductions from his salary
going to the cost of the vehicle will be treated as rentals for his use thereof
while working with Mekeni, and shall not be refunded. Indeed, there is no
such stipulation or arrangement between them. Thus, the CAs reliance on
Elisco Tool is without basis, and its conclusions arrived at in the questioned
decision are manifestly mistaken. To repeat what was said in Elisco Tool,
[P]etitioner does not deny that private respondent Rolando Lantan acquired
the vehicle in question under a car plan for executives of the Elizalde group
of companies. Under a typical car plan, the company advances the purchase
price of a car to be paid back by the employee through monthly deductions
from his salary. The company retains ownership of the motor vehicle until it
shall have been fully paid for. However, retention of registration of the car in
the companys name is only a form of a lien on the vehicle in the event that
the employee would abscond before he has fully paid for it. There are also
stipulations in car plan agreements to the effect that should the employment
of the employee concerned be terminated before all installments are fully
paid, the vehicle will be taken by the employer and all installments paid
shall be considered rentals per agreement.
It was made clear in this pronouncement that installments made on the car
plan may be treated as rentals only when there is an express stipulation in
the car plan agreement to such effect. It was therefore patent error for the
appellate court to assume that, even in the absence of express stipulation,
petitioners payments. Antonio Locsin II v. Mekeni Food Corporation, G.R.
No. 192105, December 9, 2013.

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Lexoterica: Compilation of SC Rulings

Sales; contract of sale; elements; distinguished from contract to sell.


Corollary thereto, a contract of sale is classified as a consensual contract,
which means that the sale is perfected by mere consent. No particular form
is required for its validity. Upon perfection of the contract, the parties may
reciprocally demand performance, i.e., the vendee may compel transfer of
ownership of the object of the sale, and the vendor may require the vendee to
pay the thing sold.
In contrast, a contract to sell is defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the property
despite delivery thereof to the prospective buyer, binds himself to sell the
property exclusively to the prospective buyer upon fulfillment of the
condition agreed upon, i.e., the full payment of the purchase price. A
contract to sell may not even be considered as a conditional contract of sale
where the seller may likewise reserve title to the property subject of the sale
until the fulfillment of a suspensive condition, because in a conditional
contract of sale, the first element of consent is present, although it is
conditioned upon the happening of a contingent event which may or may not
occur. ACE Foods, Inc. v. Micro Pacific Technologies Co., Ltd., G.R. No.
200602, December 11, 2013.
Sales; contract to sell; concept of.Verily, in a contract to sell, the
prospective seller binds himself to sell the property subject of the agreement
exclusively to the prospective buyer upon fulfillment of the condition agreed
upon which is the full payment of the purchase price but reserving to himself
the ownership of the subject property despite delivery thereof to the
prospective buyer.The full payment of the purchase price in a contract to sell
is a suspensive condition, the non-fulfillment of which prevents the
prospective sellers obligation to convey title from becoming effective, as in
this case. Optimum Development Bank v. Spouses Benigno v. Jovellanos and
Lourdes R. Jovellanos, G.R. No. 189145, December 4, 2013.
Sales; contract to sell; real property in installments; covered by Realty
Installment Buyer Protection Act. Further, it is significant to note that given
that the Contract to Sell in this case is one which has for its object real
property to be sold on an installment basis, the said contract is especially
governed by and thus, must be examined under the provisions of RA
6552, or the Realty Installment Buyer Protection Act, which provides for
the rights of the buyer in case of his default in the payment of succeeding

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installments. Optimum Development Bank v. Spouses Benigno v. Jovellanos


and Lourdes R. Jovellanos, G.R. No. 189145, December 4, 2013.
SPECIAL LAWS
Property Registration Decree; alienable lands of public domain; proof of; to
prove that the land subject of an application for registration is alienable, an
applicant must establish the existence of a positive act of the Government.
The burden of proof in overcoming the presumption of State ownership of
lands of the public domain is on the person applying for registration, or in
this case, for homestead patent. The applicant must show that the land
subject of the application is alienable or disposable. It must be stressed that
incontrovertible evidence must be presented to establish that the land subject
of the application is alienable or disposable.
As the court pronounced in Republic of the Phils. v. Tri-Plus Corporation, to
prove that the land subject of an application for registration is alienable, an
applicant must establish the existence of a positive act of the
Government such as a presidential proclamation or an executive order, an
administrative action, investigation reports of Bureau of Lands investigators,
and a legislative act or statute. The applicant may also secure a certification
from the Government that the lands applied for are alienable and disposable.
Republic of the Philippines-Bureau of Forest Development v. Vicente Roxas,
et al./Provident Tree Farms, Inc. v. Vicente Roxas, et al., G.R. Nos.
157988/160640, December 11, 2013.
Property Registration Decree; estoppel; the principle of estoppel does not
operate against the Government for the act of its agents. Neither can
respondent Roxas successfully invoke the doctrine of estoppel against
petitioner Republic. While it is true that respondent Roxas was granted
Homestead Patent No. 111598 and OCT No. P-5885 only after undergoing
appropriate administrative proceedings, the Government is not now estopped
from questioning the validity of said homestead patent and certificate of
title. It is, after all, hornbook law that the principle of estoppel does not
operate against the Government for the act of its agents. And while there
may be circumstances when equitable estoppel was applied against public
authorities, i.e., when the Government did not undertake any act to contest
the title for an unreasonable length of time and the lot was already alienated

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

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evidence indicating that respondent Roxas committed fraud when he applied


for homestead patent over the subject property. It does not appear that he
knowingly and intentionally misrepresented in his application that the
subject property was alienable and disposable agricultural land. Nonetheless,
we recognized in Republic of the Phils. v. Mangotara that there are instances
when we granted reversion for reasons other than fraud:
Reversion is an action where the ultimate relief sought is to revert the land
back to the government under the Regalian doctrine. Considering that the
land subject of the action originated from a grant by the government, its
cancellation is a matter between the grantor and the grantee. In Estate of the
Late Jesus S. Yujuico v. Republic (Yujuico case), reversion was defined as
an action which seeks to restore public land fraudulently awarded and
disposed of to private individuals or corporations to the mass of public
domain. It bears to point out, though, that the Court also allowed the resort
by the Government to actions for reversion to cancel titles that were void for
reasons other than fraud, i.e., violation by the grantee of a patent of the
conditions imposed by law; and lack of jurisdiction of the Director of Lands
to grant a patent covering inalienable forest land or portion of a river, even
when such grant was made through mere oversight. In Republic v. Guerrero,
the Court gave a more general statement that the remedy of reversion can be
availed of only in cases of fraudulent or unlawful inclusion of the land in
patents or certificates of title. Republic of the Philippines-Bureau of Forest
Development v. Vicente Roxas, et al./Provident Tree Farms, Inc. v. Vicente
Roxas, et al., G.R. Nos. 157988/160640, December 11, 2013.
Property Registration Decree; Torrens certificate of title is not conclusive
proof of ownership. It is an established rule that a Torrens certificate of title
is not conclusive proof of ownership. Verily, a party may seek its annulment
on the basis of fraud or misrepresentation. However, such action must be
seasonably filed, else the same would be barred. Laura F. Paraguya v. Sps.
Alma Escurel-Crucillo and Emeterio Crucillo and the Register of Deeds of
Sorsogon, G.R. No. 200265, December 2, 2013.
Property Registration Decree; Torrens certificate of title is not conclusive
proof of ownership becomes incontrovertible and indefeasible after one (1)
year from the date of its entry. In this relation, Section 32 of PD 1529
provides that the period to contest a decree of registration shall be one (1)
year from the date of its entry and that, after the lapse of the said period, the

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Torrens certificate of title issued thereon becomes incontrovertible and


indefeasible, viz.:
Sec. 32. Review of decree of registration; Innocent purchaser for value.
The decree of registration shall not be reopened or revised by reason of
absence, minority, or other disability of any person adversely affected
thereby, nor by any proceeding in any court for reversing judgments,
subject, however, to the right of any person, including the government and
the branches thereof, deprived of land or of any estate or interest therein by
such adjudication or confirmation of title obtained by actual fraud, to file in
the proper Court of First Instance a petition for reopening and review of the
decree of registration not later than one year from and after the date of the
entry of such decree of registration, but in no case shall such petition be
entertained by the court where an innocent purchaser for value has acquired
the land or an interest therein, whose rights may be prejudiced. Whenever
the phrase innocent purchaser for value or an equivalent phrase occurs in
this Decree, it shall be deemed to include an innocent lessee, mortgagee, or
other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and
the certificate of title issued shall become incontrovertible. Any person
aggrieved by such decree of registration in any case may pursue his remedy
by action for damages against the applicant or any other persons responsible
for the fraud. (Emphases and underscoring supplied) Laura F. Paraguya v.
Sps. Alma Escurel-Crucillo and Emeterio Crucillo and the Register of Deeds
of Sorsogon, G.R. No. 200265, December 2, 2013.

November 2013 Philippine Supreme


Court Decisions on Civil Law
Posted on December 6, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

Here are select November 2013 rulings of the Supreme Court of the
Philippines on civil law:
CIVIL CODE

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Lexoterica: Compilation of SC Rulings

Contracts; binding effect. It is hornbook doctrine in the law on contracts that


the parties are bound by the stipulations, clauses, terms and conditions they
have agreed to provided that such stipulations, clauses, terms and conditions
are not contrary to law, morals, public order or public policy. Consolidated
Industrial Gases, Inc. v. Alabang Medical Center, G.R. No. 181983,
November 13, 2013.
Contracts; breach of; when moral damages may be awarded. In Francisco v.
Ferrer,this Court ruled that moral damages may be awarded on the
following bases:
To recover moral damages in an action for breach of contract, the breach
must be palpably wanton, reckless, malicious, in bad faith, oppressive or
abusive.
Under the provisions of this law, in culpa contractual or breach of contract,
moral damages may be recovered when the defendant acted in bad faith or
was guilty of gross negligence (amounting to bad faith) or in wanton
disregard of his contractual obligation and, exceptionally, when the act of
breach of contract itself is constitutive of tort resulting in physical injuries.
Moral damages may be awarded in breaches of contracts where the
defendant acted fraudulently or in bad faith.
Bad faith does not simply connote bad judgment or negligence, it imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong,
a breach of known duty through some motive or interest or ill will that
partakes of the nature of fraud.
The person claiming moral damages must prove the existence of bad faith by
clear and convincing evidence for the law always presumes good faith. It is
not enough that one merely suffered sleepless nights, mental anguish,
serious anxiety as the result of the actuations of the other party. Invariably
such action must be shown to have been willfully done in bad faith or will ill
motive. Mere allegations of besmirched reputation, embarrassment and
sleepless nights are insufficient to warrant an award for moral damages. It
must be shown that the proximate cause thereof was the unlawful act or
omission of the [private respondent] petitioners.

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An award of moral damages would require certain conditions to be met, to


wit: (1) first, there must be an injury, whether physical, mental or
psychological, clearly sustained by the claimant; (2) second, there must be
culpable act or omission factually established; (3) third, the wrongful act or
omission of the defendant is the proximate cause of the injury sustained by
the claimant; and (4) fourth, the award of damages is predicated on any of
the cases stated in Article 2219 of the Civil Code. Alejandro V. Tankeh v.
Development Bank of the Philippines, et al., G.R. No. 171428, November
11, 2013.

Contracts; breach of; damages; exemplary damages; concept. Exemplary


damages are discussed in Article 2229 of the Civil Code, as follows:
ART. 2229. Exemplary or corrective damages are imposed, by way of
example or correction of the public good, in addition to moral, temperate,
liquidated or compensatory damages.
Exemplary damages are further discussed in Articles 2233 and 2234,
particularly regarding the pre-requisites of ascertaining moral damages and
the fact that it is discretionary upon this Court to award them or not:
ART. 2233. Exemplary damages cannot be recovered as a matter of right;
the court will decide whether or not they should be adjudicated.
ART. 2234. While the amount of the exemplary damages need not be
proven, the plaintiff must show that he is entitled to moral, temperate or
compensatory damages before the court may consider the question of
whether or not exemplary damages should be awarded x x x
The purpose of exemplary damages is to serve as a deterrent to future and
subsequent parties from the commission of a similar offense. The case of
People v. Rante citing People v. Dalisay held that:
Also known as punitive or vindictive damages, exemplary or corrective
damages are intended to serve as a deterrent to serious wrong doings, and as
a vindication of undue sufferings and wanton invasion of the rights of an

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injured or a punishment for those guilty of outrageous conduct. These terms


are generally, but not always, used interchangeably. In common law, there is
preference in the use of exemplary damages when the award is to account
for injury to feelings and for the sense of indignity and humiliation suffered
by a person as a result of an injury that has been maliciously and wantonly
inflicted, the theory being that there should be compensation for the hurt
caused by the highly reprehensible conduct of the defendantassociated
with such circumstances as willfulness, wantonness, malice, gross
negligence or recklessness, oppression, insult or fraud or gross fraudthat
intensifies the injury. The terms punitive or vindictive damages are often
used to refer to those species of damages that may be awarded against a
person to punish him for his outrageous conduct. In either case, these
damages are intended in good measure to deter the wrongdoer and others
like him from similar conduct in the future.
To justify an award for exemplary damages, the wrongful act must be
accompanied by bad faith, and an award of damages would be allowed only
if the guilty party acted in a wanton, fraudulent, reckless or malevolent
manner. Alejandro V. Tankeh v. Development Bank of the Philippines, et al.,
G.R. No. 171428, November 11, 2013.
Contracts; fraud; concept; dolo incidente distinguished from dolo causante.
In Solidbank Corporation v. Mindanao Ferroalloy Corporation, et al.,this
Court elaborated on the distinction between dolo causante and dolo
incidente: Fraud refers to all kinds of deception whether through
insidious machination, manipulation, concealment or misrepresentation
that would lead an ordinarily prudent person into error after taking the
circumstances into account. In contracts, a fraud known as dolo causante or
causal fraud is basically a deception used by one party prior to or
simultaneous with the contract, in order to secure the consent of the other.
Needless to say, the deceit employed must be serious. In contradistinction,
only some particular or accident of the obligation is referred to by incidental
fraud or dolo incidente, or that which is not serious in character and without
which the other party would have entered into the contract anyway.
Alejandro V. Tankeh v. Development Bank of the Philippines, et al., G.R.
No. 171428, November 11, 2013.
Contracts; fraud; dolo incidente and dolo causante; effect on contracts.The
distinction between fraud as a ground for rendering a contract voidable or as

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basis for an award of damages is provided in Article 1344: In order that


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

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relations, an entirely different standard of proof needs to be satisfied. The


imputation of fraud in a civil case requires the presentation of clear and
convincing evidence. Mere allegations will not suffice to sustain the
existence of fraud. The burden of evidence rests on the part of the plaintiff or
the party alleging fraud. The quantum of evidence is such that fraud must be
clearly and convincingly shown. Alejandro V. Tankeh v. Development Bank
of the Philippines, et al., G.R. No. 171428, November 11, 2013.
Contracts; Reciprocal obligations; concept; for failing to perform all its
correlative obligation under the reciprocal contract, a party cannot
unilaterally demand performance by the other party. Reciprocal obligations
are those which arise from the same cause, and in which each party is a
debtor and a creditor of the other, such that the obligation of one is
dependent upon the obligation of the other. They are to be performed
simultaneously, so that the performance of one is conditioned upon the
simultaneous fulfillment of the other. In reciprocal obligations, neither
party incurs in delay if the other does not comply or is not ready to comply
in a proper manner with what is incumbent upon him. From the moment one
of the parties fulfills his obligation, delay by the other begins.
In reciprocal obligations, before a party can demand the performance of the
obligation of the other, the former must also perform its own obligation.
Consolidated Industrial Gases, Inc. v. Alabang Medical Center, G.R. No.
181983, November 13, 2013.
Contracts; rescission; grounds. Rescission of a contract will not be permitted
for a slight or casual breach, but only for such substantial and fundamental
violations as would defeat the very object of the parties in making the
agreement. Whether a breach is substantial is largely determined by the
attendant circumstances. Consolidated Industrial Gases, Inc. v. Alabang
Medical Center, G.R. No. 181983, November 13, 2013.
Damages; actual damages; concept; when awarded. For damages to be
recovered, the best evidence obtainable by the injured party must be
presented. Actual or compensatory damages cannot be presumed, but must
be proved with reasonable degree of certainty. The Court cannot rely on
speculation, conjecture or guesswork as to the fact and amount of damages,
but must depend upon competent proof that they have been suffered and on

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evidence of the actual amount. If the proof is flimsy and unsubstantial, no


damages will be awarded. Consolidated Industrial Gases, Inc. v. Alabang
Medical Center, G.R. No. 181983, November 13, 2013.
Estoppel; cannot be made to apply against the government. Granting that the
persons representing the government was negligent, the doctrine of estoppel
cannot be taken against the Republic. It is a well-settled rule that the
Republic or its government is not estopped by mistake or error on the part of
its officials or agents.
In any case, even granting that the said official was negligent, the doctrine of
estoppel cannot operate against the State. It is a well-settled rule in our
jurisdiction that the Republic or its government is usually not estopped by
mistake or error on the part of its officials or agents (Manila Lodge No. 761
vs. CA, 73 SCRA 166, 186; Republic vs. Marcos, 52 SCRA 238, 244;
Luciano vs. Estrella, 34 SCRA 769). Republic of the Philippines v. Antonio
Bacas, et al., G.R. No. 182913, November 20, 2013.
Sales; sale of real property; authority of the agent must be in writing;
otherwise the sale is null and void. Articles 1874 of the Civil Code provides:
Art. 1874. When a sale of a piece of land or any interest therein is through
an agent, the authority of the latter shall be in writing; otherwise, the sale
shall be void.
Likewise, Article 1878 paragraph 5 of the Civil Code specifically mandates
that the authority of the agent to sell a real property must be conferred in
writing, to wit:
Art. 1878. Special powers of attorney are necessary in the following cases:
(1) x x x
xxx
(5) To enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration;

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x x x.
The foregoing provisions explicitly require a written authority when the sale
of a piece of land is through an agent, whether the sale is gratuitously or for
a valuable consideration. Absent such authority in writing, the sale is null
and void. Spouses Eliseo R. Bautista and Emperatriz C. Bautista v. Spouses
Mila Jalandoni and Antonio Jalandoni and Manila Credit Corporation,
G.R. No. 171464/G.R. No. 199341, November 27, 2013.
Sales; sale of real property; buyer in good faith; conditions to prove good
faith; failure to verify extent and nature of agents authority. A buyer in
good faith is one who buys the property of another without notice that some
other person has a right to or interest in such property. He is a buyer for
value if he pays a full and fair price at the time of the purchase or before he
has notice of the claim or interest of some other person in the property.
Good faith connotes an honest intention to abstain from taking
unconscientious advantage of another.To prove good faith, the following
conditions must be present: (a) the seller is the registered owner of the land;
(b) the owner is in possession thereof; and (3) at the time of the sale, the
buyer was not aware of any claim or interest of some other person in the
property, or of any defect or restriction in the title of the seller or in his
capacity to convey title to the property. All these conditions must be present,
otherwise, the buyer is under obligation to exercise extra ordinary diligence
by scrutinizing the certificates of title and examining all factual
circumstances to enable him to ascertain the sellers title and capacity to
transfer any interest in the property. Spouses Eliseo R. Bautista and
Emperatriz C. Bautista v. Spouses Mila Jalandoni and Antonio Jalandoni
and Manila Credit Corporation, G.R. No. 171464/G.R. No. 199341,
November 27, 2013.
Sales; sale of real property on installment; grace period. Section 3(a) of R.A.
6552 provides that the total grace period corresponds to one month for every
one year of installment payments made, provided that the buyer may
exercise this right only once in every five years of the life of the contract and
its extensions. The buyers failure to pay the installments due at the
expiration of the grace period allows the seller to cancel the contract after 30
days from the buyers receipt of the notice of cancellation or demand for
rescission of the contract by a notarial act.

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Sale of real property on installment; cash surrender value; when the buyer is
entitled thereto. Republic Act No. 6552, also known as the Maceda Law, or
the Realty Installment Buyer Protection Act, has the declared public policy
of protecting buyers of real estate on installment payments against onerous
and oppressive conditions.
Section 3 of R.A. 6552 provides for the rights of a buyer who has paid at
least two years of installments but defaults in the payment of succeeding
installments. Section 3 provides that in all transactions or contracts involving
the sale or financing of real estate on installment payments, including
residential condominium apartments but excluding industrial lots,
commercial buildings and sales to tenants under R.A. No. 3844, as amended
by R.A. No. 6389, where the buyer has paid at least two years of
installments, the buyer is entitled to the following rights in case he defaults
in the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within
the total grace period earned by him which is hereby fixed at the rate of one
month grace period for every one year of installment payments made:
Provided, That this right shall be exercised by the buyer only once in every
five years of the life of the contract and its extensions, if any.
(b) If the contract is cancelled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty per cent
of the total payments made, and, after five years of installments, an
additional five per cent every year but not to exceed ninety per cent of the
total payments made: Provided, That the actual cancellation of the contract
shall take place after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act and
upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the
computation of the total number of installment payments made. Gatchalian
Realty, Inc. v. Evelyn Angeles, G.R. No. 202358, November 27, 2013.
Sales; sale of real property on installment; cancellation of; twin requirements
of a notarized notice of cancellation and a refund of the cash surrender
value. The Court has been consistent in ruling that a valid and effective

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

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The reason behind the law was explained in the case of Fewkes vs.
Vasquez,where it was noted that under Section 21 of the Land Registration
Act an application for registration of land is required to contain, among
others, a description of the land subject of the proceeding, the name, status
and address of the applicant, as well as the names and addresses of all
occupants of the land and of all adjoining owners, if known, or if unknown,
of the steps taken to locate them. When the application is set by the court for
initial hearing, it is then that notice (of the hearing), addressed to all persons
appearing to have an interest in the lot being registered and the adjoining
owners, and indicating the location, boundaries and technical description of
the land being registered, shall be published in the Official Gazette for two
consecutive times. It is this publication of the notice of hearing that is
considered one of the essential bases of the jurisdiction of the court in land
registration cases, for the proceedings being in rem, it is only when there is
constructive seizure of the land, effected by the publication and notice, that
jurisdiction over the res is vested on the court. Furthermore, it is such notice
and publication of the hearing that would enable all persons concerned, who
may have any rights or interests in the property, to come forward and show
to the court why the application for registration thereof is not to be
granted.Republic of the Philippines v. Antonio Bacas, et al., G.R. No.
182913, November 20, 2013.
Land registration; any title to inalienable public land is void ab initio; all
proceedings of the Land Registration Court involving the such property is
without legal effect, hence cannot attain finality. In Collado v. Court of
Appeals and the Republic, the Court declared that any title to an inalienable
public land is void ab initio. Any procedural infirmities attending the filing
of the petition for annulment of judgment are immaterial since the LRC
never acquired jurisdiction over the property. All proceedings of the LRC
involving the property are null and void and, hence, did not create any legal
effect. A judgment by a court without jurisdiction can never attain finality.
The Land Registration Court has no jurisdiction over non-registrable
properties, such as public navigable rivers which are parts of the public
domain, and cannot validly adjudge the registration of title in favor of
private applicant. Republic of the Philippines v. Antonio Bacas, et al., G.R.
No. 182913, November 20, 2013.
Land registration; confirmation and registration of imperfect and incomplete
title; qualifications. C.A. No. 141 governs the classification and disposition

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of lands of the public domain. Section 11 of C.A. No. 141 provides, as one
of the modes of disposing public lands that are suitable for agriculture, the
confirmation of imperfect or incomplete titles. Section 48, on the other
hand, enumerates those who are considered to have acquired an imperfect or
incomplete title over public lands and, therefore, entitled to confirmation and
registration under the Land Registration Act.
As amended by P.D. No. 1073 on January 25, 1977, Section 48(b) of C.A.
No. 141 provides:
Section 48. The following described citizens of the Philippines, occupying
lands of the public domain or claiming to own any such lands or an interest
therein, but whose titles have not been perfected or completed, may apply to
the Court of First Instance [now Regional Trial Court] of the province where
the land is located for confirmation of their claims and the issuance of a
certificate of title therefor, under the Land Registration Act, to wit:
xxxx
(b) Those who by themselves or through their predecessors-in-interest have
been in open, continuous, exclusive, and notorious possession and
occupation of agricultural lands of the public domain, under a bona fide
claim of acquisition or ownership, since June 12, 1945, or earlier,
immediately preceding the filing of the application for confirmation of title
except when prevented by war or force majeure. These shall be conclusively
presumed to have performed all the conditions essential to a Government
grant and shall be entitled to a certificate of title under the provisions of this
chapter.
Prior to the amendment introduced by P.D. No. 1073, Section 48(b) of C.A.
No. 141, then operated under the Republic Act (R.A.) No. 1942 (June 22,
1957) amendment, which reads:
(b) Those who by themselves or through their predecessors-in-interest have
been in open, continuous, exclusive and notorious possession and occupation
of agricultural lands of the public domain, under a bona fide claim of
acquisition or ownership, for at least thirty years, immediately preceding the
filing of the application for confirmation of title except when prevented by

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war or force majeure. These shall be conclusively presumed to have


performed all the conditions essential to a Government grant and shall be
entitled to a certificate of title under the provisions of this chapter.
xxx
In relation to C.A. No. 141, Section 14 of Presidential Decree P.D.) No.
1529 or the Property Registration Decree specifies those who are qualified to
register their incomplete title over an alienable and disposable public land
under the Torrens system. P.D. No. 1529, which was approved on June 11,
1978, superseded and codified all laws relative to the registration of
property.
The pertinent portion of Section 14 of P.D. No. 1529 reads:
Section 14. Who may apply. The following persons may file in the proper
Court of First Instance [now Regional Trial Court] an application for
registration of title to land, whether personally or through their duly
authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have
been in open, continuous, exclusive and notorious possession and occupation
of alienable and disposable lands of the public domain under a bona fide
claim of ownership since June 12, 1945, or earlier.
Roman Catholic Archbishop of Manila v. Cresencia Sta. Teresa Ramos,
assisted by her husband, Ponciano Francisco, G.R. No. 179181, November
18, 2013.
Land registration; confirmation and registration of imperfect and incomplete
title; open, continuous, exclusive and notorious possession. The possession
contemplated by Section 48(b) of C.A. No. 141 is actual, not fictional or
constructive. In Carlos v Republic of the Philippines,the Court explained the
character of the required possession, as follows:
The law speaks of possession and occupation. Since these words are
separated by the conjunction and, the clear intention of the law is not to
make one synonymous with the other. Possession is broader than occupation

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Lexoterica: Compilation of SC Rulings

because it includes constructive possession. When, therefore, the law adds


the word occupation, it seeks to delimit the all-encompassing effect of
constructive possession. Taken together with the words open, continuous,
exclusive and notorious, the word occupation serves to highlight the fact that
for an applicant to qualify, his possession must not be a mere fiction. Actual
possession of a land consists in the manifestation of acts of dominion over it
of such a nature as a party would naturally exercise over his own property.
Proof of actual possession of the property at the time of the filing of the
application is required because the phrase adverse, continuous, open, public,
and in concept of owner, the RCAM used to describe its alleged possession,
is a conclusion of law,not an allegation of fact. Possession is open when it is
patent, visible, apparent [and] notorious x x x continuous when
uninterrupted, unbroken and not intermittent or occasional; exclusive when
[the possession is characterized by acts manifesting] exclusive dominion
over the land and an appropriation of it to [the applicant's] own use and
benefit; and notorious when it is so conspicuous that it is generally known
and talked of by the public or the people in the neighborhood.Roman
Catholic Archbishop of Manila v. Cresencia Sta. Teresa Ramos, assisted by
her husband, Ponciano Francisco, G.R. No. 179181, November 18,
2013. Land registration; lands forming part of a military reservation are
inalienable, hence not registrable. The law governing the applications was
Commonwealth Act (C.A.) No. 141,as amended by RA 1942, particularly
Sec. 48(b) which provided that those who by themselves or through their
predecessors in interest have been in open, continuous, exclusive and
notorious possession and occupation of agricultural lands of the public
domain, under a bona fide claim of acquisition of ownership, for at least
thirty years immediately preceding the filing of the application for
confirmation of title except when prevented by war or force majeure. These
shall be conclusively presumed to have performed all the conditions
essential to a Government grant and shall be entitled to a certificate of title
under the provisions of this chapter.
As can be gleaned therefrom, the necessary requirements for the grant of an
application for land registration are the following:
1. The applicant must, by himself or through his predecessors-in-interest,
have been in possession and occupation of the subject land;

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2. The possession and occupation must be open, continuous, exclusive and


notorious;
3. The possession and occupation must be under a bona fide claim of
ownership for at least thirty years immediately preceding the filing of the
application; and
4. The subject land must be an agricultural land of the public domain. As
earlier stated, in 1938, President Quezon issued Presidential Proclamation
No. 265, which took effect on March 31, 1938, reserving for the use of the
Philippine Army parcels of the public domain situated in the barrios of
Bulua and Carmen, then Municipality of Cagayan, Misamis Oriental. The
subject parcels of land were withdrawn from sale or settlement or reserved
for military purposes, subject to private rights, if any there be.
Such power of the President to segregate lands was provided for in Section
64(e) of the old Revised Administrative Code and C.A. No. 141 or the
Public Land Act. Later, the power of the President was restated in Section
14, Chapter 4, Book III of the 1987 Administrative Code. When a property
is officially declared a military reservation, it becomes inalienable and
outside the commerce of man.It may not be the subject of a contract or of a
compromise agreement. A property continues to be part of the public
domain, not available for private appropriation or ownership, until there is a
formal declaration on the part of the government to withdraw it from being
such. In the case of Republic v. Court of Appeals and De Jesus, it was even
stated that
Lands covered by reservation are not subject to entry, and no lawful
settlement on them can be acquired.The claims of persons who have settled
on, occupied, and improved a parcel of public land which is later included in
a reservation are considered worthy of protection and are usually respected,
but where the President, as authorized by law, issues a proclamation
reserving certain lands and warning all persons to depart therefrom, this
terminates any rights previously acquired in such lands by a person who was
settled thereon in order to obtain a preferential right of purchase. And
patents for lands which have been previously granted, reserved from sale, or
appropriate, are void. Republic of the Philippines v. Antonio Bacas, et al.,
G.R. No. 182913, November 20, 2013.

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Trademark registration; not a mode of acquiring ownership but merely


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

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Lexoterica: Compilation of SC Rulings

Birkenstock Orthopaedi GmBH and Co. Kg, etc. v. Philippine Shoe Expo
Marketing Corp., G.R. No. 194307, November 20, 2013.

September 2013 Philippine Supreme


Court Decisions on Civil Law
Posted on October 16, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

Here are select September 2013 rulings of the Supreme Court of the
Philippines on civil law:
CIVIL CODE
Civil registry; nature of civil register books; books making up the civil
register and all documents relating thereto are public documents and shall be
prima facie evidence of the facts therein contained; as public documents,
they are admissible in evidence even without further proof of their due
execution and genuineness.There is no question that the documentary
evidence submitted by petitioner are all public documents. As provided in
the Civil Code:
ART. 410. The books making up the civil register and all documents relating
thereto shall be considered public documents and shall be prima facie
evidence of the facts therein contained.
As public documents, they are admissible in evidence even without further
proof of their due execution and genuineness. Thus, the RTC erred when it
disregarded said documents on the sole ground that the petitioner did not
present the records custodian of the NSO who issued them to testify on their
authenticity and due execution since proof of authenticity and due execution
was not anymore necessary. Moreover, not only are said documents
admissible, they deserve to be given evidentiary weight because they
constitute prima facie evidence of the facts stated therein. And in the instant
case, the facts stated therein remain unrebutted since neither the private
respondent nor the public prosecutor presented evidence to the contrary. In

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Lexoterica: Compilation of SC Rulings

Yasuo Iwasawa v. Felisa Custodio Gangan (a.k.a. Felisa Gangan


Arambulo and Felisa Gangan Iwasawa), et al., G.R. No. 204169,
September 11, 2013.
Contracts; contract to sell distinguished from contract of sale; in a contract
to sell, ownership remains with the vendor and does not pass to the vendee
until full payment of the purchase price; a deed of sale is absolute when
there is no stipulation in the contract that title to the property remains with
the seller until the full payment of the purchase price. In a conditional sale,
as in a contract to sell, ownership remains with the vendor and does not pass
to the vendee until full payment of the purchase price. The full payment of
the purchase price partakes of a suspensive condition, and non-fulfillment of
the condition prevents the obligation to sell from arising. To differentiate, a
deed of sale is absolute when there is no stipulation in the contract that title
to the property remains with the seller until full payment of the purchase
price. Ramos v. Heruela held that Articles 1191 and 1592 of the Civil Code
are applicable to contracts of sale, while R.A. No. 6552 applies to contracts
to sell. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No.
179594, September 11, 2013.

Contracts; lease contracts; lease contracts survive the death of the parties and
continue to bind the heirs except if the contract states otherwise; the
provision in the lease contract stating that this contract is nontransferable
unless prior written consent of the lessor is obtained in writing refers to
transfers inter vivos and not transmissions mortis causa. The Supreme Court
has previously ruled that lease contracts, by their nature, are not personal.
The general rule, therefore, is lease contracts survive the death of the parties
and continue to bind the heirs except if the contract states otherwise. In Sui
Man Hui Chan v. Court of Appeals, we held that: A lease contract is not
essentially personal in character. Thus, the rights and obligations therein are
transmissible to the heirs. The general rule, therefore, is that heirs are bound
by contracts entered into by their predecessors-in-interest except when the
rights and obligations arising therefrom are not transmissible by (1) their
nature, (2) stipulation or (3) provision of law. In the subject Contract of
Lease, not only were there no stipulations prohibiting any transmission of
rights, but its very terms and conditions explicitly provided for the
transmission of the rights of the lessor and of the lessee to their respective

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heirs and successors. The contract is the law between the parties. The death
of a party does not excuse nonperformance of a contract, which involves a
property right, and the rights and obligations thereunder pass to the
successors or representatives of the deceased. Similarly, nonperformance is
not excused by the death of the party when the other party has a property
interest in the subject matter of the contract. Section 6 of the lease contract
provides that [t]his contract is nontransferable unless prior consent of the
lessor is obtained in writing. Section 6 refers to transfers inter vivos and not
transmissions mortis causa. What Section 6 seeks to avoid is for the lessee
to substitute a third party in place of the lessee without the lessors consent.
Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No. 179594,
September 11, 2013.
Contracts; lease contracts; sublease arrangement; concept. Assignment or
transfer of lease, which is covered by Article 1649 of the Civil Code, is
different from a sublease arrangement, which is governed by Article 1650 of
the same Code. In a sublease, the lessee becomes in turn a lessor to a sublessee. The sub-lessee then becomes liable to pay rentals to the original
lessee. However, the juridical relation between the lessor and lessee is not
dissolved. The parties continue to be bound by the original lease contract.
Thus, in a sublease arrangement, there are at least three parties and two
distinct juridical relations. Manuel Uy & Sons, Inc. v. Valbueco,
Incorporated, G.R. No. 179594, September 11, 2013.
Contracts; lease contracts; lessees right upon the termination of the lease to
(a) claim reimbursement from the lessor for half the value of the useful
improvements introduced by the lessee in good faith, or to (b) demolish of
such improvements. The CA erred in not applying Article 1678 of the Civil
Code which provides: Art. 1678. If the lessee makes, in good faith, useful
improvements which are suitable to the use for which the lease is intended,
without altering the form or substance of the property leased, the lessor upon
the termination of the lease shall pay the lessee one-half of the value of the
improvements at that time. Should the lessor refuse to reimburse said
amount, the lessee may remove the improvements, even though the principal
thing may suffer damage thereby. He shall not, however, cause any more
impairment upon the property leased than is necessary. With regard to
ornamental expenses, the lessee shall not be entitled to any reimbursement,
but he may remove the ornamental objects, provided no damage is caused to
the principal thing, and the lessor does not choose to retain them by paying

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their value at the time the lease is extinguished.


The foregoing provision applies if the improvements were: (1) introduced in
good faith; (2) useful; and (3) suitable to the use for which the lease is
intended, without altering the form and substance. We find that the
aforementioned requisites are satisfied in this case. The buildings were
constructed before Germans demise, during the subsistence of a valid
contract of lease. It does not appear that HDSJ prohibited German from
constructing the buildings. Thus, HDSJ should have reimbursed German (or
his estate) half of the value of the improvements as of 2001. If HDSJ is not
willing to reimburse the Inocencios, then the latter should be allowed to
demolish the buildings. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated,
G.R. No. 179594, September 11, 2013.
Contracts; tortious interference; elements; exception. As correctly pointed
out by the Inocencios, tortious interference has the following elements: (1)
existence of a valid contract; (2) knowledge on the part of the third person of
the existence of the contract; and (3) interference of the third person without
legal justification or excuse. In So Ping Bun v. Court of Appeals, we held
that there was no tortious interference if the intrusion was impelled by
purely economic motives. In So Ping Bun, we explained that: Authorities
debate on whether interference may be justified where the defendant acts for
the sole purpose of furthering his own financial or economic interest. One
view is that, as a general rule, justification for interfering with the business
relations of another exists where the actors motive is to benefit himself.
Such justification does not exist where his sole motive is to cause harm to
the other. Added to this, some authorities believe that it is not necessary that
the interferers interest outweighs that of the party whose rights are invaded,
and that an individual acts under an economic interest that is substantial, not
merely de minimis, such that wrongful and malicious motives are negatived,
for he acts in self-protection. Moreover, justification for protecting ones
financial position should not be made to depend on a comparison of his
economic interest in the subject matter with that of others. It is sufficient if
the impetus of his conduct lies in a proper business interest rather than in
wrongful motives. Analita P. Inocencion, substituting for Ramon
Inocencion (deceased) v. Hospicio de San Jose, G.R. No. 201787,
September 25, 2013.
Damages; loss of earning capacity; compensation for lost income is in the

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nature of damages and as such requires due proof of the damages suffered;
there must be unbiased proof of the deceaseds income. In People v. Caraig,
the Supreme Court had drawn two exceptions to the rule that documentary
evidence should be presented to substantiate the claim for damages for loss
of earning capacity, and have thus awarded damages where there is
testimony that the victim was either (1) self-employed earning less than the
minimum wage under current labor laws, and judicial notice may be taken of
the fact that in the victims line of work no documentary evidence is
available; or (2) employed as a daily-wage worker earning less than the
minimum wage under current labor laws. In People of the Philippines v.
Edwin Ibanez y Albante, et al., G.R. No. 197813, September 25, 2013.
Estoppel; requisites. For estoppel to take effect, there must be knowledge of
the real facts by the party sought to be estopped and reliance by the party
claiming estoppel on the representation made by the former. In this case,
petitioner cannot be estopped from asking for the return of the vessel in the
condition that it had been at the time it was seized by respondent because he
had not known of the deteriorated condition of the ship. Ernesto Dy v. Hon.
Gina M. Bibat-Palamos, in her capacity as Presiding Judge of the RTC,
Branch 64, Makati City, and Orix Metro Leasing and Finance Corporation,
G.R. No. 196200, September 11, 2013.
Interest; Judgment award; imposition of interests; under BSP Circular No.
799, effective on July 1, 2013, the interest rate to be imposed for a loan or
forbearance of money, goods or credits and the rate allowed in judgments in
the absence of stipulation thereon, was changed from 12% to 6%. Notice
must be taken that in Resolution No. 796 dated May 16, 2013, the Monetary
Board of the Bangko Sentral ng Pilipinas approved the revision of the
interest rate to be imposed for the loan or forbearance of any money, goods
or credits and the rate allowed in judgments, in the absence of an express
contract as to such rate of interest. Thus, under BSP Circular No. 799, issued
on June 21, 2013 and effective on July 1, 2013, the said rate of interest is
now back at six percent (6%), S.C. Megaworld Construction and
Development Corporation v. Engr. Luis U. Parada, represented by Engr.
Leonardo A. Parada of Genlite Industries, G.R. No. 183804, September 11,
2013.
Laches; concept; the question of laches is addressed to the sound discretion
of the court and, being an equitable doctrine, its application is controlled by

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equitable considerations. Laches has been defined as the failure or neglect


for an unreasonable and unexplained length of time to do that which, by
exercising due diligence, could or should have been done earlier, thus,
giving rise to a presumption that the party entitled to assert it either has
abandoned or declined to assert it.
On this score, it is a well-settled principle of law that laches is a recourse in
equity, which is, applied only in the absence of statutory law. And though
laches applies even to imprescriptible actions, its elements must be proved
positively. Ultimately, the question of laches is addressed to the sound
discretion of the court and, being an equitable doctrine, its application is
controlled by equitable considerations. Citibank, N.A. and the Citigroup
Private Bank v. Ester H. Tanco-Gabaldon, et al./ Carol Lim v. Ester H.
Tanco-Gabaldon, et al., G.R. No. 198444/G.R. No. 198469-70, September
4, 2013.
Obligations; novation; concept; elements. In novation, a subsequent
obligation extinguishes a previous one through substitution either by
changing the object or principal conditions, by substituting another in place
of the debtor, or by subrogating a third person into the rights of the creditor.
Novation requires (a) the existence of a previous valid obligation; (b) the
agreement of all parties to the new contract; (c) the extinguishment of the
old contract; and (d) the validity of the new one. There cannot be novation in
this case since the proposed substituted parties did not agree to the PRAs
supposed assignment of its obligations under the contract for the electrical
and light works at Heritage Park to the HPMC. The latter definitely and
clearly rejected the PRAs assignment of its liability under that contract to
the HPMC. Philippine Reclamation Authority (formerly known as the Public
Estates Authority v. Romago, Inc./Romago, Inc. Vs. Philippine Reclamation
Authority, G.R. Nos. 174665 and 175221, September 18, 2013.
Obligations; novation as a mode of extinguishing an obligation; concept;
novation is never presumed but must be clearly and unequivocally shown.
Novation is a mode of extinguishing an obligation by changing its objects or
principal obligations, by substituting a new debtor in place of the old one, or
by subrogating a third person to the rights of the creditor. It is the
substitution of a new contract, debt, or obligation for an existing one
between the same or different parties. The settled rule is that novation is
never presumed, but must be clearly and unequivocally shown. In order for a

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new agreement to supersede the old one, the parties to a contract must
expressly agree that they are abrogating their old contract in favor of a new
one. Thus, the mere substitution of debtors will not result in novation, and
the fact that the creditor accepts payments from a third person, who has
assumed the obligation, will result merely in the addition of debtors and not
novation, and the creditor may enforce the obligation against both debtors. If
there is no agreement as to solidarity, the first and new debtors are
considered obligated jointly. Philippine Reclamation Authority (formerly
known as thePublic Estates Authority v. Romago, Inc./Romago, Inc. Vs.
Philippine Reclamation Authority,G.R. Nos. 174665 and 175221, September
18, 2013.
SPECIAL LAWS
Land registration; an applicant who seeks to have a land registered in his
name has the burden of proving that he is its owner in fee simple. As held in
Republic v. Lee:
The most basic rule in land registration cases is that no person is entitled to
have land registered under the Cadastral or Torrens system unless he is the
owner in fee simple of the same, even though there is no opposition
presented against such registration by third persons. x x x In order that the
petitioner for the registration of his land shall be permitted to have the same
registered, and to have the benefit resulting from the certificate of title,
finally, issued, the burden is upon him to show that he is the real and
absolute owner, in fee simple.
In First Gas Power Corporation v. Republic of the Philippines, Represented
by the Office of the Solicitor General, G.R. No. 169461, September 2, 2013.
Land registration; Nature of land registration proceedings; land registration
proceedings are in rem in nature and, hence, by virtue of the publication
requirement, all claimants and occupants of the subject property are deemed
to be notified of the existence of a cadastral case involving the subject lots;
parties are precluded from re-litigating the same issues already determined
by final judgment. In this case, records disclose that petitioner itself
manifested during the proceedings before the RTC that there subsists a
decision in a previous cadastral case, i.e., Cad. Case No. 37, which covers

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the same lots it applied apprised of the existence of the foregoing decision
even before the rendition of the RTC Decision and Amended Order through
the LRA Report dated as early as November 24, 1998 which, as abovequoted, states that the subject lots were previously applied for registration
of title in the [c]adastral proceedings and were both decided under [Cad.
Case No. 37], GLRO Record No. 1969, and are subject to the following
annotation x x x: Lots 1298 (45-1) [and] 1315 (61-1) Pte. Nueva
doc. Since it had been duly notified of an existing decision which binds
over the subject lots, it was incumbent upon petitioner to prove that the said
decision would not affect its claimed status as owner of the subject lots in
fee simple. In First Gas Power Corporation v. Republic of the Philippines,
Represented by the Office of the Solicitor General, G.R. No. 169461,
September 2, 2013.
Land registration proceedings; nature; being a proceeding in rem, there is no
need to give personal notice to the owners or claimants of the land sought to
be registered in order to vest the courts with power and authority over the
res. Since no issue was raised as to Antonia Victorinos compliance with the
prerequisites of notice and publication, she is deemed to have followed such
requirements. As a consequence, petitioner is deemed sufficiently notified of
the hearing of Antonias application. Hence, she cannot claim that she is
denied due process. In Crisanta Guido-Enriquez v. Alicia I. Victorino, et al.,
G.R. No. 180427, September 30, 2013.
Land registration; requirement that the application for land registration must
state the full names and addresses of all occupants of the land and those of
the adjoining owners, if known, and if not known, it must state the extent of
the search made to find them. As to the alleged denial of petitioners right to
due process due to Antonia Victorinos failure to identify petitioner as
indispensable party in her application for registration, as well as to serve her
with actual and personal notice, Section 15 of Presidential Decree No. 1529
simply requires that the application for registration shall state the full
names and addresses of all occupants of the land and those of the adjoining
owners, if known, and, if not known, it shall state the extent of the search
made to find them. A perusal of Antonia Victorinos Application shows
that she enumerated the adjoining owners. She also indicated therein that, to
the best of her knowledge, no person has any interest or is in possession of
the subject land. The fact that she did not identify petitioner as an occupant
or an adjoining owner is not tantamount to denial of petitioners right to due

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process and does not nullify the RTC Decision granting such application. In
Crisanta Guido-Enriquez v. Alicia I. Victorino, et al., G.R. No. 180427,
September 30, 2013.
Land Registration; Torrens title; conclusive evidence of ownership of the
land; the phrase married to is merely descriptive of the civil status of the
registered owner. A Torrens title is generally a conclusive evidence of the
ownership of the land referred to, because there is a strong presumption that
it is valid and regularly issued.25 The phrase married to is merely
descriptive of the civil status of the registered owner. In Juan Sevilla Salas,
Jr. v. Eden Villena Aguil, G.R. No. 202370, September 23, 2013.
Marriage; property regimes for marriages that are subsequently declared
void under Article 36 of the Family Code; property acquired during the
marriage is presumed to have been obtained through the couples joint
efforts and governed by the rules on co-ownership. In Dio v. Dio, the
Supreme Court held that Article 147 of the Family Code applies to the union
of parties who are legally capacitated and not barred by any impediment to
contract marriage, but whose marriage is nonetheless declared void under
Article 36 of the Family Code, as in this case. Article 147 of the Family
Code provides:
ART. 147. When a man and a woman who are capacitated to marry each
other, live exclusively with each other as husband and wife without the
benefit of marriage or under a void marriage, their wages and salaries shall
be owned by them in equal shares and the property acquired by both of
them through their work or industry shall be governed by the rules on
coownership.
In the absence of proof to the contrary, properties acquired while they
lived together shall be presumed to have been obtained by their joint
efforts, work or industry, and shall be owned by them in equal shares.
For purposes of this Article, a party who did not participate in the
acquisition by the other party of any property shall be deemed to have
contributed jointly in the acquisition thereof if the formers efforts consisted
in the care and maintenance of the family and of the household.
Neither party can encumber or dispose by acts inter vivos of his or her share

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in the property acquired during cohabitation and owned in common, without


the consent of the other, until after the termination of their cohabitation.
When only one of the parties to a void marriage is in good faith, the share of
the party in bad faith in the co-ownership shall be forfeited in favor of their
common children. In case of default of or waiver by any or all of the
common children or their descendants, each vacant share shall belong to the
respective surviving descendants. In the absence of descendants, such share
shall belong to the innocent party. In all cases, the forfeiture shall take place
upon termination of the cohabitation. (Emphasis supplied)
Under this property regime, property acquired during the marriage is prima
facie presumed to have been obtained through the couples joint efforts and
governed by the rules on co-ownership. In Juan Sevilla Salas, Jr. v. Eden
Villena Aguil, G.R. No. 202370, September 23, 2013.
Marriage; nullity of marriage; a judicial declaration of nullity is required
before a valid subsequent marriage can be contracted, or else, what
transpires is a bigamous marriage. The Supreme Court has consistently held
that a judicial declaration of nullity is required before a valid subsequent
marriage can be contracted; or else, what transpires is a bigamous
marriage, which is void from the beginning as provided in Article 35(4) of
the Family Code of the Philippines. In Yasuo Iwasawa v. Felisa Custodio
Gangan (a.k.a. Felisa Gangan Arambulo and Felisa Gangan
Iwasawa), et al., G.R. No. 204169, September 11, 2013.
Realty Installment Buyer Act; right of buyer to refund on installments in
case he defaults in the payments of succeeding installments accrues only
when he has paid at least two years of installments. Under R.A. No. 6552,
the right of the buyer to refund accrues only when he has paid at least two
years of installments. In this case, respondent has paid less than two years of
installments; hence, it is not entitled to a refund. Manuel Uy & Sons, Inc. v.
Valbueco, Incorporated, G.R. No. 179594, September 11, 2013.

August 2013 Philippine Supreme

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Court Decisions on Civil Law


Posted on September 11, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law

Here are select August 2013 rulings of the Supreme Court of the Philippines
on civil law:
Compensation; Concept; Requisites. Compensation is a mode of
extinguishing to the concurrent amount, the debts of persons who in their
own right are creditors and debtors of each other. The object of
compensation is the prevention of unnecessary suits and payments through
the mutual extinction by operation of law of concurring debts. Article 1279
of the Civil Code provides for the requisites for compensation to take effect:
Article 1279. In order that compensation may be proper, it is necessary:
(1)That each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other;
(2)That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated;
(3)That the two debts be due;
(4)That they be liquidated and demandable;
(5)That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.
Adelaida Soriano v. People of the Philippines, G.R. No. 181692, August 14,
2013.
Compensation; when both debts are liquidated and demandable. A debt is
liquidated when the amount is known or is determinable by inspection of the
terms and conditions of relevant documents. Adelaida Soriano v. People of
the Philippines, G.R. No. 181692, August 14, 2013.

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Contracts; determination of nature of contract. In determining the nature of a


contract, courts are not bound by the title or name given by the parties. The
decisive factor in evaluating such agreement is the intention of the parties, as
shown not necessarily by the terminology used in the contract but by their
conduct, words, actions and deeds prior to, during and immediately after
executing the agreement. As such, therefore, documentary and parol
evidence may be submitted and admitted to prove such intention. Hur Tin
Yang v. People of the Philippines, G.R. No. 195117, August 14, 2013.

Co-ownership; rights of co-owners. Having succeeded to the property as


heirs of Gregoria and Romana, petitioners and respondents became coowners thereof. As co-owners, they may use the property owned in common,
provided they do so in accordance with the purpose for which it is intended
and in such a way as not to injure the interest of the co-ownership or prevent
the other co-owners from using it according to their rights. They have the
full ownership of their parts and of the fruits and benefits pertaining thereto,
and may alienate, assign or mortgage them, and even substitute another
person in their enjoyment, except when personal rights are involved. Each
co-owner may demand at any time the partition of the thing owned in
common, insofar as his share is concerned. Finally, no prescription shall run
in favor of one of the co-heirs against the others so long as he expressly or
impliedly recognizes the co-ownership. Antipolo Ining (deceased), survived
by Manuel Villanueva, Teodora Villanueva-Francisco, Camilo Francisco,
Adolfo Francisco, Lucimo Francisco, Jr., Milagros Francisco,Celedonio
Francisco, Herminigildo Francisco; Ramon Tresvalles, Roberto Tajonera,
Natividad Ining-Ibea (deceased) survived by Edilberto Ibea, Josefa Ibea,
Martha Ibea, Carmen Ibea, Amparo Ibea-Fernandez, Henry Ruiz, Eugenio
Ruiz and Pastor Ruiz; Dolores Ining-Rimon (deceased) survived by Jesus
Rimon, Cesaria Rimon Gonzales and Remedios Rimon Cordero; and Pedro
Ining (deceased) survived by Elisa Tan Ining (wife) and Pedro Ining, Jr. v.
Leonardo R. Vega, substituted by Lourdes Vega, Restonilo I. Vega, Crispulo
M. Vega, Milbuena Vega-Restituto and Lenard Vega, G.R. No. 174727,
August 12, 2013.
Co-ownership; prescription; for prescription to set in, the repudiation must
be done by a co-owner; requisites. Time and again, it has been held that a
co-owner cannot acquire by prescription the share of the other co-owners,

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absent any clear repudiation of the co-ownership. In order that the title may
prescribe in favor of a co-owner, the following requisites must concur: (1)
the co-owner has performed unequivocal acts of repudiation amounting to an
ouster of the other co-owners; (2) such positive acts of repudiation have
been made known to the other co-owners; and (3) the evidence thereof is
clear and convincing. In fine, since none of the co-owners made a valid
repudiation of the existing co-ownership, Leonardo could seek partition of
the property at any time. Antipolo Ining (deceased), survived by Manuel
Villanueva, Teodora Villanueva-Francisco, Camilo Francisco, Adolfo
Francisco, Lucimo Francisco, Jr., Milagros Francisco,Celedonio Francisco,
Herminigildo Francisco; Ramon Tresvalles, Roberto Tajonera, Natividad
Ining-Ibea (deceased) survived by Edilberto Ibea, Josefa Ibea, Martha Ibea,
Carmen Ibea, Amparo Ibea-Fernandez, Henry Ruiz, Eugenio Ruiz and
Pastor Ruiz; Dolores Ining-Rimon (deceased) survived by Jesus Rimon,
Cesaria Rimon Gonzales and Remedios Rimon Cordero; and Pedro Ining
(deceased) survived by Elisa Tan Ining (wife) and Pedro Ining, Jr. v.
Leonardo R. Vega, substituted by Lourdes Vega, Restonilo I. Vega, Crispulo
M. Vega, Milbuena Vega-Restituto and Lenard Vega, G.R. No. 174727,
August 12, 2013.
Damages; actual damages; requires competent proof of the actual amount of
loss. To justify an award for actual damages, there must be competent proof
of the actual amount of loss. Credence can be given only to claims duly
supported by receipts. Respondents did not submit any documentary proof,
like receipts, to support their claim for actual damages. Comsavings Bank
(now GSIS Family Bank) v. Sps. Danilo and Estrella Capistrano, G.R. No.
170942, August 28, 2013.
Damages; attorneys fees; allowed when exemplary damages are awarded or
where the plaintiff has incurred expenses to protect his interest by reason of
defendants act or omission. Article 2208 of the Civil Code allows recovery
of attorneys fees when exemplary damages are awarded or where the
plaintiff has incurred expenses to protect his interest by reason of
defendants act or omission. Considering that exemplary damages were
properly awarded here, and that respondents hired a private lawyer to litigate
its cause, the Supreme Court agrees with the RTC and CA that the
P30,000.00 allowed as attorneys fees were appropriate and reasonable.
Comsavings Bank (now GSIS Family Bank) v. Sps. Danilo and Estrella
Capistrano, G.R. No. 170942, August 28, 2013.

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Damages; Award of attorneys fees and litigation expenses and costs;


justified when there is bad faith. Even granting that Atty. Sabitsana has
ceased to act as the Muertegui familys lawyer, he still owed them his
loyalty. The termination of attorney-client relation provides no justification
for a lawyer to represent an interest adverse to or in conflict with that of the
former client on a matter involving confidential information which the
lawyer acquired when he was counsel. The clients confidence once reposed
should not be divested by mere expiration of professional employment. This
is underscored by the fact that Atty. Sabitsana obtained information from
Carmen which he used to his advantage and to the detriment of his client.
[F]rom the foregoing disquisition, it can be seen that petitioners are guilty of
bad faith in pursuing the sale of the lot despite being apprised of the prior
sale in respondents favor. Moreover, petitioner Atty. Sabitsana has
exhibited a lack of loyalty toward his clients, the Muerteguis, and by his
acts, jeopardized their interests instead of protecting them. Over and above
the trial courts and the CAs findings, this provides further justification for
the award of attorneys fees, litigation expenses and costs in favor of the
respondent. Spouses Celemencio C. Sabitsana, Jr. and Ma. Rosario M.
Sabitsana v. Juanito F. Muertegui, represented by his attorney-in-fact,
Domingo A. Muertegui, Jr., G.R. No. 181359, August 5, 2013.
Damages; Attorneys fees; what constitute bad faith. There was no gross and
evident bad faith on the part of Asian Construction in filing its complaint
against Sumitomo since it was merely seeking payment of its unpaid works
done pursuant to the Agreement. Neither can its subsequent refusal to accept
Sumitomos offered compromise be classified as a badge of bad faith since it
was within its right to either accept or reject the same owing to its
contractual nature. Absent any other just or equitable reason to rule
otherwise, these incidents are clearly off-tangent with a finding of gross and
evident bad faith which altogether negates Sumitomos entitlement to
attorneys fees. Asian Construction and Development Corporation v.
Sumitomo Corporation / Sumitomo Corporation v. Asia Construction and
Development Corporation, G.R. No. 196723 / G.R. No. 196728, August 28,
2013.
Damages; Attorneys fees; when awarded. Jurisprudence dictates that in the
absence of a governing stipulation, attorneys fees may be awarded only in
case the plaintiffs action or defendants stand is so untenable as to amount

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to gross and evident bad faith. This is embodied in Article 2208 of the Civil
Code which states:
Article 2208. In the absence of stipulation, attorneys fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
xxxx
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiffs plainly valid, just and demandable claim;
xxxx
Asian Construction and Development Corporation v. Sumitomo Corporation
/ Sumitomo Corporation v. Asia Construction and Development
Corporation, G.R. No. 196723 / G.R. No. 196728, August 28, 2013.
Damages; Exemplary damages; the law allows the grant of exemplary
damages to set an example for the public good. The law allows the grant of
exemplary damages to set an example for the public good. The business of a
bank is affected with public interest; thus, it makes a sworn profession of
diligence and meticulousness ingiving irreproachable service. For this
reason, the bank should guard against injury attributable to negligence or
bad faith on its part. The banking sector must at all times maintain a high
level of meticulousness. The grant of exemplary damages is justified by the
initial carelessness of petitioner, aggravated by its lack of promptness in
repairing its error. Comsavings Bank (now GSIS Family Bank) v. Sps. Danilo
and Estrella Capistrano, G.R. No. 170942, August 28, 2013.
Damages; Moral damages; recoverable for acts or actions referred to in
Article 20 of the Civil Code. In their amended complaint, respondents
claimed that the acts of GCB Builders and Comsavings Bank had caused
them to suffer sleepless nights, worries and anxieties. The claim was well
founded. Danilo worked in Saudi Arabia in order to pay the loan used for the
construction of their family home. His anxiety and anguish over the
incomplete and defective construction of their house, as well as the
inconvenience he and his wife experienced because of this suit were not
easily probable. On her part, Estrella was a mere housewife, but was the

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attorney-in-fact of Danilo in matters concerning the loan transaction. With


Danilo working abroad, she was alone in overseeing the house construction
and the progress of the present case. Given her situation, she definitely
experienced worries and sleepless nights. The award of moral damages of
P100,000.00 awarded by the CA as exemplary damages is proper.
Comsavings Bank (now GSIS Family Bank) v. Sps. Danilo and Estrella
Capistrano, G.R. No. 170942, August 28, 2013.
Damages; Temperate damages; may be recovered when the court finds that
some pecuniary loss was suffered but its amount cannot be proved with
certainty. Nonetheless, it cannot be denied that they had suffered substantial
losses. Article 2224 of the Civil Code allows the recovery of temperate
damages when the court finds that some pecuniary loss was suffered but its
amount cannot be proved with certainty. In lieu of actual damages, therefore,
temperate damages of P25,000.00 are awarded. Such amount, in the courts
view, is reasonable under the circumstances. Comsavings Bank (now GSIS
Family Bank) v. Sps. Danilo and Estrella Capistrano, G.R. No. 170942,
August 28, 2013.
Damages; Interests; Eastern Shipping Lines guidelines as modified by BSPMB Circular No. 799. The Supreme Court set out the following guidelines
on damages and interest due:
1. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts is breached, the contravenor can be held
liable for damages. The provisions under Title XVIII on Damages of the
Civil Code govern in determining the measure of recoverable damages.
2. With regard particularly to an award of interest in the concept of actual
and compensatory damages, the rate of interest, as well as the accrual
thereof, is imposed, as follows:
(a) When the obligation is breached, and it consists in the payment of a sum
of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially demanded. In the
absence of of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and

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subject to the provisions of Article 1169 the Civil Code.


(b) When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or damages, except when or until
the demand can be established with reasonable certainty. Accordingly,
where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially
(Art. 1169, Civil Code), but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run
only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in
any case, be on the amount finally adjudged.
(c) When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality
until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit. Dario Nacar v. Gallery Frames and/or
Felipe Borde, Jr., G.R. No. 189871, August 13, 2013.
Gross negligence; concept. Based on the provisions, a banking institution
like Comsavings Bank is obliged to exercise the highest degree of diligence
as well as high standards of integrity and performance in all its transactions
because its business is imbued with public interest. As aptly declared in
Philippine National Bank v. Pike: [T]he stability of banks largely depends
on the confidence of the people in the honesty and efficiency of banks.
Gross negligence connotes want of care in the performance of ones duties;
it is a negligence characterized by the want of even slight care, acting or
omitting to act in a situation where there is duty to act, not inadvertently but
willfully and intentionally, with a conscious indifference to consequences
insofar as other persons may be affected. It evinces a thoughtless disregard
of consequences without exerting any effort to avoid them. Comsavings
Bank (now GSIS Family Bank) v. Sps. Danilo and Estrella Capistrano, G.R.
No. 170942, August 28, 2013.

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Interest; Legal rate of interest effective July 1, 2013; pursuant to BSP


Circular 799, series of 2013, the legal rate of interest shall be 6% per annum.
The Court held that [P]ursuant to Circular No. 799, series of 2013 of the
Bangko Sentral ng Pilipinas which took effect July 1, 2013, the amount of
P6,000.00, erroneously paid by Petitioner to the bank, shall earn interest at
the rate of 6% per annum computed from the filing of the Petition in Civil
Case No. 5535 up to its full satisfaction. Virginia M. Venzon v. Rural Bank
of Buenavista, Inc., represented by Lourdesita E. Parajes, G.R. No. 178031,
August 28, 2013.
Interest; legal rate of interest; interest at 6% per annum imposed on award in
favor of illegally dismissed employees. Interest at the rate of 6% per annum
must be imposed on the award for separation pay, back wages, and
attorneys fees to illegally dismissed employees in accordance with Circular
No. 799, Series of 2013 of the Bangko Sentral ng Pilipinas which took effect
July 1, 2013. Vicente Ang v. Seferino San Joaquin, Jr., and Diosdado
Fernandez, Error! Hyperlink reference not valid..
Interest; legal interest; where obligation constitutes a loan or forbearance of
money, goods or credit; legal rate allowed in judgments. In the absence of an
express stipulation as to the rate of interest that would govern the parties, the
rate of legal interest for loans or forbearance of any money, goods or credits
and the rate allowed in judgments shall no longer be 12% per annum. As
reflected in the case of Eastern Shipping Lines and Subsection X305.1 of the
Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and
4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions,
before its amendment by BSP-MB Circular No. 799, the interest rate will
now be 6% per annum effective July 1, 2013. Dario Nacar v. Gallery
Frames and/or Felipe Borde, Jr., G.R. No. 189871, August 13, 2013.
Interest; Legal interest; prospective application. It should be noted that the
new rate could only be applied prospectively and not retroactively.
Consequently, the 12% per annum legal interest shall apply only until June
30, 2013. Come July 1, 2013 the new rate of 6% per annum shall be the
prevailing rate of interest when applicable. Nonetheless, with regard to those
judgments that have become final and executory prior to July 1, 2013, said
judgments shall not be disturbed and shall continue to be implemented
applying the rate of interest fixed therein. Dario Nacar v. Gallery Frames
and/or Felipe Borde, Jr., G.R. No. 189871, August 13, 2013.

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Laches; definition. The Court observes that laches had already set in, thereby
precluding the Andrades from pursuing their claim. Case law defines laches
as the failure to assert a right for an unreasonable and unexplained length of
time, warranting a presumption that the party entitled to assert it has either
abandoned or declined to assert it. Bobby Tan v. Grace Andrade, et
al./Grace Andrade, et al. v. Bobby Tan, G.R. Nos. 171904 & 172017,
August 7, 2013.
Quasi-contracts; solutio indebiti; concept. In a controversy over payment
made after the foreclosure of the mortgaged property, the Court held: Since
respondent was not entitled to receive the said amount, as it is deemed fully
paid from the foreclosure of petitioners property since its bid price at the
auction sale covered all that petitioner owed it by way of principal, interest,
attorneys fees and charges, it must return the same to petitioner. If
something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises. Virginia M.
Venzon v. Rural Bank of Buenavista, Inc., represented by Lourdesita E.
Parajes, G.R. No. 178031, August 28, 2013.
Sales; double sale involving unregistered land; Article 1544 of the Civil
Code does not apply; prior sale, even if made through an unnotarized deed
of sale, prevails; registration of second sale is unavailing as registration does
not vest title; Under Act 3344, registration if instruments affecting
unregistered lands is without prejudice to a third party with a better right;
actual and prior knowledge of the first sale makes the subsequent buyers
purchasers in bad faith. Article 1544 of the Civil Code does not apply to
sales involving unregistered land. Both the trial court and the CA are,
however, wrong in applying Article 1544 of the Civil Code. Both courts
seem to have forgotten that the provision does not apply to sales involving
unregistered land. Suffice it to state that the issue of the buyers good or bad
faith is relevant only where the subject of the sale is registered land, and the
purchaser is buying the same from the registered owner whose title to the
land is clean. In such case, the purchaser who relies on the clean title of the
registered owner is protected if he is a purchaser in good faith for value.
The sale to respondent Juanito was executed on September 2, 1981 via an
unnotarized deed of sale, while the sale to petitioners was made via a
notarized document only on October 17, 1991, or ten years thereafter. Thus,
Juanito who was the first buyer has a better right to the lot, while the

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subsequent sale to petitioners is null and void, because when it was made,
the seller Garcia was no longer the owner of the lot. Nemo dat quod non
habet.
The fact that the sale to Juanito was not notarized does not alter anything,
since the sale between him and Garcia remains valid nonetheless.
Notarization, or the requirement of a public document under the Civil Code,
is only for convenience, and not for validity or enforceability. And because
it remained valid as between Juanito and Garcia, the latter no longer had the
right to sell the lot to petitioners, for his ownership thereof had ceased.
Nor can petitioners registration of their purchase have any effect on
Juanitos rights. The mere registration of a sale in ones favor does not give
him any right over the land if the vendor was no longer the owner of the
land, having previously sold the same to another even if the earlier sale was
unrecorded. Neither could it validate the purchase thereof by petitioners,
which is null and void. Registration does not vest title; it is merely the
evidence of such title. Our land registration laws do not give the holder any
better title than what he actually has.
Under Act No. 3344, registration of instruments affecting unregistered lands
is without prejudice to a third party with a better right. The aforequoted
phrase has been held by the Court to mean that the mere registration of a sale
in ones favor does not give him any right over the land if the vendor was
not anymore the owner of the land having previously sold the same to
somebody else even if the earlier sale was unrecorded.
Petitioners defense of prescription, laches and estoppel are unavailing since
their claim is based on a null and void deed of sale. The fact that the
Muerteguis failed to interpose any objection to the sale in petitioners favor
does not change anything, nor could it give rise to a right in their favor; their
purchase remains void and ineffective as far as the Muerteguis are
concerned. Spouses Celemencio C. Sabitsana, Jr. and Ma. Rosario M.
Sabitsana v. Juanito F. Muertegui, represented by his attorney-in-fact,
Domingo A. Muertegui, Jr., G.R. No. 181359, August 5, 2013.
Sales; actual and prior knowledge of the first sale makes the subsequent
buyers purchasers in bad faith. Petitioners actual and prior knowledge of the

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first sale to Juanito makes them purchasers in bad faith. It also appears that
petitioner Atty. Sabitsana was remiss in his duties as counsel to the
Muertegui family. Instead of advising the Muerteguis to register their
purchase as soon as possible to forestall any legal complications that
accompany unregistered sales of real property, he did exactly the opposite:
taking advantage of the situation and the information he gathered from his
inquiries and investigation, he bought the very same lot and immediately
caused the registration thereof ahead of his clients, thinking that his purchase
and prior registration would prevail. The Court cannot tolerate this
mercenary attitude. Instead of protecting his clients interest, Atty. Sabitsana
practically preyed on him. Spouses Celemencio C. Sabitsana, Jr. and Ma.
Rosario M. Sabitsana v. Juanito F. Muertegui, represented by his attorneyin-fact, Domingo A. Muertegui, Jr., G.R. No. 181359, August 5, 2013.
Succession; siblings are heirs of decedent who died without issue. Since
Leon died without issue, his heirs are his siblings, Romana and Gregoria,
who thus inherited the property in equal shares. In turn, Romanas and
Gregorias heirs the parties herein became entitled to the property upon
the sisters passing. Under Article 777 of the Civil Code, the rights to the
succession are transmitted from the moment of death. Antipolo Ining
(deceased), survived by Manuel Villanueva, Teodora Villanueva-Francisco,
Camilo Francisco, Adolfo Francisco, Lucimo Francisco, Jr., Milagros
Francisco,Celedonio Francisco, Herminigildo Francisco; Ramon
Tresvalles, Roberto Tajonera, Natividad Ining-Ibea (deceased) survived by
Edilberto Ibea, Josefa Ibea, Martha Ibea, Carmen Ibea, Amparo IbeaFernandez, Henry Ruiz, Eugenio Ruiz and Pastor Ruiz; Dolores IningRimon (deceased) survived by Jesus Rimon, Cesaria Rimon Gonzales and
Remedios Rimon Cordero; and Pedro Ining (deceased) survived by Elisa
Tan Ining (wife) and Pedro Ining, Jr. v. Leonardo R. Vega, substituted by
Lourdes Vega, Restonilo I. Vega, Crispulo M. Vega, Milbuena VegaRestituto and Lenard Vega, G.R. No. 174727, August 12, 2013.
Special Laws
Correction of name; adversary proceeding; impleading and notice to affected
and interested parties; when failure to implead and notify is cured by
publication of notice of hearing; strict compliance with the Rules of Court
mandated when petition involves substantial and controversial alterations.
Respondents birth certificate shows that her full name is Anita Sy, that she

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is a Chinese citizen and a legitimate child of Sy Ton and Sotera Lugsanay. In


filing the petition, however, she seeks the correction of her first name and
surname, her status from legitimate to illegitimate and her citizenship
from Chinese to Filipino. Thus, respondent should have impleaded and
notified not only the Local Civil Registrar but also her parents and siblings
as the persons who have interest and are affected by the changes or
corrections respondent wanted to make.
The fact that the notice of hearing was published in a newspaper of general
circulation and notice thereof was served upon the State will not change the
nature of the proceedings taken. A reading of Sections 4 and 5, Rule 108 of
the Rules of Court shows that the Rules mandate two sets of notices to
different potential oppositors: one given to the persons named in the petition
and another given to other persons who are not named in the petition but
nonetheless may be considered interested or affected parties. Summons
must, therefore, be served not for the purpose of vesting the courts with
jurisdiction but to comply with the requirements of fair play and due process
to afford the person concerned the opportunity to protect his interest if he so
chooses.
While there may be cases where the Court held that the failure to implead
and notify the affected or interested parties may be cured by the publication
of the notice of hearing, earnest efforts were made by petitioners in bringing
to court all possible interested parties. Such failure was likewise excused
where the interested parties themselves initiated the corrections
proceedings; when there is no actual or presumptive awareness of the
existence of the interested parties; or when a party is inadvertently left out.
It is clear from the foregoing discussion that when a petition for cancellation
or correction of an entry in the civil register involves substantial and
controversial alterations, including those on citizenship, legitimacy of
paternity or filiation, or legitimacy of marriage, a strict compliance with the
requirements of Rule 108 ofthe Rules of Court is mandated. If the entries in
the civil register could be corrected or changed through mere summary
proceedings and not through appropriate action wherein all parties who may
be affected by the entries are notified or represented, the door to fraud or
other mischief would be set open, the consequence of which might be
detrimental and far reaching. Republic of the Philppines v. Dr. Norma S.
Lugsanay Uy, G.R. No. 198010, August 12, 2013.

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Correction of name; Appropriate adversary proceeding; definition. What is


meant by appropriate adversary proceeding? Blacks Law Dictionary
defines adversary proceeding as follows:
One having opposing parties; contested, as distinguished from an ex parte
application, one of which the party seeking relief has given legal warning to
the other party, and afforded the latter an opportunity to contest it. Excludes
an adoption proceeding. Republic of the Philppines v. Dr. Norma S.
Lugsanay Uy, G.R. No. 198010, August 12, 2013.
Correction of name; errors in a civil registry and facts established in an
appropriate adversary proceeding. It has been settled in a number of cases
starting with Republic v. Valencia that even substantial errors in a civil
registry may be corrected and the true facts established provided the parties
aggrieved by the error avail themselves of the appropriate adversary
proceeding. The pronouncement of the Court in that case is illuminating:
It is undoubtedly true that if the subject matter of a petition is not for the
correction of clerical errors of a harmless and innocuous nature, but one
involving nationality or citizenship, which is indisputably substantial as well
as controverted, affirmative relief cannot be granted in a proceeding
summary in nature. However, it is also true that a right in law may be
enforced and a wrong may be remedied as long as the appropriate remedy is
used. This Court adheres to the principle that even substantial errors in a
civil registry may be corrected and the true facts established provided the
parties aggrieved by the error avail themselves of the appropriate adversary
proceeding. Republic of the Philppines v. Dr. Norma S. Lugsanay Uy, G.R.
No. 198010, August 12, 2013.
Family Relations; Conjugal property; presumption that all property of the
marriage is presumed to belong to the conjugal partnership, unless it be
proved that it pertains exclusively to the husband or to the wife; for
presumption to apply, party invoking the same must preliminarily prove that
the property was indeed acquired during the marriage; presumption cannot
apply where there is no showing as to when the property alleged to be
conjugal was acquired. Pertinent to the resolution of this second issue is
Article 160 of the Civil Code which states that [a]ll property of the
marriage is presumed to belong to the conjugal partnership, unless it be

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proved that it pertains exclusively to the husband or to the wife. For this
presumption to apply, the party invoking the same must, however,
preliminarily prove that the property was indeed acquired during the
marriage. As held in Go v. Yamane:
x x As a condition sine qua non for the operation of [Article 160] in favor of
the conjugal partnership, the party who invokes the presumption must first
prove that the property was acquired during the marriage.
In other words, the presumption in favor of conjugality does not operate if
there is no showing of when the property alleged to be conjugal was
acquired. Moreover, the presumption may be rebutted only with strong,
clear, categorical and convincing evidence. There must be strict proof of the
exclusive ownership of one of the spouses, and the burden of proof rests
upon the party asserting it.
In this case, there is no evidence to indicate when the property was acquired
by petitioner Josefina. Thus, we agree with petitioner Josefinas declaration
in the deed of absolute sale she executed in favor of the respondent that she
was the absolute and sole owner of the property. Bobby Tan v. Grace
Andrade, et al./Grace Andrade, et al. v. Bobby Tan, G.R. Nos. 171904 &
172017, August 7, 2013.
Family relations. Under the Family Code, family relations, which is the
primary basis for succession, exclude relations by affinity. Antipolo Ining
(deceased), survived by Manuel Villanueva, Teodora Villanueva-Francisco,
Camilo Francisco, Adolfo Francisco, Lucimo Francisco, Jr., Milagros
Francisco,Celedonio Francisco, Herminigildo Francisco; Ramon
Tresvalles, Roberto Tajonera, Natividad Ining-Ibea (deceased) survived by
Edilberto Ibea, Josefa Ibea, Martha Ibea, Carmen Ibea, Amparo IbeaFernandez, Henry Ruiz, Eugenio Ruiz and Pastor Ruiz; Dolores IningRimon (deceased) survived by Jesus Rimon, Cesaria Rimon Gonzales and
Remedios Rimon Cordero; and Pedro Ining (deceased) survived by Elisa
Tan Ining (wife) and Pedro Ining, Jr. v. Leonardo R. Vega, substituted by
Lourdes Vega, Restonilo I. Vega, Crispulo M. Vega, Milbuena VegaRestituto and Lenard Vega, G.R. No. 174727, August 12, 2013.
Land titles; indefeasibility of certificate of title to public land issued

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pursuant to a grant or patent; false statement exception; reversion of land.


The certificate of title issued pursuant to any grant or patent involving public
lands is as conclusive and indefeasible as any other certificate of title issued
to private lands in the ordinary or cadastral registration proceedings. It is not
subject to collateral attack. However, Section 91 of Commonwealth Act No.
141 (The Public Land Act) provides for the cancellation of the concession,
title or permit granted for any false statement in the application or omission
of facts in the application.
Once a patent is registered and the corresponding certificate of title is issued,
the land covered by it ceases to be part of the public domain and becomes
private property, and the Torrens Title issued pursuant to the patent becomes
indefeasible upon the expiration of one year from the date of issuance of
such patent. However, as held in The Director of Lands v. De Luna, et al.,
even after the lapse of one year, the State may still bring an action under
Section 101 of Commonwealth Act No. 141 for the reversion to the public
domain of land which has been fraudulently granted to private individuals.
The burden of proof rests on the party who asserts the affirmative of an
issue. Republic of the Philippines v. Angeles Bellate, and Spouses Jesus
Cabanto and Marieta Juanerio, G.R. No. 175685, August 7, 2013.
Land titles; Fraud in an application for grant of title to public land or patent;
definition. It was held on Libudan v. Gil that [t]he fraud must consist in an
intentional omission of facts required by law to be stated in the application
or a willful statement of a claim against the truth. It must show some specific
acts intended to deceive and deprive another of his right. The fraud must be
actual and extrinsic, not merely constructive or intrinsic; the evidence
thereof must be clear, convincing and more than merely preponderant,
because the proceedings which are assailed as having been fraudulent are
judicial proceedings which by law, are presumed to have been fair and
regular. Republic of the Philippines v. Angeles Bellate, and Spouses Jesus
Cabanto and Marieta Juanerio, G.R. No. 175685, August 7, 2013.
Trust receipts; purpose. To emphasize, the Trust Receipts Law was created
to to aid in financing importers and retail dealers who do not have sufficient
funds or resources to finance the importation or purchase of merchandise,
and who may not be able to acquire credit except through utilization, as
collateral, of the merchandise imported or purchased. Hur Tin Yang v.
People of the Philippines, G.R. No. 195117, August 14, 2013.

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Trust receipts; when not a trust receipts transaction. Nonetheless, when both
parties enter into an agreement knowing fully well that the return of the
goods subject of the trust receipt is not possible even without any fault on
the part of the trustee, it is not a trust receipt transaction penalized under
Sec. 13 of PD 115 in relation to Art. 315, par. 1(b) of the RPC, as the only
obligation actually agreed upon by the parties would be the return of the
proceeds of the sale transaction. This transaction becomes a mere loan,
where the borrower is obligated to pay the bank the amount spent for the
purchase of the goods. Hur Tin Yang v. People of the Philippines, G.R. No.
195117, August 14, 2013.

July 2013 Philippine Supreme Court


Decisions on Civil Law
Posted on August 23, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

Here are select July 2013 rulings of the Supreme Court of the Philippines in
civil law:
Civil Code
Agency; apparent authority of an agent based on estoppel; concept. In
Woodchild Holdings, Inc. v. Roxas Electric and Construction Company, Inc.
the Court stated that persons dealing with an assumed agency, whether the
assumed agency be a general or special one, are bound at their peril, if they
would hold the principal liable, to ascertain not only the fact of agency but
also the nature and extent of authority, and in case either is controverted, the
burden of proof is upon them to establish it. In other words, when the
petitioner relied only on the words of respondent Alejandro without securing
a copy of the SPA in favor of the latter, the petitioner is bound by the risk
accompanying such trust on the mere assurance of Alejandro.
The same Woodchild case stressed that apparent authority based on estoppel
can arise from the principal who knowingly permit the agent to hold himself
out with authority and from the principal who clothe the agent with indicia

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of authority that would lead a reasonably prudent person to believe that he


actually has such authority. Apparent authority of an agent arises only from
acts or conduct on the part of the principal and such acts or conduct of the
principal must have been known and relied upon in good faith and as a result
of the exercise of reasonable prudence by a third person as claimant and
such must have produced a change of position to its detriment. In the
instant case, the sale to the Spouses Lajarca and other transactions where
Alejandro allegedly represented a considerable majority of the co-owners
transpired after the sale to the petitioner; thus, the petitioner cannot rely
upon these acts or conduct to believe that Alejandro had the same authority
to negotiate for the sale of the subject property to him. Reman Recio v. Heirs
of Spouses Aguego and Maria Altamirano, G.R. No.182349, July 24, 2013.

Agency; definition under the Civil Code; form of contract. Article 1868 of
the Civil Code defines a contract of agency as a contract whereby a person
binds himself to render some service or to do something in representation
or on behalf of another, with the consent or authority of the latter. It may be
express, or implied from the acts of the principal, from his silence or lack of
action, or his failure to repudiate the agency, knowing that another person is
acting on his behalf without authority.
As a general rule, a contract of agency may be oral.
However, it must be written when the law requires a specific form.
Specifically, Article 1874 of the Civil Code provides that the contract of
agency must be written for the validity of the sale of a piece of land or any
interest therein. Otherwise, the sale shall be void. A related provision,
Article 1878 of the Civil Code, states that special powers of attorney are
necessary to convey real rights over immovable properties. Sally Yoshizaki
v. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013.
Agency; general power of attorney; an agency couched in general terms
comprises only acts of administration. The certification is a mere general
power of attorney which comprises all of Joy Trainings business. Article
1877 of the Civil Code clearly states that [a]n agency couched in general
terms comprises only acts of administration, even if the principal should

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

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expressly mentions a sale or that includes a sale as a necessary


ingredient of the authorized act. We unequivocably declared in Cosmic
Lumber Corporation v. Court of Appeals that a special power of attorney
must express the powers of the agent in clear and unmistakable
language for the principal to confer the right upon an agent to sell real
estate. When there is any reasonable doubt that the language so used
conveys such power, no such construction shall be given the document. The
purpose of the law in requiring a special power of attorney in the disposition
of immovable property is to protect the interest of an unsuspecting owner
from being prejudiced by the unwarranted act of another and to caution the
buyer to assure himself of the specific authorization of the putative agent.
Sally Yoshizaki v. Joy Training Center of Aurora, Inc., G.R. No. 174978,
July 31, 2013.
Agency; special power of attorney; required for an agent to sell an
immovable property; authority must be in writing, otherwise sale is void. In
Alcantara v. Nido, the Court emphasized the requirement of an SPA before
an agent may sell an immovable property. In the said case, Revelen was the
owner of the subject land. Her mother, respondent Brigida Nido accepted the
petitioners offer to buy Revelens land at Two Hundred Pesos (P200.00) per
sq m. However, Nido was only authorized verbally by Revelen. Thus, the
Court declared the sale of the said land null and void under Articles 1874
and 1878 of the Civil Code. Reman Recio v. Heirs of Spouses Aguego and
Maria Altamirano, G.R. No.182349, July 24, 2013.
Arrastre operator; functions; duty to take good care of goods and to turn
them over to the party entitled to their possession. The functions of an
arrastre operator involve the handling of cargo deposited on the wharf or
between the establishment of the consignee or shipper and the ships tackle.
Being the custodian of the goods discharged from a vessel, an arrastre
operators duty is to take good care of the goods and to turn them over to the
party entitled to their possession. Handling cargo is mainly the arrastre
operators principal work so its drivers/operators or employees should
observe the standards and measures necessary to prevent losses and damage
to shipments under its custody. Asian Terminals, Inc. v. Philam Insurance
Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co.,
Inc. (now Chartis Philippines Insurance Inc.) v. Westwind Shipping
Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v.
Philam Insurance Co., Inc. and Asian Terminals, Inc., G.R. Nos.

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181163/181262/181319, July 24, 2013.


Attorneys fees; dual concept. In order to resolve the issues in this case, it is
necessary to discuss the two concepts of attorneys fees ordinary and
extraordinary. In its ordinary sense, it is the reasonable compensation paid to
a lawyer by his client for legal services rendered. In its extraordinary
concept, it is awarded by the court to the successful litigant to be paid by the
losing party as indemnity for damages. Francisco L. Rosario, Jr. v. Lellani
De Guzman, Arleen De Guzman, et al., G.R. No. 191247, July 10, 2013.
Attorneys fees for professional services rendered; may be claimed in the
very action itself or in a separate action; prescription for oral contract of
attorneys fees is 6 years; concept of quantum meruit; guidelines under the
Code of Professional Responsibility. The Court now addresses two
important questions: (1) How can attorneys fees for professional services be
recovered? (2) When can an action for attorneys fees for professional
services be filed? The case of Traders Royal Bank Employees UnionIndependent v. NLRC is instructive:
As an adjunctive episode of the action for the recovery of bonus differentials
in NLRC-NCR Certified Case No. 0466, private respondents present claim
for attorneys fees may be filed before the NLRC even though or, better
stated, especially after its earlier decision had been reviewed and partially
affirmed. It is well settled that a claim for attorneys fees may be asserted
either in the very action in which the services of a lawyer had been rendered
or in a separate action.
With respect to the first situation, the remedy for recovering attorneys fees
as an incident of the main action may be availed of only when something is
due to the client. Attorneys fees cannot be determined until after the main
litigation has been decided and the subject of the recovery is at the
disposition of the court. The issue over attorneys fees only arises when
something has been recovered from which the fee is to be paid. While a
claim for attorneys fees may be filed before the judgment is rendered, the
determination as to the propriety of the fees or as to the amount thereof will
have to be held in abeyance until the main case from which the lawyers
claim for attorneys fees may arise has become final. Otherwise, the
determination to be made by the courts will be premature. Of course, a

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

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part of the attorney himself. An attorney must show that he is entitled to


reasonable compensation for the effort in pursuing the clients cause, taking
into account certain factors in fixing the amount of legal fees.
Rule 20.01 of the Code of Professional Responsibility lists the guidelines for
determining the proper amount of attorney fees, to wit:
Rule 20.1 A lawyer shall be guided by the following factors in determining
his fees:
a) The time spent and the extent of the services rendered or required;
b) The novelty and difficulty of the questions involved;
c) The importance of the subject matter;
d) The skill demanded;
e) The probability of losing other employment as a result of acceptance of
the proffered case;
f) The customary charges for similar services and the schedule of fees of the
IBP chapter to which he belongs;
g) The amount involved in the controversy and the benefits resulting to the
client from the service;
h) The contingency or certainty of compensation;
i) The character of the employment, whether occasional or established; and
j) The professional standing of the lawyer.
Francisco L. Rosario, Jr. v. Lellani De Guzman, Arleen De Guzman, et al.,
G.R. No. 191247, July 10, 2013.
Attorneys fees; recoverable in actions for indemnity under workmens

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compensation and employers liability laws. However, the Court finds that
the petitioner is entitled to attorneys fees pursuant to Article 2208(8) of the
Civil Code which states that the award of attorneys fees is justified in
actions for indemnity under workmens compensation and employers
liability laws. Camilo A. Esguerra v. United Philippines Lines, Inc., et al.,
G.R. No. 199932, July 3, 2013.
Attorneys fees; when recoverable. The Court of Appeals rightfully upheld
the NLRCs affirmance of the grant of attorneys fees to San Miguel.
Thereby, the NLRC did not commit any grave abuse of its discretion,
considering that San Miguel had been compelled to litigate and to incur
expenses to protect his rights and interest. In Producers Bank of the
Philippines v. Court of Appeals, the Court ruled that attorneys fees could be
awarded to a party whom an unjustified act of the other party compelled to
litigate or to incur expenses to protect his interest. It was plain that
petitioners refusal to reinstate San Miguel with backwages and other
benefits to which he had been legally entitled was unjustified, thereby
entitling him to recover attorneys fees. Zuellig Freight and Cargo Systems
v. National Labor Relations Commission, et al., G.R. No. 157900, July 22,
2013
Attorneys fees; when recoverable. With respect to the award of attorneys
fees, Article 2208 of the Civil Code provides, among others, that such fees
may be recovered when exemplary damages are awarded, when the
defendants act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest, and where the defendant
acted in gross and evident bad faith in refusing to satisfy the plaintiffs
plainly valid, just and demandable claim. Joyce V. Ardiente v. Spouses
Javier and Ma. Theresa Pastofide, G.R. No. 161921, July 17, 2013.
Common carriers; extraordinary diligence in vigilance of goods transported;
cargoes while being unloaded generally remain under the custody of the
carrier. Common carriers, from the nature of their business and for reasons
of public policy, are bound to observe extraordinary diligence in the
vigilance over the goods transported by them. Subject to certain exceptions
enumerated under Article 1734 of the Civil Code, common carriers are
responsible for the loss, destruction, or deterioration of the goods. The
extraordinary responsibility of the common carrier lasts from the time the
goods are unconditionally placed in the possession of, and received by the

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carrier for transportation until the same are delivered, actually or


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

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installment basis, and as such categorically declared rescission to be not the


proper remedy. This is considering that in a contract to sell, payment of the
price is a positive suspensive condition, failure of which is not a breach of
contract warranting rescission under Article 1191 of the Civil Code but
rather just an event that prevents the supposed seller from being bound to
convey title to the supposed buyer. Also, and as correctly ruled by the CA,
Article 1191 cannot be applied to sales of real property on installment since
they are governed by the Maceda Law.
There being no breach to speak of in case of non-payment of the purchase
price in a contract to sell, as in this case, the RTCs factual finding that
Lourdes was willing and able to pay her obligation a conclusion arrived at
in connection with the said courts determination of whether the nonpayment of the purchase price in accordance with the terms of the contract
was a substantial breach warranting rescission therefore loses significance.
The spouses Bonrostros reliance on the said factual finding is thus
misplaced. They cannot invoke their readiness and willingness to pay their
obligation on November 24, 1993 as an excuse from being made liable for
interest beyond the said date. Sps. Nameal and Lourdes Bonrostro v. Sps.
Juan and Constacia Luna, G.R. No.172346, July 24, 2013.
Damages; damages for loss of earning capacity; must be duly proven by
documentary evidence; exceptions. The Supreme Court agrees with the
Court of Appeals when it removed the RTCs award respecting the
indemnity for the loss of earning capacity. As it has already previously ruled
that damages for loss of earning capacity is in the nature of actual damages,
which as a rule must be duly proven by documentary evidence, not merely
by the self-serving testimony of the widow.
By way of exception, damages for loss of earning capacity may be awarded
despite the absence of documentary evidence when (1) the deceased is selfemployed earning less than the minimum wage under current labor laws, and
judicial notice may be taken of the fact that in the deceaseds line of work no
documentary evidence is available; or (2) the deceased is employed as a
daily wage worker earning less than the minimum wage under current labor
laws. People of the Philippines v. Garry Vergara y Oriel and Joseph
Incencio y Paulino, G.R. No. 177763, July 3, 2013

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Damages; exemplary damages; concept. As for exemplary damages, Article


2229 provides that exemplary damages may be imposed by way of example
or correction for the public good. Nonetheless, exemplary damages are
imposed not to enrich one party or impoverish another, but to serve as a
deterrent against or as a negative incentive to curb socially deleterious
actions. In the instant case, the Court agrees with the CA in sustaining the
award of exemplary damages, although it reduced the amount granted,
considering that respondent spouses were deprived of their water supply for
more than nine (9) months, and such deprivation would have continued were
it not for the relief granted by the RTC. Joyce V. Ardiente v. Spouses Javier
and Ma. Theresa Pastofide, G.R. No. 161921, July 17, 2013.
Damages; exemplary damages; awarded if there is an aggravating
circumstance, whether ordinary or qualifying. Unlike the criminal liability
which is basically a State concern, the award of exemplary damages,
however, is likewise, if not primarily, intended for the offended party who
suffers thereby. It would make little sense for an award of exemplary
damages to be due the private offended party when the aggravating
circumstance is ordinary but to be withheld when it is qualifying. Withal, the
ordinary or qualifying nature of an aggravating circumstance is a distinction
that should only be of consequence to the criminal, rather than to the civil,
liability of the offender. In fine, relative to the civil aspect of the case, an
aggravating circumstance, whether ordinary or qualifying, should entitle the
offended party to an award of exemplary damages within the unbridled
meaning of Article 2230 of the Civil Code. People of the Philippines v.
Garry Vergara y Oriel and Joseph Incencio y Paulino, G.R. No. 177763,
July 3, 2013.
Damages; interest thereon; where obligation does not constitute a loan or
forbearance of money. The CA erred in imposing an interest rate of 12% on
the award of damages. Under Article 2209 of the Civil Code, when an
obligation not constituting a loan or forbearance of money is breached, an
interest on the amount of damages awarded may be imposed at the discretion
of the court at the rate of 6% per annum. In the similar case of Belgian
Overseas Chartering and Shipping NV v. Philippine First Insurance Co.,
lnc., the Court reduced the rate of interest on the damages awarded to the
carrier therein to 6% from the time of the filing of the complaint until the
finality of the decision. Asian Terminals, Inc. v. Philam Insurance Co., Inc.
(now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now

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Chartis Philippines Insurance Inc.) v. Westwind Shipping Corporation and


Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance
Co., Inc. and Asian Terminals, Inc., G.R. Nos. 181163/181262/181319, July
24, 2013.
Damages; moral damages; when recoverable. In Philippine National Bank v.
Spouses Rocamora, the Supreme Court said that:
Moral damages are not recoverable simply because a contract has been
breached. They are recoverable only if the defendant acted fraudulently or in
bad faith or in wanton disregard of his contractual obligations. The breach
must be wanton, reckless, malicious or in bad faith, and oppressive or
abusive. Likewise, a breach of contract may give rise to exemplary damages
only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.
Carlos Lim, et al. v. Development Bank of the Philippines, G.R. No. 177050,
July 1, 2013.
Damages; moral damages; awarded where the victim of a crime suffered a
violent death, even in the absence of proof of mental and emotional suffering
of the victims heirs. The Supreme Court sustained the RTCs award for
moral damages in the amount of P50,000.00 even in the absence of proof of
mental and emotional suffering of the victims heirs. As borne out by human
nature and experience, a violent death invariably and necessarily brings
about emotional pain and anguish on the part of the victims family. While
no amount of damages may totally compensate the sudden and tragic loss of
a loved one it is nonetheless awarded to the heirs of the deceased to at least
assuage them. People of the Philippines v. Garry Vergara y Oriel and
Joseph Incencio y Paulino, G.R. No. 177763, July 3, 2013
Damages; moral and exemplary damages in claims for disability benefits;
not recoverable where employer was not negligent in affording the employee
with medical treatment, and employer did not forsake employee during the
period of disability. The CA correctly denied an award of moral and
exemplary damages. The respondents were not negligent in affording the
petitioner with medical treatment neither did they forsake him during his
period of disability. Camilo A. Esguerra v. United Philippines Lines, Inc., et

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al., G.R. No. 199932, July 3, 2013.


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

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This article, known to contain what is commonly referred to as the principle


of abuse of rights, sets certain standards which must be observed not only in
the exercise of ones rights, but also in the performance of ones duties.
These standards are the following: to act with justice; to give everyone his
due; and to observe honesty and good faith. The law, therefore, recognizes a
primordial limitation on all rights; that in their exercise, the norms of human
conduct set forth in Article 19 must be observed. A right, though by itself
legal because recognized or granted by law as such, may nevertheless
become the source of some illegality. When a right is exercised in a manner
which does not conform with the norms enshrined in Article 19 and results
in damage to another, a legal wrong is thereby committed for which the
wrongdoer must be held responsible. But while Article 19 lays down a rule
of conduct for the government of human relations and for the maintenance
of social order, it does not provide a remedy for its violation. Generally, an
action for damages under either Article 20 or Article 21 would be proper.
Joyce V. Ardiente v. Spouses Javier and Ma. Theresa Pastofide, G.R. No.
161921, July 17, 2013.
Human Relations; civil case for fraud; Article 33 of the Civil Code provides
that a civil case for damages based on fraud may proceed independently of
the criminal case therefor; said civil case will not operate as a prejudicial
question that will justify the suspension of a criminal case. It is well settled
that a civil action based on defamation, fraud and physical injuries may be
independently instituted pursuant to Article 33 of the Civil Code, and does
not operate as a prejudicial question that will justify the suspension of a
criminal case. This was precisely the Courts thrust in G.R. No. 148193,
thus:
Moreover, neither is there a prejudicial question if the civil and the criminal
action can, according to law, proceed independently of each other. Under
Rule 111, Section 3 of the Revised Rules on Criminal Procedure, in the
cases provided in Articles 32, 33, 34 and 2176 of the Civil Code, the
independent civil action may be brought by the offended party. It shall
proceed independently of the criminal action and shall require only a
preponderance of evidence. In no case, however, may the offended party
recover damages twice for the same act or omission charged in the criminal
action.
In the instant case, Civil Case No. 99-95381, for Damages and Attachment

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on account of the alleged fraud committed by respondent and his mother in


selling the disputed lot to PBI is an independent civil action under Article 33
of the Civil Code. As such, it will not operate as a prejudicial question that
will justify the suspension of the criminal case at bar. Rafael Jose Consing,
Jr. v. People of the Philippines, G.R. No. 161075, July 15, 2013.
Letter of credit; definition; nature. A letter of credit is a financial device
developed by merchants as a convenient and relatively safe mode of dealing
with sales of goods to satisfy the seemingly irreconcilable interests of a
seller, who refuses to part with his goods before he is paid, and a buyer, who
wants to have control of his goods before paying. However, letters of credit
are employed by the parties desiring to enter into commercial transactions,
not for the benefit of the issuing bank but mainly for the benefit of the
parties to the original transaction, in these cases, Nichimen Corporation as
the seller and Universal Motors as the buyer. Hence, the latter, as the buyer
of the Nissan CKD parts, should be regarded as the person entitled to
delivery of the goods. Accordingly, for purposes of reckoning when notice
of loss or damage should be given to the carrier or its agent, the date of
delivery to Universal Motors is controlling. Asian Terminals, Inc. v. Philam
Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam
Insurance Co., Inc. (now Chartis Philippines Insurance Inc.) v. Westwind
Shipping Corporation and Asian Terminals, Inc./ Westwind Shipping
Corporation v. Philam Insurance Co., Inc. and Asian Terminals, Inc., G.R.
Nos. 181163/181262/181319, July 24, 2013.
Mortgage; includes all natural or civil fruits and improvements found on the
mortgaged property when the secured obligation becomes due; in case of
non-payment of the secured debt, foreclosure proceedings shall cover not
only the hypothecated property but all its accessions and accessories as well;
indispensable requisite that mortgagor be the absolute owner of the
encumbered property. Rent, as an accessory, follows the principal. In fact,
when the principal property is mortgaged, the mortgage shall include all
natural or civil fruits and improvements found thereon when the secured
obligation becomes due as provided in Article 2127 of the Civil Code, viz:
Art. 2127. The mortgage extends to the natural accessions, to the
improvements, growing fruits, and the rents or income not yet received when
the obligation becomes due, and to the amount of the indemnity granted or
owing to the proprietor from the insurers of the property mortgaged, or in

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virtue of expropriation for public use, with the declarations, amplifications


and limitations established by law, whether the estate remains in the
possession of the mortgagor, or it passes into the hands of a third person.
Consequently, in case of non-payment of the secured debt, foreclosure
proceedings shall cover not only the hypothecated property but all its
accessions and accessories as well. This was illustrated in the early case of
Cu Unjieng e Hijos v. Mabalacat Sugar Co. where the Court held:
That a mortgage constituted on a sugar central includes not only the land on
which it is built but also the buildings, machinery, and accessories installed
at the time the mortgage was constituted as well as the buildings, machinery
and accessories belonging to the mortgagor, installed after the constitution
thereof x x x [.]
Applying such pronouncement in the subsequent case of Spouses Paderes v.
Court of Appeals, the Court declared that the improvements constructed by
the mortgagor on the subject lot are covered by the real estate mortgage
contract with the mortgagee bank and thus included in the foreclosure
proceedings instituted by the latter.
However, the rule is not without qualifications. In Castro, Jr. v. CA the
Court explained that Article 2127 is predicated on the presumption that the
ownership of accessions and accessories also belongs to the mortgagor as the
owner of the principal. After all, it is an indispensable requisite of a valid
real estate mortgage that the mortgagor be the absolute owner of the
encumbered property. Philippine National Bank v. Sps. Bernard and
Cresencia Maraon, G.R.No. 189316, July 1, 2013.
Mortgage; mortgagee in good faith; right to have mortgage lien carried over
and annotated on the new certificate of title. The protection afforded to PNB
as a mortgagee in good faith refers to the right to have its mortgage lien
carried over and annotated on the new certificate of title issued to Spouses
Maraon as so adjudged by the RTC. Thereafter, to enforce such lien thru
foreclosure proceedings in case of non- payment of the secured debt, as PNB
did so pursue. The principle, however, is not the singular rule that governs
real estate mortgages and foreclosures attended by fraudulent transfers to the
mortgagor. Philippine National Bank v. Sps. Bernard and Cresencia

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Maraon, G.R.No. 189316, July 1, 2013.


Obligations; conditions; fulfillment thereof; deemed fulfilled when obligor
voluntarily prevents it fulfillment; requisites. The spouses Bonrostro want to
be relieved from paying interest on the amount of P214,492.62 which the
spouses Luna paid to Bliss as amortizations by asserting that they were
prevented by the latter from fulfilling such obligation. They invoke Art.
1186 of the Civil Code which provides that the condition shall be deemed
fulfilled when the obligor voluntarily prevents its fulfillment.
However, the Court finds Art. 1186 inapplicable to this case. The said
provision explicitly speaks of a situation where it is the obligor who
voluntarily prevents fulfillment of the condition. Here, Constancia is not the
obligor but the obligee. Moreover, even if this significant detail is to be
ignored, the mere intention to prevent the happening of the condition or the
mere placing of ineffective obstacles to its compliance, without actually
preventing fulfillment is not sufficient for the application of Art. 1186. Two
requisites must concur for its application, to wit: (1) intent to prevent
fulfillment of the condition; and, (2) actual prevention of compliance. Sps.
Nameal and Lourdes Bonrostro v. Sps. Juan and Constacia Luna, G.R.
No.172346, July 24, 2013.
Obligations; constructive fulfillment; Article 1186 of the Civil Code;
requisites. As aptly pointed out by the CA, Article 1186 of the Civil Code,
which states that the condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment, does not apply in this case, viz:
Article 1186 enunciates the doctrine of constructive fulfillment of
suspensive conditions, which applies when the following three (3) requisites
concur, viz: (1) The condition is suspensive; (2) The obligor actually
prevents the fulfillment of the condition; and (3) He acts voluntarily.
Suspensive condition is one the happening of which gives rise to the
obligation. It will be irrational for any Bank to provide a suspensive
condition in the Promissory Note or the Restructuring Agreement that will
allow the debtor-promissor to be freed from the duty to pay the loan without
paying it.
Carlos Lim, et al. v. Development Bank of the Philippines, G.R. No. 177050,

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July 1, 2013.
Obligations; if an obligation consists of payment of money, and the debtor
incurs in delay, the indemnity for damages, there being no stipulation to the
contrary, shall be the payment of the interest agreed upon, and in the absence
of stipulation, the legal interest. Under Article 2209 ofthe Civil Code,
[i]fthe obligation consists in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there being no stipulation to the
contrary, shall be the payment of the interest agreed upon, and in the
absence of stipulation, the legal interest x x x. There being no stipulation on
interest in case ofdelay in the payment ofamortization, the CA thus correctly
imposed interest at the legal rate which is now 12%per annum. Sps. Nameal
and Lourdes Bonrostro v. Sps. Juan and Constacia Luna, G.R. No.172346,
July 24, 2013.
Penalties and interest rates; penalties and interest rates should be expressly
stipulated in writing. As to the imposition of additional interest and penalties
not stipulated in the Promissory Notes, this should not be allowed. Article
1956 of the Civil Code specifically states that no interest shall be due
unless it has been expressly stipulated in writing. Thus, the payment of
interest and penalties in loans is allowed only if the parties agreed to it and
reduced their agreement in writing. Carlos Lim, et al. v. Development Bank
of the Philippines, G.R. No. 177050, July 1, 2013.
Prescription; Article 1144 of the Civil Code. We concur with the CAs
ruling that respondents action did not yet prescribe. The legal provision
governing this case was not Article 1146 of the Civil Code, but Article 1144
of the Civil Code, which states:
Article 1144. The following actions must be brought within ten years from
the time the cause of action accrues:
(1)Upon a written contract; (2) Upon an obligation created by law; (3)Upon
a judgment.
Vector Shipping Corporation, et al. v. American Home Assurance Co., et al.,
G.R. No. 159213, July 3, 2013.

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Lexoterica: Compilation of SC Rulings

Property; co-ownership; sale of co-owned property; if only one co-owner


agreed to the sale, said co-owner only sold his aliquot share in the subject
property. But as held by the appellate court, the sale between the petitioner
and Alejandro is valid insofar as the aliquot share of respondent Alejandro is
concerned. Being a co-owner, Alejandro can validly and legally dispose of
his share even without the consent of all the other co-heirs. Since the balance
of the full price has not yet been paid, the amount paid shall represent as
payment to his aliquot share. This then leaves the sale of the lot of the
Altamiranos to the Spouses Lajarca valid only insofar as their shares are
concerned, exclusive of the aliquot part of Alejandro, as ruled by the CA.
Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R.
No.182349, July 24, 2013.
Property; patrimonial property and property of public dominion; patrimonial
property of the State may be the object of prescription, however, those
intended for some public service or the development of national wealth are
property of public dominion, which are not susceptible to acquisition by
prescription; public domain lands become patrimonial property only if there
is a declaration that these are alienable or disposable, together with an
express government manifestation that the property is already patrimonial or
no longer retained for public service or the development of national wealth.
Under Article 422 of the Civil Code, public domain lands become
patrimonial property only if there is a declaration that these are alienable or
disposable, together with an express government manifestation that the
property is already patrimonial or no longer retained for public service or the
development of national wealth. Only when the property has become
patrimonial can the prescriptive period for the acquisition of property of the
public dominion begin to run. Also under Section 14(2) of Presidential
Decree (P.D.) No. 1529, it is provided that before acquisitive prescription
can commence, the property sought to be registered must not only be
classified as alienable and disposable, it must also be expressly declared by
the State that it is no longer intended for public service or the development
of the national wealth, or that the property has been converted into
patrimonial. Absent such an express declaration by the State, the land
remains to be property of public dominion. Dream Village Neighborhood
Association, Inc., represented by its Incumbent President Greg Seriego v.
Bases Conversion Development Authority, G.R. No.192896, July 24, 2013.
Rent; civil fruit; rightful recipient. Rent is a civil fruit that belongs to the

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owner of the property producing it by right of accession. The rightful


recipient of the disputed rent in this case should thus be the owner of the
subject lot at the time the rent accrued. Philippine National Bank v. Sps.
Bernard and Cresencia Maraon, G.R.No. 189316, July 1, 2013.
Subrogation; basis; definition. Consistent with the pertinent law and
jurisprudence, therefore, Exhibit I was already enough by itself to prove the
payment of P7,455,421.00 as the full settlement of Caltexs claim. The
payment made to Caltex as the insured being thereby duly documented,
respondent became subrogated as a matter of course pursuant to Article 2207
of the Civil Code. In legal contemplation, subrogation is the substitution of
another person in the place of the creditor, to whose rights he succeeds in
relation to the debt; and is independent of any mere contractual relations
between the parties to be affected by it, and is broad enough to cover every
instance in which one party is required to pay a debt for which another is
primarily answerable, and which in equity and conscience ought to be
discharged by the latter. Vector Shipping Corporation, et al. v. American
Home Assurance Co., et al., G.R. No. 159213, July 3, 2013.
Subrogation in insurance cases; accrues simply upon payment by the
insurance company of the insurance claim; payment by the insurer to the
insured operates as an equitable assignment to the insurer of all remedies
that the insured may have against the third party whose negligence or
wrongful act caused the loss. The Court holds that petitioner Philam has
adequately established the basis of its claim against petitioners ATI and
Westwind. Philam, as insurer, was subrogated to the rights of the consignee,
Universal Motors Corporation, pursuant to the Subrogation Receipt executed
by the latter in favor of the former. The right of subrogation accrues simply
upon payment by the insurance company of the insurance claim. Petitioner
Philams action finds support in Article 2207 of the Civil Code, which
provides as follows:
Art. 2207. If the plaintiffs property has been insured, and he has received
indemnity from the insurance company for the injury or loss arising out of
the wrong or breach of contract complained of, the insurance company shall
be subrogated to the rights of the insured against the wrongdoer or the
person who has violated the contract. x x x.

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Yet, even with the exclusion of Marine Certificate No. 708-8006717-4, the
Subrogation Receipt, on its own, is adequate proof that petitioner Philam
paid the consignees claim on the damaged goods. Petitioners ATI and
Westwind failed to offer any evidence to controvert the same. In Malayan
Insurance Co., Inc. v. Alberto, the Court explained the effect of payment by
the insurer of the insurance claim in this wise:
We have held that payment by the insurer to the insured operates as an
equitable assignment to the insurer of all the remedies that the insured may
have against the third party whose negligence or wrongful act caused the
loss. The right of subrogation is not dependent upon, nor does it grow out of,
any privity of contract. It accrues simply upon payment by the insurance
company of the insurance claim. The doctrine of subrogation has its roots in
equity. It is designed to promote and accomplish justice; and is the mode
that equity adopts to compel the ultimate payment of a debt by one who, in
justice, equity, and good conscience, ought to pay. Asian Terminals, Inc. v.
Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/
Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.) v.
Westwind Shipping Corporation and Asian Terminals, Inc./ Westwind
Shipping Corporation v. Philam Insurance Co., Inc. and Asian Terminals,
Inc., G.R. Nos. 181163/181262/181319, July 24, 2013.
Tender of payment; concept; tender of payment, if refused without just
cause, will discharge the debtor only after a valid consignation with the
court; when tender of payment is not accompanied by the means of payment,
and the debtor did not take any immediate step to make a consignation, then
interest is not suspended from the time of such tender. Tender of payment
is the manifestation by the debtor of a desire to comply with or pay an
obligation. If refused without just cause, the tender of payment will
discharge the debtor of the obligation to pay but only after a valid
consignation of the sum due shall have been made with the proper court.
Consignation is the deposit of the [proper amount with a judicial authority]
in accordance with rules prescribed by law, after the tender of payment has
been refused or because of circumstances which render direct payment to the
creditor impossible or inadvisable.
Tender of payment, without more, produces no effect. [T]o have the
effect of payment and the consequent extinguishment of the obligation to
pay, the law requires the companion acts of tender of payment and

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

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immediately pay their obligation to avoid the impending foreclosure of their


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

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

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delivered: Provided, That if a notice of loss or damage, either apparent or


concealed, is not given as provided for in this section, that fact shall not
affect or prejudice the right of the shipper to bring suit within one year after
the delivery of the goods or the date when the goods should have been
delivered. Asian Terminals, Inc. v. Philam Insurance Co., Inc. (now Chartis
Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis
Philippines Insurance Inc.) v. Westwind Shipping Corporation and Asian
Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co.,
Inc. and Asian Terminals, Inc., G.R. Nos. 181163/181262/181319, July 24,
2013.
Family Code; marriage; void ab initio for lack of a marriage license; no
inconsistency in finding the marriage null and void ab initio and, at the same
time, non-existent; contracts which are absolutely simulated or fictitious are
inexistent and void from the beginning. There is no inconsistency in finding
the marriage between Benjamin and Sally null and void ab initio and, at the
same time, non-existent. Under Article 35 of the Family Code, a marriage
solemnized without a license, except those covered by Article 34 where no
license is necessary, shall be void from the beginning. In this case, the
marriage between Benjamin and Sally was solemnized without a license. It
was duly established that no marriage license was issued to them and that
Marriage License No. N-07568 did not match the marriage license numbers
issued by the local civil registrar of Pasig City for the month of February
1982. The case clearly falls under Section 3 of Article 3520 which made
their marriage void ab initio. The marriage between Benjamin and Sally was
also non-existent. Applying the general rules on void or inexistent contracts
under Article 1409 of the Civil Code, contracts which are absolutely
simulated or fictitious are inexistent and void from the beginning. Thus,
the Court of Appeals did not err in sustaining the trial courts ruling that the
marriage between Benjamin and Sally was null and void ab initio and nonexistent. Sally Go-Bangayan v. Benjamin Bangayan, Jr., G.R. No. 201061,
July 3, 2013.
Family Code; marriage license; certification from the local civil registrar is
adequate to prove the non-issuance of a marriage license and, absent any
suspicious circumstance, the certification enjoys probative value. The
certification from the local civil registrar is adequate to prove the nonissuance of a marriage license and absent any suspicious circumstance, the
certification enjoys probative value, being issued by the officer charged

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under the law to keep a record of all data relative to the issuance of a
marriage license. Sally Go-Bangayan v. Benjamin Bangayan, Jr., G.R. No.
201061, July 3, 2013.
Family Code; property relations in cases of cohabitation without the benefit
of marriage; rules. The Court of Appeals correctly ruled that the property
relations of Benjamin and Sally is governed by Article 148 of the Family
Code which states:
Art. 148. In cases of cohabitation not falling under the preceding Article,
only the properties acquired by both of the parties through their actual joint
contribution of money, property, or industry shall be owned by them in
common in proportion to their respective contributions. In the absence of
proof to the contrary, their contributions and corresponding shares are
presumed to be equal. The same rule and presumption shall apply to joint
deposits of money and evidences of credit.
If one of the parties is validly married to another, his or her share in the coownership shall accrue to the absolute community of conjugal partnership
existing in such valid marriage. If the party who acted in bad faith is not
validly married to another, his or her share shall be forfeited in the manner
provided in the last paragraph of the preceding Article.
The foregoing rules on forfeiture shall likewise apply even if both parties are
in bad faith.
Benjamin and Sally cohabitated without the benefit of marriage. Thus, only
the properties acquired by them through their actual joint contribution of
money, property, or industry shall be owned by them in common in
proportion to their respective contributions. Sally Go-Bangayan v. Benjamin
Bangayan, Jr., G.R. No. 201061, July 3, 2013.
Land ownership; decree of registration for which an OCT was issued is
accorded greater weight as against tax declarations and tax receipts in the
name of another; tax declarations and tax receipts only become the basis of a
claim of ownership when coupled with proof of actual possession of
property. In the case of Ferrer-Lopez v. CA, the Court ruled that as against
an array of proofs consisting of tax declarations and/or tax receipts which

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are not conclusive evidence of ownership nor proof of the area covered
therein, an original certificate of title, which indicates true and legal
ownership by the registered owners over the disputed premises, must
prevail. Accordingly, respondents Decree No. 98992 for which an original
certificate of title was issued should be accorded greater weight as against
the tax declarations and tax receipts presented by petitioners in this case.
Besides, tax declarations and tax receipts may only become the basis of a
claim for ownership when they are coupled with proof of actual possession
of the property. Heirs of Alejandra Delfin, namely, Leopoldo Delfin, et al. v.
Avelina Rabadon, G.R. No. 165014, July 31, 2013.
Land registration; decree of registration bars all claims and rights which
arose or may have existed prior to the decree of registration. It is an
elemental rule that a decree of registration bars all claims and rights which
arose or may have existed prior to the decree of registration. By the issuance
of the decree, the land is bound and title thereto quieted, subject only to
certain exceptions under the property registration decree. Heirs of Alejandra
Delfin, namely, Leopoldo Delfin, et al. v. Avelina Rabadon, G.R. No.
165014, July 31, 2013.
Republic Act No. 26; reconstitution of title; nature of proceeding; Torrens
system; sources of reconstitution; mandatory requirements of publication,
posting, and notice. At the outset, the Court notes that the present amended
petition for reconstitution is anchored on the owners duplicate copy of TCT
No. 8240 a source for reconstitution of title under Section 3(a)29 of RA 26
which, in turn, is governed by the provisions of Section 10 in relation to
Section 9 of RA 26 with respect to the publication, posting, and notice
requirements. Section 10 reads:
SEC. 10. Nothing hereinbefore provided shall prevent any registered owner
or person in interest from filing the petition mentioned in section five of this
Act directly with the proper Court of First Instance, based on sources
enumerated in sections 2(a), 2(b), 3(a), 3(b), and/or 4(a) of this Act:
Provided, however, That the court shall cause a notice of the petition, before
hearing and granting the same, to be published in the manner stated in
section nine hereof: And, provided, further, That certificates of title
reconstituted pursuant to this section shall not be subject to the encumbrance
referred to in section seven of this Act.

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Corollarily, Section 9 reads in part:


SEC. 9. x x x Thereupon, the court shall cause a notice of the petition to be
published, at the expense of the petitioner, twice in successive issues of the
Official Gazette, and to be posted on the main entrance of the provincial
building and of the municipal building of the municipality or city in which
the land lies, at least thirty days prior to the date of hearing, and after
hearing, shall determine the petition and render such judgment as justice and
equity may require. x x x.
The foregoing provisions, therefore, clearly require that (a) notice of the
petition should be published in two (2) successive issues of the Official
Gazette; and (b) publication should be made at least thirty (30) days prior to
the date of hearing. Substantial compliance with this jurisdictional
requirement is not enough; it bears stressing that the acquisition of
jurisdiction over a reconstitution case is hinged on a strict compliance with
the requirements of the law. Republic of the Philippines v. Ricordito N. De
Asis, Jr., G.R. No. 193874, July 24, 2013.
Torrens system; the issue on the validity of title necessitates a remand of the
case. The Court recognizes the importance of protecting the countrys
Torrens system from fake land titles and deeds. Considering that there is an
issue on the validity of the title of petitioner VSD, which title is alleged to be
traceable to OCT No. 994 registered on April 19, 1917, which mother title
was held to be inexistent in Manotok Realty, Inc. v. CLT Realty
Development Corporation, in the interest of justice, and to safeguard the
correct titling of properties, a remand is proper to determine which of the
parties derived valid title from the legitimate OCT No. 994 registered on
May 3, 1917. Since this Court is not a trier of facts and not capacitated to
appreciate evidence of the first instance, the Court may remand this case to
the Court of Appeals for further proceedings, as it has been similarly tasked
in Manotok Realty, Inc. v. CLT Realty Development Corporation. VSD
Realty & Development Corporation v. Uniwide Sales, Inc. and Dolores
Baello Tejada, G.R. No. 170677, July 31, 2013
Torrens system; Torrens title; lands under a Torrens title cannot be acquired
by prescription or adverse possession. Moreover, it is a settled rule that lands
under a Torrens title cannot be acquired by prescription or adverse

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possession. Section 47 of P.D. No. 1529, the Property Registration Decree,


expressly provides that no title to registered land in derogation of the title of
the registered owner shall be acquired by prescription or adverse possession.
And, although the registered landowner may still lose his right to recover the
possession of his registered property by reason of laches, nowhere has
Dream Village alleged or proved laches, which has been defined as such
neglect or omission to assert a right, taken in conjunction with lapse of time
and other circumstances causing prejudice to an adverse party, as will
operate as a bar in equity. Put any way, it is a delay in the assertion of a right
which works disadvantage to another because of the inequity founded on
some change in the condition or relations of the property or parties. It is
based on public policy which, for the peace of society, ordains that relief
will be denied to a stale demand which otherwise could be a valid claim.
Dream Village Neighborhood Association, Inc., represented by its
Incumbent President Greg Seriego v. Bases Conversion Development
Authority, G.R. No.192896, July 24, 2013.

June 2013 Philippine Supreme Court


Decisions on Civil Law
Posted on July 15, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

Here are select June 2013 rulings of the Supreme Court of the Philippines on
civil law:
Civil Code
Contract; contract of carriage; definition; common carrier; definition; breach
of contract of carriage; entitlement to damages; contract of services;
standard of care required; damages; when recoverable; quasi-delict; solidary
liability of joint tortfeasors. A contract of carriage is defined as one whereby
a certain person or association of persons obligate themselves to transport
persons, things, or news from one place to another for a fixed price. On its
face, the airplane ticket is a valid written contract of carriage. This Court has
held that when an airline issues a ticket to a passenger confirmed on a

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Lexoterica: Compilation of SC Rulings

particular flight, on a certain date, a contract of carriage arises, and the


passenger has every right to expect that he would fly on that flight and on
that date. If he does not, then the carrier opens itself to a suit for breach of
contract of carriage.
Under Article 1732 of the Civil Code, this persons, corporations, firms, or
associations engaged in the business of carrying or transporting passengers
or goods or both, by land, water, or air, for compensation, offering their
services to the public is called a common carrier.
In contrast, the contractual relation between Sampaguita Travel and
respondents is a contract for services. Since the contract between the
parties is an ordinary one or services, the standard of care required of
respondent is that of a good father of a family under Article 1173 of the
Civil Code. This connotes reasonable care consistent with that which an
ordinarily prudent person would have observed when confronted with a
similar situation. The test to determine whether negligence attended the
performance of an obligation is: did the defendant in doing the alleged
negligent act use that reasonable care and caution which an ordinarily
prudent person would have used in the same situation? If not, then he is
guilty of negligence.

For one to be entitled to actual damages, it is necessary to prove the actual


amount of loss with a reasonable degree of certainty, premised upon
competent proof and the best evidence obtainable by the injured party. To
justify an award of actual damages, there must be competent proof of the
actual amount of loss. Credence can be given only to claims which are duly
supported by receipts.
Under Article 2220 of the Civil Code of the Philippines, an award of moral
damages, in breaches of contract, is in order upon a showing that the
defendant acted fraudulently or in bad faith. What the law considers as bad
faith which may furnish the ground for an award of moral damages would be
bad faith in securing the contract and in the execution thereof, as well as in
the enforcement of its terms, or any other kind of deceit. In the same vein, to
warrant the award of exemplary damages, defendant must have acted in

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wanton, fraudulent, reckless, oppressive, or malevolent manner.


Nominal damages are recoverable where a legal right is technically violated
and must be vindicated against an invasion that has produced no actual
present loss of any kind or where there has been a breach of contract and no
substantial injury or actual damages whatsoever have been or can be shown.
Under Article 2221 of the Civil Code, nominal damages may be awarded to
a plaintiff whose right has been violated or invaded by the defendant, for the
purpose of vindicating or recognizing that right, not for indemnifying the
plaintiff for any loss suffered.
The amount to be awarded as nominal damages shall be equal or at least
commensurate to the injury sustained by respondents considering the
concept and purpose of such damages. The amount of nominal damages to
be awarded may also depend on certain special reasons extant in the case.
The amount of such damages is addressed to the sound discretion of the
court and taking into account the relevant circumstances, such as the failure
of some respondents to board the flight on schedule and the slight breach in
the legal obligations of the airline company to comply with the terms of the
contract, i.e., the airplane ticket and of the travel agency to make the correct
bookings.
Cathay Pacific and Sampaguita Travel acted together in creating the
confusion in the bookings which led to the erroneous cancellation of
respondents bookings. Their negligence is the proximate cause of the
technical injury sustained by respondents. Therefore, they have become joint
tortfeasors, whose responsibility for quasi-delict, under Article 2194 of the
Civil Code, is solidary. Cathay Pacific Airways v. Juanita Reyes, et al., G.R.
No. 185891, June 26, 2013
Contract; contract of sale; disputable presumptions; failure to pay the price;
effect of; double sale; effect; registration in good faith; buyer in good faith;
duty of a buyer when a piece of land is in the actual possession of third
persons. Under Section 3, Rule 131 of the Rules of Court, the following are
disputable presumptions: (1) private transactions have been fair and regular;
(2) the ordinary course of business has been followed; and (3) there was
sufficient consideration for a contract. These presumptions operate against
an adversary who has not introduced proof to rebut them. They create the

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necessity of presenting evidence to rebut the prima facie case they created,
and which, if no proof to the contrary is presented and offered, will prevail.
The burden of proof remains where it is but, by the presumption, the one
who has that burden is relieved for the time being from introducing evidence
in support of the averment, because the presumption stands in the place of
evidence unless rebutted.
Granting that there was no delivery of the consideration, the seller would
have no right to sell again what he no longer owned. His remedy would be to
rescind the sale for failure on the part of the buyer to perform his part of
their obligation pursuant to Article 1191 of the New Civil Code. In the case
of Clara M. Balatbat v. Court Of Appeals and Spouses Jose Repuyan and
Aurora Repuyan, it was written:
The failure of the buyer to make good the price does not, in law, cause
the ownership to revest to the seller unless the bilateral contract of sale is
first rescinded or resolved pursuant to Article 1191 of the New Civil Code.
Non-payment only creates a right to demand the fulfillment of the
obligation or to rescind the contract. [Emphases supplied]
[O]wnership of an immovable property which is the subject of a double sale
shall be transferred: (1) to the person acquiring it who in good faith first
recorded it in the Registry of Property; (2) in default thereof, to the person
who in good faith was first in possession; and (3) in default thereof, to the
person who presents the oldest title, provided there is good faith. The
requirement of the law then is two-fold: acquisition in good faith and
registration in good faith. Good faith must concur with the registration. If it
would be shown that a buyer was in bad faith, the alleged registration they
have made amounted to no registration at all.
When a piece of land is in the actual possession of persons other than the
seller, the buyer must be wary and should investigate the rights of those in
possession. Without making such inquiry, one cannot claim that he is a
buyer in good faith. When a man proposes to buy or deal with realty, his
duty is to read the public manuscript, that is, to look and see who is there
upon it and what his rights are. A want of caution and diligence, which an
honest man of ordinary prudence is accustomed to exercise in making
purchases, is in contemplation of law, a want of good faith. The buyer who

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has failed to know or discover that the land sold to him is in adverse
possession of another is a buyer in bad faith.
[I]f a vendee in a double sale registers the sale after he has acquired
knowledge of a previous sale, the registration constitutes a registration in
bad faith and does not confer upon him any right. If the registration is done
in bad faith, it is as if there is no registration at all, and the buyer who has
first taken possession of the property in good faith shall be
preferred. Hospicio D. Rosaroso, et al. v. Lucila Laborte Soria, et al., G.R.
No. 194846, June 19, 2013
Contract; contract of sale; elements; contract to sell; elements; difference
between a contract of sale and a contract to sell; effect of non-payment in a
contract of sale; laches; definition; Torrens system; exception to general rule
that action to recover registered land covered by the Torrens System may not
be barred by laches. A contract of sale is defined under Article 1458 of the
Civil Code:
By the contract of sale, one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to
pay therefore a price certain in money or its equivalent.
The elements of a contract of sale are: (a) consent or meeting of the minds,
that is, consent to transfer ownership in exchange for the price; (b)
determinate subject matter; and (c) price certain in money or its equivalent.
A contract to sell, on the other hand, is defined by Article 1479 of the Civil
Code:
[A] bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the subject property despite delivery thereof to
the prospective buyer, binds himself to sell the said property exclusively to
the prospective buyer upon fulfillment of the condition agreed upon, that is,
full payment of the purchase price.
In a contract of sale, the title to the property passes to the buyer upon the
delivery of the thing sold, whereas in a contract to sell, the ownership is, by
agreement, retained by the seller and is not to pass to the vendee until full

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payment of the purchase price.


Even assuming, arguendo, that the petitioner was not paid, such non
payment is immaterial and has no effect on the validity of the contract of
sale. A contract of sale is a consensual contract and what is required is the
meeting of the minds on the object and the price for its perfection and
validity. In this case, the contract was perfected the moment the petitioner
and the respondent agreed on the object of the sale the two-hectare parcel
of land, and the price Three Thousand Pesos (P3,000.00). Non-payment of
the purchase price merely gave rise to a right in favor of the petitioner to
either demand specific performance or rescission of the contract of sale.
Laches has been defined as the failure or neglect, for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence
could or should have been done earlier. It should be stressed that laches is
not concerned only with the mere lapse of time. As a general rule, an action
to recover registered land covered by the Torrens System may not be barred
by laches. Neither can laches be set up to resist the enforcement of an
imprescriptible legal right. In exceptional cases, however, the Court allowed
laches as a bar to recover a titled property. Thus, in Romero v. Natividad, the
Court ruled that laches will bar recovery of the property even if the mode of
transfer was invalid. Likewise, in Vda. de Cabrera v. CA, the Court ruled:
In our jurisdiction, it is an enshrined rule that even registered owners of
property may be barred from recovering possession of property by
virtue of laches. Under the Land Registration Act (now the Property
Registration Decree), no title to registered land in derogation to that of the
registered owner shall be acquired by prescription or adverse possession.
The same is not true with regard to laches.
More particularly, laches will bar recovery of a property, even if the mode of
transfer used by an alleged member of a cultural minority lacks executive
approval. Thus, in Heirs of Dicman v. Cario, the Court upheld the Deed of
Conveyance of Part Rights and Interests in Agricultural Land executed by
Ting-el Dicman in favor of Sioco Cario despite lack of executive approval.
The Court stated that despite the judicial pronouncement that the sale of
real property by illiterate ethnic minorities is null and void for lack of
approval of competent authorities, the right to recover possession has

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nonetheless been barred through the operation of the equitable doctrine of


laches. Ali Akang v. Municipality of Isulan, Sultan Kudarat Province, G.R.
No. 186014, June 26, 2013
Contract; contract of sale; disqualification of a lawyer to buy under Article
1491; elements of a contract; autonomous nature; obligatory nature of
contract; interpretation; courts have no authority to alter a contract by
construction or to make a new contract for the parties; penal clause;
generally substitutes the indemnity for damages and the payment of interests
in case of non-compliance. Admittedly, Article 1491 (5) of the Civil Code
prohibits lawyers from acquiring by purchase or assignment the property or
rights involved which are the object of the litigation in which they intervene
by virtue of their profession. The CA lost sight of the fact, however, that the
prohibition applies only during the pendency of the suit and generally does
not cover contracts for contingent fees where the transfer takes effect only
after the finality of a favorable judgment.
Defined as a meeting of the minds between two persons whereby one binds
himself, with respect to the other to give something or to render some
service, a contract requires the concurrence of the following requisites: (a)
consent of the contracting parties; (b) object certain which is the subject
matter of the contract; and, (c) cause of the obligation which is established.
Viewed in the light of the autonomous nature of contracts enunciated under
Article 1306 of the Civil Code, on the other hand, we find that the
Kasunduan was correctly found by the RTC to be a valid and binding
contract between the parties.
Obligations arising from contracts, after all, have the force of law between
the contracting parties who are expected to abide in good faith with their
contractual commitments, not weasel out of them. Moreover, when the terms
of the contract are clear and leave no doubt as to the intention of the
contracting parties, the rule is settled that the literal meaning of its
stipulations should govern. In such cases, courts have no authority to alter a
contract by construction or to make a new contract for the parties. Since
their duty is confined to the interpretation of the one which the parties have
made for themselves without regard to its wisdom or folly, it has been ruled
that courts cannot supply material stipulations or read into the contract

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words it does not contain. Indeed, courts will not relieve a party from the
adverse effects of an unwise or unfavorable contract freely entered into.
An accessory undertaking to assume greater liability on the part of the
obligor in case of breach of an obligation, the foregoing stipulation is a penal
clause which serves to strengthen the coercive force of the obligation and
provides for liquidated damages for such breach. The obligor would then be
bound to pay the stipulated indemnity without the necessity of proof of the
existence and the measure of damages caused by the breach.
In obligations with a penal clause, the penalty generally substitutes the
indemnity for damages and the payment of interests in case of noncompliance. Usually incorporated to create an effective deterrent against
breach of the obligation by making the consequences of such breach as
onerous as it may be possible, the rule is settled that a penal clause is not
limited to actual and compensatory damages. Heirs of Manuel Uy Ek Liong
v. Mauricia Meer Castillo, Heirs of Buenaflor C. Umali, represented by
Nancy Umali, et al., G.R. No. 176425, June 5, 2013.
Contract; default of debtor; definition; requisites; liquidated damages;
stipulation therefor; double function; penalty clause; definition; function.
Default or mora on the part of the debtor is the delay in the fulfillment of the
prestation by reason of a cause imputable to the former. It is the
nonfulfillment of an obligation with respect to time.
It is a general rule that one who contracts to complete certain work within a
certain time is liable for the damage for not completing it within such time,
unless the delay is excused or waived.
In this jurisdiction, the following requisites must be present in order that the
debtor may be in default: (1) that the obligation be demandable and already
liquidated; (2) that the debtor delays performance; and (3) that the creditor
requires the performance judicially or extrajudicially.
Liability for liquidated damages is governed by Articles 2226 to 2228 of the
Civil Code. A stipulation for liquidated damages is attached to an obligation
in order to ensure performance and has a double function: (1) to provide for
liquidated damages, and (2) to strengthen the coercive force of the obligation

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by the threat of greater responsibility in the event of breach. The amount


agreed upon answers for damages suffered by the owner due to delays in the
completion of the project. As a precondition to such award, however, there
must be proof of the fact of delay in the performance of the obligation.
A penalty clause, expressly recognized by law, is an accessory undertaking
to assume greater liability on the part of the obligor in case of breach of an
obligation. It functions to strengthen the coercive force of obligation and to
provide, in effect, for what could be the liquidated damages resulting from
such a breach. The obligor would then be bound to pay the stipulated
indemnity without the necessity of proof on the existence and on the
measure of damages caused by the breach. It is well-settled that so long as
such stipulation does not contravene law, morals, or public order, it is
strictly binding upon the obligor. J Plus Asia Development Corporation v.
Utility Assurance Corporation, G.R. No. 199650, June 26, 2013
Contract; rescission under Article 1191; mutual restitution; contracts;
definition. Mutual restitution is required in cases involving rescission under
Article 1191 of the Civil Code; such restitution is necessary to bring back
the parties to their original situation prior to the inception of the contract.
As a general rule, a contract is a meeting of minds between two persons. The
Civil Code upholds the spirit over the form; thus, it deems an agreement to
exist, provided the essential requisites are present. A contract is upheld as
long as there is proof of consent, subject matter and cause. Moreover, it is
generally obligatory in whatever form it may have been entered into. From
the moment there is a meeting of minds between the parties, [the contract] is
perfected. Fil-Estate Gold and Development, Inc., et al. v. Vertex Sales and
Trading, Inc., G.R. No. 202079, June 10, 2013.
Contract; void contracts; effect. A void contract is equivalent to nothing; it
produces no civil effect; and it does not create, modify or extinguish a
juridical relation. Joselito C. Borromeo v. Juan T. Mina, G.R. No. 193747,
June 5, 2013.
Credit; concurrence and preference of credit; tax clearance is not required
for the approval of a project of partition. The position of the BIR, insisting
on prior compliance with the tax clearance requirement as a condition for the

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approval of the project of distribution of the assets of a bank under


liquidation, is contrary to both the letter and intent of the law on liquidation
of banks by the PDIC.
The law expressly provides that debts and liabilities of the bank under
liquidation are to be paid in accordance with the rules on concurrence and
preference of credit under the Civil Code. Duties, taxes, and fees due the
Government enjoy priority only when they are with reference to a specific
movable property, under Article 2241(1) of the Civil Code, or immovable
property, under Article 2242(1) of the same Code. However, with reference
to the other real and personal property of the debtor, sometimes referred to
as free property, the taxes and assessments due the National Government,
other than those in Articles 2241(1) and 2242(1) of the Civil Code, such as
the corporate income tax, will come only in ninth place in the order of
preference. On the other hand, if the BIRs contention that a tax clearance be
secured first before the project of distribution of the assets of a bank under
liquidation may be approved, then the tax liabilities will be given absolute
preference in all instances, including those that do not fall under Articles
2241(1) and 2242(1) of the Civil Code. In order to secure a tax clearance
which will serve as proof that the taxpayer had completely paid off his tax
liabilities, PDIC will be compelled to settle and pay first all tax liabilities
and deficiencies of the bank, regardless of the order of preference under the
pertinent provisions of the Civil Code. Following the BIRs stance,
therefore, only then may the project of distribution of the banks assets be
approved and the other debts and claims thereafter settled, even though
under Article 2244 of the Civil Code such debts and claims enjoy preference
over taxes and assessments due the National Government. Philippine
Deposit Insurance Corporation v. Bureau of Internal Revenue, G.R. No.
172892, June 13, 2013
Damages; Attorneys fees; dual concept of attorneys fees; an award of
attorneys fees under Article 2208 demands factual, legal, and equitable
justification. Article 2208 of the New Civil Code of the Philippines states the
policy that should guide the courts when awarding attorneys fees to a
litigant. As a general rule, the parties may stipulate the recovery of
attorneys fees. In the absence of such stipulation, this article restrictively
enumerates the instances when these fees may be recovered.
In ABS-CBN Broadcasting Corp. v. CA, this Court had the occasion to

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expound on the policy behind the grant of attorneys fees as actual or


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

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could have easily filed this notice, in the way it represented Van Doorn in its
dealings in the Philippines. While this omission does not affect the validity
of the termination of employment, it subjects the employer to the payment of
indemnity in the form of nominal damages. Poseidon International Maritime
Services, Inc. v. Tito R. Tamala, et al., G.R. No. 186475, June 26, 2013
Damages; temperate damages; when warranted. Article 2224 of the New
Civil Code provides that (t)emperate or moderate damages, which are more
than nominal but less than compensatory damages may be recovered when
the court finds that some pecuniary loss has been suffered but its amount
cannot, from the nature of the case, proved with certainty. People of the
Philippines v. Reggie Bernardo, G.R. No. 198789, June 3, 2013.
Interest rates; a stipulated interest of 24% per annum is not unconscionable;
surcharge on principal loan; a surcharge of 1% per month on the principal
loan is valid; surcharge or penalty partakes of the nature of liquidated
damages; different from interest payment. In Villanueva v. Court of Appeals,
where the issue raised was whether the 24% p.a. stipulated interest rate is
unreasonable under the circumstances, we answered in the negative and
held:
In Spouses Zacarias Bacolor and Catherine Bacolor v. Banco Filipino
Savings and Mortgage Bank, Dagupan City Branch, this Court held that the
interest rate of 24% per annum on a loan of P244,000.00, agreed upon by the
parties, may not be considered as unconscionable and excessive. As such,
the Court ruled that the borrowers cannot renege on their obligation to
comply with what is incumbent upon them under the contract of loan as the
said contract is the law between the parties and they are bound by its
stipulations.
Also, in Garcia v. Court of Appeals, this Court sustained the agreement of
the parties to a 24% per annum interest on an P8,649,250.00 loan finding the
same to be reasonable and clearly evidenced by the amended credit line
agreement entered into by the parties as well as two promissory notes
executed by the borrower in favor of the lender.
Based on the above jurisprudence, the Court finds that the 24% per annum
interest rate, provided for in the subject mortgage contracts for a loan of

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P225,000.00, may not be considered unconscionable. Moreover, considering


that the mortgage agreement was freely entered into by both parties, the
same is the law between them and they are bound to comply with the
provisions contained therein.
In Ruiz v. CA, we held:
The 1% surcharge on the principal loan for every month of default is valid.
This surcharge or penalty stipulated in a loan agreement in case of default
partakes of the nature of liquidated damages under Art. 2227 of the New
Civil Code, and is separate and distinct from interest payment. Also referred
to as a penalty clause, it is expressly recognized by law. It is an accessory
undertaking to assume greater liability on the part of an obligor in case of
breach of an obligation. The obligor would then be bound to pay the
stipulated amount of indemnity without the necessity of proof on the
existence and on the measure of damages caused by the breach.
Spouses Florentino T. Mallari and Aurea V. Mallari v. Prudential Bank of
the Philippines, G.R. No. 197861, June 5, 2013
Tort; collateral source rule; unjust enrichment; elements. As part of
American personal injury law, the collateral source rule was originally
applied to tort cases wherein the defendant is prevented from benefiting
from the plaintiffs receipt of money from other sources. Under this rule, if
an injured person receives compensation for his injuries from a source
wholly independent of the tortfeasor, the payment should not be deducted
from the damages which he would otherwise collect from the tortfeasor. In a
recent Decision by the Illinois Supreme Court, the rule has been described as
an established exception to the general rule that damages in negligence
actions must be compensatory. The Court went on to explain that although
the rule appears to allow a double recovery, the collateral source will have a
lien or subrogation right to prevent such a double recovery. In Mitchell v.
Haldar, the collateral source rule was rationalized by the Supreme Court of
Delaware:
The collateral source rule is predicated on the theory that a tortfeasor has no
interest in, and therefore no right to benefit from monies received by the
injured person from sources unconnected with the defendant. According to

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the collateral source rule, a tortfeasor has no right to any mitigation of


damages because of payments or compensation received by the injured
person from an independent source. The rationale for the collateral source
rule is based upon the quasi-punitive nature of tort law liability. It has been
explained as follows:
The collateral source rule is designed to strike a balance between two
competing principles of tort law: (1) a plaintiff is entitled to compensation
sufficient to make him whole, but no more; and (2) a defendant is liable for
all damages that proximately result from his wrong. A plaintiff who receives
a double recovery for a single tort enjoys a windfall; a defendant who
escapes, in whole or in part, liability for his wrong enjoys a windfall.
Because the law must sanction one windfall and deny the other, it favors the
victim of the wrong rather than the wrongdoer.
Thus, the tortfeasor is required to bear the cost for the full value of his or her
negligent conduct even if it results in a windfall for the innocent plaintiff.
(Citations omitted)
As seen, the collateral source rule applies in order to place the responsibility
for losses on the party causing them. Its application is justified so that the
wrongdoer should not benefit from the expenditures made by the injured
party or take advantage of contracts or other relations that may exist between
the injured party and third persons. Thus, it finds no application to cases
involving no-fault insurances under which the insured is indemnified for
losses by insurance companies, regardless of who was at fault in the incident
generating the losses.
To constitute unjust enrichment, it must be shown that a party was unjustly
enriched in the sense that the term unjustly could mean illegally or
unlawfully. A claim for unjust enrichment fails when the person who will
benefit has a valid claim to such benefit. Mitsubishi Motors Philippines
Salaried Employees Union v. Mitsubishi Motors Philippines Corporation,
G.R. No. 175773, June 17, 2013.
Unjust enrichment; definition; elements. Unjust enrichment is a term used
to depict result or effect of failure to make remuneration of or for property or
benefits received under circumstances that give rise to legal or equitable

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obligation to account for them. To be entitled to remuneration, one must


confer benefit by mistake, fraud, coercion, or request. Unjust enrichment is
not itself a theory of reconveyance. Rather, it is a prerequisite for the
enforcement of the doctrine of restitution. There is unjust enrichment when:
1. A person is unjustly benefited; and
2. Such benefit is derived at the expense of or with damages to another.
Philippine Transmarine Carriers, Inc. v. Leandro Legaspi, G.R. No.
202791, June 10, 2013.
Special Laws
Family Code; support; in proportion to the resources or means of the giver
and to the needs of the recipient; support pendente lite in cases of legal
separation and petitions for declaration of nullity or annulment of marriage;
judicial determination is guided by the Rule on Provisional Orders; support
in arrears; deductions from accrued support pendente lite; judgment for
support does not become final. As a matter of law, the amount of support
which those related by marriage and family relationship is generally obliged
to give each other shall be in proportion to the resources or means of the
giver and to the needs of the recipient. Such support comprises everything
indispensable for sustenance, dwelling, clothing, medical attendance,
education and transportation, in keeping with the financial capacity of the
family.
Upon receipt of a verified petition for declaration of absolute nullity of void
marriage or for annulment of voidable marriage, or for legal separation, and
at any time during the proceeding, the court, motu proprio or upon verified
application of any of the parties, guardian or designated custodian, may
temporarily grant support pendente lite prior to the rendition of judgment or
final order. Because of its provisional nature, a court does not need to delve
fully into the merits of the case before it can settle an application for this
relief. All that a court is tasked to do is determine the kind and amount of
evidence which may suffice to enable it to justly resolve the application. It is
enough that the facts be established by affidavits or other documentary
evidence appearing in the record.

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Judicial determination of support pendente lite in cases of legal separation


and petitions for declaration of nullity or annulment of marriage are guided
by the provisions of the Rule on Provisional Orders.
On the issue of crediting of money payments or expenses against accrued
support, we find as relevant the following rulings by US courts.
In Bradford v. Futrell, appellant sought review of the decision of the Circuit
Court which found him in arrears with his child support payments and
entered a decree in favor of appellee wife. He complained that in
determining the arrearage figure, he should have been allowed full credit for
all money and items of personal property given by him to the children
themselves, even though he referred to them as gifts. The Court of Appeals
of Maryland ruled that in the suit to determine amount of arrears due the
divorced wife under decree for support of minor children, the husband
(appellant) was not entitled to credit for checks which he had clearly
designated as gifts, nor was he entitled to credit for an automobile given to
the oldest son or a television set given to the children. Thus, if the children
remain in the custody of the mother, the father is not entitled to credit for
money paid directly to the children if such was paid without any relation to
the decree.
In Martin, Jr. v. Martin, the Supreme Court of Washington held that a
father, who is required by a divorce decree to make child support payments
directly to the mother, cannot claim credit for payments voluntarily made
directly to the children. However, special considerations of an equitable
nature may justify a court in crediting such payments on his indebtedness to
the mother, when such can be done without injustice to her.
Suffice it to state that the matter of increase or reduction of support should
be submitted to the trial court in which the action for declaration for nullity
of marriage was filed, as this Court is not a trier of facts. The amount of
support may be reduced or increased proportionately according to the
reduction or increase of the necessities of the recipient and the resources or
means of the person obliged to support. As we held in Advincula v.
Advincula:
Judgment for support does not become final. The right to support is of such

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nature that its allowance is essentially provisional; for during the entire
period that a needy party is entitled to support, his or her alimony may be
modified or altered, in accordance with his increased or decreased needs,
and with the means of the giver. It cannot be regarded as subject to final
determination.
Susan Lim-Lua v. Danilo Y. Lua, G.R. Nos. 175279-80, June 5, 2013.
Family Code; Rule on Declaration of Absolute Nullity of Void Marriages
and Annulment of Voidable Marriages; not applicable in an action for
recognition of foreign judgment; foreign judgment relating to the marital
status of a person; special proceeding for cancellation or correction of entries
in the civil registry under Rule 108 of the Rules of Court; the first husband
has a right to file the petition; effect of a foreign divorce decree to a Filipino
spouse; Article 26 of the Family Code. The Rule on Declaration of Absolute
Nullity of Void Marriages and Annulment of Voidable Marriages (A.M. No.
02-11-10-SC) does not apply in a petition to recognize a foreign judgment
relating to the status of a marriage where one of the parties is a citizen of a
foreign country. Moreover, in Juliano-Llave v. Republic, this Court held that
the rule in A.M. No. 02-11-10-SC that only the husband or wife can file a
declaration of nullity or annulment of marriage does not apply if the reason
behind the petition is bigamy.
A foreign judgment relating to the status of a marriage affects the civil
status, condition and legal capacity of its parties. However, the effect of a
foreign judgment is not automatic. To extend the effect of a foreign
judgment in the Philippines, Philippine courts must determine if the foreign
judgment is consistent with domestic public policy and other mandatory
laws. Article 15 of the Civil Code provides that [l]aws relating to family
rights and duties, or to the status, condition and legal capacity of persons are
binding upon citizens of the Philippines, even though living abroad. This is
the rule of lex nationalii in private international law. Thus, the Philippine
State may require, for effectivity in the Philippines, recognition by
Philippine courts of a foreign judgment affecting its citizen, over whom it
exercises personal jurisdiction relating to the status, condition and legal
capacity of such citizen.
A petition to recognize a foreign judgment declaring a marriage void does

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not require relitigation under a Philippine court of the case as if it were a


new petition for declaration of nullity of marriage. Philippine courts cannot
presume to know the foreign laws under which the foreign judgment was
rendered. They cannot substitute their judgment on the status, condition and
legal capacity of the foreign citizen who is under the jurisdiction of another
state. Thus, Philippine courts can only recognize the foreign judgment as a
fact according to the rules of evidence.
Since the recognition of a foreign judgment only requires proof of fact of the
judgment, it may be made in a special proceeding for cancellation or
correction of entries in the civil registry under Rule 108 of the Rules of
Court. Rule 1, Section 3 of the Rules of Court provides that [a] special
proceeding is a remedy by which a party seeks to establish a status, a right,
or a particular fact. Rule 108 creates a remedy to rectify facts of a persons
life which are recorded by the State pursuant to the Civil Register Law or
Act No. 3753. These are facts of public consequence such as birth, death or
marriage, which the State has an interest in recording. There is no doubt that
the prior spouse has a personal and material interest in maintaining the
integrity of the marriage he contracted and the property relations arising
from it. There is also no doubt that he is interested in the cancellation of an
entry of a bigamous marriage in the civil registry, which compromises the
public record of his marriage. The interest derives from the substantive right
of the spouse not only to preserve (or dissolve, in limited instances) his most
intimate human relation, but also to protect his property interests that arise
by operation of law the moment he contracts marriage. These property
interests in marriage include the right to be supported in keeping with the
financial capacity of the family and preserving the property regime of the
marriage.
Section 2(a) of A.M. No. 02-11-10-SC does not preclude a spouse of a
subsisting marriage to question the validity of a subsequent marriage on the
ground of bigamy. On the contrary, when Section 2(a) states that [a]
petition for declaration of absolute nullity of void marriage may be filed
solely by the husband or the wife it refers to the husband or the wife of
the subsisting marriage. Under Article 35(4) of the Family Code, bigamous
marriages are void from the beginning. Thus, the parties in a bigamous
marriage are neither the husband nor the wife under the law. The husband or
the wife of the prior subsisting marriage is the one who has the personality
to file a petition for declaration of absolute nullity of void marriage under

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

Section 2(a) of A.M. No. 02-11-10-SC.


[A] Filipino citizen cannot dissolve his marriage by the mere expedient of
changing his entry of marriage in the civil registry. However, this does not
apply in a petition for correction or cancellation of a civil registry entry
based on the recognition of a foreign judgment annulling a marriage where
one of the parties is a citizen of the foreign country. There is neither
circumvention of the substantive and procedural safeguards of marriage
under Philippine law, nor of the jurisdiction of Family Courts under R.A.
No. 8369. A recognition of a foreign judgment is not an action to nullify a
marriage. It is an action for Philippine courts to recognize the effectivity of a
foreign judgment, which presupposes a case which was already tried and
decided under foreign law. The procedure in A.M. No. 02-11-10-SC does
not apply in a petition to recognize a foreign judgment annulling a bigamous
marriage where one of the parties is a citizen of the foreign country. Neither
can R.A. No. 8369 define the jurisdiction of the foreign court.
Article 26 of the Family Code confers jurisdiction on Philippine courts to
extend the effect of a foreign divorce decree to a Filipino spouse without
undergoing trial to determine the validity of the dissolution of the marriage.
The second paragraph of Article 26 of the Family Code provides that
[w]here a marriage between a Filipino citizen and a foreigner is validly
celebrated and a divorce is thereafter validly obtained abroad by the alien
spouse capacitating him or her to remarry, the Filipino spouse shall have
capacity to remarry under Philippine law. The second paragraph of Article
26 of the Family Code only authorizes Philippine courts to adopt the effects
of a foreign divorce decree precisely because the Philippines does not allow
divorce. Philippine courts cannot try the case on the merits because it is
tantamount to trying a case for divorce. Minoru Fujiki v. Maria Paz Galela
Marinay, et al., G.R. No. 196049, June 26, 2013.
Family Courts Act of 1997; Violence Against Women and Children Act of
2004; Family Courts; jurisdiction; a special court of the same level as RTC;
RTCs designated as family courts remain possessed of authority as courts of
general original jurisdiction. At the outset, it must be stressed that Family
Courts are special courts, of the same level as Regional Trial Courts. Under
R.A. 8369, otherwise known as the Family Courts Act of 1997, family
courts have exclusive original jurisdiction to hear and decide cases of
domestic violence against women and children. In accordance with said law,

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

the Supreme Court designated from among the branches of the Regional
Trial Courts at least one Family Court in each of several key cities
identified. To achieve harmony with the first mentioned law, Section 7 of
R.A. 9262 now provides that Regional Trial Courts designated as Family
Courts shall have original and exclusive jurisdiction over cases of VAWC
defined under the latter law.
Inspite of its designation as a family court, the RTC of Bacolod City remains
possessed of authority as a court of general original jurisdiction to pass upon
all kinds of cases whether civil, criminal, special proceedings, land
registration, guardianship, naturalization, admiralty or insolvency. It is
settled that RTCs have jurisdiction to resolve the constitutionality of a
statute, this authority being embraced in the general definition of the
judicial power to determine what are the valid and binding laws by the
criterion of their conformity to the fundamental law. The Constitution vests
the power of judicial review or the power to declare the constitutionality or
validity of a law, treaty, international or executive agreement, presidential
decree, order, instruction, ordinance, or regulation not only in this Court, but
in all RTCs. Jesus C. Garcia v. The Hon. Ray Alan T. Drilon, et al., G.R.
No. 179267, June 25, 2013
Torrens system; purpose. Torrens title; generally conclusive evidence of the
ownership of the land; not subject to collateral attack; Land Registration
Authority; functions. The real purpose of the Torrens system is to quiet title
to land and to stop forever any question as to its legality. Once a title is
registered, the owner may rest secure, without the necessity of waiting in the
portals of the court, or sitting on the mirador su casa, to avoid the
possibility of losing his land. A Torrens title is generally a conclusive
evidence of the ownership of the land referred to therein. A strong
presumption exists that Torrens titles are regularly issued and that they are
valid.
Section 48 of Presidential Decree No. 1529, otherwise known as the
Property Registration Decree, explicitly provides that [a] certificate of title
shall not be subject to collateral attack. It cannot be altered, modified, or
cancelled except in a direct proceeding in accordance with law.
The duty of LRA officials to issue decrees of registration is ministerial in the

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

sense that they act under the orders of the court and the decree must be in
conformity with the decision of the court and with the data found in the
record. They have no discretion in the matter. However, if they are in doubt
upon any point in relation to the preparation and issuance of the decree,
these officials ought to seek clarification from the court. They act, in this
respect, as officials of the court and not as administrative officials, and their
act is the act of the court. They are specifically called upon to extend
assistance to courts in ordinary and cadastral land registration proceedings.
Deogenes O. Rodriguez v. Hon. Court of Appeals and Philippine Chinese
Charitable Association, Inc., G.R. No. 184589, June 13, 2013

April 2013 Philippine Supreme Court


Decisions on Civil Law
Posted on May 20, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

Here are select April 2013 rulings of the Supreme Court of the Philippines
on civil law:
Contract; Rescission; effect. Rescission entails a mutual restitution of
benefits received. An injured party who has chosen rescission is also entitled
to the payment of damages. Sandoval Shipyards, Inc. v. Philippine Merchant
Marine Academy (PMMA); G.R. No. 188633. April 10, 2013
Obligation; Extinguishment of obligations; consignation; when tender of
payment not necessary; judicial in character; difference between
consignation and tender of payment. Under Article 1256 of the Civil Code,
the debtor shall be released from responsibility by the consignation of the
thing or sum due, without need of prior tender of payment, when the creditor
is absent or unknown, or when he is incapacitated to receive the payment at
the time it is due, or when two or more persons claim the same right to
collect, or when the title to the obligation has been lost.
Consignation is necessarily judicial. Article 1258 of the Civil Code
specifically provides that consignation shall be made by depositing the thing

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

or things due at the disposal of judicial authority. The said provision clearly
precludes consignation in venues other than the courts.
Elsewhere, what may be made is a valid tender of payment, but not
consignation. The two, however, are to be distinguished.

Tender of payment must be distinguished from consignation. Tender is the


antecedent of consignation, that is, an act preparatory to the consignation,
which is the principal, and from which are derived the immediate
consequences which the debtor desires or seeks to obtain. Tender of
payment may be extrajudicial, while consignation is necessarily judicial, and
the priority of the first is the attempt to make a private settlement before
proceeding to the solemnities of consignation. (8 Manresa 325).
Sps. Cacayorin v. Armed Forces and Police Mutual Benefit Association,
Inc.; G.R. No. 171298. April 15, 2013
Property; Ejectment; only issue is who is entitled to physical possession;
forcible entry; prior physical possession is vital; judgment conclusive
between the parties and their successors-in-interest; effects if prevailing
party is a usufructuary; usufruct; death of usufructuary extinguishes
usufruct. Ejectment cases forcible entry and unlawful detainer are
summary proceedings designed to provide expeditious means to protect
actual possession or the right to possession of the property involved. The
only question that the courts resolve in ejectment proceedings is: who is
entitled to the physical possession of the premises, that is, to the possession
de facto and not to the possession de jure. It does not even matter if a partys
title to the property is questionable. Thus, an ejectment case will not
necessarily be decided in favor of one who has presented proof of ownership
of the subject property.
Indeed, possession in ejectment cases means nothing more than actual
physical possession, not legal possession in the sense contemplated in civil
law. In a forcible entry case, prior physical possession is the primary
consideration[.] A party who can prove prior possession can recover such
possession even against the owner himself. Whatever may be the character

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

of his possession, if he has in his favor prior possession in time, he has the
security that entitles him to remain on the property until a person with a
better right lawfully ejects him. [T]he party in peaceable, quiet possession
shall not be thrown out by a strong hand, violence, or terror.
The judgment in an ejectment case is conclusive between the parties and
their successors-in interest by title subsequent to the commencement of the
action; hence, it is enforceable by or against the heirs of the deceased. This
judgment entitles the winning party to: (a) the restitution of the premises, (b)
the sum justly due as arrears of rent or as reasonable compensation for the
use and occupation of the premises, and (c) attorneys fees and costs.
[T]he right to the usufruct is now rendered moot by the death of Wilfredo
since death extinguishes a usufruct under Article 603(1) of the Civil Code.
This development deprives the heirs of the usufructuary the right to retain or
to reacquire possession of the property even if the ejectment judgment
directs its restitution.
Thus, what actually survives under the circumstances is the award of
damages, by way of compensation. Rivera-Calingasan v. Rivera; G.R. No.
171555. April 17, 2013
Property; Public property; public plaza forms part of the public dominion;
cannot be the object of appropriation, lease, any other contractual
undertaking; void contracts. [Public plaza is for] public use and thereby,
forming part of the public dominion. Accordingly, it cannot be the object of
appropriation either by the State or by private persons. Nor can it be the
subject of lease or any other contractual undertaking. In Villanueva v.
Castaeda, Jr., citing Espiritu v. Municipal Council of Pozorrubio, the
Court pronounced that:
x x x Town plazas are properties of public dominion, to be devoted to public
use and to be made available to the public in general. They are outside the
commerce of man and cannot be disposed of or even leased by the
municipality to private parties.
In this relation, Article 1409(1) of the Civil Code provides that a contract
whose purpose is contrary to law, morals, good customs, public order or

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

public policy is considered void and as such, creates no rights or obligations


or any juridical relations. Land Bank of the Philippines v. Cacayurin; G.R.
No. 191667. April 17, 2013
Special Laws
Foreclosure of Mortgage pursuant to P.D. No. 385; when its purpose is
served; when hearing is necessary before issuance of writ of possession;
foreclosure of mortgage under Section 33, Rule 39 of the Rules on Civil
Procedure; when issuance of writ of possession is not ministerial. While the
Supreme Court had already declared in Philippine National Bank v. Adil that
once the property of a debtor is foreclosed and sold to a GFI, it would be
mandatory for the court to place the GFI in the possession and control of the
propertypursuant to Section 4 of P.D. No. 385 (Requiring Government
Financial Institutions to Foreclose Mandatorily All Loans with Arrearages,
Including Interest and Charges Amounting to at Least Twenty (20%) of the
Total Outstanding Obligation) this rule should not be construed as
absolute or without exception.
The evident purpose underlying P.D. 385 is sufficiently served by allowing
foreclosure proceedings initiated by GFIs to continue until a judgment
therein becomes final and executory, without a restraining order, temporary
or permanent injunction against it being issued. But if a parcel of land is
occupied by a party other than the judgment debtor, the proper procedure is
for the court to order a hearing to determine the nature of said adverse
possession before it issues a writ of possession. This is because a third party,
who is not privy to the debtor, is protected by the law. Such third party may
be ejected from the premises only after he has been given an opportunity to
be heard, to comply with the time honored principle of due process.
In the same vein, under Section 33 of Rule 39 of the Rules on Civil
Procedure, the possession of a mortgaged property may be awarded to a
purchaser in the extrajudicial foreclosure, unless a third party is actually
holding the property adversely vis--vis the judgment debtor.
[T]he obligation of a court to issue a writ of possession in favor of the
purchaser in an extrajudicial foreclosure sale ceases to be ministerial, once it
appears that there is a third party who is in possession of the property and is

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

claiming a right adverse to that of the debtor/mortgagor. We explained in


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

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

should be filed in the Court of Appeals in accordance with the Doctrine of


Hierarchy of Courts. To be sure, even if the Courts original jurisdiction to
issue a writ of certiorari is concurrent with the RTCs and the Court of
Appeals in certain cases, such concurrence does not sanction an unrestricted
freedom of choice of court forum. From the decision of the Court of
Appeals, the losing party may then file a petition for review on certiorari
under Rule 45 of the Rules of Court with the Supreme Court. This is because
the errors which the court may commit in the exercise of jurisdiction are
merely errors of judgment which are the proper subject of an appeal.
When the OSG filed its notice of appeal under Rule 42, it availed itself of
the wrong remedy. As a result, the running of the period for filing of a
Petition for Certiorari continued to run and was not tolled. Upon lapse of
that period, the Decision of the RTC could no longer be questioned.
Republic of the Philippines v. Narceda; G.R. No. 182760. April 10, 2013
The Subdivision and Condominium Buyers Protective Decree; contract to
sell; validity is not affected by lack of certificate of registration of
subdivision developer and failure to register the contract before the Register
of Deeds; Maceda Law. In Spouses Co Chien v. Sta. Lucia Realty and
Development Corporation, Inc. this Court has already ruled that the lack of a
certificate of registration and a license to sell on the part of a subdivision
developer does not result to the nullification or invalidation of the contract to
sell it entered into with a buyer. The contract to sell remains valid and
subsisting. In said case, the Court upheld the validity of the contract to sell
notwithstanding violations by the developer of the provisions of PD 957. We
held that nothing in PD 957 provides for the nullity of a contract validly
entered into in cases of violation of any of its provisions such as the lack of a
license to sell.
Moreover, Flora claims that the contract she entered into with Moldex is
void because of the latters failure to register the contract to sell/document of
conveyance with the Register of Deeds, in violation of Section 1730 of PD
957. However, just like in Section 5 which did not penalize the lack of a
license to sell with the nullification of the contract, Section 17 similarly did
not mention that the developers or Moldexs failure to register the contract
to sell or deed of conveyance with the Register of Deeds resulted to the
nullification or invalidity of the said contract or deed [T]hus, nonregistration of an instrument of conveyance will not affect the validity of a

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

contract to sell. It will remain valid and effective between the parties thereto
as under PD 1529 or The Property Registration Decree, registration merely
serves as a constructive notice to the whole world to bind third parties.
Under the Maceda Law, the defaulting buyer who has paid at least two years
of installments has the right of either to avail of the grace period to pay or,
the cash surrender value of the payments made:
Section 3. In all transactions or contracts involving the sale or financing of
real estate on installment payments, including residential condominium
apartments but excluding industrial lots, commercial buildings and sales to
tenants under Republic Act Numbered Thirty-eight Hundred Forty-four, as
amended by Republic Act Numbered Sixty-three Hundred Eighty-nine,
where the buyer has paid at least two years of installments, the buyer is
entitled to the following rights in case he defaults in the payment of
succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within
the total grace period earned by him which is hereby fixed at the rate of one
month grace period for every one year of installment payments made:
Provided, That this right shall be exercised by the buyer only once in every
five years of the life of the contract and its extensions, if any.
(b) If the contract is canceled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty per cent
of the total payments made, and, after five years of installments, an
additional five per cent every year but not to exceed ninety per cent of the
total payments made: Provided, That the actual cancellation of the contract
shall take place after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act and
upon full payment of the cash surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the
computation of the total number of installment payments made.
Moldex Realty, Inc. v. Saberon; G.R. No. 176289. April 8, 2013

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

April 2013 Philippine Supreme Court


Decisions on Civil Law
Posted on May 10, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

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

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

the priority of the first is the attempt to make a private settlement before
proceeding to the solemnities of consignation. (8 Manresa 325).
Sps. Cacayorin v. Armed Forces and Police Mutual Benefit Association,
Inc.; G.R. No. 171298. April 15, 2013

Property; Ejectment; only issue is who is entitled to physical possession;


forcible entry; prior physical possession is vital; judgment conclusive
between the parties and their successors-in-interest; effects if prevailing
party is a usufructuary; usufruct; death of usufructuary extinguishes
usufruct. Ejectment cases forcible entry and unlawful detainer are
summary proceedings designed to provide expeditious means to protect
actual possession or the right to possession of the property involved. The
only question that the courts resolve in ejectment proceedings is: who is
entitled to the physical possession of the premises, that is, to the possession
de facto and not to the possession de jure. It does not even matter if a partys
title to the property is questionable. Thus, an ejectment case will not
necessarily be decided in favor of one who has presented proof of ownership
of the subject property.
Indeed, possession in ejectment cases means nothing more than actual
physical possession, not legal possession in the sense contemplated in civil
law. In a forcible entry case, prior physical possession is the primary
consideration[.] A party who can prove prior possession can recover such
possession even against the owner himself. Whatever may be the character
of his possession, if he has in his favor prior possession in time, he has the
security that entitles him to remain on the property until a person with a
better right lawfully ejects him. [T]he party in peaceable, quiet possession
shall not be thrown out by a strong hand, violence, or terror.
The judgment in an ejectment case is conclusive between the parties and
their successors-in interest by title subsequent to the commencement of the
action; hence, it is enforceable by or against the heirs of the deceased. This
judgment entitles the winning party to: (a) the restitution of the premises, (b)
the sum justly due as arrears of rent or as reasonable compensation for the
use and occupation of the premises, and (c) attorneys fees and costs.

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

[T]he right to the usufruct is now rendered moot by the death of Wilfredo
since death extinguishes a usufruct under Article 603(1) of the Civil Code.
This development deprives the heirs of the usufructuary the right to retain or
to reacquire possession of the property even if the ejectment judgment
directs its restitution.
Thus, what actually survives under the circumstances is the award of
damages, by way of compensation. Rivera-Calingasan v. Rivera; G.R. No.
171555. April 17, 2013
Property; Public property; public plaza forms part of the public dominion;
cannot be the object of appropriation, lease, any other contractual
undertaking; void contracts. A pPublic plaza is for public use and therefore
forms part of the public dominion. Accordingly, it cannot be the object of
appropriation either by the State or by private persons. Nor can it be the
subject of lease or any other contractual undertaking. In Villanueva v.
Castaeda, Jr., citing Espiritu v. Municipal Council of Pozorrubio, the
Court pronounced that:
x x x Town plazas are properties of public dominion, to be devoted to public
use and to be made available to the public in general. They are outside the
commerce of man and cannot be disposed of or even leased by the
municipality to private parties.
In this relation, Article 1409(1) of the Civil Code provides that a contract
whose purpose is contrary to law, morals, good customs, public order or
public policy is considered void and as such, creates no rights or obligations
or any juridical relations. Land Bank of the Philippines v. Cacayurin; G.R.
No. 191667. April 17, 2013
Special Laws
Foreclosure of Mortgage pursuant to P.D. No. 385; when its purpose is
served; when hearing is necessary before issuance of writ of possession;
foreclosure of mortgage under Section 33, Rule 39 of the Rules on Civil
Procedure; when issuance of writ of possession is not ministerial. Indeed,
while the Court had already declared in Philippine National Bank v. Adil that
once the property of a debtor is foreclosed and sold to a GFI, it would be

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

mandatory for the court to place the GFI in the possession and control of the
propertypursuant to Section 4 of P.D. No. 385 (Requiring Government
Financial Institutions to Foreclose Mandatorily All Loans with Arrearages,
Including Interest and Charges Amounting to at Least Twenty (20%) of the
Total Outstanding Obligation) this rule should not be construed as
absolute or without exception.
The evident purpose underlying P.D. 385 is sufficiently served by allowing
foreclosure proceedings initiated by GFIs to continue until a judgment
therein becomes final and executory, without a restraining order, temporary
or permanent injunction against it being issued. But if a parcel of land is
occupied by a party other than the judgment debtor, the proper procedure is
for the court to order a hearing to determine the nature of said adverse
possession before it issues a writ of possession. This is because a third party,
who is not privy to the debtor, is protected by the law. Such third party may
be ejected from the premises only after he has been given an opportunity to
be heard, to comply with the time honored principle of due process.
In the same vein, under Section 33 of Rule 39 of the Rules on Civil
Procedure, the possession of a mortgaged property may be awarded to a
purchaser in the extrajudicial foreclosure, unless a third party is actually
holding the property adversely vis--vis the judgment debtor.
The obligation of a court to issue a writ of possession in favor of the
purchaser in an extrajudicial foreclosure sale ceases to be ministerial, once it
appears that there is a third party who is in possession of the property and is
claiming a right adverse to that of the debtor/mortgagor. The Supreme Court
explained in Philippine National Bank v. Austria that the foregoing doctrinal
pronouncements are not without support in substantive law:
x x x. Notably, the Civil Code protects the actual possessor of a property, to
wit:
Art. 433. Actual possession under claim of ownership raises a disputable
presumption of ownership. The true owner must resort to judicial process for
the recovery of the property.
Under the aforequoted provision, one who claims to be the owner of a

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

property possessed by another must bring the appropriate judicial action for
its physical recovery. The term judicial process could mean no less than an
ejectment suit or reivindicatory action, in which the ownership claims of the
contending parties may be properly heard and adjudicated.
Royal Savings Bank v. Asia, et al.; G.R. No. 183658. April 10, 2013
Family Code; Declaration of Presumptive Death; judgment is immediately
final and executory; proper remedy is a special civil action for certiorari
filed in the Court of Appeals; decision of Court of Appeals reviewable by
the Supreme Court via certiorari under Rule 45. It is improper to avail of an
ordinary appeal as a vehicle for questioning a trial courts decision in a
summary proceeding for the declaration of presumptive death under Article
41 of the Family Code.
As explained in Republic v. Tango, the remedy of a losing party in a
summary proceeding is not an ordinary appeal, but a petition for certiorari,
to wit:
By express provision of law, the judgment of the court in a summary
proceeding shall be immediately final and executory. As a matter of course,
it follows that no appeal can be had of the trial courts judgment in a
summary proceeding for the declaration of presumptive death of an absent
spouse under Article 41 of the Family Code. It goes without saying,
however, that an aggrieved party may file a petition for certiorari to
question abuse of discretion amounting to lack of jurisdiction. Such petition
should be filed in the Court of Appeals in accordance with the Doctrine of
Hierarchy of Courts. To be sure, even if the Courts original jurisdiction to
issue a writ of certiorari is concurrent with the RTCs and the Court of
Appeals in certain cases, such concurrence does not sanction an unrestricted
freedom of choice of court forum. From the decision of the Court of
Appeals, the losing party may then file a petition for review on certiorari
under Rule 45 of the Rules of Court with the Supreme Court. This is because
the errors which the court may commit in the exercise of jurisdiction are
merely errors of judgment which are the proper subject of an appeal.
When the OSG filed its notice of appeal under Rule 42, it availed itself of
the wrong remedy. As a result, the running of the period for filing of a

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Petition for Certiorari continued to run and was not tolled. Upon lapse of
that period, the Decision of the RTC could no longer be questioned.
Republic of the Philippines v. Narceda; G.R. No. 182760. April 10, 2013.

March 2013 Philippine Supreme


Court Decisions on Civil Law
Posted on April 8, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law

Here are select March 2013 rulings of the Supreme Court of the Philippines
on civil law:
Civil Code
Contracts; contract of sale; perfection; essential elements; stages. A contract
of sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price. Thus, for a contract of
sale to be valid, all of the following essential elements must concur: a)
consent or meeting of the minds; b) determinate subject matter; and c) price
certain in money or its equivalent.
As for the price, fixing it can never be left to the decision of only one of the
contracting parties. But a price fixed by one of the contracting parties, if
accepted by the other, gives rise to a perfected sale.

As regards consent, when there is merely an offer by one party without


acceptance of the other, there is no contract. The decision to accept a
bidders proposal must be communicated to the bidder. However, a binding
contract may exist between the parties whose minds have met, although they
did not affix their signatures to any written document, as acceptance may be
expressed or implied. It can be inferred from the contemporaneous and
subsequent acts of the contracting parties. Thus, the Supreme Court has held:

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x x x The rule is that except where a formal acceptance is so required,


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

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P350,000, with interest at 12% per month for any delayed payment after
November 15, 1999, until fully paid.
An allegation of vitiated consent must be proven by preponderance of
evidence. Although the undertaking in the affidavit appears to be onerous
and lopsided, this does not necessarily prove the alleged vitiation of consent.
They, in fact, admitted the genuineness and due execution of the Joint
Affidavit and Undertaking when they said that they signed the same to
secure possession of their vehicle.
In order that the debtor may be in default, it is necessary that the following
requisites be present: (1) that the obligation be demandable and already
liquidated; (2) that the debtor delays performance; and (3) that the creditor
requires the performance judicially and extrajudicially. Default generally
begins from the moment the creditor demands the performance of the
obligation. Rodolfo G. Cruz and Esperanza Ibias vs. Atty. Delfin Gruspe;
G.R. No. 191431. March 13, 2013
Contracts; parties may establish any agreement, term, and condition they
may deem advisable, provided they are not contrary to law, morals or public
policy; if the language used is clear, there is no need for construction;
mortgage; courts duty, merely to interpret the intent of the parties; even if
not expressly so stated, the mortgage extends to the improvements;
machineries and equipment are considered real properties. As held in
Gateway Electronics Corp. v. Land Bank of the Philippines, the rule in this
jurisdiction is that the contracting parties may establish any agreement, term,
and condition they may deem advisable, provided they are not contrary to
law, morals or public policy. The right to enter into lawful contracts
constitutes one of the liberties guaranteed by the Constitution.
It has been explained by the Supreme Court in Norton Resources and
Development Corporation v. All Asia Bank Corporation in reiteration of the
ruling in Benguet Corporation v. Cabildo that:
A courts purpose in examining a contract is to interpret the intent of the
contracting parties, as objectively manifested by them. The process of
interpreting a contract requires the court to make a preliminary inquiry as to
whether the contract before it is ambiguous. A contract provision is

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ambiguous if it is susceptible of two reasonable alternative interpretations.


Where the written terms of the contract are not ambiguous and can only be
read one way, the court will interpret the contract as a matter of law.
Then till now the pronouncement has been that if the language used is as
clear as day and readily understandable by any ordinary reader, there is no
need for construction.
Law and jurisprudence provide and guide that even if not expressly so
stated, the mortgage extends to the improvements.
Article 2127 of the Civil Code provides:
Art. 2127. The mortgage extends to the natural accessions, to the
improvements, growing fruits, and the rents or income not yet received when
the obligation becomes due, and to the amount of the indemnity granted or
owing to the proprietor from the insurers of the property mortgaged, or in
virtue of expropriation for public use, with the declarations, amplifications
and limitations established by law, whether the estate remains in the
possession of the mortgagor, or it passes into the hands of a third person.
In the early case of Bischoff v. Pomar and Cia. General de Tabacos, the
Court ruled that even if the machinery in question was not included in the
mortgage expressly, Article 111 of the [old] Mortgage Law provides that
chattels permanently located in a building, either useful or ornamental, or for
the service of some industry even though they were placed there after the
creation of the mortgage shall be considered as mortgaged with the estate,
provided they belong to the owner of said estate.
The real estate mortgage over the machineries and equipment is even in full
accord with the classification of such properties by the Civil Code of the
Philippines as immovable property. Thus:
Article 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil;
xxxx

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(5) Machinery, receptacles, instruments or implements intended by the


owner of the tenement for an industry or works which may be carried on in a
building or on a piece of land, and which tend directly to meet the needs of
the said industry or works.
Star Two (SPV-AMC), Inc. vs. Paper City Corporation of the Philippines;
G.R. No. 169211. March 6, 2013
Property; encroachment on property; builder in bad faith; options available
to owner of the land; rules in the determining the reckoning period for
valuing the property. Under Article 448 pertaining to encroachments in good
faith, as well as Article 450 referring to encroachments in bad faith, the
owner of the land encroached upon petitioner herein has the option to
require respondent builder to pay the price of the land.
Although these provisions of the Civil Code do not explicitly state the
reckoning period for valuing the property, Ballatan v. Court of Appeals
already specifies that in the event that the seller elects to sell the lot, the
price must be fixed at the prevailing market value at the time of payment.
More recently, Tuatis v. Spouses Escol illustrates that the present or current
fair value of the land is to be reckoned at the time that the landowner elected
the choice, and not at the time that the property was purchased. In
Sarmiento v. Agana, we reckoned the valuation of the property at the time
that the real owner of the land asked the builder to vacate the property
encroached upon. Moreover, the oft-cited case Depra v. Dumlao likewise
ordered the courts of origin to compute the current fair price of the land in
cases of encroachment on real properties. Vda. de Roxas v. Our Ladys
Foundation, Inc.; G.R. No. 182378. March 6, 2013
Special Laws
Agrarian Reform; land ownership; mere issuance of the Certificate of Land
Transfer does not vest full ownership on the holder and does not
automatically operate to divest the land owner of all of his rights over the
landholding; requirements to effect a transfer of ownership; agricultural
lands; any sale or disposition of agricultural lands made after the effectivity
of R.A. No. 6657 which has been found contrary to its provisions shall be

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null and void; procedures for the reallocation of farmholdings covered by


P.D. No. 27 by reason of abandonment or the refusal to become a
beneficiary; requisites of abandonment. The mere issuance of the Certificate
of Land Transfer (CLT) does not vest full ownership on the holder and
does not automatically operate to divest the landowner of all of his rights
over the landholding. The holder must first comply with certain mandatory
requirements to effect a transfer of ownership. Under R.A. No. 6657
(Comprehensive Agrarian Reform Law of 1988) in relation with P.D. No. 27
(Decreeing the Emancipation of Tenants from the Bondage of the Soil,
Transferring to Them the Ownership of the Land they Till and Providing the
Instruments and Mechanism Therefor) and E.O. No. 228 (Declaring Full
Land Ownership to Qualified Farmer Beneficiaries Covered by P.D. No. 27:
Determining the Value of Remaining Unvalued Rice and Corn Lands Subject
to P.D. No. 27; and Providing for the Manner of Payment by the Farmer
Beneficiary and Mode of Compensation to the Landowner), the title to the
landholding shall be issued to the tenant-farmer only upon the satisfaction of
the following requirements: (1) payment in full of the just compensation for
the landholding, duly determined by final judgment of the proper court; (2)
possession of the qualifications of a farmer-beneficiary under the law; (3)
full-pledged membership of the farmer-beneficiary in a duly recognized
farmers cooperative; and (4) actual cultivation of the landholding. We
explained in several cases that while a tenant with a CLT is deemed the
owner of a landholding, the CLT does not vest full ownership on him.
The tenant-holder of a CLT merely possesses an inchoate right that is
subject to compliance with certain legal preconditions for perfecting title and
acquiring full ownership.
Pursuant to R.A. No. 6657 (Comprehensive Agrarian Reform Law of 1988)
in relation with P.D. No. 27 (Decreeing the Emancipation of Tenants from
the Bondage of the Soil, Transferring to Them the Ownership of the Land
they Till and Providing the Instruments and Mechanism Therefor), any sale
or disposition of agricultural lands made after the effectivity of R.A. No.
6657 which has been found contrary to its provisions shall be null and void.
The proper procedure for the reallocation of the disputed lot must be
followed to ensure that there indeed exist grounds for the cancellation of the
CLT or for forfeiture of rights under it, and that the lot is subsequently
awarded to a qualified farmer-tenant pursuant to the law.
Under Ministry Memorandum Circular No. 04-83 (Supplemental Guidelines

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to Govern Transfer Action of Areas Covered by P.D. 27 by Reason of


Abandonment, Waiver of Rights and Illegal Transactions) in relation with
Ministry Memorandum Circular No. 08-80 (Guidelines in the Disposition
and Reallocation of Farmholdings of Tenant-Farmers who Refuses to
Become Beneficiaries of P.D. No. 27) and Ministry Memorandum Circular
No. 07-79 (Rules and Regulations Governing Transactions Involving Lands
Covered by P.D. No. 27), the following procedures must be observed for the
reallocation of farmholdings covered by P.D. No. 27 by reason of
abandonment or the refusal to become a beneficiary, among others:
I.

Investigation Procedure

1. The conduct of verification by the concerned Agrarian Reform Team


Leader (ARTL) to ascertain the reasons for the refusal. All efforts shall be
exerted to convince the tenant-farmer to become a beneficiary and to comply
with his obligations as such beneficiary.
2. If the tenant-farmer still refuses, the ARTL shall determine the
substitute. The ARTL shall first consider the immediate member of the
tenant-farmers family who assisted in the cultivation of the land, and who is
willing to be substituted to all the rights and obligations of the tenant-farmer.
In the absence or refusal of such member, the ARTL shall choose one from a
list of at least three qualified tenants recommended by the President of the
Samahang Nayon or, in default, any organized farmer association, subject to
the award limits under P.D. No. 27.
3. Formal notice of the report shall be given to the concerned farmerbeneficiary together with all the pertinent documents and evidences.
4. The ARTL shall submit the records of the case with his report and
recommendation to the District Officer within 5 days from the ARTLs
determination of the substitute. The District Officer shall likewise submit his
report and recommendation to the Regional Director and the latter to the
Bureau of Agrarian Legal Assistance, for review, evaluation, and
preparation of the final draft decision for final approval.
5. The decision shall declare the cancellation of the CLT if issued.

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In the event of the farmer-beneficiarys death, the transfer or reallocation of


his landholding to his heirs shall be governed by Ministry Memorandum
Circular No. 19-78 (Rules and Regulations In Case of Death of a TenantBeneficiary).
For abandonment to exist, the following requisites must concur: (1) a clear
intent to abandon; and (2) an external act showing such intent. The term is
defined as the willful failure of the ARB, together with his farm household,
to cultivate, till, or develop his land to produce any crop, or to use the land
for any specific economic purpose continuously for a period of two calendar
years. It entails, among others, the relinquishment of possession of the lot
for at least two (2) calendar years and the failure to pay the amortization for
the same period. What is critical in abandonment is intent which must be
shown to be deliberate and clear. The intent must be established by the
factual failure to work on the landholding absent any valid reason as well as
a clear intent, which is shown as a separate element. Heirs of Lorenzo
Buensuceso vs. Perez; G.R. No. 173926. March 6, 2013
General Banking Law and Act No. 3135; right of redemption; period;
juridical entities; General Banking Law of 2000 merely modified the time
for the exercise of such right by reducing the one-year period originally
provided in Act No. 3135; right of redemption, being statutory, it must be
exercised in the manner prescribed by the statute, and within the prescribed
time limit to make it effective. The law governing cases of extrajudicial
foreclosure of mortgage is Act No. 3135 (An Act to Regulate the Sale of
Property Under Special Powers Inserted In or Annexed to Real-Estate
Mortgages), as amended by Act No. 4118 (An Act to Amend Act No. 3135).
Section 6 thereof provides:
SEC. 6. In all cases in which an extrajudicial sale is made under the special
power hereinbefore referred to, the debtor, his successors-in interest or any
judicial creditor or judgment creditor of said debtor, or any person having a
lien on the property subsequent to the mortgage or deed of trust under which
the property is sold, may redeem the same at any time within the term of one
year from and after the date of the sale; and such redemption shall be
governed by the provisions of sections four hundred and sixty-four to four
hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as
these are not inconsistent with the provisions of this Act.

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The one-year period of redemption is counted from the date of the


registration of the certificate of sale. In this case, the parties provided in their
real estate mortgage contract that upon petitioners default and the latters
entire loan obligation becoming due, respondent may immediately foreclose
the mortgage judicially in accordance with the Rules of Court, or
extrajudicially in accordance with Act No. 3135, as amended (An Act to
Regulate the Sale of Property Under Special Powers Inserted In or Annexed
to Real-Estate Mortgages).
However, Section 47 of R.A. No. 8791 otherwise known as The General
Banking Law of 2000 which took effect on June 13, 2000, amended Act
No. 3135. Said provision reads:
SECTION 47. Foreclosure of Real Estate Mortgage. In the event of
foreclosure, whether judicially or extrajudicially, of any mortgage on real
estate which is security for any loan or other credit accommodation granted,
the mortgagor or debtor whose real property has been sold for the full or
partial payment of his obligation shall have the right within one year after
the sale of the real estate, to redeem the property by paying the amount due
under the mortgage deed, with interest thereon at the rate specified in the
mortgage, and all the costs and expenses incurred by the bank or institution
from the sale and custody of said property less the income derived
therefrom. However, the purchaser at the auction sale concerned whether in
a judicial or extrajudicial foreclosure shall have the right to enter upon and
take possession of such property immediately after the date of the
confirmation of the auction sale and administer the same in accordance with
law. Any petition in court to enjoin or restrain the conduct of foreclosure
proceedings instituted pursuant to this provision shall be given due course
only upon the filing by the petitioner of a bond in an amount fixed by the
court conditioned that he will pay all the damages which the bank may suffer
by the enjoining or the restraint of the foreclosure proceeding.
Notwithstanding Act 3135, juridical persons whose property is being sold
pursuant to an extrajudicial foreclosure, shall have the right to redeem the
property in accordance with this provision until, but not after, the
registration of the certificate of foreclosure sale with the applicable
Register of Deeds which in no case shall be more than three (3) months
after foreclosure, whichever is earlier. Owners of property that has been
sold in a foreclosure sale prior to the effectivity of this Act shall retain their

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redemption rights until their expiration. (Emphasis supplied.)


Under the new law, an exception is thus made in the case of juridical persons
which are allowed to exercise the right of redemption only until, but not
after, the registration of the certificate of foreclosure sale and in no case
more than three (3) months after foreclosure, whichever comes first.
Section 47 (of the General Banking Law of 2000) did not divest juridical
persons of the right to redeem their foreclosed properties but only modified
the time for the exercise of such right by reducing the one-year period
originally provided in Act No. 3135 (An Act to Regulate the Sale of Property
Under Special Powers Inserted In or Annexed to Real-Estate Mortgages).
The new redemption period commences from the date of foreclosure sale,
and expires upon registration of the certificate of sale or three months after
foreclosure, whichever is earlier. There is likewise no retroactive application
of the new redemption period because Section 47 (of the General Banking
Law of 2000) exempts from its operation those properties foreclosed prior to
its effectivity and whose owners shall retain their redemption rights under
Act No. 3135 (An Act to Regulate the Sale of Property Under Special
Powers Inserted In or Annexed to Real-Estate Mortgages).
The right of redemption being statutory, it must be exercised in the manner
prescribed by the statute, and within the prescribed time limit, to make it
effective. Furthermore, as with other individual rights to contract and to
property, it has to give way to police power exercised for public welfare.
Goldenway Merchandising Corporation vs. Equitable PCI Bank; G.R. No.
195540. March 13, 2013

February 2013 Philippine Supreme


Court Decisions on Civil Law
Posted on March 18, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law

Here are select February 2013 rulings of the Supreme Court of the
Philippines on civil law:

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Lexoterica: Compilation of SC Rulings

Civil Code
Common Carrier; requisite before presumption of negligence arises; bill of
lading; interpretation thereof; inherent nature of the subject shipment or its
packaging as ground for exempting common carrier from liability; failure to
prove negligence does not entitle claimant for damages. Though it is true
that common carriers are presumed to have been at fault or to have acted
negligently if the goods transported by them are lost, destroyed, or
deteriorated, and that the common carrier must prove that it exercised
extraordinary diligence in order to overcome the presumption, the plaintiff
must still, before the burden is shifted to the defendant, prove that the
subject shipment suffered actual shortage. This can only be done if the
weight of the shipment at the port of origin and its subsequent weight at the
port of arrival have been proven by a preponderance of evidence, and it can
be seen that the former weight is considerably greater than the latter weight,
taking into consideration the exceptions provided in Article 1734 of the Civil
Code.
The Berth Term Grain Bill of Lading states that the subject shipment was
carried with the qualification Shippers weight, quantity and quality
unknown, meaning that it was transported with the carrier having been
oblivious of the weight, quantity, and quality of the cargo. This
interpretation of the quoted qualification is supported by Wallem Philippines
Shipping, Inc. v. Prudential Guarantee & Assurance, Inc., a case involving
an analogous stipulation in a bill of lading, wherein the Supreme Court held
that:
Indeed, as the bill of lading indicated that the contract of carriage was under
a said to weigh clause, the shipper is solely responsible for the loading
while the carrier is oblivious of the contents of the shipment. (Emphasis
supplied)
Hence, the weight of the shipment as indicated in the bill of lading is not
conclusive as to the actual weight of the goods. Consequently, the
respondent must still prove the actual weight of the subject shipment at the
time it was loaded at the port of origin so that a conclusion may be made as
to whether there was indeed a shortage for which petitioner must be liable.

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The shortage, if any, may have been due to the inherent nature of the subject
shipment or its packaging since the subject cargo was shipped in bulk and
had a moisture content of 12.5%.
Considering that respondent was not able to establish conclusively that the
subject shipment weighed 3,300 metric tons at the port of loading, and that it
cannot therefore be concluded that there was a shortage for which petitioner
should be responsible; bearing in mind that the subject shipment most likely
lost weight in transit due to the inherent nature of Soya Bean Meal;
assuming that the shipment lost weight in transit due to desorption, the
shortage of 199.863 metric tons that respondent alleges is a minimal 6.05%
of the weight of the entire shipment, which is within the allowable 10%
allowance for loss; and noting that the respondent was not able to show
negligence on the part of the petitioner and that the weighing methods which
respondent relied upon to establish the shortage it alleges is inaccurate,
respondent cannot fairly claim damages against petitioner for the subject
shipments alleged shortage. Asian Terminals, Inc. vs. Simon Enterprises,
Inc.; G.R. No. 177116. February 27, 2013

Contract; contract to sell; sellers obligation to deliver the corresponding


certificates of title is simultaneous and reciprocal to the buyers full payment
of the purchase price; rescission; effects; requires mutual restitution;
Subdivision and Condominium Buyers Protective Decree (PD 957); intent
of PD 957 to protect the buyer against unscrupulous developers, operators
and/or sellers; damages; when moral damages may be awarded; when
exemplary damages may be awarded; propriety of award of attorneys fees.
It is settled that in a contract to sell, the sellers obligation to deliver the
corresponding certificates of title is simultaneous and reciprocal to the
buyers full payment of the purchase price. In this relation, Section 25 of PD
957 (Regulating the Sale of Subdivision Lots and Condominiums, Providing
Penalties for Violations Thereof), which regulates the subject transaction,
imposes on the subdivision owner or developer the obligation to cause the
transfer of the corresponding certificate of title to the buyer upon full
payment, to wit:
Sec. 25. Issuance of Title. The owner or developer shall deliver the title of

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the lot or unit to the buyer upon full payment of the lot or unit. No fee,
except those required for the registration of the deed of sale in the Registry
of Deeds, shall be collected for the issuance of such title. In the event a
mortgage over the lot or unit is outstanding at the time of the issuance of the
title to the buyer, the owner or developer shall redeem the mortgage or the
corresponding portion thereof within six months from such issuance in order
that the title over any fully paid lot or unit may be secured and delivered to
the buyer in accordance herewith. (Emphasis supplied.)
The long delay in the performance of GPIs obligation from date of demand
on September 16, 2002 was unreasonable and unjustified. It cannot therefore
be denied that GPI substantially breached its contract to sell with Sps.
Fajardo which thereby accords the latter the right to rescind the same
pursuant to Article 1191 of the Code, viz:
ART. 1191. The power to rescind obligations is implied in reciprocal ones,
in case one of the obligors should not comply with what is incumbent upon
him.
The injured party may choose between the fulfillment and the rescission of
the obligation, with the payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter should become
impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who
have acquired the thing, in accordance with articles 1385 and 1388 and the
Mortgage Law.
Rescission does not merely terminate the contract and release the parties
from further obligations to each other, but abrogates the contract from its
inception and restores the parties to their original positions as if no contract
has been made. Consequently, mutual restitution, which entails the return of
the benefits that each party may have received as a result of the contract, is
thus required.

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To be sure, it has been settled that the effects of rescission as provided for in
Article 1385 of the Code are equally applicable to cases under Article 1191,
to wit:
x x x Mutual restitution is required in cases involving rescission under
Article 1191. This means bringing the parties back to their original status
prior to the inception of the contract. Article 1385 of the Civil Code
provides, thus:
ART. 1385. Rescission creates the obligation to return the things which
were the object of the contract, together with their fruits, and the price
with its interest; consequently, it can be carried out only when he who
demands rescission can return whatever he may be obligated to restore.
Neither shall rescission take place when the things which are the object of
the contract are legally in the possession of third persons who did not act in
bad faith.
In this case, indemnity for damages may be demanded from the person
causing the loss.
The Court has consistently ruled that this provision applies to rescission
under Article 1191:
[S]ince Article 1385 of the Civil Code expressly and clearly states that
rescission creates the obligation to return the things which were the object
of the contract, together with their fruits, and the price with its interest, the
Court finds no justification to sustain petitioners position that said Article
1385 does not apply to rescission under Article 1191. x x x (Emphasis
supplied; citations omitted.)
As a necessary consequence, considering the propriety of the rescission as
earlier discussed, Sps. Fajardo must be able to recover the price of the
property pegged at its prevailing market value consistent with the Courts
pronouncement in Solid Homes, viz:
Indeed, there would be unjust enrichment if respondents Solid Homes, Inc.
& Purita Soliven are made to pay only the purchase price plus interest. It is

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definite that the value of the subject property already escalated after almost
two decades from the time the petitioner paid for it. Equity and justice
dictate that the injured party should be paid the market value of the lot,
otherwise, respondents Solid Homes, Inc. & Purita Soliven would enrich
themselves at the expense of herein lot owners when they sell the same
lot at the present market value. Surely, such a situation should not be
countenanced for to do so would be contrary to reason and therefore,
unconscionable. Over time, courts have recognized with almost pedantic
adherence that what is inconvenient or contrary to reason is not allowed in
law. (Emphasis supplied.)
On this score, it is apt to mention that it is the intent of PD 957 (Regulating
the Sale of Subdivision Lots and Condominiums, Providing Penalties for
Violations Thereof) to protect the buyer against unscrupulous developers,
operators and/or sellers who reneged on their obligations. Thus, in order to
achieve this purpose, equity and justice dictate that the injured party should
be afforded full recompense and as such, be allowed to recover the
prevailing market value of the undelivered lot which had been fully paid for.
Furthermore, the Court finds that there is proper legal basis to accord moral
and exemplary damages and attorneys fees, including costs of suit. Verily,
GPIs unjustified failure to comply with its obligations as above discussed
caused Sps. Fajardo serious anxiety, mental anguish and sleepless nights,
thereby justifying the award of moral damages. In the same vein, the
payment of exemplary damages remains in order so as to prevent similarly
minded subdivision developers to commit the same transgression. And
finally, considering that Sps. Fajardo were constrained to engage the
services of counsel to file this suit, the award of attorneys fees must be
likewise sustained. Gotesco Properties, Inc., et al. vs. Sps. Eugenio and
Angelina Fajardo; G.R. No. 201167. February 27, 2013
Contracts; interpretation thereof; intention of the parties; relativity of
contracts; credit line; definition; trust receipt; characteristics; coverage;
contract of adhesion; generally not a one-sided document; interest rate;
parties have the right to agree on rate of interest; interest rate must not be
excessive, iniquitous, unconscionable and exorbitant; attorneys fees; award
must rest on a factual basis and legal justification stated in the body of the
decision under review. If the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of its

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stipulations shall control. In determining their intention, their


contemporaneous and subsequent acts shall be principally considered.
Under the notion of relativity of contracts embodied in Article 1311 of the
Civil Code, contracts take effect only between the parties, their assigns and
heirs. Hence, the farmer-participants, not being themselves parties to the
contractual documents signed by Gloria, were not to be thereby liable.
A credit line is really a loan agreement between the parties. According to
Rosario Textile Mills Corporation v. Home Bankers Savings and Trust Co.:
x x x [A] credit line is that amount of money or merchandise which a
banker, a merchant, or supplier agrees to supply to a person on credit and
generally agreed to in advance. It is a fixed limit of credit granted by a
bank, retailer, or credit card issuer to a customer, to the full extent of which
the latter may avail himself of his dealings with the former but which he
must not exceed and is usually intended to cover a series of transactions in
which case, when the customers line of credit is nearly exhausted, he is
expected to reduce his indebtedness by payments before making any further
drawings.
A trust receipt is a security transaction intended to aid in financing
importers and retail dealers who do not have sufficient funds or resources to
finance the importation or purchase of merchandise, and who may not be
able to acquire credit except through utilization, as collateral, of the
merchandise imported or purchased. It is a security agreement that secures
an indebtedness and there can be no such thing as security interest that
secures no obligation.
The contract, its label notwithstanding, was not a trust receipt transaction in
legal contemplation or within the purview of the Trust Receipts Law
(Presidential Decree No. 115) such that its breach would render Gloria
criminally liable for estafa. Under Section 4 of the Trust Receipts Law, the
sale of goods by a person in the business of selling goods for profit who, at
the outset of the transaction, has, as against the buyer, general property
rights in such goods, or who sells the goods to the buyer on credit, retaining
title or other interest as security for the payment of the purchase price, does
not constitute a trust receipt transaction and is outside the purview and

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coverage of the law.


In Land Bank v. Perez, the Court has elucidated on the coverage of Section 4
(of the Trust Receipts Law), to wit:
There are two obligations in a trust receipt transaction. The first is covered
by the provision that refers to money under the obligation to deliver it
(entregarla) to the owner of the merchandise sold. The second is covered by
the provision referring to merchandise received under the obligation to
return it (devolverla) to the owner. Thus, under the Trust Receipts Law,
intent to defraud is presumed when (1) the entrustee fails to turn over the
proceeds of the sale of goods covered by the trust receipt to the entruster; or
(2) when the entrustee fails to return the goods under trust, if they are not
disposed of in accordance with the terms of the trust receipts.
In all trust receipt transactions, both obligations on the part of the trustee
exist in the alternative the return of the proceeds of the sale or the return or
recovery of the goods, whether raw or processed. When both parties enter
into an agreement knowing that the return of the goods subject of the
trust receipt is not possible even without any fault on the part of the
trustee, it is not a trust receipt transaction penalized under Section 13 of
P.D. 115; the only obligation actually agreed upon by the parties would
be the return of the proceeds of the sale transaction. This transaction
becomes a mere loan, where the borrower is obligated to pay the bank
the amount spent for the purchase of the goods. (Bold emphasis supplied)
A contract of adhesion prepared by one party, usually a corporation, is
generally not a one-sided document as long as the signatory is not prevented
from studying it before signing. At any rate, the social stature of the
parties, the nature of the transaction, and the amount involved were also
factors to be considered in determining whether the aggrieved party
exercised adequate care and diligence in studying the contract prior to its
execution. Thus, [u]nless a contracting party cannot read or does not
understand the language in which the agreement is written, he is presumed to
know the import of his contract and is bound thereby.
The Usury Law allowed the parties in a loan agreement to exercise
discretion on the interest rate to be charged. Once a judicial demand for

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payment has been made, however, Article 2212 of the Civil Code should
apply, that is: Interest due shall earn legal interest from the time it is
judicially demanded, although the obligation may be silent upon this point.
The Central Bank circulars on interest rates granted to the parties leeway on
the rate of interest agreed upon. In this regard, the Court has said:
The Usury Law had been rendered legally ineffective by Resolution No. 224
dated 3 December 1982 of the Monetary Board of the Central Bank, and
later by Central Bank Circular No. 905 (Amendment of Books I to IV of the
Manual of Regulations for Banks and Other Financial Intermediaries)
which took effect on 1 January 1983. These circulars removed the ceiling on
interest rates for secured and unsecured loans regardless of maturity. The
effect of these circulars is to allow the parties to agree on any interest that
may be charged on a loan. The virtual repeal of the Usury Law is within the
range of judicial notice which courts are bound to take into account.
Although interest rates are no longer subject to a ceiling, the lender does not
have an unbridled license to impose increased interest rates. The lender and
the borrower should agree on the imposed rate, and such imposed rate
should be in writing.
Accordingly, the interest rate agreed upon should not be excessive,
iniquitous, unconscionable and exorbitant; otherwise, the Court may
declare the rate illegal.
The award of attorneys fees must rest on a factual basis and legal
justification stated in the body of the decision under review. Absent the
statement of factual basis and legal justification, attorneys fees are to be
disallowed. In Abobon v. Abobon, the Court has expounded on the
requirement for factual basis and legal justification in order to warrant the
grant of attorneys fees to the winning party, viz:
As to attorneys fees, the general rule is that such fees cannot be recovered
by a successful litigant as part of the damages to be assessed against the
losing party because of the policy that no premium should be placed on the
right to litigate. Indeed, prior to the effectivity of the present Civil Code,
such fees could be recovered only when there was a stipulation to that effect.
It was only under the present Civil Code that the right to collect attorneys

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fees in the cases mentioned in Article 2208 of the Civil Code came to be
recognized. Such fees are now included in the concept of actual damages.
Even so, whenever attorneys fees are proper in a case, the decision rendered
therein should still expressly state the factual basis and legal justification for
granting them. Granting them in the dispositive portion of the judgment is
not enough; a discussion of the factual basis and legal justification for them
must be laid out in the body of the decision.
Sps. Dela Cruz vs. Planters Products, Inc.; G.R. No. 158649. February 18,
2013
Contract; rescission under Article 1191; recognizes an implied resolutory
condition in reciprocal obligations; effects thereof. The action for the
rescission of the deed of sale on the ground that Advanced Foundation did
not comply with its obligation actually seeks one of the alternative remedies
available to a contracting party under Article 1191 of the Civil Code, to wit:
Article 1191. The power to rescind obligations is implied in reciprocal ones,
in case one of the obligors should not comply with what is incumbent upon
him.
The injured party may choose between the fulfillment and the rescission of
the obligation, with the payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter should become
impossible.
The court shall decree the rescission claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who
have acquired the thing, in accordance with Articles 1385 and 1388 and the
Mortgage Law.
Article 1191 of the Civil Code recognizes an implied or tacit resolutory
condition in reciprocal obligations. The condition is imposed by law, and
applies even if there is no corresponding agreement thereon between the
parties. The explanation for this is that in reciprocal obligations a party

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incurs in delay once the other party has performed his part of the contract;
hence, the party who has performed or is ready and willing to perform may
rescind the obligation if the other does not perform, or is not ready and
willing to perform.
It is true that the rescission of a contract results in the extinguishment of the
obligatory relation as if it was never created, the extinguishment having a
retroactive effect. The rescission is equivalent to invalidating and unmaking
the juridical tie, leaving things in their status before the celebration of the
contract. However, until the contract is rescinded, the juridical tie and the
concomitant obligations subsist. Teodoro A. Reyes vs. Ettore Rossi; G.R.
No. 159823. February 18, 2013.
Ejectment; distinction between a summary action of ejectment and a plenary
action for recovery of possession and/or ownership of the land; power of the
inferior courts to rule on the question of ownership in ejectment suits;
partition; validity of oral partition; actual possession and exercise of
dominion over definite portions of the property are considered strong proof
of an oral partition; ownership; tax declarations and tax receipts alone are
not conclusive evidence. It is well to be reminded of the settled distinction
between a summary action of ejectment and a plenary action for recovery of
possession and/or ownership of the land. What really distinguishes an action
for unlawful detainer from a possessory action (accion publiciana) and from
a reinvindicatory action (accion reinvindicatoria) is that the first is limited to
the question of possession de facto. Unlawful detainer suits
(accion interdictal) together with forcible entry are the two forms of
ejectment suit that may be filed to recover possession of real property. Aside
from the summary action of ejectment, accion publiciana or the plenary
action to recover the right of possession and accion reinvindicatoria or the
action to recover ownership which also includes recovery of possession,
make up the three kinds of actions to judicially recover possession.
Under Section 3 of Rule 70 of the Rules of Court, the Summary Procedure
governs the two forms of ejectment suit, the purpose being to provide an
expeditious means of protecting actual possession or right to possession of
the property. They are not processes to determine the actual title to an estate.
If at all, inferior courts are empowered to rule on the question of ownership
raised by the defendant in such suits, only to resolve the issue of possession
and its determination on the ownership issue is not conclusive.

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The validity of an oral partition is well-settled in our jurisdiction. In Vda. de


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

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as between each other to hold their respective parts in severalty.


A parol partition may also be sustained on the ground that the parties thereto
have acquiesced in and ratified the partition by taking possession in
severalty, exercising acts of ownership with respect thereto, or otherwise
recognizing the existence of the partition.
A number of cases have specifically applied the doctrine of part
performance, or have stated that a part performance is necessary, to take a
parol partition out of the operation of the statute of frauds. It has been held
that where there was a partition in fact between tenants in common, and a
part performance, a court of equity would have regard to and enforce such
partition agreed to by the parties.
It is settled that tax declarations and tax receipts alone are not conclusive
evidence of ownership. They are merely indicia of a claim of ownership,61
but when coupled with proof of actual possession of the property, they can
be the basis of claim of ownership through prescription. In the absence of
actual, public and adverse possession, the declaration of the land for tax
purposes does not prove ownership. Casilang vs. Casilang-Dizon, et al.;
G.R. No. 180269. February 20, 2013
Mortgage; accommodation mortgage; sanctioned under Article 2085 of the
Civil Code; accommodation mortgagor is ordinarily not the recipient of the
loan; reasonable promptness in attacking the validity of a mortgage;
unreasonable delay may delay may amount to ratification. The validity of an
accommodation mortgage is allowed under Article 2085 of the Civil Code
which provides that [t]hird persons who are not parties to the principal
obligation may secure the latter by pledging or mortgaging their own
property. An accommodation mortgagor, ordinarily, is not himself a
recipient of the loan, otherwise that would be contrary to his designation as
such.
It bears stressing that an accommodation mortgagor, ordinarily, is not
himself a recipient of the loan, otherwise that would be contrary to his
designation as such. We have held that it is not always necessary that the
accommodation mortgagor be apprised beforehand of the entire amount of
the loan nor should it first be determined before the execution of the Special

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Power of Attorney in favor of the debtor. This is especially true when the
words used by the parties indicate that the mortgage serves as a continuing
security for credit obtained as well as future loan availments.
Mortgagors desiring to attack a mortgage as invalid should act with
reasonable promptness, and unreasonable delay may amount to ratification.
Spouses Ramos vs. Raul Obispo and Far East Bank and Trust Co.; G.R. No.
193804. February 27, 2013
Tort; Doctrine of Last Clear Chance; definition and characteristics;
contributory negligence; definition; effect; apportionment of damages
between parties who are both negligent involving banking transactions;
highest degree of diligence is required for banks. The doctrine of last clear
chance, stated broadly, is that the negligence of the plaintiff does not
preclude a recovery for the negligence of the defendant where it appears that
the defendant, by exercising reasonable care and prudence, might have
avoided injurious consequences to the plaintiff notwithstanding the
plaintiffs negligence. The doctrine necessarily assumes negligence on the
part of the defendant and contributory negligence on the part of the plaintiff,
and does not apply except upon that assumption. Stated differently, the
antecedent negligence of the plaintiff does not preclude him from recovering
damages caused by the supervening negligence of the defendant, who had
the last fair chance to prevent the impending harm by the exercise of due
diligence. Moreover, in situations where the doctrine has been applied, it
was defendants failure to exercise such ordinary care, having the last clear
chance to avoid loss or injury, which was the proximate cause of the
occurrence of such loss or injury.
A collecting bank is guilty of contributory negligence when it accepted for
deposit a post-dated check notwithstanding that said check had been cleared
by the drawee bank which failed to return the check within the 24-hour
reglementary period.
In the cited case of Philippine Bank of Commerce v. Court of Appeals, while
the Court found petitioner bank as the culpable party under the doctrine of
last clear chance since it had, thru its teller, the last opportunity to avert the
injury incurred

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by its client simply by faithfully observing its own validation procedure, it


nevertheless ruled that the plaintiff depositor (private respondent) must share
in the loss on account of its contributory negligence. Thus:
The foregoing notwithstanding, it cannot be denied that, indeed, private
respondent was likewise negligent in not checking its monthly statements of
account. Had it done so, the company would have been alerted to the series
of frauds being committed against RMC by its secretary. The damage would
definitely not have ballooned to such an amount if only RMC, particularly
Romeo Lipana, had exercised even a little vigilance in their financial affairs.
This omission by RMC amounts to contributory negligence which shall
mitigate the damages that may be awarded to the private respondent
under Article 2179 of the New Civil Code, to wit:
x x x. When the plaintiffs own negligence was the immediate and
proximate cause of his injury, he cannot recover damages. But if his
negligence was only contributory, the immediate and proximate cause of the
injury being the defendants lack of due care, the plaintiff may recover
damages, but the courts shall mitigate the damages to be awarded.
In view of this, we believe that the demands of substantial justice are
satisfied by allocating the damage on a 60-40 ratio. Thus, 40% of the
damage awarded by the respondent appellate court, except the award of
P25,000.00 attorneys fees, shall be borne by private respondent RMC; only
the balance of 60% needs to be paid by the petitioners. The award of
attorneys fees shall be borne exclusively by the petitioners. (Italics in the
original; emphasis supplied)
Contributory negligence is conduct on the part of the injured party,
contributing as a legal cause to the harm he has suffered, which falls below
the standard to which he is required to conform for his own protection.
Admittedly, petitioners acceptance of the subject check for deposit despite
the one year postdate written on its face was a clear violation of established
banking regulations and practices. In such instances, payment should be
refused by the drawee bank and returned through the PCHC within the 24hour reglementary period. As aptly observed by the CA, petitioners failure
to comply with this basic policy regarding post-dated checks was a telling
sign of its lack of due diligence in handling checks coursed through it.

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It bears stressing that the diligence required of banks is more than that of a
Roman paterfamilias or a good father of a family. The highest degree of
diligence is expected, considering the nature of the banking business that is
imbued with public interest. While it is true that respondents liability for its
negligent clearing of the check is greater, petitioner cannot take lightly its
own violation of the long-standing rule against encashment of post-dated
checks and the injurious consequences of allowing such checks into the
clearing system. Allied Banking Corporation vs. Bank of the Philippine
Islands; G.R. No. 188363. February 27, 2013
Special Laws
Torrens system; curtain principle; right to rely on the Torrens certificate of
title; exception, when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such
inquiry; purchaser in good faith; definition. Under the Torrens system of
land registration, the registered owner of realty cannot be deprived of her
property through fraud, unless a transferee acquires the property as an
innocent purchaser for value. A transferee who acquires the property
covered by a reissued owners copy of the certificate of title without taking
the ordinary precautions of honest persons in doing business and examining
the records of the proper Registry of Deeds, or who fails to pay the full
market value of the property is not considered an innocent purchaser for
value.
Under the Torrens system of land registration, the State is required to
maintain a register of landholdings that guarantees indefeasible title to those
included in the register. The system has been instituted to combat the
problems of uncertainty, complexity and cost associated with old title
systems that depended upon proof of an unbroken chain of title back to a
good root of title. The State issues an official certificate of title to attest to
the fact that the person named is the owner of the property described therein,
subject to such liens and encumbrances as thereon noted or what the law
warrants or reserves.
One of the guiding tenets underlying the Torrens system is the curtain
principle, in that one does not need to go behind the certificate of title
because it contains all the information about the title of its holder. This

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principle dispenses with the need of proving ownership by long complicated


documents kept by the registered owner, which may be necessary under a
private conveyancing system, and assures that all the necessary information
regarding ownership is on the certificate of title. Consequently, the avowed
objective of the Torrens system is to obviate possible conflicts of title by
giving the public the right to rely upon the face of the Torrens certificate
and, as a rule, to dispense with the necessity of inquiring further; on the part
of the registered owner, the system gives him complete peace of mind that
he would be secured in his ownership as long as he has not voluntarily
disposed of any right over the covered land.
The Philippines adopted the Torrens system through Act No. 496, also
known as the Land Registration Act, which was approved on November 6,
1902 and took effect on February 1, 1903. In this jurisdiction, therefore, a
person dealing in registered land has the right to rely on the Torrens
certificate of title and to dispense with the need of inquiring further, except
when the party has actual knowledge of facts and circumstances that would
impel a reasonably cautious man to make such inquiry.
Good faith is the honest intention to abstain from taking unconscientious
advantage of another. It means the freedom from knowledge and
circumstances which ought to put a person on inquiry. Given this notion of
good faith, therefore, a purchaser in good faith is one who buys the property
of another without notice that some other person has a right to, or interest in,
such property and pays full and fair price for the same. Spouses Cusi vs.
Lilia V. De Vera, et al.; G.R. Nos. 195825/195871. February 27, 2013
Torrens System; right to rely on Torrens title. [It is a] settled principle that
one who deals with property registered under the Torrens System need not
go beyond the same, but only has to rely on the title. Moreover, since the
subject property was already covered by a Torrens title at the time that
respondents bought the same, the law does not require them to go beyond
what appears on the face of the title. The lot has, thus, passed to respondents,
who are presumed innocent purchasers for value, in the absence of any
allegation to the contrary. Mercado, et al. vs. Sps. Espina; G.R. No. 173987.
February 25, 2013

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Implementing Rules and Regulations


for Clerical Corrections in Date of
Birth and Sex in the Civil Registry
Posted on March 15, 2013 by Imelda A. Manguiat Posted in Civil Law, Philippines Law, Philippines - Regulation

The Office of the Civil Registrar General of the National Statistics Office
promulgated Administrative Order No. 1 series of 2012 (AO 1) on October
24, 2012. The AO implements the provisions of Republic Act 10172, the
amendatory law to Republic Act 9048, and supplements Administrative
Order 1 series of 2001, which, in turn, implements RA 9048. Both statutes
provide a means of correcting erroneous entries in the civil registry without
need of judicial action.
Prior to RA 10172, RA 9048 allowed changes in a persons first name or
nickname as well as corrections to typographical entries through an
administrative petition to the local civil registry or the consul-general. RA
10172 expands RA 9048 and expressly allows corrections to entries
concerning a persons date of birth or sex. More specifically, the law
amended Sections 1, 2, 5 and 8 of RA 9048, which respectively defined the
scope of the powers of the civil registry, the terms used in the Act, the form
and contents of the petition and the authority to charge fees for the
correction.
Only clerical or typographical errors are allowed to be corrected. For
substantial amendments to any entry in the civil registry, except for change
of first name or nickname, an adversarial proceeding under Rule 108 of the
Rules of Court is still required. These include petitions to change nationality,
age or status. Under the act, clerical or typographical errors are harmless
and innocuousvisible to the eyes or obvious to the understanding, and can
be corrected or changed only by reference to other existing record or
records.

As in RA 9048, a sworn affidavit with relevant supporting documents is

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required for the petition. These documents shall include a certified true copy
of the certificate containing the erroneous entry and at least two public or
private documents containing the entries on which the civil registry will base
its correction. The AO also requires publication of the petition once a week
for two consecutive weeks, the affidavit of publication and a copy of the
newspaper clipping, a certification that petitioner has no pending
administrative, civil or criminal case or criminal record from the NBI, PNP
and petitioners employer, if any, and submission of the petitioners school
records or school documents such as medical records, baptismal records
and other documents issued by religious authorities if the entry to be
corrected pertains to the date of birth or sex of a person. Moreover, if the
entry sought to be corrected pertains to gender, the law, and the AO also
requires a certification by a government physician that petitioner has not
undergone sex change or transplant. The Act also allows the city or
municipal registrar to require other documents to support the petition.
The petition must be filed in triplicate in the local civil registry in which the
erroneous entry was registered. If one is currently living outside the
Philippines or is residing in the Philippines but far from the civil registry
where the entries are registered, then the petition may be filed with the
consul-general or the local civil registry of the place where petitioner is
currently residing.
A stricter rule is imposed for petitions concerning changes in the entry as to
sex. The IRR requires personal filing of the petition with the city or
municipal civil registry or consulate where the record to be corrected is
registered.
Under the AO, the civil registry may collect PhP3,000 for every petition.
Only indigent petitioners are exempt from payment. Indigency may be
proved by a certification to that effect from the city or municipal social
welfare office. If the petition is filed with the consul-general, a filing fee of
USD150, or its equivalent, may be collected. Migrant petitions, or those
filed with a civil registrar other than the one where the entries are registered,
shall be charged an additional service fee of PhP1,000. A petition that
includes corrections under both RA 9048 and RA 10172 will only be
charged a single filing fee of PhP3,000.

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While errors in the date of birth is now correctible administratively, the IRR
clarifies that it excludes corrections to the year of birth since the law still
does not allow administrative corrections to entries pertaining to age. In
relation to the medical certification required for changes in entries of a
persons sex, the IRR requires that the physician issuing such a certification
must be registered with the Professional Regulations Commission and
employed in a government hospital, public health office or health institution.
The petition may be filed by the owner of the record sought to be corrected
or by his or her representative, namely a spouse, child, parent, sibling,
grandparent, guardian or other person authorized by the owner or by law.
Petitions on behalf of a minor or incapacitated person may be brought by
these same representatives.
Finally, while the AO generally adopts the procedures for processing,
posting and publishing the petition as well as the duties of the civil registrar
and the civil registrar general outlined under AO 1 series of 2001 for
petitions under RA 9048, it adds to the duties of the Civil Registrar by
requiring it to issue a certification as to the authenticity of the medical
certification to be issued by the accredited government physician in cases
where the petition relates to changes in the entry on sex. This requirement
was not provided for by law, prompting a petition by the local civil registrar
of Quezon City for the issuance of a temporary restraining order (TRO)
against the implementation of the IRR on this issue. The petition also claims
that the provision requiring local governments (LGUs) to ratify the fees
imposed under the AO unduly restricted the authority given by law to the
civil registrar to impose fees under the Act. Finally, the petition for TRO
also claims that the AO was issued without consultation with the association
of local civil registrars. The Regional Trial Court of Quezon City denied the
prayer for a TRO last December and the IRR remains effective as of this
writing.

January 2013 Philippine Supreme


Court Decisions on Civil Law

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings
Posted on February 22, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases

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

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

Spouses Roberto and Aida Amurao; G.R. No. 179628. January 16, 2013

Contract; law between the parties; rules on interpretation; easement of right


of way; just compensation; attorneys fees; exception rather than the general
rule. Indeed, the rule is settled that a contract constitutes the law between the
parties who are bound by its stipulations which, when couched in clear and
plain language, should be applied according to their literal tenor. Courts
cannot supply material stipulations, read into the contract words it does not
contain or, for that matter, read into it any other intention that would
contradict its plain import. Neither can they rewrite contracts because they
operate harshly or inequitably as to one of the parties, or alter them for the
benefit of one party and to the detriment of the other, or by construction,
relieve one of the parties from the terms which he voluntarily consented to,
or impose on him those which he did not.
Where the right of way easement, as in this case, similarly involves
transmission lines which not only endangers life and limb but restricts as
well the owners use of the land traversed thereby, the ruling in Gutierrez
remains doctrinal and should be applied. It has been ruled that the owner
should be compensated for the monetary equivalent of the land if, as here,
the easement is intended to perpetually or indefinitely deprive the owner of
his proprietary rights through the imposition of conditions that affect the
ordinary use, free enjoyment and disposal of the property or through
restrictions and limitations that are inconsistent with the exercise of the
attributes of ownership, or when the introduction of structures or objects
which, by their nature, create or increase the probability of injury, death
upon or destruction of life and property found on the land is necessary.
Measured not by the takers gain but the owners loss, just compensation is
defined as the full and fair equivalent of the property taken from its owner
by the expropriator.
The determination of just compensation in eminent domain proceedings is a
judicial function and no statute, decree, or executive order can mandate that
its own determination shall prevail over the courts findings. Any valuation
for just compensation laid down in the statutes may serve only as a guiding
principle or one of the factors in determining just compensation, but it may

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Lexoterica: Compilation of SC Rulings

not substitute the courts own judgment as to what amount should be


awarded and how to arrive at such amount. Hence, Section 3A of R.A. No.
6395, as amended (An Act Revising the Charter of the National Power
Corporation), is not binding upon this Court.
For want of a statement of the rationale for the award in the body of the
RTCs 14 March 2000 Decision, we are constrained, however, to disallow
the grant of attorneys fees in favor of the Spouses Cabahug in an amount
equivalent to 5% of the just compensation due as well as the legal interest
thereon. Considered the exception rather than the general rule, the award of
attorneys fees is not due every time a party prevails in a suit because of the
policy that no premium should be set on the right to litigate. Jesus L.
Cabahug and Coronacion M. Cabahug vs. National Power Corporation;
G.R. No. 186069. January 30, 2013
Contract; perfection of contracts; consent; offer and acceptance; contract of
sale; consensual in nature. Contracts are perfected by mere consent, which is
manifested by the meeting of the offer and the acceptance upon the thing and
the cause which are to constitute the contract. The requisite acceptance of
the offer is expressed in Article 1319 of the Civil Code which states:
ART. 1319. Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract.
The offer must be certain and the acceptance absolute. A qualified
acceptance constitutes a counter-offer.
In Palattao v. Court of Appeals, this Court held that if the acceptance of the
offer was not absolute, such acceptance is insufficient to generate consent
that would perfect a contract. Thus:
Contracts that are consensual in nature, like a contract of sale, are perfected
upon mere meeting of the minds. Once there is concurrence between the
offer and the acceptance upon the subject matter, consideration, and terms of
payment, a contract is produced. The offer must be certain. To convert the
offer into a contract, the acceptance must be absolute and must not qualify
the terms of the offer; it must be plain, unequivocal, unconditional, and
without variance of any sort from the proposal. A qualified acceptance, or
one that involves a new proposal, constitutes a counter-offer and is a

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Lexoterica: Compilation of SC Rulings

rejection of the original offer. Consequently, when something is desired


which is not exactly what is proposed in the offer, such acceptance is not
sufficient to generate consent because any modification or variation from the
terms of the offer annuls the offer.
The acceptance must be identical in all respects with that of the offer so as to
produce consent or meeting of the minds. Where a party sets a different
purchase price than the amount of the offer, such acceptance was qualified
which can be at most considered as a counter-offer; a perfected contract
would have arisen only if the other party had accepted this counteroffer. In
Villanueva v. Philippine National Bank this Court further elucidated on the
meaning of unqualified acceptance, as follows:
While it is impossible to expect the acceptance to echo every nuance of
the offer, it is imperative that it assents to those points in the offer which,
under the operative facts of each contract, are not only material but
motivating as well. Anything short of that level of mutuality produces not a
contract but a mere counter-offer awaiting acceptance. More particularly
on the matter of the consideration of the contract, the offer and its
acceptance must be unanimous both on the rate of the payment and on
its term. An acceptance of an offer which agrees to the rate but varies the
term is ineffective. (Emphasis supplied)
A contract of sale is consensual in nature and is perfected upon mere
meeting of the minds. When there is merely an offer by one party without
acceptance of the other, there is no contract. When the contract of sale is not
perfected, it cannot, as an independent source of obligation, serve as a
binding juridical relation between the parties. Heirs of Fausto C. Ignacio
vs. Home Bankers Savings and Trust Co., et al.; G.R. No. 177783. January
23, 2013
Damages; moral damages; requisites; granted when rights of individuals are
violated; exemplary damages; actual damages; nature; in the absence of
proof, temperate damages may be awarded; attorneys fees; exception rather
than the general rule. Moral damages are awarded to compensate the
claimant for physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation
and similar injury. Jurisprudence has established the following requisites for

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Lexoterica: Compilation of SC Rulings

the award of moral damages: (1) there is an injury whether physical, mental
or psychological, which was clearly sustained by the claimant; (2) there is a
culpable act or omission factually established; (3) the wrongful act or
omission of the defendant is the proximate cause of the injury sustained by
the claimant; and (4) the award of damages is predicated on any of the cases
stated in Article 2219 of the Civil Code.
Pertinent to the case at hand, Article 32 of the Civil Code provides for the
award of moral damages in cases where the rights of individuals, including
the right against deprivation of property without due process of law, are
violated. In Quisumbing v. Manila Electric Company, this Court treated the
immediate disconnection of electricity without notice as a form of
deprivation of property without due process of law, which entitles the
subscriber aggrieved to moral damages. We stressed:
More seriously, the action of the defendant in maliciously disconnecting the
electric service constitutes a breach of public policy. For public utilities,
broad as their powers are, have a clear duty to see to it that they do not
violate nor transgress the rights of the consumers. Any act on their part that
militates against the ordinary norms of justice and fair play is considered an
infraction that gives rise to an action for damages. Such is the case at bar.
In addition to moral damages, exemplary damages are imposed by way of
example or correction for the public good. In this case, to serve as an
example that before disconnection of electric supply can be effected by a
public utility, the requisites of law must be complied with we sustain the
award of exemplary damages to respondents.
Actual damages are compensation for an injury that will put the injured
party in the position where it was before the injury. They pertain to such
injuries or losses that are actually sustained and susceptible of measurement.
Except as provided by law or by stipulation, a party is entitled to adequate
compensation only for such pecuniary loss as is duly proven. Basic is the
rule that to recover actual damages, not only must the amount of loss be
capable of proof; it must also be actually proven with a reasonable degree of
certainty premised upon competent proof or the best evidence obtainable.
Actual or compensatory damages cannot be presumed, but must be duly

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Lexoterica: Compilation of SC Rulings

proved with a reasonable degree of certainty. The award is dependent upon


competent proof of the damage suffered and the actual amount thereof. The
award must be based on the evidence presented, not on the personal
knowledge of the court; and certainly not on flimsy, remote, speculative and
unsubstantial proof.
Nonetheless, in the absence of competent proof on the amount of actual
damages suffered, a party is entitled to temperate damages. Temperate or
moderate damages, which are more than nominal but less than compensatory
damages, may be recovered when the court finds that some pecuniary loss
has been suffered but its amount cannot, from the nature of the case, be
proved with certainty. The amount thereof is usually left to the discretion of
the courts but the same should be reasonable, bearing in mind that temperate
damages should be more than nominal but less than compensatory.
An award of attorneys fees has always been the exception rather than the
rule. Attorneys fees are not awarded every time a party prevails in a suit.
The policy of the Court is that no premium should be placed on the right to
litigate. The trial court must make express findings of fact and law that bring
the suit within the exception. What this demands is that factual, legal or
equitable justifications for the award must be set forth not only in the fallo
but also in the text of the decision, or else, the award should be thrown out
for being speculative and conjectural. Manila Electric Company
(MERALCO) vs. Atty. P.M. Castillo, doing business under the trade name
and style of Permanent Light Manufacturing Enterprises, et al.; G.R. No.
182976. January 14, 2013
Damages; moral damages; when awarded. The Court has awarded moral
damages in termination cases when bad faith, malice or fraud attend the
employees dismissal or where the act oppresses labor, or where it was done
in a manner contrary to morals, good customs or public policy. General
Milling Corporation vs. Violeta L. Viajar; G.R. No. 181738. January 30,
2013
Effectivity of laws; generally, no retroactive effect; exception, when law is
procedural. As a general rule, laws shall have no retroactive effect.
However, exceptions exist, and one such exception concerns a law that is
procedural in nature. The reason is that a remedial statute or a statute

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Lexoterica: Compilation of SC Rulings

relating to remedies or modes of procedure does not create new rights or


take away vested rights but only operates in furtherance of the remedy or the
confirmation of already existing rights. A statute or rule regulating the
procedure of the courts will be construed as applicable to actions pending
and undetermined at the time of its passage. All procedural laws are
retroactive in that sense and to that extent. The retroactive application is not
violative of any right of a person who may feel adversely affected, for,
verily, no vested right generally attaches to or arises from procedural laws.
Spouses Augusto G. Dacudao and Ofelia R. Dacudao vs. Secretary of
Justice Raul M. Gonzales of the Department of Justice; G.R. No. 188056.
January 8, 2013
Ejectment; unlawful detainer; estoppel against tenants; conclusive
presumption; foreclosure of mortgage; title to land remains in the mortgagor
until expiration of redemption period; inchoate character of purchasers
right. [T]he only question that the courts resolve in ejectment proceedings is:
who is entitled to the physical possession of the premises, that is, to the
possession de facto and not to the possession de jure. It does not even matter
if a partys title to the property is questionable.
In an unlawful detainer case, the sole issue for resolution is the physical or
material possession of the property involved, independent of any claim of
ownership by any of the party litigants. Where the issue of ownership is
raised by any of the parties, the courts may pass upon the same in order to
determine who has the right to possess the property. The adjudication is,
however, merely provisional and would not bar or prejudice an action
between the same parties involving title to the property.
[I]n unlawful detainer, one unlawfully withholds possession thereof after the
expiration or termination of his right to hold possession under any contract,
express or implied. In such case, the possession was originally lawful but
became unlawful by the expiration or termination of the right to possess;
hence, the issue of rightful possession is decisive for, in such action, the
defendant is in actual possession and the plaintiffs cause of action is the
termination of the defendants right to continue in possession.
The conclusive presumption found in Section 2 (b), Rule 131 of the Rules of
Court, known as estoppel against tenants, provides as follows:

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Lexoterica: Compilation of SC Rulings

Sec. 2. Conclusive presumptions. The following are instances of


conclusive presumptions:
(b) The tenant is not permitted to deny the title of his landlord at the time of
the commencement of the relation of landlord and tenant between them.
(Emphasis supplied).
It is clear from the abovequoted provision that what a tenant is estopped
from denying is the title of his landlord at the time of the commencement of
the landlord-tenant relation. If the title asserted is one that is alleged to have
been acquired subsequent to the commencement of that relation, the
presumption will not apply. Hence, the tenant may show that the landlords
title has expired or been conveyed to another or himself; and he is not
estopped to deny a claim for rent, if he has been ousted or evicted by title
paramount.
It is settled that during the period of redemption, it cannot be said that the
mortgagor is no longer the owner of the foreclosed property, since the rule
up to now is that the right of a purchaser at a foreclosure sale is merely
inchoate until after the period of redemption has expired without the right
being exercised. The title to land sold under mortgage foreclosure remains in
the mortgagor or his grantee until the expiration of the redemption period
and conveyance by the masters deed. Indeed, the rule has always been that
it is only upon the expiration of the redemption period, without the judgment
debtor having made use of his right of redemption, that the ownership of the
land sold becomes consolidated in the purchaser.
Stated differently, under Act. No. 3135 (An Act to Regulate the Sale of
Property Under Special Powers Inserted in or Annexed to Real Estate
Mortgages), the purchaser in a foreclosure sale has, during the redemption
period, only an inchoate right and not the absolute right to the property with
all the accompanying incidents. He only becomes an absolute owner of the
property if it is not redeemed during the redemption period. Juanita
Ermitao, represented by her Attorney-in-fact, Isabelo Ermitao vs. Lailanie
M. Paglas; G.R. No. 174436. January 23, 2013
Interest; 12% interest rate doctrine in Eastern Shipping Lines vs. CA. [T]he
imposition of 12% interest is still warranted in the case at bar, not from the

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Lexoterica: Compilation of SC Rulings

date of sale on November 9, 1994, as the respondents insist; but from the
finality of the decision up to the satisfaction of judgment in line with the
doctrine laid down in Eastern Shipping Lines, Inc. v. Court of Appeals.
[T]he payment of 12% interest from the finality of judgment is in order
pursuant to Eastern Shippings Lines, Inc. where the Court held that:
When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or damages except when or until
the demand can be established with reasonable certainty. Accordingly,
where the demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or extrajudicially
(Art. 1169, Civil Code) but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run
only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in
any case, be on the amount finally adjudged.
When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then
an equivalent to a forbearance of credit.
Spouses Ricardo and Elena Golez vs. Spouses Carlos and Amelita Navarro;
G.R. No. 192532. January 30, 2013
Legal Compensation; mode of extinguishing obligations; difference with
conventional compensation; requisites. Compensation is a mode of
extinguishing to the concurrent amount the obligations of persons who in
their own right and as principals are reciprocally debtors and creditors of
each other. Legal compensation takes place by operation of law when all the
requisites are present, as opposed to conventional compensation which takes
place when the parties agree to compensate their mutual obligations even in
the absence of some requisites. Legal compensation requires the concurrence
of the following conditions:

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Lexoterica: Compilation of SC Rulings

(1) That each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.
Mondragon Personal Sales, Inc. vs. Victoriano S. Sola, Jr.; G.R. No.
174882. January 21, 2013
Marriage; essential and formal requisites; marriage license; certification of
non-issuance by civil registrar; diligent search requirement compared to
presumption of regularity in performance of official duties; effect of absence
of marriage license. As the marriage of Gloria and Syed was solemnized on
January 9, 1993, Executive Order No. 209, or the Family Code of the
Philippines, is the applicable law. The pertinent provisions that would apply
to this particular case are Articles 3, 4 and 35(3), which read as follows:
Art. 3. The formal requisites of marriage are:
(1) Authority of the solemnizing officer;
(2) A valid marriage license except in the cases provided for in Chapter 2 of
this Title; and
(3) A marriage ceremony which takes place with the appearance of the
contracting parties before the solemnizing officer and their personal
declaration that they take each other as husband and wife in the presence of
not less than two witnesses of legal age.

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Lexoterica: Compilation of SC Rulings

Art. 4. The absence of any of the essential or formal requisites shall render
the marriage void ab initio, except as stated in Article 35(2).
A defect in any of the essential requisites shall render the marriage voidable
as provided in Article 45.
An irregularity in the formal requisites shall not affect the validity of the
marriage but the party or parties responsible for the irregularity shall be
civilly, criminally and administratively liable.
Art. 35. The following marriages shall be void from the beginning:
xxxx
(3) Those solemnized without a license, except those covered by the
preceding Chapter.
Under Sec. 3(m), Rule 131 of the Rules of Court, it is a disputable
presumption that an official duty has been regularly performed, absent
contradiction or other evidence to the contrary. We held, The presumption
of regularity of official acts may be rebutted by affirmative evidence of
irregularity or failure to perform a duty. No such affirmative evidence was
shown that the Municipal Civil Registrar was lax in performing her duty of
checking the records of their office, thus the presumption must stand. In fact,
proof does exist of a diligent search having been conducted, as Marriage
License No. 996967 was indeed located and submitted to the court. The fact
that the names in said license do not correspond to those of Gloria and Syed
does not overturn the presumption that the registrar conducted a diligent
search of the records of her office.
In the case of Cario v. Cario, following the case of Republic, it was held
that the certification of the Local Civil Registrar that their office had no
record of a marriage license was adequate to prove the non-issuance of said
license. The case of Cario further held that the presumed validity of the
marriage of the parties had been overcome, and that it became the burden of
the party alleging a valid marriage to prove that the marriage was valid, and
that the required marriage license had been secured.

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Lexoterica: Compilation of SC Rulings

Article 4 of the Family Code is clear when it says, The absence of any of
the essential or formal requisites shall render the marriage void ab initio,
except as stated in Article 35(2). Article 35(3) of the Family Code also
provides that a marriage solemnized without a license is void from the
beginning, except those exempt from the license requirement under Articles
27 to 34, Chapter 2, Title I of the same Code. Syed Azhar Abbas vs. Gloria
Goo Abbas; G.R. No. 183896. January 30, 2013
Marriage; psychological incapacity; definition; burden of proof; sexual
infidelity and abandonment do not necessarily constitute psychological
incapacity; psychological fitness as a wife not equated with professional
relationship; doubts are resolved in favor of marriage. Article 36 of the
Family Code governs psychological incapacity as a ground for declaration of
nullity of marriage. It provides that [a] marriage contracted by any party
who, at the time of the celebration, was psychologically incapacitated to
comply with the essential marital obligations of marriage, shall likewise be
void even if such incapacity becomes manifest only after its solemnization.
In interpreting this provision, we have repeatedly stressed that psychological
incapacity contemplates downright incapacity or inability to take
cognizance of and to assume the basic marital obligations; not merely
the refusal, neglect or difficulty, much less ill will, on the part of the errant
spouse. The plaintiff bears the burden of proving the juridical antecedence
(i.e., the existence at the time of the celebration of marriage), gravity and
incurability of the condition of the errant spouse.
In any event, sexual infidelity and abandonment of the conjugal dwelling,
even if true, do not necessarily constitute psychological incapacity; these are
simply grounds for legal separation. To constitute psychological incapacity,
it must be shown that the unfaithfulness and abandonment are manifestations
of a disordered personality that completely prevented the erring spouse from
discharging the essential marital obligations.
Aside from the time element involved, a wifes psychological fitness as a
spouse cannot simply be equated with her professional/work relationship;
workplace obligations and responsibilities are poles apart from their marital
counterparts. While both spring from human relationship, their relatedness
and relevance to one another should be fully established for them to be
compared or to serve as measures of comparison with one another.

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Once again, we stress that marriage is an inviolable social institution


protected by the State. Any doubt should be resolved in favor of its existence
its existence and continuation and against its dissolution and nullity. It
cannot be dissolved at the whim of the parties nor by transgressions made by
one party to the other during the marriage. Republic of the Philippines vs.
Cesar Encelan; G.R. No. 170022. January 9, 2013
Possession; de jure vs. de facto nature of possession; elements of forcible
entry. Ownership carries the right of possession, but the possession
contemplated by the concept of ownership is not exactly the same as the
possession in issue in a forcible entry case. Possession in forcible entry suits
refers only to possession de facto, or actual or material possession, and not
possession flowing out of ownership; these are different legal concepts for
which the law provides different remedies for recovery of possession. As the
court explained in Pajuyo v. Court of Appeals, and again in the more recent
cases of Gonzaga v. Court of Appeals, De Grano v. Lacaba, and Lagazo v.
Soriano, the word possession in forcible entry suits refers to nothing more
than prior physical possession or possession de facto, not possession de jure
or legal possession in the sense contemplated in civil law. Title is not the
issue, and its absence is not a ground for the courts to withhold relief from
the parties in an ejectment case. Thus, in a forcible entry case, a party who
can prove prior possession can recover such possession even against the
owner himself.
Whatever may be the character of his possession, if he has in his favor prior
possession in time, he has the security that entitles him to remain on the
property until a person with a better right lawfully ejects him. He cannot be
ejected by force, violence or terror not even by its owners. For these
reasons, an action for forcible entry is summary in nature aimed only at
providing an expeditious means of protecting actual possession. Ejectment
suits are intended to prevent breach of x x x peace and criminal disorder
and to compel the party out of possession to respect and resort to the law
alone to obtain what he claims is his. Thus, lest the purpose of these
summary proceedings be defeated, any discussion or issue of ownership is
avoided unless it is necessary to resolve the issue of de facto possession.
Under Section 1, Rule 70 of the Rules of Court, for a forcible entry suit to
prosper, the plaintiff must allege and prove: (1) prior physical possession of
the property; and (2) unlawful deprivation of it by the defendant through

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force, intimidation, strategy, threat or stealth. As in any civil case, the


burden of proof lies with the complainants (the respondents in this case) who
must establish their case by preponderance of evidence. Nenita Quality
Foods Corporation vs. Crisostomo Galabo, et al.; G.R. No. 174191. January
30, 2013
Quasi-contracts; definition; requisites of solutio indebiti. A quasi-contract
involves a juridical relation that the law creates on the basis of certain
voluntary, unilateral and lawful acts of a person, to avoid unjust enrichment.
The Civil Code provides an enumeration of quasi-contracts, but the list is not
exhaustive and merely provides examples.
Article 2154 embodies the concept solutio indebiti which arises when
something is delivered through mistake to a person who has no right to
demand it. It obligates the latter to return what has been received through
mistake. Solutio indebiti, as defined in Article 2154 of the Civil Code, has
two indispensable requisites: first, that something has been unduly delivered
through mistake; and second, that something was received when there was
no right to demand it. Metropolitan Bank & Trust Company vs. Absolute
Management Corporation; G.R. No. 170498. January 9, 2013
Torts; abuse of rights; elements; award of damages. While the Court
mindfully notes that damages may be recoverable due to an abuse of right
under Article 21 in conjunction with Article 19 of the Civil Code of the
Philippines, the following elements must, however, obtain: (1) there is a
legal right or duty; (2) exercised in bad faith; and (3) for the sole intent of
prejudicing or injuring another. Records reveal that none of these elements
exists in the case at bar and thus, no damages on account of abuse of right
may he recovered. Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc., et
al.; G.R. No. 199338. January 21, 2013
Torts; proximate cause; vicarious liability is not applicable in the absence of
employer-employee or principal-agent relationship; contracts; requisites of
stipulation pour autrui; Lease; act of parking a vehicle in a garage upon
payment of a fixed amount, is a lease; obligations of lessor; contracts of
adhesion; actual damages must be proved with reasonable degree of
certainty. Proximate cause has been defined as that cause, which, in natural
and continuous sequence, unbroken by any efficient intervening cause,

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produces the injury or loss, and without which the result would not have
occurred.
Neither will the vicarious liability of an employer under Article 2180 of the
Civil Code apply in this case. It is uncontested that Pea and Gaddi were
assigned as security guards by AIB to BSP pursuant to the Guard Service
Contract. Clearly, therefore, no employer-employee relationship existed
between BSP and the security guards assigned in its premises. Consequently,
the latters negligence cannot be imputed against BSP but should be
attributed to AIB, the true employer of Pea and Gaddi. In the case of
Soliman, Jr. v. Tuazon, the Court enunciated thus:
It is settled that where the security agency, as here, recruits, hires and
assigns the work of its watchmen or security guards, the agency is the
employer of such guards and watchmen. Liability for illegal or harmful acts
committed by the security guards attaches to the employer agency, and not
to the clients or customers of such agency. As a general rule, a client or
customer of a security agency has no hand in selecting who among the pool
of security guards or watchmen employed by the agency shall be assigned to
it; the duty to observe the diligence of a good father of a family in the
selection of the guards cannot, in the ordinary course of events, be
demanded from the client whose premises or property are instructions or
directions to the security guards assigned to it, does not, by itself, render the
client responsible as an employer of the security guards concerned and liable
for their wrongful acts or omissions. Those instructions or directions are
ordinarily no more than requests commonly envisaged in the contract for
services entered into with the security agency.
Nor can it be said that a principal-agent relationship existed between BSP
and the security guards Pea and Gaddi as to make the former liable for the
latters complained act. Article 1868 of the Civil Code states that [b]y the
contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or
authority of the latter. The basis for agency therefore is representation,
which element is absent in the instant case. Records show that BSP merely
hired the services of AIB, which, in turn, assigned security guards, solely for
the protection of its properties and premises. Nowhere can it be inferred in
the Guard Service Contract that AIB was appointed as an agent of BSP.
Instead, what the parties intended was a pure principal-client relationship

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whereby for a consideration, AIB rendered its security services to BSP.


[I]n order that a third person benefited by the second paragraph of Article
1311, referred to as a stipulation pour autrui, may demand its fulfillment, the
following requisites must concur: (1) There is a stipulation in favor of a third
person; (2) The stipulation is a part, not the whole, of the contract; (3) The
contracting parties clearly and deliberately conferred a favor to the third
person the favor is not merely incidental; (4) The favor is unconditional
and uncompensated; (5) The third person communicated his or her
acceptance of the favor before its revocation; and (6) The contracting parties
do not represent, or are not authorized, by the third party.
It has been held that the act of parking a vehicle in a garage, upon payment
of a fixed amount, is a lease. Even in a majority of American cases, it has
been ruled that where a customer simply pays a fee, parks his car in any
available space in the lot, locks the car and takes the key with him, the
possession and control of the car, necessary elements in bailment, do not
pass to the parking lot operator, hence, the contractual relationship between
the parties is one of lease.
Article 1654 of the Civil Code provides that [t]he lessor (BSP) is obliged:
(1) to deliver the thing which is the object of the contract in such a condition
as to render it fit for the use intended; (2) to make on the same during the
lease all the necessary repairs in order to keep it suitable for the use to which
it has been devoted, unless there is a stipulation to the contrary; and (3) to
maintain the lessee in the peaceful and adequate enjoyment of the lease for
the entire duration of the contract. In relation thereto, Article 1664 of the
same Code states that [t]he lessor is not obliged to answer for a mere act of
trespass which a third person may cause on the use of the thing leased; but
the lessee shall have a direct action against the intruder.
[C]ontracts of adhesion are not void per se. It is binding as any other
ordinary contract and a party who enters into it is free to reject the
stipulations in its entirety. If the terms thereof are accepted without
objection, as in this case, where plaintiffs-appellants have been leasing
BSPs parking space for more or less 20 years, then the contract serves as
the law between them.

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It is axiomatic that actual damages must be proved with reasonable degree of


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

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property, repulsive to the common sense of man. It has no support in law, in


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

December 2012 Philippine Supreme


Court Decisions on Civil Law
Posted on January 11, 2013 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law Tagged damages, Public Land Act, sale, unjust
enrichment

Here are select December 2012 rulings of the Supreme Court of the
Philippines on civil law:
Civil Code

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

Damages; When Applicable. It is essential that for damages to be awarded, a


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

Unjust enrichment; reimbursement. It is well-established that equity as a rule


will follow the law and will not permit that to be done indirectly which,
because of public policy, cannot be done directly. Surely, a contract that
violates the Constitution and the law is null and void, vests no rights, creates
no obligations and produces no legal effect at all. Corollary thereto, under
Article 1412 of the Civil Code, petitioner cannot have the subject properties
deeded to him or allow him to recover the money he had spent for the
purchase thereof. The law will not aid either party to an illegal contract or
agreement; it leaves the parties where it finds them. Indeed, one cannot
salvage any rights from an unconstitutional transaction knowingly entered
into. Neither can the Court grant petitioners claim for reimbursement on the

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basis of unjust enrichment. As held in Frenzel v. Catito, a case also


involving a foreigner seeking monetary reimbursement for money spent on
purchase of Philippine land, the provision on unjust enrichment does not
apply if the action is proscribed by the Constitution. Willem Beumer v.
Avelina Amores, G.R. No. 195670. December 3, 2012.
Special Laws
Public Land Act; Five-year Prohibition for Alienation of Homestead Patent;
Sale; Void Contract. To reiterate, Section 118 of the Public Land Act, as
amended, reads that [e]xcept in favor of the Government or any of its
branches, units, or institutions, or legally constituted banking corporations,
lands acquired under free patent or homestead provisions shall not be subject
to encumbrance or alienation from the date of the approval of the application
and for a term of five years from and after the date of issuance of the patent
or grant x x x. The provisions of law are clear and explicit. A contract
which purports to alienate, transfer, convey, or encumber any homestead
within the prohibitory period of five years from the date of the issuance of
the patent is void from its execution. In a number of cases, this Court has
held that such provision is mandatory. Alejandro Binayug and Ana Binayug
vs. Eugenio Ugaddan, et al. G.R. No. 181623. December 5, 2012.

November 2012 Philippine Supreme


Court Decisions on Civil Law
Posted on December 14, 2012 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law Tagged co-ownership, contract, damages,
filiation, laches, land registration, lease, marriage, mortgage, sale, succession, will

Here are select November 2012 rulings of the Supreme Court of the
Philippines on civil law:
Civil Code
Co-ownership; validity of partition contracts. Contrary to the finding of the
Court of Appeals, the subdivision agreements forged by Mendoza and her

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Lexoterica: Compilation of SC Rulings

alleged co-owners were not for the partition of pro-indiviso shares of coowners of Lot 733 but were actually conveyances, disguised as partitions, of
portions of Lot 733 specifically Lots 733-A and 733-B, and portions of the
subsequent subdivision of Lot 733-C. It cannot be overemphasized enough
that the two deeds of absolute sale over portions of substantially the same
parcel of land antedated the subdivision agreements in question and their
execution acknowledged too before a notary public. Rupeta Cano Vda. De
Viray and Jesus Carlo Gerard Viray v. Spouses Jose Usi and Amelita
Usi, G.R.No.192486. November 21,2012.
Constructive delivery; execution of public instrument only prima facie
presumption of delivery. Article 1477 of the Civil Code recognizes that the
ownership of the thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof. Related to this article is Article
1497 which provides that [t]he thing sold shall be understood as delivered,
when it is placed in the control and possession of the vendee. With respect
to incorporeal property, Article 1498 of the Civil Code lays down the
general rule: the execution of a public instrument shall be equivalent to the
delivery of the thing which is the object of the contract, if from the deed the
contrary does not appear or cannot clearly be inferred. However, the
execution of a public instrument gives rise only to a prima facie presumption
of delivery, which is negated by the failure of the vendee to take actual
possession of the land sold. [A] person who does not have actual possession
of the thing sold cannot transfer constructive possession by the execution
and delivery of a public instrument. In this case, no constructive delivery of
the land transpired upon the execution of the deed of sale since it was not the
spouses Villamor, Sr. but the respondents who had actual possession of the
land. The presumption of constructive delivery is inapplicable and must
yield to the reality that the petitioners were not placed in possession and
control of the land. Sps. Erosto Santiago and Nelsi Santiago v. Mancer
Villamor, et al.; G.R. No. 168499. November 26,2012

Contracts; inadequacy of consideration does not render the contract void;


need not be monetary. Inadequacy of consideration does not vitiate a
contract unless it is proven which in the case at bar was not, that there was
fraud, mistake or undue influence. While consideration is usually in the form
of money or property, it need not be monetary. Eduardo M. Cojuangco, Jr.

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Lexoterica: Compilation of SC Rulings

vs. Republic of the Philippines; G.R. No. 180705. November 27, 2012.
Contracts; requisites; disputable presumption that there is sufficient
consideration for a Contract. Under Art. 1318 of the Civil Code, there is no
contract unless the following requisites concur: (1) consent of the
contracting parties; (2) object certain which is the subject matter of the
contract; (3) cause of the obligation which is established. The following
contract is inexistent and void from the beginning: those whose cause or
object did not exist at the time of the transaction. There is a disputable
presumption that there was a sufficient consideration for a contract. The rule
then is that the party who stands to profit from a declaration of the nullity of
a contract on the ground of insufficiency of consideration which would
necessarily refer to one who asserts such nullityhas the burden of
overthrowing the presumption offered by the Rules of Court. Eduardo M.
Cojuangco, Jr. vs. Republic of the Philippines; G.R. No. 180705. November
27, 2012.
Damages; entitlement; when death results from delict. Anent the award of
damages, when death occurs due to a crime, the following may be
recovered: (1) civil indemnity ex delicto for the death of the victim; (2)
actual or compensatory damages; (3) moral damages; (4) exemplary
damages; (5) attorneys fees and expenses of litigation; and (6) interest, in
proper cases. People of the Philippines v. Marcial M. Malicdem; G.R. No.
184601. November 12, 2012.
Damages; exemplary damages in delict; awarded when there is an
aggravating circumstance, whether ordinary or qualifying. Unlike the
criminal liability which is basically a State concern, the award of damages,
however, is likewise, if not primarily, intended for the offended party who
suffers thereby. It would make little sense for an award of exemplary
damages to be due the private offended party when the aggravating
circumstance is ordinary but to be withheld when it is qualifying. Withal, the
ordinary or qualifying nature of an aggravating circumstance is a distinction
that should only be of consequence to the criminal, rather than to the civil,
liability of the offender. In fine, relative to the civil aspect of the case, an
aggravating circumstance, whether ordinary or qualifying, should entitle the
offended party to an award of exemplary damages within the unbridled
meaning of Article 2230 of the Civil Code. People of the Philippines v.
Marcial M. Malicdem; G.R. No. 184601. November 12, 2012.

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Lexoterica: Compilation of SC Rulings

Damages for violation of right to privacy; inviolability of diplomatic


residence. As already exhaustively discussed by both the RTC and the CA,
Nestor himself admitted that he caused the taking of the pictures of Lavinas
residence without the latters knowledge and consent. Nestor reiterates that
he did so sans bad faith or malice. However, Nestors surreptitious acts
negate his allegation of good faith. If it were true that Lavina kept ivories in
his diplomatic residence, then, his behavior deserves condemnation.
However, that is not the issue in the case at bar. Nestor violated the New
Civil Code prescriptions concerning the privacy of ones residence and he
cannot hide behind the cloak of his supposed benevolent intentions to justify
the invasion. Hence, the award of damages and attorneys fees in Lavinas
favor is proper. Nestor N. Padalhin, et al. Vs. Nelson D. Lavia. G.R. No.
183026. November 14,2012.
Filiation; support; entitlement; clear and convincing proof of filiation. Time
and again, this Court has ruled that a high standard of proof is required to
establish paternity and filiation. An order for support may create an
unwholesome situation or may be an irritant to the family or the lives of the
parties so that it must be issued only if paternity or filiation is established by
clear and convincing evidence. Antonio Perla v. Mirasol Baring and Randy
B. Perla; G.R. No. 172471, November 12, 2012.
Filiation; open and continuous possession of status. To prove open and
continuous possession of the status of an illegitimate child, there must be
evidence of the manifestation of the permanent intention of the supposed
father to consider the child as his, by continuous and clear manifestations of
parental affection and care, which cannot be attributed to pure charity. Such
acts must be of such a nature that they reveal not only the conviction of
paternity, but also the apparent desire to have and treat the child as such in
all relations in society and in life, not accidentally, but continuously. Here,
the single instance that Antonio allegedly hugged Randy and promised to
support him cannot be considered as proof of continuous possession of the
status of a child. To emphasize, [t]he fathers conduct towards his son must
be spontaneous and uninterrupted for this ground to exist. Antonio Perla v.
Mirasol Baring and Randy B. Perla; G.R. No. 172471, November 12, 2012.
Filiation; proof; Certificate of Live Birth; not competent proof of paternity
when putative father had no hand in preparation; Baptismal Certificate; per
se not a competent proof of filiation or circumstantial evidence to prove

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Lexoterica: Compilation of SC Rulings

filiation. Just like in a birth certificate, the lack of participation of the


supposed father in the preparation of a baptismal certificate renders this
document incompetent to prove paternity. And while a baptismal certificate
may be considered a public document, it can only serve as evidence of the
administration of the sacrament on the date specified but not the veracity of
the entries with respect to the childs paternity. Thus, baptismal certificates
are per se inadmissible in evidence as proof of filiation and they cannot be
admitted indirectly as circumstantial evidence to prove the same. Antonio
Perla v. Mirasol Baring and Randy B. Perla; G.R. No. 172471, November
12, 2012.
Laches; elements. The elements of laches must be proven positively. Laches
is evidentiary in nature, a fact that cannot be established by mere allegations
in the pleadings. Evidence is of utmost importance in establishing the
existence of laches because there is no absolute rule as to what constitutes
laches or staleness of demand; each case is to be determined according to the
particular circumstances. Verily, the application of laches is addressed to the
sound discretion of the court as its application is controlled by equitable
considerations.
Laches is not concerned only with the mere lapse of time. The following
elements must be present in order to constitute laches: (1) conduct on the
part of the defendant, or of one under whom he claims, giving rise to the
situation of which complaint is made for which the complaint seeks a
remedy; (2) delay in asserting the complainants rights, the complainant
having had knowledge or notice, of the defendants conduct and having been
afforded an opportunity to institute a suit; (3) lack of knowledge or notice on
the part of the defendant that the complaint would assert the right on which
he bases his suit; and (4) injury or prejudice to the defendant in the event the
relief is accorded to the complainant, or the suit is not held to be barred. Jack
Arroyo v. Bocago Inland Devt Corp. (BIDECO), G.R. No. 167880
November 14,2012
Lease; rescission in reciprocal obligation. Article 1191 of the Civil Code
provides that the power to rescind obligations is implied in reciprocal ones,
in case one of the obligors should not comply with what is incumbent upon
him. A lease contract is a reciprocal contract. By signing the lease
agreement, the lessor grants possession over his/her property to the lessee
for a period of time in exchange for rental payment. Indeed, rescission is

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Lexoterica: Compilation of SC Rulings

statutorily recognized in a contract of lease. The aggrieved party is given the


option to the aggrieved party to ask for: (1) the rescission of the contract; (2)
rescission and indemnification for damages; or (3) only indemnification for
damages, allowing the contract to remain in force. Sps. Socrates Sy and Cely
Sy v. Andoks Litson Corporation. G.R. No. 192108. November 21, 2012.
Marriage; petition for nullity of marriage; AM No. 02-11-10; appearance by
the Office of the Solicitor General still required. The Resolution nowhere
stated that appeals by the OSG were no longer required. On the contrary, the
Resolution explicitly required the OSG to actively participate in all stages of
the proceedings. Arabelle Mendoza v. Republic of the Philippines and
Dominic Mendoza, G.R. No. 157649. November 12, 2012.
Marriage; psychological incapacity; elements. Psychological incapacity
under Article 36 of the Family Code contemplates an incapacity or inability
to take cognizance of and to assume basic marital obligations, and is not
merely the difficulty, refusal, or neglect in the performance of marital
obligations or ill will. It consists of: (a) a true inability to commit oneself to
the essentials of marriage; (b) the inability must refer to the essential
obligations of marriage, that is, the conjugal act, the community of life and
love, the rendering of mutual help, and the procreation and education of
offspring; and (c) the inability must be tantamount to a psychological
abnormality. Proving that a spouse failed to meet his or her responsibility
and duty as a married person is not enough; it is essential that he or she must
be shown to be incapable of doing so due to some psychological illness.
Republic v. Court of Appeals and Eduardo de Quintos, Jr., G.R. No.
159594. November 12, 2012.
Marriage; psychological incapacity; expert evidence; thorough and in-depth
assessment required. The expert evidence presented in cases of declaration
of nullity of marriage based on psychological incapacity presupposes a
thorough and in-depth assessment of the parties by the psychologist or
expert to make a conclusive diagnosis of a grave, severe and incurable
presence of psychological incapacity. Republic v. Court of Appeals and
Eduardo de Quintos, Jr., G.R. No. 159594. November 12, 2012.
Marriage; psychological incapacity; proof of natal or disabling supervening
factor required. It is not enough that the respondent, alleged to be

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Lexoterica: Compilation of SC Rulings

psychologically incapacitated, had difficulty in complying with his marital


obligations, or was unwilling to perform these obligations. Proof of a natal
or supervening disabling factor an adverse integral element in the
respondents personality structure that effectively incapacitated him from
complying with his essential marital obligations must be shown. Republic
v. Court of Appeals and Eduardo de Quintos, Jr., G.R. No. 159594.
November 12, 2012.
Marriage; psychological incapacity; Santos and Molina guidelines. The
pronouncements in Santos and Molina have remained as the precedential
guides in deciding cases grounded on the psychological incapacity of a
spouse. But the Court has declared the existence or absence of the
psychological incapacity based strictly on the facts of each case and not on a
priori assumptions, predilections or generalizations. Indeed, the incapacity
should be established by the totality of evidence presented during trial,
making it incumbent upon the petitioner to sufficiently prove the existence
of the psychological incapacity. Republic v. Court of Appeals and Eduardo
de Quintos, Jr., G.R. No. 159594. November 12, 2012.
Marriage; psychological incapacity; three basic requirements. To entitle
petitioner spouse to a declaration of the nullity of his or her marriage, the
totality of the evidence must sufficiently prove that respondent spouses
psychological incapacity was grave, incurable and existing prior to the time
of the marriage. Arabelle Mendoza v. Republic of the Philippines and
Dominic Mendoza, G.R. No. 157649. November 12, 2012.
Marriage; psychological incapacity; totality of evidence proving incapacity
required. Even if the expert opinions of psychologists are not conditions sine
qua non in the granting of petitions for declaration of nullity of marriage, the
actual medical examination was to be dispensed with only if the totality of
evidence presented was enough to support a finding of his psychological
incapacity. This did not mean that the presentation of any form of medical or
psychological evidence to show the psychological incapacity would have
automatically ensured the granting of petition for declaration of nullity of
marriage. What was essential, we should emphasize herein, was the
presence of evidence that can adequately establish the partys psychological
condition. But where, like here, the parties had full opportunity to present
the professional and expert opinions of psychiatrists tracing the root cause,
gravity and incurability of the alleged psychological incapacity, then the

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opinions should be represented and be weighed by the trial courts in order to


determine and decide whether or not to declare the nullity of the marriages.
It bears repeating that the trial courts, as in all other cases they try, must
always base their judgments not solely on the expert opinions presented by
the parties but on the totality of evidence adduced in the course of their
proceedings. Arabelle Mendoza v. Republic of the Philippines and Dominic
Mendoza, G.R. No. 157649. November 12, 2012.
Mortgage; mortgagee in good faith relying on Torrens Certificate of Title;
Indefeasibility. Primarily, it bears noting that the doctrine of mortgagee in
good faith is based on the rule that all persons dealing with property
covered by a Torrens Certificate of Title are not required to go beyond what
appears on the face of the title. This is in deference to the public interest in
upholding the indefeasibility of a certificate of title as evidence of lawful
ownership of the land or of any encumbrance thereon. In the case of banks
and other financial institutions, however, greater care and due diligence are
required since they are imbued with public interest, failing which renders the
mortgagees in bad faith. Thus, before approving a loan application, it is a
standard operating practice for these institutions to conduct an ocular
inspection of the property offered for mortgage and to verify the genuineness
of the title to determine the real owner(s) thereof. The apparent purpose of
an ocular inspection is to protect the true owner of the property as well as
innocent third parties with a right, interest or claim thereon from a usurper
who may have acquired a fraudulent certificate of title thereto. Philippine
Banking Corporation v. Arturo Dy, et al., G.R. No. 183774. November 14,
2012
Property; accretion; elements; By law, accretion the gradual and
imperceptible deposit made through the effects if the current of the water
belongs to the owner if the land adjacent to the banks of rivers where it
forms. The drying up of the river is not accretion. Hence, the dried-up
riverbed belongs to the State as property of public dominion, not to the
riparian owner, unless a law vests the ownership in some other person.
Republic of the Philippines v. Arcadio Ivan Santos III and Arcadio Santos,
Jr. G.R. No. 160453. November 12, 2012
Property; builder in good faith; not limited to those claiming ownership over
property; builder in good faith; landowners options. Article 448 of the Civil
Code applies when the builder believes that he is the owner of the land or

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that by some title he has the right to build thereon, or that, at least, he has a
claim of title thereto. In Tuatis, we ruled that the seller (the owner of the
land) has two options under Article 448: (1) he may appropriate the
improvements for himself after reimbursing the buyer (the builder in good
faith) the necessary and useful expenses under Articles 546 and 548 of the
Civil Code; or (2) he may sell the land to the buyer, unless its value is
considerably more than that of the improvements, in which case, the buyer
shall pay reasonable rent. Communities Cagayan, Inc. v. Sps. Arsenio
(deceased) and Angeles Nanol, et al. G.R. No. 176791. November 14, 2012
Quieting of title. The issues in a case for quieting of title are fairly simple;
the plaintiff need to prove only two things, namely: (1) the plaintiff or
complainant has a legal or an equitable title to or interest in the real property
subject of the action; and (2) that the deed, claim, encumbrance or
proceeding claimed to be casting a cloud on his title must be shown to be in
fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy. Stated differently, the plaintiff must show that he has a legal
or at least an equitable title over the real property in dispute, and that some
deed or proceeding beclouds its validity or efficacy. Joaquin G. Chung, Jr.,
et al. Vs. Jack Daniel Mondragon, et al.; G.R. No. 179754. November 21,
2012.
Quieting of title; legal or equitable title in quieting of title. An action for
quieting of title is essentially a common law remedy grounded on equity.
The competent court is tasked to determine the respective rights of the
complainant and other claimants, not only to place things in their proper
place, to make the one who has no rights to said immovable respect and not
disturb the other, but also for the benefit of both, so that he who has the right
would see every cloud of doubt over the property dissipated, and he could
afterwards without fear introduce the improvements he may desire, to use,
and even to abuse the property as he deems best. But for an action to quiet
title to prosper, two indispensable requisites must concur, namely: (1) the
plaintiff or complainant has a legal or an equitable title to or interest in the
real property subject of the action; and (2) the deed, claim, encumbrance, or
proceeding claimed to be casting cloud on his title must be shown to be in
fact invalid or inoperative despite its prima facie appearance of validity or
legal efficacy. Dionisio Mananquil, et al. v. Roberto Moico; G.R. No.
180076. November 20, 2012.

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Sales; Art 1544; elements of double sale. A double sale situation, which
would call, if necessary, the application of Art. 1544 of the Civil Code,
arises when, as jurisprudence teaches, the following requisites concur: (a)
The two (or more) sales transactions must constitute valid sales; (b) The two
(or more) sales transactions must pertain to exactly the same subject
matter; (c) The two (or more) buyers at odds over the rightful ownership of
the subject matter must each represent conflicting interests; and (d) The
two (or more) buyers at odds over the rightful ownership of the subject
matter must each have bought from the very same seller. Rupeta Cano
Vda. De Viray and Jesus Carlo Gerard Viray v. Spouses Jose Usi and
Amelita Usi, G.R.No.192486. November 21,2012.
Sales; contract of sale; purchasers in good faith. A purchaser in good faith is
one who buys property without notice that some other person has a right to
or interest in such property and pays its fair price before he has notice of the
adverse claims and interest of another person in the same property.
However, where the land sold is in the possession of a person other than the
vendor, the purchaser must be wary and must investigate the rights of the
actual possessor; without such inquiry, the buyer cannot be said to be in
good faith and cannot have any right over the property. Sps. Erosto Santiago
and Nelsi Santiago v. Mancer Villamor, et al.; G.R. No. 168499. November
26,2012.
Succession; will; attestation clause; statement of number of pages;
mandatory requirement; substantial compliance only when evidence aliunde
is not necessary.The law is clear that the attestation must state the number of
pages used upon which the will is written. The purpose of the law is to
safeguard against possible interpolation or omission of one or some of its
pages and prevent any increase or decrease in the pages. While Article 809
allows substantial compliance for defects in the form of the attestation
clause, Richard likewise failed in this respect. The statement in the
Acknowledgment portion of the subject last will and testament that it
consists of 7 pages including the page on which the ratification and
acknowledgment are written cannot be deemed substantial compliance. The
will actually consists of 8 pages including its acknowledgment which
discrepancy cannot be explained by mereexamination of the will itself but
through the presentation of evidence. Richard B. Lopez v. Diana Jeanne
Lopez, et al., G.R. No. 189984. November 12, 2012.

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Special Laws
Family Code; abandonment not a ground for declaration of
nullity.Abandonment was not one of the grounds for the nullity of marriage
under the Family Code. It did not also constitute psychological incapacity, it
being instead a ground for legal separation under Article 55(10) of the
Family Code. Republic v. Court of Appeals and Eduardo de Quintos, Jr.,
G.R. No. 159594. November 12, 2012.
Land Titles and Deeds; confirmation of imperfect title; requirements. Under
Section 14(1) of Presidential Decree No. 1529 (Property Registration
Decree), then, applicants for confirmation of imperfect title must prove the
following, namely: (a) that the land forms part of the disposable and
alienable agricultural lands of the public domain; and (b) that they have been
in open, continuous, exclusive, and notorious possession and occupation of
the land under a bona fide claim of ownership either since time immemorial
or since June 12, 1945. Republic of the Philippines v. Arcadio Ivan Santos
III and Arcadio Santos, Jr. G.R. No. 160453. November 12, 2012
Land Titles and Deeds; property of public dominion; proof of alienability
and disposability; not subject to acquisitive prescription. The principle that
the riparian owner whose land receives the gradual deposits of soil does not
need to make an express act of possession, and that no acts of possession are
necessary in that instance because it is the law itself that pronounces the
alluvium to belong to the riparian owner from the time that the deposit
created by the current of the water becomes manifest has no applicability
herein. This is simply because the lot was not formed through accretion.
Hence the ownership of the land adjacent to the river bank by respondents
predecessor-in-interest did not translate to possession of the subject lot that
would ripen to acquisitive prescription.
Yet, even conceding, for the sake of argument that respondents possessed
the subject lot for more than thirty years in the character they claimed, they
did not thereby acquire the land by prescription or by other means without
any competent proof that the land was already declared as alienable and
disposable by the government. Absent that declaration, the land still
belonged to the State as part of its public dominion. Republic of the
Philippines v. Arcadio Ivan Santos III and Arcadio Santos, Jr. G.R. No.

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160453. November 12, 2012


Maceda Law; entitlement to cash surrender value; requisites; cancellation of
contract; requisites. In this connection, we deem it necessary to point out
that, under the Maceda Law, the actual cancellation of a contract to sell takes
place after 30 days from receipt by the buyer of the notarized notice of
cancellation, and upon full payment of the cash surrender value to the buyer.
In other words, before a contract to sell can be validly and effectively
cancelled, the seller has (1) to send a notarized notice of cancellation to the
buyer and (2) to refund the cash surrender value. Until and unless the seller
complies with these twin mandatory requirements, the contract to sell
between the parties remains valid and subsisting. Thus, the buyer has the
right to continue occupying the property subject of the contract to sell, and
may still reinstate the contract by updating the account during the grace
period and before the actual cancellation of the contract. Communities
Cagayan, Inc. v. Sps. Arsenio (deceased) and Angeles Nanol, et al. G.R. No.
176791. November 14, 2012.

October 2012 Philippine Supreme


Court Decisions on Civil Law
Posted on November 9, 2012 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law Tagged co-ownership, compromise, contract,
dacion en pago, damages, ejectment, homestead patent, mortgage, novation, obligations,
patent, succession, Torrens system, unjust enrichment

Here are select October 2012 rulings of the Supreme Court of the
Philippines on civil law:
Civil Code
Assignment of credit; dation in payment. An assignment of credit is an
agreement by virtue of which the owner of a credit, known as the assignor,
by a legal cause, such as sale, dation in payment, exchange or donation, and
without the consent of the debtor, transfers his credit and accessory rights to
another, known as the assignee, who acquires the power to enforce it to the

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same extent as the assignor could enforce it against the debtor. It may be in
the form of sale, but at times it may constitute a dation in payment, such as
when a debtor, in order to obtain a release from his debt, assigns to his
creditor a credit he has against a third person. As a dation in payment, the
assignment of credit operates as a mode of extinguishing the obligation; the
delivery and transmission of ownership of a thing (in this case, the credit due
from a third person) by the debtor to the creditor is accepted as the
equivalent of the performance of the obligation.
The terms of the compromise judgment of the parties, however, did not
convey an intent to equate the assignment of Magdalenas retirement
benefits as the equivalent of the payment of the debt due the spouses
Serfino. There was actually no assignment of credit; if at all, the
compromise judgment merely identified the fund from which payment for
the judgment debt would be sourced. Only when Magdalena has received
and turned over to the spouses Serfino the portion of her retirement benefits
corresponding to the debt due would the debt be deemed paid. Since no valid
assignment of credit took place, the spouses Serfino cannot validly claim
ownership of the retirement benefits that were deposited with FEBTC.
Without ownership rights over the amount, they suffered no pecuniary loss
that has to be compensated by actual damages. Sps. Godfrey and Gerardina
Serfino vs. Far East Bank and Trust Company, Inc., now Bank of the
Philippine Islands.G.R. No. 171845. October 10, 2012
Compromise agreement; relation to original agreement; interest. Petitioner
argues that the compromise agreement created an obligation separate from
the original loan, for which respondent is now liable. By stating that the
compromise agreement and the original loan transaction are distinct,
petitioner would now attempt to exact payment on both. This goes against
the very purpose of the parties entering into a compromise agreement, which
was to extinguish the obligation under the loan. Petitioner may not seek the
enforcement of both the compromise agreement and payment of the loan,
even in the event that the compromise agreement remains unfulfilled.
The Court had previously tagged a 5% monthly interest rate agreed upon as
excessive, iniquitous, unconscionable and exorbitant, contrary to morals,
and the law. We need not unsettle the principle we had affirmed in a
plethora of cases that stipulated interest rates of 3% per month and higher
are excessive, iniquitous, unconscionable, and exorbitant. Arthur F.

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Lexoterica: Compilation of SC Rulings

Mechavez vs. Marlyn M, Bermudez G.R. No. 185368. October 11, 2012

Construction contract; progress billing; unjust enrichment. The owners


approval of progress billing is merely provisional. Progress billings are but
preliminary estimates of the value of the periodic accomplishments of the
contractor. It is the right of every owner to reevaluate or re-measure the
work of its contractor during the progress of the work.
The rationale underlying the owners right to seek an evaluation of the
contractors work is the right to pay only the true value of the work as may
be reasonably determined under the circumstances. This is consistent with
the law against unjust enrichment under Article 22 of the Civil Code which
states that every person who through an act of performance by another, or
any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to
him. R.V. Santos Company, Inc. vs. Belle Corporation G.R. Nos. 159561-62.
October 3, 2012.
Contracts; extension; performance security; public bidding. The extension of
the option period means that the Comelec had more time to determine the
propriety of exercising the option. With the extension, the Comelec could
acquire the subject PCOS machines under the same terms and conditions as
earlier agreed upon. The end result is that the Comelec acquired the subject
PCOS machines with its meager budget and was able to utilize the rentals
paid for the 2010 elections as part of the purchase price.
It must be pointed out that public biddings are held for the best protection of
the public and to give the public the best possible advantages by means of
open competition between the bidders. What are prohibited are
modifications or amendments which give the winning bidder an edge or
advantage over the other bidders who took part in the bidding, or which
make the signed contract unfavorable to the government. In this case, the
extension of the option period and the eventual purchase of the subject
goods resulted in more benefits and advantages to the government and to the
public in general. The advantage to the government, time and budget
constraints, the application of the rules on valid amendment of government

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contracts, and the successful conduct of the May 2010 elections are among
the factors looked into in arriving at the conclusion that the assailed
Resolutions issued by the Comelec and the agreement and deed entered into
between the Comelec and Smartmatic-TIM, are valid. Archbishop Fernando
R. Capalla, et al. vs. The Hon. Commission on Elections/Solidarity for
Sovereignty etc. G.R. No. 201112/G.R. No. 201121/G.R. No. 201127/G.R.
No. 201413. October 23, 2012
Contracts; freedom to stipulate. Art. 1306 of the Civil Code guarantees the
freedom of parties to stipulate the terms of their contract provided that they
are not contrary to law, morals, good customs, public order, or public policy.
Here, both parties knew for a fact that the property subject of their contract
was occupied by informal settlers, whose eviction would entail court actions
that in turn, would require some amount of time. They also knew that the
length of time that would take to conclude such court actions was not within
their power to determine. Despite such knowledge, both parties still agreed
to the stipulation that the payment of the balance of the purchase price will
be deferred until the informal settlers are ejected. Thus, PLU cannot be
allowed to renege on its agreement. The parties intended the performance of
the obligation until the squatters are duly evicted. P.L. Uy Realty
Corporation vs. ALS Management and Development Corporation and
Antonio K. Litonjua G.R. No. 166642. October 24, 2012
Contracts; simulation. In a contract of sale, its perfection is consummated at
the moment there is a meeting of the minds upon the thing that is the object
of the contract and upon the price. If the parties state a false cause in the
contract to conceal their real agreement, the contract is only relatively
simulated and the parties are still bound by their real agreement. In absolute
simulation, there is a colorable contract but it has no substance as the parties
have no intention to be bound by it. The main characteristic of an absolute
simulation is that the apparent contract is not really desired or intended to
produce legal effect or in any way alter the juridical situation of the parties.
As a result, an absolutely simulated or fictitious contract is void, and the
parties may recover from each other what they may have given under the
contract.
In the case at bench, no valid sale of the subject property actually took place
between the alleged vendors, Ireneo and Salvacion; and the alleged vendees,
Spouses Intac. There was simply no consideration and no intent to sell it.

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Marietto, a witness to the execution of the absolute deed of sale, testified


that Ireneo personally told him that he was going to execute a document of
sale because Spouses Intac needed to borrow the title to the property and use
it as collateral for their loan application. Aside from the plain denial,
petitioners could not show any tangible evidence of any payment therefor.
Their failure to prove their payment only strengthened Mariettos story that
there was no payment made because Ireneo had no intention to sell. Heirs of
Dr. Mario S. Intac and Angelina Mendoza-Intac vs. Court of Appeals and
Spouses Marcelo Roy, Jr. and Josefina Mendoza-Roy, et al. G.R. No.
173211. October 11, 2012
Co-ownership; action for ejectment. Article 487 of the Civil Code provides
that anyone of the co-owners may bring an action for ejectment without
joining the others. The action is not limited to ejectment cases but includes
all kinds of suits for recovery of possession because the suit is presumed to
have been instituted for the benefit of all. A co-owner is not even a
necessary party to an action for ejectment, for complete relief could be
afforded even in his absence, Hence, Exequiel, a co-owner, may bring the
action for unlawful detainer even without the special power of attorney of
his coheirs. Heirs of Albina G. Ampil, namely Precious A. Zavalla, Eduardo
Ampil, et al. vs. Teresa Manahan and Mario Manahan G.R. No. 175990.
October 11, 2012
Damages; proof of pecuniary loss. The spouses Serfino invoke American
common law that imposes a duty upon a bank receiving a notice of adverse
claim to the fund in a depositors account to freeze the account for a
reasonable length of time, sufficient to allow the adverse claimant to
institute legal proceedings to enforce his right to the fund. To adopt the
foreign rule, however, goes beyond the power of this Court to promulgate
rules governing pleading, practice and procedure in all courts. The rule
reflects a matter of policy that is better addressed to the Bangko Sentral ng
Pilipinas. Essentially, these statutes do not impose a duty on banks to freeze
the deposit upon a mere notice of adverse claim; they first require either a
court order or an indemnity bond. The banks contractual relations are with
its depositor, not with the third party. In the absence of any positive duty of
the bank to an adverse claimant, there could be no breach that entitles the
latter to moral damages. Sps. Godfrey and Gerardina Serfino vs. Far East
Bank and Trust Company, Inc., now Bank of the Philippine Islands. G.R. No.
171845. October 10, 2012

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Damages; temperate, moderate, exemplary. Petitioner assails the award of


P50,000 as moral damages granted to the heirs of Henry Go despite the fact
that neither Henry Go nor any of his heirs testified on matters that could be
the basis for such monetary award. Indeed, in this case, since respondent
Henry Go was not able to testify, there is then no evidence on record to
prove that he suffered mental anguish, besmirched reputation, sleepless
nights, wounded feelings or similar injury by reason of petitioners conduct.
However, there was no error committed by the lower courts with regard to
the award of temperate or moderate damages of P100,000 to respondents
Lao Lim and Go. The purpose for respondents trip to Hong Kong was to
conduct business negotiations, but respondents were not able to meet their
counterparts as they were not allowed to board the PR300 flight.
Understandably, it is difficult, if not impossible, to adduce solid proof of the
losses suffered by respondents due to their failure to make it to their business
meetings. Thus, it is only just that respondents be awarded temperate or
moderate damages. Since respondent is entitled to temperate damages, then
the court may also award exemplary damages. Philippine Airlines, Inc. vs.
Francisco Lao Lim, The Heirs of Henry Go, Manuel Limtiong and Rainbow
Tours and Travel, Inc. G.R. No. 168987. October 17, 2012
Land ownership. The bare allegation of respondents that they had been in
peaceful and continuous possession of the lot in question because their
predecessor-in-interest had been in possession thereof in the concept of an
owner from time immemorial, cannot prevail over the tax declarations and
other documentary evidence presented by petitioners. In the absence of any
supporting evidence, that of the petitioners deserves more probative value. A
perusal of the records shows that respondents occupation of the lot in
question was by mere tolerance. From the minutes of the meeting in the
Barangay Lupon, Perfecto admitted that in Albina permitted them to use the
lots on the condition that they would vacate the same should Albina need
it. Heirs of Albina G. Ampil, namely Precious A. Zavalla, Eduardo Ampil, et
al. vs. Teresa Manahan and Mario Manahan G.R. No. 175990. October 11,
2012
Mortgage; escalation clause. We consider to be unsubstantiated the
petitioners claim of their lack of consent to the escalation clauses. They did
not adduce evidence to show that they did not assent to the increases in the
interest rates. The records reveal instead that they requested only the

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reduction of the interest rate or the restructuring of their loans. Escalation


clauses are valid and do not contravene public policy. These clauses are
common in credit agreements as means of maintaining fiscal stability and
retaining the value of money on long-term contracts. Any increase in the rate
of interest made pursuant to an escalation clause must be the result of an
agreement between the parties. Thus, any change must be mutually agreed
upon, otherwise, the change carries no binding effect. Spouses Humberto
Delos Santos and Carmencita Delos Santos vs. Metropolitan Bank and Trust
Company G.R. No. 153852. October 24, 2012
Novation; lease agreement; default. Article 1292 of the Civil Code provides
that in novation, it is imperative that it be so declared in unequivocal terms,
or that the old and the new obligations be on every point incompatible with
each other. In this case, the cause in a contract of lease is the enjoyment of
the thing; in a contract of deposit, it is the safekeeping of the thing. They
thus create essentially distinct obligations that would result in a novation
only if the parties entered into one after the other concerning the same
subject matter.
The turning point in this case is whether or not the parties subsequently
entered into an agreement for the storage of the buses that superseded their
prior lease agreement involving the same buses. RCJ failed to present any
clear proof that it agreed with Master Tours to abandon the lease of the
buses and in its place constitute RCJ as depositary of the same, providing
storage service to Master Tours for a fee. The only evidence RCJ relied on is
Master Tours letter in which it demanded the return of the four buses which
were placed in RCJs garage for safekeeping. For one thing, the letter does
not on its face constitute an agreement. It contains no contractual
stipulations respecting some warehousing arrangement between the parties
concerning the buses. The idea of RCJ safekeeping the buses for Master
Tours is actually consistent with their lease agreement. In fact, the lessee of
a movable property has an obligation to return the thing leased, upon the
termination of the lease, just as he received it. Apart from delivering the
buses to RCJ, the agreement did not require any further act from Master
Tours as a condition to the exercise of its right to collect the lease fee. RCJ
Bus Lines, Incorporated vs. Master Tours and Travel Corporation G.R. No.
177232. October 11, 2012
Novation; loan; restructuring. Article 1292 of the Civil Code contemplates

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two kinds of novation. Novation is never presumed, and the animus novandi,
whether totally or partially, must appear by express agreement of the parties,
or by their acts that are too clear and unmistakable. The contracting parties
must incontrovertibly disclose that their object in executing the new contract
is to extinguish the old one. Upon the other hand, no specific form is
required for an implied novation, and all that is prescribed by law would be
an incompatibility between the two contracts. Nonetheless, both kinds of
novation must still be clearly proven.
Without a written contract stating in unequivocal terms that the parties were
novating the original loan agreement, eliminating an express novation, the
Court looks to whether there is an incompatibility between the Floor Stock
Line secured by Trust receipts and the subsequent restructured Omnibus
Line which was supposedly approved by PNB. The test of incompatibility is
whether the two obligations can stand together, each one having its
independent existence. The obligation is not novated by an instrument that
expressly recognizes the old, changes only the terms of payment, adds other
obligations not incompatible with the old ones, or the new contract merely
supplements the old one. Besides, novation does not extinguish criminal
liability. Philippine National Bank Vs. Lilian S. Soriano G.R. No. 164051,
October 3, 2012.
Obligations; default in performance; liquidated damages. The parties to a
contract are allowed to stipulate on liquidated damages to be paid in case of
breach. A perusal of the significant provisions of the Construction Contract
and the relevant construction documents would show that the rights to
liquidated damages and to terminate the contract are distinct remedies that
are available to respondent. As long as the contractor fails to finish the
works within the period agreed upon by the parties without justifiable reason
and after the owner makes a demand, then liability for damages as a
consequence of such default arises.
With the modification of the contract period, petitioner was obliged to
perform the works and deliver the units. Yet it still reneged on its obligation.
Assuming that the reasons for valid extension indeed exist, still, petitioner
should bear the consequences for the delay when petitioner failed to meet its
new deadline. While the Court has reduced the amount of liquidated
damages in some cases because of partial fulfillment of the contract and/or
the amount is unconscionable, the Court does not find the same to be

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applicable in this case. As of the last certified billing, petitioners


percentage accomplishment was only 62.57%. Hence, the Court applied the
general rule not to ignore the freedom of the parties to agree on such terms
and conditions as they see fit as long as they are not contrary to law, morals,
good customs, public order or public policy. Atlantic Erectors, Inc. vs. Court
of Appeals and Herbal Cove Realty Corporation. G.R. No. 170732. October
11, 2012
Obligations; delay; additional works and change order; principle of quantum
meruit. Petitioner insists that respondent should pay the remaining balance
on the contract price, that it was respondents additional works and change
orders which caused the delay in the completion of the proposed project.
Respondent anchors its non-payment of the remaining balance primarily on
the defects and delays incurred by petitioner in the completion of the
construction project.
Testimonial and documentary proof strongly show that the delay was caused
by the additional works and change order works required by respondent
which were not part of the original Agreement. Pursuant to the
aforementioned contractual obligations, petitioner completed the
construction of the four-storey commercial building and two-storey kitchen
with dining hall. Thus, this Court finds no legal basis for respondent to not
comply with its obligation to pay the balance of the contract price due the
petitioner. Under the principle of quantum meruit, a contractor is allowed to
recover the reasonable value of the thing or service rendered in order to
avoid unjust enrichment. Robert Pascua, doing business under the name and
style Tri-Web Construction vs. G & G Realty Corporation G.R. No. 196383.
October 15, 2012
Obligations; payment; extinguishment of obligation. Respondents
obligation consists of payment of a sum of money. In order to extinguish
said obligation, payment should be made to the proper person as set forth in
Article 1240 of the Civil Code. Admittedly, payment of the remaining
balance of P200,000 was not made to the creditors themselves. Respondent
claims that Losloso was the authorized agent of petitioners, but the latter
dispute it. Loslosos authority to receive payment was embodied in
petitioners letter addressed to respondent where they informed respondent
of the amounts they advanced for the payment of the 1997 real estate taxes.
In said letter, petitioners reminded respondent of her remaining balance,

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together with the amount of taxes paid. Taking into consideration the busy
schedule of respondent, petitioners advised the latter to leave the payment to
a certain Dori who admittedly is Losloso, or to her trusted helper. This is
an express authority given to Losloso to receive payment. Spouses Miniano
B. Dela Cruz and Leta L. Dela Cruz vs. Ana Marie Concepcion G.R. No.
172825. October 11, 2012
Regalian doctrine; public land. Under the Regalian doctrine, land that has
not been acquired from the government, either by purchase, grant, or any
other mode recognized by law, belongs to the State as part of the public
domain. Thus, it is indispensable for a person claiming title to a public land
to show that his title was acquired through such means. To prove that the
subject property is alienable and disposable land of the public domain,
respondents presented the CENRO Certificate. However, a CENRO or
PENRO Certification is not enough to certify that a land is alienable and
disposable. The applicant for land registration must prove that the DENR
Secretary had approved the land classification and released the land of the
public domain as alienable and disposable, and that the land subject of the
application for registration falls within the approved area per verification
through survey by the PENRO or CENRO. In addition, the applicant for
land registration must present a copy of the original classification approved
by the DENR Secretary and certified as a true copy by the legal custodian of
the official records.
Although the survey and certification were done declaring certain portions
of the public domain situated in Cebu City as alienable and disposable, an
actual copy of such classification, certified as true by the legal custodian of
the official records, was not presented in evidence. Unfortunately,
respondents were not able to discharge the burden of overcoming the
presumption that the land they sought to be registered forms part of the
public domain. Republic of the Philippines vs. Gloria Jaralve (deceased),
substituted by Alan Jess Jaralve-Document, Jr., et al. G.R. No. 175177.
October 24, 2012
Succession; extra-judicial settlement of estate; grounds for nullity. Upon the
death of Anunciacion, her children and Enrique acquired their respective
inheritances, entitling them to their pro indiviso shares in her whole estate.
In the execution of the Extra-Judicial Settlement of the Estate with Absolute
Deed of Sale in favor of spouses Uy, all the heirs of Anunciacion should

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have participated. Considering that Eutropia and Victoria were admittedly


excluded and that then minors Rosa and Douglas were not properly
represented therein, the settlement was not valid and binding upon them and
consequently, a total nullity.
However, while the settlement of the estate is null and void, the subsequent
sale of the subject properties made by Enrique and his children, Napoleon,
Alicia and Visminda, in favor of the respondents is valid but only with
respect to their proportionate shares. With respect to Rosa and Douglas who
were minors at the time of the execution of the settlement and sale, their
natural guardian and father, Enrique, represented them in the transaction.
However, on the basis of the laws prevailing at that time, Enrique was
merely clothed with powers of administration and bereft of any authority to
dispose of their 2/16 shares in the estate of their mother, Anunciacion.
A father or mother, as the natural guardian of the minor under parental
authority, does not have the power to dispose or encumber the property of
the latter. Such power is granted by law only to a judicial guardian of the
wards property and even then only with courts prior approval. Napoleon D.
Neri, et al. vs Heirs of Hadji Yusop Uy and Julpha Ibrahim Uy. G.R. No.
194366. October 10, 2012
SPECIAL LAWS
BOT Law; water rights; appropriation. Foreign ownership of a hydropower
facility is not prohibited under existing laws. The construction, rehabilitation
and development of hydropower plants are among those infrastructure
projects which even wholly-owned foreign corporations are allowed to
undertake under the Amended Build-Operate-Transfer (Amended BOT) Law
(R.A. No. 7718). Executive Order No. 215 allowed the entry of private
sector the Independent Power Producers (IPPs) to participate in the power
generation activities in the country.
Further, water right is defined in the Water Code as the privilege granted
by the government to appropriate and use water. Under the Water Code
concept of appropriation, a foreign company may not be said to be
appropriating our natural resources if it utilizes the waters collected in the
dam and converts the same into electricity through artificial devices. Since

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the National Power Corporation (NPC) remains in control of the operation of


the dam by virtue of water rights granted to it, there is no legal impediment
to foreign-owned companies undertaking the generation of electric power
using waters already appropriated by NPC, the holder of water permit.
Initiative For Dialoque and Emprovement Through Alternative Legal
Services, Inc., Et Al. vs. Power Sector Assets and Liabilities Management
Corpotation Etc., et aAl. G.R. No. 192088. October 9, 2012
Homestead patent; five-year prohibitory period; no distinction between
consummated and executory sale; unjust enrichment. The five-year
prohibitory period following the issuance of the homestead patent is
provided under Section 118 of the Public Land Act. It bears stressing that
the law was enacted to give the homesteader or patentee every chance to
preserve for himself and his family the land that the State had gratuitously
given to him as a reward for his labour in cleaning and cultivating it.
In the present case, the negotiations for the purchase of the properties
covered by the patents issued in 1991 were made in 1995 and, eventually, an
undated Deed of Conditional Sale was executed. Petitioner raises the issue
whether by a deed of conditional sale there was alienation or encumbrance
within the contemplation of the law. The prohibition does not distinguish
between consummated and executory sale. The conditional sale entered into
by the parties is still a conveyance of the homestead patent; that the formal
deed of sale was executed after the expiration of the staid period did not and
could not legalize a contract that was void from its inception. Nevertheless,
petitioner does not err in seeking the return of the down payment as a
consequence of the sale having been declared void. The rule is settled that
the declaration of nullity of a contract which is void ab initio operates to
restore things to the state and condition in which they were found before the
execution thereof. Filinvest Land, Inc., Efren C. Gutierrer vs. Abdul Backy,
Abehera, Baiya, Edris, et al. G.R. No. 174715. October 11, 2012
Republic Act (RA) No. 26; certificate of title; reconstitution; sources. The
Office of the Solicitor General raised the issue that the Domingos did not
comply with Sections 12 and 13 of RA No. 26 because they failed to notify
the heirs of the Spouses Ramoso and a certain Senen Gabaldon of the
reconstitution proceedings for an original certificate of title. Respondents
argue that the names of the heirs of the Spouses Ramoso and Gabaldon do
not appear in the owners duplicate, hence need not be notified.

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RA No. 26 provides two procedures and sets of requirements in the


reconstitution of lost or destroyed certificates of title depending on the
source of the petition for reconstitution. Section 10 in relation to Section 9,
and on the other, Sections 12 and 13. Section 10 of RA No. 26 applies if the
source is the owners duplicate certificate, which shall be published in the
manner stated in section nine. Section 9 of RA No. 26 states that the notice
shall specify the number of the certificate of title, the name of the registered
owner, the names of the interested parties appearing in the reconstituted
certificate of title, the location of the property, and the date on which all
persons having an interest in the property must appear and file such claim as
they may have. The respondents complied with these requirements and thus
the RTC validly acquired jurisdiction to hear and decide the petition for
reconstitution. Republic of the Philippines vs. Angel T. Domingo and
Benjamin T. Domingo. G.R. No. 197315. October 10, 2012
Realty Installment Buyer Protection Act; contract to sell. A contract is what
the law defines it to be, and not what it is called by the contracting parties. A
contract to sell is defined as a bilateral contract whereby the prospective
seller, while expressly reserving the ownership of the subject property
despite delivery thereof to the prospective buyer, binds itself to sell the said
property exclusively to the prospective buyer upon fulfillment of the
condition agreed upon, that is, full payment of the purchase price.
The Shelter Contract Award granted to respondent expressly stipulates that
upon completion of payment of the amount representing the full value of
the House and Lot subject of the Contract Award, the Union shall execute a
Deed of Transfer and shall cause the issuance of the corresponding Transfer
Certificate of Title in favor of and in the name of the Awardee. It cannot be
denied, therefore, that the parties entered into a contract to sell in the guise
of a reimbursement scheme requiring respondent to make monthly
reimbursement payments which are, in actuality, installment payments for
the value of the subject house and lot.
While the Court agreed that the cancellation of a contract to sell may be
done outside of court, however, the cancellation by the seller must be in
accordance with Sec. 3(b) of R.A. No. 6552, which requires a notarial act of
rescission and the refund to the buyer of the full payment of the cash
surrender value of the payments on the property. In the present case,
petitioner failed to prove that the Shelter Contract Award had been cancelled

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in accordance with R.A. No. 6552, which would have been the basis for the
illegality of respondents continuous possession of the subject premises.
Hence, the action for ejectment must fail. Associated Marine Office and
Seamens Union Of The Philippines vs. Noriel Decena G.R. No. 178584.
October 8, 2012.

September 2012 Philippine Supreme


Court Decisions on Civil Law
Posted on October 10, 2012 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law Tagged contract, lease, mortgage, obligations,
prescription, quasi-delict, unjust enrichment

Here are select September 2012 rulings of the Supreme Court of the
Philippines on civil law:
Civil Code
Contracts; capacity. Contracting parties must be juristic entities at the time
of the consummation of the contract. Stated otherwise, to form a valid and
legal agreement it is necessary that there be a party capable of contracting
and a party capable of being contracted with. Hence, if any one party to a
supposed contract was already dead at the time of its execution, such
contract is undoubtedly simulated and false and, therefore, null and void by
reason of its having been made after the death of the party who appears as
one of the contracting parties therein. The death of a person terminates
contractual capacity. De Belen Vda. de Cabalu, et al. v. Tabu, et al.; G.R.
No. 188417. September 24, 2012
Contracts; future inheritance; contractual capacity Under Article 1347 of
the Civil Code, no contract may be entered into upon future inheritance
except in cases expressly authorized by law. Paragraph 2 of Article 1347
characterizes a contract entered into upon future inheritance as void. The law
applies when the following requisites concur: (1) the succession has not yet
been opened; (2) the object of the contract forms part of the inheritance; and
(3) the promissor has, with respect to the object, an expectancy of a right

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Lexoterica: Compilation of SC Rulings

which is purely hereditary in nature. De Belen Vda. de Cabalu, et al. v.


Tabu, et al.; G.R. No. 188417. September 24, 2012

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

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without their presence to a suit or proceeding, the judgment of a court cannot


attain real finality. The absence of an indispensable party renders all
subsequent actions of the court null and void for want of authority to act, not
only as to the absent parties but even as to those present. Living@Sense, Inc.
v. Malayan Insurance Company, Inc.; G.R. No. 193753. September 26, 2012
Prescription; actions; attorneys fees We agree with the trial and appellate
courts, for as the records bear, that the ten (10)-year prescriptive period to
file an action based on the subject promissory notes was interrupted by the
several letters exchanged between the parties. This is in conformity with the
second and third circumstances under Article 1155 of the New Civil Code
(NCC) which provides that the prescription of actions is interrupted when:
(1) they are filed before the court; (2) there is a written extrajudicial demand
by the creditors; and (3) there is any written acknowledgment of the debt by
the debtor.
Regarding the award of attorneys fees, the applicable provision is Article
2208(2) of the NCC which allows the grant thereof when the defendants act
or omission compelled the plaintiff to litigate or to incur expenses to protect
its interest. Considering the circumstances that led to the filing of the
complaint in court, and the clear refusal of the petitioners to satisfy their
existing debt to the bank despite the long period of time and the
accommodations granted to it by the respondent to enable them to satisfy
their obligations, we agree that the respondent was compelled by the
petitioners acts to litigate for the protection of the banks interests, making
the award of attorneys fees proper. Magdiwang Realty Corp., et al. v.
Manila Banking Corp.; G.R. No. 195592. September 5, 2012
Publication requirement; laws The publication requirement covers not only
statutes but administrative regulations and issuances, as clearly outlined in
Taada v.Tuvera. As opposed to Honasan II v. The Panel of Investigating
Prosecutors of the Department of Justice, where the Court held that OMBDOJ Joint Circular No. 95-001 is only an internal arrangement between the
DOJ and the Office of the Ombudsman outlining the authority and
responsibilities among prosecutors of both offices in the conduct of
preliminary investigation, the assailed Joint Committees Rules of Procedure
regulate not only the prosecutors of the DOJ and the Comelec but also the
conduct and rights of persons, or the public in general. The publication
requirement should, therefore, not be ignored.

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Publication is a necessary component of procedural due process to give as


wide publicity as possible so that all persons having an interest in the
proceedings may be notified thereof. The requirement of publication is
intended to satisfy the basic requirements of due process. It is imperative for
it will be the height of injustice to punish or otherwise burden a citizen for
the transgressions of a law or rule of which he had no notice whatsoever.
Arroyo v. Dept of Justice; G.R. No. 199082/G.R. No. 199085/G.R. No.
199118. September 18, 2012
Publication requirement; regulations Publication is a basic postulate of
procedural due process. The purpose of publication is to duly inform the
public of the contents of the laws which govern them and regulate their
activities. Article 2 of the Civil Code, as amended by Section 1 of Executive
Order No. 200, states that [l]aws shall take effect after fifteen days
following the completion of their publication either in the Official Gazette or
in a newspaper of general circulation in the Philippines, unless it is
otherwise provided. Section 18, Chapter 5, Book I of Executive Order No.
292 or the Administrative Code of 1987 similarly provides that [l]aws shall
take effect after fifteen (15) days following the completion of their
publication in the Official Gazette or in a newspaper of general circulation,
unless it is otherwise provided.
Procedural due process demands that administrative rules and regulations be
published in order to be effective. There are, however, several exceptions to
the requirement of publication. First, an interpretative regulation does not
require publication in order to be effective. The applicability of an
interpretative regulation needs nothing further than its bare issuance for it
gives no real consequence more than what the law itself has already
prescribed. It add[s] nothing to the law and do[es] not affect the
substantial rights of any person. Second, a regulation that is merely internal
in nature does not require publication for its effectivity. It seeks to regulate
only the personnel of the administrative agency and not the general public.
Third, a letter of instruction issued by an administrative agency concerning
rules or guidelines to be followed by subordinates in the performance of
their duties does not require publication in order to be effective. Asociation
of Southern Tagalog Electric Cooperatives, Inc., et al. v. Energy Regulatory
Commission; G.R. No. 192117/G.R. No. 192118. September 18, 2012
Tort; medical negligence; requisites; doctors not guarantors of care The

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type of lawsuit which has been called medical malpractice or, more
appropriately, medical negligence, is that type of claim which a victim has
available to him or her to redress a wrong committed by a medical
professional which has caused bodily harm. In order to successfully pursue
such a claim, a patient must prove that a health care provider, in most cases a
physician, either failed to do something which a reasonably prudent health
care provider would have done, or that he or she did something that a
reasonably prudent provider would not have done; and that the failure or
action caused injury to the patient. Stated otherwise, the complainant must
prove: (1) that the health care provider, either by his act or omission, had
been negligent, and (2) that such act or omission proximately caused the
injury complained of.
In medical negligence cases, it is settled that the complainant has the burden
of establishing breach of duty on the part of the doctors or surgeons. It must
be proven that such breach of duty has a causal connection to the resulting
death of the patient. A verdict in malpractice action cannot be based on
speculation or conjecture. Causation must be proven within a reasonable
medical probability based upon competent expert testimony.
Doctors are protected by a special law. They are not guarantors of care. They
do not even warrant a good result. They are not insurers against mishaps or
unusual consequences. Furthermore, they are not liable for honest mistake of
judgment. Cereno v. Court of Appeal,s et al.; G.R. No. 167366. September
26, 2012
Unjust enrichment; implied trusts The statutory basis for unjust enrichment
is found in Article 22 of the Civil Code, which provides:
Every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the
latter without just or legal ground, shall return the same to him.
Under the foregoing provision, there is unjust enrichment when: (1) a person
is unjustly benefited; and (2) such benefit is derived at the expense of or
with damages to another. GSIS, et al. v. COA, et al.; G.R. No. 162372.
September 11, 2012

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Special Laws
Contracts; rescission R.A. No. 6552 (or the Realty Installment Buyer Act)
recognizes the right of the seller to cancel the contract but any such
cancellation must be done in conformity with the requirements therein
prescribed. In addition to the notarial act of rescission, the seller is required
to refund to the buyer the cash surrender value of the payments on the
property. The actual cancellation of the contract can only be deemed to take
place upon the expiry of a 30-day period following the receipt by the buyer
of the notice of cancellation or demand for rescission by a notarial act and
the full payment of the cash surrender value. Planters Devt Bank v.
Chandumal; G.R. No. 195619. September 5, 2012.

August 2012 Philippine Supreme


Court Decisions on Civil Law
Posted on September 21, 2012 by Rose Marie M. King-Dominguez Posted in Civil
Law, Philippines - Cases, Philippines - Law Tagged damages, partition, patent, quasidelict

Here are select August 2012 rulings of the Supreme Court of the Philippines
on civil law:
Civil Code
Accion reivindicatoria. Article 434 of the Civil Code provides that in an
action to recover, the property must be identified, and the plaintiff must rely
on the strength of his title and not on the weakness of the defendants claim.
The first requisite is the identity of the land. In an accion reinvindicatoria,
the person who claims that he has a better right to the property must first fix
the identity of the land he is claiming by describing the location, area and
boundaries thereof. Anent the second requisite, i.e., the claimants title over
the disputed area, the rule is that a party can claim a right of ownership only
over the parcel of land that was the object of the deed. It is settled that what
really defines a piece of land is not the area mentioned in its description, but

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the boundaries therein laid down, as enclosing the land and indicating its
limits. We have held, however, that in controversial cases where there
appears to be an overlapping of boundaries, the actual size of the property
gains importance. Leonardo Notarte et al. v. Godofredo Notarte, G.R. No.
180614, August 29, 2012.
Damages; actual and moral damages; factual and legal support required.
Article 2199 of the Civil Code is the statutory basis for the award of actual
damages, which entitles a person to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved. As such, actual
damages if allowed by the RTC, being bereft of factual support, are
speculative and whimsical. Without the clear and distinct findings of fact
and law, the award amounts only to an ipse dixit on the part of the RTC, and
do not attain finality.
Absent a clear and distinct statement of the factual and legal support for the
award of moral damages, the award is thus also speculative and whimsical.
Moral damages constitute another judicial ipse dixit, the inevitable
consequence of which is to render the award of moral damages incapable of
attaining finality. In addition, the grant of moral damages in that manner
contravenes the law that permit the recovery of moral damages as the means
to assuage physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury. Moral damages are not intended to enrich the plaintiff at
the expense of the defendant, but to restore the plaintiff to his status quo ante
as much as possible. University of the Philippines, et al. v. Hon. Agustin
Dizon et al., G.R. No. 171182, Aug. 23, 2012.

Damages; attorneys fees. The general rule is that a successful litigant


cannot recover attorneys fees as part of the damages to be assessed against
the losing party because of the policy that no premium should be placed on
the right to litigate. Prior to the effectivity of the present Civil Code, indeed,
such fees could be recovered only when there was a stipulation to that effect.
It was only under the present Civil Code that the right to collect attorneys
fees in the cases mentioned in Article 2208 of the Civil Code came to be
recognized. Nonetheless, with attorneys fees being allowed in the concept

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Lexoterica: Compilation of SC Rulings

of actual damages, their amounts must be factually and legally justified in


the body of the decision and not stated for the first time in the decretal
portion. Stating the amounts only in the dispositive portion of the judgment
is not enough; a rendition of the factual and legal justifications for them
must also be laid out in the body of the decision. University of the
Philippines, et al. v. Hon. Agustin Dizon et al., G.R. No. 171182, Aug. 23,
2012.
Partition; oral partition. Under Article 1082 of the Civil Code, every act
which is intended to put an end to indivision among co-heirs is deemed to be
a partition even though it should purport to be a sale, an exchange, or any
other transaction. Partition may thus be inferred from circumstances
sufficiently strong to support the presumption.
The validity of an oral partition is already well-settled. It is not required that
the partition agreement be registered or annotated in the OCT of the land to
be valid. After exercising acts of ownership over their respective portions of
the contested estate, petitioners are estopped from denying the existence of
an oral partition.
Regardless of whether a parol partition or agreement to partition is valid and
enforceable at law, equity will in proper cases, where the parol partition has
actually been consummated by the taking of possession in severalty and the
exercise of ownership by the parties of the respective portions set off to
each, recognize and enforce such parol partition and the rights of the parties
thereunder. Leonardo Notarte et al. v. Godofredo Notarte, G.R. No. 180614,
August 29, 2012.
Quasi-delict; negligence of hotel. The hotel business is imbued with public
interest. Catering to the public, hotelkeepers are bound to provide not only
lodging for their guests but also security to the persons and belongings of
their guests. The twin duty constitutes the essence of the business. Applying
by analogy Article 2000, Article 2001 and Article 2002 of the Civil
Code (all of which concerned [sic] the hotelkeepers degree of care and
responsibility as to the personal effects of their guests), we hold that there is
much greater reason to apply the same if not greater degree of care and
responsibility when the lives and personal safety of their guests are involved.
Otherwise, the hotelkeepers would simply stand idly by as strangers have

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unrestricted access to all the hotel rooms on the pretense of being visitors of
the guests, without being held liable should anything untoward befall the
unwary guests. That would be absurd, something that no good law would
ever envision. Makati Shangri-La Hotel & Resort v. Ellen Johanne Harper,
et al., G.R. No. 189998, August 29, 2012.
Special Laws
Patent; issuance; homestead patent prevails over land tax declaration. When
a homesteader has complied with all the terms and conditions which entitle
him to a patent for a particular tract of public land, he acquires a vested
interest therein, enough to be regarded as the equitable owner thereof. Where
the right to a patent to land has once become vested in a purchaser of public
lands, it is equivalent to a patent actually issued. The execution and delivery
of patent, after the right to a particular parcel of land has become complete,
are the mere ministerial acts of the officer charged with that duty. Even
without a patent, a perfected homestead is a property right in the fullest
sense, unaffected by the fact that the paramount title to the land is still in the
government. Such land may be conveyed or inherited.
As evidence of ownership of land, a homestead patent prevails over a land
tax declaration. Jose Medina v. Court of Appeals & The Heirs of the Late
Abundio Castaares, G.R. No. 137582, August 29, 2012.

August 2012 Philippine Supreme


Court Decisions on Civil Law
Posted on September 12, 2012 by Rose Marie M. King-Dominguez Posted in Civil Law
Tagged common carrier, contract, damages, family home, rescission, support, Torrens
title

Here are select August 2012 rulings of the Supreme Court of the Philippines
on civil law:
Civil Code

ATTY. RESCI ANGELLI RIZADA


Lexoterica: Compilation of SC Rulings

Common carrier; damages. The operator of a. school bus service is a


common carrier in the eyes of the law. He is bound to observe extraordinary
diligence in the conduct of his business. He is presumed to be negligent
when death occurs to a passenger. His liability may include indemnity for
loss of earning capacity even if the deceased passenger may only be an
unemployed high school student at the time of the accident. Spouses
Teodorico and Nanette Perea v. Spouses Nicolas and Teresita L. Zarate, et
al.; G.R. No. 157917. August 29, 2012.
Contracts; rescission; consequences are restitution and in this case, each
party will bear its own damage. As correctly observed by the RTC, the
rescissory action taken by GSIS is pursuant to Article 1191 of the Civil
Code. In cases involving rescission under the said provision, mutual
restitution is required. The parties should be brought back to their original
position prior to the inception of the contract. Accordingly, when a decree
of rescission is handed down, it is the duty of the court to require both
parties to surrender that which they have respectively received and to place
each other as far as practicable in [their] original situation. Pursuant to this,
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 and the
Addendum.
Relevant also is the provision of Article 1192 of the Civil Code which reads:
In case both parties have committed a breach of the obligation, the liability
of the first infractor shall be equitably tempered by the courts. If it cannot
be determined which of the parties first violated the contract, the same
shall be deemed extinguished, and each shall bear his own damages.
(Emphasis suppied.)

In this case, it cannot be determined with certainty which between the parties
is the first infractor. It could be GSIS because of the high probability that
even before the execution of the agreements, real property taxes were
already imposed and unpaid such that when GSIS applied for building
permits, the tax liability was already in the substantial amount of P54
million. It was just that GSIS could not have been mindful of the same

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Lexoterica: Compilation of SC Rulings

because of its stand that it is tax exempt. But as this cannot be conclusively
presumed, there exists an uncertainty as to which between the failure to
comply on the part of each party came first; hence, the last portion of Article
1192 finds application. Pursuant thereto, the parties respective claims for
damages are thus deemed extinguished and each of them shall bear its own
damage. Goldloop Properties, Inc. vs. Government Service Insurance
System; G.R. No. 171076, August 1, 2012.
Contracts; rescission by reason of subject being under litigation; resolution
of litigation is not a condition to rescission. Contracts which are rescissible
due to fraud or bad faith include those which involve things under litigation,
if they have been entered into by the defendant without the knowledge and
approval of the litigants or of competent judicial authority. Thus, Article
1381(4) of the Civil Code provides: The following contracts are rescissible:
x x x x (4) Those which refer to things under litigation if they have been
entered into by the defendant without the knowledge and approval of the
litigants or of competent judicial authority[.]
The rescission of a contract under Article 1381(4) of the Civil Code only
requires the concurrence of the following: first, the defendant, during the
pendency of the case, enters into a contract which refers to the thing subject
of litigation; and second, the said contract was entered into without the
knowledge and approval of the litigants or of a competent judicial authority.
As long as the foregoing requisites concur, it becomes the duty of the court
to order the rescission of the said contract.
It bears stressing that the right to ask for the rescission of a contract under
Article 1381(4) of the Civil Code is not contingent upon the final
determination of the ownership of the thing subject of litigation. The
primordial purpose of Article 1381(4) of the Civil Code is to secure the
possible effectivity of the impending judgment by a court with respect to the
thing subject of litigation. It seeks to protect the binding effect of a courts
impending adjudication vis--vis the thing subject of litigation regardless of
which among the contending claims therein would subsequently be upheld.
Accordingly, a definitive judicial determination with respect to the thing
subject of litigation is not a condition sine qua non before the rescissory
action contemplated under Article 1381(4) of the Civil Code may
be instituted. Lilia B. Luz, et al. vs. Florante Baylon; G.R. No. 182435,
August 13, 2012.

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Damages; moral; exemplary; attorneys fees. To be recoverable, moral


damages must be capable of proof and must be actually proved with a
reasonable degree of certainty. Courts cannot simply rely on speculation,
conjecture or guesswork in determining the fact and amount of damages.
Yet, nothing was adduced here to justify the grant of moral damages. What
we have was only the allegation on moral damages, with the complaint
stating that the respondents had been forced to litigate, and that they had
suffered mental anguish, serious anxiety and wounded feelings from the
petitioners refusal to restore the possession of the land in question to them.
The allegation did not suffice, for allegation was not proof of the facts
alleged.
The Court cannot also affirm the exemplary damages granted in favor of the
respondents. Exemplary damages were proper only if the respondents, as the
plaintiffs, showed their entitlement to moral, temperate or compensatory
damages. Yet, they did not establish their entitlement to such other damages.
As to attorneys fees, the general rule is that such fees cannot be recovered
by a successful litigant as part of the damages to be assessed against the
losing party because of the policy that no premium should be placed on the
right to litigate. Indeed, prior to the effectivity of the present Civil Code,
such fees could be recovered only when there was a stipulation to that effect.
It was only under the present Civil Code that the right to collect attorneys
fees in the cases mentioned in Article 2208 of the Civil Code came to be
recognized. Such fees are now included in the concept of actual damages.
Even so, whenever attorneys fees are proper in a case, the decision rendered
therein should still expressly state the factual basis and legal justification for
granting them. Numeriano P. Abobon vs. Felicitas Abata Abobon, et al.;
G.R. No. 155830, August 15, 2012.
Family relations; filiation and support. There are four significant procedural
aspects of a traditional paternity action that parties have to face: a prima
facie case, affirmative defenses, presumption of legitimacy, and physical
resemblance between the putative father and the child. We explained that a
prima facie case exists if a woman declares supported by corroborative
proof that she had sexual relations with the putative father; at this point,
the burden of evidence shifts to the putative father. We explained further that

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the two affirmative defenses available to the putative father are: (1)
incapability of sexual relations with the mother due to either physical
absence or impotency, or (2) that the mother had sexual relations with other
men at the time of conception.
Since filiation is beyond question, support follows as a matter of obligation;
a parent is obliged to support his child, whether legitimate or illegitimate.
Support consists of everything indispensable for sustenance, dwelling,
clothing, medical attendance, education and transportation, in keeping with
the financial capacity of the family. Thus, the amount of support is variable
and, for this reason, no final judgment on the amount of support is made as
the amount shall be in proportion to the resources or means of the giver and
the necessities of the recipient. It may be reduced or increased
proportionately according to the reduction or increase of the necessities of
the recipient and the resources or means of the person obliged to support.
Charles Gotardo v. Divina Buling; G.R. No. 165166, August 15, 2012.
Property; dried-up riverbed. If indeed a property was the former bed of a
creek that changed its course and passed through the property of the
claimant, then, pursuant to Article 461, the ownership of the old bed left to
dry by the change of course was automatically acquired by the claimant.
Before such a conclusion can be reached, the fact of natural abandonment of
the old course must be shown, that is, it must be proven that the creek indeed
changed its course without artificial or man-made intervention. Thus, the
claimant, in this case the Reyeses, must prove three key elements by clear
and convincing evidence. These are: (1) the old course of the creek, (2) the
new course of the creek, and (3) the change of course of the creek from the
old location to the new location by natural occurrence.
In this regard, the Reyeses failed to adduce indubitable evidence to prove the
old course, its natural abandonment and the new course. In the face of a
Torrens title issued by the government, which is presumed to have been
regularly issued, the evidence of the Reyeses was clearly wanting.
Uncorroborated testimonial evidence will not suffice to convince the Court
to order the reconveyance of the property to them. Spouses Crispin Galang
and Caridad Galang vs. Spouses Conrado S. Reyes and Fe De Kastro Reyes
(As substituted by their legal heir: Hermenigildo K. Reyes); G.R. No.
184746, August 8, 2012.

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Property; possession as right of the owner. It is beyond question under the


law that the owner has not only the right to enjoy and dispose of a thing
without other limitations than those established by law, but also the right of
action against the holder and possessor of the thing in order to recover it. He
may exclude any person from the enjoyment and disposal of the thing, and,
for this purpose, he may use such force as may be reasonably necessary to
repel or prevent an actual or threatened unlawful physical invasion or
usurpation of his property. Numeriano P. Abobon vs. Felicitas Abata
Abobon, et al.; G.R. No. 155830, August 15, 2012.
Special Laws
Family Code; family homes exemption from foreclosure. Spouses
Fortalezas argument that the subject property is exempt from forced sale
because it is a family home deserves scant consideration. As a rule, the
family home is exempt from execution, forced sale or attachment. However,
Article 155(3) of the Family Code explicitly allows the forced sale of a
family home for debts secured by mortgages on the premises before or
after such constitution. In this case, there is no doubt that spouses Fortaleza
voluntarily executed on January 28, 1998 a deed of Real Estate Mortgage
over the subject property which was even notarized by their original counsel
of record. And assuming that the property is exempt from forced sale,
spouses Fortaleza did not set up and prove to the Sheriff such exemption
from forced sale before it was sold at the public auction. Sps. Charlie
Fortaleza and Ofelia Fortaleza vs. Sps. Raul Lapitan and Rona Lapitan;
G.R. No. 178288, August 15, 2012.
P.D. No. 1529; collateral attack on titles is not allowed. In order for him to
properly assail the validity of the respondents TCT, he must himself bring
an action for that purpose. Instead of bringing that direct action, he mounted
his attack as a merely defensive allegation herein. Such manner of attack
against the TCT was a collateral one, which was disallowed by Section 48 of
Presidential Decree No. 1529. Numeriano P. Abobon vs. Felicitas Abata
Abobon, et al.; G.R. No. 155830, August 15, 2012.
P.D. No. 1529; registration of title. The present rule on the matter then
requires that an application for original registration be accompanied by: (1)
CENRO or PENRO Certification; and (2) a copy of the original

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classification approved by the DENR Secretary and certified as a true copy


by the legal custodian of the official records. Medida failed in this respect.
The records only include CENRO Certifications on the subject properties
alienability and disposability, but not a copy of the original classification
approved by the DENR Secretary and certified as true copy by its legal
custodian.
Furthermore, even the CENRO Certifications filed before this Court deserve
scant consideration since these were not presented during the trial. The
genuineness and due execution of these documents had not been duly proven
in the manner required by law.
In view of the failure of the respondent to establish by sufficient proof that
the subject parcels of land had been classified as part of the alienable and
disposable land of the public domain, his application for registration of title
should be denied. Republic of the Philippines vs. Marlon Medida; G.R. No.
195097, August 13, 2012.

July 2012 Philippine Supreme Court


Decisions on Civil Law
Posted on August 13, 2012 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law Tagged attorney's fees, contract, damages,
innocent purchaser, interest, moral damages, mortgage, property, rehabilitation, sale,
statute of frauds, unjust enrichment

Here are select July 2012 rulings of the Supreme Court of the Philippines on
civil law:
Civil Code
Contracts; reciprocal obligations. Reciprocal obligations are those which
arise from the same cause, and in which each party is a debtor and a creditor
of the other, such that the obligation of one is dependent upon the obligation
of the other. They are to be performed simultaneously such that the
performance of one is conditioned upon the simultaneous fulfillment of the

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other. For one party to demand the performance of the obligation of the
other party, the former must also perform its own obligation. Accordingly,
petitioner, not having provided the services that would require the payment
of service fees as stipulated in the Lease Development Agreement, is not
entitled to collect the same. Subic Bay Metropolitan Authority vs. Honorable
Court of Appeals and Subic International Hotel Corporation; G.R. No.
192885, July 4, 2012.
Contracts; contract of sale vs. contract to sell. The elements of a contract of
sale are, to wit: a) Consent or meeting of the minds, that is, consent to
transfer ownership in exchange for the price; b) Determinate subject matter;
and c) Price certain in money or its equivalent. It is the absence of the first
element which distinguishes a contract of sale from that of a contract to sell.
In a contract to sell, the prospective seller explicitly reserves the transfer of
title to the prospective buyer, meaning, the prospective seller does not as yet
agree or consent to transfer ownership of the property subject of the contract
to sell until the happening of an event, such as, in most cases, the full
payment of the purchase price. What the seller agrees or obliges himself to
do is to fulfill his promise to sell the subject property when the entire
amount of the purchase price is delivered to him. In other words, the full
payment of the purchase price partakes of a suspensive condition, the nonfulfillment of which prevents the obligation to sell from arising and, thus,
ownership is retained by the prospective seller without further remedies by
the prospective buyer.

In a contract of sale, on the other hand, the title to the property passes to the
vendee upon the delivery of the thing sold. Unlike in a contract to sell, the
first element of consent is present, although it is conditioned upon the
happening of a contingent event which may or may not occur. If the
suspensive condition is not fulfilled, the perfection of the contract of sale is
completely abated. However, if the suspensive condition is fulfilled, the
contract of sale is thereby perfected, such that if there had already been
previous delivery of the property subject of the sale to the buyer, ownership
thereto automatically transfers to the buyer by operation of law without any
further act having to be performed by the seller. The vendor loses ownership

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over the property and cannot recover it until and unless the contract is
resolved or rescinded. Virgilio S. David vs. Misamis Occidental II Electric
Cooperative, Inc., G.R. No. 194785, July 11, 2012.
Contracts; contract of sale; delivery. Among the terms and conditions of the
proposal to which MOELCI agreed, it was stated:
2. Delivery Ninety (90) working days upon receipt of your purchase order
and downpayment. C&F Manila, freight, handling, insurance, custom duties
and incidental expenses shall be for the account of MOELCI II.
On this score, it is clear that MOELCI agreed that the power transformer
would be delivered and that the freight, handling, insurance, custom duties,
and incidental expenses shall be shouldered by it.
On the basis of this express agreement, Article 1523 of the Civil Code
becomes applicable. It provides:
Where, in pursuance of a contract of sale, the seller is authorized or
required to send the goods to the buyer delivery of the goods to a
carrier, whether named by the buyer or not, for the purpose of
transmission to the buyer is deemed to be a delivery of the goods to the
buyer, except in the cases provided for in Article 1503, first, second and
third paragraphs, or unless a contrary intent appears. (Emphasis supplied)
Thus, the delivery made by David to William Lines, Inc., as evidenced by
the Bill of Lading, was deemed to be a delivery to MOELCI. David was
authorized to send the power transformer to the buyer pursuant to their
agreement. When David sent the item through the carrier, it amounted to a
delivery to MOELCI.
Furthermore, in the case of Behn, Meyer & Co. (Ltd.) v. Yangco it was
pointed out that a specification in a contract relative to the payment of
freight can be taken to indicate the intention of the parties with regard to the
place of delivery. So that, if the buyer is to pay the freight, as in this case, it
is reasonable to suppose that the subject of the sale is transferred to the
buyer at the point of shipment. In other words, the title to the goods transfers
to the buyer upon shipment or delivery to the carrier.

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Of course, Article 1523 provides a mere presumption and in order to


overcome said presumption, MOELCI should have presented evidence to the
contrary. The burden of proof was shifted to MOELCI, who had to show that
the rule under Article 1523 was not applicable. In this regard, however,
MOELCI failed. Virgilio S. David vs. Misamis Occidental II Electric
Cooperative, Inc.; G.R. No. 194785, July 11, 2012.
Contracts; interpretation. The rule is that it is not the title of the contract, but
its express terms or stipulations that determine the kind of contract entered
into by the parties. Virgilio S. David vs. Misamis Occidental II Electric
Cooperative, Inc.; G.R. No. 194785, July 11, 2012.
Contracts; statute of frauds. There being delivery and release, said fact
constitutes partial performance which takes the case out of the protection of
the Statute of Frauds. It is elementary that the partial execution of a contract
of sale takes the transaction out of the provisions of the Statute of Frauds so
long as the essential requisites of consent of the contracting parties, object
and cause of the obligation concur and are clearly established to be present.
Virgilio S. David vs. Misamis Occidental II Electric Cooperative, Inc.; G.R.
No. 194785, July 11, 2012.
Damages; attorneys fees. David was compelled to file an action against
MOELCI but this reason alone will not warrant an award of attorneys fees.
It is settled that the award of attorneys fees is the exception rather than the
rule. Counsels fees are not awarded every time a party prevails in a suit
because of the policy that no premium should be placed on the right to
litigate. Attorneys fees, as part of damages, are not necessarily equated to
the amount paid by a litigant to a lawyer. In the ordinary sense, attorneys
fees represent the reasonable compensation paid to a lawyer by his client for
the legal services he has rendered to the latter; while in its extraordinary
concept, they may be awarded by the court as indemnity for damages to be
paid by the losing party to the prevailing party. Attorneys fees as part of
damages are awarded only in the instances specified in Article 2208 of the
Civil Code which demands factual, legal, and equitable justification. Its
basis cannot be left to speculation or conjecture. In this regard, none was
proven. Moreover, in the absence of stipulation, a winning party may be
awarded attorneys fees only in case plaintiffs action or defendants stand is
so untenable as to amount to gross and evident bad faith. MOELCIs case
cannot be similarly classified. Virgilio S. David vs. Misamis Occidental II

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Electric Cooperative, Inc.;G.R. No. 194785, July 11, 2012.


Damages; moral damages. A breach of contract may give rise to an award of
moral damages only if the party guilty of the breach acted fraudulently or in
bad faith. Likewise, a breach of contract may give rise to exemplary
damages if the guilty party acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner.
The CIAC awarded moral and exemplary damages in favor of petitioners on
the basis of respondents failure to make payments on time and in full. The
CIAC gave merit to the allegations of petitioners that the delayed and
staggered payments drained them financially and emotionally, compelled
them to apply for additional loans, affected their reputation and credit
standing adversely, made them suffer mental anguish, serious anxiety and
sleepless nights, and prevented them from participating in the bidding of
other projects because of their financial problems.
However, as already explained above, with the exception of the down
payment, petitioners agreed to a staggered payment of the progress billings;
hence, they cannot now claim that they were adversely affected by
respondents payments in
installment. Also, with respect to the down payment, there was no showing
that respondents failure to pay the same on time and in full was attended by
fraud or bad faith or was in wanton or oppressive disregard of petitioners
rights.
More importantly, an award of moral damages must be anchored on a clear
showing that the party entitled thereto actually experienced mental
anguish, besmirched reputation, sleepless nights, wounded feelings, or
similar injury. Here, while petitioners alleged that their finances were
adversely affected, they did not present any evidence thereof, such as
documents evidencing the loans they were supposedly compelled to obtain.
In the same manner, respondent also failed to present sufficient evidence of
their entitlement to moral and exemplary damages. The alleged besmirched
reputation it allegedly suffered as a result of the building not having been
finished on time was not supported by any evidence other than respondents

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bare allegation.
Absent any showing that the parties are entitled to moral and exemplary
damages, their respective claims therefor must be disallowed. Engr. Emelyne
P. Cayetano, et al. vs. Colegio De San Juan De Letran-Calamba; G.R. No.
179545, July 11, 2012.
Human relations; unjust enrichment. To allow the petitioner to leave the
company before it has fulfilled the reasonable expectation of service on his
part will amount to unjust enrichment. Pertinently, Article 22 of the New
Civil Code states:
Art. 22. Every person who through an act of performance by another, or any
other means, acquires or comes into possession of something at the expense
of the latter without just or legal ground, shall return the same to him.
There is unjust enrichment when a person unjustly retains a benefit at the
loss of another, or when a person retains the money or property of another
against the fundamental principles of justice, equity and good conscience.
Two conditions must concur: (1) a person is unjustly benefited; and (2) such
benefit is derived at the expense of or with damages to another. The main
objective of the principle of unjust enrichment is to prevent one from
enriching oneself at the expense of another. It is commonly accepted that
this doctrine simply means that a person shall not be allowed to profit or
enrich himself inequitably at anothers expense. The enrichment may consist
of a patrimonial, physical, or moral advantage, so long as it is appreciable in
money. It must have a correlative prejudice, disadvantage or injury to the
plaintiff which may consist, not only of the loss of the property or the
deprivation of its enjoyment, but also of the non-payment of compensation
for a prestation or service rendered to the defendant without intent to donate
on the part of the plaintiff, or the failure to acquire something what the latter
would have obtained.
As can be gathered from the facts, PAL invested a considerable amount of
money in sending the petitioner abroad to undergo training to prepare him
for his new appointment as B747-400 Captain. In the process, the petitioner
acquired new knowledge and skills which effectively enriched his technical
know-how. As all other investors, PAL expects a return on investment in the

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form of service by the petitioner for a period of 3 years, which is the


estimated length of time within which the costs of the latters training can be
fully recovered. The petitioner is, thus, expected to work for PAL and utilize
whatever knowledge he had learned from the training for the benefit of the
company. However, after only one (1) year of service, the petitioner opted to
retire from service, leaving PAL stripped of a necessary manpower. Bibiano
C. Elegir vs. Philippine Airlines, Inc.; G.R. No. 181995, July 16, 2012.
Interest; rate of stipulated interest. The Court now comes to Davids prayer
that MOELCI be made to pay the total sum of 5,472,722.27 plus the
stipulated interest at 24% per annum from the filing of the complaint.
Although the Court agrees that MOELCI should pay interest, the stipulated
rate is, however, unconscionable and should be equitably reduced. While
there is no question that parties to a loan agreement have wide latitude to
stipulate on any interest rate in view of the Central Bank Circular No. 905 s.
1982 which suspended the Usury Law ceiling on interest effective January 1,
1983, it is also worth stressing that interest rates whenever unconscionable
may still be reduced to a reasonable and fair level. There is nothing in the
said circular which grants lenders carte blanche authority to raise interest
rates to levels which will either enslave their borrowers or lead to a
hemorrhaging of their assets. Accordingly, the excessive interest of 24% per
annum stipulated in
the sales invoice should be reduced to 12% per annum. Virgilio S. David vs.
Misamis Occidental II Electric Cooperative, Inc.;G.R. No. 194785, July 11,
2012.
Legal separation; application of Family Code provisions to marriage entered
into prior to the Family Codes enactment; whats a vested right?; definition
of net profits. This case was actually decided based on procedural law. The
decision being questioned had actually become final (in the words of the
Court, immutable), so the rest, which the tribunal set out after discussing
lengthily [its adverb, not mine] the immutability of the Decision is for the
enlightenment of the parties and the public at large.
Essentially, the Court noted that even if you got married before the Family
Code was enacted, how your property is divvied up can still be governed by
the Family Code because of the latters provisions allowing retroactive

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effect provided there is no prejudice to any vested right (see Article 256 of
the Family Code). Here, the husband was divested of his share in the net
profits of the conjugal partnership pursuant to Article 129 in relation to
Article 63(2) of the Family Code. The husband argued that he already had a
vested right in the net profits. The Court said that you can impair a vested
right provided the holder of the right was afforded due process, which took
place in this case, and besides, he is the guilt party and finally, the decision
is IMMUTABLE. Then the Court, in defining net profits, went into a
discussion of the differences between the absolute community regime and
the conjugal partnership of gains. Again, in my view, the discussion is
obiter, but if you want to slog through it, you are welcome. Brigido B. Quia
vs. Rita C. Quiao, et al.; G.R. No. 176556, July 4, 2012.
Mortgage; validity of blanket or dragnet clauses. As a general rule, a
mortgage liability is usually limited to the amount mentioned in the contract.
However, the amounts named as consideration in a contract of mortgage do
not limit the amount for which the mortgage may stand as security if from
the four corners of the instrument the intent to secure future and other
indebtedness can be gathered.
Alternatively, while a real estate mortgage may exceptionally secure future
loans or advancements, these future debts must be specifically described in
the mortgage contract. An obligation is not secured by a mortgage unless it
comes fairly within the terms of the mortgage contract.
The stipulation extending the coverage of a mortgage to advances or loans
other than those already obtained or specified in the contract is valid and has
been commonly referred to as a blanket mortgage or dragnet clause. In
Prudential Bank v. Alviar, this Court elucidated on the nature and purpose of
such a clause as follows:
A blanket mortgage clause, also known as a dragnet clause in American
jurisprudence, is one which is specifically phrased to subsume all debts of
past or future origins. Such clauses are carefully scrutinized and strictly
construed. Mortgages of this character enable the parties to provide
continuous dealings, the nature or extent of which may not be known or
anticipated at the time, and they avoid the expense and inconvenience of
executing a new security on each new transaction. A dragnet clause

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operates as a convenience and accommodation to the borrowers as it makes


available additional funds without their having to execute additional security
documents, thereby saving time, travel, loan closing costs, costs of extra
legal services, recording fees, et cetera. xxx.
A mortgage that provides for a dragnet clause is in the nature of a continuing
guaranty and constitutes an exception to the rule than an action to foreclose a
mortgage must be limited to the amount mentioned in the mortgage contract.
Its validity is anchored on Article 2053 of the Civil Code and is not limited
to a single transaction, but contemplates a future course of dealing, covering
a series of transactions, generally for an indefinite time or until revoked. It is
prospective in its operation and is generally intended to provide security
with respect to future transactions within certain limits, and contemplates a
succession of liabilities, for which, as they accrue, the guarantor becomes
liable. In other words, a continuing guaranty is one that covers all
transactions, including those arising in the future, which are within the
description or contemplation of the contract of guaranty, until the expiration
or termination thereof. Philippine Charity Sweepstakes Office (PCSO) vs.
New Dagupan Metro Gas Corporation, et al.; G.R. No. 173171, July 11,
2012.
Property; property belonging to the State. The subject lands are reclaimed
lands, specifically portions of the foreshore and offshore areas of Manila
Bay. As such, these lands remain public lands and form part of the public
domain. In the case of Chavez v. Public Estates Authority and AMARI
Coastal Development Corporation,
the Court held that foreshore and submerged areas irrefutably belonged to
the public domain and were inalienable unless reclaimed, classified as
alienable lands open to disposition and further declared no longer needed for
public service. The fact that alienable lands of the public domain were
transferred to the PEA (now PRA) and issued land patents or certificates of
title in PEAs name did not automatically make such lands private. This
Court also held therein that reclaimed lands retained their inherent potential
as areas for public use or public service. Republic of the Philippines,
represented by the Philippine Reclamation Authority (PRA) vs. City of
Paraaque; G.R. No. 191109, July 18, 2012.

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Special Laws
Administrative Code of 1997; definition of a GOCC. A GOCC must have
been organized as a stock or non-stock corporation. The Philippine
Reclamation Authority is neither. It is not a GOCC. Instead, PRA is a
government instrumentality vested with corporate powers and performing an
essential public service pursuant to Section 2(10) of the Introductory
Provisions of the Administrative Code. Being an incorporated government
instrumentality, it is exempt from payment of real property tax. Republic of
the Philippines, represented by the Philippine Reclamation Authority (PRA)
vs. City of Paraaque; G.R. No. 191109, July 18, 2012.
Administrative Code; real property owned by Government. The
Administrative Code allows real property owned by the Republic to be titled
in the name of agencies or instrumentalities of the national government.
Such real properties remain owned by the Republic and continue to be
exempt from real estate tax. Indeed, the Republic grants the beneficial use of
its real property to an agency or instrumentality of the national government.
This happens when the title of the real property is transferred to an agency or
instrumentality even as the Republic remains the owner of the real property.
Such arrangement does not result in the loss of the tax exemption, unless
the beneficial use thereof has been granted, for consideration or otherwise,
to a
taxable person. Republic of the Philippines, represented by the Philippine
Reclamation Authority (PRA) vs. City of Paraaque; G.R. No. 191109, July
18, 2012.
Interim rules on corporate rehabilitation; effect of stay order on foreclosure.
A Stay Order cannot suspend the foreclosure of accommodation mortgages,
because the Stay Order may only cover the suspension of the enforcement of
all claims against the debtor, its guarantors, and sureties not solidarily liable
with the debtor the enforcement of the mortgage lien cannot be considered
as a claim against a guarantor or a surety not solidarily liable with the debtor
corporations. While spouses Chua executed Continuing Guaranty and
Comprehensive Surety undertakings in favor of Allied Bank, the bank did
not proceed against them as individual guarantors or sureties. Rather, by
initiating extrajudicial foreclosure proceedings, the bank was directly

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proceeding against the property mortgaged to them by the spouses as


security. The Civil Code provides that the property upon which a mortgage
is imposed directly and immediately subjected to the fulfillment of the
obligation for whose security the mortgage was constituted. As such, a real
estate mortgage is a lien on the property itself, inseparable from the property
upon which it was constituted. In this case, we find that the undertaking of
spouses Chua with respect to the loans of petitioner corporations is the sale
at public auction of certain real properties belonging to them to satisfy the
indebtedness of petitioner corporations in case of a default by the latter. This
undertaking is properly that of a third-party mortgagor or an accommodation
mortgagor, whereby one mortgages ones property to stand as security for
the indebtedness of another. Situs Development Corporation, et al. vs.
Asiatrust Bank, et al.; G.R. No. 180036, July 25, 2012.
P.D. No. 1529; cancellation or discharge of mortgage. Section 62 of
Presidential Decree (P.D.) No. 1529 appears to require the execution of an
instrument in order for a mortgage to be cancelled or discharged. However,
this rule presupposes that there has been a prior registration of the mortgage
lien prior to its discharge. In this case, the subject mortgage had already been
cancelled or terminated upon Galangs full payment before PCSO availed of
registration in 1992. As the subject mortgage was not annotated on TCT No.
52135 at the time it was terminated, there was no need for Peralta to secure a
deed of cancellation in order for such discharge to be fully effective and duly
reflected on the face of her title. Philippine Charity Sweepstakes Office
(PCSO) vs. New Dagupan Metro Gas Corporation, et al.; G.R. No. 173171,
July 11, 2012.
P.D. No. 1529; confirmation of imperfect title. The Supreme Court held that
the respondent could not have acquired title over the property through
prescription because the lands were of public dominion.
That properties of the public dominion are not susceptible to prescription
and that only properties of the State that are no longer earmarked for public
use, otherwise known as patrimonial, may be acquired by prescription are
fundamental, even elementary, principles in this jurisdiction. In Heirs of
Mario Malabanan v. Republic, the Supreme Court, in observance of the
foregoing, clarified the import of Section 14(2) and made the following
declarations: (a) the prescriptive period for purposes of acquiring an
imperfect title over a property of the State shall commence to run from the

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date an official declaration is issued that such property is no longer intended


for public service or the development of national wealth; and (b) prescription
will not run as against the State even if the property has been previously
classified as alienable and disposable as it is that official declaration that
converts the property to patrimonial. Republic of the Philippines vs. Metro
Index Realty and Development Corporation; G.R. No. 198585, July 2, 2012.
P.D. No. 1529; purchase of land; innocent purchaser. Soquillo was not a
purchaser in good faith. He and the heirs of Coloso, Jr. who were his
predecessors-in-interest, knew about the sale made to Tortola and the
possession of the disputed property by Villaflores. Besides, Tortola
registered the sale, albeit with much delay, in 2002. As of the time Tortolas
complaint was titled, no registration was effected by Soquillo. Santiago V.
Soquillo vs. Jorge P. Tortola; G.R. No. 192450, July 23, 2012.
P.D. No. 1529; registration of imperfect title; elements. Section 14(1) of
Presidential Decree No. 1529 refers to the original registration of
imperfect titles to public land acquired under Section 11(4) in relation to
Section 48(b) of Commonwealth Act No. 141, or the Public Land Act, as
amended. Section 14(1) of Presidential Decree No. 1529 and Section 48(b)
of Commonwealth Act No. 141 specify identical requirements for the
judicial confirmation of imperfect titles, to wit:
1. That the subject land forms part of the alienable and disposable lands of
the public domain;
2. That the applicants, by themselves or through their predecessors-ininterest, have been in open, continuous, exclusive and notorious possession
and occupation of the subject land under a bona fide claim of ownership,
and;
3. That such possession and occupation must be since June 12, 1945 or
earlier. Republic of the Philippines vs. Michael C. Santos, et al., etc.; G.R.
No. 180027, July 18, 2012.
P.D. No. 1529; registration of title to land acquired by prescription. Section
14(2) of Presidential Decree No. 1529 sanctions the original registration of
lands acquired by prescription under the provisions of existing law. In the

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seminal case of Heirs of Mario Malabanan v. Republic, this Court clarified


that the existing law mentioned in the subject provision refers to no other
than Republic Act No. 386, or the Civil Code of the Philippines. Malabanan
acknowledged that only lands of the public domain that are patrimonial in
character are susceptible to acquisitive presecription and, hence, eligible
for registration under Section 14(2) of Presidential Decree No. 1529.
Applying the pertinent provisions of the Civil Code,52 Malabanan further
elucidated that in order for public land to be considered as patrimonial
there must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial.
Until then, the period of acquisitive prescription against the State will not
commence to run. The requirement of an express declaration
contemplated by Malabanan is separate and distinct from the mere
classification of public land as alienable and disposable. On this point,
Malabanan was reiterated by the recent case of Republic v. Rizalvo, Jr.
In this case, the respondents were not able to present any express
declaration from the State, attesting to the patrimonial character of Lot 3.
To put it bluntly, the respondents were not able to prove that acquisitive
prescription has begun to run against the State, much less that they have
acquired title to Lot 3 by virtue thereof. As jurisprudence tells us, a mere
certification or report classifying the subject land as alienable and disposable
is not sufficient. Republic of the Philippines vs. Michael C. Santos, et al.,
etc.; G.R. No. 180027, July 18, 2012.
P.D. No. 1529; value of registration; innocent purchaser. Construing the
foregoing conjunctively, as to third persons, a property registered under the
Torrens system is, for all legal purposes, unencumbered or remains to be the
property of the person in whose name it is registered, notwithstanding the
execution of any conveyance, mortgage, lease, lien, order or judgment
unless the corresponding deed is registered. The law does not require a
person dealing with the owner of registered land to go beyond the certificate
of title as he may rely on the notices of the encumbrances on the property
annotated on the certificate of title or absence of any annotation.
Registration affords legal protection such that the claim of an innocent
purchaser for value is recognized as valid despite a defect in the title of the
vendor.

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A purchaser in good faith and for value is one who buys property of another,
without notice that some other person has a right to, or interest in, such
property, and pays a full and fair price for the same, at the time of such
purchase, or before he has notice of the claim or interest of some other
person in the property.39 Good faith is the opposite of fraud and of bad
faith, and its non-existence must be established by competent proof. Sans
such proof, a buyer is deemed to be in good faith and his interest in the
subject property will not be disturbed. A purchaser of a registered property
can rely on the guarantee afforded by pertinent laws on registration that he
can take and hold it free from any and all prior liens and claims except those
set forth in or preserved against the certificate of title.
This Court cannot give credence to PCSOs claim to the contrary. PCSO did
not present evidence, showing that New Dagupan had knowledge of the
mortgage despite its being unregistered at the time the subject sale was
entered into. Peralta, in the compromise agreement, even admitted that she
did not inform New Dagupan of the subject mortgage. PCSOs only basis for
claiming that New Dagupan was a buyer in bad faith was the latters reliance
on a mere photocopy of TCT No. 52135. However, apart from the fact that
the facsimile bore no annotation of a lien or encumbrance, PCSO failed to
refute the testimony of Cua that his verification of TCT No. 52135 with the
Register of Deeds of Dagupan City confirmed Peraltas claim of a clean title.
Since PCSO had notice of New Dagupans adverse claim prior to the
registration of its mortgage lien, it is bound thereby and thus legally
compelled to respect the proceedings on the validity of such adverse claim.
It is therefore of no moment if PCSOs foreclosure of the subject mortgage
and purchase of the subject property at the auction sale took place prior to
New Dagupans acquisition of title as decreed in the Decision dated January
21, 1994 of RTC Branch 43. The effects of a foreclosure sale retroact to the
date the mortgage was registered.43 Hence, while PCSO may be deemed to
have acquired title over the subject property on May 20, 1992, such title is
rendered inferior by New Dagupans adverse claim, the validity of which
was confirmed per the Decision dated January 21, 1994 of RTC Branch 43.
Philippine Charity Sweepstakes Office (PCSO) vs. New Dagupan Metro Gas
Corporation, et al.; G.R. No. 173171, July 11, 2012.
SPV Act; extinguishment of credit . Petitioners cannot take refuge in the
provisions of the SPV Act of 2004 in conjunction with Art. 1634 of the Civil

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Lexoterica: Compilation of SC Rulings

Code. For the debtor to be entitled to extinguish his credit by reimbursing


the assignee under Art. 1634, the following requisites must concur:
(a) there must be a credit or other incorporeal right;
(b) the credit or other incorporeal right must be in litigation;
(c) the credit or other incorporeal right must be sold to an assignee pending
litigation;
(d) the assignee must have demanded payment from the debtor;
(e) the debtor must reimburse the assignee for the price paid by the latter, the
judicial costs incurred by the latter and the interest on the price from the day
on which the same was paid; and
(f) the reimbursement must be done within 30 days from the date of the
assignees demand.
In this case, the credit owed by petitioner corporations to Metrobank had
already been extinguished when the bank foreclosed upon the parcel of land
mortgaged to it by the spouses Chua as security for petitioners debts, in full
satisfaction of the loan the bank had extended. Therefore, during the
pendency of these proceedings, what was transferred by Metrobank to
Cameron was ownership over the foreclosed property, subject only to the
right of redemption by the proper party within one year reckoned from the
date of registration of the Certificate of Sale.
Moreover, the provisions of the Civil Code on subrogation and assignment
of credits are only applicable to NPLs, defined in the SPV Act of 2002 as
follows:
Non-Performing Loans or NPLs refers to loans and receivables such
as mortgage loans, unsecured loans, consumption loans, trade
receivables, lease receivables, credit card receivables and all registered
and unregistered security and collateral instruments, including but not
limited to, real estate mortgages, chattel mortgages, pledges, and
antichresis, whose principal and/or interest have remained unpaid for at least

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one hundred eighty (180) days after they have become past due or any of
the events of default under the loan agreement has occurred.
What is involved in this case is more properly a real property acquired by a
financial institution in settlement of a loan (ROPOA). Under the law,
ROPOAs are defined in this manner:
ROPOAs refers to real and other properties owned or acquired by
an [financial institution] in settlement of loans and receivables, including
real properties, shares of stocks, and chattels formerly constituting
collaterals for secured loans which have been acquired by way of dation in
payment (dacion en pago) or judicial or extra-judicial foreclosure or
execution of judgment.
May the subject property be considered as one acquired by Metrobank
pursuant to an extrajudicial foreclosure sale?
The Implementing Rules and Regulations of the SPV Act of 2002 provide
that, in case of extrajudicial foreclosure, a property is deemed acquired by a
financial institution on the date of notarization of the Sheriffs Certificate. In
this case, a Certificate of Sale has not been executed in favor of Metrobank
in deference to the Stay Order issued by the rehabilitation court. However,
we reiterate that the rehabilitation court has no jurisdiction to suspend
foreclosure proceedings over a third-party mortgage. Much less can it
restrain the issuance of a Certificate of Sale after the subject properties have
been sold at public auction more than a year before the Petition for
Rehabilitation was filed. The property foreclosed by Metrobank was clearly
beyond the ambit of the Stay Order. Consequently, there was no valid
ground for the Sheriff to withhold the issuance and execution of the
Certificate of Sale.
The parcel of land mortgaged to Metrobank and subsequently transferred to
Cameron should be treated as a ROPOA as provided for by law. Hence, the
application of Art. 1634 finds no basis in law. Situs Development
Corporation, et al. vs. Asiatrust Bank, et al.; G.R. No. 180036, July 25,
2012.

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Lexoterica: Compilation of SC Rulings

June 2012 Philippine Supreme Court


Decisions on Civil Law
Posted on July 13, 2012 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law Tagged agency, antichresis, contract, damages,
guarantee, interest rate, lease, moral damages, mortgage, novation, prescription, quasidelict, Torrens title, unjust enrichment

Here are select June 2012 rulings of the Supreme Court of the Philippines on
civil law:
Civil Code
Agency; ratification. The complaint was anchored on the supposed failure of
FEBTC to duly investigate the authority of Antonio in contracting the
exceptionally and relatively immense loans amounting to P5,000,000.00.
Marcos alleged therein that his property had thereby become unlawfully
burdened by unauthorized real estate mortgage contracts, because the loans
and the mortgage contracts had been incurred by Antonio and his wife only
for themselves, to the exclusion of petitioner. Yet, Marcos could not deny
that under the express terms of the SPA, he had precisely granted to Antonio
as his agent the authority to borrow money, and to transfer and convey the
property by way of mortgage to FEBTC; to sign, execute and deliver
promissory notes; and to receive the proceeds of the loans on the formers
behalf. In other words, the mortgage contracts were valid and enforceable
against petitioner, who was consequently fully bound by their terms.
Moreover, even if it was assumed that Antonios obtaining the loans in his
own name, and executing the mortgage contracts also in his own name had
exceeded his express authority under the SPA, Marcos was still liable to
FEBTC by virtue of his express ratification of Antonios act. Under Article
1898 of the Civil Code, the acts of an agent done beyond the scope of his
authority do not bind the principal unless the latter expressly or impliedly
ratifies the same.
In agency, ratification is the adoption or confirmation by one person of an
act performed on his behalf by another without authority. The substance of
ratification is the confirmation after the act, amounting to a substitute for a

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Lexoterica: Compilation of SC Rulings

prior authority. Here, there was such a ratification by Marcos, as borne out
by his execution of the letter of acknowledgement on September 12, 1996.

But Marcos insists that the letter of acknowledgment was only a mere letter
(written) on a mimeographic paper a mere scrap of paper, a document by
adhesion. The Court is confounded by Marcos dismissal of his own express
written ratification of Antonios act. Being himself a lawyer, Marcos was
aware of the import and consequences of the letter of acknowledgment. The
Court cannot agree with his insistence that the letter was worthless due to its
being a contract of adhesion. The letter was not a contract, to begin with,
because it was only a unilateral act of his. Secondly, his insistence was
fallacious and insincere because he knew as a lawyer that even assuming
that the letter could be treated as a contract of adhesion it was nonetheless
effective and binding like any other contract. The Court has consistently
held that a contract of adhesion was not prohibited for that reason. In
Pilipino Telephone Corporation v. Tecson,for instance, the Court said that
contracts of adhesion were valid but might be occasionally struck down only
if there was a showing that the dominant bargaining party left the weaker
party without any choice as to be completely deprived of an opportunity to
bargain effectively. That exception did not apply here, for, verily, Marcos,
being a lawyer, could not have been the weaker party. As the tenor of the of
acknowledgment indicated, he was fully aware of the meaning and sense of
every written word or phrase, as well as of the legal effect of his
confirmation thereby of his agents act. It is axiomatic that a mans act,
conduct and declaration, wherever made, if voluntary, are admissible against
him, for the reason that it is fair to presume that they correspond with the
truth, and it is his fault if they do not. Marcos V. Prieto vs. Court of Appeals,
et al.; G.R. No. 158597, June 18, 2012.
Agency; ratification; agency by estoppel. Under Articles 1898 and 1910, an
agents act, even if done beyond the scope of his authority, may bind the
principal if he ratifies them, whether expressly or tacitly. It must be stressed
though that only the principal, and not the agent, can ratify the unauthorized
acts, which the principal must have knowledge of.
Neither Unimarine nor Cebu Shipyard was able to repudiate CBICs

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testimony that it was unaware of the existence of Surety Bond No. G (16)
29419 and Endorsement No. 33152. There were no allegations either that
CBIC should have been put on alert with regard to Quinains business
transactions done on its behalf. It is clear, and undisputed therefore, that
there can be no ratification in this case, whether express or implied.
Article 1911, on the other hand, is based on the principle of estoppel, which
is necessary for the protection of third persons. It states that the principal is
solidarily liable with the agent even when the latter has exceeded his
authority, if the principal allowed him to act as though he had full powers.
However, for an agency by estoppel to exist, the following must be
established:
2. The principal manifested a representation of the agents authority or
knowingly allowed the agent to assume such authority;
3. The third person, in good faith, relied upon such representation; and
4. Relying upon such representation, such third person has changed his
position to his detriment.
In Litonjua, Jr. v. Eternit Corp., this Court said that [a]n agency by
estoppel, which is similar to the doctrine of apparent authority, requires
proof of reliance upon the representations, and that, in turn, needs proof that
the representations predated the action taken in reliance.
This Court cannot agree with the Court of Appeals pronouncement of
negligence on CBICs part. CBIC not only clearly stated the limits of its
agents powers in their contracts, it even stamped its surety bonds with the
restrictions, in order to alert the concerned parties. Moreover, its company
procedures, such as reporting requirements, show that it has designed a
system to monitor the insurance contracts issued by its agents. CBIC cannot
be faulted for Quinains deliberate failure to notify it of his transactions with
Unimarine. In fact, CBIC did not even receive the premiums paid by
Unimarine to Quinain.
Furthermore, nowhere in the decisions of the lower courts was it stated that
CBIC let the public, or specifically Unimarine, believe that Quinain had the
authority to issue a surety bond in favor of companies other than the
Department of Public Works and Highways, the National Power
Corporation, and other government agencies. Neither was it shown that

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CBIC knew of the existence of the surety bond before the endorsement
extending the life of the bond, was issued to Unimarine. For one to
successfully claim the benefit of estoppel on the ground that he has been
misled by the representations of another, he must show that he was not
misled through his own want of reasonable care and circumspection.
Country Bankers Insurance Corporation vs. Keppel Cebu Shipyard, Inc., et
al.; G.R. No. 166044, June 18, 2012.
Antichresis. For the contract of antichresis to be valid, Article 2134 of the
Civil Code requires that the amount of the principal and of the interest shall
be specified in writing; otherwise the contract of antichresis shall be void.
In this case, the Heirs of Adolfo were indisputably unable to produce any
document in support of their claim that the contract between Adolfo and
Bangis was an antichresis, hence, the CA properly held that no such
relationship existed between the parties. Aniceto Bangis, substituted by his
heirs, namely Rodolfo B. Bangis, et al. vs. Heirs of Serafin and Salud
Adolfo, namely: Luz A. Banniester, et al.; G.R. No. 190875, June 13, 2012.
Contract of Adhesion. See entry under Agency; ratification (case of Prieto v.
Court of Appeals).
Contracts; novation. A novation arises when there is a substitution of an
obligation by a subsequent one that extinguishes the first, either by changing
the object or the principal conditions, or by substituting the person of the
debtor, or by subrogating a third person in the rights of the creditor. For a
valid novation to take place, there must be, therefore: (a) a previous valid
obligation; (b) an agreement of the parties to make a new contract; (c) an
extinguishment of the old contract; and (d) a valid new contract. In short, the
new obligation extinguishes the prior agreement only when the substitution
is unequivocally declared, or the old and the new obligations are
incompatible on every point. A compromise of a final judgment operates as
a novation of the judgment obligation upon compliance with either of these
two conditions.
To be clear, novation is not presumed. This means that the parties to a
contract should expressly agree to abrogate the old contract in favor of a new
one. In the absence of the express agreement, the old and the new
obligations must be incompatible on every point. There is incompatibility

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when the two obligations cannot stand together, each one having its
independent existence. If the two obligations cannot stand together, the latter
obligation novates the first. Changes that breed incompatibility must be
essential in nature and not merely accidental. The incompatibility must
affect any of the essential elements of the obligation, such as its object,
cause or principal conditions thereof; otherwise, the change is merely
modificatory in nature and insufficient to extinguish the original obligation.
The receipt dated February 5, 1992 was only the proof of Servandos
payment of his obligation as confirmed by the decision of the RTC. It did
not establish the novation of his agreement with the respondents. Indeed, the
Court has ruled that an obligation to pay a sum of money is not novated by
an instrument that expressly recognizes the old, or changes only the terms of
payment, or adds other obligations not incompatible with the old ones, or the
new contract merely supplements the old one. A new contract that is a mere
reiteration, acknowledgment or ratification of the old contract with slight
modifications or alterations as to the cause or object or principal conditions
can stand together with the former one, and there can be no incompatibility
between them. Moreover, a creditors acceptance of payment after demand
does not operate as a modification of the original contract.
Lastly, the extension of the maturity date did not constitute a novation of the
previous agreement. It is settled that an extension of the term or period of the
maturity date does not result in novation. Heirs of Servando Franco vs. Sps.
Veronica & Danilo Gonzales; G.R. No. 159709, June 27, 2012.
Damages; actual damages and moral damages. For its role in the conversion
of the checks, which deprived SSPI of the use thereof, Equitable is solidarily
liable with Uy to compensate SSPI for the damages it suffered.
Among the compensable damages are actual damages, which encompass the
value of the loss sustained by the plaintiff, and the profits that the plaintiff
failed to obtain. Interest payments, which SSPI claims, fall under the second
category of actual damages.
SSPI computed its claim for interest payments based on the interest rate
stipulated in its contract with Interco. It explained that the stipulated interest
rate is the actual interest income it had failed to obtain from Interco due to

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Lexoterica: Compilation of SC Rulings

the defendants tortious conduct.


The Court finds the application of the stipulated interest rate erroneous. SSPI
did not recover interest payments at the stipulated rate from Interco because
it agreed that the delay was not Intercos fault, but that of the defendants. If
that is the case, then Interco is not in delay (at least not after issuance of the
checks) and the stipulated interest payments in their contract did not become
operational. If Interco is not liable to pay for the 36% per annum interest
rate, then SSPI did not lose that income. SSPI cannot lose something that it
was not entitled to in the first place. Thus, SSPIs claim that it was entitled
to interest income at the rate stipulated in its contract with Interco, as a
measure of its actual damage, is fallacious.
More importantly, the provisions of a contract generally take effect only
among the parties, their assigns and heirs. SSPI cannot invoke the
contractual stipulation on interest payments against Equitable because it is
neither a party to the contract, nor an assignee or an heir to the contracting
parties.
Nevertheless, it is clear that defendants actions deprived SSPI of the present
use of its money for a period of two years. SSPI is therefore entitled to
obtain from the tortfeasors the profits that it failed to obtain from July 1991
to June 1993. SSPI should recover interest at the legal rate of 6% per annum,
this being an award for damages based on quasi-delict and not for a loan or
forbearance of money.
Both the trial and appellate courts awarded Pardo P3 million in moral
damages. Pardo claimed that he was frightened, anguished, and seriously
anxious that the government would prosecute him for money laundering and
tax evasion because of defendants actions. In other words, he was worried
about the repercussions that defendants actions would have on him.
Equitable argues that Pardos fears are all imagined and should not be
compensated. The bank points out that none of Pardos fears panned out.
Moral damages are recoverable only when they are the proximate result of
the defendants wrongful act or omission. Both the trial and appellate courts
found that Pardo indeed suffered as a result of the diversion of the three

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checks. It does not matter that the things he was worried and anxious about
did not eventually materialize. It is rare for a person, who is beset with
mounting problems, to sift through his emotions and distinguish which fears
or anxieties he should or should not bother with. So long as the injured
partys moral sufferings are the result of the defendants actions, he may
recover moral damages.
The Court, however, finds the award of P3 million excessive. Moral
damages are given not to punish the defendant but only to give the plaintiff
the means to assuage his sufferings with diversions and recreation. We find
that the award of P50,000.00 as moral damages is reasonable under the
circumstances. Equitable Banking Corporation vs. Special Steel Products,
Inc. and Augusto L. Pardo; G.R. No. 175350, June 13, 2012.
Damages; moral damages. The Court increased the award of damages to
500,000 as moral damages and 100,000 as exemplary damages in
connection with a finding that the crime of Trafficking in Persons as a
Prostitute was committed. It quoted a previous ruling, People v. Lalli, where
the Court stated that: the award finds basis in Article 2219 of the Civil
Code, which states:
Art. 2219. Moral damages may be recovered in the following and analogous
cases: x x x
(3)

Seduction, abduction, rape, or other lascivious acts;

The criminal case of Trafficking in Persons as a Prostitute is an analogous


case to the crimes of seduction, abduction, rape, or other lascivious acts. In
fact, it is worse. To be trafficked as a prostitute without ones consent and to
be sexually violated four to five times a day by different strangers is
horrendous and atrocious. There is no doubt that Lolita experienced physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, and social humiliation when she was
trafficked as a prostitute in Malaysia. Since the crime of Trafficking in
Persons was aggravated, being committed by a syndicate, the award of
exemplary damages is likewise justified.
The Court went to say that: [w]e find no legal impediment to increasing the

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award of moral and exemplary damages in the case at bar. Neither is there
any logical reason why we should differentiate between the victims herein
and those in that case, when the circumstances are frighteningly similar. To
do so would be to say that we discriminate one from the other, when all of
these women have been the victims of unscrupulous people who capitalized
on the poverty of others. While it is true that accused-appellant was not tried
and convicted of the crime of trafficking in persons, this Court based its
award of damages on the Civil Code, and not on the Anti-Trafficking in
Persons Act, as clearly explained in Lalli. The People of the Philippines vs.
Nurfrashir Hashim y Saraban, et al. Bernadette Panscala, etc.;G.R. No.
194255, June 13, 2012.
Damages; quasi-delict; vicarious liability. As a general rule, one is only
responsible for his own act or omission. Thus, a person will generally be
held liable only for the torts committed by himself and not by another. This
general rule is laid down in Article 2176 of the Civil Code.
Based on the above-cited article, the obligation to indemnify another for
damage caused by ones act or omission is imposed upon the tortfeasor
himself, i.e., the person who committed the negligent act or omission. The
law, however, provides for exceptions when it makes certain persons liable
for the act or omission of another.
One exception is an employer who is made vicariously liable for the tort
committed by his employee. Article 2180 of the Civil Code states:
Article 2180. The obligation imposed by Article 2176 is demandable not
only for ones own acts or omissions, but also for those of persons for whom
one is responsible.
xxxx
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry.
xxxx

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The responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good father
of a family to prevent damage.
Under Article 2176, in relation with Article 2180, of the Civil Code, an
action predicated on an employees act or omission may be instituted against
the employer who is held liable for the negligent act or omission committed
by his employee.
Although the employer is not the actual tortfeasor, the law makes him
vicariously liable on the basis of the civil law principle of pater familias for
failure to exercise due care and vigilance over the acts of ones subordinates
to prevent damage to another. In the last paragraph of Article 2180 of the
Civil Code, the employer may invoke the defense that he observed all the
diligence of a good father of a family to prevent damage.
As its core defense, Filcar contends that Article 2176, in relation with
Article 2180, of the Civil Code is inapplicable because it presupposes the
existence of an employer-employee relationship. According to Filcar, it
cannot be held liable under the subject provisions because the driver of its
vehicle at the time of the accident, Floresca, is not its employee but that of
its Corporate Secretary, Atty. Flor.
We cannot agree. It is well settled that in case of motor vehicle mishaps, the
registered owner of the motor vehicle is considered as the employer of
the tortfeasor-driver, and is made primarily liable for the tort committed by
the latter under Article 2176, in relation with Article 2180, of the Civil
Code. The rationale for the rule that a registered owner is vicariously liable
for damages caused by the operation of his motor vehicle is explained by the
principle behind motor vehicle registration, which has been discussed by this
Court in Erezo, and cited by the CA in its decision:
The main aim of motor vehicle registration is to identify the owner so
that if any accident happens, or that any damage or injury is caused by
the vehicle on the public highways, responsibility therefor can be fixed
on a definite individual, the registered owner. Instances are numerous
where vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner or

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drivers, or with very scant means of identification. It is to forestall these


circumstances, so inconvenient or prejudicial to the public, that the motor
vehicle registration is primarily ordained, in the interest of the determination
of persons responsible for damages or injuries caused on public highways.
[emphasis ours]
Thus, whether there is an employer-employee relationship between the
registered owner and the driver is irrelevant in determining the liability of
the registered owner who the law holds primarily and directly responsible
for any accident, injury or death caused by the operation of the vehicle in the
streets and highways. Filcar Transport Services vs. Jose A. Espinas; G.R.
No. 171456, June 20, 2012.
Damages; unjust enrichment. There is unjust enrichment when (1) a person
is unjustly benefited, and (2) such benefit is derived at the expense of or with
damages to another. In the instant case, the fraudulent scheme concocted by
Uy allowed him to improperly receive the proceeds of the three crossed
checks and enjoy the profits from these proceeds during the entire time that
it was withheld from SSPI. Equitable, through its gross negligence and
mislaid trust on Uy, became an unwitting instrument in Uys scheme.
Equitables fault renders it solidarily liable with Uy, insofar as respondents
are concerned. Nevertheless, as between Equitable and Uy, Equitable should
be allowed to recover from Uy whatever amounts Equitable may be made to
pay under the judgment. It is clear that Equitable did not profit in Uys
scheme. Disallowing Equitables cross-claim against Uy is tantamount to
allowing Uy to unjustly enrich himself at the expense of Equitable. For this
reason, the Court allows Equitables cross-claim against Uy. Equitable
Banking Corporation vs. Special Steel Products, Inc. and Augusto L. Pardo;
G.R. No. 175350, June 13, 2012.
Equitable mortgage. Lomises questions the nature of the agreement between
him and Johnny, insisting that it was a contract of loan, not an assignment of
leasehold rights and sale of improvements. In other words, what existed was
an equitable mortgage, as contemplated in Article 1602, in relation with
Article 1604, of the Civil Code. An equitable mortgage has been defined
as one which although lacking in some formality, or form or words, or other
requisites demanded by a statute, nevertheless reveals the intention of the
parties to charge real property as security for a debt, there being no
impossibility nor anything contrary to law in this intent. Article 1602 of

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the Civil Code lists down the circumstances that may indicate that a contract
is an equitable mortgage:
Art. 1602. The contract shall be presumed to be an equitable mortgage,
in any of the following cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another
instrument extending the period of redemption or granting a new period is
executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real
intention of the parties is that the transaction shall secure the payment
of a debt or the performance of any other obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be
received by the vendee as rent or otherwise shall be considered as interest
which shall be subject to the usury laws. [Emphasis ours.]
Based on Lomises allegations in his pleadings, we consider three
circumstances to determine whether his claim is well-supported. First,
Johnny was a mere college student dependent on his parents for support
when the agreement was executed, and it was Johnnys mother, Domes, who
was the party actually interested in acquiring the market stalls. Second,
Lomises received only P48,000.00 of the P68,000.00 that Johnny claimed he
gave as down payment; Lomises said that the P20,000.00 represented
interests on the loan. Third, Lomises retained possession of the market stalls
even after the execution of the agreement.
Whether separately or taken together, these circumstances do not support
a conclusion that the parties only intended to enter into a contract of

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loan.
That Johnny was a mere student when the agreement was executed does not
indicate that he had no financial capacity to pay the purchase price of
P260,000.00.
As to the second point, Lomises contends that of the P68,000.00 given by
Johnny, he only received P48,000.00, with the remaining P20,000.00
retained by Johnny as interest on the loan. However, the testimonies of the
witnesses presented during trial, including Lomises himself, negate this
claim. On the third point, that Lomises retained possession of the market
stalls even after the execution of his agreement with Johnny is also not an
indication that the true transaction between them was one of loan. Johnny
had yet to complete his payment and, until Lomises decided to forego with
their agreement, had four more months to pay; until then, Lomises retained
ownership and possession of the market stalls.
Hence, the CA was correct in characterizing the agreement between Johnny
and Lomises as a sale of improvements and assignment of leasehold rights.
Lomises Aludos, deceased, substituted by Flora Aludos vs. Johnny M.
Suerte; G.R. No. 165285, June 18, 2012.
Guarantee. By its tenor, Greys undertaking was a guarantee. It says,
payment unconditionally guaranteed within sixty (60) days from Planters
Products, Inc. Invoice date up to Pesos: Two Hundred Thousand
(P200,000.00) only. As it happens, bank guarantees are highly regulated
transactions under the law. They are undertakings that are not so casually
issued by banks or by their branch managers at the dorsal side of a clients
promissory note as if an afterthought. A bank guarantee is a contract that
binds the bank and so may be entered into only under authority granted by
its board of directors. Such authority does not appear on any document.
Indeed, PPI had no right to expect branch manager Grey to issue one without
such authorization. United Coconut Planters Bank vs. Planters Products,
Inc., Janet Layson and Gregory Grey; G.R. No. 179015, June 13, 2012.
Interest rate. We affirm the interest rate decreed by the CA. Stipulated
interest rates are illegal if they are unconscionable and courts are allowed to
temper interest rates when necessary. In exercising this vested power to

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determine what is iniquitous and unconscionable, the Court must consider


the circumstances of each case. What may be iniquitous and unconscionable
in one case, may be just in another.
We cannot uphold the petitioners invocation of our ruling in DBP v. Court
of Appeals wherein the interest rate imposed was reduced to 10% per annum.
The overriding circumstance prompting such pronouncement was the regular
payments made by the borrower. Evidently, such fact is wanting in the case
at bar, hence, the petitioner cannot demand for a similar interest rate.
The circumstances attendant herein are similar to those in Trade &
Investment Development Corporation of the Philippines v. Roblett Industrial
Construction Corporation wherein we levied the legal interest rate of 12%
per annum.
However, pursuant to Bank of the Philippine Islands, Inc. v. Yu, we deem it
proper to further reduce the penalty charge decreed by the CA from 2% per
month to 1% per month or 12% per annum in view of the following factors:
(1) respondent has already received P7,504,522.27 in penalty charges, and
(2) the loan extended to respondent was a short-term credit facility. RGM
Industries, Inc. vs. United Pacific Capital Corporation; G.R. No. 194781,
June 27, 2012.
Lease; implied lease. It bears emphasis that the respondent did not give the
petitioner a notice to vacate upon the expiration of the lease contract in
December 1997 (the notice to vacate was sent only on August 5, 1998), and
the latter continued enjoying the subject premises for more than 15 days,
without objection from the respondent. By the inaction of the respondent as
lessor, there can be no inference that it intended to discontinue the lease
contract. An implied new lease was therefore created pursuant to Article
1670 of the Civil Code.
An implied new lease or tacita reconduccion will set in when the following
requisites are found to exist: a) the term of the original contract of lease has
expired; b) the lessor has not given the lessee a notice to vacate; and c) the
lessee continued enjoying the thing leased for fifteen days with the
acquiescence of the lessor.

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Since the rent was paid on a monthly basis, the period of lease is considered
to be from month to month, in accordance with Article 1687 of the Civil
Code. [A] lease from month to month is considered to be one with a
definite period which expires at the end of each month upon a demand to
vacate by the lessor. When the respondent sent a notice to vacate to the
petitioner on August 5, 1998, the tacita reconduccion was aborted, and the
contract is deemed to have expired at the end of that month. [A] notice to
vacate constitutes an express act on the part of the lessor that it no longer
consents to the continued occupation by the lessee of its property. After
such notice, the lessees right to continue in possession ceases and her
possession becomes one of detainer. Viegely Samelo, represented by
Attorney-in-Fact Cristina Samelo vs. Manotok Services, Inc., etc.; G.R. No.
170509, June 27, 2012.
Lease; interest on unpaid rentals. The petitioner is liable to pay interest by
way of damages for her failure to pay the rentals due for the use of the
subject premises. We reiterate that the respondents extrajudicial demand on
the petitioner was made on August 5, 1998. Thus, from this date, the rentals
due from the petitioner shall earn interest at 6% per annum, until the
judgment in this case becomes final and executory. After the finality of
judgment, and until full payment of the rentals and interests due, the legal
rate of interest to be imposed shall be 12%. Viegely Samelo, represented by
Attorney-in-Fact Cristina Samelo vs. Manotok Services, Inc., etc.; G.R. No.
170509, June 27, 2012.
Mortgage; deficiency claim; allowable after extrajudicial foreclosure of
mortgage. We rule that PNB had the legal right to recover the deficiency
amount. In Philippine National Bank v. Court of Appeals, we held that: it is
settled that if the proceeds of the sale are insufficient to cover the debt in an
extrajudicial foreclosure of the mortgage, the mortgagee is entitled to claim
the deficiency from the debtor. For when the legislature intends to deny the
right of a creditor to sue for any deficiency resulting from foreclosure of
security given to guarantee an obligation it expressly provides as in the case
of pledges [Civil Code, Art. 2115] and in chattel mortgages of a thing sold
on installment basis [Civil Code, Art. 1484(3)]. Act No. 3135, which
governs the extrajudicial foreclosure of mortgages, while silent as to the
mortgagees right to recover, does not, on the other hand, prohibit recovery
of deficiency. Accordingly, it has been held that a deficiency claim arising
from the extrajudicial foreclosure is allowed.

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Indeed, as we indicated in Prudential Bank v. Martinez, the fact that the


mortgaged property was sold at an amount less than its actual market value
should not militate against the right to such recovery. Francisco Rabat, et al.
vs. Philippine National Bank; G.R. No. 158755, June 18, 2012.
Mortgage; pactum commissorium. The following are the elements of pactum
commissorium:
(1) There should be a property mortgaged by way of security for the
payment of the principal obligation; and
(2) There should be a stipulation for automatic appropriation by the creditor
of the thing mortgaged in case of non-payment of the principal obligation
within the stipulated period.
Villars purchase of the subject property did not violate the prohibition on
pactum commissorium. The power of attorney provision above did not
provide that the ownership over the subject property would automatically
pass to Villar upon Galass failure to pay the loan on time. What it granted
was the mere appointment of Villar as attorney-in-fact, with authority to sell
or otherwise dispose of the subject property, and to apply the proceeds to the
payment of the loan. This provision is customary in mortgage contracts, and
is in conformity with Article 2087 of the Civil Code.
Galass decision to eventually sell the subject property to Villar for an
additional P1,500,000.00 was well within the scope of her rights as the
owner of the subject property. The subject property was transferred to Villar
by virtue of another and separate contract, which is the Deed of Sale. Garcia
never alleged that the transfer of the subject property to Villar was automatic
upon Galass failure to discharge her debt, or that the sale was simulated to
cover up such automatic transfer. Pablo P. Garcia vs. Yolanda Valdez
Villar; G.R. No. 158891, June 27, 2012.
Ownership; acquisitive prescription. The claim of the Heirs of Bangis that
since they have been in possession of the subject land since 1972 or for 28
years reckoned from the filing of the complaint in 2000 then, the present
action has prescribed is untenable. It bears to note that while Bangis indeed
took possession of the land upon its alleged mortgage, the certificate of title

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(TCT No. 6313) remained with Adolfo and upon his demise, transferred to
his heirs, thereby negating any contemplated transfer of ownership. Settled
is the rule that no title in derogation of that of the registered owner can be
acquired by prescription or adverse possession. Moreover, even if
acquisitive prescription can be appreciated in this case, the Heirs of Bangis
possession being in bad faith is two years shy of the requisite 30-year
uninterrupted adverse possession required under Article 1137 of the Civil
Code.
Consequently, the Heirs of Bangis cannot validly claim the rights of a
builder in good faith as provided for under Article 449 in relation to Article
448 of the Civil Code. Thus, the order for them to surrender the possession
of the disputed land together with all its improvements was properly made.
Aniceto Bangis, substituted by his heirs, namely Rodolfo B. Bangis, et al. vs.
Heirs of Serafin and Salud Adolfo, namely: Luz A. Banniester, et al.; G.R.
No. 190875, June 13, 2012.
Property; builder in bad faith. See entry under ownership; acquisitive
prescription (case of Bangis v. Heirs of Adolfo).
Sale at public auction; inadequacy of bid price. We have consistently held
that the inadequacy of the bid price at a forced sale, unlike that in an
ordinary sale, is immaterial and does not nullify the sale; in fact, in a forced
sale, a low price is considered more beneficial to the mortgage debtor
because it makes redemption of the property easier. Francisco Rabat, et al.
vs. Philippine National Bank; G.R. No. 158755, June 18, 2012.
Special Laws
Family Code; presumption of death; summary judicial proceedings under the
Family Code. Under Article 41 of the Family Code, the losing party in a
summary proceeding for the declaration of presumptive death may file a
petition for certiorari with the CA on the ground that, in rendering judgment
thereon, the trial court committed grave abuse of discretion amounting to
lack of jurisdiction. From the decision of the CA, the aggrieved party may
elevate the matter to this Court via a petition for review on certiorari under
Rule 45 of the Rules of Court. (Digesters Note: This case also summarizes
a number of cases on proof for existence of a well-founded belief that the

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absent spouse is already dead, but there is no ruling on this point and the
comment by the Court that the Republics arguments are well-taken, is
obiter.) Republic of the Philippines vs. Yolanda Cadacio Granada; G.R. No.
187512, June 13, 2012.
Land titles; conflicting titles. As held in the case of Top Management
Programs Corporation v. Luis Fajardo and the Register of Deeds of Las
Pias City: if two certificates of title purport to include the same land,
whether wholly or partly, the better approach is to trace the original
certificates from which the certificates of titles were derived.
Having, thus, traced the roots of the parties respective titles supported by
the records of the Register of Deeds of Malaybalay City, the courts a quo
were correct in upholding the title of the Heirs of Adolfo as against TCT No.
T-10567 of Bangis, notwithstanding its earlier issuance on August 18, 1976
or long before the Heirs of Adolfo secured their own titles on May 26, 1998.
To paraphrase the Courts ruling in Mathay v. Court of Appeals: where two
(2) transfer certificates of title have been issued on different dates, the one
who holds the earlier title may prevail only in the absence of any anomaly or
irregularity in the process of its registration, which circumstance does not
obtain in this case. Aniceto Bangis, substituted by his heirs, namely Rodolfo
B. Bangis, et al. vs. Heirs of Serafin and Salud Adolfo, namely: Luz A.
Banniester, et al.; G.R. No. 190875, June 13, 2012.
P.D. No. 1529; Torrens title; collateral attack. As for the spouses Decalengs
contention that Certificate of Title No. 1 does not exist, the Court fully
agrees with the Court of Appeals that the same constitutes a collateral attack
of Certificate of Title No. 1. It is a hornbook principle that a certificate of
title serves as evidence of an indefeasible title to the property in favor of the
person whose name appears therein. In order to establish a system of
registration by which recorded title becomes absolute, indefeasible, and
imprescriptible, the legislature passed Act No. 496, which took effect
onFebruary 1, 1903. Act No. 496 placed all registered lands in the
Philippines under the Torrens system. The Torrens system requires the
government to issue a certificate of title stating that the person named in the
title is the owner of the property described therein, subject to liens and
encumbrances annotated on the title or reserved by law. The certificate of
title is indefeasible and imprescriptible and all claims to the parcel of land
are quieted upon issuance of the certificate. Presidential Decree No. 1529,

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known as the Property Registration Decree, enacted on June 11, 1978,


amended and updated Act No. 496.
Section 48 of Presidential Decree No. 1529 provides:
Section 48. Certificate not subject to collateral attack. A certificate of title
shall not be subject to collateral attack. It cannot be altered, modified, or
cancelled except in a direct proceeding in accordance with law.
A Torrens title cannot be attacked collaterally, and the issue on its validity
can be raised only in an action expressly instituted for that purpose. A
collateral attack is made when, in another action to obtain a different relief,
the certificate of title is assailed as an incident in said action. Sps. Ambrosio
Decaleng [as substituted by his heirs] and Julia Wanay Decaleng
vs. Bishop of the Missionary District of Protestant Episcopal Church in the
United States of America, et al.; G.R. No. 171209 & UDK-13672. June 27,
2012
P.D. No. 1529; Torrens title; collateral attack; indefeasibility of title vs.
possession. In Soriente v. Estate of the Late Arsenio E. Concepcion, a
similar allegation possession of the property in dispute since time
immemorial was met with rebuke as such possession, for whatever length
of time, cannot prevail over a Torrens title, the validity of which is presumed
and immune to any collateral attack.
The validity of respondents certificate of title cannot be attacked by
petitioner in this case for ejectment. Under Section 48 of Presidential Decree
No. 1529, a certificate of title shall not be subject to collateral attack. It
cannot be altered, modified or cancelled, except in a direct proceeding for
that purpose in accordance with law. The issue of the validity of the title of
the respondents can only be assailed in an action expressly instituted for that
purpose. Whether or not petitioner has the right to claim ownership over the
property is beyond the power of the trial court to determine in an action for
unlawful detainer.
Given the foregoing, the petitioners attempt to remain in possession by
casting a cloud on the respondents title cannot prosper.

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Neither will the sheer lapse of time legitimize the petitioners refusal to
vacate the subject area or bar the respondents from gaining possession
thereof. As ruled in Spouses Ragudo v. Fabella Estate Tenants Association,
Inc., laches does not operate to deprive the registered owner of a parcel of
land of his right to recover possession thereof. Heirs of Jose Maligaso, Sr.,
etc. vs. Sps. Simon D. Encinas and Esperanza E. Encinas; G.R. No. 182716,
June 20, 2012.

April 2012 Philippine Supreme Court


Decisions on Civil Law
Posted on May 16, 2012 by Rose Marie M. King-Dominguez Posted in Civil Law
Tagged compensation, contract, damages, double sale, negligence, novation, patent,
prescription, sale, surety, Torrens system, voidable contract, will

Here are select April 2012 rulings of the Supreme Court of the Philippines
on civil law:
Civil Code
Compensation/set-off; requisites. The applicable provisions of law are
Articles 1278, 1279 and 1290 of the Civil Code of the Philippines:
Art. 1278. Compensation shall take place when two persons, in their own
right, are creditors and debtors of each other.
Art. 1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated;

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(3) That the two debts be due;


(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.
Art. 1290. When all the requisites mentioned in Article 1279 are present,
compensation takes effect by operation of law, and extinguishes both debts
to the concurrent amount, even though the creditors and debtors are not
aware of the compensation.
Based on the foregoing, in order for compensation to be valid, the five
requisites mentioned in the above-quoted Article 1279 should be present, as
in the case at bench. Insular Investment and Trust Corporation vs. Capital
One Equities Corp. and Planters Development Bank; G.R. No. 183308,
April 25, 2012

Contracts; double sales; possession; actual and physical delivery. A double


sale calls for the application of the rules in Article 1544 of the Civil Code, to
wit:
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.
Should it be immovable property, the ownership shall belong to the person
acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who
in good faith was first in the possession; and, in the absence thereof, to the
person who presents the oldest title, provided there is good faith.
Jurisprudence has interpreted possession in Article 1544 of the Civil Code to
mean both actual physical delivery and constructive delivery. Actual
delivery of a thing sold occurs when it is placed under the control and

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possession of the vendee. Delivery of a thing sold may also be made


constructively. Article 1498 of the Civil Code states that: When the sale is
made through a public instrument, the execution thereof shall be equivalent
to the delivery of the thing which is the object of the contract, if from the
deed the contrary does not appear or cannot clearly be inferred. The Roman
Catholic Church vs. Pante; G.R. No. 174118, April 11, 2012.
Contracts; mistake; voidable contract. For mistake as to the qualification of
one of the parties to vitiate consent, two requisites must concur:
1.
the mistake must be either with regard to the identity or with regard to
the qualification of one of the contracting parties; and
2.
the identity or qualification must have been the principal consideration
for the celebration of the contract.
The Roman Catholic Church vs. Pante; G.R. No. 174118, April 11, 2012.
Damages; interest in case of breach of contract; interest rate. Interest may be
imposed even in the absence of stipulation in the contract because Article
2210 of the Civil Code expressly provides that [i]nterest may, in the
discretion of the court, be allowed upon damages awarded for breach of
contract.
Anent the interest rate, 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%). In this case, the parties
did not stipulate as to the applicable rate of interest.
The contract involved in this case is admittedly not a loan but a Conditional
Deed of Sale. However, the contract provides that the seller must return the
payment made by the buyer if the conditions are not fulfilled. There is no
question that they have in fact, not been fulfilled as the seller has admitted
this. Notwithstanding demand by the buyer, the seller has failed to return the
money and should be considered in default from the time that demand was
made.

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Even if the transaction involved a Conditional Deed of Sale, can the


stipulation governing the return of the money be considered as a forbearance
of money which required payment of interest at the rate of 12%. Forbearance
is a contractual obligation of lender or creditor to refrain during a given
period of time, from requiring the borrower or debtor to repay a loan or debt
then due and payable. 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. Hermojina Estores vs. Spouses
Arturo and Laura Supangan: G.R. No. 175139, April 18, 2012.
Damages; liquidated damages. Article 2226 of the Civil Code allows the
parties to a contract to stipulate on liquidated damages to be paid in case of
breach. It is attached to an obligation in order to insure performance and has
a double function: (1) to provide for liquidated damages, and (2) to
strengthen the coercive force of the obligation by the threat of greater
responsibility in the event of breach. As a general rule, contracts constitute
the law between the parties, and they are bound by its stipulations. For as
long as they are not contrary to law, morals, good customs, public order, or
public policy, the contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient. Philippine
Charter Insurance Corporation vs. Petroleum Distributors & Service
Corporation; G.R. No. 180898. April 18, 2012.
Damages; negligence; proximate cause. PNBs act of releasing the proceeds
of the check prior to the lapse of the 15-day clearing period was the
proximate cause of the loss. Here, while PNB highlights Ofelias fault in
accommodating a strangers check and depositing it to the bank, it remains
mum in its release of the proceeds thereof without exhausting the 15-day
clearing period, an act which contravened established banking rules and
practice. It is worthy of notice that the 15-day clearing period alluded to is
construed as 15 banking days. It bears stressing that the diligence required
of banks is more than that of a Roman pater familias or a good father of a
family. The highest degree of diligence is expected. PNB miserably failed
to do its duty of exercising extraordinary diligence and reasonable business
prudence. The disregard of its own banking policy amounts to gross
negligence, which the law defines as negligence characterized by the want
of even slight care, acting or omitting to act in a situation where there is duty
to act, not inadvertently but wilfully and intentionally with a conscious

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indifference to consequences in so far as other persons may be affected.


With regard to collection or encashment of checks, suffice it to say that the
law imposes on the collecting bank the duty to scrutinize diligently the
checks deposited with it for the purpose of determining their genuineness
and regularity. The collecting bank, being primarily engaged in banking,
holds itself out to the public as the expert on this field, and the law thus
holds it to a high standard of conduct. A bank is expected to be an expert in
banking procedures and it has the necessary means to ascertain whether a
check, local or foreign, is sufficiently funded. Philippine National Bank vs.
Spouses Cheah Chee Chong and Ofelia Camacho Cheah/Spouses Cheah
Chee Chong and Ofelia Camacho Chea vs. Philippine National Bank; G.R.
Nos. 170865/G.R. No. 170892, April 25, 2012.
Damages; requisites. License to operate a cockpit is a mere privilege, and
even if he was able to get a business permit from the mayor, this did not give
him a license to operate a cockpit. Without any legal right to operate a
cockpit in the municipality, petitioner is not entitled to damages. Injury
alone does not give petitioner the right to recover damages; he must also
have a right of action for the legal wrong inflicted by the respondents. We
need not belabor that in order that the law will give redress for an act
causing damage, there must be damnum et injuria that act must be not only
hurtful, but wrongful. Danilo A. Du vs. Venancio R. Jayoma, et al.; G.R.
No. 175042, April 23, 2012.
Damages; res ipsa loquitur; elements; liability of employer. Under the
doctrine of res ipsa loquitur, [w]here the thing that caused the injury
complained of is shown to be under the management of the defendant or his
servants; and the accident, in the ordinary course of things, would not
happen if those who had management or control used proper care, it affords
reasonable evidence in the absence of a sufficient, reasonable and logical
explanation by defendant that the accident arose from or was caused by the
defendants want of care. Res ipsa loquitur is merely evidentiary, a mode
of proof, or a mere procedural convenience, since it furnishes a substitute
for, and relieves a plaintiff of, the burden of producing a specific proof of
negligence. It recognizes that parties may establish prima facie negligence
without direct proof, thus, it allows the principle to substitute for specific
proof of negligence. It permits the plaintiff to present along with proof of the
accident, enough of the attending circumstances to invoke the doctrine,
create an inference or presumption of negligence and thereby place on the

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defendant the burden of proving that there was no negligence on his part.
The doctrine is based partly on the theory that the defendant in charge of
the instrumentality which causes the injury either knows the cause of the
accident or has the best opportunity of ascertaining it while the plaintiff has
no such knowledge, and is therefore compelled to allege negligence in
general terms.
The requisites of the doctrine of res ipsa loquitur as established by
jurisprudence are as follows:
1) the accident is of a kind which does not ordinarily occur unless someone
is negligent;
2) the cause of the injury was under the exclusive control of the person in
charge and
3) the injury suffered must not have been due to any voluntary action or
contribution on the part of the person injured.
The aforementioned requisites having been met, there now arises a
presumption of negligence which he could have overcome by evidence that
he exercised due care and diligence in preventing strangers from using his
jeep. Unfortunately, he failed to do so.
The operator on record of a vehicle is primarily responsible to third persons
for the deaths or injuries consequent to its operation, regardless of whether
the employee drove the registered owners vehicle in connection with his
employment. Absent the circumstance of unauthorized use48 or that the
subject vehicle was stolen which are valid defenses available to a registered
owner, he cannot escape liability for quasi-delict resulting from his jeeps
use. Oscar Del Carmen, Jr. vs. Geronimo Bacoy, guradian and representing
the children, namely, Mary Marjorie B. Monsalud, et al.; G.R. No. 173870,
April 25, 2012.
Property; acquisition by prescription; confirmation of incomplete or
imperfect titles; requirements. There must be an express declaration by the
State that the public dominion property is no longer intended for public
service or the development of the national wealth or that the property has

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been converted into patrimonial. Without such express declaration, the


property, even if classified as alienable or disposable, remains property of
the public dominion, pursuant to Article 420(2), and thus incapable of
acquisition by prescription. It is only when such alienable and disposable
lands are expressly declared by the State to be no longer intended for public
service or for the development of the national wealth that the period of
acquisitive prescription can begin to run. Such declaration shall be in the
form of a law duly enacted by Congress or a Presidential Proclamation in
cases where the President is duly authorized by law.
For one to invoke the provisions of Section 14(2) and set up acquisitive
prescription against the State, it is primordial that the status of the property
as patrimonial be first established. Furthermore, the period of possession
preceding the classification of the property as patrimonial cannot be
considered in determining the completion of the prescriptive period.
Adverse, continuous, open, public possession in the concept of an owner is a
conclusion of law and the burden to prove it by clear, positive and
convincing evidence is on the applicant. A claim of ownership will not
proper on the basis of tax declarations if unaccompanied by proof of actual
possession.
The counting of the thirty (30)-year prescriptive period for purposes of
acquiring ownership of a public land under Section 14(2) can only start from
the issuance of DARCO Conversion Order. Before the property was
declared patrimonial by virtue of such conversion order, it cannot be
acquired by prescription. Jean Tan, et al. vs. Republic of the Philippines;
G.R. No. 193443, April 16, 2012.
Sale; rescission for breach of obligation to deliver; constructive delivery,
execution of public instrument. A party is entitled to demand for the
rescission of their contract for the failure to deliver the physical possession
of the subject property and the certificate of title covering the same
notwithstanding the absence of stipulations in the agreement expressly
indicating the consequences of such omission, pursuant to Article 1191 of
the NCC, which states that the power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him.

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Article 1498 of the NCC generally considers the execution of a public


instrument as constructive delivery by the seller to the buyer of the property
subject of a contract of sale. The case at bar, however, falls among the
exceptions to the foregoing rule since a mere presumptive and not
conclusive delivery is created as the respondent failed to take material
possession of the subject property.
There is symbolic delivery of the property subject of the sale by the
execution of the public instrument, unless from the express terms of the
instrument, or by clear inference therefrom, this was not the intention of the
parties. Such would be the case, for instance, where the vendor has no
control over the thing sold at the moment of the sale, and, therefore, its
material delivery could not have been made.
As a general rule, the execution of a public instrument amounts to a
constructive delivery of the thing subject of a contract of sale. However,
exceptions exist, among which is when mere presumptive and not conclusive
delivery is created in cases where the buyer fails to take material possession
of the subject of sale. A person who does not have actual possession of the
thing sold cannot transfer constructive possession by the execution and
delivery of a public instrument. Villamar vs. Mangaoil; G.R. No. 188661,
April 11, 2012.
Surety; novation. A contract of suretyship is an agreement whereby a party,
called the surety, guarantees the performance by another party, called the
principal or obligor, of an obligation or undertaking in favor of another
party, called the obligee. Although the contract of a surety is secondary only
to a valid principal obligation, the surety becomes liable for the debt or duty
of another although it possesses no direct or personal interest over the
obligations nor does it receive any benefit therefrom. The suretys obligation
is not an original and direct one for the performance of his own act, but
merely accessory or collateral to the obligation contracted by the principal.
Nevertheless, although the contract of a surety is in essence secondary only
to a valid principal obligation, his liability to the creditor or promisee of the
principal is said to be direct, primary and absolute; in other words, he is
directly and equally bound with the principal.
A surety is released from its obligation when there is a material alteration of

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the principal contract in connection with which the bond is given, such as a
change which imposes a new obligation on the promising party, or which
takes away some obligation already imposed, or one which changes the legal
effect of the original contract and not merely its form. In this case, however,
no new contract was concluded and perfected as only the revision of the
work schedule originally agreed upon was the subject thereof. There was no
new contract/agreement which could be considered to have substituted the
Building Contract. Philippine Charter Insurance Corporation vs. Petroleum
Distributors & Service Corporation; G.R. No. 180898. April 18, 2012.
Will, extrinsic validity. The state of being forgetful does not necessarily
make a person mentally unsound so as to render him unfit to execute a Will.
Forgetfulness is not equivalent to being of unsound mind. Besides, Article
799 of the New Civil Code states: To be of sound mind, it is not necessary
that the testator be in full possession of all his reasoning faculties, or that his
mind be wholly unbroken, unimpaired, or unshattered by disease, injury or
other cause. It shall be sufficient if the testator was able at the time of
making the will to know the nature of the estate to be disposed of, the proper
objects of his bounty, and the character of the testamentary act. Bare
allegations of duress or influence of fear or threats, undue and improper
influence and pressure, fraud and trickery cannot be used as basis to deny
the probate of a will. Baltazar, et. al. vs. Laxa; G.R. No. 174489, April 11,
2012.
Special Laws
Torrens System; registration; action for reconveyance; acquisitive
prescription. Registration of a piece of land under the Torrens System does
not create or vest title, because it is not a mode of acquiring ownership. A
certificate of title is merely an evidence of ownership or title over the
particular property described therein. Thus, notwithstanding the
indefeasibility of the Torrens title, the registered owner may still be
compelled to reconvey the registered property to its true owners.
In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property or its
title which has been wrongfully or erroneously registered in another persons
name, to its rightful or legal owner, or to the one with a better right. An

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action for annulment of title or reconveyance based on fraud is


imprescriptible where the plaintiff is in possession of the property subject of
the acts.
Acquisitive prescription is a mode of acquiring ownership by a possessor
through the requisite lapse of time. In order to ripen into ownership,
possession must be in the concept of an owner, public, peaceful and
uninterrupted. Possession is open when it is patent, visible, apparent,
notorious and not clandestine. It is continuous when uninterrupted, unbroken
and not intermittent or occasional; exclusive when the adverse possessor can
show exclusive dominion over the land and an appropriation of it to his own
use and benefit; and notorious when it is so conspicuous that it is generally
known and talked of by the public or the people in the neighborhood. The
party who asserts ownership by adverse possession must prove the presence
of the essential elements of acquisitive prescription.
For civil interruption to take place, the possessor must have received judicial
summons. Heirs of Tanyag vs. Gabriel, et. al.; G.R. No. 175763, April 11,
2012.
Free patent; prohibition against alienation. Section 118 of CA 141 requires
that before the five year prohibition applies, there should be an alienation or
encumbrance of the land acquired under free patent or homestead.
In real property law, alienation is defined as the transfer of the property and
possession of lands, tenements, or other things from one person to another. It
is the act by which the title to real estate is voluntarily resigned by one
person to another and accepted by the latter, in the forms prescribed by law.
In this case, Comia did not transfer, convey or cede the property; but rather,
he relinquished, renounced and quitclaimed the property considering that
the property already belonged to the spouses. The voluntary renunciation by
Comia of that portion was not an act of alienation, but an act of correcting
the inclusion of the property in his free patent.
In support of the fact that the alienation transpired prior to the grant of a free
patent, it is remarkable that Comia never contested that the spouses had been
in actual possession of the subject portion even before his patent application.
The private ownership of land as when there is a prima facie proof of

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ownership like a duly registered possessory information or a clear showing


of open, continuous, exclusive, and notorious possession is not affected by
the issuance of a free patent over the same land. Jose Abelgas, Jr., et al. vs.
Servilliano Comia, et al.; G.R. No. 163125, April 18, 2012.
Emancipation patents; cancellation; land titles; tax declarations; mere tax
declarations not conclusive evidence of ownership or possession. Under
DAR Administrative Order No. 02, Series of 1994, emancipation patents
may be cancelled by the PARAD or the DARAB for violations of agrarian
laws, rules and regulations. The same administrative order further states that
administrative corrections may include non-identification of spouse,
correction of civil status, corrections of technical descriptions and other
matters related to agrarian reform; and that the DARABs decision may
include cancellation of registered EP/CLOA, reimbursement of lease rental
as amortization to ARBs, reallocation of the land to qualified beneficiary,
perpetual disqualification to become an ARB, and other ancillary matters
related to the cancellation of the EP or CLOA. However, the DARs
issuance of an Emancipation Patent and the corresponding OCT covering the
contested lot carries with it a presumption of regularity. The Petition to
correct/cancel Pablos Emancipation Patent can prosper only if petitioners
are able to present substantial evidence that a portion of their lot was
erroneously covered by the patent. Substantial evidence refers to such
relevant evidence as a reasonable mind might accept as adequate to support
a conclusion.
Well settled is the rule that tax declarations and receipts are not conclusive
evidence of ownership or of the right to possess land when not supported by
any other evidence. The fact that the disputed property may have been
declared for taxation purposes in the names of the applicants for registration
or of their predecessors-in-interest does not necessarily prove ownership.
They are merely indicia of a claim of ownership. Sps. Magno v. Heirs of
Parulan; G.R. No. 183916, April 25, 2012.

March

2012

Philippine

Supreme

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Lexoterica: Compilation of SC Rulings

Court Decisions on Civil Law


Posted on April 25, 2012 by Rose Marie M. King-Dominguez Posted in Civil Law
Tagged contract, damages, interest, nuisance, rescission

Here are select March 2012 rulings of the Supreme Court of the Philippines
on civil law:
Civil Code
Contracts; bad faith, fraud. Bad faith does not simply connote bad judgment
or negligence; it imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of a known duty through some motive
or interest or ill will that partakes of the nature of fraud. Fraud has been
defined to include an inducement through insidious machination. Insidious
machination refers to a deceitful scheme or plot with an evil or devious
purpose. Deceit exists where the party, with intent to deceive, conceals or
omits to state material facts and, by reason of such omission or concealment,
the other party was induced to give consent that would not otherwise have
been given. These are allegations of fact that demand clear and convincing
proof. They are serious accusations that can be so conveniently and casually
invoked, and that is why they are never presumed. In this case, the evidence
presented is insufficient to prove that respondent acted in bad faith or
fraudulently in dealing with petitioner. R.S. Tomas, Inc. v. Rizal Cement
Company, Inc.; G.R. No. 173155. March 21, 2012
Contracts; rescission of contract. The rescission referred to in Article 1191
of the Civil Code, more appropriately referred to as resolution, is on the
breach of faith by the defendant, which is violative of the reciprocity
between the parties. The right to rescind, however, may be waived, expressly
or impliedly. While the right to rescind reciprocal obligations is implied, that
is, that such right need not be expressly provided in the contract,
nevertheless the contracting parties may waive the same.
Hence, in spite of the existence of dispute or controversy between the parties
during the course of the Subcontract Agreement, HRCC had agreed to
continue the performance of its obligations pursuant to the Subcontract
Agreement. In view of the provision of the Subcontract Agreement, HRCC
is deemed to have effectively waived its right to effect extrajudicial

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rescission of its contract with FFCCI. Accordingly, HRCC, in the guise of


rescinding the Subcontract Agreement, was not justified in implementing a
work stoppage. F.F. Cruz & Co., Inc. vs. HR Construction Corp.; G.R. No.
187521. March 14, 2012

Contracts; void and inexistent sale not subject to ratification. As to the


applicability of Article 1317 of the Civil Code, contracts of sale lacking the
approval of the Secretary of the Interior/Agriculture and Natural Resources
fall under the class of void and inexistent contracts enumerated in Article
1409, which cannot be ratified. Section 18 of Act No. 1120 mandates the
approval by the Secretary for a sale of friar land to be valid.
The official document denominated as Sale Certificate clearly required
both the signatures of the Director of Lands who issued such sale certificate
to an applicant settler/occupant and the Secretary of the Interior/Agriculture
and Natural Resources indicating his approval of the sale. These forms had
been prepared and issued by the Chief of the Bureau of Public Lands under
the supervision of the Secretary of the Interior, consistent with Act No. 1120
as may be necessary x x x to carry into effect all the provisions [thereof]
that are to be administered by or under [his] direction, and for the conduct of
all proceedings arising under such provisions. Serverino M. Manotok IV, et
al. vs. Heirs of Homer L. Barque, represented by Teresita Barque
Hernandez; G.R. Nos. 162335 & 162605. March 6, 2012
Contracts; waiver of rights under contract. Waiver is defined as a voluntary
and intentional relinquishment or abandonment of a known existing legal
right, advantage, benefit, claim or privilege, which except for such waiver
the party would have enjoyed; the voluntary abandonment or surrender, by a
capable person, of a right known by him to exist, with the intent that such
right shall be surrendered and such person forever deprived of its benefit; or
such conduct as warrants an inference of the relinquishment of such right; or
the intentional doing of an act inconsistent with claiming it.
FFCCIs voluntary payment in favor of HRCC, albeit in amounts
substantially different from those claimed by the latter, is a glaring
indication that it had effectively waived its right to demand for the joint

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measurement of the completed works. FFCCIs failure to demand a joint


measurement of HRCCs completed works reasonably justified the inference
that it had already relinquished its right to do so. F.F. Cruz & Co., Inc. vs.
HR Construction Corp.; G.R. No. 187521. March 14, 2012
Damages; loss of earning capacity. Damages for loss of earning capacity is
in the nature of actual damages, which as a rule must be duly proven by
documentary evidence, not merely by the self-serving testimony of the
widow. By way of exception, damages for loss of earning capacity may be
awarded despite the absence of documentary evidence when (1) the
deceased is self-employed earning less than the minimum wage under
current labor laws, and judicial notice may be taken of the fact that in the
deceaseds line of work no documentary evidence is available; or (2) the
deceased is employed as a daily wage worker earning less than the minimum
wage under current labor laws.
It was error for the Court of Appeals to have awarded damages for loss of
earning capacity based on Nelfas testimony alone. First, while it is
conceded that the deceased was self-employed, the Court cannot accept that
in his line of work there was no documentary proof available to prove his
income from such occupation. There would have been receipts, job orders,
or some form of written contract or agreement between the deceased and his
clients when he is contracted for a job. Second, and more importantly,
decedent was not earning less than the minimum wage at the time of his
death. Paulita Edith Serra vs. Nelfa T. Mumar; G.R. No. 193861. March
14, 2012
Employer; liability for damages. Under Article 2180 of the Civil Code,
employers are liable for the damages caused by their employees acting
within the scope of their assigned tasks. Whenever an employees
negligence causes damage or injury to another, there instantly arises a
presumption that the employer failed to exercise the due diligence of a good
father of the family in the selection or supervision of its employees. The
liability of the employer is direct or immediate. It is not conditioned upon
prior recourse against the negligent employee and a prior showing of
insolvency of such employee. Moreover, under Article 2184 of the Civil
Code, if the causative factor was the drivers negligence, the owner of the
vehicle who was present is likewise held liable if he could have prevented
the mishap by the exercise of due diligence.

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Petitioner failed to show that she exercised the level of diligence required in
supervising her driver in order to prevent the accident. She admitted that de
Castro had only been her driver for one year and she had no knowledge of
his driving experience or record of previous accidents. She also admitted
that it was de Castro who maintained the vehicle and would even remind her
to pay the installment of the car. Petitioner also admitted that, at the time
of the accident, she did not know what was happening and only knew they
bumped into another vehicle when the driver shouted. She then closed her
eyes and a moment later felt something heavy fall on the roof of the car.
When the vehicle stopped, petitioner left the scene purportedly to ask help
from her brother, leaving the other passengers to come to the aid of her
injured driver. Paulita Edith Serra vs. Nelfa T. Mumar; G.R. No. 193861.
March 14, 2012
Interest on the judgment; 12% per annum to be computed from default,
which is from judicial or extrajudicial demand. Applying Lunaria v. People,
the Court of Appeals modified the appealed judgment holding petitioner
liable for the amount of the dishonored check, with 12% interest per annum
from the date of judicial demand until the finality of this Decision. We find
the need to modify the ruling of the CA with regard to the imposition of
interest on the judgment. It has been established that in the absence of
stipulation, the rate of interest shall be 12% per annum to be computed from
default, that is, from judicial or extrajudicial demand under and subject to
the provisions of Article 1169of the Civil Code. In Ongson v. People, we
held that interest began to run from the time of the extrajudicial demand, as
duly proved by the creditor. Thus, petitioner should also be held liable for
the amount of the dishonored check, which is 1,500,000, plus 12% legal
interest covering the period from the date of the receipt of the demand letter
on 14 May 1999 to the finality of this Decision. The total amount due in the
dispositive portion of the CAs Decision, inclusive of interest, shall further
earn 12% interest per annum from the finality of this Decision until fully
paid. Eleanor De Leon Llenado vs. People of the Philippines and Editha
Villaflores. G.R. No. 193279. March 14, 2012
Nuisance per se vs. nuisance per accidens; only nuisance per se may be
summarily abated without judicial intervention. If petitioner indeed found
respondents fence to have encroached on the sidewalk, his remedy is not to
demolish the same summarily after respondents failed to heed his request to
remove it. Instead, he should go to court and prove respondents supposed

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violations in the construction of the concrete fence. Indeed, unless a thing is


a nuisance per se, it may not be abated summarily without judicial
intervention.
Respondents fence is not a nuisance per se. By its nature, it is not injurious
to the health or comfort of the community. It was built primarily to secure
the property of respondents and prevent intruders from entering it. And as
correctly pointed out by respondents, the sidewalk still exists. If petitioner
believes that respondents fence indeed encroaches on the sidewalk, it may
be so proven in a hearing conducted for that purpose. Not being a nuisance
per se, but at most a nuisance per accidens, its summary abatement without
judicial intervention is unwarranted. Jaime S. Perez, both in his personal
and official capacity as Chief, Marikina Demolition Office vs. Spouses
Fortunito L. Madrona and Yolanda B. Pante; G.R. No. 184478. March 21,
2012
Special Laws
Act No. 1120 See digest of Serverino M. Manotok IV, et al. vs. Heirs of
Homer L. Barque, represented by Teresita Barque Hernandez; G.R. Nos.
162335 & 162605. March 6, 2012, under heading of Contracts.

February 2012 Philippine Supreme


Court Decisions on Civil Law
Posted on March 19, 2012 by Rose Marie M. King-Dominguez Posted in Civil Law,
Philippines - Cases, Philippines - Law Tagged agency, attorney's fees, contract, dacion
en pago, damages, delay, laches, lease, marriage, moral damages, mortgage, negligence,
obligation, possession, pre-emption, prescription, quasi-delict, subrogation, succession,
surety, Torrens system

Here are select February 2012 rulings of the Supreme Court of the
Philippines on civil law:
Agency; Accounting. Article 1891 of the Civil Code contains a few of the
obligations owed by an agent to his principal Every agent is bound to

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Lexoterica: Compilation of SC Rulings

render an account of his transactions and to deliver to the principal whatever


he may have received by virtue of the agency, even though it may not be
owing to the principal. Every stipulation exempting the agent from the
obligation to render an account shall be void.
It is evident that the reason behind the failure of petitioner to render an
accounting to respondent is immaterial. What is important is that the former
fulfill her duty to render an account of the relevant transactions she entered
into as respondents agent. Caridad Segarra Sazon vs. Letecia VasquezMenancio, G.R. No. 192085. February 22, 2012.
Agency; Fruits. Every agent is bound to deliver to the principal whatever the
former may have received by virtue of the agency, even though that amount
may not be owed to the principal. Caridad Segarra Sazon vs. Letecia
Vasquez-Menancio, G.R. No. 192085. February 22, 2012.
Attorneys fees; When payable. With respect to attorneys fees, it is proper
on the ground that petitioners act of denying respondent and
its employees access to the leased premises has compelled respondent to
litigate and incur expenses to protect its interest. Also, under the
circumstances prevailing in the present case, attorneys fees may be granted
on grounds of justice and equity. Manila International Airport vs. Avia
Filipinas International, Inc., G.R. No. 180168. February 27, 2012

Civil Code; Moral damages; Exemplary damages; Attorneys fees. Article


2219 of the Civil Code of the Philippines provides for recovery of moral
damages in certain cases:
Art. 2219. Moral damages may be recovered in the following and analogous
cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;

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Lexoterica: Compilation of SC Rulings

(4) Adultery or concubinage;


(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34,
and 35.
The parents of the female seduced, abducted, raped, or abused, referred to in
No. 3 of this article, may also recover moral damages.
The spouse, descendants, ascendants, and brothers and sisters may bring the
action mentioned in No. 9 of this article, in the order named.
Article 2229 of the Civil Code, on the other hand, provides for recovery of
exemplary damages:
Art. 2229. Exemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages.
In this case, we agree with the CA in not awarding moral and exemplary
damages for lack of factual basis.
Lastly, Article 2208 of the Civil Code provides for recovery of attorneys
fees and expenses of litigation:
Art. 2208. In the absence of stipulation, attorneys fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:

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(1) When exemplary damages are awarded;


(2) When the defendants act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiffs plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmens compensation and employers
liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorneys fees and expenses of litigation should be recovered.
In all cases, the attorneys fees and expenses of litigation must be
reasonable.
Article 111 of the Labor Code provides for a maximum award of attorneys
fees in cases of recovery of wages:
Art. 111. Attorneys fees.
a.

In cases of unlawful withholding of wages, the culpable party may be

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Lexoterica: Compilation of SC Rulings

assessed attorneys fees equivalent to ten percent of the amount of wages


recovered.
b.
It shall be unlawful for any person to demand or accept, in any judicial
or administrative proceedings for the recovery of wages, attorneys fees
which exceed ten percent of the amount of wages recovered.
Since De Gracia, et al. had to secure the services of the lawyer to recover
their unpaid salaries and protect their interest, we agree with the CAs
imposition of attorneys fees in the amount of ten percent (10%) of the total
claims. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc.
Ltd. vs Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012.
Contract; Simulation. Article 1345 of the Civil Code provides that the
simulation of a contract may either be absolute or relative. In absolute
simulation, there is a colorable contract but it has no substance as the parties
have no intention to be bound by it. The main characteristic of an absolute
simulation is that the apparent contract is not really desired or intended to
produce legal effect or in any way alter the juridical situation of the parties.
As a result, an absolutely simulated or fictitious contract is void, and the
parties may recover from each other what they may have given under the
contract. However, if the parties state a false cause in the contract to conceal
their real agreement, the contract is only relatively simulated and the parties
are still bound by their real agreement. Hence, where the essential requisites
of a contract are present and the simulation refers only to the content or
terms of the contract, the agreement is absolutely binding and enforceable
between the parties and their successors in interest. The primary
consideration in determining the true nature of a contract is the intention of
the parties. If the words of a contract appear to contravene the evident
intention of the parties, the latter shall prevail. Such intention is determined
not only from the express terms of their agreement, but also from the
contemporaneous and subsequent acts of the parties. Spouses Jose and
Milagros Villaceran vs. Josephine De Guzman, G.R. No. 169055. February
22, 2012.
Contract; Subrogation. Subrogation is the substitution of one person by
another with reference to a lawful claim or right, so that he who is
substituted succeeds to the rights of the other in relation to a debt or claim,

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including its remedies or securities. The principle covers a situation wherein


an insurer has paid a loss under an insurance policy is entitled to all the
rights and remedies belonging to the insured against a third party with
respect to any loss covered by the policy. It contemplates full substitution
such that it places the party subrogated in the shoes of the creditor, and he
may use all means that the creditor could employ to enforce payment.
Malayan Insurance Co., Inc. vs. Rodelio Alberto and Enrico Alberto Reyes,
G.R. No. 194320. February 1, 2012.
Damages; Torrens system; Laches and prescription. Article 434 of the Civil
Code provides that [i]n an action to recover, the property must be
identified, and the plaintiff must rely on the strength of his title and not on
the weakness of the defendants claim. In other words, in order to recover
possession, a person must prove (1) the identity of the land claimed, and (2)
his title.
Jurisprudence consistently holds that prescription and laches can not apply
to registered land covered by the Torrens system because under the
Property Registration Decree, no title to registered land in derogation to that
of the registered owner shall be acquired by prescription or adverse
possession. Rogelio J. Jakolsalem, et al. vs. Roberto S. Barangan, G.R. No.
175025. February 15, 2012.
Free patent; Fradulently secured. A Free Patent may be issued where the
applicant is a natural-born citizen of the Philippines; is not the owner of
more than twelve (12) hectares of land; has continuously occupied and
cultivated, either by himself or through his predecessors-in-interest, a tract
or tracts of agricultural public land subject to disposition, for at least 30
years prior to the effectivity of Republic Act No. 6940; and has paid the real
taxes thereon while the same has not been occupied by any person. Once a
patent is registered and the corresponding certificate of title is issued, the
land covered thereby ceases to be part of public domain and becomes private
property, and the Torrens Title issued pursuant to the patent becomes
indefeasible upon the expiration of one year from the date of such issuance.
However, a title emanating from a free patent which was secured through
fraud does not become indefeasible, precisely because the patent from
whence the title sprung is itself void and of no effect whatsoever. Well-

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settled is the doctrine that the registration of a patent under the Torrens
System does not by itself vest title; it merely confirms the registrants
already existing one. Verily, registration under the Torrens System is not a
mode of acquiring ownership.
Nonetheless, a free patent that was fraudulently acquired, and the certificate
of title issued pursuant to the same, may only be assailed by the government
in an action for reversion pursuant to Section 101 of the Public Land Act.
Since it was the Director of Lands who processed and approved the
applications of the appellants and who ordered the issuance of the
corresponding free patents in their favor in his capacity as administrator of
the disposable lands of the public domain, the action for annulment should
have been initiated by him, or at least with his prior authority and consent.
Nancy T. Lorzano vs. Juan Tabayag, Jr., G.R. No. 189647. February 6,
2012.
Lease; Failure to maintain lessee in peaceful possession. It is clear that
petitioner failed to maintain respondent in the peaceful and adequate
enjoyment of the leased premises by unjustifiably preventing the latter
access thereto. Consequently, in accordance with Article 1658 of the Civil
Code, respondent had no duty to make rent payments. Manila International
Airport vs. Avia Filipinas International, Inc., G.R. No. 180168. February 27,
2012.
Lease; Increase in rental. Article 1374 of the Civil Code clearly provides that
[t]he various stipulations of a contract shall be interpreted together,
attributing to the doubtful ones that sense which may result from all of them
taken jointly. It is true that Article II, Paragraph 2.04 of the Contract of
Lease states that [a]ny subsequent amendment to Administrative Order No.
4, Series of 1982, which will effect a decrease or escalation of the monthly
rental or impose new and additional fees and charges, including but not
limited to government/MIAA circulars, rules and regulation to this effect,
shall be deemed incorporated herein and shall automatically amend this
Contract insofar as the monthly rental is concerned. However, the above
quoted provision of the lease contract should not be read in isolation. Rather,
it should be read together with the provisions of Article VIII, Paragraph
8.13, which provide that [a]ny amendment, alteration or modification
of th[e] Contract shall not be valid and binding, unless and until made in
writing and signed by the parties thereto. It is clear from the foregoing that

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the intention of the parties is to subject such amendment to the conformity of


both petitioner and respondent. Manila International Airport vs. Avia
Filipinas International, Inc., G.R. No. 180168. February 27, 2012
Legal pre-emption; Notice requirement. Article 1623 of the Civil Code
provides that the right of legal pre-emption or redemption shall not be
exercised except within thirty days from the notice in writing by the
prospective vendor, or by the vendor, as the case may be. The written notice
of sale is mandatory. This Court has long established the rule that
notwithstanding actual knowledge of a co-owner, the latter is still entitled to
a written notice from the selling co-owner in order to remove all
uncertainties about the sale, its terms and conditions, as well as its efficacy
and status. Sps. Roman Pascual and Mercedita R. Pascual,et al. vs. Sps.
Antonio Ballesteros and Lorenza Melchor-Balles, G.R. No. 186269.
February 15, 2012.
Marriage; Divorce not allowed in the Philippines; Exception based
on principles of comity; Divorce must be proven as a fact. The Supreme
Court had already ruled that under the principles of comity, our jurisdiction
recognizes a valid divorce obtained by a spouse of foreign nationality. This
doctrine was established as early as 1985 in Van Dorn v. Romillo, Jr.
wherein the SC said: It is true that owing to the nationality principle
embodied in Article 15 of the Civil Code, only Philippine nationals are
covered by the policy against absolute divorces, the same being considered
contrary to our concept of public policy and morality. However, aliens may
obtain divorces abroad, which may be recognized in the Philippines,
provided they are valid according to their national law. In this case, the
divorce in Nevada released private respondent from the marriage from the
standards of American law, under which divorce dissolves the marriage.
Nonetheless, the fact of divorce must still first be proven as the Supreme
Court has enunciated in Garcia v. Recio, to wit: Before a foreign judgment
is given presumptive evidentiary value, the document must first be presented
and admitted in evidence. A divorce obtained abroad is proven by the
divorce decree itself. Indeed the best evidence of a judgment is the judgment
itself. The decree purports to be a written act or record of an act of an
official body or tribunal of a foreign country. Merope Enriquez Vda De
Catalan vs Louella A. Catalan-Lee, G.R. No. 183622. February 8, 2012.

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Marriage; Presumption of conjugality of property; Married to is


merely descriptive of the status of the owner. Pursuant to Article 160 of the
Civil Code of the Philippines, all property of the marriage is presumed to
belong to the conjugal partnership, unless it be proved that it pertains
exclusively to the husband or to the wife. Although it is not necessary to
prove that the property was acquired with funds of the partnership, proof of
acquisition during the marriage is an essential condition for the operation of
the presumption in favor of the conjugal partnership. Not having established
the time of acquisition of the property, the Dela Peas insist that the
registration thereof in the name of Antonia R. Dela Pea, of legal age,
Filipino, married to Antegono A. Dela Pea should have already
sufficiently established its conjugal nature. Confronted with the same issue
in the case Ruiz vs. Court of Appeals, the Supreme Court ruled, however,
that the phrase married to is merely descriptive of the civil status of the
wife and cannot be interpreted to mean that the husband is also a registered
owner. Because it is likewise possible that the property was acquired by the
wife while she was still single and registered only after her marriage, neither
would registration thereof in said manner constitute proof that the same was
acquired during the marriage and, for said reason, to be presumed conjugal
in nature. Since there is no showing as to when the property in question
was acquired, the fact that the title is in the name of the wife alone is
determinative of its nature as paraphernal, i.e., belonging exclusively to said
spouse. Antonia R. Dela Pea, et al. vs Gemma Remilyn C. Avila and
Far East Bank & Trust Co., G.R. No. 187490., February 8, 2012.
Mortgage; Foreclosure of Mortgage; Necessary consequence of nonpayment. Since foreclosure of the mortgage is but the necessary
consequence of non-payment of the mortgage debt, FEBTC-BPI was,
likewise, acting well within its rights as mortgagee when it foreclosed the
real estate mortgage on the property upon Gemmas failure to pay the loans
secured thereby. Executed on 26 November 1997, the mortgage predated
Antonias filing of an Affidavit of Adverse Claim with the Register of Deeds
of Marikina on 3 March 1998 and the annotation of a Notice of Lis Pendens
on TCT No. 337834 on 10 December 1999. The mortgage directly and
immediately subjects the property upon which it is imposed, whoever the
possessor may be, to the fulfilment of the obligation for whose security it
was constituted. When the principal obligation is not paid when due, the
mortgagee consequently has the right to foreclose the mortgage, sell the
property, and apply the proceeds of the sale to the satisfaction of the unpaid

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loan. Antonia R. Dela Pea, et al. vs Gemma Remilyn C. Avila and Far East
Bank & Trust Co., G.R. No. 187490., February 8, 2012.
Mortgage; Third party mortgagor. Third persons who are not parties to the
principal obligation may secure the latter by pledging or mortgaging their
own property. The fact that the loans were solely for the benefit of TFRC
would not invalidate the mortgage with respect to respondents property as
long as valid consent was given. Thus, when respondent executed the real
estate mortgage over its properties, such properties thereby secured the
performance of the principal obligation notwithstanding the fact that
respondent itself had not assumed any liability for the debt of TFRC. China
Banking Corporation vs. QBRO Fishing Enterprises, Inc., G.R. No. 184556,
February 22, 2012.
Negligence; 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 which he is required to conform for
his own protection. It is an act or omission amounting to want of ordinary
care on the part of the person injured which, concurring with the defendants
negligence, is the proximate cause of the injury.
Here, we cannot see how the respondents could have contributed to their
injury when they were not even aware of the forthcoming danger. It was
established during the trial that the jeepney carrying the respondents was
following a ten-wheeler truck which was only about three to five meters
ahead. When the truck proceeded to traverse the railroad track, Reynaldo,
the driver of the jeepney, simply followed through. He did so under the
impression that it was safe to proceed. It bears noting that the prevailing
circumstances immediately before the collision did not manifest even the
slightest indication of an imminent harm. To begin with, the truck they were
trailing was able to safely cross the track. Likewise, there was no crossing
bar to prevent them from proceeding or, at least, a stoplight or signage to
forewarn them of the approaching peril. Thus, relying on his faculties of
sight and hearing, Reynaldo had no reason to anticipate the impending
danger. He proceeded to cross the track and, all of a sudden, his jeepney was
rammed by the train being operated by the petitioners. Even then, the
circumstances before the collision negate the imputation of contributory
negligence on the part of the respondents. What clearly appears is that the
accident would not have happened had the petitioners installed reliable and

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adequate safety devices along the crossing to ensure the safety of all those
who may utilize the same. Philippine National Railways Corporation, et al.
vs. Purificacion Vizcara, et al., G.R. No. 190022. February 15, 2012
Negligence; Proximate cause. The petitioners negligence in maintaining
adequate and necessary public safety devices in the area of the accident was
the proximate cause of the mishap. Thus, there is no other party to blame but
the petitioners for their failure to ensure that adequate warning devices are
installed along the railroad crossing. Philippine National Railways
Corporation, et al. vs. Purificacion Vizcara, et al., G.R. No.
190022. February 15, 2012
Obligations; Delay. The civil law concept of delay or default commences
from the time the obligor demands, judicially or extrajudicially, the
fulfillment of the obligation from the obligee. In legal parlance, demand is
the assertion of a legal or procedural right. Philippine Charter Insurance
Corporation vs. Central Colleges of the Philippines and Dynamic Planners
and Construction Corporation, G.R. No. 180631-33. February 22, 2012.
Obligation, Extinguishment thereof; Dation in payment. Indeed, pursuant to
Article 1232 of the Civil Code, an obligation is extinguished by payment or
performance. There is payment when there is delivery of money or
performance of an obligation. Article 1245 of the Civil Code provides for a
special mode of payment called dation in payment (dacin en pago). There is
dation in payment when property is alienated to the creditor in satisfaction of
a debt in money. Here, the debtor delivers and transmits to the creditor the
formers ownership over a thing as an accepted equivalent of the payment or
performance of an outstanding debt. In such cases, Article 1245 provides
that the law on sales shall apply, since the undertaking really partakes in
one sense of the nature of sale; that is, the creditor is really buying the
thing or property of the debtor, the payment for which is to be charged
against the debtors obligation. 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. Tan Shuy
vs Spouses Guillermo Maulawin, et al., G.R. No. 190375. February 8, 2012.

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Obligations; Surety. A surety under Article 2047 of the New Civil


Code solidarily binds itself with the principal debtor to assure the fulfillment
of the obligation. As provided in Article 2047, the surety undertakes to be
bound solidarily with the principal obligor. That undertaking makes a surety
agreement an ancillary contract as it presupposes the existence of a principal
contract. Although the contract of a surety is in essence secondary only to a
valid principal obligation, the surety becomes liable for the debt or duty of
another although it possesses no direct or personal interest over the
obligations nor does it receive any benefit therefrom. The suretys obligation
is not an original and direct one for the performance of his own act, but
merely accessory or collateral to the obligation contracted by the
principal. Nevertheless, although the contract of a surety is in essence
secondary only to a valid principal obligation, his liability to the creditor or
promisee of the principal is said to be direct, primary and absolute; in other
words, he is directly and equally bound with the principal.
Suretyship, in essence, contains two types of relationship the principal
relationship between the obligee and the obligor, and the accessory surety
relationship between the principal and the surety. In this arrangement, the
obligee accepts the suretys solidary undertaking to pay if the obligor does
not pay. Such acceptance, however, does not change in any material way
the obligees relationship with the principal obligor. Neither does it make the
surety an active party to the principal obligee-obligor relationship. Thus, the
acceptance does not give the surety the right to intervene in the principal
contract. The suretys role arises only upon the obligors default, at which
time, it can be directly held liable by the obligee for payment as a solidary
obligor. Philippine Charter Insurance Corporation vs. Central Colleges of
the Philippines and Dynamic Planners and Construction Corporation, G.R.
No. 180631-33. February 22, 2012.
Possession; Recovery of possession; Implied vs. constructive
trust; Prescription; Acquisitive vs. extinctive prescription; Ordinary vs.
extraordinary prescription. In a constructive trust, there is neither a promise
nor any fiduciary relation to speak of and the so-called trustee neither
accepts any trust nor intends holding the property for the beneficiary. The
relation of trustee and cestui que trust does not in fact exist, and the holding
of a constructive trust is for the trustee himself, and therefore, at all times
adverse. Prescription may supervene even if the trustee does not repudiate
the relationship.

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Prescription, as a mode of acquiring ownership and other real rights over


immovable property, is concerned with lapse of time in the manner and
under conditions laid down by law, namely, that the possession should be in
the concept of an owner, public, peaceful, uninterrupted, and
adverse. Acquisitive prescription of real rights may be ordinary or
extraordinary.
The CA correctly dismissed petitioners complaint as an action for
reconveyance based on an implied or constructive trust prescribes in 10
years from the time the right of action accrues. This is the other kind of
prescription under the Civil Code, called extinctive prescription, where
rights and actions are lost by the lapse of time. Petitioners action for
recovery of possession having been filed 55 years after Macario occupied
Dionisias share, it is also barred by extinctive prescription.
Ordinary acquisitive prescription requires possession in good faith and with
just title for 10 years. In extraordinary prescription, ownership and other
real rights over immovable property are acquired through uninterrupted
adverse possession for 30 years without need of title or of good faith.
Celerino E. Mercado vs Belen Espinocilla and Ferdinand Espinocilla., G.R.
No. 184109, February 1, 2012.
Public Document; Effect of notarization; Presumption of regularity. With the
material contradictions in the Dela Peas evidence, the CA cannot be
faulted for upholding the validity of the impugned 4 November 1997 Deed
of Absolute Sale. Having been duly notarized, said deed is a public
document which carries the evidentiary weight conferred upon it with
respect to its due execution. Regarded as evidence of the facts therein
expressed in a clear, unequivocal manner, public documents enjoy a
presumption of regularity which may only be rebutted by evidence so clear,
strong and convincing as to exclude all controversy as to falsity. The burden
of proof to overcome said presumptions lies with the party contesting the
notarial document like the Dela Peas who, unfortunately, failed to
discharge said onus. Absent clear and convincing evidence to contradict the
same, we find that the CA correctly pronounced the Deed of Absolute Sale
was valid and binding between Antonia and Gemma. Antonia R. Dela Pea,
et al. vs Gemma Remilyn C. Avila and Far East Bank & Trust Co., G.R. No.
187490. February 8, 2012 .

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Quasi delict; Negligence. Negligence is the want of care required by the


circumstances. It is a conduct that involves an unreasonably great risk of
causing damage; or, more fully, a conduct that falls below the standard
established by law for the protection of others against unreasonably great
risk of harm. Not all omissions can be considered as negligent.
The test of negligence is as follows Could a prudent man, in the case under
consideration, foresee harm as a result of the course actually pursued? If so,
it was the duty of the actor to take precautions to guard against that harm.
Reasonable foresight of harm, followed by ignoring of the suggestion born
of this prevision, is always necessary before negligence can be held to exist.
Philam Insurance Company, Inc., et al. vs. Court of Appeals and
D.M. Consunji, Inc., G.R. No. 165413. February 22, 2012.
Real Estate Mortgage; Extrajudicial foreclosure sale; Recovery of
unpaid balance or deficiency; Inadequacy of sale price. Citing BPI Family
Savings Bank, Inc. v. Avenido, the Supreme Court reiterated the wellentrenched rule that a creditor is not precluded from recovering any unpaid
balance on the principal obligation if the extrajudicial foreclosure sale of the
property subject of the real estate mortgage results in a deficiency, to wit: It
is settled that if the proceeds of the sale are insufficient to cover the debt in
an extrajudicial foreclosure of mortgage, the mortgagee is entitled to claim
the deficiency from the debtor. While Act No. 3135, as amended, does not
discuss the mortgagees right to recover the deficiency, neither does it
contain any provision expressly or impliedly prohibiting recovery. If the
legislature had intended to deny the creditor the right to sue for any
deficiency resulting from the foreclosure of a security given to guarantee an
obligation, the law would expressly so provide. Absent such a provision in
Act No. 3135, as amended, the creditor is not precluded from taking action
to recover any unpaid balance on the principal obligation simply because he
chose to extrajudicially foreclose the real estate mortgage.
The Supreme Court ruled in Suico Rattan & Buri Interiors, Inc. v. Court of
Appeals that, in deference to the rule that a mortgage is simply a security and
cannot be considered payment of an outstanding obligation, the creditor is
not barred from recovering the deficiency even if it bought the mortgaged
property at the extrajudicial foreclosure sale at a lower price than its market
value notwithstanding the fact that said value is more than or equal to the
total amount of the debtors obligation. Thus, it is wrong for petitioners to

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conclude that when respondent bank supposedly bought the foreclosed


properties at a very low price, the latter effectively prevented the former
from satisfying their whole obligation. Petitioners still had the option of
either redeeming the properties and, thereafter, selling the same for a price
which corresponds to what they claim as the properties actual market value
or by simply selling their right to redeem for a price which is equivalent to
the difference between the supposed market value of the said properties and
the price obtained during the foreclosure sale. In either case, petitioners will
be able to recoup the loss they claim to have suffered by reason of the
inadequate price obtained at the auction sale and, thus, enable them to settle
their obligation with respondent bank. Moreover, petitioners are not justified
in concluding that they should be considered as having paid their obligations
in full since respondent bank was the one who acquired the mortgaged
properties and that the price it paid was very inadequate. The fact that it is
respondent bank, as the mortgagee, which eventually acquired the
mortgaged properties and that the bid price was low is not a valid reason for
petitioners to refuse to pay the remaining balance of their obligation. Settled
is the rule that a mortgage is simply a security and not a satisfaction of
indebtedness. Bank of the Philippine Islands, as successor-in-Interest of
Far Far East Bank & Trust Company vs Cythia L. Reyes, G.R. No. 182769.
February 1, 2012.
Res ipsa loquitur; Simple negligence; Elements of negligence; Damages.
The doctrine of res ipsa loquitur as a rule of evidence is unusual to the law
of negligence which recognizes that prima facie negligence may be
established without direct proof and furnishes a substitute for specific proof
of negligence. The doctrine, however, is not a rule of substantive law, but
merely a mode of proof or a mere procedural convenience. The rule, when
applicable to the facts and circumstances of a given case, is not meant to and
does not dispense with the requirement of proof of culpable negligence on
the party charged. It merely determines and regulates what shall be prima
facie evidence thereof and helps the plaintiff in proving a breach of the
duty. The doctrine can be invoked when and only when, under the
circumstances involved, direct evidence is absent and not readily available.
The requisites for the application of the doctrine of res ipsa loquitur are: (1)
the accident was of a kind which does not ordinarily occur unless someone is
negligent; (2) the instrumentality or agency which caused the injury was
under the exclusive control of the person in charge; and (3) the injury
suffered must not have been due to any voluntary action or contribution of

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the person injured.


Negligence is defined as the failure to observe for the protection of the
interests of another person that degree of care, precaution, and vigilance,
which the circumstances justly demand, whereby such other person suffers
injury. The elements of simple negligence are: (1) that there is lack of
precaution on the part of the offender, and (2) that the damage impending to
be caused is not immediate or the danger is not clearly manifest
Moral damages are not punitive in nature, but are designed to compensate
and alleviate in some way the physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury unjustly inflicted on a person. Intended
for the restoration of the psychological or emotional status quo ante, the
award of moral damages is designed to compensate emotional injury
suffered, not to impose a penalty on the wrongdoer. Dr. Emmanuel Jarcia,
Jr. and Dr. Marilou Bastan vs. People of the Philippines, G.R. No. 187926.
February 15, 2012.
Succession; Hereditary estate transmitted to heirs immediately after death of
decedent. Under the rules of succession, the heirs instantaneously became
co-owners of the Marcos properties upon the death of the President. The
property rights and obligations to the extent of the value of the inheritance of
a person are transmitted to another through the decedents death. In this
concept, nothing prevents the heirs from exercising their right to transfer or
dispose of the properties that constitute their legitimes, even absent their
declaration or absent the partition or the distribution of the estate. In
Jakosalem v. Rafols, the Supreme Court said: Article 440 of the Civil Code
provides that the possession of hereditary property is deemed to be
transmitted to the heir without interruption from the instant of the death of
the decedent, in case the inheritance be accepted. And Manresa with reason
states that upon the death of a person, each of his heirs becomes the
undivided owner of the whole estate left with respect to the part or portion
which might be adjudicated to him, a community of ownership being thus
formed among the coowners of the estate while it remains undivided. (3
Manresa, 357; Alcala vs. Alcala, 35 Phil. 679.) And according to article 399
of the Civil Code, every part owner may assign or mortgage his part in the
common property, and the effect of such assignment or mortgage shall be
limited to the portion which may be allotted him in the partition upon the

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dissolution of the community. Republic of the Philippines vs Ma. Imelda


Imee R. Marcos-Manotoc, et al., G.R. No. 171701. February 8, 2012.
Temperate damages. Under Article 2224 of the Civil Code, temperate or
moderate damages are more than nominal but less than compensatory, and
may be recovered when the court finds that some pecuniary loss has been
suffered, but the amount cannot, from the nature of the case, be proved with
certainty. The CA found that respondent paid for the doctors professional
fees and incurred other hospital expenses; however, the records failed to
show that he presented proof of the actual amount of expenses therein,
which served as the basis for the CA to award temperate damages in the
amount of P100,000.00. Wuerth Philippines, Inc. vs. Rodante Ynson, G.R.
No. 175932, February 15, 2012.
Torrens Title; Doctrine of indefeasibility; Conclusiveness of title; Burden of
proof; Direct attack vs. collateral attack. Prohibition against collateral attack
does not apply to spurious or non-existent titles, since such titles do not
enjoy indefeasibility. Well-settled is the rule that the indefeasibility of a
title does not attach to titles secured by fraud and misrepresentation. In view
of these circumstances, it was as if no title was ever issued in this case to the
petitioner and therefore this is hardly the occasion to talk of collateral attack
against a title.
An action or proceeding is deemed an attack on a title when the object of
the action is to nullify the title, and thus challenge the judgment pursuant to
which the title was decreed. The attack is direct when the object of the
action is to annul or set aside such judgment, or to enjoin its
enforcement. On the other hand, it is indirect or collateral when, in an action
or proceeding to obtain a different relief, an attack on the judgment is
nevertheless made as an incident thereof. Heirs of Leoncio C. Oliveros,
represented by Aurora B. Oliveros, et al. vs San Miguel Corporation, et
al., G.R.