Case Digest prepared by :Tali, Sarah Jean Zerrosa A.

SPOUSES ERNESTO IBIAS SR. and GONIGONDO IBIAS vs. BENITA PEREZ MACABEO

FACTS:

A parcel of land was previously owned by Albina Natividad Y. Perez and Marcelo Ibias, both
deceased, a reconstitution proceeding was filed by Ernesto covering the disputed land. In support of
his petition for reconstitution, he testified that said owner's duplicate [of] title was lost while in his
parents' possession. Such petition was granted and the title was reconstituted, now TCT No. 245124
under the names of Spouses Ibias.For this reason, Benita (half-sister of Ernesto) filed a complaint for
annulment of title against spouses ibias. she averred that defendant-appellant Ernesto made it
appear that the title was lost or misplaced while in the possession of the registered owners when in
truth and in fact, he knew fully well that said title was in the possession of Benita. Proof of such
knowledge was shown by his letter dated 23 July 1999 where he asked Benita for TCT No. 24605,
which was in the latter's possession. At the time defendant-appellant Ernesto executed the Affidavit
of Loss and filed his petition for reconstitution, he knew that the title was intact and in the possession
of Benita. The issuance of the reconstituted title in favor of the Spouses Ibias thus deprived Benita
and her other siblings of their right over the subject property.

Ernesto countered that he is the registered owner of the land. He claimed that he and his late
brother Rodolfo are the only heirs of Marcelo and Albina Ibias. The subject property was acquired
and titled sometime in 1950. He and his late parents have been living in the same house during the
lifetime of the latter. After the death of his parents, he diligently exerted efforts to locate the title but
these attempts proved futile. He inquired from his half-sister, plaintiff-appellee Benita Macabeo,
about the whereabouts of said title. Benita claimed that she was in possession of the title but asked
defendant-appellant Ernesto for the amount of PI 1,000.00 in exchange for the title and as her share
in the property. Defendant-appellant Ernesto paid said amount, but when he asked for the turnover
of the title, Benita failed to deliver the title nor show the document. Defendant-appellant Ernesto was
thus convinced that Benita had neither possession nor knowledge of the whereabouts of the title.

Believing in good faith that the title was indeed lost, he executed the Affidavit of Loss dated
13 August 1999. Thereafter, he instituted a petition for issuance of new owner's duplicate certificate
of title. Benita did not oppose or object to the petition. Eventually, the new TCT No. 245124 was
issued in favor of Spouses Ibias by the Register of Deeds.

RTC ruled in favor of Benita and ordered the cancelation of the title, CA affirmed the decision

ISSUE:

Whether or not the lower court erred in cancelling the title issued in favor of spouses Ibias?

RULING: NO, the RTC and CA were correct in cancelling the title issued in favor of spouses Ibias

The reconstitution of a title is simply the re-issuance of a lost duplicate certificate of title in
its original form and condition. It does not determine or resolve the ownership of the land covered
by the lost or destroyed title. A reconstituted title, like the original certificate of title, by itself does
not vest ownership of the land or estate covered thereby.
 Ernesto claimed loss of TCT No. 24605, and instituted reconstitution proceedings.
Reconstitution (Section 109) applies only if the owner's duplicate certificate is indeed lost or
destroyed. If a certificate of title has not been lost, but is in fact in the possession of another person,
then the reconstituted title is void and the court that rendered the decision had no
jurisdiction.Consequently, the decision may be attacked any time. Section 11 of RA No. 6732 further
provides that "[a] reconstituted title obtained by means of fraud, deceit or other machination is
void ab initio as against the party obtaining the same and all persons having knowledge thereof."

In the present case, the allegedly lost owner's duplicate copy of TCT No. 24605 was in the
possession of Benita. The lost TCT was offered in evidence during the trial. The Spouses Ibias did not
contest the genuineness and authenticity of said TCT. The Spouses Ibias only questioned the
submission of a photocopy of the TCT, but the trial court, after hearing the arguments of both parties,
admitted the photocopy as part of the evidence presented by Benita. There is no reason to justify the
issuance of a reconstituted title in the name of Spouses Ibias; hence, there is no error in the
cancellation of the same reconstituted title.

Ernesto claimed that he believed that the original owner's duplicate copy of TCT No. 24605 was lost
after he asked Benita for it then she failed to show it to him. Ernesto chose to omit facts and to avail
of Section 109 as remedy instead of Section 107. Section 107 of PD 1529
reads:ChanRoblesVirtualawlibrary

Section 107. Surrender of withhold duplicate certificates. - Where it is necessary to issue a new
certificate of title pursuant to any involuntary instrument which divests the title of the
registered owner against his consent or where a voluntary instrument cannot be registered by
reason of the refusal or failure of the holder to surrender the owner's duplicate certificate of
title, the party in interest may file a petition in court to compel surrender of the same to the
Register of Deeds. The court, after hearing, may order the registered owner or any person
withholding the duplicate certificate to surrender the same, and direct the entry of a new
certificate or memorandum upon such surrender. If the person withholding the duplicate
certificate is not amenable to the process of the court, or if not any reason the outstanding
owner's duplicate certificate cannot be delivered, the court may order the annulment of the
same as well as the issuance of a new certificate of title in lieu thereof. Such new certificate and
all duplicates thereof shall contain a memorandum of the annulment of the outstanding
duplicate.

-oOo-
Case Digest prepared by :Tali, Sarah Jean Zerrosa A.

BENAVISTA PROPERTIES, INC., AND/OR JOSEPHINE CONDE vs. RAMON G. MARIÑO

FACTS:

The Spouses Buencamino and Spouses San Juan (landowners) entered into a Joint Venture
Agreement (JVA) with La Savoie Development Corporation. The parties agreed that La Savoie would
develop the three (3) parcels of land located in San Rafael, Bulacan into a commercial and residential
subdivision and manage the project including its sales. The pricing of the lots were to be determined
jointly by the landowners and La Savoie. The landowners subsequently sold their property to
Josephine Conde (Conde) who assigned her interests to Buenavista Properties, Inc. (BPI). Conde and
BPI thereafter executed an Addendum (to the JVA) extending the period of development to 1997.
Soon after, BPI, through Conde, wrote La Savoie several letters asking the latter "to stop selling until
it has put enough development to obtain the best prices", and until they have agreed on the revised
prices. In a letter dated August 17, 1997, BPI reiterated its request and to "immediately stop selling
the subdivision lots until they have agreed on the prices otherwise, it shall be forced to invoke the
termination clause of the JVA." BPFs requests were left unheeded.

However, before the said letter of BPI with La Savoie, On July 18, 1997, respondent Ramon
G. Mariño (Mariño) and La Savoie, through its President Jeanne Menguito (Menguito), entered into
a Contract to Sell involving a parcel of land in Buenavista Park Subdivision. Paragraph 4 of the
Contract provides that upon complete payment of the purchase price, La Savoie agrees to execute a
final deed of sale in favor of Mariño.

On February 28, 1998, BPI filed before the Regional Trial Court (RTC) a complaint against
La Savoie for the termination of the JVA, recovery of properties plus damages, with a prayer for a
temporary restraining order and a writ of preliminary injunction (JVA rescission case). The RTC
issued a writ of preliminary injunction on August 11, 1998, enjoining La Savoie from selling the
remaining unsold lots in the Buenavista Park Subdivision. Then, in the decision dated June 12,
2003 the RTC, among others: (1) terminated the JVA and the Addendum to the JVA; and (2) ordered
La Savoie to deliver to BPI the possession of the Buenavista Park Subdivision together with all the
improvements thereon. This case eventually reach the SC and the court ruled in favor of BPI affirming
the decision of the RTC and CA.

Hoewever, before the said decision, Mariño completed the payment for the subdivision
lot on September 19, 2001. La Savoie thereafter transmitted the corresponding Deed of Absolute
Sale to BPI for its execution. Despite demands, BPI refused to sign the Deed and to deliver the title in
favor of Mariño. BPI claimed that La Savoie, in excess of authority, sold the subdivision lots in prices
fixed unilaterally and without BPFs approval. Hence, Mariño subsequently filed before the Housing
and Land Use Regulatory Board (HLURB) an action for specific performance against the petitioners.

In its decision dated June 5, 2006, the HLURB-Legal Services Group rendered a favorable
judgment to Mariño. Then the HLURB Commissioners affirmed the findings of facts and conclusions
of law contained in the decision of the HLURB-Legal Services Group
The petitioners appealed the September 17, 2007 HLURB decision before the Office of the
President (OP) which the latter denied in its September 30, 2008 decision. The OP likewise denied
the petitioners' motion for reconsideration in its May 7, 2009 decision. Hence, BPI appealed with the
CA, however the CA merely affirmed the decision of OP.
ISSUE:

1. whether La Savoie had the authority to sell the subdivision lots pursuant to the JVA and its
Addendum (YES)
2. assuming arguendo that La Savoie had the authority to sell under the JVA, whether such authority
had already been rescinded prior to the execution of the Contract to Sell with Mariño. (NO)

RULING:
1. YES
The court find it clear from the pertinent provisions of the JVA that contrary to BPI's claim,
La Savoie was empowered to sell the Buenavista Park Subdivision lots, including the subject lot
it sold to Mariño.anrobleslaw
This conclusion proceeds from the examination of clauses 2.2, 3.1, and 6.2 of the JVA which
states that La Savoie had the power to, among others: (1) provide and exercise general
management over the project including its marketing and sales; (2) to act as BPI's attorney-
in-fact with full power and authority to take full possession of the realty, including engaging
the services of brokers; and (3) sell the lots, within the specified period. Additionally, La
Savoie had the authority to receive and give receipts under its name, payments from buyers
of the subdivision lots, per clause 7.1 of the JVA.

2. NO

contrary to BPI's assertion, the Contract to Sell between La Savoie and Mariño was
executed before BPI categorically withdrew La Savoie's authority to sell under the JVA. Note
that per clause 8.1 of the JVA, in case La Savoie fails or refuses to perform its obligations under the
JVA or violates any provisions of the JVA, BPI could either sue the former for specific performance or
cancel the contract via written communication to this effect.

In this case, BPI's option to cancel the JVA, instead of suing for specific performance, became
categorically clear only on February 28, 1998 when it filed the JVA rescission case against La Savoie.
La Savoie and Mariño entered into the Contract to Sell on July 18, 1997 or seven (7) months prior to
the filing of the JVA rescission case; undoubtedly, La Savoie then still retained the full authority under
the JVA to enter into the Contract to Sell with Mariño.

While BPI wrote La Savoie several letters prior to the filing of the JVA rescission case, i.e., on July
22, 1996, August 15, 1996, September 30, 1996, and August 15, 1997, requesting and/or asking the
latter to suspend or stop selling the subdivision lots until they have agreed on the selling price, BPI
never categorically terminated the JVA nor withdrew La Savoie's authority to sell through these
letters.bleslaw

Notably, and again contrary to BPFs claim, these letters show that it did not cancel the JVA prior
to the filing of the JVA rescission case because, as of its August 15, 1997 letter, it was still about to
invoke the termination clause of the JVA.

-oOo-
Case Digest prepared by: Allen S. Mercado

AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM (AFPRSBS) v. EDUARDO

SANVICTORES
G.R. No. 207586; August 17, 2016
Ponente: Justice Jose Catral Mendoza

Statement of Facts:

Sometime in 1994, Prime East Properties, Inc. (PEPI), formerly Antipolo Properties, Inc.,
offered to Eduardo Sanvictores for sale on installment basis a parcel of land in Village East Executive
Homes designated as Lot 5, Block 64, Phase II covering an area of approximately 204 square meters
and situated in Tayuman, Pantok, Binangonan, Rizal. On April 20, 1994, Sanvictores paid the required
down payment of Php 81,949.04. A Contract to Sell was executed by and between PEPI and AFPRSBS,
as the seller, and Sanvictores, as the buyer. On February 27, 1999, Sanvictores paid in full the
purchase price of the subject property in the amount of Php 534,378.79. However, despite the full
payment, PEPI and AFPRSBS failed to execute the corresponding Deed of Absolute Sale and deliver
the corresponding title thereto. Sanvictores made his demand to PEPI but the latter claimed that the
title of the subject property was still with the Philippine National Bank (PNB) and could not be
released due to economic crisis. Despite Sanvictores’ repeated follow-ups with PEPI, the latter did
not communicate for a period of four years.

As a defense, PEPI argued, inter alia, that the complaint should be dismissed for (1) lack of
cause of action; (2) that it could not be faulted for delay in the delivery of the title due to force
majeure; (3) that it substantially complied with its obligation in good faith; and (4) that it was always
transparent in dealing with the public.

For its part, AFPRSBS countered that it was not the owner and developer of Village East
Executive Homes but PEPI and that the latter alone was the seller.

Statement of the Case:

Sanvictores filed a complaint for rescission of the Contract to Sell, refund of payment,
damages, and attorney’s fees against PEPI and AFPRSBS before the HLURB. On March 27, 2006, the
HLURB Arbiter rendered a decision in favor of Sanvictores. The HLURB Arbiter ruled that Sanvictores
was entitled to the reliefs he prayed for because of the unjustified refusal of the seller to execute the
deed of absolute sale and to deliver the title to the subject property despite the full payment of the
purchase price. The seller’s unjustified refusal constituted a substantive breach of its legal and
contractual obligation. Accordingly, pursuant to the appeal made by PEPI and AFPRSBS, the HLURB
Board affirmed the decision of the HLURB Arbiter as it found no reversible error.

On June 22, 2010, the Office of the President upheld the decision of the HLURB Board. It stated
that in the contract to sell PEPI and AFPRSBS were referred to singly as the “seller” and there were
no delineations whatsoever as to their rights and obligations. Hence, the OP concluded that their
obligation to Sanvictores was joint and several.

The Court of Appeals affirmed the decision of the Office of the President.
Issue:

Whether or not petitioner AFPRSBS is jointly and severally liable with PEPI to the respondent.

Ruling:

The Supreme Court ruled in the affirmative. Hence, it denied the Petition for Review on
Certiorari filed by AFPRSBS.

In a wealth of cases, the Court has consistently ruled that the factual findings and conclusions
of an adjudicative body, especially when affirmed on appeal and supported by enough evidence, are
entitled to great weight, full respect and even finality by the Court, because administrative agencies
or quasi-judicial bodies are clothed with special knowledge and expertise on specific matters within
their jurisdiction. In the absence of any proof showing grave abuse of discretion, the appellate court
will not disturb their factual findings and conclusions.

In the case at bench, the HLURB, the OP and the CA were one in ruling that AFPRSBS was
jointly and severally liable with PEPI to Sanvictores. There is no doubt that the nature of the
obligation of PEPI and AFPRSBS under the subject contract to sell was solidary. In the said contract,
PEPI and AFPRSBS were expressly referred to as the “seller” while Sanvictores was referred to as the
“buyer”. This could only mean that PEPI and AFPRSBS were considered as one seller in the contract.
As correctly pointed out by the administrative tribunals and the CA, there was no delineation as to
their rights and obligations.

Also in the said contract, the signatories were Espina, representing PEPI; Mena, representing
AFPRSBS; and Sanvictores. Furthermore, the signature of Espina and Mena were affixed in the last
portion of the Deed of Restrictions under the word “owner” with Espina signing for PEPI and Mena
for AFPRSBS. AFPRSBS is estopped from denying Mena’s authority to represent it. It is quite obvious
that AFPRSBs clothed Mena with apparent authority to act on its behalf in the execution of the
contract to sell. There is estoppel when the principal has clothed the agent with indicia of authority
as to lead a reasonably prudent person to believe that the agent has such authority. Therefore, in an
agency by estoppel or apparent authority, the principal is bound by the acts of his agent with the
apparent authority which he knowingly permits the agent to assume, or which he holds the agent out
to the public as possessing.

-oOo-
Case Digest prepared by: Allen S. Mercado

REPUBLIC OF THE PHILIPPINES v. DANILO A. PANGASINAN

G.R. No. 214077; August 10, 2016
Ponente: Justice Presbitero J. Velasco, Jr.

Statement of Facts:

Danilo and Jospehine Pangasinan first met at the Philippine Plaza Hotel in Manila where they
were both working sometime in 1981. Following a three-month courtship, Josephine became
pregnant. To erase any notion of impropriety, the couple immediately contracted marriage, first
civilly on December 29, 1981, followed by a church wedding on January 23, 1982. The couple begot
three children—Juan Carlo, Julia Erika and Josua.

At the outset, life for Danny and Josephine generally ran harmoniously, although marred from
time to time by arguments about money matters. However, sign of marital kinks appeared when
Danilo’s business began to slow down.

When Danilo came back from a business trip, he found an irate Josephine seething at him.
Josephine’s sudden demand to see his passbook so enraged Danilo that he tossed the passbook in
front of her. Out of anger and exasperation, Danilo grabbed and smashed two glass cups beside him,
while Josephine continued on with her tirade against him. Josephine left the conjugal home the next
day, never to resume cohabitation with Danilo.

Statement of the Case:

Josephine filed a number of cases against Danilo, viz.: (1) two cases for violation of Republic
Act No. 9262 or the Anti-Violence against Women and their Children Act of 2004 and (2) a Petition
for Annulment—all of which she would withdraw. Subsequently, however, she filed an (3) Action for
Legal Separation.

After 30 years of marriage, Danilo filed a Petition dated May 25, 2011 before the Regional
Trial Court praying for the declaration of nullity of his marriage to Josephine on the ground of the
latter’s psychological incapacity under Article 36 of the Family Code. The petition was consolidated
with the legal separation case that Josephine filed, but which has, however, ordered archived by the
trial court upon her motion.

Danilo alleged that he discovered his wife as competitive, domineering, headstrong, and
always determined to get what she wanted in the relationship. Their disagreements even over the
most trivial matters usually ended up in fights. Josephine’s negative traits, so Danilo averred, existed
prior to their marriage. These include an exaggerated sense of self-importance and sense of
entitlement by giving the impression that she was superior to him. Aside from these, Danilo alleged
that Josephine was indifferent and lacked empathy to his plight as shown by her lack of concern for
his distress when she failed to take care of him in the hospital when he was recuperating from two
heart surgeries in 2009. In support of his case, Danilo presented Dr. Natividad A. Dayan, a clinical
psychologist, who, in her Psychological Evaluation Report, concluded that both Josephine and Danilo
are psychologically incapacitated to fulfill their essential marital obligations.

On the other hand, Josephine manifested that she is no longer presenting controverting
evidence and is leaving the issue of nullity of their marriage entirely to the trial court for evaluation.
 In its decision dated March 6, 2012, the RTC declared the marriage between Danilo and
Josephine void from the start, noting, inter alia, that the totality of evidence presented show that both
parties failed to establish a functional family as they were incapacitated to comply with their marital
obligations. The petition for legal separation was, however, dismissed for lack of merit. Upon appeal
by the Republic of the Philippines, through the Office of the Solicitor General, the Court of Appeals
affirmed the trial court’s findings that Josephine, indeed, suffers from psychological incapacity. The
Motion for Reconsideration of the averted Decision was likewise denied by the Court of Appeals.

Issue:

Whether or not the totality of evidence presented warrants, as the courts a quo determined,
the declaration of nullity of Danilo and Josephine’s marriage based on their psychological incapacity
under Article 36 of the Family Code.

Ruling:

The Supreme Court ruled in the negative. As declared by the Supreme Court in Santos v. Court
of Appeals, psychological incapacity must be characterized by: (a) gravity; (b)juridical antecedence;
and (c) incurability. Thereafter, in Republic v. Court of Appeals, also known as the Molina case, the
Court laid down guidelines in the disposition of psychological incapacity cases.

A person’s psychological incapacity to comply with his or her essential obligations, as the case
may be, in marriage must be rooted on a medically or clinically identifiable grave illness that is
incurable and shown to have existed at the time of marriage, although the manifestations thereof may
only be evident after marriage. Using the abovementioned standards in the present case, the Court
finds that the totality of evidence presented is insufficient to establish Josephine and Danilo’s
psychological incapacity.

The totality of evidence presented failed to establish the psychological incapacity of the
parties. A careful reading of Dr. Dayan’s testimony reveals that it was replete with generalities and
wanting in factual bases. It bears noting that while Dr. Dayan testified that she was able to interview
Josephine, the said interview was conducted only through a phone call. This greatly undermines the
credibility of the results of the psychological evaluation of Josephine.

The stringency by which the Court assesses the sufficiency of psychological evaluation
reports is necessitated by the pronouncement in the 1987 Philippine Constitution that marriage is
an inviolable social institution protected by the State. It cannot be dissolved at the whim of the
parties, especially where the pieces of evidence presented are grossly deficient to show the juridical
antecedence, gravity and incurability of the condition of the party alleged to be psychologically
incapacitated to assume and perform the essential marital duties. Any doubt should be resolved in
favor of its existence and continuation and against its dissolution and nullity.

Further, in Marable v. Marable, the Supreme Court stressed that psychological incapacity
must be more than just a “difficulty”, “refusal” or “neglect” in the performance of some marital
obligations. Rather, it is essential that the concerned party was incapable of doing so, due to some
psychological illness existing at the time of the celebration of marriage.

Lastly, neither can the marriage be nullified on the basis of Danilo’s supposed psychological
incapacity pursuant to Section 2 (d) of the Rule on Declaration of Absolute Nullity of Void Marriages
and Annulment of Voidable Marriages which states that “a petition under Article 36 of the Family
Code shall specifically allege the complete facts showing that either or both parties were
psychologically incapacitated from complying with the essential marital obligations of marriage at
the time of the celebration of marriage even if such incapacity becomes manifest only after its
celebration.”

-oOo-
Case Digest prepared by: Allen S. Mercado

LUZ S. NICOLAS v. LEONORA C. MARIANO

G.R. No. 201070; August 1, 2016
Ponente: Justice Mariano C. Del Castillo

Statement of Facts:

The subject of the controversy is the one-half portion of a 155 square meter parcel of land
known as Lot 13-A, Blk 40 located at 109 Kapayapaan St., Bagong Barrio, Caloocan City and covered
by TCT No. C-44249. The parcel of land is part of the National Housing Authority’s (NHA) Bagong
Barrio Project and built thereon is Leonora Mariano’s five-unit apartment which she leases out to
tenants.

In 1972, Leonora Mariano filed with the NHA an application for a land grant under the Bagong
Barrio Project. In 1978, the NHA approved the application, thus, her institution as grantee of the
foregoing parcel of land. The grant, however, is subject to a mortgage inscribed on the dorsal side of
TCT No. C-44249. Accordingly, the NHA withheld conveyance of the original TCT to Leonora Mariano,
furnishing her instead a photocopy thereof, until her full payment of the mortgage loan. The NHA’s
Statement of Account indicates that as of September 30, 2004, Leonora Mariano’s outstanding
obligation amounted to Php 37,679.70.

On January 28, 1998, Leonora Mariano obtained a Php 100,000.00 loan from Luz Nicolas with
a payment term of ten months at the monthly interest rate at 7%. To secure the loan, she executed a
Mortgage Contract over the subject property. On February 22, 1999, Leonora Mariano, having
defaulted in the payment of her obligation, executed in favor of Luz Nicolas a second mortgage deed
denominated as Sanglaan ng Lupa at Bahay—this time mortgaging not only the subject property but
also the improvements thereon worth Php 552,000.00 inclusive of the original loan of Php
100,000.00.

On June 7, 2000, Leonora Mariano, similarly defaulting on the second obligation, executed a
deed of Absolute Sale of Real Property, conveying to Luz Nicolas the ownership of the subject
property and the improvements thereon for a purchase price of Php 600,000.00. Interestingly, it
appears that from June 1999 until June 2004, the tenants of Leonora Mariano’s five-unit apartment
have been remitting monthly rentals to Luz Nicolas which amounted to Php 600,000.00 as well.

Statement of the Case:

On July 8, 2004, Leonora Mariano filed a complaint for Specific Performance with Damages
and with prayer for the issuance of a Temporary Restraining Order and thereafter a Permanent
Mandatory Injunction against Luz Nicolas before the RTC of Caloocan City. Leonora Mariano sought
to be released from the second mortgage agreement and stop Luz Nicolas from further collecting
upon her credit through the rentals from her apartments claiming that she has fully paid her debt.
The RTC ruled in favor Leonora Mariano considering that at the time of the execution of the Deed of
Absolute Sale there was no consideration for the sale of the property. Thus, the RTC ordered the
cancellation of the two mortgages, ordered Luz Nicolas to stop collecting further monthly rentals, to
pay for moral damages and to pay the costs of the suit.
On appeal, the Court of Appeals partly upheld the decision of the RTC of Caloocan City
declaring that the Absolute Sale of Real Property invalid on the ground that Leonora Mariano, the
supposed vendor of the subject property, is also not the owner thereof. For a sale to be valid,
according to the appellate court, it is imperative that the vendor is the owner of the property sold
pursuant to the well-settled principle of “nemo dat quod non habet”—or one cannot give what he does
not own. However, the Court of Appeals deleted the moral damages decreed by the RTC in favor of
Leonora Mariano.

Hence, Luz Nicolas filed a Petition for Review on Certiorari before the Supreme Court.

Issues:

(1) Whether or not the Court of Appeals seriously erred in holding that Leonora Mariano was
not the absolute owner at the time the Deed of Absolute Sale was executed; and

(2) Whether or not the deed of sale over the subject property between the parties is valid and
binding.

Ruling:

The Supreme Court denied the Petition for Review on Certiorari filed by Luz Nicolas. The High
Court held that while title to subject TCT No. C-44249 is in the name of Leonora Mariano, she has not
completed her installment payments to NHA. Thus, if she never became the owner of the subject
property, then she could not validly mortgage and sell the same to Luz Nicolas. The principle nemo
dat quod non habet certainly applies.

Luz Nicolas is charged with knowledge of the circumstances surrounding the subject
property. The dorsal side of the TCT constitutes sufficient warning as to the subject property’s
condition at the time. In other words, the subject TCT was not a clean title, and if Luz Nicolas exercised
diligence, she would have discovered that Mariano was delinquent in her installment payments to
the NHA.

For her part, Mariano cannot recover damages on account of her claimed losses arising from
her entering into contract with Nicolas. Realizing that she is not the owner of the subject property
and knowing that she has not fully paid the price therefor, she is guilty as Nicolas for knowingly
mortgaging and thereafter selling what is not hers. As correctly held by the appellate court, both
parties are not in good faith; they are deemed in pari delicto or in equal fault, and for this, “neither
one may expect positive relief from courts of justice in the interpretation of their contract. The Courts
will leave them as they were at the time the case was filed.” With this foregoing pronouncement, the
Supreme Court found it unnecessary to tackle the other concomitant issues raised by the parties.
They have become irrelevant in light of the view taken of the case.

-oOo-
Case Digest prepared by: Mirabel Ortiz

VICTORIA ECHANES v. SPOUSES PATRICIO HAILAR and ADORACION HAILAR

G.R. No. 203880
Augus,t 10, 2016
PERALTA, J.

FACTS:

The late Eduardo Cuenta was the owner of an unregistered parcel of land with an area of
1,447 square meters, more or less, located at Poblacion Anquileng (now Burgos), Sta. Lucia, Ilocos
Sur designated as Lot No. 2297 of the Cadastral Survey of Sta. Lucia, Ilocos, Sur. As the owner of the
said property, he was issued Tax Declaration No. 7622-C. On July 8, 1996, the heirs of Eduardo Cuenta
executed an Extrajudicial Settlement dividing and adjudicating unto themselves the parcel of land
left by Eduardo Cuenta. A portion of Lot No. 2297 denominated as Lot No. 2297-A comprising 495
square meters was adjudicated to petitioner who is one of the heirs (granddaughter) of Eduardo
Cuenta. Thereafter, petitioner applied for a free patent over Lot No. 2997-A. Accordingly, an Original
Certificate of Title No. P-43056 was issued in her name by the Register of Deeds of Ilocos Sur on
October 15, 1996. A portion of Lot No. 2297-A with an area of more or less 80 square meters is
currently occupied by respondents. Since petitioner's children are in need of the area currently
occupied by respondents, petitioner sent respondents a Notice to Vacate. Despite receipt of said
demand letter, respondents refused to vacate the premises.

On April 14, 2009, petitioner filed a Complaint for Ejectment with Damages before the MCTC
of Sta. Cruz-Sta. Lucia, Ilocos Sur. Petitioner averred that during the lifetime of her parents,
respondents asked her parents that they be allowed to build their nipa house on the subject lot. The
request by respondents was allegedly made in the presence of the petitioner. The request was
granted by petitioner's parents on the condition that respondents would voluntarily vacate the land
when the petitioner's family need the same. Thus, according to petitioner, respondents' continued
possession and occupation of the subject lot is out of tolerance and permission granted to them by
petitioner and her parents.

In their Answer, respondents countered that the late Domingo Joven (who died in 1967). 13
the father of respondent Adoracion Joven Hailar, purchased the subject lot from the late Eduardo
Cuenta after World War II as evidenced by Tax Declaration No. 12141-C14 in the name of Domingo
Joven issued in 1959. From then on, respondent Adoracion Joven Hailar and her siblings occupied
and exercised acts of dominion, and have been in possession of the land exclusively, publicly,
continuously for more than 40 years as evidenced by tax declarations and realty tax payments made
by them. They built their family house thereon, and later, a house made of concrete materials was
built.

Hence, MCTC of Sta. Cruz - Sta. Lucia, Ilocos Sur rendered a Decision dismissing the complaint
but without prejudice on the part of the plaintiff in filing an accion publiciana or accion
reivindicatoria, before the proper court. There being no proof of evident bad faith against the plaintiff
in filing the instant case, no award of fees or damages may be granted.
RTC, however, reversed and set aside the Decision of the MCTC. On the other hand, CA reversed and
set aside the decision of the RTC and reinstated and affirmed the decision of the MCTC. Hence, this
petition.
ISSUE: Whether the petitioner failed to prove tolerance, by preponderance of evidence with respect
to the possession of the respondents over the subject lot.
HELD: The Court ruled in the affirmative.

It bears to reiterate that settled is the rule that 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 party's 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.

Therefore, since the issue of ownership is raised in this unlawful detainer case, its resolution
boils down to which of the parties' respective evidence deserves more weight.

To prove the allegation of tolerance on the part of petitioner, she presented, among others, a
portion of Transcript of Stenographic Notes (TSN) dated September 11, 2003 taken during the
hearing in the case for Quieting of Title and Annulment of Title filed against petitioner before the
same MTC, and argued why the same was not considered by the MTC in the resolution of the issue. A
perusal of the said TSN would show that Filomena Carbonell, sister of petitioner, testified that after
World War II, Domingo Joven approached her aunt and begged that he be allowed to build a house
on the disputed property. This lone statement of said witness in another case revealed somehow that
it was not the parents of petitioner who allegedly tolerated the occupation of respondents contrary
to the allegation of petitioner in her complaint.

Consequently, in an action for forcible entry and detainer, if plaintiff can prove prior physical
possession in himself, he may recover such possession even from the owner, but, on the other hand,
if he cannot prove such prior physical possession, he has no right of action for forcible entry and
detainer even if he should be the owner of the property.

There is no dispute that the respondents had continuously and openly occupied and
possessed, in the concept of an owner, the subject property from the time they purchased it from
Eduardo Cuenta. They segregated and declared for taxation purposes as early as 1959 the portion of
Lot No. 2297-A consisting of 231 square meters. The property was consistently declared for taxation
purposes until 2007. While tax declarations and realty tax payments are not conclusive proofs of
possession, they are good indicia of possession in the concept of an owner based on the presumption
that no one in his right mind would be paying taxes for a property that is not his actual or constructive
possession.

Hence, the Court agreed with the ruling of the MTC that, compared to the bare assertion of
petitioner that her parents merely tolerated respondents' possession, the version of the respondents
that they are occupying the property by virtue of the conveyance in their favor through purchase
many years ago is more credible.
-oOo-
Case Digest prepared by: Mirabel Ortiz
SERGIO R. OSMENA III v. POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT
CORPORATION, EMMANUEL R. LEDESMA, JR., SPC POWER CORPORATION, and THERMA
POWER VISAYAS, INC.
G.R. No. 212686
October 5 , 2016
VELASCO, JR., J.

FACTS:

On December 27, 2013, the Board of Directors of the Power Sector Assets and Liabilities
Management Corporation (PSALM) approved the commencement of the 3rd round of bidding for the
sale of the 153.1MW NPPC. Respondents SPC Power Corporation (SPC) and TVPI submitted their
respective bids for the project. In due course, PSALM issued a Notice of Award dated April 30, 2014
in favor of TPVI, declaring the latter as the Winning Bidder. The execution of a Land Lease Agreement
(LLA) and Assets Purchase Agreement (APA) in favor of TPVI, however, was subject to SPC’s non-
exercise of its Right to Top.

The pertinent portion of the Notice of Award provides:

PSALM’s execution of the APA, however, shall be subject to the second paragraph of Section
IB-20 (Award to the Winning Bidder) of the Bidding Procedures, which provides that: “PSALM’s
entering into the Asset Purchase Agreement with the Winning Bidder shall be subject to SPC’s rights
under Section 3.02 of the LLA. Hence, if the exercise of the rights of SPC under Section 3.02 of the LLA is
legally and validly consummated, PSALM shall not enter into the Asset Purchase Agreement with the
Winning Bidder. Should SPC not exercise its rights under Section 3.02 of the LLA or if the exercise of the
rights of SPC under Section 3.02 of the LLA is not legally and validly consummated, upon notice by
PSALM, the Winning Bidder must enter into and fully and faithfully comply with the Asset Purchase
Agreement.”

On the assumption that SPC validly exercised its Right to Top, PSALM executed the NPPC-APA
and NPPC-LLA in SPC’s favor, cancelling TPVI’s Notice of Award in the process. The Right to Top and
the resultant agreements from its exercise, however, were subsequently nullified by the Court.

Petitioner Sergio R. Osmeñ a III (Osmeñ a) and respondents PSALM and SPC filed their
respective motions for reconsideration. Respondent TPVI, on the other hand, filed the instant
Manifestation/Motion wherein it maintained that the nullification of SPC’s Right to Top calls for the
reinstatement of the cancelled April 30, 2014 Notice of Award in its favor.

The Court resolved to deny with finality SPC’s motion on December 9, 2015, and those of
Osmeñ a and PSALM on April 6, 2016. Notwithstanding the denial with finality of their respective
motions, they were nevertheless required to comment on TPVI’s Manifestation/Motion that
remained unresolved. For their part, respondents SPC and PSALM contend that the Decision resulted
in the material alteration of the terms of the public bidding and called for the conduct of another in
its stead.

ISSUE: Whether the obligation to award the NPPC-LLA and NPPC-APA to TPVI is due and
demandable.
HELD:

The Court ruled in the affirmative.

The award of the NPPC-LLA and NPPC-LLA to TPVI finds justification under Arts. 1181 and
1185 of the Civil Code.

Article 1181. In conditional obligations, the acquisition of rights, as well

as the extinguishment or loss of those already acquired, shall depend upon the happening of the event
which constitutes the condition.

Article 1185. The condition that some event will not happen at a determinate time shall render
the obligation effective from the moment the time indicated has elapsed, or if it has become evident
that the event cannot occur. x x x (emphasis added)

The Court explained in The Wellex Group, Inc. v. U-Land Airlines, Co., Ltd. that, under Art. 1185,
if an obligation is conditioned on the non-occurrence of a particular event at a determinate time, that
obligation arises (a) at the lapse of the indicated time, or (b) if it has become evident that the event
cannot occur.

In the case at bar, PSALM’s obligation to award the contract in TPVI’s favor was dependent
on the non-occurrence of an event: SPC’s legal and valid exercise of its Right to Top. As phrased by
PSALM: “the approval of the sale to TPVI was a conditional one, the consummation of which is
dependent on the non-exercise by SPC of its right to top.” It has become apparent, however, that such
event will never occur. SPC can never legally and validly invoke its Right to Top in view of its nullity.
The condition, therefore, is deemed complied with by operation of law, and the obligation to execute
the purchase contracts in favor of TPVI, due and demandable.

Consequently, regardless of whether or not the Right to Top was nullified, the award of the
purchase contracts to TPVI would still be in order, for it appears that SPC did not validly exercise its
erstwhile advantage. The exercise of the Right to Top is no different from the manner of perfecting
any other sales contract. It is perfected by mere consent, upon a meeting of the minds on the offer
and the acceptance thereof based on subject matter, price and terms of payment.

In the case at bar, PSALM Chief Emmanuel R. Ledesma, Jr., on April 29, 2014, wrote to SPC
informing the latter that it has the right to top the winning bid of TPVI for a 10-year lease on NPPC
that will expire on January 29, 2020. The letter likewise directed SPC to pay within thirty (30) days
should it exercise the said right. Thus, when the 30-day period to exercise the Right to Top was about
to lapse, the standing offer to SPC was for a lease expiring on January 29, 2020. Without SPC
communicating its unqualified acceptance of such offer before the Right to Top expired, the award of
the purchase contracts to TPVI became due.

Although the Department of Justice eventually found for SPC on June 23, 2014, the 30-day
period to exercise the Right to Top has already elapsed, and the said right, by then, could no longer
be validly or legally consummated. It was incumbent upon SPC to seek judicial intervention to toll
the running of the 30-day period pending the resolution of the issue. No recourse, however, was
interposed by SPC.
 Hence, the Manifestation/Motion dated March 16, 2016 of respondent TPVI is granted and
Respondent PSALM is further directed to execute the NPPC-AP A and NPPC-LLA in favor of
respondent TPVI with dispatch.

-oOo-
Case Digest prepared by: Mirabel Ortiz
SPOUSES JOVEN SY and CORAZON QUE SY v. CHINA BANKING CORPORA TION
G.R. No. 215954
August 1, 2016
MENDOZA, J.

FACTS:

Three promissory notes were executed by petitioners in favor of China Bank. The first
amounted to P8,800,000.00, designated as PN No. 5070016047; the second covering P5,200,000.00,
designated as PN No. 5070016030; and the third involving P5,900,000.00, designated as PN No.
5070014942. Under PN Nos. 5070016047 and 5070016030, petitioners promised to pay China Bank
the due amounts within a period of 351 days on or before June 14, 2002 with interest payable in
advance for 15 days from June 28, 2001 to July 13, 2001 at 16% per annum, with the succeeding
interest payable starting July 13, 2001 and every month thereafter until fully paid at the prevailing
rate as determined on the date of interest payment.

In PN No. 5070014942, petitioners promised to pay the principal amount at the rate of
Pl00,000.00 monthly for a period of 59 months with interest payable monthly at prevailing rates,
initially at 23.5%. Part of the terms of the PNs was an agreement for petitioners to pay jointly and
severally penalty charges equivalent to 1/10 of 1% per day of the total amount due should they
default, payable and due from the date of default until fully paid. Petitioners also agreed to pay 10%
of the total amount due as attorney's fees. The said PNs were also secured by a real estate mortgage
over petitioners' property covered by TCT No. N-155159.

Petitioners, however, failed to comply with their obligation which eventually amounted to a
total ofP.28,438,791.69. This forced China Bank to foreclose the mortgaged property on February 26,
2004. There being a deficiency, China Bank demanded in a letter, dated April 19, 2004, that
petitioners settle the balance in the amount of P13,938,791.69, but to no avail.

China Bank then filed its complaint for sum of money before the RTC praying that judgment
be rendered ordering petitioners to pay, jointly and severally, the amount of P13,938,791.69
representing the amount of deficiency, plus interest at the legal rate, from February 26, 2004 until
fully paid; an additional amount equivalent to 1/10 of 1% per day of the total amount, until fully paid,
as penalty; an amount equivalent to 10% of the said amounts as attorney's fees and expenses of
litigation; and costs of suit.

However, petitioners failed to appear despite notice for the initial presentation of
defendants' evidence. Thus, RTC considered the case submitted for decision on the basis of the
evidence presented by China Bank and ruled in favor of the latter. It, however, held as unconscionable
the penalty charges stipulated in the PNs amounting to 1/10 of 1% per day or 3% per month,
compounded. Anchoring on its authority under Art. 1229 of the Civil Code, the RTC reduced the
penalty charges to only 1% on the principal loan for every month of default. It also sustained the
payment of attorney's fees but modified the amount for being unreasonable to only Pl00,000.00
instead of the 10% of the total amount due. On the other hand, CA affirmed the ruling of the RTC.
Hence, this petition.

ISSUE: Whether the CA erred in finding no reversible error on the part of the RTC in affirming the
computed amount of petitioners' liability as stated in the dispositive portion of the RTC decision.
HELD:

Undisputed is the fact that China Bank was no longer collecting under the terms of the three
PNs issued by petitioners, but was anchoring all its claims on its right to the deficiency balance owed
by petitioners after failing to recover the full amount due from the foreclosure sale of the mortgaged
property.

Thus, in holding petitioners liable for the deficiency balance of P13,938,791.69, the
computation of which already included penalty charges at the rate of 1/10 of 1% per day, the RTC
committed a palpable error and contradicted its own ruling. The penalty charges and, necessarily,
the deficiency balance, should have been computed much lower after applying the reduced rate of 1
% per month of default. To be exact, petitioner's total penalty charges should only amount to
Pl,849,541.26 and not P5,548,623.78. Moreover, instead of being liable for interest charges in the
amount of Pl,938,216.15, petitioners should have been adjudged only liable for Pl,911,665.24. Lastly,
the attorney's fees to be paid by petitioners as agreed upon should then be added to the total
outstanding balance computed above. The RTC, however, in adopting the computation of China Bank
in toto, did not notice that it included attorney's fees in the amount of P112,585,344.70 representing
10% of the total amount as stated in the PNs. This was clearly improper and contrary to its
pronouncement reducing the attorney's fees to only Pl00,000.00. Thus, with the Pl00,000.00
representing attorney's fees, the amount of the outstanding balance should now amount to only
P22,234,132.93. And because China Bank already realized P14,500,000.00 from the foreclosure of
petitioners' mortgaged property, the outstanding balance should stand only at P7,734,132.93.

However, an interest of twelve (12) percent per annum on the deficiency balance to be
computed from April 19, 2004 until June 30, 2013, and six (6) percent per annum thereafter, until
fully satisfied, should be paid by the petitioners following Bangko Sentral ng Pilipinas Monetary
Board Resolution No. 796, dated May 16, 2013, and its Circular No. 799, Series of 2013, together with
the Court's ruling in Nacar vs. Gallery Frames. An interest of 1% per month is no longer imposed as
the terms of the PNs no longer govern. As explained earlier, China Bank's claims are based now solely
on the deficiency amount after failing to recover everything from the foreclosure sale on February
26, 2004.

Hence, the petition is affirmed with modifications. Respondent spouses Joven Sy and Corazon
Que Sy are ordered to pay petitioner China Banking Corporation P7,734,132.93, representing the
deficiency of their obligation, net of the proceeds of the foreclosed property, plus legal interest of
12% per annum from April 19, 2004 until June 30, 2013, and 6% per annum thereafter, until fully
satisfied.

-oOo-
Case Digest prepared by: Bianca Mari Herrera

SANGGUNIANG PANLALAWIGAN OF BATAAN v. CONGRESSMAN ENRIQUE T. GARCIA, JR.,

MEMBERS OF THE FACULTY, CONCERNED STUDENTS AND THE BOARD OF TRUSTEES OF THE
BATAAN POLYTECHNIC STATE COLLEGE
G.R. No. 174964, October 05, 2016, Reyes, J.

Facts:

Lot Nos. 2193 and 2194 of the Bataan Cadastre were registered in the name of the Province
of Bataan. Both lots were embraced in Original Certificate of Title (OCT) No. N-182, and occupied by
the Bataan Community Colleges (BCC) and the Medina Lacson de Leon School of Arts and Trades
(MLLSAT), both State-run schools. Subsequently, the Congress passed RA 8562, authored by
Congressman Garcia, converting the MLLSAT into a polytechnic college, to be known as the Bataan
Polytechnic State College (BPSC), and integrating thereto the BCC. Cong. Garcia wrote to then
Governor of Bataan Leonardo Roman, and the Sangguniang Panlalawigan of Bataan (petitioner),
requesting them to cause the transfer of the title of the aforesaid lots to BPSC. No transfer was
effected. Thus, Cong. Garcia, along with the faculty members and some concerned students of BPSC
(collectively, the respondents) filed a Special Civil Action for Mandamus with the RTC of Balanga,
Bataan against the Governor and the petitioner. The RTC granted the writ of mandamus. The
Governor and the petitioner appealed to the CA alleging that the subject lots were the patrimonial
properties of the Province of Bataan, and as such they cannot be taken by the National Government
without due process of law and without just compensation. They also pointed out that certain loan
obligations of the Province of Bataan to the Land Bank of the Philippines (LBP) were secured with a
mortgage on the lots; and since the mortgage lien was duly annotated on its title, OCT No. N-182, the
writ of mandamus violated the non-impairment clause of the Constitution. The CA affirmed the RTC;
hence, the case.

Issue:

Whether the subject parcels of land are patrimonial properties of the Province of Bataan
which cannot be taken without due process of law and without just compensation.

Ruling:

No. Under the well-entrenched and time-honored Regalian Doctrine, all lands of the public
domain are under the absolute control and ownership of the State. As adopted in our republican
system, this medieval concept is stripped of royal overtones; and ownership of all lands belonging to
the public domain is vested in the State. Also, local government property devoted to governmental
purposes, such as local administration, public education, and public health, as may be provided under
special laws, is classified as public. Thus, properties devoted to such purposes are considered public
and Congress has absolute control over it.

Property registered in the name of the municipal corporation but without proof that it was
acquired with its corporate funds is deemed held by it in trust for the State. In the absence of a title
deed to any land claimed by the City of Manila as its own, showing that it was acquired with its private
or corporate funds, the presumption is that such land came from the State upon the creation of the
municipality (Unson vs. Lacson, et al., 100 Phil. 695). It may, therefore, be laid down as a general rule
that regardless of the source or classification of land in the possession of a municipality, excepting
those acquired with its own funds in its private or corporate capacity, such property is held in trust
for the State for the benefit of its inhabitants, whether it be for governmental or proprietary purposes.
It holds such lands subject to the paramount power of the legislature to dispose of the same, for after
all it owes its creation to it as an agent for the performance of a part of its public work, the
municipality being but a subdivision or instrumentality thereof for purposes of local administration.
Accordingly, the legal situation is the same as if the State itself holds the property and puts it to a
different use (2 Mc Quilin, Municipal Corporations, 3rd Ed. p. 197, citing Monagham vs. Armatage, 218
Minn. 27, 15 N. W. 2nd 241).

True it is that the legislative control over a municipal corporation is not absolute even when
it comes to its property devoted to public use, for such control must not be exercised to the extent of
depriving persons of their property or rights without due process of law, or in a manner impairing
the obligations of contracts. Nevertheless, when it comes to property of the municipality which it did
not acquire in its private or corporate capacity with its own funds, the legislature can transfer its
administration and disposition to an agency of the National Government to be exposed of according
to its discretion. Here it did so in obedience to the constitutional mandate of promoting social justice
to insure the well-being and economic security of the people.

-oOo-
Case Digest prepared by: Bianca Mari Herrera

CONCHITA A. SONLEY v. ANCHOR SAVINGS BANK/ EQUICOM SAVINGS BANK

G.R. No. 205623, August 10, 2016, Del Castillo, J.

Facts:

Petitioner alleged that she agreed to purchase a real property from Anchor for the sum of
Php2,200,000.00. Petitioner, however, defaulted in paying her monthly obligation which prompted
Anchor to rescind the contract to sell. In filing the complaint petitioner averred that the rescission of
the contract to sell was null and void because she had already substantially paid her obligation to the
bank. Anchor denied the allegations that were made by the petitioner in her complaint. On the
contrary, it contended that the post-dated checks which were issued by the petitioner in its favor
covering the monthly installments for the purchase of the subject property were all dishonored by
the drawee bank.

Subsequently, after the issuance of a Pre-Trial Order by the trial court, the parties agreed to
an amicable settlement and entered into a Compromise Agreement. On the basis thereof, the trial
court rendered a Judgment. However, Anchor later on filed a Manifestation and Motion for Execution
in the trial court claiming that petitioner had not been paying the agreed monthly installments in
accordance with the compromise agreement. Moreover, it averred that all the checks which the
petitioner issued to pay her obligations were again dishonored. Thus, Anchor prayed that a writ of
execution be issued in its favor. The trial court and the Court of Appeals ruled in favor of Anchor;
hence, the case.

Issue:

Whether the trial court had no power to issue a writ of execution in Civil Case No. 09-217 as
the issuance thereof was not authorized and specifically provided for in its August 16, 2010
Judgment.

Ruling:

No. Under Article 2041 of the Civil Code, "(i)f one of the parties fails or refuses to abide by the
compromise, the other party may either enforce the compromise or regard it as rescinded and insist
upon his original demand." "The language of this Article 2041 x x x denotes that no action for
rescission is required x x x, and that the party aggrieved by the breach of a compromise agreement
may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had
never been any compromise agreement, without bringing an action for rescission thereof. He need
not seek a judicial declaration of rescission, for he may 'regard' the compromise agreement already
'rescinded'. He need not seek a judicial declaration of rescission, for he may "regard" the compromise
agreement already rescinded.

The parties' Compromise Agreement states that - In case of failure of the plaintiff to pay, for
any reason whatsoever, the amount provided in the Schedule of Payment, the plaintiff hereby agrees
to pay, in addition to, and separate from, the interest rate agreed upon, a penalty charge of FIVE
PERCENT (5%) per month or a fraction thereof, based on unpaid installments computed from due
date until fully paid. This shall be without prejudice to the right of the defendant to rescind this
Compromise Agreement as provided under the "Contract to Sell" dated 21 December 2007 upon
compliance with the requirements provided for under the law. The Contract to Sell provides, on the
other hand, that - The failure of the BUYER to pay on due date any monthly installment in accordance
with the Schedule of Payment provided in Paragraph 2 - Manner of payment, or if, at any time, the
SELLER is of the opinion that the BUYER would be unable to pay or meet his obligations under this
Contract or in case the BUYER was declared in default by any other creditor, then the SELLER shall
be entitled, as a matter of right, to rescind this Contract.

While the assailed dispositions of the trial court and the CA do not specify the remedies that
respondent is entitled to, it is clear that rescission and eviction were specifically sought and prayed
for in respondent's Manifestation and Motion for Execution. Certainly, a compromise agreement
becomes the law between the parties. Once the compromise is perfected, the parties are bound to
abide by it in good faith. should a party fail or refuse to comply with the terms of a compromise of
amicable settlement, the other party could either enforce the compromise by a writ of execution or
regard it as rescinded and so insist upon his/her original, demand. Petitioner may be right in arguing
that respondent has the option to proceed with the sale and charge corresponding penalties instead,
pursuant to the stipulations in the Contract to Sell; however, respondent chose to rescind the same,
an option which it is equally entitled to by contract and under the law and thus evict petitioner from
the premises.

-oOo-
Case Digest prepared by: Bianca Mari Herrera

HAIDE BULALACAO-SORIANO v. ERNESTO PAPINA

G.R. No. 213187, August 24, 2016, Velasco Jr., J.

Facts:

The subject property was sold by the heirs of De Jesus to respondent Ernesto and his brother,
Manuel, for P15,000, as evidenced by a document denominated as "Extrajudicial Settlement of Estate
with Sale." The tax declarations covering the property, however, remained in the name of De Jesus.
Thereafter, respondent's father allowed petitioner Haide to stay and build a house on the lot, on the
condition that she would surrender possession thereof to the co-owners should the latter need the
property. Eventually, the Papina Brothers mortgaged the property to Haide to secure a P25,000 loan.
By virtue of the Sanglaan petitioner's possession of the subject property remained undisturbed.

Years after, Manuel, without Ernesto's knowledge, sold his share in the subject property to
Haide for P100,000, payable on installment, with the understanding that she would continue to
occupy the premises. The provisions of the contract pertinently read:esaw

XXX3. Na ang magbabayad sa kaukulang buwis ng lupa ay ang UNANG PANIG bago mailipat sa
IKALAWANG PANIG.4. Na ang IKALAWANG PANIG ang siyang may karapatan na mamosesyon at
makinabang sa lugar na nasasaad sa itaas. XXX

Pursuant to the Kasunduan, Manuel received from petitioner the payment leaving a balance
of P8,500. Anent the balance, Haide alleges that per their contract, it was Manuel's obligation to pay
for the taxes due on the property and to transfer the property in her name. Manuel, however, refused
to comply with his contractual obligation and instructed her instead to handle the transfers and that
any and all amounts to be paid by her in effecting such shall be deemed as payment of the P8,500
balance. Acting on Manuel's alleged instruction, petitioner claims that she shelled out P20,780 to
defray real property and estate taxes as well as other assessments due the Estate of De Jesus that
were due since 1983. Said unpaid taxes, according to her, were not settled by the Papina brothers
after they purchased the subject property from De Jesus. This amount of P20,780, according to
petitioner, is more than enough to cover the balance.

Petitioner refused to leave the premises when demanded by the Respondent brothers; hence,
the latter made a formal demand for petitioner to vacate the premises and surrender possession
thereof to him. Because of petitioner's refusal to vacate the property, respondent sought judicial
recourse via a Complaint for Ejectment before the Municipal Trial Court (MTC). The MTC dismissed
the complaint for lack of jurisdiction, holding that an element of unlawful detainer is not present
since respondent's demand to vacate was grounded on petitioner's occupation of the portion that
was not sold to her, and not on the termination of her right to hold possession by virtue of a contract
or for nonpayment of rent. The RTC disagreed with the MTC and held that the elements for an action
for unlawful detainer are present in the instant case which the CA affirmed; hence, the case.

Issue:

Whether petitioner has fully paid the contract price under the Kasunduan, which would
render the subdivision agreement void, and uphold her right to stay in the subject property.

Ruling:
 Yes, though a case for unlawful detainer is concerned mainly with the determination of the
parties' right to possess the subject property, the Court is not precluded from provisionally ruling on
the issue of ownership to resolve the issue of possession.

Here, petitioner insists that while it is clear from the third paragraph of the Kasunduan that
the obligation to pay the taxes on the property is borne by Manuel, the latter eventually instructed
her to perform the obligation in his stead and credit the same to her unpaid balance of P8,500. In
compliance with the new covenant, petitioner spent P20,780, which is more than enough to cover
the balance, rendering the sale fully paid. There is preponderant evidence that petitioner paid the
said amount. She submitted in evidence receipts of the amounts that she paid in having the Tax
Declaration of half of the property in her name.obleslawOn the other hand, respondent failed to
present any evidence that Manuel complied with his obligation to fully settle the taxes due on the
property. This being the case, and as a matter of equity, the court finds it proper to provisionally
uphold petitioner's claim that the amount paid for taxes due on the subject property be credited to
her balance in the purchase price. To rule differently in this case would result in injustice to petitioner
who graciously loaned money to herein respondent and his brother, and who even did not exercise
her right to foreclose the mortgage and obtain absolute ownership over the entire property, only to
be later deceived by Manuel and deprived of her real rights over the subject property. The SC
dismissed the unlawful detainer case. Be that as it may, the Court is merely provisionally resolving
the issue of ownership as it is so closely intertwined with the issue of possession. Hence, it is not
precluding the subsequent definitive resolution of the issues surrounding the property's ownership.

-oOo-