Compendium civil (1)

COMPILATION OF SUPREME COURT DECISIONS

(MARCH 2014-MARCH 2015)

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN Ateneo de Davao University

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CIVIL LAW

• G.R. No. 193684 March 5,

2014, ONE NETWORK RURAL BANK, INC. vs.DANILO G. BARIC,

• A third party who did not

commit a violation or invasion

ofthe plaintiffor aggrieved

party's rights may not be held

liable for nominal damages.

While the Petition does not squarely

address the true issue involved, it is

nonetheless evident that the CA gravely

erred in holding Network Bank solidarily

liable with Palado for the payment of nominal damages.

“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

o f 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 ofa right violated or invaded.

Network Bank did not violate any of

Baric's rights; it was merely a purchaser

or transferee ofthe property. Surely, it is

not prohibited from acquiring the property

even while the forcible entry case was

pending, because as the registered owner

ofthe subject property, Palado may

transfer his title at any time

andtheleasemerelyfollowsthepropertyasali

enorencumbrance. Anyinvasion or

violation of Baric's rights as lessee was

committed solely by Palado, and Network

Bank may not be implicated or found

guilty unless it actually took part in the

commission of illegal acts, which does not

appear to be so from the evidence on

record. On the contrary, it appears that

Barie was ousted through Palado's 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.

With regard to Baric's argument that he

should be reinstated to the premises and

awarded damages, this may not be

allowed. He did not question the CA ruling

in an appropriate Petition before this

Court. "It is well-settled that a party who

has not appealed from a decision cannot

seek any relief other than what is

provided in the judgment appealed from.

An appellee who has himself not appealed

may not obtain from the appellate court

any affirmative relief other than the ones

granted in the decision of the court below.

• G.R. No. 180069. March 5, 2014Philippine

Commercial International Bank (now BDO

Unibank, Inc.) Vs. Arturo P. Franco,

substituted by his heirs, namely: Mauricia

P. Franco, Floribel P. Franco, and

Alexander P. Franco

• A quick point, however, on the

issue of alleged payment by

petitioner Bank on the subject trust

certificate indentures.

Jurisprudence abounds that, in civil cases,

one who pleads payment has the burden

of proving it. Even where the plaintiff

must allege non- payment, the general

rule is that the burden rests on the

defendant to prove payment, rather than

on the plaintiff to prove non-payment.

When the creditor is in possession of the

document of credit, he need not prove

non- payment for it is presumed. The

creditor’s possession of the evidence of

debt is proof that the debt has not been discharged by payment.

In this case, respondent's possession of

the original copies of the subject TICs

strongly supports his claim that petitioner

Bank's obligation to return the principal

http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/march2014/180069.pdf




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plus interest of the money placement has

not been extinguished. The TICs in the

hands of respondent is a proof of

indebtedness and a prima facie evidence

that they have not been paid. Petitioner

Bank could have easily presented

documentary evidence to dispute the

claim, but it did not. In its omission, it

may be reasonably deduced that no

evidence to that effect really exist. Worse,

the testimonies of petitioner Bank's own

witnesses, reinforce, rather than belie,

respondent's allegations of non-payment.

• G.R. No. 173423. March 5, 2014 Sps.

Antonio Fortuna and Erlinda Fortuna Vs.

Republic of the Philippines

• We deny the petition for failure of

the spouses Fortuna to sufficiently

prove their compliance with the

requisites for the acquisition of title

to alienable lands of the public

domain.

• The nature of Lot No. 4457 as

alienable and disposable public

land has not been sufficiently established

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 to land derived

through a public grant to establish

foremost the alienable and disposable

nature of the land. The PLA 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.

Under Section 6 of the PLA, 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

(DENR) Secretary is likewise empowered

by law to approve a land classification and

declare such land as alienable and

disposable.

In this case, the CA declared that the

alienable nature of the land was

established by the notation in the

survey plan. It also relied on the

Certification dated July 19, 1999 from

the DENR Community Environment and

Natural Resources Office (CENRO) that

“there is, per record, neither any public

land application filed nor title previously

issued for the subject parcel[.]”However,

we find that neither of the above

documents is evidence of a positive

act from the government reclassifying

the lot as alienable and disposable agricultural land of the public domain.

Mere notations appearing in survey

plans are inadequate proof of the

covered properties’ alienable and

disposable character. These notations,

at the very least, only establish that the

land subject of the application for

registration falls within the approved

alienable and disposable area per

verification through survey by the proper

government office. The applicant,

however, must also present a copy of

the original classification of the land

into alienable and disposable land, as

declared by the DENR Secretary or as proclaimed by the President.

The survey plan and the DENR-CENRO

certification are not proof that the

President or the DENR Secretary has

reclassified and released the public land as

alienable and disposable. The offices that

prepared these documents are not the

official repositories or legal custodian

of the issuances of the President or the

DENR Secretary declaring the public land





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as alienable and disposable.

For failure to present incontrovertible

evidence that Lot No. 4457 has been

reclassified as alienable and disposable

land of the public domain though a

positive act of the Executive Department,

the spouses Fortuna’s claim of title

through a public land grant under the PLA should be denied.

In judicial confirmation of imperfect

or incomplete title, the period of

possession should commence, at the latest, as of May 9, 1947

Although the above finding that the

spouses Fortuna failed to establish the

alienable and disposable character of Lot

No. 4457 serves as sufficient ground to

deny the petition and terminate the case,

we deem it proper to continue to address

the other important legal issues raised in the petition.

As mentioned, the PLA is the law that

governs the grant and disposition of

alienable agricultural lands. Under Section

11 of the PLA, alienable lands of the public

domain may be disposed of, among

others, by judicial confirmation of

imperfect or incomplete title.

On June 22, 1957, the cut-off date of July

26, 1894 was replaced by a 30-year

period of possession under RA No. 1942.

Section 48(b) of the PLA, as amended by

RA No. 1942, read:

(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. [emphasis and underscore ours]

On January 25, 1977, PD No. 1073

replaced the 30-year period of possession

by requiring possession since June 12, 1945. Section 4 of PD No. 1073 reads:

SEC. 4. The provisions of Section 48(b)

and Section 48(c), Chapter VIII of the

Public Land Act are hereby amended in

the sense that these provisions shall apply

only to alienable and disposable lands of

the public domain which have been in


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. [emphasis supplied]

Under the PD No. 1073 amendment,

possession of at least 32 years – from

1945 up to its enactment in 1977 – is

required. This effectively impairs the

vested rights of applicants who had

complied with the 30-year possession

required under the RA No. 1942

amendment, but whose possession

commenced only after the cut-off date of

June 12, 1945 was established by the PD

No. 1073 amendment. To remedy this, the

Court ruled in Abejaron v. Nabasa that

“Filipino citizens who by themselves or

their predecessors-in-interest have been,

prior to the effectivity of P.D. 1073 on

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 at least 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 years

counted backward from January 25,

1977 – the effectivity date of PD No.

1073.

It appears, however, that January 25,

1977 was the date PD No. 1073 was

enacted; based on the certification from

the National Printing Office, PD No. 1073

was published in Vol. 73, No. 19 of




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the Official Gazette, months later than

its enactment or on May 9, 1977. This

uncontroverted fact materially affects the

cut-off date for applications for judicial

confirmation of incomplete title under

Section 48(b) of the PLA.

Although Section 6 of PD No. 1073 states

that “[the] Decree shall take effect upon

its promulgation,” the Court has declared

in Tanada, et al. v. Hon. Tuvera, etc., et al

that the publication of laws is an

indispensable requirement for its

effectivity. “[A]ll statutes, including those

of local application and private laws, shall

be published as a condition for their

effectivity, which shall begin fifteen days

after publication unless a different

effectivity date is fixed by the legislature.”

Accordingly, Section 6 of PD No. 1073

should be understood to mean that the

decree took effect only upon its

publication, or on May 9, 1977. This,

therefore, moves the cut-off date for

applications for judicial confirmation

of imperfect or incomplete title under

Section 48(b) of the PLA to May 8,

1947. In other words, applicants must

prove that they 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

30 years, or at least since May 8, 1947.

The spouses Fortuna were unable to

prove that they possessed Lot No.

4457 since May 8, 1947

Even if the Court assumes that Lot No.

4457 is an alienable and disposable

agricultural land of the public domain, the

spouses Fortuna’s application for

registration of title would still not prosper

for failure to sufficiently prove that they possessed the land since May 8, 1947.

The spouses Fortuna’s allegation that: (1)

the absence of a notation that Tax

Declaration No. 8366 was a new tax

declaration and (2) the notation stating

that Tax Declaration No. 8366 cancels the

earlier Tax Declaration No. 10543 both

indicate that Pastora possessed the land

prior to 1948 or, at the earliest, in 1947.

We also observe that Tax Declaration No.

8366 contains a sworn statement of the

owner that was subscribed on October 23,

1947. While these circumstances may

indeed indicate possession as of 1947,

none proves that it commenced as of the

cut-off date of May 8, 1947. Even if the

tax declaration indicates possession since

1947, it does not show the nature of

Pastora’s possession. 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.”

• G.R. No. 184371. March 5, 184371Spouses

Mario and Julia Campos Vs. Republic of

the Philippines

• the sole issue raised by the

Republic was merely on the

discrepancies on the area and

description of the subject land as

indicated in the documents and

evidence presented, which issue

the petitioners already addressed

in their appeal brief before the CA.

Persons applying for registration o f title

under Section 14( 1) o f Presidential

Decree No. 1529 must prove: (1) that the





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land sought to be

registered forms part of the disposable

and alienable lands of the public

domain, and (2) that they have been in open, continuous, exclusive and

notorious possession and occupation of

the same under a bona fide claim of

ownership since June 12, 1945, or

earlier.

As the CA did, we find that the petitioners

failed to prove that they and their

predecessors-in-interest have been in


possession and occupation of the subject land, under a bona

fide claim of ownership, since June 12,

1945, or earlier. The oldest documentary

evidence presented by the petitioners was

a 1948 tax declaration over the subject

land in the name of Margarita Laigo. The

petitioners failed to present evidence of

their possession prior to 1948. In fact, the

petitioners, in their application for

registration, base their possession of

the subject land only from 1948, and

not "since June 12, 1945, or earlier" as required by law.

We emphasize that since the effectivity

ofP.D. No. 1073 on January 25, 1977, it

must be shown that possession and

occupation of the land sought to be

registered by the applicant himself or

through his predecessors- in-interest,

started on June 12, 1945 or earlier,

which totally conforms to the requirement

under Section 14(1) of P.D. No 1529. A

mere showing of possession and

occupation for thirty (30) years or more is

no longer sufficient.

• G.R. No. 172909. March 5, 2014Spouses

Silvestre O. Plaza and Elena Y. Plaza Vs.

Guillermo Lustiva, et al.

Issue: NULLITY OF LAND AUCTION

Sections 181 and 267 of the Local

Government Code of 1991 are

inapplicable; these provisions do not apply to the present case

The petitioners may not invoke Section

181 of the Local Government Code of

1991 to validate their alleged title. The

law authorizes the local government unit

to purchase the auctioned property only in

instances where “ There is no bidder or

the highest bid is insufficient”. A

disqualified bidder is not among the

authorized grounds. The local government

also never undertook steps to purchase

the property under Section 181 of the

Local Government Code of 1991, presumably because it

knew the invoked provision does not apply.

Neither can the Court agree with the

petitioners’ stance that the respondents’

defense — the petitioners’ defective title

— must fail for want of deposit to the

court the amount required by Section 267

of the Local Government Code.

A simple reading of the title readily

reveals that the provision relates to

actions for annulment of tax sales. The

section likewise makes use of terms

“entertain” and “institution” to mean that

the deposit requirement applies only to

initiatory actions assailing the validity of

tax sales. The intent of the provision to

limit the deposit requirement to actions

for annulment of tax sales led to the

Court’s ruling in National Housing

Authority v. Iloilo City, et al. that the

deposit requirement is jurisdictional — a

condition necessary for the court to

entertain the action:

These rulings clearly render inapplicable

the petitioners’ insistence that the

respondents should have made a deposit

to the court. The suit filed by the

petitioners was an action for injunction

and damages; the issue of nullity of the





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auction was raised by the respondents

themselves merely as a defense and in no

way converted the action to an action for annulment of a tax sale.

The petitioners are guilty of forum shopping

We agree with the CA that the petitioners

committed forum shopping when they

filed the specific performance case despite

the pendency of the present case before

the CA. In the recent case of Heirs of

Marcelo Sotto, etc., et al. v. Matilde S.

Palicte, the Court laid down the three

ways forum shopping may be

committed: 1) through litis pendentia —

filing multiple cases based on the same

cause of action and with the same prayer,

the previous case not having been

resolved yet; 2) through res judicata —

filing multiple cases based on the same

cause of action and the same prayer, the

previous case having been finally

resolved; and 3) splitting of causes of

action — filing multiple cases based on the

same cause of action but with different

prayers — the ground to dismiss being

either litis pendentia or res judicata. “The

requisites of litis pendentia are: (a) the

identity of parties, or at least such as

representing the same interests in both

actions; (b) the identity of rights asserted

and relief prayed for, the relief being

founded on the same facts; and (c) the

identity of the two cases such that

judgment in one, regardless of which

party is successful, would amount to res

judicata in the other.”

Noticeable among these three types of

forum shopping is the identity of the

cause of action in the different cases

filed. Cause of action is “the act or

omission by which a party violates the right of another.”

The cause of action in the present case

(and the main case) is the petitioners’

claim of ownership of the land when they

bought it, either from the City

Government of Butuan or from Tuazon.

This ownership is the petitioners’ basis in

enjoining the respondents from

dispossessing them of the property. On

the other hand, the specific performance

case prayed that the City Government of

Butuan be ordered to issue the petitioners

the certificate of sale grounded on the

petitioners’ ownership of the land when

they had bought it, either from the City

Government of Butuan or from Tuazon.

While it may appear that the main relief

prayed for in the present injunction case is

different from what was prayed for in the

specific performance case, the cause of

action which serves as the basis for the

reliefs remains the same — the

petitioners’ alleged ownership of the

property after its purchase in a public auction.

Thus, the petitioners' subsequent filing of

the specific performance action is forum

shopping of the third kind-splitting causes

of action or filing multiple cases based on

the same cause of action, but with

different prayers. As the Court has held in

the past, "there is still forum shopping

even if the reliefs prayed for in the two

cases are different, so long as both cases raise substantially the same issues.

Similarly, the CA correctly found that the

petitioners and their counsel were guilty of

forum shopping based on litis pendentia.

Not only were the parties in both cases

the same insofar as the City Government

of Butuan is concerned, there was also

identity ofrights asserted and identity of

facts alleged. The cause of action in the

specific performance case had already

been ruled upon in the present case,

although it was still pending appeal before

the CA. Likewise, the prayer sought in the

specific performance case-for the City

Government ofButuan to execute a deed

of sale in favor of the petitioners - had

been indirectly ruled upon in the present

case when the RTC declared that no

certificate of sale could be issued because

there had been no valid sale.

• G.R. No. 192123. March 10, 2014Dr.

Fernando P. Solidum Vs. People of the

Philippines





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• This appeal is taken by a physician-

anesthesiologist who has been

pronounced guilty of reckless

imprudence resulting in serious

physical injuries by the Regional

Trial Court (RTC) and the Court of

Appeals (CA). He had been part of

the team of anesthesiologists

during the surgical pull- through

operation conducted on a three-

year old patient born with an imperforate anus.

Applicability of the Doctrine of Res

Ipsa Loquitur

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.

The Court considers the application here

of the doctrine of res ipsa loquitur

inappropriate. Although it should be

conceded without difficulty that the

second and third elements were present,

considering that the anesthetic agent and

the instruments were exclusively within

the control of Dr. Solidum, and that the

patient, being then unconscious during the

operation, could not have been guilty of

contributory negligence, the first element

was undeniably wanting. Luz delivered

Gerald to the care, custody and control of

his physicians for a pull-through

operation. Except for the imperforate

anus, Gerald was then of sound body and

mind at the time of his submission to the

physicians. Yet, he experienced

bradycardia during the operation, causing

loss of his senses and rendering him

immobile. Hypoxia, or the insufficiency of

oxygen supply to the brain that caused

the slowing of the heart rate, scientifically

termed as bradycardia, would not

ordinarily occur in the process of a pull-

through operation, or during the

administration of anesthesia to the

patient, but such fact alone did not prove

that the negligence of any of his attending

physicians, including the

anesthesiologists, had caused the injury.

In fact, the anesthesiologists attending to

him had sensed in the course of the

operation that the lack of oxygen could

have been triggered by the vago-vagal

reflex, prompting them to administer

atropine to the patient.

Negligence of Dr. Solidum

In view of the inapplicability of the

doctrine of res ipsa loquitur, the Court

next determines whether the CA correctly

affirmed the conviction of Dr. Solidum for

criminal negligence.

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.

Dr. Solidum’s conviction by the RTC was

primarily based on his failure to monitor

and properly regulate the level of

anesthetic agent administered on Gerald by overdosing at 100% halothane.

The Prosecution did not prove the

elements of reckless imprudence beyond

reasonable doubt because the

circumstances cited by the CA were

insufficient to establish that Dr. Solidum

had been guilty of inexcusable lack of

precaution in monitoring the

administration of the anesthetic agent to Gerald.




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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 physician’s 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 the patient.

Dr. Solidum was criminally charged for

“failing to monitor and regulate properly

the levels of anesthesia administered to

said Gerald Albert Gercayo and using

100% halothane and other anesthetic

medications.” However, the foregoing

circumstances, taken together, did not

prove beyond reasonable doubt that Dr.

Solidum had been recklessly imprudent in

administering the anesthetic agent to

Gerald. Indeed, Dr. Vertido’s findings did

not preclude the probability that other

factors related to Gerald’s major

operation, which could or could not

necessarily be attributed to the

administration of the anesthesia, had

caused the hypoxia and had then led

Gerald to experience bradycardia. Dr.

Vertido revealingly concluded in his

report, instead, that “although the

anesthesiologist followed the normal

routine and precautionary procedures, still

hypoxia and its corresponding side effects did occur.”

Liability of Ospital ng Maynila

Although the result now reached has

resolved the issue of civil liability, we have

to address the unusual decree of the RTC,

as affirmed by the CA, of expressly

holding Ospital ng Maynila civilly liable

jointly and severally with Dr. Solidum. The

decree was flawed in logic and in law.

In criminal prosecutions, the civil action

for the recovery of civil liability that is

deemed instituted with the criminal action

refers only to that arising from the offense

charged. It is puzzling, therefore, how the

RTC and the CA could have adjudged

Ospital ng Maynila jointly and severally

liable with Dr. Solidum for the damages

despite the obvious fact that Ospital ng

Maynila, being an artificial entity, had not

been charged along with Dr. Solidum. The

lower courts thereby acted capriciously

and whimsically, which rendered their

judgment against Ospital ng Maynila void

as the product of grave abuse of

discretion amounting to lack of

jurisdiction.

Not surprisingly, the flawed decree raises

other material concerns that the RTC and

the CA overlooked. We deem it important,

then, to express the following

observations for the instruction of the Bench and Bar.

For one, Ospital ng Maynila was not at all

a party in the proceedings. Hence, its

fundamental right to be heard was not

respected from the outset. The RTC and

the CA should have been alert to this

fundamental defect. Verily, no person can

be prejudiced by a ruling rendered in an

action or proceeding in which he was not

made a party. Such a rule would enforce

the constitutional guarantee of due process of law.

Moreover, Ospital ng Maynila could be

held civilly liable only when subsidiary

liability would be properly enforceable

pursuant to Article 103 of the Revised

Penal Code. But the subsidiary liability

seems far-fetched here. The conditions for

subsidiary liability to attach to Ospital ng

Maynila should first be complied with.

Firstly, pursuant to Article 103 of the

Revised Penal Code, Ospital ng Maynila

must be shown to be a corporation

"engaged in any kind of industry." The

term industry means any department or




9

branch of art, occupation or business,

especially one that employs labor and

capital, and is engaged in industry.

However, Ospital ng Maynila, being a

public hospital, was not engaged in

industry conducted for profit but purely in

charitable and humanitarian work.

Secondly, assuming that Ospital ng

Maynila was engaged in industry for profit,

Dr. Solidum must be shown to be an

employee of Ospital ng Maynila acting in

the discharge of his duties during the

operation on Gerald. Yet, he definitely was

not such employee but a consultant of the

hospital. And, thirdly, assuming that civil

liability was adjudged against Dr. Solidum

as an employee (which did not happen

here), the execution against him was

unsatisfied due to his being insolvent.

• G.R. No. 163767. March 10, 2014Republic

of the Philippines represented by the

Director of Lands Vs. Rosario De Guzman

Vda. De Joson

• This case concerns the discharge of

the burden of proof by the

applicant in proceedings for the

registration ofland under Section

14 (1) and (2) of Presidential

Decree No. 1529 (Property

Registration Decree).

The respondent sought to have the land

registered in her name by alleging that

she and her predecessors-in-interest had

been in open, peaceful, continuous,

uninterrupted and adverse possession of

the land in the concept of owner since

time immemorial. However, the Republic

counters that the land was public land;

and that it could not be acquired by

prescription. The determination of the

issue hinges on whether or not the land

was public; if so, whether the respondent

satisfactorily proved that the land had

already been declared as alienable and

disposable land of the public domain; and

that she and her predecessors-in-interest

had been in open, peaceful, continuous,

uninterrupted and adverse possession of

the land in the concept of owner since

June 12, 1945, or earlier.

Under Section 14(1), therefore, the

respondent had to prove that: (1) the land

formed part of the alienable and

disposable land of the public domain; and

(2) she, by herself or through her

predecessors-in-interest, had been in

open, continuous, exclusive, and notorious

possession and occupation of the subject

land under a bona fide claim of ownership from June 12, 1945, or earlier.

what is left wanting is the fact that the

respondent did not discharge her burden

to prove the classification of the land as

demanded by the first requisite. She did

not present evidence of the land, albeit

public, having been declared alienable and

disposable by the State. During trial, she

testified that the land was not within any

military or naval reservation, and Frisco

Domingo, her other witness, corroborated

her. Although the Republic countered that

the verification made by the Bureau of

Forest Development showed that the land

was within the unclassified region of

Paombong, Bulacan as per BF Map LC No.

637 dated March 1, 1927, such showing

was based on the 1st Indorsement dated

July 22, 1977 issued by the Bureau of

Forest Development, which the CA did not

accord any evidentiary weight to for

failure of the Republic to formally offer it

in evidence. Still, Fiscal Reyes, in the

opposition he filed in behalf of the

Government, argued that the land was a

portion of the Labangan Channel operated

by the Pampanga River Control System,

and could not be the subject of

appropriation or land registration. Thus,

the respondent as the applicant remained

burdened with proving her compliance with the first requisite.

This doctrine unavoidably means that the

mere certification issued by the CENRO or

PENRO did not suffice to support the

application for registration, because the

applicant must also submit a copy of the

original classification of the land as

alienable and disposable as approved by

the DENR Secretary and certified as a true

copy by the legal custodian of the official





10

records.

Yet, even assuming that the DENR-CENRO

certification alone would have sufficed, the

respondent’s application would still be

denied considering that the reclassification

of the land as alienable or disposable

came only after the filing of the

application in court in 1976. The

certification itself indicated that the land

was reclassified as alienable or disposable only on October 15, 1980.

On the other hand, under Section 14(2),

ownership of private lands acquired

through prescription may be registered in

the owner’s name. Did the respondent

then acquire the land through prescription

considering that her possession and

occupation of the land by her and her

predecessors-in- interest could be traced

back to as early as in 1926, and that the

nature of their possession and occupation

was that of a bona fide claim of ownership for over 30 years?

Clearly, the respondent did not.

The period of possession prior to the

reclassification of the land as alienable

and disposable land of the public domain

is not considered in reckoning the

prescriptive period in favor of the possessor.

In other words, the period of possession

prior to the reclassification of the land, no

matter how long, was irrelevant because

prescription did not operate against the State before then.

In her act of dishonesty, respondent failed to take heed of the Code of

Conduct for Court Personnel, which

regards all court personnel as sentinels

Of justice expected to refrain from any act

of impropriety. Thus,applying

the penalties under the Revised Uniform

Rules on Administrative Cases in the Civil

Service, we sanction her perfidy by

imposing upon her the penalty ofdismissal

from service with accessory penalties.

• G.R. No. 188539. March 12, 2014Mariano

Lim Vs. Security Bank Corporation

• main issue is whether petitioner

may validly be held liable for the

principal debtor's loan obtained six

months after the execution of the Continuing Suretyship.

In this case, what petitioner executed was

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 company which anticipates

entering into a series of credit

transactions with a particular

company, normally requires the

projected principal debtor to execute

a continuing surety agreement along

with its sureties. By executing such

an agreement, the principal places

itself in a position to enter into the

projected series of transactions with

its creditor; with such suretyship

agreement, there would be no need to

execute a separate surety contract or

bond for each financing or credit

accommodation extended to the principal debtor.

The terms of the Continuing Suretyship

executed by petitioner, quoted earlier, are

very clear. It states that petitioner, as

surety, shall, without need for any notice,

demand or any other act or deed,

immediately become liable and shall pay

“all credit accommodations extended





11

by the Bank to the Debtor, including

increases, renewals, roll-overs,

extensions, restructurings, amendments

or novations thereof, as well as (i) all

obligations of the Debtor 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.” Such stipulations are valid

and legal and constitute the law between

the parties, as Article 2053 of the Civil

Code provides that “[a] guaranty may also

be given as security for future debts, the

amount of which is not yet known; x x x.”

Thus, petitioner is unequivocally bound by

the terms of the Continuing Suretyship.

There can be no cavil then that petitioner

is liable for the principal of the loan,

together with the interest and penalties

due thereon, even if said loan was

obtained by the principal debtor even after

the date of execution of the Continuing

Suretyship.

• G.R. No. 192717. March 12, 2014Minda S.

Gaerlan Vs. Republic of the Philippines

• Essentially, the main issue to be

resolved is whether the CA erred in

dismissing petitioner’s application for registration of title.

Now, on the merits. Petitioner asserts that

the land subject of her

application has been declared alienable

and disposable in 1925 and that her

possession through her predecessors-in-

interest started in 1929. However, after a

careful examination of the evidence

adduced by petitioner, we find no error on

the part of the CA in dismissing

petitioner’s application for registration of

title for the failure of petitioner to prove

satisfactorily the requirements for registration provided under the law.

To comply with the first requisite,

petitioner submitted a CENRO Certification

stating that Lot 4342, Cad-237 located in

Patag, Cagayan de Oro City falls within

the alienable and disposable area under

Project No. 8, Block I. Petitioner also

submitted LC Map No. 543 which was

certified and approved on December 31,

1925. We, however, find that the attached

certification is inadequate to prove that

the subject lot is alienable and disposable.

We held in Republic v. T.A.N. Properties,

Inc. that a CENRO certification is

insufficient to prove the alienable and

disposable character of the land sought to

be registered. The applicant must also

show sufficient proof that the DENR

Secretary has approved the land

classification and released the land in question as alienable and disposable.

Thus, as it now stands, aside from the

CENRO certification, an application for

original registration of title over a parcel

of land must be accompanied by a copy of

the original classification approved by the

DENR Secretary and certified as a true


records in order to establish that the land is indeed alienable and disposable.

As to the second and third requisites, we

agree with the appellate court that

petitioner failed to establish that she and

her predecessors-in- interest have been in


possession and occupation of the subject

land on or before June 12, 1945. Based on

the records, the earliest evidence of

possession that petitioner and her

predecessor-in-interest Mamerta Tan had

over the subject property was only in

1975 when Mamerta Tan purchased the

subject lot from Teresita Tan. While

Mamerta Tan testified that she purchased

the property from Teresita, the records

are bereft of any evidence to show

Teresita’s mode of acquisition of

ownership over the subject lot or from

whom she acquired the property and

when her possession of the subject lot had commenced.

In fine, since petitioner failed to prove

that (1) the subject property was





12

classified as part of the disposable and

alienable land of the public domain; and

(2) she and her predecessors-in-interest

have been in open, continuous, exclusive,

and notorious possession and occupation

thereof under a bona fide claim of

ownership since June 12, 1945 or earlier,

her application for registration of title of

the subject property under P.D. No. 1529

should be denied.

• G.R. No. 154390. March 17,

2014Metropolitan Fabrics, Inc., et al. Vs.

Prosperity Credit Resources, Inc. et al.

• The genuineness and due

execution of a deed of real estate

mortgage that has been

acknowledged before a notary

public are presumed. Any

allegation of fraud and forgery

against the deed must be

established by clear and competent evidence.

The contested deed of real estate

mortgage was a public document by virtue

of its being acknowledged before notary

public Atty. Noemi Ferrer. As a notarized

document, the deed carried the

evidentiary weight conferred upon it with

respect to its due execution, and had in its

favor the presumption of regularity.

Hence, it was admissible in evidence

without further proof of its authenticity,

and was entitled to full faith and credit

upon its face. To rebut its authenticity and

genuineness, the contrary evidence must

be clear, convincing and more than merely

preponderant; otherwise, the deed should be upheld.

Action to assail the mortgage already

prescribed

The next issue to address is whether the

action to assail the real estate mortgage already prescribed.

To resolve the issue of prescription, it is

decisive to determine if the mortgage was

void or merely voidable.

It appears that the original stance of

petitioners was that the deed of real

estate mortgage was voidable. In their

complaint, they averred that the deed,

albeit in printed form, was incomplete in

essential details, and that Metropolitan,

through Enrique Ang as its president,

signed it in good faith and in absolute confidence.

As the records show, petitioners really

agreed to mortgage their properties as

security for their loan, and signed the

deed of mortgage for the purpose.

Thereafter, they delivered the TCTs of the

properties subject of the mortgage to respondents.

Consequently, petitioners' contention of

absence of consent had no firm moorings.

It remained unproved. To begin with, they

neither alleged nor established that they

had been forced or coerced to enter into

the mortgage. Also, they had freely and

voluntarily applied for the loan, executed

the mortgage contract and turned over

the TCTs of their properties. And, lastly,

contrary to their modified defense of

absence of consent, Vicky Ang's testimony

tended at best to prove the vitiation of

their consent through insidious words,

machinations or misrepresentations

amounting to fraud, which showed that

the contract was voidable. Where the

consent was given through fraud, the

contract was voidable, not void ab initio.

This is because a voidable or annullable

contract is existent, valid and binding,

although it can be annulled due to want of

capacity or because of the vitiated consent of one of the parties.

With the contract being voidable,

petitioners' action to annul the real estate

mortgage already prescribed. 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. The discovery of fraud is

reckoned from the time the document was






13

registered in the Register of Deeds in view

of the rule that registration was notice to

the whole world. Thus, because the

mortgage involving the seven lots was

registered on September 5, 1984, they

had until September 5, 1988 within which

to assail the validity of the mortgage. But

their complaint was instituted in the RTC

only on October 10, 1991. Hence, the

action, being by then already prescribed,

should be dismissed.

• G.R. No. 200468. March 19, 2014Macaria

Arguelles and the Heirs of the Deceased

Petronio Arguelles Vs. Malarayat Rural

Bank, Inc.

• In fine, the issue in this case is

whether the respondent Malarayat

Rural Bank is a mortgagee in good

faith who is entitled to protection

on its mortgage lien.

Petitioners imputed negligence on the part

of respondent Malarayat Rural Bank when

it approved the loan application of the

spouses Guia. They pointed out that the

bank failed to conduct a thorough ocular

inspection of the land mortgaged and an

extensive investigation of the title of the

registered owner. And since the

respondent Malarayat Rural Bank cannot

be considered a mortgagee in good faith,

petitioners argued that the unregistered

sale in their favor takes precedence over

the duly registered mortgage lien. On the

other hand, respondent Malarayat Rural

Bank claimed that it exercised the

required degree of diligence before

granting the loan application. In

particular, it asserted the absence of any

facts or circumstances that can reasonably

arouse suspicion in a prudent person.

Thus, the respondent Malarayat Rural

Bank argued that it is a mortgagee in

good faith with a better right to the

mortgaged land as compared to the vendees to the unregistered sale.

The petition is meritorious.

In Bank of Commerce v. Spouses San

Pablo, Jr., we declared that indeed, 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.

“[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.”

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.

In this case, we find that the respondent

Malarayat Rural Bank fell short of the

required degree of diligence, prudence,

and care in approving the loan application of the spouses Guia.

Respondent should have diligently

conducted an investigation of the

land offered as collateral. Although the Report o f Inspection and Credit

Investigation found at the dorsal portion

of the Application for Agricultural Loan.

proved that the respondent Malarayat

Rural Bank inspected the land,

the respondent turned a blind eye to the finding therein that the "lot is

planted [with] sugarcane with annual yield (crops) in the amount of

P15,000. We disagree with respondent's stance that the mere planting

and harvesting of sugarcane cannot

reasonably trigger suspicion that there is

adverse possession over the land offered

as mortgage. Indeed, such fact should





14

have immediately prompted the

respondent to conduct further inquiries,

especially since the spouses Guia were not

the registered owners ofthe land being

mortgaged. They merely derived the

authority to mortgage the lot from the

Special Power of Attorney allegedly

executed by the late Fermina M. Guia.

Hence, it was incumbent upon the

respondent Malarayat Rural Bank to be

more cautious in dealing with the spouses

Guia, and inquire further regarding the

identity and possible adverse claim of those in actual possession of the property.

Pertinently, in Land Bank ofthe Philippines

v. Poblete, we ruled that "[w]here the

mortgagee acted with haste in granting

the mortgage loan and did not ascertain

the ownership of the land being

mortgaged, as well as the authority of the

supposed agent executing the mortgage,

it cannot be considered an innocent mortgagee."

Since the subject land was not mortgaged

by the owner thereof and since the

respondent Malarayat Rural Bank is not a

mortgagee in good faith, said bank is not

entitled to protection under the law. The

unregistered sale in favor of the spouses

Arguelles must prevail over the mortgage

lien of respondent Malarayat Rural Bank.

• G.R. No. 181055. March 19, 2014Heirs of

Teresita Montoya, et al. Vs. National

Housing Authority, et al.

• The petitioners’ presented CLTs

could not have vested them

with ownership over the

property

• 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 government’s OLT

program pursuant to P.D. No. 27.

It serves as the tenant-farmer’s

(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- farmer’s 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.

• G.R. No. 199146. March 19, 2014Heirs of

Pacifico Pocido, et al. Vs. Arsenia Avila and

Emelinda Chua

ISSUE: JURISDICTION OVER A

COMPLAINT TO QUIET TITLE TO A LAND

THAT FORMS 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.

In an action for quieting of title, the






15

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.”

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.

In this case, petitioners, claiming to be

owners of the disputed property, allege

that respondents are unlawfully claiming

the disputed property by using void

documents, namely the “Catulagan” and

the Deed of Waiver of Rights. However,

the records reveal that petitioners do not

have legal or equitable title over the

disputed property, which forms part of Lot

43, a public land within the Baguio

Townsite Reservation. It is clear from the

facts of the case that petitioners’

predecessors-in-interest, the heirs of

Pocdo Pool, were not even granted a

Certificate of Ancestral Land Claim over

Lot 43, which remains public land. Thus,

the trial court had no other recourse but

to dismiss the case.


of the Philippines Vs. Zurbaran Realty &

Development Corp.

• An application for original

registration of land of the public

domain under Section 14(2) of

Presidential Decree (PD) No. 1529

must show not only that the land

has previously been declared

alienable and disposable, but also

that the land has been declared

patrimonial property of the State at

the onset of the 30-year or 10-year

period of possession and

occupation required under the law

on acquisitive prescription.

Once again, the Court applies this rule-as

clarified in Heirs ofMario Malabanan v.

Republic

• G.R. No. 161151. March 24, 2014BJDC

Construction, represented by its

Manager/Proprieto Janet S. Dela Cruz Vs.

Nena E. Lanuzo, et al.

• The party alleging the negligence

of the other as the cause of injury

has the burden to establish the

allegation with competent

evidence. If the action based on

negligence is civil in nature, the

proof required is preponderance

ofevidence.

• This case involves a claim for

damages arising from the death of

a motorcycle rider in a nighttime

accident due to the supposed

negligence of a construction

company then undertaking re-

blocking work on a national

highway. The plaintiffs insisted that

the accident happened because the

construction company did not

provide adequate lighting on the

site, but the latter countered that

the fatal accident was caused by

the negligence of the motorcycle

rider himself. The trial court

decided in favor of the construction

company, but the Court of Appeals

(CA) reversed the decision and

ruled for the plaintiffs.

Upon a review of the records, the Court

affirms the findings of the RTC, and rules

that the Lanuzo heirs, the parties carrying

the burden of proof, did not establish by

preponderance of evidence that the

negligence on the part of the company

was the proximate cause of the fatal accident of Balbino.

the doctrine of res ipsa loquitur had no

application here.

For the doctrine to apply, the following

requirements must be shown to exist,

namely: (a) the accident is of a kind that






16

ordinarily does not occur in the absence of

someone’s 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.

Based on the evidence adduced by the

Lanuzo heirs, negligence cannot be fairly

ascribed to the company considering that

it has shown its installation of the

necessary warning signs and lights in the

project site. In that context, the fatal

accident was not caused by any

instrumentality within the exclusive

control of the company. In contrast,

Balbino had the exclusive control of how

he operated and managed his motorcycle.

The records disclose that he himself did

not take the necessary precautions. As

Zamora declared, Balbino overtook

another motorcycle rider at a fast speed,

and in the process could not avoid hitting

a barricade at the site, causing him to be

thrown off his motorcycle onto the newly

cemented road. SPO1 Corporal’s

investigation report corroborated

Zamora’s declaration. This causation of

the fatal injury went uncontroverted by the Lanuzo heirs.

Moreover, by the time of the accident, the

project, which had commenced in

September 1997, had been going on for

more than a month and was already in the

completion stage. Balbino, who had

passed there on a daily basis in going to

and from his residence and the school

where he then worked as the principal,

was thus very familiar with the risks at the

project site. Nor could the Lanuzo heirs

justly posit that the illumination was not

adequate, for it cannot be denied that

Balbino’s motorcycle was equipped with

headlights that would have enabled him at

dusk or night time to see the condition of

the road ahead. That the accident still

occurred surely indicated that he himself

did not exercise the degree of care expected of him as a prudent motorist.

According to Dr. Abilay, the cause of

death of Balbino was the fatal depressed

fracture at the back of his head, an injury

that Dr. Abilay opined to be attributable to

his head landing on the cemented road

after being thrown off his motorcycle.

Considering that it was shown that Balbino

was not wearing any protective head gear

or helmet at the time of the accident, he

was guilty of negligence in that respect.

Had he worn the protective head gear or

helmet, his untimely death would not have

occurred.

The RTC was correct on its conclusions

and findings that the company was not

negligent in ensuring safety at the project

site. All the established circumstances

showed that the proximate and immediate

cause of the death of Balbino was his own

negligence. Hence, the Lanuzo heirs could

not recover damages.

• G.R. No. 160689. March 26, 2014Raul H.

Sesbreño Vs. Court of Appeals, et al.

• This case conc~ms the claim for

damages of petitioner Raul H.

Sesbrefio founded on abuse of

rights. Sesbrefio accused the

violation of contract (VOC)

inspection team dispatched by the

Visayan Electric Company (VECO)

to check his electric meter with

conducting an unreasonable search in his residential premises.

Sesbreno’s insistence has no legal and factual basis.

The constitutional guaranty against

unlawful searches and seizures is intended

as a restraint against the Government and

its agents tasked with law enforcement. It

is to be invoked only to ensure freedom

from arbitrary and unreasonable exercise of State power.

It is worth noting that the VOC inspectors

decided to enter the main premises only

after finding the meter of Sesbreno turned

upside down, hanging and its disc not

rotating. Their doing so would enable

them to determine the unbilled electricity





17

consumed by his household. The

circumstances justified their decision, and

their inspection of the main premises was

a continuation of the authorized entry.

There was no question then that their

ability to determine the unbilled electricity

called for them to see for themselves the

usage of electricity inside. Not being

agents of the State, they did not have to first obtain a search warrant to do so.

Clearly, Sesbreno did not establish his

claim for damages if the respondents were

not guilty of abuse of rights. To stress, the

concept of abuse of rights prescribes that

a person should not use his right unjustly

or in bad faith; otherwise, he may be

liable to another who suffers injury. The

rationale for the concept is to present

some basic principles to be followed for

the rightful relationship between human

beings and the stability of social order.

• G.R. No. 195031. March 26,

2014International Container Terminal

Services, Inc. Vs. Celeste M. Chua

ISSUE: LIABILITY FOR DAMAGES DUE TO

LOSS AS A RESULT OF FIRE

This Court will no longer delve on the

issue of whether or not the fire which

caused the loss of and/or damage to

respondent’s personal effects is a

fortuitous event since both the trial court

and the Court of Appeals correctly ruled

that the fire which occurred in this case

cannot be considered an act of God since

the same was not caused by lightning or a

natural disaster or other calamity not attributable to human agency.

With respect to the issue of negligence,

there is no doubt that, under the

circumstances of this case, petitioner is

liable to respondent for damages on

account of the loss of the contents of her

container van. Petitioner itself admitted

during the pre-trial of this case that

respondent’s container van caught fire

while stored within its premises. Absent

any justifiable explanation on the part of

petitioner on the cause of the fire as

would absolve it from liability, the

presumption that there was negligence on

its part comes into play. The situation in

this case, therefore, calls for the

application of the doctrine of 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.”

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. This it failed to

do. Thus, the trial court and the Court of

Appeals acted appropriately in applying

the principle of res ipsa loquitur to the

case at bar.

• G.R. No. 189420. March 26, 2014Raul V.

Arambulo and Teresita Dela Cruz Vs.

Genaro Nolasco and Jeremy Spencer

Nolasco

As intimated above, the erroneous

application of Article 491 is, in this case,

an innate infirmity. The very initiatory

pleading below was captioned Petition For

Relief Under Article 491 of the New Civil

Code. Petitioners, likewise petitioners

before the RTC, filed the case on the

submission that Article 491 covers the

petition and grants the relief prayed for,

which is to compel the respondent co-

owners to agree to the sale of the co-owned property.

That a sale constitutes an alteration as

mentioned in Article 491 is an established

jurisprudence. It is settled that alterations

include any act of strict dominion or

ownership and any encumbrance or

disposition has been held implicitly to be

an act of alteration. Alienation of the thing







18

by sale of the property is an act of strict

dominion. However, the ruling that

alienation is alteration does not mean that

a sale of commonly owned real property is

covered by the second paragraph of

Article 491, such that if a co- owner

withholds consent to the sale, the courts,

upon a showing of a clear prejudice to the

common interest, may, as adequate relief, order the grant of the withheld consent.

Ruling that the trial court erred in its

conclusion, the Court of Appeals correctly

relied on Article 493 in support of the

finding that respondents cannot be

compelled to agree with the sale. We

affirm the reversal by the Court of Appeals of the judgment of the trial court.

1. There is co-ownership whenever, as in

this case, the ownership of an undivided

thing, belongs to different persons. 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.

2. Our reading of Article 493 as applied to

the facts of this case is a reiteration of

what was pronounced in Bailon-Casilao v.

Court of Appeals. The rights of a co-owner

of a certain property are clearly specified

in Article 493 of the Civil Code. Thus:

12 13 14 15 16

Art. 493. Each co-owner shall have the full

ownership of his part and of the fruits and

benefits pertaining thereto, and he may

therefore alienate, assign or mortgage

it[,] and even substitute another person in

its enjoyment, except when personal

rights are involved. But the effect of the

alienation or [the] mortgage, with respect

to the co-owners, shall be limited to the

portion which may be allotted to him in

the division upon the termination of the co-ownership.

The ultimate authorities in civil law,

recognized as such by the Court, agree

that co-owners such as respondents have

over their part, the right of full and

absolute ownership. Such right is the

same as that of individual owners which is

not diminished by the fact that the entire

property is co- owned with others. That

part which ideally belongs to them, or

their mental portion, may be disposed of

as they please, independent of the

decision of their co-owners. So we rule in

this case. The respondents cannot be

ordered to sell their portion of the co-owned properties.

3. Indeed, the respected commentaries

suggest the conclusion that, insofar as the

sale of co-owned properties is concerned,

there is no common interest that may be

prejudiced should one or more of the co-

owners refuse to sell the co-owned

property, which is exactly the factual

situation in this case. When respondents

disagreed to the sale, they merely

asserted their individual ownership rights.

Without unanimity, there is no common interest.

Petitioners who project themselves as

prejudiced co-owners may bring a suit for

partition, which is one of the modes of

extinguishing co- ownership. Article 494 of

the Civil Code provides that no co-owner

shall be obliged to remain in the co-




19

ownership, and that each co-owner may

demand at any time partition of the thing

owned in common insofar as his share is

concerned. Corollary to this rule, Article

498 of the Civil Code states that whenever

the thing is essentially indivisible and the

co-owners cannot agree that it be allotted

to one of them who shall indemnify the

others, it shall be sold and its proceeds

accordingly distributed. This is resorted to

(a) when the right to partition the

property is invoked by any of the co-

owners but because of the nature of the

property, it cannot be subdivided or its

subdivision would prejudice the interests

of the co-owners, and (b) the co- owners

are not in agreement as to who among

them shall be allotted or assigned the

entire property upon proper

reimbursement of the co-owners. This is

the result obviously aimed at by

petitioners at the outset. As already

shown, this cannot be done while the co-

ownership exists.


of the Philippines represented by Aklan

National Colleges of Fisheries (ANCF) and

Dr. Elenita R. Adrade, in her capacity as

ANCF Superintendent Vs. 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

ISSUE: segregating from the Aklan

National College of Fisheries (ANCF)

reservation the portion of land being

claimed by respondents.

In the case at bar, 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.

Accordingly, respondents cannot be

considered to have private rights within

the purview of Proclamation No. 2074 as

to prevent the application of said

proclamation to the subject property.

• A.M. No. P-09-2648/A.M. No. P-13-3174.

March 26, 2014Office of the Court

Administrator Vs. Atty. Leah Espera

Miranda, Clerk of Court and Ms. Jocelyn H.

Divinagracia, Clerk III both of the

Regional Trial Court, Br. 38, Iloilo

City/Atty. Rex G. Rico Vs. Clerk fo Court V

Leah Espera Miranda and Clerk III Jocelyn

H. Divinagracia

• We find no merit in Miranda

and Divinagracia’s explanation.

• Their involvement was not confined

to the routinary process of

receiving the Notice of Appeal and

checking if it complied with the

requirements. They knowingly

allowed the tampering of the

Notice of Appeal to make it

appear that it complied with

Section 11, Rule 13 of the 1997

Rules of Civil Procedure.

The Code of Conduct for Court Personnel

reminds court personnel, in performing

their duties and responsibilities, to serve

as sentinels of justice. Any act of

impropriety they commit immeasurably

affects the honor and dignity of the

Judiciary and the people’s confidence in the Judiciary.

Miranda and Divinagracia’s act of allowing

the tampering of the records of Special

Civil Action No. 02-27326 to make it

appear that the Notice of Appeal filed by

private respondents complied with the

requirements constitutes grave misconduct.

The Attorney’s Oath mandates a lawyer,

among other duties: (a) to do no

falsehood; (b) nor consent to the doing of

the same in court; and (c) to conduct

himself as a lawyer to the best of his

knowledge and discretion with all good

fidelity to the court. Having this in mind,

Atty. Castillon and Atty. Lodero 's

involvement in the tampering o f the

records, and in the filing o f a falsified

document, should be fully investigated to


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20

determine if their actions merit

disciplinary action.

• A.M. No. P-12-3093. March 26,

2014Anonymous Complaint Against

Otelia Lyn G. Maceda, Court Interpreter,

Municipal Trial Court, Palapag, Northern

Samar

ISSUE: Complaint against a COURT

INTERPRETER alleging falsification of the

her attendance in court so she could

attend her law classes at UEP in Catarman, Norther Samar.

We see no reason to disturb the finding of

the OCA that Maceda did indeed falsify her

DTRs and is, therefore, guilty of

dishonesty.

Judge Falcotelo stated in his Report that

for Maceda to make it on time to her law

classes at UEP, she would have to leave

the MTC at 4:00 p.m. or even earlier.

Maceda’s Summary of Scholastic Records,

submitted by UEP College Secretary

Alfredo D. Tico, showed that Maceda had

law school subjects for the school years

2009-2010 and 2010-2011 which started

at 5:30 p.m. Hence, it was impossible for

Maceda to have left the MTC only at 5:00

p.m. as she had consistently logged in her

DTRs during the months she was also attending her classes.

Maceda’s repeated assertion that she

continued her law school classes for self-

improvement and with the permission of

the MTC Presiding Judge does little to

exculpate her of administrative liability.

These are not acceptable excuses for not

properly declaring the time she logged-off

from work in her DTRs. Time and again,

the OCA and this Court have underscored

the importance of court employees

truthfully and accurately recording in their

DTRs the time of their arrival in and departure from office.

Maceda’s falsification of her DTRs is

dishonesty. Dishonesty is defined as the

“(d)isposition to lie, cheat, deceive, or

defraud; untrustworthiness; lack of

integrity; lack of honesty, probity or

integrity in principle; lack of fairness and

straightforwardness; disposition to

defraud, deceive or betray.”

• G.R. No. 179155. April 2, 2014Nicomedes

J. Lozada Vs. Eulalia Bracewell, et al.

• The core issue raised for the

Court’s resolution is whether or not

the Las Pinas City-RTC has

jurisdiction over the petition for

review of Decree No. N-217036,

which was issued as a result of the

judgment rendered by the RTC of Makati City, Branch 134.

Under Act No. 496 (Act 496), or the “Land

Registration Act,” as amended, – which

was the law in force at the time of the

commencement by both parties of their

respective registration proceedings –

jurisdiction over all applications for

registration of title was conferred upon the

Courts of First Instance (CFIs, now RTCs)

of the respective provinces in which the

land sought to be registered is situated.

The land registration laws were updated

and codified under PD 1529, which took

effect on January 23, 1979, and under

Section 17 thereof, jurisdiction over an

application for land registration is still

vested on the CFI (now, RTC) of the

province or city where the land is

situated.

It should be pointed out, however,

that with the passage of PD 1529, the

distinction between the general

jurisdiction vested in the RTC and the

limited jurisdiction conferred upon it

as a cadastral court was eliminated.

RTCs now have the power to hear and

determine all questions, even contentious

and substantial ones, arising from

applications for original registration of

titles to lands and petitions filed after such

registration.

Since the LRA’s issuance of a decree of

registration only proceeds from the land

registration court’s directive, a petition



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21

taken under Section 32 of PD 1529 is

effectively a review of the land registration court’s ruling. As

such, case law instructs that for “as long as a final decree has not been

entered by the [LRA] and the period of

one (1) year has not elapsed from the

date of entry of such decree, the title is

not finally adjudicated and the decision in

the registration proceeding continues to

be under the control and sound discretion

of the court rendering it.”

While it is indeed undisputed that it was

the RTC of Makati City, Branch 134 which

rendered the decision directing the LRA to

issue Decree No. N-217036, and should,

applying the general rule as above-stated,

be the same court before which a petition

for the review of Decree No. N-217036 is

filed, the Court must consider the

circumstantial milieu in this case that, in

the interest of orderly procedure, warrants

the filing of the said petition before the

Las Pinas City-RTC.

Particularly, the Court refers to the fact

that the application for original

registration in this case was only filed

before the RTC of Makati City, Branch 134

because, during that time, i.e., December

1976, Las Pinas City had no RTC. Barring

this situation, the aforesaid application

should not have been filed before the RTC

of Makati City, Branch 134 pursuant to the

rules on venue prevailing at that time.

Under Section 2, Rule 4 of the 1964

Revised Rules of Court, which took effect

on January 1, 1964, the proper venue for

real actions, such as an application for

original registration, lies with the CFI of

the province where the property is situated,

As the land subject of this case is

undeniably situated in Las Pinas City, the

application for its original registration

should have been filed before the Las

Pinas City-RTC were it not for the fact that

the said court had yet to be created at the

time the application was filed. Be that as it

may, and considering further that the

complication at hand is actually one of

venue and not of jurisdiction (given

that RTCs do retain jurisdiction over

review of registration decree cases

pursuant to Section 32 of PD 1529), the

Court, cognizant of the peculiarity of the

situation, holds that the Las Pinas City-

RTC has the authority over the

petition for the review of Decree No.

N- 217036 filed in this case. Indeed , the filing of the petition for review before

the Las Pinas City-RTC was only but a

rectificatory implementation of the rules of

procedure then-existing, which was

temporarily set back only because of past

exigencies. In light of the circumstances

now prevailing, the Court perceives no

compelling reason to deviate from

applying the rightful procedure. After all,

venue is only a matter of procedure and,

hence, should succumb to the greater

interests of the orderly administration of

justice.

• G.R. No. 175540. April 7, 2014Dr. Filoteo

A. Alano Vs. Zenaida Magud-Logmao

Concurring OpinionJ. Leonen

ISSUE: LIABILITY FOR DAMAGES [issue of

notice of death to next of kin prior to

harvesting of internal organs]

A careful reading of the above shows that

petitioner instructed his subordinates to

“make certain” that “all reasonable

efforts” are exerted to locate the patient's

next of kin, even enumerating ways in

which to ensure that notices of the death

of the patient would reach said relatives.

It also clearly stated that permission or

authorization to retrieve and remove the

internal organs of the deceased was being

given ONLY IF the provisions of the

applicable law had been complied with.

Such instructions reveal that petitioner

acted prudently by directing his

subordinates to exhaust all reasonable

means of locating the relatives of the


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22

deceased. He could not have made his

directives any clearer. He even specifically

mentioned that permission is only

being granted IF the Department of

Surgery has complied with all the

requirements of the law. Verily, petitioner

could not have been faulted for having full

confidence in the ability of the doctors in

the Department of Surgery to comprehend

the instructions, obeying all his directives,

and acting only in accordance with the requirements of the law.

Furthermore, as found by the lower courts

from the records of the case, the doctors

and personnel of NKI disseminated notices

of the death of respondent's son to the

media and sought the assistance of the

appropriate police authorities as early as

March 2, 1988, even before petitioner

issued the Memorandum. Prior to

performing the procedure for retrieval of

the deceased's internal organs, the

doctors concerned also the sought the

opinion and approval of the Medico-Legal

Officer of the NBI.

Thus, there can be no cavil that petitioner

employed reasonable means to

disseminate notifications intended to

reach the relatives of the deceased. The

only question that remains pertains to the

sufficiency of time allowed for notices to reach the relatives of the deceased.

If respondent failed to immediately

receive notice of her son's death because

the notices did not properly state the

name or identity of the deceased, fault

cannot be laid at petitioner's door. The

trial and appellate courts found that it was

the EAMC, who had the opportunity to

ascertain the name of the deceased, who

recorded the wrong information regarding

the deceased's identity to NKI. The NKI

could not have obtained the information

about his name from the patient, because

as found by the lower courts, the

deceased was already unconscious by the time he was brought to the NKI.

Ultimately, it is respondent's failure to

adduce adequate evidence that doomed

this case. "[i]n civil cases, it is a basic rule

that the party making allegations has the

burden of proving them by a

preponderance of evidence. The parties

must rely on the strength of their own

evidence and not upon the weakness of

the defense offered by their opponent."

Here, there is to proof that, indeed, the

period of around 24 hours from the time

notices were disseminated, cannot be

considered as reasonable under the

circumstances. They failed to present any

expert witness to prove that given the

medical technology and knowledge at that

time in the 1980's, the doctors could or

should have waited longer before

harvesting the internal organs for transplantation.

Verily, the Court cannot, in conscience,

agree with the lower court. Finding

petitioner liable for damages is improper.

It should be emphasized that the internal

organs ofthe deceased were removed only

after he had been declared brain dead;

thus, the emotional pain suffered by

respondent due to the death of her son

cannot in any way be attributed to

petitioner. Neither can the Court find

evidence on record to show that

respondent's emotional suffering at the

sight of the pitiful state in which she found

her son's lifeless body be categorically

attributed to petitioner's conduct.

• G.R. No. 189563. April 7, 2014Gilat

Satellite Networks Ltd., Vs. United

Coconut Planters Bank General Insurance

Co., Inc.

• The existence of a suretyship

agreement does not give the

surety the right to intervene in

the principal contract, nor can

an arbitration clause between

the buyer and the seller be

invoked by a non-party such as

the surety.

Petitioner alleges that arbitration laws

mandate that no court can compel

arbitration, unless a party entitled to it

applies for this relief. This referral,





23

however, can only be demanded by one

who is a party to the arbitration

agreement. Considering that neither

petitioner nor One Virtual has asked for a

referral, there is no basis for the CA’s

order to arbitrate.

Moreover, Articles 1216 and 2047 of the

Civil Code clearly provide that the creditor

may proceed against the surety without

having first sued the principal debtor. ven

the Surety Agreement itself states that

respondent becomes liable upon “mere

failure of the Principal to make such

prompt payment.” Thus, petitioner should

not be ordered to make a separate claim

against One Virtual (via arbitration) before proceeding against respondent.

In suretyship, the oft-repeated rule is that

a surety’s liability is joint and solidary with

that of the principal debtor. This

undertaking makes a surety agreement an

ancillary contract, as it presupposes the

existence of a principal contract.

Nevertheless, although the contract of a

surety is in essence secondary only to a

valid principal obligation, its liability to the

creditor or “promise” of the principal is

said to be direct, primary and absolute; in

other words, a surety is directly and

equally bound with the principal. He

becomes liable for the debt and duty of

the principal obligor, even without

possessing a direct or personal interest in

the obligations constituted by the latter.

Thus, a surety is not entitled to a separate

notice of default or to the benefit of

excussion. It may in fact be sued

separately or together with the principal debtor.

After a thorough examination of the pieces

of evidence presented by both parties, the

RTC found that petitioner had delivered all

the goods to One Virtual and installed

them. Despite these compliances, One

Virtual still failed to pay its obligation,

triggering respondent’s liability to

petitioner as the former’s surety. In other

words, the failure of One Virtual, as the

principal debtor, to fulfill its monetary

obligation to petitioner gave the latter an

immediate right to pursue respondent as the surety.

Consequently, we cannot sustain

respondent’s claim that the Purchase

Agreement, being the principal contract to

which the Suretyship Agreement is

accessory, must take precedence over

arbitration as the preferred mode of

settling disputes.

First, we have held in Stronghold

Insurance Co. Inc. v. Tokyu Construction

Co. Ltd., that “[the] acceptance [of a

surety agreement], however, does not

change in any material way the creditor’s

relationship with the principal debtor nor

does it make the surety an active party to

the principal creditor-debtor relationship.

In other words, the acceptance does

not give the surety the right to

intervene in the principal contract.

The surety’s role arises only upon the

debtor’s default, at which time, it can be

directly held liable by the creditor for

payment as a solidary obligor.” Hence, the

surety remains a stranger to the Purchase

Agreement. We agree with petitioner that

respondent cannot invoke in its favor the

arbitration clause in the Purchase

Agreement, because it is not a party to

that contract. An arbitration agreement

being contractual in nature, it is binding

only on the parties thereto, as well as their assigns and heirs.

Second, Section 24 of Republic Act No.

9285 is clear in stating that a referral to

arbitration may only take place “if at least

one party so requests not later than the

pre-trial conference, or upon the request

of both parties thereafter.” Respondent

has not presented even an iota of

evidence to show that either petitioner or

One Virtual submitted its contesting claim for arbitration.

Third, sureties do not insure the solvency

of the debtor, but rather the debt itself.

They are contracted precisely to mitigate

risks of non- performance on the part of




24

the obligor. This responsibility

necessarily places a surety on the

same level as that of the principal

debtor. The effect is that the creditor is

given the right to directly proceed against

either principal debtor or surety. This is

the reason why excussion cannot be

invoked. To require the creditor to

proceed to arbitration would render the

very essence of suretyship nugatory and diminish its value in commerce.

Interest, as a form of indemnity, may

be awarded to a creditor for the delay

incurred by a debtor in the payment

of the latter’s obligation, provided that the delay is inexcusable.

Having held that a surety upon demand

fails to pay, it can be held liable for

interest, even if in thus paying, its liability

becomes more than the principal

obligation. The increased liability is not

because of the contract, but because of

the default and the necessity of judicial collection.

However, for delay to merit interest, it

must be inexcusable in nature. We agree

with petitioner that records are bereft of

proof to show that respondent’s delay was

indeed justified by the circumstances –

that is, One Virtual’s advice regarding

petitioner’s alleged breach of obligations.

The lower court’s Decision itself belied this

contention when it said that “plaintiff is

not disputing that it did not complete

commissioning work on one of the two

systems because One Virtual at that time

is already in default and has not paid

GILAT. Assuming arguendo that the

commissioning work was not completed,

respondent has no one to blame but its

principal, One Virtual; if only it had paid

its obligation on time, petitioner would not

have been forced to stop operations.

Moreover, the deposition of Mr. Erez

Antebi, vice president of Gilat, repeatedly

stated that petitioner had delivered all

equipment, including the licensed

software; and that the equipment had

been installed and in fact, gone into

operation. Notwithstanding these

compliances, respondent still failed to pay.

• G.R. No. 193787. April 7, 2014Spouses

Jose C. Roque and Beatriz Dela Cruz

Roque, et al. Vs. Ma. Pamela P. Aguado,

et al.

• The central issue in this case is

whether or not the CA erred in not

ordering the reconveyance of the

subject portion in Sps. Roque’s favor.

The essence of an action for reconveyance

is to seek the transfer of the property

which was wrongfully or erroneously

registered in another person’s name to its

rightful owner or to one with a better

right. Thus, it is incumbent upon the

aggrieved party to show that he has a

legal claim on the property superior

to that of the registered owner and

that the property has not yet passed

to the hands of an innocent purchaser for value.

Examining its provisions, the Court finds

that the stipulation above- highlighted

shows that the 1977 Deed of Conditional

Sale is actually in the nature of a contract

to sell and not one of sale contrary to Sps.

Roque’s belief. In this relation, it has been

consistently ruled that where the seller

promises to execute a deed of

absolute sale upon the completion by

the buyer of the payment of the

purchase price, the contract is only a

contract to sell even if their agreement is

denominated as a Deed of Conditional

Sale, as in this case. This treatment stems

from the legal characterization of a

contract to sell, that is, 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 subject property

exclusively to the prospective buyer

upon fulfillment of the condition

agreed upon, such as, the full

payment of the purchase price.

Elsewise stated, in a contract to sell,

ownership is retained by the vendor and is





25

not to pass to the vendee until full

payment of the purchase price.

On the matter of double sales, suffice it to

state that Sps. Roque’s reliance on Article

1544 of the Civil Code has been misplaced

since the contract they base their claim of

ownership on is, as earlier stated, a

contract to sell, and not one of sale. In

Cheng v. Genato, the Court stated the

circumstances which must concur in order

to determine the applicability of Article

1544, none of which are obtaining in this case, viz.:

(a) The two (or more) sales transactions

in issue must pertain to exactly the same

subject matter, and must be valid sales transactions;

(b) The two (or more) buyers at odds over

the rightful ownership of the subject

matter must each represent conflicting interests; and

(c) The two (or more) buyers at odds over

the rightful ownership of the subject

matter must each have bought from the

same seller.

• G.R. No. 192669. April 21, 2014Raul

Saberon, Joan F. Saberon and Jacqueline

Saberon Vs. Oscar Ventanilla, Jr., and

Carmen Gloria D. Ventanilla Separate

OpinionJ. Velasco, Jr.

• Resolution of the Court

• At first glance, it would seem that

the case involves convoluted issues

brought about by the number of

times the Ventanillas were impelled

by circumstances to seek judicial

action.

• readily reveal that the essential

facts are not disputed: 1) that the

subject properties have indeed

been the objects of various

transfers effected by MRCI leading

to the current controversy between

the Saberons and the Ventanillas;

and 2) that prior to the sale to the

Saberons, a notice of levy as

• Nonetheless, the antecedents

would

• an encumbrance was already in

existence.

Sections 51 and 52 of P.D. No. 1529

explain the purpose and effects of

registering both voluntary and involuntary instruments,

These provisions encapsulate the rule that

documents, like the certificates of title do

not effect a conveyance of or

encumbrances on a parcel of land.

Registration is the operative act that

conveys ownership or affects the land

insofar as third persons are concerned. By

virtue of registration, a constructive notice

to the whole world of such voluntary or

involuntary instrument or court writ or processes, is thereby created.

The question of utmost relevance to this case, then, is this:

not the registration of the notice of levy

had produced constructive notice that

would bind third persons despite the failure of the ROD-QC to annotate

whether or

the same in the certificates of title?

In answering these questions, the Court is

beckoned to rule on two conflicting rights

over the subject properties: the right of

the Ventanillas to acquire the title to the

registered land from the moment of

inscription of the notice of levy on the day

book (or entry book), on one hand; and

the right of the Saberons to rely on what

appears on the certificate of title for

purposes of voluntary dealings with the

same parcel of land, on the other.

The Saberons could not be said to have

authored the entanglement they found

themselves in. No fault can be attributed

to them for relying on the face of the title

presented by Marquez. This is bolstered

by the fact that the RTC decision shows no

categorical finding that the Saberons’

purchase of the lots from Marquez was


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26

tainted with bad faith. That the Saberons

should have harbored doubts against

Marquez is too high a standard to impose

on a buyer of titled land. This is in

consonance to the rule that the one who

deals with property registered under the

Torrens system is charged with notice only

of such burdens and claims as are

annotated on the title. “All persons dealing

with property covered by Torrens

certificate of title are not required to

explore further than what the Torrens title

upon its face indicates in quest for any

hidden defect or inchoate right that may subsequently defeat his right thereto.”

These rules remain as essential features

of the Torrens system. The present case

does not entail a modification or overturning of these principles.

Be that as it may, no fault can likewise be imputed to the Ventanillas.

In ultimately ruling for the Ventanillas, the

courts a quo focused on the superiority of

their notice of levy and the constructive

notice against the whole world which it

had produced and which effectively bound

third persons including the Saberons.

It has already been established in the two

previous cases decided by the Court that

the contracts to sell executed in favor of

the Ventanillas are valid and subsisting.

Clearly, it has been acknowledged, even

by MRCI, as can be seen in the latter’s

own choice to only question their solidary

liability in the 1990 case and its failure to

assign the same as an error in the 1994

case. In the same vein, the issue on

Marquez’s title had already been passed

upon and settled in the 1994 case. That he purchased the lots prior to the

In fact, the Court explicitly declared that

MRCI’s transaction with Marquez “cannot

prevail over the final and executory

judgment ordering MRCI to execute an

absolute deed of sale in favor of the

Ventanillas.”

annotation of the notice of levy in MRCI’s

title was of no moment.

These favorable findings prompted the

Ventanillas to register the notice of levy

on the properties. The records show that

on the strength of a final and executory

decision by the Court, they successfully

obtained a writ of execution from the RTC

and a notice of levy was then entered,

albeit on the primary entry book only. The

contract to sell to Marquez was registered

on May 21, 1991, while the notice of levy

was issued ten (10) days later, or on May

31, 1991. In February 1992, MRCI

executed the Deed of Sale with Marquez,

under whose name the clean titles, sans

the notice of levy, were issued. A year

later, or on March 11, 1992, MRCI

registered the deed of sale to Marquez

who later sold the same property to the

Saberons.

This complex situation could have been

avoided if it were not for the

failure of ROD Cleofe to carry over the

notice of levy to Marquez’s title, serving as

a senior encumbrance that might have

dissuaded the Saberons

from purchasing the properties.

The Court agrees with the position of the

RTC in rejecting ROD

Cleofe’s theory.

Distinctions between a contract to sell and a contract of sale are well-

established in jurisprudence. In a contract

of sale, the title to the property passes to

the vendee upon the delivery of the thing

sold; in a contract to sell, ownership is, by

agreement, reserved in the vendor and is

not to pass to the vendee until full

payment of the purchase price. Otherwise

stated, in a contract of sale, the vendor

loses ownership over the property and




27

cannot recover it until and unless the

contract is resolved or rescinded;

whereas, in a contract to sell, title is

retained by the vendor until full payment

of the price. In the latter contract,

payment of the price is a positive

suspensive condition, failure of which is

not a breach but an event that prevents

the

obligation of the vendor to convey title from becoming effective.

It is undeniable, therefore, that no title was transferred to Marquez

upon the annotation of the contract to sell

on MRCI’s title. As correctly found by the

trial court, the contract to sell cannot be

substituted by the Deed of Absolute Sale

as a “mere conclusion” of the previous

contract since the owners of the

properties under the two instruments are different.

Considering that the deed of sale in favor

of Marquez was of later registration, the

notice of levy should have been carried

over to the title as a

senior encumbrance.

Corollary to this is the rule that a levy of a judgment debtor creates a

lien, which nothing can subsequently

destroy except the very dissolution of the

attachment of the levy itself. Prior

registration of the lien creates a

preference, since the act of registration is

the operative act to convey and affect the

land. Jurisprudence dictates that the said

lien continues until the debt is paid, or the

sale is had under an execution issued on

the judgment or until the judgment is

satisfied, or the attachment is discharged or vacated in

the same manner provided by law.

Under no law, not even P.D. No. 1529, is

it stated that an attachment shall be

discharged upon sale of the property

other than under execution.

Additionally, Section 59 of P.D. No. 1529

provides that, “[i]f, at the

time of the transfer, subsisting

encumbrances or annotations appear in

the registration book, they shall be carried

over and stated in the new certificate or

certificates, except so far as they may be

simultaneously released or discharged.”

This provision undoubtedly speaks of the

ministerial duty on the part of the Register

of Deeds to carry over existing encumbrances to the

certificates of title.

From the foregoing, ROD Cleofe’s theory that a deed of sale, as a

mere conclusion of a contract to sell, turns

into a senior encumbrance which may

surpass a notice of levy, has no leg to

stand on. It was, in fact, properly rejected

by the courts a quo. Verily, the

controversy at hand arose not from the

Ventanillas’ fault, but from ROD Cleofe’s misplaced understanding of

his duty under the law.

Surely, the Ventanillas had every right to presume that the Register of

Deeds would carry over the notice of levy

to subsequent titles covering the subject

properties. The notice was registered

precisely to bind the properties and to

serve as caution to third persons who

might potentially deal with the property under the custody of the law.

While the Court is not unmindful that a

buyer is charged with notice only of such

burdens and claims as are annotated on

the title, the RTC and the CA are both

correct in applying the rule as to the

effects of involuntary registration. In




28

cases of voluntary registration of

documents, an innocent purchaser for

value of registered land becomes the

registered owner, and, in contemplation of

law the holder of a certificate of title, the

moment he presents and files a duly

notarized and valid deed of sale and the

same is entered in the day book and at

the same time he surrenders or presents

the owner's duplicate certificate of title

covering the land sold and pays the

registration fees, because what remains to

be done lies not within his power to

perform. The Register of Deeds is duty bound to perform it.

In cases of involuntary registration, an

entry thereof in the day book is a

sufficient notice to all persons even if the

owner's duplicate certificate of title is not

presented to the register of deeds.

Therefore, in the registration of an

attachment, levy upon execution, notice of lis pendens, and the like, the

entry thereof in the day book is a

sufficient notice to all persons of such

adverse claim.

In the case at bench, the notice of levy covering the subject property

was annotated in the entry book of the

ROD QC prior to the issuance of a TCT in

the name of the Saberons. Clearly, the

Ventanillas’ levy was placed on record

prior to the sale. This shows the

superiority and preference in rights of the

Ventanillas over the property as against

the Saberons.

The Court finds the Saberons to be builders in good faith.

No less than the court a quo observed that

“no actual evidence that the Saberons

connived with the MRCI and Marquez to

have the titles registered in their names to

the prejudice of the (Ventanillas)” and

that what was obvious was that “the

Saberons dealt with clean certificates of

titles.” Also quite telling on this point is

the finding that MRCI, Krohn, Tabalingcos,

and Marquez are liable to the Saberons.

Consequently, Article 448 in relation to

Article 546 of the Civil Code will apply.

Thus, the two options available to the

Ventanillas: 1) they may exercise the right

to appropriate after payment of indemnity

representing the value ofthe

improvements introduced and the

necessary and useful expenses defrayed

on the subject lots; or 2) they may forego

payment of the said indemnity and

instead, oblige the Saberons to pay the price ofthe land.

Should the Ventanillas elect to appropriate

the improvements, the trial court is

ordered to determine the value of the

improvements and the necessary and

useful expenses after hearing and

reception of evidence. Should the

Ventanillas, however, pursue the option to

oblige the Saberons to pay the "price of

the land," the trial court is ordered to

determine said price to be paid to the

Ventanillas.

• G.R. No. 196023. April 21, 2014Jose Juan

Tong, et al. Vs. Go Tiat Kun, et al.

• Briefly stated, the issues to be

resolved in this petition are: (1)

Was there an implied resulting

trust constituted over Lot 998

when Juan Tong purchased the

property and registered it in the

name of Luis, Sr.? (2) May parol

evidence be used as proof of the

establishment of the trust? (3)

Were the petitioners’ action barred

by prescription, estoppel and laches?

A review of the records shows an intention

to create a trust between the parties.

Although Lot 998 was titled in the name of

Luis, Sr., the circumstances surrounding

the acquisition of the subject property

eloquently speak of the intent that the

equitable or beneficial ownership of the

property should belong to the Juan Tong





29

family.

Second, the possession of Lot 998 had

always been with the petitioners. The

property was physically possessed by Juan

Tong and was used as stockyard for their

lumber business before it was acquired,

and even after it was acquired. In fact,

the lot remains to be the stockyard of the family lumber business until this very day.

Third, from the time it was registered in

the name of Luis, Sr. in 1957, Lot 998

remained undivided and untouched by the

respondents. It was only after the death

of Luis, Sr. that the respondents claimed

ownership over Lot 998 and subdivided it into two lots, Lot 998-A and Lot 998-B.

Fourth, respondent Leon admitted that up

to the time of his father’s death, (1) Lot

998 is in the possession of the petitioners,

(2) they resided in the tenement in the

front part of Juan Tong’s compound, (3)

Luis Sr. never sent any letter or

communication to the petitioners claiming

ownership of Lot 998, and (4) he and his

mother have a residence at Ledesco

Village, La Paz, Iloilo City while his brother

and sisters also have their own residences.

Fifth, the real property taxes on Lot 998

were paid not by Luis Sr. but by his father

Juan Tong and the Juan Tong Lumber,

Inc., from 1966 up to early 2008 as

evidenced by the following: a) the letter of

assessment sent by the City Treasurer of

Iloilo, naming Juan Tong as the owner of

Lot 998; and b) the receipts of real

property taxes paid by Juan Tong Lumber,

and later by Juan Tong Lumber, Inc., from

1997 to 2008. While some of the tax

receipts were in the name of Luis Sr., the

fact that the petitioners were in

possession of the originals thereof

established that the petitioners, the Juan

Tong Lumber, Inc., or the late Juan Tong

paid for the taxes. The respondents did

not try to explain the petitioners’

possession of the realty property tax

receipts in the name of Luis Sr.

The appellate court’s conclusion that an

express trust was created because there

was a direct and positive act by Juan Tong

to create a trust must inevitably yield to

the clear and positive evidence on record

which showed that what was truly created

was an implied resulting trust. As what

has been fully established, in view of the

mutual trust and confidence existing

between said parties who are family

members, the only reason why Lot 998

was registered in the name of Luis, Sr.

was to facilitate the purchase of the said

property to be used in the family’s lumber

business since Luis, Sr. is the only Filipino

Citizen in the Juan Tong family at that

time. As the registered owner of Lot 998,

it is only natural that tax declarations and

the corresponding tax payment receipts

be in the name of Luis, Sr. so as to effect payment thereof.

The principle of a resulting trust is based

on the equitable doctrine that valuable

consideration and not legal title

determines the equitable title or interest

and are presumed always to have been

contemplated by the parties. They arise

from the nature or circumstances of the

consideration involved in a transaction

whereby one person thereby becomes

invested with legal title but is obligated in

equity to hold his legal title for the benefit

of another. On the other hand, a

constructive trust, unlike an express trust,

does not emanate from, or generate a

fiduciary relation. Constructive trusts are

created by the construction of equity in

order to satisfy the demands of justice

and prevent unjust enrichment. They arise

contrary to intention against one who, by

fraud, duress or abuse of confidence,

obtains or holds the legal right to property

which he ought not, in equity and good conscience, to hold.

Guided by the foregoing definitions, the

Court is in conformity with the finding of

the trial court that an implied resulting

trust was created as provided under the




30

first sentence of Article 1448 which is

sometimes referred to as a purchase

money resulting trust, the elements of

which are: (a) an actual payment of

money, property or services, or an

equivalent, constituting valuable

consideration; and (b) such consideration

must be furnished by the alleged

beneficiary of a resulting trust.

Here, the petitioners have shown that the

two elements are present in the instant

case. Luis, Sr. was merely a trustee of

Juan Tong and the petitioners in relation

to the subject property, and it was Juan

Tong who provided the money for the

purchase of Lot 998 but the corresponding

transfer certificate of title was placed in

the name of Luis, Sr.

The principle that a trustee who puts a

certificate of registration in his name

cannot repudiate the trust by relying on

the registration is one of the well-known

limitations upon a title. A trust, which

derives its strength from the confidence

one reposes on another especially

between families, does not lose that

character simply because of what appears in a legal document.

Contrary to the claim of the respondents,

it is not error for the trial court to rely on

parol evidence, i.e., the oral testimonies

of witnesses Simeon Juan Tong and Jose

Juan Tong, to arrive at the conclusion that

an implied resulting trust exists. What is

crucial is the intention to create a trust.

“Intention—although only presumed,

implied or supposed by law from the

nature of the transaction or from the facts

and circumstances accompanying the

transaction, particularly the source of the

consideration—is always an element of a

resulting trust and may be inferred from

the acts or conduct of the parties rather

than from direct expression of conduct.

Certainly, intent as an indispensable

element is a matter that necessarily lies in

the evidence, that is, by evidence, even

circumstantial, of statements made by the

parties at or before the time title passes.

Because an implied trust is neither

dependent upon an express agreement

nor required to be evidenced by writing,

Article 1457 of our Civil Code authorizes

the admission of parol evidence to prove

their existence. Parol evidence that is

required to establish the existence of an

implied trust necessarily has to be

trustworthy and it cannot rest on loose, equivocal or indefinite declarations.”

Lastly, the respondents’ assertion that the

petitioners’ action is barred by

prescription, laches and estoppel is

erroneous.

As a rule, implied resulting trusts do not

prescribe except when the trustee

repudiates the trust. Further, the action to

reconvey does not prescribe so long as the

property stands in the name of the

trustee. To allow prescription would be

tantamount to allowing a trustee to

acquire title against his principal and true

owner. It should be noted that the title of

Lot 998 was still registered in the name of

Luis Sr. even when he predeceased Juan

Tong. Considering that the implied trust

has been repudiated through such death,

Lot 998 cannot be included in his estate

except only insofar as his undivided share

thereof is concerned. It is well-settled that

title to property does not vest ownership

but it is a mere proof that such property

has been registered. And, the fact that the

petitioners are in possession of all the tax

receipts and tax declarations of Lot 998 all

the more amplify their claim of ownership

over Lot 998-A. Although these tax

declarations or realty tax payments of

property are not conclusive evidence of

ownership, nevertheless, they are good

indicia of possession in the concept of

owner, for no one in his right mind would

be paying taxes for a property that is not

in his actual or at least constructive

possession. Such realty tax payments

constitute proof that the holder has a

claim of title over the property. Therefore,

the action for reconveyance of Lot 998-A,

which forms part of Lot 998, is

imprescriptible and the petitioners are not




31

estopped from claiming ownership thereof.

Moreso, when the petitioners received a

letter from VGCC, and discovered about

the breach ofthe trust agreement

committed by the heirs of Luis, Sr., they

immediately instituted an action to protect

their rights, as well as upon learning that

respondent Go Tiat Kun executed a Deed

of Sale of Undivided Interest over Lot 998-

A in favor of her children. Clearly, no

delay may be attributed to them. The

doctrine of laches is not strictly applied

between near relatives, and the fact that

the parties are connected by ties of blood

or marriage tends to excuse an otherwise

unreasonable delay.

• G.R. No. 161380. April 21, 2014Aznar

Brothers Realty Company Vs. Spouses

Jose and Magdalena Ybañez

The ownership of a sizable parcel of land

is the subject of this dispute between the

buyer of its recognized owner and the

buyer of the successors-in-interest of the

recognized owner. The land has since

been registered under the Torrens system

in the name of the latter buyer who had

meanwhile obtained a free patent on the

premise that the land belonged to the

public domain.chanrobleslaw

We sustain the CA’s conclusion that the

Spouses Ybañez were guilty of bad faith,

and that they acquired Lot No. 18563

from sellers who were not the owners.

Accordingly, we resolve the second error

raised herein in favor of Aznar Brothers.

The records and evidence fully

substantiated the CA’s conclusion. The

Spouses Ybañez acquired Lot No. 18563

through the deed of sale executed on June

21, 1978 by Adriano in favor of Jose R.

Ybañez. Together with his siblings Fabian

Ybañez, Carmen Ybañez-Tagimacruz, Fe

Ybañez-Alison, and Dulcisima Ybañez-

Tagimacruz, Adriano had supposedly

inherited Lot No. 18563 from Casimiro,

their father, who had died intestate on

July 3, 1968. Holding themselves as the

heirs and successors-in-interest of

Casimiro, they had then executed on

August 29, 1977 the Extrajudicial

Declaration of Heirs with an Extrajudicial

Settlement of Estate of Deceased Person

and Deed of Absolute Sale, whereby they

divided and adjudicated Lot No. 18563

among themselves, and then sold the

entire lot to Adriano.

But, as the CA correctly found, the

Spouses Ybañez held no right to Lot No.

18563 because Adriano, their seller, and

his siblings were not the owners of Lot No.

18563. Indeed, Casimiro had absolutely

conveyed his interest in Lot No. 18563 to

Aznar Brothers under the Deed of

Absolute Sale of March 21, 1964 with the

marital consent of Maria Daclan,

Casimiro’s surviving spouse and the

mother of Adriano and his siblings.

Considering that such conveyance was

effective and binding on Adriano and his

siblings, there was no valid transmission

of Lot No. 18563 upon Casimiro’s death to

any of said heirs, and they could not

legally adjudicate Lot No. 18563 unto

themselves, and validly transfer it to

Adriano. The conveyance by Adriano to

Jose R. Ybañez on June 21, 1978 was

absolutely void and ineffectual.

There is also no question that the Spouses

Ybañez were aware of the conveyance of

Lot No. 18563 by Casimiro to Aznar

Brothers considering that the Deed of

Absolute Sale of March 21, 1964 between

Casimiro and Aznar Brothers was

registered in the book of registry of

unregistered land on the same day

pursuant to their agreement. Such

registration constituted a constructive

notice of the conveyance on the part of

the Spouses Ybañez pursuant to Section

194 of the Revised Administrative Code of

1917, as amended by Act No. 3344

Although a deed or instrument affecting

unregistered lands would be valid only

between the parties thereto, third parties

would also be affected by the registered

deed or instrument on the theory of

constructive notice once it was further

registered in accordance with Section 194,

i.e., the deed or instrument was written or

inscribed in the day book and the register

book for unregistered lands in the Office





32

of the Register of Deeds for the province

or city where the realty was located.

The effect on third parties of the

constructive notice by virtue of the

registration of the deed or instrument was

aptly illustrated in Bautista v. Fule,37

where the Court pronounced that the

subsequent buyer of unregistered land

sold at an execution sale, which the

purchaser at the public auction registered

under Act No. 3344 seven days after that

sale, was “deemed to have constructive

notice” of the sale, and, therefore, could

not be “entitled to the rights of a

purchaser in good faith.” The Court

emphasized that as to lands not registered

under either the Spanish Mortgage Law or

the Land Registration Act, the registration

under Act No. 3344 should produce its

effects against third persons if the law was

“to have utility at all.”38chanrobleslaw

It is worth mentioning that Act No. 3344

(approved on December 8, 1926) was the

governing law at the time of the execution

of the deed of absolute sale of March 21,

1964 between Casimiro and Aznar

Brothers, and the deed of absolute sale of

February 17, 1967 between Tanuco and

Aznar Brothers. Both deeds were

registered pursuant to Section 194; while,

on the other hand, the sale between

Adriano and Jose R. Ybañez on June 21,

1978 was covered by the P.D. No. 1529,

also known as the Property Registration

Decree (whose effectivity was upon its

approval on June 11,

1978).39chanrobleslaw

Section 3 of P.D. No. 1529, albeit

expressly discontinuing the system of

registration under the Spanish Mortgage

Law, has considered lands recorded under

that system as unregistered land that

could still be recorded under Section 113

of P.D. No. 1529 “until the land shall have

been brought under the operation of the

Torrens system;” and has provided that

“[t]he books of registration for

unregistered lands provided under Section

194 of the Revised Administrative Code,

as amended by Act No. 3344, shall

continue to remain in force; provided, that

all instruments dealing with unregistered

lands shall henceforth be registered under

Section 113 of this Decree.” It is clear,

therefore, that even with the effectivity of

P.D. No. 1529, all unregistered lands may

still be registered pursuant to Section 113

of P.D. No. 1529, which essentially

replicates Section 194, as amended by Act

No. 3344, to the effect that a deed or

instrument conveying real estate not

registered under the Torrens system40

should affect only the parties thereto

unless the deed or instrument was

registered in accordance with the same

section.41chanrobleslaw

The only exception to the rule on

constructive notice by registration of the

deed or instrument affecting unregistered

realty exists in favor of “a third party with

a better right.” This exception is provided

in Section 194, as amended by Act No.

3344, to the effect that the registration

“shall be understood to be without

prejudice to a third party with a better

right;” and in paragraph (b) of Section

113 of P.D. No. 1529, to the effect that

“any recording made under this section

shall be without prejudice to a third party

with a better right.” As to who is “a third

party with better right” under these

provisions is suitably explained in Hanopol

v. Pilapil,42 a case where the sale of

unregistered land was registered under

Act No. 3344 but the land was sold twice,

as follows:chanRoblesvirtualLawlibrary

It thus appears that the “better right”

referred to in Act No. 3344 is much more

than the mere prior deed of sale in favor

of the first vendee. In the Lichauco case

just mentioned, it was the prescriptive

right that had supervened. Or, as also

suggested in that case, other facts and

circumstances exist which, in addition

to his deed of sale, the first vendee

can be said to have better right than

the second purchaser.43 (Bold emphasis

supplied.)

The Court also observes in Sales v. Court

of Appeals,44 a case involving parties to a

deed of donation who had agreed to




33

register the instrument under Act No.

3344 but failed to do so, that the “better

right” of a third party relates to “other

titles which a party might have acquired

independently of the unregistered deed

such as title by prescription.”45 But the

exception does not obviously apply to the

Spouses Ybañez because they acquired

their right from Adriano who did not hold

any legal or equitable interest in Lot No.

18563 that he could validly transfer to the

Spouses Ybañez.chanrobleslaw

• G.R. No. 182894. April 22, 2014Fe Floro

Valino Vs. Rosario D. Adriano, et al.

Dissenting OpinionJ. Leonen

• The lone legal issue in this petition

is who between Rosario and Valino

is entitled to the remains of Atty.

Adriano.

The Court’s Ruling

Article 305 of the Civil Code, in relation to

what is now Article 1996 of the Family

Code, specifies the persons who have the

right and duty to make funeral

arrangements for the deceased.

Thus:chanRoblesvirtualLawlibrary

Art. 305. The duty and the right to

make arrangements for the funeral of a

relative shall be in accordance with the

order established for support, under

Article 294. In case of descendants of the

same degree, or of brothers and sisters,

the oldest shall be preferred. In case of

ascendants, the paternal shall have a

better right. [Emphases supplied]

Art. 199. Whenever two or more persons

are obliged to give support, the liability

shall devolve upon the following persons

in the order herein provided:

(1) The spouse;

(2) The descendants in the nearest

degree;

(3) The ascendants in the nearest degree;

and

(4) The brothers and sisters. (294a)

[Emphasis supplied]

Further, Article 308 of the Civil Code

provides:chanRoblesvirtualLawlibrary

Art. 308. No human remains shall be

retained, interred, disposed of or

exhumed without the consent of the

persons mentioned in Articles 294 and

305. [Emphases supplied]

In this connection, Section 1103 of the

Revised Administrative Code


Section 1103. Persons charged with the

duty of burial. – The immediate duty of

burying the body of a deceased person,

regardless of the ultimate liability for the

expense thereof, shall devolve upon the

persons herein below specified:

(a) If the deceased was a married

man or woman, the duty of the burial

shall devolve upon the surviving

spouse if he or she possesses

sufficient means to pay the necessary

expenses;

x x x x. [Emphases supplied]

From the aforecited provisions, it is

undeniable that the law simply confines

the right and duty to make funeral

arrangements to the members of the

family to the exclusion of one’s common

law partner. In Tomas Eugenio, Sr. v.

Velez,7 a petition for habeas corpus was

filed by the brothers and sisters of the late

Vitaliana Vargas against her lover, Tomas

Eugenio, Sr., alleging that the latter

forcibly took her and confined her in his

residence. It appearing that she already

died of heart failure due to toxemia of

pregnancy, Tomas Eugenio, Sr. sought the

dismissal of the petition for lack of

jurisdiction and claimed the right to bury

the deceased, as the common–law

husband.

In its decision, the Court resolved that the

trial court continued to have jurisdiction

over the case notwithstanding the death

of Vitaliana Vargas. As to the claim of

Tomas Eugenio, Sr. that he should be

considered a “spouse” having the right

and duty to make funeral arrangements

for his common–law wife, the Court

ruled:chanRoblesvirtualLawlibrary


http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/april2014/182894_leonen.pdf




34

x x x Indeed, Philippine Law does not

recognize common law marriages. A

man and woman not legally married who

cohabit for many years as husband and

wife, who represent themselves to the

public as husband and wife, and who are

reputed to be husband and wife in the

community where they live may be

considered legally married in common law

jurisdictions but not in the Philippines.

While it is true that our laws do not just

brush aside the fact that such

relationships are present in our society,

and that they produce a community of

properties and interests which is governed

by law, authority exists in case law to the

effect that such form of co–ownership

requires that the man and woman living

together must not in any way be

incapacitated to contract marriage. In any

case, herein petitioner has a subsisting

marriage with another woman, a legal

impediment which disqualified him from

even legally marrying Vitaliana. In

Santero vs. CFI of Cavite, the Court, thru

Mr. Justice Paras, interpreting Art. 188 of

the Civil Code (Support of Surviving

Spouse and Children During Liquidation of

Inventoried Property) stated: “Be it noted,

however, that with respect to ’spouse,'

the same must be the legitimate

’spouse' (not common–law spouses).”

There is a view that under Article 332 of

the Revised Penal Code, the term

“spouse” embraces common law relation

for purposes of exemption from criminal

liability in cases of theft, swindling and

malicious mischief committed or caused

mutually by spouses. The Penal Code

article, it is said, makes no distinction

between a couple whose cohabitation is

sanctioned by a sacrament or legal tie and

another who are husband and wife de

facto. But this view cannot even apply to

the facts of the case at bar. We hold that

the provisions of the Civil Code, unless

expressly providing to the contrary as in

Article 144, when referring to a "spouse”

contemplate a lawfully wedded

spouse. Petitioner vis–a–vis Vitaliana was

not a lawfully–wedded spouse to her; in

fact, he was not legally capacitated to

marry her in her lifetime.8 [Emphases

supplied]

As applied to this case, it is clear that the

law gives the right and duty to make

funeral arrangements to Rosario, she

being the surviving legal wife of Atty.

Adriano. The fact that she was living

separately from her husband and was in

the United States when he died has no

controlling significance. To say that

Rosario had, in effect, waived or

renounced, expressly or impliedly, her

right and duty to make arrangements for

the funeral of her deceased husband is

baseless. The right and duty to make

funeral arrangements, like any other right,

will not be considered as having been

waived or renounced, except upon

clear and satisfactory proof of

conduct indicative of a free and

voluntary intent to that end.9 While

there was disaffection between Atty.

Adriano and Rosario and their children

when he was still alive, the Court also

recognizes that human compassion, more

often than not, opens the door to mercy

and forgiveness once a family member

joins his Creator. Notably, it is an

undisputed fact that the respondents

wasted no time in making frantic pleas to

Valino for the delay of the interment for a

few days so they could attend the service

and view the remains of the deceased. As

soon as they came to know about Atty.

Adriano’s death in the morning of

December 19, 1992 (December 20, 1992

in the Philippines), the respondents

immediately contacted Valino and the

Arlington Memorial Chapel to express their

request, but to no avail.

Valino insists that the expressed wishes of

the deceased should nevertheless prevail

pursuant to Article 307 of the Civil Code.

Valino’s own testimony that it was Atty.

Adriano’s wish to be buried in their family

plot is being relied upon heavily. It should

be noted, however, that other than

Valino’s claim that Atty. Adriano wished to

be buried at the Manila Memorial Park, no

other evidence was presented to




35

corroborate such claim. Considering that

Rosario equally claims that Atty. Adriano

wished to be buried in the Adriano family

plot in Novaliches, it becomes apparent

that the supposed burial wish of Atty.

Adriano was unclear and undefinite.

Considering this ambiguity as to the true

wishes of the deceased, it is the law that

supplies the presumption as to his intent.

No presumption can be said to have been

created in Valino’s favor, solely on account

of a long–time relationship with Atty.

Adriano.

Moreover, it cannot be surmised that just

because Rosario was unavailable to bury

her husband when she died, she had

already renounced her right to do so.

Verily, in the same vein that the right and

duty to make funeral arrangements will

not be considered as having been waived

or renounced, the right to deprive a

legitimate spouse of her legal right to bury

the remains of her deceased husband

should not be readily presumed to have

been exercised, except upon clear and

satisfactory proof of conduct indicative of

a free and voluntary intent of the

deceased to that end. Should there be

any doubt as to the true intent of the

deceased, the law favors the

legitimate family. Here, Rosario’s

keenness to exercise the rights and

obligations accorded to the legal wife was

even bolstered by the fact that she was

joined by the children in this case.

Even assuming, ex gratia argumenti, that

Atty. Adriano truly wished to be buried in

the Valino family plot at the Manila

Memorial Park, the result remains the

same. Article 307 of the Civil Code


Art. 307. The funeral shall be in

accordance with the expressed wishes

of the deceased. In the absence of such

expression, his religious beliefs or

affiliation shall determine the funeral

rites. In case of doubt, the form of the

funeral shall be decided upon by the

person obliged to make arrangements for

the same, after consulting the other

members of the family.

From its terms, it is apparent that Article

307 simply seeks to prescribe the “form of

the funeral rites” that should govern in the

burial of the deceased. As thoroughly

explained earlier, the right and duty to

make funeral arrangements reside in the

persons specified in Article 305 in relation

to Article 199 of the Family Code. Even if

Article 307 were to be interpreted to

include the place of burial among those on

which the wishes of the deceased shall be

followed, Dr. Arturo M. Tolentino (Dr.

Tolentino), an eminent authority on civil

law, commented that it is generally

recognized that any inferences as to

the wishes of the deceased should be

established by some form of

testamentary disposition.10 As Article

307 itself provides, the wishes of the

deceased must be expressly provided. It

cannot be inferred lightly, such as from

the circumstance that Atty. Adriano spent

his last remaining days with Valino. It

bears stressing once more that other than

Valino’s claim that Atty. Adriano wished to

be buried at the Valino family plot, no

other evidence was presented to

corroborate it.

At any rate, it should be remembered that

the wishes of the decedent with respect

to his funeral are not absolute. As Dr.

Tolentino further

wrote:chanRoblesvirtualLawlibrary

The dispositions or wishes of the deceased

in relation to his funeral, must not be

contrary to law. They must not violate

the legal and reglamentary provisions

concerning funerals and the

disposition of the remains, whether as

regards the time and manner of

disposition, or the place of burial, or the

ceremony to be observed.11 [Emphases

supplied]

• In this case, the wishes of the

deceased with respect to his

funeral are limited by Article 305

of the Civil Code in relation to

Article 199 of the Family Code,




36

and subject the same to those

charged with the right and duty to

make the proper arrangements to

bury the remains of their loved–

one.

As for Valino’s contention that there is no

point in exhuming and transferring the

remains of Atty. Adriano, it should be said

that the burial of his remains in a place

other than the Adriano family plot in

Novaliches runs counter to the wishes of

his family. It does not only violate their

right provided by law, but it also

disrespects the family because the

remains of the patriarch are buried in the

family plot of his live–in partner.

It is generally recognized that the corpse

of an individual is outside the commerce

of man. However, the law recognizes that

a certain right of possession over the

corpse exists, for the purpose of a decent

burial, and for the exclusion of the

intrusion by third persons who have no

legitimate interest in it. This quasi–

property right, arising out of the duty of

those obligated by law to bury their dead,

also authorizes them to take possession of

the dead body for purposes of burial to

have it remain in its final resting place, or

to even transfer it to a proper place where

the memory of the dead may receive the

respect of the living. This is a family

right. There can be no doubt that persons

having this right may recover the corpse

from third persons.13

• All this notwithstanding, the Court

finds laudable the acts of Valino in

taking care of Atty. Adriano during

his final moments and giving him a

proper burial. For her sacrifices, it

would indeed be unkind to assess

actual or moral damages against

her.

• Finally, it should be said that

controversies as to who should

make arrangements for the funeral

of a deceased have often

aggravated the bereavement of the

family and disturbed the proper

solemnity which should prevail at

every funeral. It is for the purpose

of preventing such controversies

that the Code Commission saw it

best to include the provisions on

“Funerals.”15

• G.R. No. 180105. April 23, 2014Sps. David

Eserjose and Zenaida Eserjose Vs. Allied

Banking Corporation and Pacita Uy

This case is about the effect of a reduction

in the course of appeal of the judgment

amount after the execution sale of the

defendant’s properties to satisfy the trial

court’s judgment had already taken place.

Issue Presented

The only issue to be resolved in this case

is whether or not the CA erred in

reversing the RTC ruling that allowed the

consolidation of ownership in and turnover

of possession of the two lots covered by

TCTs N–241231 and N–242930 to the

Eserjoses, in effect allowing ABC and Uy

to just pay them the amounts of the

awards in cash.


When this Court substantially reduced the

amounts of damages that the RTC

awarded the Eserjoses, it in effect partially

reversed the executed judgment issued in

the case. Section 5, Rule 39 of the 1997

Rules of Civil Procedure applies to such a

situation. It


SEC. 5. Effect of reversal of executed

judgment. – Where the executed

judgment is reversed totally or partially,

or annulled, on appeal or otherwise, the

trial court may, on motion, issue such

orders of restitution or reparation of

damages as equity and justice may

warrant under the circumstances.

Here, the RTC executed on a judgment

debt of P8,050,000 when what was later

determined to be due was only

P4,050,000. Clearly, the trial court had

the discretion to order restitution and

reparation of damages. Its exercise of

that discretion must, however, be fair to

all the parties concerned.





37

The CA was right in holding that the RTC

committed grave abuse of discretion in

not allowing for the restitution of the

properties improperly auctioned for

substantially wrong amounts considering

that the registration of titles in the names

of the Eserjoses and the turnover of

possession of such properties to them had

not yet taken place. There is no legal

impediment to ABC and Uy being allowed

to pay the judgment debt in cash, the

preferred mode of satisfaction of money

judgment.7

• G.R. No. 205879. April 23, 2014Skunac

Corporation and Alfonso F. Enriquez Vs.

Roberto S. Sylianteng, et al.

• Coming to the merits of the case,

the abovementioned assignment of

errors boils down to two basic

questions: (1) whether or not

respondents' predecessor–in–

interest, Emerenciana, validly

acquired the subject lots from Luis,

and (2) whether or not

respondents, in turn, validly

acquired the same lots from

Emerenciana.

•

• The Court rules in the affirmative,

but takes exception to the CA’s

and RTC’s application of Article

1544 of the Civil Code.

•

• Reliance by the trial and appellate

courts on Article 1544 of the Civil

Code is misplaced. The requisites

that must concur for Article 1544

to apply

are:chanRoblesvirtualLawlibrary

•

• (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.11

•

• Obviously, said provision has no

application in cases where the

sales involved were initiated not by

just one but two vendors.12 In the

present case, the subject lots were

sold to petitioners and respondents

by two different vendors –

Emerenciana and Romeo Pujalte

(Romeo). Hence, Article 1544 of

the Civil Code is not applicable.

Nonetheless, the Court agrees with the

findings and conclusion of the CA that

Emerenciana’s acquisition of the subject

lots from Luis and her subsequent sale of

the same to respondents are valid and

lawful. Petitioners dispute such finding. To

prove their contention, they assail the

authenticity and due execution of the deed

of sale between Luis and Emerenciana.

Petitioners contend that respondents'

presentation of the “duplicate/carbon”

original of the Deed of Sale13 dated June

20, 1958 is in violation of the best

evidence rule under Section 3, Rule 130 of

the Rules of Court.14 The Court does not

agree.

The best evidence rule is inapplicable to

the present case. The said rule applies

only when the content of such document

is the subject of the inquiry.15 Where the

issue is only as to whether such document

was actually executed, or exists, or on the

circumstances relevant to or surrounding

its execution, the best evidence rule does

not apply and testimonial evidence is

admissible.16 Any other substitutionary

evidence is likewise admissible without

need to account for the original.17 In the

instant case, what is being questioned is

the authenticity and due execution of the

subject deed of sale. There is no real issue

as to its contents.

In any case, going to the matter of

authenticity and due execution of the

assailed document, petitioners do not

dispute that the copy of the deed of sale





38

that respondents submitted as part of

their evidence is a duplicate of the original

deed of sale dated June 20, 1958. It is

settled that a signed carbon copy or

duplicate of a document executed at the

same time as the original is known as a

duplicate original and maybe introduced in

evidence without accounting for the non–

production of the original.18

Moreover, Section 4 (b), Rule 130 of the

Rules of Court provides that “[w]hen a

document is in two or more copies

executed at or about the same time, with

identical contents, all such copies are

equally regarded as originals.”

In addition, evidence of the authenticity

and due execution of the subject deed is

the fact that it was notarized. The

notarization of a private document

converts it into a public document.19

Moreover, a notarized instrument is

admissible in evidence without further

proof of its due execution, is conclusive as

to the truthfulness of its contents, and has

in its favor the presumption of

regularity.20 This presumption is affirmed

if it is beyond dispute that the notarization

was regular.21 To assail the authenticity

and due execution of a notarized

document, the evidence must be clear,

convincing and more than merely

preponderant.22

In the present case, petitioners failed to

present convincing evidence to prove that

the notarization of the subject deed was

irregular as to strip it of its public

character. On the contrary, a certified

copy of page 26 of the notarial register of

the notary public who notarized the

subject deed of sale, which was issued by

the Records Management and Archives

Office of Manila, shows that the sale of the

subject lots by Luis to Emerenciana was

indeed regularly notarized.23

Petitioners further argue that the deed of

sale between Emerenciana and Luis was

not registered with the Register of Deeds

of Quezon City. The Court, however,

agrees with the CA that the said deed

was, in fact, registered as evidenced by

official receipts24 issued to this effect.

Petitioners, again, did not present any

evidence to assail the authenticity of these

documents.

Petitioners also question the authenticity

of the subject deed of sale (Exhibit “B–1–

C”) by arguing that only one copy of such

deed was prepared as only one document

number was assigned by the notary to the

said deed. Petitioners claim that this is

contrary to the claim of respondents that

the said deed of sale was prepared,

executed and notarized in several copies.

The Court is not persuaded.

It is true that Section 246, Article V, Title

IV, Chapter II of the Revised

Administrative Code provides that “[t]he

notary shall give to each instrument

executed, sworn to, or acknowledged

before him a number corresponding to the

one in his register, and shall also state on

the instrument the page or pages of his

register on which the same is recorded.”

In this regard, the Court agrees with

respondents' contention that the

“instrument” being referred to in the

abovequoted provision is the deed or

contract which is notarized. It does not

pertain to the number of copies of such

deed or contract. Hence, one number is

assigned to a deed or contract regardless

of the number of copies prepared and

notarized. Each and every copy of such

contract is given the same document

number. It is, thus, wrong for petitioners

to argue that only one copy of the June

20, 1958 deed of sale was prepared and

notarized, because only one document

number appears on the notarial book of

the notary public who notarized the said

deed. On the contrary, evidence shows

that at least two copies of the subject

deed of sale was prepared and notarized

– one was submitted for registration with

the Register of Deeds of Quezon City and

the other was retained by Emerenciana,

which is the copy presented in evidence

by respondents.

Petitioners, nonetheless, insist that they

have valid title over the subject

properties. They trace their respective




39

titles from that of Romeo. Romeo, in turn,

derives his supposed ownership of and

title over the subject lots from his claim

that he is the sole heir of the estate of his

alleged predecessor–in–interest, Luis.

Evidence, however, shows that Romeo

never became the owner of the subject

properties for two reasons.

First, as shown above, the disputed lots

were already sold by Luis during his

lifetime. Thus, these parcels of land no

longer formed part of his estate when he

died. As a consequence, Romeo’s sale of

the disputed lots to petitioners was not

affirmed by the estate court, because the

subject parcels of land were not among

those included in the said estate at the

time that Romeo was appointed as the

administrator thereof. As shown in its

October 11, 1993 Order,28 the RTC of

Pasig, acting as an estate court, denied

Romeo’s motion for approval of the sale of

the subject lots, because these properties

were already sold to respondents per

report submitted by the Register of Deeds

of San Juan.

Second, even granting that the subject

lots formed part of the estate of Luis, it

was subsequently proven in a separate

case that Romeo is not his heir. In a

criminal case for use of falsified

documents filed against Romeo, it was

proven that his claim of heirship is

spurious. In the said criminal case, his

birth certificate and the marriage

certificate of his supposed parents, which

he presented before the estate court, to

prove his claim that he is the sole heir of

Luis, were found by the criminal court to

be falsified.

Indeed, not being an heir of Luis, Romeo

never acquired any right whatsoever over

the subject lots, even if he was able to

subsequently obtain a title in his name. It

is a well–settled principle that no one can

give what one does not have, nemo dat

quod non habet.34 One can sell only what

one owns or is authorized to sell, and the

buyer can acquire no more right than

what the seller can transfer

legally.35 Since Romeo has no right

to the subject lots, petitioners, who

simply stepped into the shoes of Romeo,

in turn, acquired no rights to the same.

Stretching petitioners' contention a bit

further, granting that both petitioners and

respondents bought the disputed lots in

good faith by simply relying on the

certificates of the sellers, and

subsequently, acquiring titles in their own

names, respondents' title shall still prevail.

It is a settled rule that when two

certificates of title are issued to different

persons covering the same land in whole

or in part, the earlier in date must prevail,

and, in case of successive registrations

where more than one certificate is issued

over the land, the person holding a prior

certificate is entitled to the land as against

a person who relies on a subsequent

certificate.37 The titles of respondents,

having emanated from an older title,

should thus be upheld.

Anent petitioners' bad faith, this Court

finds no persuasive reason to depart from

the findings of the CA that petitioners had

prior knowledge of the estate proceedings

involving the subject lots and that they

have notice of the defect in the title of

Romeo.

It is true that a person dealing with

registered land need not go beyond the

title. However, it is equally true that such

person is charged with notice of the

burdens and claims which are annotated

on the title.38 In the instant case, The

Torrens Certificate of Title (TCT No. 5760–

R) in the name of Romeo, which was the

title relied upon by petitioners, also

contained Entry No. P.E. 4023, quoted

above, which essentially informs

petitioners that the lots which they were

about to buy and which they in fact

bought, were already sold to

Emerenciana.39 This entry should have

alerted petitioners and should have

prodded them to conduct further

investigation. Simple prudence would

have impelled them as honest persons to

make deeper inquiries to clear the

suspiciousness haunting Romeo’s title. On

the contrary, rather than taking caution in




40

dealing with Romeo, petitioners, instead,

subsequently executed deeds of sale40

over the same properties but all of which

were, nonetheless, disallowed by the

estate court in its Order41 dated October

11, 1993 on the ground that the said lots

were already sold, this time, by

Emerenciana to respondents. In this

regard, petitioners acted in bad faith.

• Philippine National Bank Vs. Jose Garcia

and children, et al.G.R. No. 182839.

June 2, 2014

• The Subject Property is

Conjugal

• a. All property acquired during

marriage

• is presumed conjugal

•

• Since Jose Sr. and Ligaya were

married prior to the effectivity of

the Family Code, their property

relations were governed by the

conjugal partnership of gains as

provided under Article 119 of the

Civil Code. Under Article 160 of the

Civil Code, “all property of the

marriage is presumed to belong to

the conjugal partnership, unless it

can be proven that it pertains

exclusively to the husband or to

the wife.”

b. Registration of the subject property

in

the name of one spouse does not

destroy

the presumption that the property is

conjugal

The petitioner bank claims that the CA

failed to consider that the subject property

was registered in the name of Jose Sr.

alone. Likewise, it raises the argument

that Jose Sr.’s change of status in the

subject property’s title from “married” to

“widower” prior to the constitution of the

real estate mortgage showed that the

property was no longer conjugal.

We do not consider this argument

persuasive.

Registration of a property alone in the

name of one spouse does not destroy its

conjugal nature. What is material is the

time when the property was

acquired.9 The registration of the

property is not conclusive evidence of the

exclusive ownership of the husband or the

wife. Although the property appears to be

registered in the name of the husband, it

has the inherent character of conjugal

property if it was acquired for valuable

consideration during marriage.10 It

retains its conjugal nature.

In order to rebut the presumptive conjugal

nature of the property, the petitioner must

present strong, clear and convincing

evidence of exclusive ownership of one of

the spouses.11 The burden of proving that

the property belongs exclusively to the

wife or to the husband rests upon the

party asserting it.

In the present case, aside from its

allegation that the subject property is no

longer conjugal and its assertion that it is

a mortgagee in good faith, the petitioner

bank offered no evidence, convincing to

this Court, that the subject property

exclusively belonged to Jose Sr. As stated

earlier, the petitioner bank failed to

overcome the legal presumption that the

disputed property was conjugal. Thus, the

conclusion of both lower courts that the

subject property was conjugal property

holds. Factual findings of the CA affirming

those of the trial court are binding on this

Court unless there is a clear showing that

such findings are tainted with

arbitrariness, capriciousness or palpable

error.12

The conjugal partnership was

converted

into an implied ordinary co-ownership

upon the death of Ligaya

Upon the death of Ligaya on January 21,

1987, the conjugal partnership was

automatically dissolved and terminated

pursuant to Article 175(1) of the Civil

Code,13 and the successional rights of her

heirs vest, as provided under Article 777

of the Civil Code, which states that “[t]he

http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/june2014/182839.pdf





41

rights to the succession are transmitted

from the moment of the death of the

decedent.”

Consequently, the conjugal partnership

was converted into an implied ordinary co-

ownership between the surviving spouse,

on the one hand, and the heirs of the

deceased, on the other.14 This resulting

ordinary co-ownership among the heirs is

governed by Article 493 of the Civil Code.

Under this provision, each co-owner has

the full ownership of his part or share in

the co-ownership and may, therefore,

alienate, assign or mortgage it except

when personal rights are involved. Should

a co-owner alienate or mortgage the co-

owned property itself, the alienation or

mortgage shall remain valid but only to

the extent of the portion which may be

allotted to him in the division upon the

termination of the co-ownership.1

In the present case, Jose Sr. constituted

the mortgage over the entire subject

property after the death of Ligaya, but

before the liquidation of the conjugal

partnership. While under Article 493 of

the Civil Code, even if he had the right to

freely mortgage or even sell his undivided

interest in the disputed property, he could

not dispose of or mortgage the entire

property without his children’s consent. As

correctly emphasized by the trial court,

Jose Sr.’s right in the subject property is

limited only to his share in the

conjugal partnership as well as his

share as an heir on the other half of

the estate which is his deceased

spouse’s share. Accordingly, the

mortgage contract is void insofar as it

extends to the undivided shares of his

children (Nora, Jose Jr., Bobby and

Jimmy) because they did not give their

consent to the transaction.17

Accordingly, the Amendment of Real

Estate Mortgage constituted by Jose Sr.

over the entire property without his co-

owners’ consent is not necessarily void in

its entirety. The right of the petitioner

bank as mortgagee is limited though only

to the portion which may be allotted to

Jose Sr. in the event of a division and

liquidation of the subject

property.cra1awlaw1ibrary

• Dolores Campos Vs. Dominador Ortega Sr.

and James SilosG.R. No. 171286. June

2, 2014

• We agree with the CA that the case

for specific performance with

damages instituted by petitioner

effectively attacks the validity of

respondents' Torrens title over the

subject lot. It is evident that,

ultimately, the objective of such

claim is to nullify the title of

respondents to the property in

question, which, in turn, challenges

the judgment pursuant to which

the title was decreed. This is a

collateral attack that is not

permitted under the principle of

indefeasibility of Torrens title.

Section 48 of Presidential Decree

No. 1529, otherwise known as the

Property Registration Decree,

unequivocally

states:ChanRoblesVirtualawlibrary

•

• SEC. 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 collateral attack transpires when,

in another action to obtain a

different relief and as an incident

to the present action, an attack is

made against the judgment

granting the title while a direct

attack (against a judgment

granting the title) is an action

whose main objective is to annul,

set aside, or enjoin the

enforcement of such judgment if

not yet implemented, or to seek

recovery if the property titled

under the judgment had been

disposed of.19 The issue on the

validity of title, i.e., whether or not

it was fraudulently issued, can only

be raised in an action expressly






42

instituted for that

purpose.20cralawred

•

• The appropriate legal remedy that

petitioner should have availed is an

action for reconveyance. Proof of

actual fraud is not required as it

may be filed even when no fraud

intervened such as when there is

mistake in including the land for

registration.

•

• Under the principle of constructive

trust, registration of property by

one person in his name, whether

by mistake or fraud, the real owner

being another person, impresses

upon the title so acquired the

character of a constructive trust for

the real owner, which would justify

an action for reconveyance. In the

action for reconveyance, the

decree of registration is respected

as incontrovertible but what is

sought instead is the transfer of

the property wrongfully or

erroneously registered in another's

name to its rightful owner or to one

with a better right. If the

registration of the land is

fraudulent, the person in whose

name the land is registered holds it

as a mere trustee, and the real

owner is entitled to file an action

for reconveyance of the

property.21cralawred

•

• An action for reconveyance

resulting from fraud prescribes four

years from the discovery of the

fraud, which is deemed to have

taken place upon the issuance of

the certificate of title over the

property, and if based on an

implied or a constructive trust it

prescribes ten (10) years from the

alleged fraudulent registration or

date of issuance of the certificate

of title over the property.22

However, an action for

reconveyance based on implied or

constructive trust is imprescriptible

if the plaintiff or the person

enforcing the trust is in possession

of the property.23 In effect, the

action for reconveyance is an

action to quiet title to the property,

which does not prescribe.24

In this case, petitioner, taking into

account Article 1155 of the Civil Code27

and jurisprudence28 on the matter, should

be guided by the following facts in

enforcing her legal remedy/ies, if still any:

(1) her judicial admission that they no

longer possess the subject lot, claiming

that they stayed therein from 1966 until

1997 when they were ejected by the

sheriff of Pasig RTC;29 (2) TCT No. 13342

was issued on December 9, 1997; and (3)

the instant case for specific performance

with damages was filed on August 17,

1999.

• Republic of the Philippines Vs. Corazon C.

Sese and Fe C. SeseG.R. No. 185092.

June 4, 2014

The vital issue to be resolved by the Court

is whether respondents are entitled to the

registration of land title under Section

14(1) of Presidential Decree (P.D.) No.

1529, or pursuant to Section 14(2) of the

same statute.

Based on the above–quoted provisions,

applicants for registration of land title

must establish and prove: (1) that the

subject land forms part of the disposable

and alienable lands of the public domain;

(2) that the applicant and his

predecessors–in–interest have been in


possession and occupation of the same;

and (3) that it is under a bona fide claim

of ownership since June 12, 1945, or

earlier.10

Compliance with the foregoing

requirements is indispensable for an

application for registration of land title,

under Section 14(1) of P.D. No. 1529, to

validly prosper. The absence of any one

requisite renders the application for

registration substantially defective.

Anent the first requisite, respondents

presented evidence to establish the






43

disposable and alienable character of the

subject land through a survey plan, where

on its lower portion, a note stated, among

others, as follows: “This survey is inside

the alienable and disposable area as per

Project No. 20 LC Map No. 637 certified by

the Bureau of Forestry on March 1, 1927.

It is outside any civil or military

reservation.” The said plan was approved

by the DENR, Land Management Services,

Regional Office III, San Fernando,

Pampanga on December 3, 1998. The

annotation in the survey plan, however,

fell short of the requirement of the law in

proving its disposable and alienable

character.

In Republic v. Espinosa,11 citing Republic

v. Sarmiento12 and Menguito v. Republic,13

the Court reiterated the rule that that a

notation made by a surveyor–geodetic

engineer that the property surveyed was

alienable and disposable was not the

positive government act that would

remove the property from the inalienable

domain and neither was it the evidence

accepted as sufficient to controvert the

presumption that the property was

inalienable.

Thus, the present rule is that an

application for original registration must

be accompanied by (1) a CENRO or

PENRO Certification; and (2) a copy of the

original classification approved by the



records.16

Here, the only evidence presented by

respondents to prove the disposable and

alienable character of the subject land was

an annotation by a geodetic engineer in a

survey plan. Although this was certified by

the DENR, it clearly falls short of the

requirements for original registration.

With regard to the third requisite, it must

be shown that the possession and

occupation of a parcel of land by the

applicant, by himself or through his

predecessors–in–interest, started on June

12, 1945 or earlier.17 A mere showing of

possession and occupation for 30 years or

more, by itself, is not sufficient.18

In this regard, respondents likewise failed.

As the records and pleadings of this case

will reveal, the earliest that respondents

and their predecessor–in–interest can

trace back possession and occupation of

the subject land was only in the year

1950, when their mother, Resurreccion,

acquired the subject land from the

Santoses on October 4, 1950 by virtue of

an absolute sale. Evidently, their

possession of the subject property

commenced roughly five (5) years beyond

June 12, 1945, the reckoning date

expressly provided under Section 14(1) of

P.D. No. 1529. Thus, their application for

registration of land title was legally infirm.

The case of Malabanan v. Republic19 gives

a definitive clarity to the applicability and

scope of original registration proceedings

under Section 14(2) of the Property

Registration Decree. In the said case, the

Court laid down the following

rules:chanRoblesvirtualLawlibrary

We synthesize the doctrines laid down in

this case, as

follows:chanRoblesvirtualLawlibrary

x x x x

(2) In complying with Section 14(2) of the

Property Registration Decree, consider

that under the Civil Code, prescription is

recognized as a mode of acquiring

ownership of patrimonial property.

However, public domain lands

become only patrimonial property not

only with a declaration that these are

alienable or disposable. There must

also be 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.

And only when the property has become

patrimonial can the prescriptive period for

the acquisition of property of the public

dominion begin to run.




44

(a) Patrimonial property is private

property of the government. The person

acquires ownership of patrimonial

property by prescription under the Civil

Code is entitled to secure registration

thereof under Section 14(2) of the

Property Registration Decree.

(b) There are two kinds of prescription by

which patrimonial property may be

acquired, one ordinary and other

extraordinary. Under ordinary acquisitive

prescription, a person acquires ownership

of a patrimonial property through

possession for at least ten (10) years, in

good faith and with just title. Under

extraordinary acquisitive prescription, a

person’s uninterrupted adverse possession

of patrimonial property for at least thirty

(30) years, regardless of good faith or just

title, ripens into ownership. (Emphasis

supplied)

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.20

Thus, under Section 14(2) of P.D. No.

1529, for acquisitive prescription to

commence and operate against the State,

the classification of land as alienable and

disposable alone is not sufficient. The

applicant must be able to show that the

State, in addition to the said classification,

expressly declared through either a law

enacted by Congress or a proclamation

issued by the President that the subject

land is no longer retained for public

service or the development of the national

wealth or that the property has been

converted into patrimonial. Consequently,

without an express declaration by the

State, the land remains to be a property

of public dominion and, hence, not

susceptible to acquisition by virtue of

prescription.21 The classification of the

subject property as alienable and

disposable land of the public domain does

not change its status as property of the

public dominion under Article 420(2) of

the Civil Code. It is still insusceptible to

acquisition by prescription.

For the above reasons, the respondents

cannot avail of either Section 14 (1) or 14

(2) of P.D. No. 1529. Under Section 14

(1), respondents failed to prove (a) that

the property is alienable and disposable;

and (b) that their possession of the

property dated back to June 12, 1945 or

earlier. Failing to prove the alienable and

disposable nature of the subject land,

respondents all the more cannot apply for

registration by way of prescription

pursuant to Section 14 (2) which requires

possession for 30 years to acquire or take.

Not only did respondents need to prove

the classification of the subject land as

alienable and disposable, but also to show

that it has been converted into

patrimonial. As to whether respondents

were able to prove that their possession

and occupation were of the character

prescribed by law, the resolution of this

issue has been rendered unnecessary by

the foregoing considerations.

• Republic of the Philippines Vs. Franklin M.

MilladoG.R. No. 194066. June 4, 2014

• In this case, the source of

reconstitution is an authenticated

copy of Decree No. 295110 under

Section 2(d), which as certified by

the LRA, was issued on October 8,

1927 in favor of Isabel, Sixto and

Apolonia, all surnamed Bautista,

covering Lot 4616, San Narciso






45

Cadastre in Cad. Case No. 9, GLRO

Cad. Record No. 371. The said co-

owners pro indiviso are supposedly

the registered owners named in

OCT No. 2108. The Deed of Extra-

Judicial Settlement of Estate with

Sale stated that Apolonia and

Isabel died single and without any

children and only the alleged heirs

of spouses Sixto and Elena Bautista

executed the said document

conveying the 7,594-square meter

lot to respondent. These supposed

vendors claiming to be heirs of one

of the registered owners were not

notified of the judicial

reconstitution proceedings.

•

• The registered owners appearing in

the title sought to be reconstituted,

or in this case, their surviving

heirs, are certainly interested

parties who should be notified of

reconstitution proceeding under

Section 12 in relation to Section 13

of R.A. 26. Indeed, for petitions

based on sources enumerated in

Sections 2(c), 2(d), 2(e), 2(f),

3(c), 3(d), 3(e) and 3(f), Section

13 adds another requirement aside

from publication and posting of

notice of hearing: that the notice

be mailed to occupants, owners of

adjoining lots, and all other

persons who may have an interest

in the property.17 Notwithstanding

the sale supposedly effected by

vendors claiming to be heirs of the

registered owners, they remain as

interested parties entitled to notice

of judicial reconstitution

proceedings.

•

• It is settled that the actual notice

requirement in Section 13 in

relation to Section 12 of R.A. 26 is

mandatory and jurisdictional.18 In

the early case of Manila Railroad

Company v. Hon. Moya, et al.,19

this Court categorically

declared:ChanRoblesVirtualawlibrar

y

•

• It is clear from section 13 of

Republic Act No. 26 that notice by

publication is not sufficient under

the circumstances. Notice must

be actually sent or delivered to

parties affected by the petition

for reconstitution. The order of

reconstitution, therefore,

having been issued without

compliance with the said

requirement, has never become

final as it was null and void. The

Manila Railroad cannot then

complain that the motion to set

aside was filed beyond the

reglementary period. (Emphasis

and underscoring supplied.)

•

• Where the authority to proceed is

conferred by a statute and the

manner of obtaining jurisdiction is

mandatory, the same must be

strictly complied with, or the

proceedings will be void. As such,

the court upon which the petition

for reconstitution of title is filed is

duty-bound to examine thoroughly

the petition for reconstitution of

title and review the record and the

legal provisions laying down the

germane jurisdictional

requirements.20 Thus, we have

held that notwithstanding

compliance with the notice

publication, the requirement of

actual notice to the occupants and

the owners of the adjoining

property under Sections 12 and 13

of R.A. 26 is itself mandatory to

vest jurisdiction upon the court in a

petition for reconstitution of title

and essential in order to allow said

court to take the case on its

merits. The non-observance of the

requirement invalidates the whole

reconstitution proceedings in the

trial court.21cralawred

•

• For non-compliance with the actual

notice requirement to all other

persons who may have interest in

the property, in this case the

registered owners and/or their




46

heirs, in accordance with Section

13 in relation to Section 12 of RA

26, the trial court did not acquire

jurisdiction over L.R.A. Case No.

RTC-237-I. The proceedings

therein were therefore a nullity and

the January 14, 2009 Decision was

void.

• Josephine Wee Vs. Felicidad MardoG.R.

No. 202414. June 4, 2014

• In the case of Republic vs. Umali,5

this Court ruled that once a patent

is registered and the corresponding

certificate of title is issued, the

land ceases to be part of public

domain and becomes private

property over which the Director of

Lands has neither control nor

jurisdiction. A public land patent,

when registered in the

corresponding Register of Deeds, is

a veritable Torrens title, and

becomes as indefeasible upon the

expiration of one (1) year from the

date of issuance thereof. Said title,

like one issued pursuant to a

judicial decree, is subject to review

within one (1) year from the date

of the issuance of the patent. This

rule is embodied in Section 103 of

PD 1529, which provides

that:ChanRoblesVirtualawlibrary

•

• Section 103. Certificates of title

pursuant to patents. – Whenever

public land is by the Government

alienated, granted or conveyed to

any person, the same shall be

brought forthwith under the

operation of this Decree. x x x

After due registration and

issuance of the certificate of

title, such land shall be deemed

to be registered land to all

intents and purposes under this

Decree. (Emphasis supplied)

•

• Accordingly, respondent’s

registered patent in the

corresponding Registry of Deeds is

a veritable Torrens title and

becomes as indefeasible as a

Torrens title upon the expiration of

one (1) year from the date of its

issuance.6cralawred

•

• For said reason, the order of the

RTC directing the Administrator of

LRA to issue a corresponding

decree in petitioner’s name is null

and void. A land registration court

has no jurisdiction to order the

registration of land already decreed

in the name of another in an earlier

land registration case. A second

decree for the same land would be

null and void, since the principle

behind the original registration is

to register a parcel of land only

once.7cralawred

•

• Verily, once a title is registered, as

a consequence either of judicial or

administrative proceedings, the

owner may rest secure, without the

necessity of waiting in the portals

of the court sitting in the mirador

de su casa to avoid the possibility

of losing his land.8 The certificate

of title cannot be defeated by

adverse, open and notorious

possession. Neither can it be

defeated by prescription. As

provided under Sec. 47 of PD

1529, no title to registered land in

derogation of the title of the

registered owner shall be acquired

by prescription or adverse

possession.

A Certificate of Title Not

Subject to Collateral Attack

Petitioner argued that the rule on

indefeasibility of title does not attach to

titles secured by fraud and

misrepresentation. In this case, she

alleged that the respondent fraudulently

registered the subject property under her

name after she (respondent) had already

sold a portion thereof to her (petitioner).

By virtue of the deed of sale, petitioner

insists that she is considered to be the

real owner of the subject parcel of land.

The Court finds no merit in petitioner’s

argument. It is settled in this jurisdiction





47

that the issue of the validity of title can

only be assailed in an action expressly

instituted for such purpose.9 A certificate

of title cannot be attacked collaterally.

This rule is provided under Section 48 of

PD 1529 which states


SEC. 48. Certificate not subject to

collateral attack. - A certificate of title

shall not be subject to collateral

attack. It cannot be altered, modified, or

canceled except in a direct proceeding in

accordance with law. (Emphasis supplied)

In Lagrosa v. Court of Appeals,10 it was

stated that it is a well-known doctrine that

the issue as to whether title was procured

by falsification or fraud as advanced by

petitioner can only be raised in an action

expressly instituted for the purpose. A

Torrens title can be attacked only for

fraud, within one year after the date of

the issuance of the decree of registration.

Such attack must be direct, and not by a

collateral proceeding. The title

represented by the certificate cannot be

changed, altered, modified, enlarged, or

diminished in a collateral proceeding.

• In this case, the petitioner is

contesting the indefeasibility of title

on the ground of fraud and

misrepresentation. Applying the

abovementioned doctrine, even

assuming that the petitioner’s

allegations are true, the same are

considered as collateral attacks,

and such must be raised in an

action expressly instituted for such

purpose and in a proper

proceeding.

Remedy of the petitioner is

to file a separate proceeding

such as an action for specific

performance or for reconveyance

The issue of fraudulent alienation raised in

the second application for registration of

the subject property is collateral attack

which should be directly raised in a

separate proceeding filed for such

purpose. It cannot be entertained in this

proceeding. In several cases, the Court

has ruled that an attack is indirect or

collateral when, in an action to obtain a

different relief, an attack on the judgment

or proceeding is nevertheless made as an

incident thereof.12cralawred

Registration, however, does not deprive

an aggrieved party of a remedy in

law. What cannot be collaterally attacked

is the certificate of title and not the title or

ownership which is represented by such

certificate. Ownership is different from a

certificate of title. The fact that a person

was able to secure a title in his name did

not operate to vest ownership upon him of

the subject land. 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. It cannot be used to

protect a usurper from the true owner;

nor can it be used as a shield for the

commission of fraud; neither does it

permit one to enrich himself at the

expense of others. Its issuance in favor of

a particular person does not foreclose the

possibility that the real property may be

co-owned with persons not named in the

certificate, or that it may be held in trust

for another person by the registered

owner.14cralawred

The remedy of the petitioner is to file a

separate proceeding or action to protect

her alleged interest. As she claimed that

she bought the subject property for value

from the respondent as evidenced by a

deed of sale, she can file an action for

specific performance to compel the

respondent to comply with her obligation

in the alleged deed of sale and/or an

action for reconveyance of the property.

She can also file an action for rescission.

Needless to state, petitioner must prove

her entitlement because the respondent

claims that the sale was falsified.

Reconveyance is based on Section 55 of

Act No. 496, as amended by Act No. 3322,

which states that in all cases of




48

registration procured by fraud the owner

may pursue all his legal and equitable

remedies against the parties to such

fraud, without prejudice, however, to the

rights of any innocent holder for value of a

certificate of title.15 It is an action in

personam available to a person whose

property has been wrongfully registered

under the Torrens system in another’s

name.16 It does not seek to set aside the

decree but, respecting it as

incontrovertible and no longer open to

review, seeks to transfer or reconvey the

land from the registered owner to the

rightful owner.17 Reconveyance is always

available as long as the property has not

passed to an innocent third person for

value.18cralawred

• Republic of the Philippines Vs. Francisca,

Geronimo and Crispin, all surnamed

SantosG.R. No. 191516. June 4, 2014

• The Court agrees with petitioner's

stance. In Republic v. Medida,5 the

Court emphasized that “anyone

who applies for registration of

ownership over a parcel of land

has the burden of overcoming

the presumption that the land

sought to be registered forms

part of the public

domain.”6 Expounding on the kind

of evidence required to overcome

said presumption, the Court stated,

thus:ChanRoblesVirtualawlibrary

•

• As the rule now stands, an

applicant must prove that the land

subject of an application for

registration is alienable and

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. The

applicant may also secure a

certification from the government

that the land claimed to have been

possessed for the required number

of years is alienable and

disposable. In a line of cases, we

have ruled that mere notations

appearing in survey plans are

inadequate proof of the

covered properties’ alienable

and disposable character.

To reiterate, the evidence required to

establish that land subject of an

application for registration is alienable and

disposable are: (1) CENRO or PENRO

Certification; and (2) a copy of the

original classification approved by the


copy by the legal custodian of the

official records. In the present case, the

foregoing documents had not been

submitted in evidence. There is no copy of

the original classification approved by the

DENR Secretary. As ruled by this Court, a

mere certification issued by the Forest

Utilization & Law Enforcement Division of

the DENR is not enough. Petitioner is then

correct that evidence on record is not

sufficient to prove that subject lots had

been declared alienable and disposable

lands.

• Paul P. Gabriel, Jr., Ireneo C. Calwag,

Thomas L. Tingga-an and the Heirs of

Juliet B. Pulkera Vs. Carmeling

CrisologoG.R. No. 204626. June 9, 2014

• The only question that needs to be

resolved in this petition is – who

between petitioners and

respondent Crisologo have a better

right of possession over the subject

parcels of land. Both contending

parties claim that they have a

superior possessory right over the

disputed lands.

•

• After a careful review of the

records, the Court holds that

Crisologo has a better right of

possession over the subject parcels

of land.

•

• Accion Publiciana: its nature and

purpose

•

• Also known as accion plenaria de

posesion, accion publiciana is an

ordinary civil proceeding to

determine the better right of

possession of realty independently











49

of title. It refers to an ejectment

suit filed after the expiration of one

year from the accrual of the cause

of action or from the unlawful

withholding of possession of the

realty.

•

• The objective of the plaintiffs in

accion publiciana is to recover

possession only, not ownership.

When parties, however, raise the

issue of ownership, the court may

pass upon the issue to determine

who between the parties has the

right to possess the property. This

adjudication, nonetheless, is not a

final and binding determination of

the issue of ownership; it is only

for the purpose of resolving the

issue of possession, where the

issue of ownership is inseparably

linked to the issue of possession.

The adjudication of the issue of

ownership, being provisional, is not

a bar to an action between the

same parties involving title to the

property. The adjudication, in

short, is not conclusive on the

issue of ownership.12

•

• In her complaint, Crisologo prayed

that she be declared in prior actual

possession of the properties in

dispute and that petitioners vacate

the same and demolish their

houses therein. She alleged,

among others, that she was the

registered owner of the subject

parcels of land and that petitioners

unlawfully entered her properties

by stealth, force and without her

prior consent and knowledge.

Clearly, she primarily wanted to

recover possession of the subject

parcels of land from petitioners.

Hence, the case is an accion

publiciana.

The respondent’s certificates of title

give her the better right to possess

the subject parcels of land

It is settled that a Torrens title is evidence

of indefeasible title to property in favor of

the person in whose name the title

appears. It is conclusive evidence with

respect to the ownership of the land

described therein. It is also settled that

the titleholder is entitled to all the

attributes of ownership of the property,

including possession. Thus, in Arambulo v.

Gungab,15 this Court declared that the

“age-old rule is that the person who has a

Torrens title over a land is entitled to

possession thereof.”16

The records show that TCT No. T-1393517

and TCT No. T-1393618 bear the name of

Carmeling P. Crisologo, as the registered

owner. Petitioners do not dispute the fact

that she has a Torrens title over the

subject parcels of land.

The respondent’s Torrens certificates of

title

are immune from a collateral attack.

• As a holder of a Torrens certificate

of title, the law protects Crisologo

from a collateral attack on the

same. Section 48 of P.D. No. 1529,

otherwise known as the Property

Registration Decree, provides that

a certificate of title cannot be the

subject of a collateral attack.

As the lawful possessor, the respondent

has the right to eject the petitioners

The Court agrees with the CA that the

only question that needs to be resolved in

this suit to recover possession is who

between the parties is entitled to the

physical or material possession of the

subject parcels of land. Therefore, the

foremost relevant issue that needs to be

determined here is simply possession, not

ownership.

The testimonial and documentary

evidence on record prove that Crisologo

has a preferred claim of possession over

that of petitioners. It cannot be denied

that she bought the subject properties

from the previous owner in 1967, which

was why the transfer certificates of title

were subsequently issued in her name.

Records further show that she has been




50

paying the realty taxes on the said

properties since 1969. She likewise

appointed Isican as administrator of the

disputed lands. More importantly, there is

no question that she offered to sell to

petitioners the portions of the subject

properties occupied by them. Hence, she

deserves to be respected and restored to

her lawful possession as provided in

Article 539 of the New Civil Code.2

• Department of Education, represented by

its Regional Director Teresita

Domalanta Vs. Mariano TuliaoG.R. No.

205664. June 9, 2014

ISSUE: ACTION FOR RECOVERY OF

POSSESION OF LAND

Here, Tuliao, as the registered owner, filed

a complaint for recovery of possession and

removal of structure. To support his claim,

he presented not only tax declarations and

tax receipts, but also a certificate of title.

The Court agrees with the CA that the said

pieces of evidence were sufficient to

resolve the issue of who had the better

right of possession. That being the case,

the burden was shifted to the DepEd to

prove otherwise. Unfortunately, the DepEd

only presented testimonial evidence and

nothing more to prove its defense and

refute Tuliao’s claim. Its lone witness was

all that the DepEd had to prove its right of

possession. As between a certificate of

title, which is an incontrovertible proof of

ownership,19 accompanied with a tax

declaration and a tax receipt on one hand,

and a testimony of a lone witness who is a

retired teacher on the other, the former

prevails in establishing who has a better

right of possession over the property,

following the rule that testimonial

evidence cannot prevail over documentary

evidence.20cralawred

As regards the DepEd 's defense of laches,

it has no merit either. It avers that its

possession of the subject land was open,

continuous, exclusive, adverse, notorious

and in the concept of an owner for at least

thirty-two (32) years already at the time

Tuliao filed the complaint. It must be

noted, however, that Tuliao's claim that

the DepEd's possession of a portion of his

land to be used as a passageway for the

students was mere tolerance was not

refuted. Thus, the same is deemed

admitted. This means that the DepEd's

possession was not truly adverse.

The Court once ruled that mere material

possession of the land vvas not adverse as

against the owner and was insufficient to

vest title, unless such possession was

accompanied by the intent to possess as

an owner.21 Accordingly, the DepEd 's

possession can only be considered as

adverse from the time the gymnasium

was being constructed in 1999 on the

subject portion of Tuliao's property.

In March 2000, Tuliao discovered the

construction and demanded that the

DepEd cease and desist from continuing

the same. When DepEd refused, Tuliao

filed a complaint for recovery of

possession of the subject lot in 2002.

Thus, only two (2) years had elapsed from

the time the DepEd resistedflliao 's claims.

Clearly, he did not sleep on his rights.

There was no prolonged inaction that

barred him from prosecuting his claims.

At any rate, the MTCC was fair when it

stated that it could not order the

immediately removal of the structures and

directed Tuliao to exercise his option

under Article 448.

If that would not be feasible or practical

for DepEd, its remedy is to file an action

for expropriation.

• Nora B. Calalang-Parulan, et al. Vs.

Rosario Calalang-Garcia, et al.G.R.

No. 184148. June 9, 2014

• We have carefully reviewed the

records of this case and sustain the

finding of the CA that Pedro

Calalang is the sole and exclusive

owner of the disputed property.

•

a close perusal of the records of this case

would show that the records are bereft of

any concrete proof to show that the

subject property indeed belonged to

respondents’ maternal grandparents. The

evidence respondents adduced merely

consisted of testimonial evidence such as









51

the declaration of Rosario Calalang-Garcia

that they have been staying on the

property as far as she can remember and

that the property was acquired by her

parents through purchase from her

maternal grandparents. However, she

was unable to produce any document to

evidence the said sale, nor was she able

to present any documentary evidence

such as the tax declaration issued in the

name of either of her parents. Moreover,

we note that the free patent was issued

solely in the name of Pedro Calalang and

that it was issued more than 30 years

after the death of Encarnacion and the

dissolution of the conjugal partnership of

gains of the first marriage. Thus, we

cannot subscribe to respondents’

submission that the subject property

originally belonged to the parents of

Encarnacion and was acquired by Pedro

Calalang and Encarnacion.

We likewise cannot sustain the argument

of the petitioners that the disputed

property belongs to the conjugal

partnership of the second marriage of

Pedro Calalang with Elvira B. Calalang on

the ground that the title was issued in the

name of “Pedro Calalang, married to Elvira

Berba [Calalang].”

The contents of a certificate of title are

enumerated by Section 45 of Presidential

Decree No. 1529, otherwise known as the

Property Registration

Decree:chanroblesvirtuallawlibrary

SEC. 45. Statement of personal

circumstances in the certificate. – Every

certificate of title shall set forth the full

names of all persons whose interests

make up the full ownership in the whole

land, including their civil status, and the

names of their respective spouses, if

married, as well as their citizenship,

residence and postal address. If the

property covered belongs to the conjugal

partnership, it shall be issued in the

names of both spouses.

A plain reading of the above provision

would clearly reveal that the phrase

“Pedro Calalang, married to Elvira Berba

[Calalang]” merely describes the civil

status and identifies the spouse of the

registered owner Pedro Calalang.

Evidently, this does not mean that the

property is conjugal. In Litam v. Rivera,15

we declared:chanroblesvirtuallawlibrary

Further strong proofs that the properties

in question are the paraphernal properties

of Marcosa Rivera, are the very Torrens

Titles covering said properties. All the said

properties are registered in the name of

“Marcosa Rivera, married to Rafael Litam.”

This circumstance indicates that the

properties in question belong to the

registered owner, Marcosa Rivera, as her

paraphernal properties, for if they were

conjugal, the titles covering the same

should have been issued in the names of

Rafael Litam and Marcosa Rivera. The

words “married to Rafael Litam” written

after the name of Marcosa Rivera, in each

of the above mentioned titles are merely

descriptive of the civil status of Marcosa

Rivera, the registered owner of the

properties covered by said titles.

It must likewise be noted that in his

application for free patent,16 applicant

Pedro Calalang averred that the land was

first occupied and cultivated by him since

1935 and that he had planted mango

trees, coconut plants, caimito trees,

banana plants and seasonal crops and

built his house on the subject lot. But he

applied for free patent only in 1974 and

was issued a free patent while already

married to Elvira B. Calalang. Thus,

having possessed the subject land in the

manner and for the period required by law

after the dissolution of the first marriage

and before the second marriage, the

subject property ipso jure became private

property and formed part of Pedro

Calalang’s exclusive property.17 It was

therefore excluded from the conjugal

partnership of gains of the second

marriage.18

As the sole and exclusive owner, Pedro

Calalang had the right to convey his

property in favor of Nora B. Calalang-




52

Parulan by executing a Deed of Sale on

February 17, 1984. The CA therefore

erred in ruling that Pedro Calalang

deprived his heirs of their respective

shares over the disputed property when

he alienated the same.

It is hornbook doctrine that successional

rights are vested only at the time of

death. Article 777 of the New Civil Code

provides that “[t]he rights to the

succession are transmitted from the

moment of the death of the decedent.” In

Butte v. Manuel Uy and Sons, Inc.,19 we

proclaimed the fundamental tenets of

succession:chanroblesvirtuallawlibrary

The principle of transmission as of the

time of the predecessor’s death is basic in

our Civil Code, and is supported by other

related articles. Thus, the capacity of the

heir is determined as of the time the

decedent died (Art. 1034); the legitime is

to be computed as of the same moment

(Art. 908), and so is the inofficiousness of

the donation inter vivos (Art. 771).

Similarly, the legacies of credit and

remission are valid only in the amount due

and outstanding at the death of the

testator (Art. 935), and the fruits accruing

after that instant are deemed to pertain to

the legatee (Art. 948).

• Thus, it is only upon the death of

Pedro Calalang on December 27,

1989 that his heirs acquired their

respective inheritances, entitling

them to their pro indiviso shares to

his whole estate. At the time of

the sale of the disputed property,

the rights to the succession were

not yet bestowed upon the heirs of

Pedro Calalang. And absent clear

and convincing evidence that the

sale was fraudulent or not duly

supported by valuable

consideration (in effect an

inofficious donation inter vivos),

the respondents have no right to

question the sale of the disputed

property on the ground that their

father deprived them of their

respective shares. Well to

remember, fraud must be

established by clear and convincing

evidence. Mere preponderance of

evidence is not even adequate to

prove fraud.20 The Complaint for

Annulment of Sale and

Reconveyance of Property must

therefore be

dismissed.cra1awlaw1ibrary

• Republic of the Philippines Vs. Crisanto S.

RanesesG.R. No. 189970. June 9, 2014

• It bears noting that in support of

his claim that the subject

properties are alienable and

disposable, respondent merely

presented the Conversion-

Subdivision Plan which was

prepared by Engr. Montallana with

the annotation that the subject

properties were “inside alienable

and disposable land area [P]roj.

[N]o. 27-B as per LC Map No. 2623

certified by the Bureau of Forestry

on January 3, 1968”42 and the

Inter-Office Memorandum from the

LLDA.

•

• Respondent’s reliance on the said

annotation and Inter-Office

•

• Memorandum is clearly insufficient.

•

• In Republic v. Dela Paz43 citing

Republic v. Sarmiento,44 this Court

ruled that the notation of the

surveyor-geodetic engineer on the

blue print copy of the conversion

and subdivision plan approved by

the Department of Environment

and Natural Resources (DENR)

Center, that “this survey is inside

the alienable and disposable area,

Project No. 27-B. L.C. Map No.

2623, certified on January 3, 1968

by the Bureau of Forestry,” is

insufficient and does not constitute

incontrovertible evidence to

overcome the presumption that the

land remains part of the inalienable

public domain.

•

• In contrast, this Court has held

that the applicant must present a






53

certificate of land classification

status issued by the Community

Environment and Natural

Resources Office (CENRO)45 or the

Provincial Environment and Natural

Resources Office (PENRO)46 of the

DENR. He must also prove that the

DENR Secretary had approved the

land classification and released the

land as alienable and disposable,

and that it is within the approved

area per verification through

survey by the CENRO or PENRO.

Further, the applicant must present

a copy of the original classification

approved by the DENR Secretary

and certified as true copy by the

legal custodian of the official

records. These facts must be

established by the applicant to

prove that the land is alienable and

disposable.47cralawred

• Golden Valley Exploration, Inc. Vs. Pinkian

Mining Company and Copper Valley,

Inc.G.R. No. 190080. June 11, 2014

• The Issue Before the Court

•

• The central issue for the Court’s

resolution is whether or not there

was a valid rescission of the OA.


The Court resolves the issue in the

affirmative.

In reciprocal obligations, either party may

rescind the contract upon the other’s

substantial breach of the obligation/s he

had assumed thereunder. The basis

therefor is Article 1191 of the Civil Code

which states as

follows:ChanRoblesVirtualawlibrary

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.

More accurately referred to as resolution,

the right of rescission under Article 1191

is predicated on a breach of faith that

violates the reciprocity between parties to

the contract.24 This retaliatory remedy is

given to the contracting party who suffers

the injurious breach on the premise that it

is “unjust that a party be held bound to

fulfill his promises when the other violates

his.”25cralawred

As a general rule, the power to

rescind an obligation must be invoked

judicially and cannot be exercised

solely on a party’s own judgment that

the other has committed a breach of

the obligation.26 This is so because

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.27As a well-established

exception, however, an injured party

need not resort to court action in

order to rescind a contract when the

contract itself provides that it may be

revoked or cancelled upon violation of

its terms and conditions.28 As

elucidated in Froilan v. Pan Oriental

Shipping Co.,29 “there is x x x nothing in

the law that prohibits the parties from

entering into agreement that violation of

the terms of the contract would cause

cancellation thereof, even without court

intervention.”30 Similarly, in Dela Rama

Steamship Co., Inc. v. Tan,31 it was held

that judicial permission to rescind an

obligation is not necessary if a contract

contains a special provision granting the

http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/pdf/web/viewer.html?file=/jurisprudence/2014/june2014/190080.pdf






54

power of cancellation to a

party.32cralawred

With this in mind, the Court therefore

affirms the correctness of the CA’s

Decision upholding PMC’s unilateral

rescission of the OA due to GVEI’s non-

payment of royalties considering the

parties’ express stipulation in the OA that

said agreement may be cancelled on such

ground.

By expressly stipulating in the OA that

GVEI’s non-payment of royalties would

give PMC sufficient cause to cancel or

rescind the OA, the parties clearly had

considered such violation to be a

substantial breach of their agreement.

Thus, in view of the above-stated

jurisprudence on the matter, PMC’s extra-

judicial rescission of the OA based on the

said ground was valid.

While it remains apparent that PMC had

not judicially invoked the other grounds to

rescind in this case, the only recognizable

effect, however, is with respect to the

reckoning point as to when the contract

would be formally regarded as rescinded.

Where parties agree to a stipulation

allowing extra-judicial rescission, no

judicial decree is necessary for

rescission to take place; the extra-

judicial rescission immediately

releases the party from its obligation

under the contract, subject only to court

reversal if found improper. On the other

hand, without a stipulation allowing

extra-judicial rescission, it is the

judicial decree that rescinds, and not

the will of the rescinding party. This

may be gathered from previous Court

rulings on the matter.

jurisprudence still indicates that an extra-

judicial rescission based on grounds

not specified in the contract would

not preclude a party to treat the same

as rescinded. The rescinding party,

however, by such course of action,

subjects himself to the risk of being held

liable for damages when the extra-judicial

rescission is questioned by the opposing

party in court

• Sps. Reynaldo and Hilly G. Sombilon Vs.

Atty. Rey Ferdinand Garay, et

al./Atty. Rey Ferdinand T. Garay Vs.

Judge Rolando S. Venadas, Sr.G.R.

No. 179914 & A.M. No. RTJ-06-2000. June

16, 2014

• A judge owes the public and the

court the duty to know the law by

heart and to have the basic rules of

procedure at the palm of his

hands.1

•

The issuance of a writ of possession is

ministerial upon the court.

A debtor has one year from the date the

Certificate of Sale is registered with the

Register of Deeds within which to redeem

his property.75 During the one-year

redemption period, the purchaser may

possess the property by filing a petition

for the issuance of a writ of possession

before the court, upon the posting of a

bond.76 But after the one-year period, the

purchaser has a right to consolidate the

title and to possess the property, without

need of a bond.77 And once title is

consolidated under the name of the

purchaser, the issuance of the writ of

possession becomes ministerial on the

part of the court; thus, no discretion is left

to the court.78 Questions regarding the

regularity and validity of the mortgage or

the foreclosure sale may not be raised as

a ground to oppose or hold in abeyance

the issuance of the writ of possession as

these must be raised in a separate action

for the annulment of the mortgage or the

foreclosure sale.79 The pendency of such

action is also not a ground to stay the

issuance of a writ of possession.80

In this case, the redemption period had

long lapsed when PNB applied for the

issuance of the Writ of Possession. In fact,

the title over the subject property had

already been consolidated in PNB’s name.

Thus, it was ministerial upon Judge

Venadas, Sr. to issue the Writ of

Possession in favor of PNB, the registered

owner of the subject property.

• Though there are instances when

the issuance of the Writ of








55

Possession may be deferred,81 we

find none of these recognized

exceptions present in the instant

case. Spouses Sombilon claim that

the sale between PNB and Atty.

Garay was invalid as it was done in

violation of paragraph 5, Article

1491 of the Civil Code. However,

the alleged invalidity of the sale is

not a ground to oppose or defer

the issuance of the Writ of

Possession as this does not affect

PNB’s right to possess the subject

property. Thus, there was no

reason for Judge Venadas, Sr. to

hold in abeyance the

implementation of the Writ of

Possession. Clearly, he committed

grave abuse of discretion in issuing

the assailed Order holding in

abeyance the implementation of

the Writ of Possession because

PNB, as the registered owner, is

entitled to the possession of the

subject property as a matter of

right.

As to the Administrative Complaint filed

against Judge Venadas, Sr., we agree with

the findings and recommendations of the

OCA.

Records show that spouses Sombilon

failed to comply with the three-day notice

rule and the required proof of service

embodied in Sections 4, 5, and 6 of Rule

15 of the Rules of Court, thereby

rendering the motion fatally defective.

Despite this, Judge Venadas, Sr. still took

cognizance of the motion filed by spouses

Sombilon, depriving PNB and Atty. Garay

of their right to due process.

To exculpate himself from the charges

against him, Judge Venadas, Sr. claims

that the motion was personally served on

PNB and its counsel on July 12, 2005 but

they refused to receive the same.

However, as aptly pointed out by the OCA,

no affidavit was submitted to substantiate

such allegation. Thus, we agree with the

Court Administrator that Judge Venadas,

Sr. is guilty of grave abuse of authority

bordering on gross

• Spouses Victor and Edna Binua Vs. Lucia

P. OngG.R. No. 207176. June 18, 2014

Spouses Victor and Edna Binua

(petitioners) seek the declaration of the

nullity of the real estate mortgages

executed by petitioner Victor in favor of

Lucia P. Ong (respondent), on the ground

that these were executed under fear,

duress and threat.

Article 1390(2) of the Civil Code provides

that contracts where the consent is

vitiated by mistake, violence,

intimidation, undue influence or fraud

are voidable or annullable. Article 1335 of

the Civil Code, meanwhile, states that

“[t]here is intimidation when one of the

contracting parties is compelled by a

reasonable and well-grounded fear of

an imminent and grave evil upon his

person or property, or upon the person

or property of his spouse, descendants or

ascendants, to give his consent.” The

same article, however, further states that

“[a] threat to enforce one’s claim

through competent authority, if the

claim is just or legal, does not vitiate

consent.”

Based on the petitioners’ own allegations,

what the respondent did was merely

inform them of petitioner Edna’s

conviction in the criminal cases for

estafa. It might have evoked a sense of

fear or dread on the petitioners’ part, but

certainly there is nothing unjust, unlawful

or evil in the respondent’s act. The

petitioners also failed to show how such

information was used by the respondent in

coercing them into signing the

mortgages. The petitioners must

remember that petitioner Edna’s

conviction was a result of a valid judicial

process and even without the respondent

allegedly “ramming it into petitioner

Victor’s throat,” petitioner Edna’s

imprisonment would be a legal

consequence of such conviction. In

Callanta v. National Labor Relations

Commission,29 the Court stated that the

threat to prosecute for estafa not being an

unjust act, but rather a valid and legal act

to enforce a claim, cannot at all be

considered as intimidation.30 As correctly






56

ruled by the CA, “[i]f the judgment of

conviction is the only basis of the

[petitioners] in saying that their consents

were vitiated, such will not suffice to

nullify the real estate mortgages and the

subsequent foreclosure of the mortgaged

properties. No proof was adduced to show

that [the respondent] used [force],

duress, or threat to make [petitioner]

Victor execute the real estate

mortgages.”31cralawred

• Mariano Mendoza and Elvira Lim Vs.

Spouses Leonora J. Gomez and

Gabriel V. GomezG.R. No. 160110. June

18, 2014

• espondents anchor their claim for

damages on Mendoza’s negligence,

banking on Article 2176 of the Civil

Code, to

wit:chanRoblesvirtualLawlibrary

•

• Whoever 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 called a

quasi-delict and is governed by the

provisions of this Chapter.

•

• In impleading Lim, on the other

hand, respondents invoke the

latter’s vicarious liability as

espoused in Article 2180 of the

same

Code:chanRoblesvirtualLawlibrary

•

• The obligation imposed by Article

2176 is demandable not only for

one’s own acts or omissions, but

also for those of persons for whom

one is responsible.

•

• x x x x

•

• 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 of industry.

•

• The first question to address, then,

is whether or not Mendoza’s

negligence was duly proven.

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.21cralawred

•

• As found by the RTC, and affirmed

by the CA, Mendoza was negligent

in driving the subject Mayamy bus,

as demonstrated by the fact that,

at the time of the collision, the bus

intruded on the lane intended for

the Isuzu truck. Having encroached

on the opposite lane, Mendoza was

clearly in violation of traffic laws.

Article 2185 of the Civil Code

provides that unless there is proof

to the contrary, it is presumed that

a person driving a motor vehicle

has been negligent if at the time of

the mishap, he was violating any

traffic regulation. In the case at

bar, Mendoza’s violation of traffic

laws was the proximate cause of

the harm.

•

• Proximate cause is defined as that

cause, which, in natural and

continuous sequence, unbroken by

any efficient intervening cause,

produces the injury, and without

which the result would not have

occurred. And more

comprehensively, the proximate

legal cause is that acting first and

producing the injury, either

immediately or by setting other

events in motion, all constituting a

natural and continuous chain of

events, each having a close causal

connection with its immediate

predecessor, the final event in the

chain immediately effecting the

injury as a natural and probable

result of the cause which first

acted, under such circumstances







57

that the person responsible for the

first event should, as an ordinary

prudent and intelligent person,

have reasonable ground to expect

at the moment of his act or default

that an injury to some person

might probably result

therefrom.22cralawred

•

• The evidence on record shows that

before the collision, the Isuzu truck

was in its rightful lane, and was

even at a stop, having been

flagged down by a security guard

of St. Ignatius Village.23 The

mishap occurred when the Mayamy

bus, travelling at a fast speed as

shown by the impact of the

collision, and going in the opposite

direction as that of the Isuzu truck,

encroached on the lane rightfully

occupied by said Isuzu truck, and

caused the latter to spin, injuring

Perez, Anla, Banca, and Repisada,

and considerably damaging the

Isuzu truck.

•

• Having settled the fact of

Mendoza’s negligence, then, the

next question that confronts us is

who may be held liable. According

to Manresa, liability for personal

acts and omissions is founded on

that indisputable principle of justice

recognized by all legislations that

when a person by his act or

omission causes damage or

prejudice to another, a juridical

relation is created by virtue of

which the injured person acquires a

right to be indemnified and the

person causing the damage is

charged with the corresponding

duty of repairing the damage. The

reason for this is found in the

obvious truth that man should

subordinate his acts to the

precepts of prudence and if he fails

to observe them and causes

damage to another, he must repair

the damage.24 His negligence

having caused the damage,

Mendoza is certainly liable to repair

said damage.

•

• Additionally, Mendoza’s employer

may also be held liable under the

doctrine of vicarious liability or

imputed negligence. Under such

doctrine, a person who has not

committed the act or omission

which caused damage or injury to

another may nevertheless be held

civilly liable to the latter either

directly or subsidiarily under

certain circumstances.25 In our

jurisdiction, vicarious liability or

imputed negligence is embodied in

Article 2180 of the Civil Code and

the basis for damages in the action

under said article is the direct and

primary negligence of the employer

in the selection or supervision, or

both, of his employee.26cralawred

•

• In the case at bar, who is deemed

as Mendoza’s employer? Is it

Enriquez, the actual owner of the

bus or Lim, the registered owner of

the bus?

Generally, when an injury is caused by the

negligence of a servant or employee,

there instantly arises a presumption of law

that there was negligence on the part of

the master or employer either in the

selection of the servant or employee

(culpa in eligiendo) or in the supervision

over him after the selection (culpa

vigilando), or both. The presumption is

juris tantum and not juris et de jure;

consequently, it may be rebutted.

Accordingly, the general rule is that if the

employer shows to the satisfaction of the

court that in the selection and supervision

of his employee he has exercised the care

and diligence of a good father of a family,

the presumption is overcome and he is

relieved of liability.32 However, with the

enactment of the motor vehicle

registration law, the defenses available

under Article 2180 of the Civil Code - that

the employee acts beyond the scope of his

assigned task or that it exercised the due

diligence of a good father of a family to

prevent damage – are no longer available

to the registered owner of the motor




58

vehicle, because the motor vehicle

registration law, to a certain extent,

modified Article 2180.33cralawred

As such, there can be no other conclusion

but to hold Lim vicariously liable with

Mendoza.

• This does not mean, however, that

Lim is left without any recourse

against Enriquez and Mendoza.

Under the civil law principle of

unjust enrichment, the registered

owner of the motor vehicle has a

right to be indemnified by the

actual employer of the driver; and

under Article 2181 of the Civil

Code, whoever pays for the

damage caused by his dependents

or employees may recover from

the latter what he has paid or

delivered in satisfaction of the

claim.

Wentling is not personally liable for

the satisfaction of nominal damages

in favor of Deoferio

Intel shall be solely liable to Deoferio for

the satisfaction of nominal damages.

Wentling, as a corporate officer, cannot be

held liable for acts done in his official

capacity because a corporation, by legal

fiction, has a personality separate and

distinct from its officers, stockholders, and

members. There is also no ground for

piercing the veil of corporate fiction

because Wentling acted in good faith and

merely relied on Dr. Lee’s psychiatric

report in carrying out the

dismissal.48cralawred

Deoferio is not entitled to salary

differential, backwages, separation

pay, moral and exemplary damages,

as well as attorney’s fees

Deoferio’s claim for salary differential is

already barred by prescription. Under

Article 291 of the Labor Code, all money

claims arising from employer-employee

relations shall be filed within three years

from the time the cause of action accrued.

In the current case, more than four years

have elapsed from the pre-termination of

his assignment to the United States until

the filing of his complaint against the

respondents. We thus see no point in

further discussing this matter. His claim

for backwages, separation pay, moral and

exemplary damages, as well as attorney’s

fees must also necessarily fail as a

consequence of our finding that his

dismissal was for an authorized cause and

that the respondents acted in good faith

when they terminated his services.

• Helen E. Cabling, assisted by her husband,

Arnel Cabling Vs. Joselin Tan

Lumapas, as rep by Nory

AbellanesG.R. No. 196950. June 18,

2014

• The well-settled rule is that in the

extrajudicial foreclosure of real

estate mortgages under Act No.

313522 (as amended), the issuance

of a writ of possession23 is

ministerial upon the court after the

foreclosure sale and during the

redemption period when the court

may issue the order for a writ of

possession upon the mere filing of

an ex parte motion and the

approval of the corresponding

bond.24cralawred

•

• The writ of possession also issues

as a matter of course, without

need of a bond or of a separate

and independent action, after the

lapse of the period of redemption,25

and after the consolidation of

ownership and the issuance of

a new TCT in the purchaser’s

name.26cralawred

•

• There is, however, an exception to

the rule.

•

• Under Section 33,27 Rule 39 of the

Rules of Court, which is made

applicable to extrajudicial

foreclosures of real estate

mortgages, the possession of the

property shall be given to the

purchaser or last redemptioner

unless a third party is actually








59

holding the property in a capacity

adverse to the judgment obligor.28

Thus, the court’s obligation to issue

an ex parte writ of possession in

favor of the purchaser in an

extrajudicial foreclosure sale

ceases to be ministerial when there

is a third party in possession of the

property claiming a right adverse

to that of the judgment

debtor/mortgagor.

•

• We emphasize that the exception

provided under Section 33, Rule 39

of the Rules of Court contemplates

a situation in which a third party

holds the property by adverse

title or right, such as that of a co-

owner, tenant or usufructuary,

who possesses the property in

his own right, and is not merely

the successor or transferee of

the right of possession of

another co-owner or the owner

of the property.29cralawred

•

• In the present case, the

respondent cannot be said to

possess the subject property by

adverse title or right as her

possession is merely premised on

the alleged conditional sale of the

property to her by the judgment

debtor/mortgagor.

•

• The execution of a contract of

conditional sale does not

immediately transfer title to the

property to be sold from seller to

buyer. In such contract, ownership

or title to the property is retained

by the seller until the fulfillment of

a positive suspensive condition

which is normally the payment of

the purchase price in the manner

agreed upon.30cralawred

•

• In the present case, the Deed of

Conditional Sale between the

respondent (buyer) and the subject

property’s registered owner (seller)

expressly reserved to the latter

ownership over the property until

full payment of the purchase price,

despite the delivery of the subject

property to the respondent. It is

provided in paragraph 6 of the

parties’ contract that only upon full

payment of the total sale value of

P2.2 million that the seller shall

execute a deed of absolute sale in

favor of the respondent.31cralawred

•

• It likewise appears from the

records that no deed of absolute

sale over the subject property has

been executed in the respondent’s

favor. Thus, the respondent’s

possession from the time the

subject property was “delivered” to

her by the seller cannot be claimed

as possession in the concept of an

owner, as the ownership and title

to the subject property still then

remained with the seller until the

title to the property was

transferred to the petitioner in

March 2009. In order for the

respondent not to be ousted by the

ex parte issuance of a writ of

possession, her possession of the

property must be adverse in that

she must prove a right

independent of and even

superior to that of the

judgment debtor/mortgagor.

•

• Under these circumstances, the

general rule, and not the

exception, applies.

• Arco Pulp and Paper Co., Inc. and Candida

A. Santos Vs. Dan. T. Lim, doing

business under the name and style of

Quality Papers & Plastic Products

EnterprisesG.R. No. 206806. June 25,

2014

Novation must be stated in clear and

unequivocal terms to extinguish an

obligation. It cannot be presumed and

may be implied only if the old and new

contracts are incompatible on every point.

The obligation between the

parties was an alternative

obligation

The rule on alternative obligations is









60

governed by Article 1199 of the Civil

Code, which

states:chanRoblesvirtualLawlibrary

Article 1199. A person alternatively bound

by different prestations shall completely

perform one of them.

The creditor cannot be compelled to

receive part of one and part of the other

undertaking.

“In an alternative obligation, there is more

than one object, and the fulfillment of one

is sufficient, determined by the choice of

the debtor who generally has the right of

election.”32 The right of election is

extinguished when the party who may

exercise that option categorically and

unequivocally makes his or her choice

known.33 The choice of the debtor must

also be communicated to the creditor who

must receive notice of it

since:chanRoblesvirtualLawlibrary

The object of this notice is to give the

creditor . . . opportunity to express his

consent, or to impugn the election made

by the debtor, and only after said notice

shall the election take legal effect when

consented by the creditor, or if impugned

by the latter, when declared proper by a

competent court.34

According to the factual findings of the

trial court and the appellate court, the

original contract between the parties was

for respondent to deliver scrap papers

worth P7,220,968.31 to petitioner Arco

Pulp and Paper. The payment for this

delivery became petitioner Arco Pulp and

Paper’s obligation. By agreement,

petitioner Arco Pulp and Paper, as the

debtor, had the option to either (1) pay

the price or (2) deliver the finished

products of equivalent value to

respondent.35cralawred

The appellate court, therefore, correctly

identified the obligation between the

parties as an alternative obligation,

whereby petitioner Arco Pulp and Paper,

after receiving the raw materials from

respondent, would either pay him the

price of the raw materials or, in the

alternative, deliver to him the finished

products of equivalent value.

When petitioner Arco Pulp and Paper

tendered a check to respondent in partial

payment for the scrap papers, they

exercised their option to pay the price.

Respondent’s receipt of the check and his

subsequent act of depositing it constituted

his notice of petitioner Arco Pulp and

Paper’s option to pay.

The memorandum of

agreement did not constitute

a novation of the original

contract

The trial court erroneously ruled that the

execution of the memorandum of

agreement constituted a novation of the

contract between the parties. When

petitioner Arco Pulp and Paper opted

instead to deliver the finished products to

a third person, it did not novate the

original obligation between the parties.

The rules on novation are outlined in the

Civil Code,

thus:chanRoblesvirtualLawlibrary

Article 1291. Obligations may be modified

by:

(1) Changing their object or principal

conditions;

(2) Substituting the person of the debtor;

(3) Subrogating a third person in the

rights of the creditor. (1203)

Article 1292. In order that an obligation

may be extinguished by another which

substitute the same, 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.

(1204)

Article 1293. Novation which consists in

substituting a new debtor in the place of

the original one, may be made even

without the knowledge or against the will

of the latter, but not without the consent




61

of the creditor. Payment by the new

debtor gives him the rights mentioned in

Articles 1236 and 1237. (1205a)

Novation extinguishes an obligation

between two parties when there is a

substitution of objects or debtors or when

there is subrogation of the creditor. It

occurs only when the new contract

declares so “in unequivocal terms” or that

“the old and the new obligations be on

every point incompatible with each

other.”36cralawred

There is nothing in the memorandum of

agreement that states that with its

execution, the obligation of petitioner Arco

Pulp and Paper to respondent would be

extinguished. It also does not state that

Eric Sy somehow substituted petitioner

Arco Pulp and Paper as respondent’s

debtor. It merely shows that petitioner

Arco Pulp and Paper opted to deliver the

finished products to a third person

instead.

The consent of the creditor must also be

secured for the novation to be

valid:chanRoblesvirtualLawlibrary

Novation must be expressly

consented to. Moreover, the conflicting

intention and acts of the parties

underscore the absence of any express

disclosure or circumstances with which to

deduce a clear and unequivocal intent by

the parties to novate the old agreement.40

(Emphasis supplied)

In this case, respondent was not privy to

the memorandum of agreement, thus, his

conformity to the contract need not be

secured.

If the memorandum of agreement was

intended to novate the original agreement

between the parties, respondent must

have first agreed to the substitution of

Eric Sy as his new debtor. The

memorandum of agreement must also

state in clear and unequivocal terms that

it has replaced the original obligation of

petitioner Arco Pulp and Paper to

respondent. Neither of these

circumstances is present in this case.

Petitioner Arco Pulp and Paper’s act of

tendering partial payment to respondent

also conflicts with their alleged intent to

pass on their obligation to Eric Sy. When

respondent sent his letter of demand to

petitioner Arco Pulp and Paper, and not to

Eric Sy, it showed that the former neither

acknowledged nor consented to the latter

as his new debtor. These acts, when taken

together, clearly show that novation did

not take place.

Since there was no novation, petitioner

Arco Pulp and Paper’s obligation to

respondent remains valid and existing.

Petitioner Arco Pulp and Paper, therefore,

must still pay respondent the full amount

of P7,220,968.31.

Petitioner Candida A. Santos

is solidarily liable with petitioner

corporation

As a general rule, directors, officers, or

employees of a corporation cannot be held

personally liable for obligations incurred

by the corporation. However, this veil of

corporate fiction may be pierced if

complainant is able to prove, as in this

case, that (1) the officer is guilty of

negligence or bad faith, and (2) such

negligence or bad faith was clearly and

convincingly proven.

Here, petitioner Santos entered into a

contract with respondent in her capacity

as the President and Chief Executive

Officer of Arco Pulp and Paper. She also

issued the check in partial payment of

petitioner corporation’s obligations to

respondent on behalf of petitioner Arco

Pulp and Paper. This is clear on the face of

the check bearing the account name,

“Arco Pulp & Paper, Co., Inc.”54 Any

obligation arising from these acts would

not, ordinarily, be petitioner Santos’

personal undertaking for which she would

be solidarily liable with petitioner Arco

Pulp and Paper.

We find, however, that the corporate veil

must be pierced. Petitioner Santos cannot




62

be allowed to hide behind the corporate

veil. When petitioner Arco Pulp and

Paper’s obligation to respondent became

due and demandable, she not only issued

an unfunded check but also contracted

with a third party in an effort to shift

petitioner Arco Pulp and Paper’s liability.

She unjustifiably refused to honor

petitioner corporation’s obligations to

respondent. These acts clearly amount to

bad faith. In this instance, the corporate

veil may be pierced, and petitioner Santos

may be held solidarily liable with

petitioner Arco Pulp and Paper.

• G.R. Nos. 183448/183464. June 30, 2014

• The main issue to be resolved in

this case is whether a forged

instrument may become the root of

a valid title in the hands of an

innocent purchaser for value, even

if the true owner thereof has been

in possession of the genuine title,

which is valid and has not been

cancelled.

•

• It is well-settled that “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. The real purpose of the

Torrens system of land registration

is to quiet title to land and put a

stop forever to any question as to

the legality of the title.”17cralawred

The Torrens system was intended to

guarantee the integrity and

conclusiveness of the certificate of

registration, but the system cannot be

used for the perpetration of fraud against

the real owner of the registered land. The

system merely confirms ownership and

does not create it. It cannot be used to

divest lawful owners of their title for the

purpose of transferring it to another one

who has not acquired it by any of the

modes allowed or recognized by law.

Thus, the Torrens system cannot be used

to protect a usurper from the true owner

or to shield the commission of fraud or to

enrich oneself at the expense of

another.19cralawred

It is well-established in our laws and

jurisprudence that a person who is dealing

with a registered parcel of land need not

go beyond the face of the title. A person is

only charged with notice of the burdens

and claims that are annotated on the

title.20 This rule, however, admits of

exceptions: that a person dealing with

registered land has a 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 or when the purchaser has

knowledge of a defect or the lack of title in

his vendor or of sufficient facts to induce a

reasonably prudent man to inquire into

the status of the title of the property in

litigation. The presence of anything which

excites or arouses suspicion should then

prompt the vendee to look beyond the

certificate and investigate the title of the

vendor appearing on the face of said

certificate. One who falls within the

exception can neither be denominated an

innocent purchaser for value nor a

purchaser in good faith; and hence does

not merit the protection of the law.22

Thus, the determination whether one is a

buyer in good faith or can be considered

an innocent purchaser for value becomes

imperative. Section 55 of the Land

Registration Act provides protection to an

innocent purchaser for value23 by allowing

him to retain the parcel of land bought

and his title is considered valid.

Otherwise, the title would be cancelled

and the original owner of the parcel of

land is allowed to repossess it.

• Jurisprudence has defined an

innocent purchaser for value as

one who buys the property of

another without notice that some

other person has a right to or

interest therein and who then pays

a full and fair price for it at the

time of the purchase or before

receiving a notice of the claim or

interest of some other persons in

the property. Buyers in good faith




63

buy a property with the belief that

the person from whom they receive

the thing is the owner who can

convey title to the property. Such

buyers do not close their eyes to

facts that should put a reasonable

person on guard and still claim that

they are acting in good

faith.24cralawred

• After executing the Deed of Sale

with Bernardina Abalon under

fraudulent circumstances, Rellama

succeeded in obtaining a title in his

name and selling a portion of the

property to the Andals, who had no

knowledge of the fraudulent

circumstances involving the

transfer from Abalon to Rellama. In

fact, the Decisions of the RTC and

the CA show no factual findings or

proof that would rebut the

presumption in favor of the Andals

as buyers in good faith. Thus, the

CA correctly considered them as

buyers in good faith and upheld

their title.

The records of the RTC and the CA have a

finding that when Rellama sold the

properties to the Andals, it was still in his

name; and there was no annotation that

would blight his clean title. To the Andals,

there was no doubt that Rellama was the

owner of the property being sold to them,

and that he had transmissible rights of

ownership over the said property. Thus,

they had every right to rely on the face of

his title alone.

• The established rule is that a

forged deed is generally null and

cannot convey title, the exception

thereto, pursuant to Section 55 of

the Land Registration Act, denotes

the registration of titles from the

forger to the innocent purchaser

for value. Thus, the qualifying point

here is that there must be a

complete chain of registered titles. 30 This means that all the transfers

starting from the original rightful

owner to the innocent holder for

value – and that includes the

transfer to the forger – must be

duly registered, and the title must

be properly issued to the

transferee.

• In the instant case, there is no

evidence that the chain of

registered titles was broken in the

case of the Andals. Neither were

they proven to have knowledge of

anything that would make them

suspicious of the nature of

Rellama’s ownership over the

subject parcel of land. Hence, we

sustain the CA’s ruling that the

Andals were buyers in good faith.

Consequently, the validity of their

title to the parcel of the land

bought from Rellama must be

upheld.

• Hector L. Uy Vs. Virginia G. Fule, et al.G.R.

No. 164961. June 30, 2014

• The decisive question here is

whether or not the petitioner was a

purchaser in good faith of the

property in litis. The standard is

that for one to be a purchaser in

good faith in the eyes of the law,

he should buy the property of

another without notice that some

other person has a right to, or

interest in, such property, and

should pay 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 persons in the property.1 He

buys the property with the belief

that the person from whom he

receives the property was the

owner and could convey title to the

property.2 Indeed, a purchaser

cannot close his eyes to facts that

should put a reasonable man on his

guard and still claim he acted in

good faith.3cralawred

An examination of the deed of sale

executed between Isabel Ronda, et al. and

the petitioner respecting the portions

covered by TCT No. 31120 and TCT No.

31121 indicates that the TCTs were issued

only on August 17, 1998 but the deed of

sale was executed on July 31, 1998. While

it is true, as the petitioner argues, that

succession occurs from the moment of





64

death of the decedent pursuant to Article

777 of the Civil Code,46 his argument did

not extend to whether or not he was a

buyer in good faith, but only to whether or

not, if at all, Isabel Ronda, et al., as the

heirs of Mariano Ronda, held the right to

transfer ownership over their

predecessor’s property. The argument did

not also address whether or not the

transfer to the petitioner was valid.

Evidently, the petitioner entered into the

deed of sale without having been able to

inspect TCT No. 31120 and TCT No. 31121

by virtue of such TCTs being not yet in

existence at that time. If at all, it was OCT

No. 9852 and OCT No. 9853 that were

available at the time of the execution of

the deed of sale, and such OCTs were

presumably inspected by petitioner before

he signed the deed of sale. It is notable

that said OCTs categorically stated that

they were entered pursuant to an

emancipation patent of the Ministry of

Agrarian Reform pursuant to the

Operation Land Transfer (OLT) Program of

the government. Furthermore, said OCTs

plainly recited the following prohibition:

“…it shall not be transferred except by

hereditary succession or to the

Government in accordance with the

provisions of Presidential Decree No. 27,

Code of Agrarian Reforms of the

Philippines and other existing laws and

regulations….”

The foregoing circumstances negated the

third element of good faith cited in

Bautista v. Silva, i.e., that “at the time of

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.”

As we have ruled in Bautista v. Silva,47 the

absence of the third condition put the

petitioner on notice and obliged him to

exercise a higher degree of diligence by

scrutinizing the certificates of title and

examining all factual circumstances in

order to determine the seller’s title and

capacity to transfer any interest in the

lots. Consequently, it is not sufficient for

him to insist that he relied on the face of

the certificates of title, for he must further

show that he exercised reasonable

precaution by inquiring beyond the

certificates of title. Failure to exercise

such degree of precaution rendered him a

buyer in bad faith. “It is a well-settled rule

that a purchaser cannot close his eyes to

facts which should put a reasonable man

upon his guard, and then claim that he

acted in good faith under the belief that

there was no defect in the title of the

vendor.”48cralawred

•

Linda Rana Vs. Teresita Lee Wong, et

al./Sps Rosario and Wilson Uy, et al. Vs.

Sps. Reynaldo and Linda RanaG.R. No.

192861/G.R. No. 192862. June 30, 2014

• Civil Case No. CEB-20893For Abatement

of Nuisance and Damages.

Under Article 694 of the Civil Code, a nuisance is

defined as "any act, omission, establishment,

business, condition of property, or anything else

which: (1) Injures or endangers the health or

safety of others; or (2) Annoys or offends the

senses; or (3) Shocks, defies or disregards

decency or morality; or (4) Obstructs or

interferes with the free passage of any public

highway or street, or any body of water; or (5)

Hinders or impairs the use of property." Based on

case law, however, the term "nuisance" is

deemed to be "so comprehensive that it has been

applied to almost all ways which have interfered

with the rights of the citizens, either in person,

property, the enjoyment of his property, or his

comfort."48cralawred

Article 695 of the Civil Code classifies nuisances

with respect to the object or objects that they

affect. In this regard, a nuisance may either be:

(a) a public nuisance (or one which "affects a

community or neighborhood or any considerable

number of persons, although the extent of the

annoyance, danger or damage upon individuals

may be unequal"); or (b) a private nuisance (or

one "that is not included in the foregoing

definition" [or, as case law puts it, one which

"violates only private rights and produces

damages to but one or a few

persons"]).49cralawred

Jurisprudence further classifies nuisances in







65

relation to their legal susceptibility to summary

abatement (that is, corrective action without

prior judicial permission). In this regard, a

nuisance "may either be: (a) a nuisance per se

(or one which "affects the immediate safety of

persons and property and may be summarily

abated under the undefined law of necessity");50

or (b) a nuisance per accidens (or that which

"depends upon certain conditions and

circumstances, and its existence being a question

of fact, it cannot be abated without due hearing

thereon in a tribunal authorized to decide

whether such a thing does in law constitute a

nuisance.")51cralawred

It is a standing jurisprudential rule that

unless a nuisance is a nuisance per se, it

may not be summarily abated. In Lucena

Grand Central Terminal, Inc. v. Jac Liner, lnc.,52

the Court, citing other cases on the matter,

emphasized the need for judicial intervention

when the nuisance is not a nuisance per se, to

wit:cralawlawlibrary

In Estate of Gregoria Francisco v. Court of

Appeals, this Court

held:chanRoblesvirtualLawlibrary

Respondents can not seek cover under the

general welfare clause authorizing the abatement

of nuisances without judicial proceedings. That

tenet applies to a nuisance per se, or one which

affects the immediate safety of persons and

property and may be summarily abated

under the undefined law of necessity. The

storage of copra in the quonset building is a

legitimate business. By its nature, it can not be

said to be injurious to rights of property, of

health or of comfort of the community. If it

be a nuisance per accidens it may be so

proven in a hearing conducted for that purpose.

It is not per se a nuisance warranting its

summary abatement without judicial

intervention.

In Pampanga Bus Co., Inc. v. Municipality of

Tarlac where the appellant-municipality similarly

argued that the terminal involved therein is a

nuisance that may be abated by the Municipal

Council via an ordinance, this Court held: "Suffice

it to say that in the abatement of nuisances

the provisions of the Civil Code-(Articles

694-707) must be observed and followed.

This appellant failed to do."53 (Emphases

supplied; citations omitted)

Aside from the remedy of summary abatement

which should be taken under the parameters

stated in Articles 704.54 (for public nuisances)

and 70655 (for private nuisances) of the Civil

Code, a private person whose property right was

invaded or unreasonably interfered with by the

act, omission, establishment, business or

condition of the property of another may file a

civil action to recover personal damages.56

Abatement may be judicially sought through a

civil action therefor57 if the pertinent

requirements under the Civil Code for summary

abatement, or the requisite that the nuisance is a

nuisance per se, do not concur. To note, the

remedies of abatement and damages are

cumulative-; hence, both may be

demanded.58cralawred

In the present cases, Wong, et al. availed of the

remedy of judicial abatement and damages

against Sps. Rana, claiming that both the

elevated and cemented subject portion and

the subject backfilling are "nuisances"

caused/created by the latter which curtailed their

use and enjoyment of their properties.

With respect to the elevated and cemented

subject portion, the Court finds that the same

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 facilitate the

ingress and egress of Sps. Rana from their house

which was admittedly located on a higher

elevation than the subject road and the adjoining

Uy, and Wong-Ong properties. Since the subject

portion is not a nuisance per se (but actually a

nuisance per accidens as will be later discussed)

it cannot be summarily abated. As such, Wong,

et al. 's demolition of Sps. Rana's subject portion,

which was not sanctioned under the RTC's

November 27, 1997 Order, remains unwarranted.

Resultantly, damages ought to be awarded in

favor of Sps. Rana particularly that of (a)

nominal damages59 - for the vindication and

recognition of Sps. Rana's right to be heard

before the court prior to Wong, et al. 's

abatement of the subject portion (erroneously

perceived as a nuisance per se) - and (b)

temperate damages60 - for the pecuniary loss

owing to the demolition of the subject portion,




66

which had been established albeit uncertain as to

the actual amount of loss.

Sps. Rana's entitlement to the above-mentioned

damages, however, only stands in theory. This is

because the actual award thereof is precluded by

the damage they themselves have caused Wong,

et al. in view of their construction of the subject

portion. As the records establish, Sps. Rana,

without prior consultation with Wong, et al. and

to their sole advantage, elevated and cemented

almost half61 of the 10-meter wide subject road.

As homeowners of Peace Valley Subdivision,

Wong, et al. maintain the rights to the

unobstructed use of and free passage over the

subject road. By constructing the subject portion,

Sps. Rana introduced a nuisance per accidens

that particularly transgressed the aforesaid

rights. Thus, for the vindication and recognition

of Wong, et al. 's rights, Sps. Rana should be

similarly held liable for nominal damages.

Under Article 2216 of the Civil Code,[62 courts

have the discretion to determine awards of

nominal and temperate damages without actual

proof of pecuniary loss, as in this case.

Assessing the respective infractions of the parties

herein, the Court finds it prudent to sustain the

CA's verdict offsetting the damage caused by said

parties against each other. The Court can,

however, only concur with the CA in result since

the latter inaccurately applied,63 as basis for its

ruling, the in pari delicto principle enunciated in

the case of Yu Bun Guan v. Ong64 (Yu Guan). In

said case, the Court discussed the in pari delicto

principle with respect to the subject matter of

inexistent and void contracts,

viz.:chanRoblesvirtualLawlibrary

Inapplicability of the in Pari Delicto Principle

The principle of in pari delicto provides that when

two parties are equally at fault, the law leaves

them as they are and denies recovery by either

one of them. However, this principle does not

apply with respect to inexistent and void

contracts. Said this Court in Modina v. Court of

Appeals:cralawlawlibrary

"The principle of in pari delicto non oritur 'actio

denies all recovery to the guilty parties inter se.

It applies to cases where the nullity arises from

the illegality of the consideration or the purpose

of the contract. When two persons are equally at

fault, the law does not relieve them. The

exception to this general rule is when the

principle is invoked with respect to inexistent

contracts."65 (emphasis supplied; citations

omitted)

Clearly, no void or inexistent contract is herein at

issue, hence, the Court's disagreement with the

CA's invocation of Yu Guan in this respect.

As for the subject backfilling touching the

perimeter fence of the Uy property, records show

that the said fence was not designed to act as a

retaining wall66 but merely to withhold windload

and its own load.67 Both the RTC and the CA

found the subject backfilling to have added

pressure on the fence,68 consequently

endangering the safety of the occupants of the

Uy property, especially considering the higher

elevation of the Rana property. With these

findings, the Court thus agrees with the courts a

quo that there is a need for Linda Rana to

construct a retaining wall69 which would bear the

weight and pressure of the filling materials

introduced on their property. The Court,

however, observed that neither the RTC nor the

CA specified in their respective decisions the

backfilled areas which would require the retaining

wall. Due to the technicality of the matter, and

considering that the due authenticity and

genuineness of the findings/recommendation70 of

the OBO and the accompanying sketch71 thereto

were not specifically denied by Sps. Rana,72 the

required retaining wall shall be constructed in

accordance with the said sketch which showed

the area backfilled.

• Spouses Eduardo and Lydia Silos Vs.

Philippine National BankG.R. No.

181045. July 2, 2014

• In loan agreements, it cannot be

denied that the rate of interest is a

principal condition, if not the most

important component. Thus, any

modification thereof must be

mutually agreed upon; otherwise,

it has no binding effect. Moreover,

the Court cannot consider a

stipulation granting a party the

option to prepay the loan if said

party is not agreeable to the

arbitrary interest rates imposed.

Premium may not be placed upon a

http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/july2014/181045.pdf





67

stipulation in a contract which

grants one party the right to

choose whether to continue with or

withdraw from the agreement if it

discovers that what the other party

has been doing all along is

improper or illegal.

• These stipulations must be once

more invalidated, as was done in

previous cases. The common

denominator in these cases is the

lack of agreement of the parties to

the imposed interest rates. For this

case, this lack of consent by the

petitioners has been made obvious

by the fact that they signed the

promissory notes in blank for the

respondent to fill. We find credible

the testimony of Lydia in this

respect. Respondent failed to

discredit her; in fact, its witness

PNB Kalibo Branch Manager Aspa

admitted that interest rates were

fixed solely by its Treasury

Department in Manila, which were

then simply communicated to all

PNB branches for implementation.

If this were the case, then this

would explain why petitioners had

to sign the promissory notes in

blank, since the imposable interest

rates have yet to be determined

and fixed by respondent’s Treasury

Department in Manila.

• Accordingly, petitioners are correct

in arguing that estoppel should not

apply to them, for “[e]stoppel

cannot be predicated on an illegal

act. As between the parties to a

contract, validity cannot be given

to it by estoppel if it is prohibited

by law or is against public policy.”88

It appears that by its acts,

respondent violated the Truth in

Lending Act, or Republic Act No.

3765, which was enacted “to

protect x x x citizens from a lack of

awareness of the true cost of credit

to the user by using a full

disclosure of such cost with a view

of preventing the uninformed use

of credit to the detriment of the

national economy.”89 The law

“gives a detailed enumeration of

the specific information required to

be disclosed, among which are the

interest and other charges incident

to the extension of credit.”90

Section 4 thereof provides that a

disclosure statement must be

furnished prior to the

consummation of the transaction

• By requiring the petitioners to sign

the credit documents and the

promissory notes in blank, and

then unilaterally filling them up

later on, respondent violated the

Truth in Lending Act, and was

remiss in its disclosure obligations

• AFP Retirement and Separation Benefits

System [AFP-RSBS] Vs. Republic of

the PhilippinesG.R. No. 180086. July 2,

2014

The period of possession prior to the

declaration that land is alienable and

disposable agricultural land is included in

the computation of possession for

purposes of acquiring registration rights

over a property if the land has already

been declared as such at the time of the

application for registration.

this court explained that there was no

other legislative intent that could be

associated with the date, June 12, 1945,

as written in our registration laws except

that it qualifies the requisite period of

possession and occupation. The law

imposes no requirement that land should

have been declared alienable and

disposable agricultural land as early as

June 12, 1945.

Therefore, what is important in computing

the period of possession is that the land

has already been declared alienable and

disposable at the time of the application

for registration. Upon satisfaction of this

requirement, the computation of the

period may include the period of adverse

possession prior to the declaration that

land is alienable and disposable.

Persons are entitled to the registration of

their titles upon satisfaction of all the

requirements enumerated under our

laws. No presumption or doctrine in favor







68

of state ownership can deprive them of

their titles once all the conditions are

satisfied.39 Our Constitution contains no

such limit upon our citizens or privilege

upon the state.40 Neither was this

doctrine extended to our organic acts. 41

Respondent argued that “[s]ince the land

subject of petitioner’s application for

registration was classified alienable and

disposable only on March 15, 1982, it

follows that petitioner could not have

possessed the same in the concept of

owner, earlier than the said date.”42

Respondent is mistaken. Although

adverse, open, continuous, and notorious

possession in the concept of an owner is a

conclusion of law to be determined by

courts, it has more to do with a person’s

belief in good faith that he or she has just

title to the property that he or she is

occupying. It is unrelated to the

declaration that land is alienable or

disposable. A possessor or occupant of

property may, therefore, be a possessor in

the concept of an owner prior to the

determination that the property is

alienable and disposable agricultural

land. His or her rights, however, are still

to be determined under the law.

Petitioner’s right to the original

registration of title over the property is,

therefore, dependent on the existence of:

a) a declaration that the land is alienable

and disposable at the time of the

application for registration and b) open

and continuous possession in the concept

of an owner through itself or through its

predecessors-in-interest since June 12,

1945 or earlier.

In this case, there is no dispute that the

properties were already declared alienable

and disposable land on March 15,

1982. Hence, the property was already

alienable and disposable at the time of

petitioner’s application for registration on

July 10, 1997.

As to the required period of possession,

petitioner was able to show that it,

through itself or its predecessors-in-

interest, has been in open, continuous,

exclusive, and notorious possession before

1945 through testimonies and documents.

Respondent argues that although

petitioner is a government-owned and -

controlled corporation, it cannot acquire

title through acquisitive prescription. This

argument is unmeritorious. The type of

corporation that petitioner is has nothing

to do with the grant of its application for

original registration. Petitioner also

acquired title to the property under

Section 14(1) of the Property Registration

Decree or Section 48(b) of the Public Land

Act, and not through acquisitive

prescription.

If respondent’s argument stems from the

Court of Appeals’ ruling that petitioner

cannot acquire title to the property

because of Section 3, Article XII of the

Constitution, which prohibits private

corporations from acquiring public land,

respondent is, again, mistaken. The

prohibition in Section 3, Article XII of the

Constitution applies only to private

corporations. Petitioner is a government

corporation organized under Presidential

Decree No. 361, as amended by

Presidential Decree No. 1656.

• Serconsision R. Mendoza Vs. Aurora

Mendoza FerminG.R. No. 177235. July

7, 2014

With regard to the issue on forgery, the

general rule is, the same cannot be

presumed and must be proved by clear,

positive and convincing evidence; the

burden of proof of which lies on the party

alleging forgery.43 The best evidence of a

forged signature in the instrument is the

instrument itself reflecting the alleged

forged signature.44 The fact of forgery can

only be established by comparison

between the alleged forged signature and

the authentic and genuine signature of the

person whose signature is theorized upon

to have been forged.45

We cannot likewise uphold the validity of

the questioned Deed of Absolute Sale on

the basis that it was notarized by one

Atty. Julian Tubig, and, therefore, carries






69

with it the presumption of regularity. Time

and again, we have ruled that “while it is

true that a notarized document carries the

evidentiary weight conferred upon it with

respect to its due execution, and has in its

favor the presumption of regularity, this

presumption, however, is not absolute.”60

It may be rebutted by clear and

convincing evidence to the contrary.61

For one, it is undisputed that there are

two (2) versions of the notarized Deed of

Absolute Sale, as admitted by petitioner,

that were allegedly executed for taxation

purposes.62 Such is certainly not in

accordance with the normal scheme of

things. Executing different adaptations of

a conveying document involving the same

parties and property invites questions, not

only as to the due execution and

genuineness thereof but also with respect

to the true intent of the parties in the

provisions contained therein. In addition,

the records show that one of the deeds is

allegedly notarized by Atty. Julian Tubig

for the City of Pasay (superimposed by

word “Manila”).

Taking into account the foregoing defects,

as well as the testimony of respondent

and her expert witnesses (had it been

properly appreciated), is sufficient to

overcome the presumption of regularity

attached to public documents and to meet

the stringent requirements to prove

forgery.

The necessity of a public document for

contracts which transmit or extinguish real

rights over immovable property, as

mandated by Article 1358 of the Civil

Code, is only for convenience; it is not

essential for validity or enforceability.64

The presumptions that attach to notarized

documents can be affirmed only so long as

it is beyond dispute that the notarization

was regular.65 A defective notarization will

strip the document of its public character

and reduce it to a private instrument.66

Consequently, when there is a defect in

the notarization of a document, the clear

and convincing evidentiary standard

normally attached to a duly-notarized

document is dispensed with, and the

measure to test the validity of such

document is preponderance of evidence.67

Here, preponderance of evidence heavily

tilts in favor of respondent.

Being a forgery, the Deed of Absolute Sale

conveyed nothing in favor of Eduardo C.

Sanchez, as claimed by petitioner. The

necessary consequence of which was

succinctly stated by the CA in the

following wise:chanroblesvirtuallawlibrary

Having ruled that the signatures of

Leonardo in the Deed of Absolute Sale

were forgeries, then it follows that such

document should be annulled for lack

of consent on the part of Leonardo.

Notably, the subject property was part of

the conjugal property of the Spouses

Leonardo and Serconsision Mendoza, this

can be gleaned from TCT No. 48946

wherein it states that the same is owned

by “Leonardo G. Mendoza & Serconsision

R. Mendoza, both of legal age.” Besides,

Aurora has not adduced any proof to

substantiate her allegation that

Serconsision was just the common-law

wife of her father.

As Leonardo and Serconsision were

married sometime in 1985, the applicable

provision governing the property relations

of the spouses is Article 172 of the Civil

Code of the Philippines which states that

the wife cannot bind the conjugal

partnership without the husband’s

consent. In Felipe vs. Heirs of Maximo

Aldon, a case decided under the provisions

of the Civil Code, the Supreme Court had

the occasion to rule that the sale of a land

belonging to the conjugal partnership

made by the wife without the consent of

the husband is voidable. The Supreme

Court further ruled that the view that the

disposal by the wife of their conjugal

property without the husband’s consent is

voidable is supported by Article 173 of the

Civil Code which states that contracts

entered by the husband without the

consent of the wife when such consent is

required are annullable at her instance

during the marriage and within ten years

from the transaction questioned. In the




70

present case, the fictitious Deed of

Absolute Sale was executed on September

22, 1986, one month after or specifically

on November 25, 1986, Leonardo died.

Aurora as one of the heirs and the duly

appointed administratrix of Leonardo’s

estate, had the right therefore to seek for

the annulment of the Deed of Sale as it

deprived her and the other legal heirs of

Leonardo of their hereditary rights.

Consequently, TCT No. 52593 in the name

of Eduardo must be cancelled. Defendant-

appellees’ unauthorized and fictitious

transaction cannot be invoked as a source

of right.68

Considering that the questioned sale was

concluded on September 22, 1986, before

the Family Code took effect, the

transaction could still be aptly governed

by the then governing provisions of the

Civil Code. Under Article 173 of the Civil

Code, the remedy available to the wife in

case her husband should dispose of their

conjugal property without her consent is

as follows:chanroblesvirtuallawlibrary

Art. 173. The wife may, during the

marriage, and within ten years from the

transaction questioned, ask the courts for

the annulment of any contract of the

husband entered into without her consent,

when such consent is required, or any act

or contract of the husband which tends to

defraud her or impair her interest in the

conjugal partnership property. Should the

wife fail to exercise this right, she or her

heirs, after the dissolution of the

marriage, may demand the value of the

property fraudulently alienated by the

husband.

• Vicente Josefa Vs. Manila Electric

CompanyG.R. No. 182705. July 18,

2014

Bautista’s negligence was the

proximate cause of the property

damage caused to Meralco The truck

hit the electricity post

Whoever by act or omission causes

damage to another, there being fault or

negligence, is obliged to pay for the

damage done. This fault or negligence, if

there is no pre-existing contractual

relation between the parties, is called

quasi-delict.36 Thus, for a quasi-delict case

to prosper, the complainant must

establish: (1) damages to the

complainant; (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.37 With respect to the third

element, the negligent act or omission

must be the proximate cause of the injury.

Bautista is presumed to be negligent

in driving the truck under

the doctrine of res ipsa

loquitur Contrary to the CA’s opinion,

the finding that it was the truck that hit

the electricity post would not immediately

result in Josefa’s liability. It is a basic rule

that it is essentially the wrongful or

negligent act or omission that creates

the vinculum juris in extra-contractual

obligations.46 In turn, the employee’s

negligence established to be the

proximate cause of the damage would

give rise to the disputable presumption

that the employer did not exercise the

diligence of a good father of a family in

the selection and supervision of the erring

employee.47

Nonetheless, in some cases where

negligence is difficult to prove, the

doctrine of res ipsa loquitur permits

an inference of negligence on the part

of the defendant or some other

person who is charged with

negligence where the thing or

transaction speaks for itself.48 This

doctrine postulates that, as a matter of

common knowledge and experience and in

the absence of some explanation by the

defendant who is charged with negligence,

the very nature of occurrences may justify

an inference of negligence on the part of

the person who controls the

instrumentality causing the injury. In

other words, res ipsa loquitur is grounded

on the superior logic of ordinary human

experience that negligence may be

deduced from the mere occurrence of the






71

accident itself.49

The procedural effect of res ipsa

loquitur in quasi-delict cases is that

the defendant’s negligence is

presumed. In other words, the burden

of evidence shifts to the defendant to

prove that he did not act with

negligence.50 This doctrine thus

effectively furnishes a bridge by which the

complainant, without knowledge of the

cause of the injury, reaches over to the

defendant, who knows or should know the

cause, for any explanation of care

exercised by him to prevent the injury.51

For this doctrine to apply, the complainant

must show that: (1) the accident is of

such character as to warrant an inference

that it would not have happened except

for the defendant’s negligence; (2) the

accident must have been caused by an

agency or instrumentality within the

exclusive management or control of the

person charged with the negligence

complained of; and (3) the accident must

not have been due to any voluntary action

or contribution on the part of the person

injured.

The present case satisfies all the elements

of res ipsa loquitur. It is very unusual and

extraordinary for the truck to hit an

electricity post, an immovable and

stationary object, unless Bautista, who

had the exclusive management and

control of the truck, acted with fault or

negligence. We cannot also conclude that

Meralco contributed to the injury since it

safely and permanently installed the

electricity post beside the street. Thus, in

Republic v. Luzon Stevedoring Corp.,52 we

imputed vicarious responsibility to Luzon

Stevedoring Corp. whose barge rammed

the bridge, also an immovable and

stationary object. In that case, we found it

highly unusual for the barge to hit the

bridge which had adequate openings for

the passage of water craft unless Luzon

Stevedoring Corp.’s employee had acted

with negligence.

Josefa is vicariously liable

under paragraph 5, Article 2180

of the Civil Code

There is an employer-employee

relations between Bautista and Josefa

The finding that Bautista acted with

negligence in driving the truck gives rise

to the application of paragraph 5, Article

2180 of the Civil Code which holds the

employer vicariously liable for damages

caused by his employees within the scope

of their assigned tasks. In the present

case, Josefa avoids the application of this

provision by denying that Bautista was his

employee at the time of the incident.

Josefa cannot evade his responsibility by

mere denial of his employment relations

with Bautista in the absence of proof that

his truck was used without authorization

or that it was stolen when the accident

occurred.53 In quasi-delict cases, the

registered owner of a motor vehicle is the

employer of its driver in contemplation of

law.54 The registered owner of any vehicle,

even if not used for public service, would

primarily be responsible to the public or to

third persons for injuries caused while the

vehicle was being driven on highways or

streets. The purpose of motor vehicle

registration is precisely to identify the

owner so that if any injury is caused by

the vehicle, responsibility can be imputed

to the registered owner.55

Josefa failed to show that he

exercised

the diligence of a good father of a

family

in the selection and supervision of

Bautista

In order for Josefa to be relieved of his

vicarious liability, he must show that he

exercised due diligence in the selection

and supervision of Bautista. In concrete

terms, Josefa should show by competent

object or documentary evidence that he

examined Bautista as to the latter’s

qualifications, experience and service

records prior to employment. He should

likewise prove by competent object or

documentary evidence that he formulated

standard operating procedures, monitored

their implementation and imposed

disciplinary measures for breach of these




72

procedures.56 However, Josefa failed to

overcome the presumption of negligence

against him since he waived his right to

present evidence during trial. We are thus

left with no other conclusion other than to

rule that Josefa is primarily liable for all

natural and probable consequences of

Bautista’s negligence.57

• Soledad Lavadia Vs. Heirs of Juan Luces

Luna, represented by Gregorio Z. Luna

and Eugenia Zaballero-LunaG.R. No.

171914. July 23, 2014

Divorce between Filipinos is void and

ineffectual under the nationality rule

adopted by Philippine law. Hence, any

settlement of property between the

parties of the first marriage involving

Filipinos submitted as an incident of a

divorce obtained in a foreign country lacks

competent judicial approval, and cannot

be enforceable against the assets of the

husband who contracts a subsequent

marriage.

1.

Atty. Luna’s first marriage with

Eugenia

subsisted up to the time of his death

The first marriage between Atty. Luna and

Eugenia, both Filipinos, was solemnized in

the Philippines on September 10, 1947.

The law in force at the time of the

solemnization was the Spanish Civil Code,

which adopted the nationality rule. The

Civil Code continued to follow the

nationality rule, to the effect that

Philippine laws relating to family rights

and duties, or to the status, condition and

legal capacity of persons were binding

upon citizens of the Philippines, although

living abroad.15 Pursuant to the nationality

rule, Philippine laws governed this case by

virtue of both Atty. Luna and Eugenio

having remained Filipinos until the death

of Atty. Luna on July 12, 1997 terminated

their marriage.

From the time of the celebration of the

first marriage on September 10, 1947

until the present, absolute divorce

between Filipino spouses has not been

recognized in the Philippines. The non-

recognition of absolute divorce between

Filipinos has remained even under the

Family Code,16 even if either or both of

the spouses are residing abroad.17 Indeed,

the only two types of defective marital

unions under our laws have been the void

and the voidable marriages. As such, the

remedies against such defective marriages

have been limited to the declaration of

nullity of the marriage and the annulment

of the marriage.

It is true that on January 12, 1976, the

Court of First Instance (CFI) of Sto.

Domingo in the Dominican Republic issued

the Divorce Decree dissolving the first

marriage of Atty. Luna and Eugenia.18

Conformably with the nationality rule,

however, the divorce, even if voluntarily

obtained abroad, did not dissolve the

marriage between Atty. Luna and Eugenia,

which subsisted up to the time of his

death on July 12, 1997. This finding

conforms to the Constitution, which

characterizes marriage as an inviolable

social institution,19 and regards it as a

special contract of permanent union

between a man and a woman for the

establishment of a conjugal and family

life.20 The non-recognition of absolute

divorce in the Philippines is a

manifestation of the respect for the

sanctity of the marital union especially

among Filipino citizens. It affirms that the

extinguishment of a valid marriage must

be grounded only upon the death of either

spouse, or upon a ground expressly

provided by law. For as long as this public

policy on marriage between Filipinos

exists, no divorce decree dissolving the

marriage between them can ever be given

legal or judicial recognition and

enforcement in this jurisdiction.

2.

The Agreement for Separation and

Property Settlement

was void for lack of court approval

The petitioner insists that the Agreement

for Separation and Property Settlement

(Agreement) that the late Atty. Luna and

Eugenia had entered into and executed in

connection with the divorce proceedings

before the CFI of Sto. Domingo in the







73

Dominican Republic to dissolve and

liquidate their conjugal partnership was

enforceable against Eugenia. Hence, the

CA committed reversible error in

decreeing otherwise.

The insistence of the petitioner was

unwarranted.

Considering that Atty. Luna and Eugenia

had not entered into any marriage

settlement prior to their marriage on

September 10, 1947, the system of

relative community or conjugal

partnership of gains governed their

property relations. This is because the

Spanish Civil Code, the law then in force

at the time of their marriage, did not

specify the property regime of the spouses

in the event that they had not entered

into any marriage settlement before or at

the time of the marriage. Article 119 of

the Civil Code clearly so provides, to

wit:cralawlawlibrary

Article 119. The future spouses may

in the marriage settlements agree

upon absolute or relative community

of property, or upon complete

separation of property, or upon any

other regime. In the absence of

marriage settlements, or when the

same are void, the system of relative

community or conjugal partnership of

gains as established in this Code,

shall govern the property relations

between husband and wife.

Article 142 of the Civil Code has defined a

conjugal partnership of gains

The conjugal partnership of gains subsists

until terminated for any of various causes

of termination enumerated in Article 175

of the Civil Code,

viz:chanRoblesvirtualLawlibrary

Article 175. The conjugal partnership of

gains terminates:cralawlawlibrary

(1) Upon the death of either

spouse;chanroblesvirtuallawlibrary

(2) When there is a decree of legal

separation;chanroblesvirtuallawlibrary

(3) When the marriage is

annulled;chanroblesvirtuallawlibrary

(4) In case of judicial separation of

property under Article 191.

The mere execution of the Agreement by

Atty. Luna and Eugenia did not per se

dissolve and liquidate their conjugal

partnership of gains. The approval of the

Agreement by a competent court was still

required under Article 190 and Article 191

of the Civil Code, as


Article 190. In the absence of an express

declaration in the marriage settlements,

the separation of property between

spouses during the marriage shall not take

place save in virtue of a judicial order.

(1432a)

Article 191. The husband or the wife may

ask for the separation of property, and it

shall be decreed when the spouse of the

petitioner has been sentenced to a penalty

which carries with it civil interdiction, or

has been declared absent, or when legal

separation has been granted.

x x x x

The husband and the wife may agree upon

the dissolution of the conjugal partnership

during the marriage, subject to judicial

approval. xxxxxx

But was not the approval of the

Agreement by the CFI of Sto. Domingo in

the Dominican Republic sufficient in

dissolving and liquidating the conjugal

partnership of gains between the late

Atty. Luna and Eugenia?

The query is answered in the negative.

There is no question that the approval

took place only as an incident of the

action for divorce instituted by Atty. Luna

and Eugenia, for, indeed, the justifications

for their execution of the Agreement were

identical to the grounds raised in the




74

action for divorce.21 With the divorce not

being itself valid and enforceable under

Philippine law for being contrary to

Philippine public policy and public law, the

approval of the Agreement was not also

legally valid and enforceable under

Philippine law. Consequently, the conjugal

partnership of gains of Atty. Luna and

Eugenia subsisted in the lifetime of their

marriage.

3.

Atty. Luna’s marriage with Soledad,

being bigamous,

was void; properties acquired during

their marriage

were governed by the rules on co-

ownership

What law governed the property relations

of the second marriage between Atty.

Luna and Soledad?

The CA expressly declared that Atty.

Luna’s subsequent marriage to Soledad on

January 12, 1976 was void for being

bigamous,22 on the ground that the

marriage between Atty. Luna and Eugenia

had not been dissolved by the Divorce

Decree rendered by the CFI of Sto.

Domingo in the Dominican Republic but

had subsisted until the death of Atty. Luna

on July 12, 1997.

The Court concurs with the CA.

In the Philippines, marriages that are

bigamous, polygamous, or incestuous are

void. Article 71 of the Civil Code clearly

states:chanRoblesvirtualLawlibrary

Article 71. All marriages performed

outside the Philippines in accordance with

the laws in force in the country where

they were performed, and valid there as

such, shall also be valid in this country,

except bigamous, polygamous, or

incestuous marriages as determined

by Philippine law.

Bigamy is an illegal marriage committed

by contracting a second or subsequent

marriage before the first marriage has

been legally dissolved, or before the

absent spouse has been declared

presumptively dead by means of a

judgment rendered in the proper

proceedings.23 A bigamous marriage is

considered void ab initio.24cralawred

Due to the second marriage between Atty.

Luna and the petitioner being void ab

initio by virtue of its being bigamous, the

properties acquired during the bigamous

marriage were governed by the rules on

co-ownership, conformably with Article

144 of the Civil Code,


Article 144. When a man and a woman

live together as husband and wife, but

they are not married, or their marriage is

void from the beginning, the property

acquired by either or both of them

through their work or industry or their

wages and salaries shall be governed by

the rules on co-ownership.(n)

In such a situation, whoever alleges co-

ownership carried the burden of proof to

confirm such fact. To establish co-

ownership, therefore, it became

imperative for the petitioner to offer proof

of her actual contributions in the

acquisition of property. Her mere

allegation of co-ownership, without

sufficient and competent evidence, would

warrant no relief in her favor.

• Leonardo C. Castillo represented by

Lennard V. Castillo Vs. Security Bank

Corporation, JRC Poultry Farms or

Spouses Leon C. Castillo, Jr., and

Teresita Flores-CastilloG.R. No.

196118. July 30, 2014

• The following are the legal

requisites for a mortgage to be

valid:chanRoblesvirtualLawlibrary

•

• (1) It must be constituted to

secure the fulfillment of a principal

obligation;chanroblesvirtuallawlibra

ry

•

• (2) The mortgagor must be the

absolute owner of the thing

mortgaged;chanroblesvirtuallawlibr

ary









75

•

• (3) The persons constituting the

mortgage must have the free

disposal of their property, and in

the absence thereof, they should

be legally authorized for the

purpose.9

Leonardo asserts that his signature in the

SPA authorizing his brother, Leon, to

mortgage his property covered by TCT No.

T-28297 was falsified. He claims that he

was in America at the time of its

execution. As proof of the forgery, he

focuses on his alleged CTC used for the

notarization10 of the SPA on May 5, 1993

and points out that it appears to have

been issued on January 11, 1993 when, in

fact, he only obtained it on May 17,

1993. But it is a settled rule that

allegations of forgery, like all other

allegations, must be proved by clear,

positive, and convincing evidence by the

party alleging it. It should not be

presumed, but must be established by

comparing the alleged forged signature

with the genuine signatures.11 Here,

Leonardo simply relied on his self-serving

declarations and refused to present

further corroborative evidence, saying that

the falsified document itself is the best

evidence.12 He did not even bother

comparing the alleged forged signature on

the SPA with samples of his real and

actual signature. What he consistently

utilized as lone support for his allegation

was the supposed discrepancy on the date

of issuance of his CTC as reflected on the

subject SPA’s notarial

acknowledgment. On the contrary, in

view of the great ease with which CTCs

are obtained these days,13 there is

reasonable ground to believe that, as the

CA correctly observed, the CTC could have

been issued with the space for the date

left blank and Leonardo merely filled it up

to accommodate his assertions. Also,

upon careful examination, the handwriting

appearing on the space for the date of

issuance is different from that on the

computation of fees, which in turn was

consistent with the rest of the writings on

the document.14 He did not likewise

attempt to show any evidence that would

back up his claim that at the time of the

execution of the SPA on May 5, 1993, he

was actually in America and therefore

could not have possibly appeared and

signed the document before the notary.

And even if the Court were to assume,

simply for the sake of argument, that

Leonardo indeed secured his CTC only on

May 17, 1993, this does not automatically

render the SPA invalid. The appellate

court aptly held that defective notarization

will simply strip the document of its public

character and reduce it to a private

instrument, but nonetheless, binding,

provided its validity is established by

preponderance of evidence.15 Article 1358

of the Civil Code requires that the form of

a contract that transmits or extinguishes

real rights over immovable property

should be in a public document, yet the

failure to observe the proper form does

not render the transaction invalid.16 The

necessity of a public document for said

contracts is only for convenience; it is not

essential for validity or

enforceability.17 Even a sale of real

property, though not contained in a public

instrument or formal writing, is

nevertheless valid and binding, for even a

verbal contract of sale or real estate

produces legal effects between the

parties.18 Consequently, when there is a

defect in the notarization of a document,

the clear and convincing evidentiary

standard originally attached to a duly-

notarized document is dispensed with, and

the measure to test the validity of such

document is preponderance of

evidence.19cralawred

Here, the preponderance of evidence

indubitably tilts in favor of the

respondents, still making the SPA binding

between the parties even with the

aforementioned assumed

irregularity. There are several telling

circumstances that would clearly

demonstrate that Leonardo was aware of

the mortgage and he indeed executed the

SPA to entrust Leon with the mortgage of

his property. Leon had in his possession

all the titles covering the eleven (11)




76

properties mortgaged, including that of

Leonardo.20 Leonardo and the rest of

their relatives could not have just blindly

ceded their respective TCTs to Leon.21 It

is likewise ridiculous how Leonardo

seemed to have been totally oblivious to

the status of his property for eight (8)

long years, and would only find out about

the mortgage and foreclosure from a

nephew who himself had consented to the

mortgage of his own lot.22 Considering

the lapse of time from the alleged forgery

on May 5, 1993 and the mortgage on

August 5, 1994, to the foreclosure on July

29, 1999, and to the supposed discovery

in 2001, it appears that the suit is a mere

afterthought or a last-ditch effort on

Leonardo’s part to extend his hold over his

property and to prevent SBC from

consolidating ownership over the

same. More importantly, Leonardo

himself admitted on cross-examination

that he granted Leon authority to

mortgage, only that, according to him, he

thought it was going to be with China

Bank, and not SBC.23 But as the CA

noted, there is no mention of a certain

bank in the subject SPA with which Leon

must specifically deal. Leon, therefore,

was simply acting within the bounds of the

SPA’s authority when he mortgaged the

lot to SBC.

True, banks and other financing

institutions, in entering into mortgage

contracts, are expected to exercise due

diligence.24 The ascertainment of the

status or condition of a property offered to

it as security for a loan must be a

standard and indispensable part of its

operations.25 In this case, however, no

evidence was presented to show that SBC

was remiss in the exercise of the standard

care and prudence required of it or that it

was negligent in accepting the

mortgage.26 SBC could not likewise be

faulted for relying on the presumption of

regularity of the notarized SPA when it

entered into the subject mortgage

agreement.

• Heirs of Reynaldo Dela Rosa, Namely:

Teofista Dela Rosa, Josephine

Santiago and Joseph Dela Rosa Vs.

Mario A. Batongbacal, et al.G.R. No.

179205, July 30, 2014

• An equitable mortgage is defined

as one 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,

and contains nothing impossible or

contrary to law. For the

presumption of an equitable

mortgage to arise, two requisites

must concur: (1) that the parties

entered into a contract

denominated as a sale; and (2) the

intention was to secure an existing

debt by way of mortgage.

Consequently, the non-payment of

the debt when due gives the

mortgagee the right to foreclose

the mortgage, sell the property and

apply the proceeds of the sale for

the satisfaction of the loan

obligation.18 While there is no

single test to determine whether

the deed of absolute sale on its

face is really a simple loan

accommodation secured by a

mortgage, the Civil Code, however,

enumerates several instances when

a contract is presumed to be an

equitable mortgage, to


•

• Article 1602. The contract shall be

presumed to be an equitable

mortgage, in any of the following

cases:chanRoblesvirtualLawlibrary

•

(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








77

be received by the vendee as rent

or otherwise shall be considered as

interest which shall be subject to

the usury laws.

•

• A perusal of the contract

denominated as Resibo reveals the

utter frailty of petitioners' position

because nothing therein suggests,

even remotely, that the subject

property was given to secure a

monetary obligation. The terms of

the contract set forth in no

uncertain terms that the

instrument was executed with the

intention of transferring the

ownership or the subject property

to the buyer in exchange for the

price. Nowhere in the deed is it

indicated that the transfer was

merely intended to secure a debt

obligation. On the contrary, the

document clearly indicates the

intent of Reynaldo to sell his share

in the property. The primary

consideration in determining the

true nature of a contract is the

intention of the parties.19 If the

words of a contract appear to

contravene the evident intention of

the parties, the latter shall

prevail.20 Such intention is

determined not only from the

express terms of their agreement,

but also from the contemporaneous

and subsequent acts of the

parties.21 That the parties intended

some other acts or contracts apart

from the express terms of the

agreement, was not proven by

Reynaldo during the trial or by his

heirs herein.22 Beyond their bare

and uncorroborated asseverations

that the contract failed to express

the true intention of the parties,

the record is bereft of any evidence

indicative that there was an

equitable mortgage.

•

• Neither could the allegation of

gross inadequacy of the price carry

the day for the petitioners. It must

be underscored at this point that

the subject of the Contract to Sell

was limited only to 1/4 pro-indiviso

share of Reynaldo consisting an

area of 3,750 square meter and

not the entire 15,001-square meter

parcel of land. As a co-owner of the

subject property, Reynaldo's right

to sell, assign or mortgage his ideal

share in the property held in

common is sanctioned by law. The

applicable law is Article 493 of the

New Civil Code, which spells out

the rights of co-owners over a co-

owned property,

• Pursuant to this law, a co-owner

has the right to alienate his

proindiviso share in the co-owned

property even without the consent

of his co-owners.23 This right is

absolute and in accordance with

the well-settled doctrine that a co-

owner has a full ownership of his

pro-indiviso share and has the right

to alienate, assign or mortgage it,

and substitute another person for

its enjoyment.24 In other words,

the law does not prohibit a co-

owner from selling, alienating,

mortgaging his ideal share in the

property held m

common.25cralawlawlibrary

• In the same breadth, a co-owner

cannot be compelled by the court

to give their consent to the sale of

his share in a co-owned property.

hus, even if the impression of the Court of

Appeals were true, i.e., that the entire

propc1iy has been sold to thirds persons,

such sale could not have affected the right

of Mario and Guillermo to recover the

property from Reynaldo. In view of the

nature of co-ownership, the Court of

Appeals correctly ruled that the terms in

the Contract to Sell, which limited the

subject to Reynaldo's ideal share in the

property held in common is perfectly valid

and binding. In fact, no authority from the

other co-owners is necessary for such

disposition to be valid as he is afforded by

the law fullownership of his part and of

the fruits and benefits pertaining thereto.

A condition set forth in a sale contract

requiring a co-owner to secure an




78

authority from his co-owners for the

alienation of his share, as seemingly

indicated in this case, should be

considered mere surplusage and docs not,

in any way, affect the validity or the

enforceability of the contract. Nor should

such a condition indicate an intention to

sell the whole because the contrary

intention has been clearly

written:chanRoblesvirtualLawlibrary

x x x Ang bahaging aking ipinagbibili ay

ang !.ole No. 1, may sukat na 3,750 sq.m.

na makikita sa nakalakip na sketch plan

na aking ding nilagdaan sa ikaliliwanag ng

kasulatang ito.28chanrobleslaw

Indeed, the intention clearly written,

settles the issue regarding the purchase

price. A contract of sale is a consensual

contract, which becomes valid and binding

upon the meeting of minds of the parties

on the price and the object of the sale.29

The mere inadequacy of the price docs not

affect its validity when both parties arc in

a position to form an independent

judgment concerning the transaction,

unless fraud, mistake or undue influence

indicative of a defect in consent is

present.30 A contract may consequently be

annulled on the ground of vitiated consent

and not due to the inadequacy of the

price.31 In the case at bar, however, no

evidence to prove fraud, mistake or undue

influence indicative of vitiated consent is

attendant.

• As the parties invoking equitable

mortgage, the Heirs of Reynaldo

did not even come close to proving

that the parties intended to charge

the property as security for a debt,

leaving us with no other choice but

to uphold the stipulations in the

contract. Basic is the rule that if

the terms of the contract are clear

and leave no doubt upon the

intention of the parties, the literal

meaning of its stipulations shall

control,32 we find that the Court of

Appeals cannot be faulted for

ruling, in modification of its original

judgment, that the sale effected by

Reynaldo of his undivided share in

the property is valid and

enforceable.

• Rural Bank of Cabadbaran, Inc. Vs. Jorgita

A. Melecio-Yap, et al.G.R. No. 178451.

July 30, 2014

The essential issues for the Court’s

resolution are whether or not (a) the

presumption of regularity accorded to the

notarized SPA and Extra-Judicial

Adjudication Documents was rebutted by

clear and convincing evidence; (b)

respondents are guilty of laches and, thus,

estopped from questioning the validity of

the real estate mortgage and subsequent

foreclosure proceedings; and (c) RBCI can

be considered as a mortgagee in good

faith.

he settled rule is that persons constituting

a mortgage must be legally authorized for

the purpose.53 In the present case, while

Erna appears to be a co-owner of the

mortgaged properties, she made it appear

that she was duly authorized to sell the

entire properties by virtue of the notarized

SPA dated August 24, 1990.

Generally, a notarized document carries

the evidentiary weight conferred upon it

with respect to its due execution, and

documents acknowledged before a notary

public have in their favor the presumption

of regularity which may only be rebutted

by clear and convincing evidence.54

However, the presumptions that attach to

notarized documents can be affirmed only

so long as it is beyond dispute that the

notarization was regular.55 A defective

notarization will strip the document of its

public character and reduce it to a private

document.56 Hence, when there is a defect

in the notarization of a document, the

clear and convincing evidentiary standard

normally attached to a duly-notarized

document is dispensed with, and the

measure to test the validity of such

document is preponderance of evidence.57

In the present case, RBCI failed to show

that the subject SPA which it relied upon

as proof of Erna’s ostensible authority to

mortgage the entirety of the subject

properties was regularly notarized. Aside






79

from the respondents who denied having

participated in the execution and

notarization of the subject SPA, the

witnesses to the instrument, i.e.,

Guendelyn Lopez Salas-Montaus and

Carmelita Cayeta Bunga, categorically

denied having appeared before Notary

Public Alan M. Famador (Atty. Famador)

on August 24, 1990 to witness the

respondents sign the SPA in the notary

public’s presence.58 Despite this

irregularity, RBCI did not present Atty.

Famador to refute the same and establish

the authenticity of the contested SPA. It

may not be amiss to point out that the

principal function of a notary public is to

authenticate documents. When a notary

public certifies to the due execution and

delivery of a document under his hand

and seal, he gives the document the force

of evidence.59

Thus, having failed to sufficiently establish

the regularity in the execution of the SPA,

the presumption of regularity accorded by

law to notarized documents can no longer

apply and the questioned SPA is to be

examined under the parameters of Section

20, Rule 132 of the Rules of Court which

provides that “[b]efore any private

document offered as authentic is received

in evidence, its due execution and

authenticity must be proved either (a)

[b]y anyone who saw the document

executed or written, or (b) [b]y evidence

of the genuineness of the signature or

handwriting of the maker.”

To be clear, the above-stated conclusion is

only made with respect to the subject SPA

and not the Extra-Judicial Adjudication

Documents as the latter should be

excluded from any forgery analysis since

they were not among those documents

sought to be nullified by respondents in its

complaint. Nevertheless, this observation

bears little significance to the resolution of

the ultimate issue at hand. This is because

the forged status of the subject SPA alone

is already enough for the Court to declare

the real estate mortgage contract null and

void but only with respect to the

shares of the other co-owners (i.e.,

respondents) whose consent thereto was

not actually procured by Erna. While Erna,

as herself a co-owner, by virtue of Article

493 of the Civil Code,63 had the right to

mortgage or even sell her undivided

interest in the said properties, she, could

not, however, dispose of or mortgage the

subject properties in their entirety without

the consent of the other co-owners.64

Accordingly, the validity of the subject real

estate mortgage and the subsequent

foreclosure proceedings therefor

conducted in favor of RBCI should be

limited only to the portion which may

be allotted to it (as the successor-in-

interest of Erna) in the event of

partition. In this relation, the CA’s

directive to remand the case to the RTC in

order to determine the exact extent of the

respective rights, interests, shares and

participation of respondents and RBCI

over the subject properties, and

thereafter, effect a final division,

adjudication and partition in accordance

with law remains in order. Meanwhile, the

writ of possession issued in favor of RBCI,

and all proceedings relative thereto should

be set aside considering that the latter’s

specific possessory rights to the said

properties remain undetermined.

Based on the foregoing, the partial

invalidity of the subject real estate

mortgage brought about by the forged

status of the subject SPA would not,

therefore, result into the partial

invalidation of the loan obligation

principally entered into by RBCI and Sps.

Mantala; thus, absent any cogent reason

to hold otherwise, the need for the

recomputation of said loan obligation

should be dispensed with.

As for RBCI’s claim that it should be

deemed a mortgagee in good faith for

having conducted exhaustive

investigations on the history of the

mortgagor’s title,70 the Court finds the

same untenable. Two reasons impel this

conclusion: first, the doctrine of

mortgagee in good faith applies only to

lands registered under the Torrens system

and not to unregistered lands, as the

properties in suit;71 and second, the




80

principle is inapplicable to banking

institutions which are behooved to

exercise greater care and prudence before

entering into a mortgage contract. Hence,

the ascertainment of the status or

condition of properties offered as security

for loans must be a standard and an

indispensable part of its operations.72

In this case, RBCI failed to observe the

required level of caution in ascertaining

the genuineness of the SPA considering

that Erna owns only an aliquot part of the

properties offered as security for the loan.

It should not have simply relied on the

face of the documents submitted since its

undertaking to lend a considerable

amount of money as a banking institution

requires a greater degree of diligence.

Hence, its rights as mortgagee and, now,

as co-owner, should only be limited to

Erna’s share to the subject properties and

not, absent the other co-owners’ consent,

to its entirety.

Finally, the Court cannot subscribe to

RBCI's contention that respondents are

barred by laches from laying claim over

the subject properties in view of their

inexplicable inaction from the time they

learned of the falsification. Laches is

principally a doctrine of equity. It is

negligence or omission to assert a right

within a reasonable time, warranting a

presumption that the party entitled to

assert it either has abandoned or declined

to assert it.73 In this case, the complaint

for nullification of the SPA was filed before

the RTC on April 17, 1996, or barely three

years from respondents’ discovery of the

averred forgery in 1993, which is within

the four-year prescriptive period provided

under Article 114674 of the Civil Code to

institute an action upon the injury to their

rights over the subject properties. A delay

within the prescriptive period is sanctioned

by law and is not considered to be a delay

that would bar relief. Laches applies only

in the absence of a statutory prescriptive

period.75 Furthermore, the doctrine of

laches cannot be used to defeat justice or

perpetrate fraud and injustice. It is the

more prudent rule that courts, under the

principle of equity, will not be guided or

bound strictly by the statute of limitations

or the doctrine of laches when by doing

so, manifest wrong or injustice would

result,76 as in this case.

Neither is there estoppel. Under Article

1431 of the Civil Code, an essential

element of estoppel is that the person

invoking it has been influenced and has

relied on the representations or conduct of

the person sought to be estopped. Said

element is, however, wanting in this case.

• Midway Maritime and Technological

Foundation, represented by its

Chairman/President PhD in

Education, Dr. Sabino M. Manglicmot

Vs. Marissa E. Castro, et al.G.R. No.

189061. August 6, 2014

• Given the existence of the lease,

the petitioner’s claim denying the

respondents’ ownership of the

residential house must be rejected.

According to the petitioner, it is

Adoracion who actually owns the

residential building having bought

the same, together with the two

parcels of land, from her father

Tomas, who, in turn, bought it in

an auction sale.

•

• It is settled that “[o]nce a contact

of lease is shown to exist between

the parties, the lessee cannot by

any proof, however strong,

overturn the conclusive

presumption that the lessor has a

valid title to or a better right of

possession to the subject premises

than the lessee.”14 Section 2(b),

Rule 131 of the Rules of Court

prohibits a tenant from denying the

title of his landlord at the time of

the commencement of the relation

of landlord and tenant between

them.15 In Santos v. National

Statistics Office,16 the Court

expounded on the rule on estoppel

against a tenant and further

clarified 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

http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/august2014/189061.pdf








81

asserted is one that is alleged to

have been acquired subsequent to

the commencement of that

relation, the presumption will not

apply.17cralawred

•

• In this case, the petitioner’s basis

for insisting on Adoracion’s

ownership dates back to the

latter’s purchase of the two parcels

of land from her father, Tomas. It

was Tomas who bought the

property in an auction sale by

Union Bank in 1993 and leased the

same to the petitioner in the same

year. Note must be made that the

petitioner’s president, Manglicmot,

is the husband of Adoracion and

son-in-law of Tomas. It is not

improbable that at the time the

petitioner leased the residential

building from the respondents’

mother in 1993, it was aware of

the circumstances surrounding the

sale of the two parcels of land and

the nature of the respondents’

claim over the residential house.

Yet, the petitioner still chose to

lease the building. Consequently,

the petitioner is now estopped from

denying the respondents’ title over

the residential building.

•

• More importantly, the respondents’

ownership of the residential

building is already an established

fact.

•

• “Nemo dat quod non habet. One

can sell only what one owns or is

authorized to sell, and the buyer

can acquire no more right than


legally.”18 It must be pointed out

that what Tomas bought from

Union Bank in the auction sale

were the two parcels of land

originally owned and mortgaged by

CCC to Bancom, and which

mortgage was later assigned by

Bancom to Union Bank. Contrary to

the petitioner’s assertion, the

property subject of the mortgage

and consequently the auction sale

pertains only to these two parcels

of land and did not include the

residential house. This was

precisely the tenor of Castro, Jr. v.

CA19 where the Court nullified the

writ of possession issued by the

trial court insofar as it affected the

residential house constructed by

the respondents on the mortgaged

property as it was not owned by

CCC, which was the mortgagor.

As regards the ruling of the RTC of

Cabanatuan City, Branch 26, in Civil Case

No. 2939 (AF) that the advertised sale of

the property included all the

improvements thereon,23 suffice it to say

that said case involved an action for

ejectment and any resolution by the RTC

on the matter of the ownership of the

improvements of the property is merely

provisional and cannot surpass the Court’s

pronouncement in Castro and in the

present case. The petitioner should be

reminded that “in ejectment suits, the

only 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.

However, the issue of ownership may be

provisionally ruled upon for the sole

purpose of determining who is entitled to

possession de facto.”24 The MTC and RTC’s

adjudication of ownership is merely

provisional and would not bar or

prejudice an action between the same

parties involving title to the


Also, Adoracion’s subsequent acquisition

of the two parcels of land from her father

does not necessarily entail the acquisition

of the residential building. “A building by

itself is a real or immovable property

distinct from the land on which it is

constructed and therefore can be a

separate subject of contracts.”26 Whatever

Adoracion acquired from her father is still

subject to the limitation pronounced by

the Court in Castro, and the sale between

Adoracion and Tomas is confined only to

the two parcels of land and excluded the

residential building owned by the




82

respondents. It is beyond question that

Tomas, and subsequently, Adoracion,

could not have acquired a right greater

than what their predecessors-in-interest –

CCC and later, Union Bank –

had.27cralawred

There is also nothing on record that will

prove the petitioner’s claim that the lease

between CCC and the respondents already

expired. The fact that Adoracion

subsequently bought the property did not

ipso facto terminate the lease. While the

lease between CCC and the respondents

contained a 15-year period, to end in

1992, the petitioner failed to show that

the subsequent transferors/purchasers of

the two parcels of land opted to terminate

the lease or instituted any action for its

termination. Bancom bought the property

at an auction sale in 1979; Union Bank, in

1984; Tomas, and later, Adoracion,

acquired the property in 1993.


provides:ChanRoblesVirtualawlibrary

The purchaser of a piece of land which is

under a lease that is not recorded in the

Registry of property may terminate the

lease, save when there is a stipulation to

the contrary in the contract of sale, or

when the purchaser knows of the

existence of the lease.

x x x x.

It cannot be denied that the

transferors/purchasers of the property all

had knowledge of the lease between CCC

and the respondents; yet, not any of the

transferors/purchasers moved to

terminate the lease.

• Midway Maritime and Technological

Foundation, represented by its

Chairman/President PhD in

Education, Dr. Sabino M. Manglicmot

Vs. Marissa E. Castro, et al.G.R. No.

189061. August 6, 2014

• Given the existence of the lease,

the petitioner’s claim denying the

respondents’ ownership of the

residential house must be rejected.

According to the petitioner, it is

Adoracion who actually owns the

residential building having bought

the same, together with the two

parcels of land, from her father

Tomas, who, in turn, bought it in

an auction sale.

•

• It is settled that “[o]nce a contact

of lease is shown to exist between

the parties, the lessee cannot by

any proof, however strong,

overturn the conclusive

presumption that the lessor has a

valid title to or a better right of

possession to the subject premises

than the lessee.”14 Section 2(b),

Rule 131 of the Rules of Court

prohibits a tenant from denying the

title of his landlord at the time of

the commencement of the relation

of landlord and tenant between

them.15 In Santos v. National

Statistics Office,16 the Court

expounded on the rule on estoppel

against a tenant and further

clarified 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.17cralawred

•

• In this case, the petitioner’s basis

for insisting on Adoracion’s

ownership dates back to the

latter’s purchase of the two parcels

of land from her father, Tomas. It

was Tomas who bought the

property in an auction sale by

Union Bank in 1993 and leased the

same to the petitioner in the same

year. Note must be made that the

petitioner’s president, Manglicmot,

is the husband of Adoracion and

son-in-law of Tomas. It is not

improbable that at the time the

petitioner leased the residential

building from the respondents’

mother in 1993, it was aware of









83

the circumstances surrounding the

sale of the two parcels of land and

the nature of the respondents’

claim over the residential house.

Yet, the petitioner still chose to

lease the building. Consequently,

the petitioner is now estopped from

denying the respondents’ title over

the residential building.

•

• More importantly, the respondents’

ownership of the residential

building is already an established

fact.

•

• “Nemo dat quod non habet. One

can sell only what one owns or is

authorized to sell, and the buyer

can acquire no more right than


legally.”18 It must be pointed out

that what Tomas bought from

Union Bank in the auction sale

were the two parcels of land

originally owned and mortgaged by

CCC to Bancom, and which

mortgage was later assigned by

Bancom to Union Bank. Contrary to

the petitioner’s assertion, the

property subject of the mortgage

and consequently the auction sale

pertains only to these two parcels

of land and did not include the

residential house. This was

precisely the tenor of Castro, Jr. v.

CA19 where the Court nullified the

writ of possession issued by the

trial court insofar as it affected the

residential house constructed by

the respondents on the mortgaged

property as it was not owned by

CCC, which was the mortgagor.

As regards the ruling of the RTC of

Cabanatuan City, Branch 26, in Civil Case

No. 2939 (AF) that the advertised sale of

the property included all the

improvements thereon,23 suffice it to say

that said case involved an action for

ejectment and any resolution by the RTC

on the matter of the ownership of the

improvements of the property is merely

provisional and cannot surpass the Court’s

pronouncement in Castro and in the

present case. The petitioner should be

reminded that “in ejectment suits, the

only 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.

However, the issue of ownership may be

provisionally ruled upon for the sole

purpose of determining who is entitled to

possession de facto.”24 The MTC and RTC’s

adjudication of ownership is merely

provisional and would not bar or

prejudice an action between the same

parties involving title to the


Also, Adoracion’s subsequent acquisition

of the two parcels of land from her father

does not necessarily entail the acquisition

of the residential building. “A building by

itself is a real or immovable property

distinct from the land on which it is

constructed and therefore can be a

separate subject of contracts.”26 Whatever

Adoracion acquired from her father is still

subject to the limitation pronounced by

the Court in Castro, and the sale between

Adoracion and Tomas is confined only to

the two parcels of land and excluded the

residential building owned by the

respondents. It is beyond question that

Tomas, and subsequently, Adoracion,

could not have acquired a right greater

than what their predecessors-in-interest –

CCC and later, Union Bank –

had.27cralawred

There is also nothing on record that will

prove the petitioner’s claim that the lease

between CCC and the respondents already

expired. The fact that Adoracion

subsequently bought the property did not

ipso facto terminate the lease. While the

lease between CCC and the respondents

contained a 15-year period, to end in

1992, the petitioner failed to show that

the subsequent transferors/purchasers of

the two parcels of land opted to terminate

the lease or instituted any action for its

termination. Bancom bought the property

at an auction sale in 1979; Union Bank, in

1984; Tomas, and later, Adoracion,

acquired the property in 1993.




84



The purchaser of a piece of land which is

under a lease that is not recorded in the

Registry of property may terminate the

lease, save when there is a stipulation to

the contrary in the contract of sale, or

when the purchaser knows of the

existence of the lease.

x x x x.

It cannot be denied that the

transferors/purchasers of the property all

had knowledge of the lease between CCC

and the respondents; yet, not any of the

transferors/purchasers moved to

terminate the lease.

• Heirs of Francisco I. Narvasa, Sr., et al. Vs.

Emiliana Imbornal, et al.G.R. No.

182908. August 6, 2014

• A. Procedural Matter: Issue of

Prescription.

•

• At the outset, the Court finds that

the causes of action pertaining to

the Motherland and the First

Accretion are barred by

prescription.

•

• An action for reconveyance is one

that seeks to transfer property,

wrongfully registered by another,

to its rightful and legal

owner.36Thus, reconveyance is a

remedy granted only to the owner

of the property alleged to be

erroneously titled in another’s

name.37cralawred

•

• As the records would show, the

Amended Complaint filed by

petitioners’ predecessors-in-

interest, Francisco, et al. is for the

reconveyance of their purported

shares or portions in the following

properties: (a) the Motherland,

originally covered by OCT No. 1462

in the name of Ciriaco; (b) the First

Accretion, originally covered by

OCT No. P-318 in the name of

respondent Victoriano; and (c) the

Second Accretion, covered by OCT

No. 21481 in the name of all

respondents. To recount,

Francisco, et al. asserted co-

ownership over the Motherland,

alleging that Ciriaco agreed to hold

the same in trust for their

predecessors-in-interest Alejandra

and Balbina upon issuance of the

title in his name. Likewise, they

alleged that respondents acquired

the First and Second Accretions by

means of fraud and deceit.

•

• When property is registered in

another’s name, an implied or

constructive trust is created by law

in favor of the true owner.38Article

1456 of the Civil Code provides

that a person acquiring property

through fraud becomes, by

operation of law, a trustee of an

implied trust for the benefit of the

real owner of the property. An

action for reconveyance based on

an implied trust prescribes in ten

(10) years, reckoned from the date

of registration of the deed or the

date of issuance of the certificate

of title over the property,39 if the

plaintiff is not in

possession.However, if the plaintiff

is in possession of the property,

the action is imprescriptible.

Based on the foregoing, Francisco, et al.

had then a period of ten (10) years from

the registration of the respective titles

covering the disputed properties within

which to file their action for reconveyance,

taking into account the fact that they were

never in possession of the said

properties. Hence, with respect to the

Motherland covered by OCT No. 1462

issued on December 5, 1933 in the

name of Ciriaco, an action for

reconveyance therefor should have been

filed until December 5,1943; with respect

to the First Accretion covered by OCT No.

P-318 issued on August 15, 1952 in the

name of respondent Victoriano, an action

of the same nature should have been filed

until August 15, 1962; and, finally, with

respect to the Second Accretion covered






85

by OCT No. 21481issued on November 10,

1978in the name of the respondents, a

suit for reconveyance therefor should have

been filed until November 10, 1988.

• A judicious perusal of the records,

however, will show that the

Amended Complaint42covering all

three (3) disputed properties was

filed only on February 27, 1984.

As such, it was filed way beyond

the 10-year reglementary period

within which to seek the

reconveyance of two (2) of

theseproperties, namely, the

Motherland and the First Accretion,

with only the reconveyance action

with respect to the Second

Accretion having been seasonably

filed. Thus, considering that

respondents raised prescription as

a defense in their Amended

Answer,43 the Amended Complaint

with respect to the Motherland and

the First Accretion ought to have

been dismissed based on the said

ground, with only the cause of

action pertaining to the Second

Accretion surviving. As will be,

however, discussed below, the

entirety of the Amended

Complaint, including the aforesaid

surviving cause of action, would

falter on its substantive merits

since the existence of the implied

trust asserted in this case had not

been established. In effect, the

said complaint is completely

dismissible.

B. Substantive Matter: Existence of

an Implied Trust.

The main thrust of Francisco, et al.’s

Amended Complaint is that an implied

trust had arisen between the Imbornal

sisters, on the one hand, and Ciriaco, on

the other, with respect to the Motherland.

This implied trust is anchored on their

allegation that the proceeds from the sale

of the Sabangan property – an inheritance

of their predecessors, the Imbornal sisters

– were used for the then-pending

homestead application filed by Ciriaco

over the Motherland. As such, Francisco,

et al. claim that they are, effectively, co-

owners of the Motherland together with

Ciriaco’s heirs.

An implied trust arises, not from any

presumed intention of the parties, but by

operation of law in order to satisfy the

demands of justice and equity and to

protect against unfair dealing or downright

fraud.44 To reiterate, Article 1456 of the

Civil Code 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.”

The burden of proving the existence of a

trust is on the party asserting its

existence, and such proof must be clear

and satisfactorily show the existence of

the trust and its elements.45 While implied

trusts may be proven by oral evidence,

the evidence must be trustworthy and

received by the courts with extreme

caution, and should not be made to rest

on loose, equivocal or indefinite

declarations. Trustworthy evidence is

required because oral evidence can easily

be fabricated.46cralawred

In this case, it cannot be said, merely on

the basis of the oral evidence offered by

Francisco, et al., that the Motherland had

been either mistakenly or fraudulently

registered in favor of Ciriaco. Accordingly,

it cannot be said either that he was

merely a trustee of an implied trust

holding the Motherland for the benefit of

the Imbornal sisters or their heirs.

In this light, the Court cannot fully accept

and accord evidentiary value to the oral

testimony offered by Francisco, et al. on

the alleged verbal agreement between

their predecessors, the Imbornal sisters,

and Ciriaco with respect to the

Motherland. Weighed against the

presumed regularity of the award of the

homestead patent to Ciriaco and the lack

of evidence showing that the same was

acquired and registered by mistake or

through fraud, the oral evidence of




86

Francisco, et al. would not effectively

establish their claims of ownership. It has

been held that oral testimony as to a

certain fact, depending as it does

exclusively on human memory, is not as

reliable as written or documentary

evidence,50 especially since the purported

agreement transpired decades ago, or in

the 1920s. Hence, with respect to the

Motherland, the CA did not err in holding

that Ciriaco and his heirs are the owners

thereof, without prejudice to the rights of

any subsequent purchasers for value of

the said property.

Consequently, as Francisco, et al. failed to

prove their ownership rights over the

Motherland, their cause of action with

respect to the First Accretion and,

necessarily, the Second Accretion, must

likewise fail. A further exposition is

apropos.

Article 457 of the Civil Code states the

rule on accretion as follows: “[t]o the

owners of lands adjoining the banks of

rivers belong the accretion which they

gradually receive from the effects of the

current of the waters.”

Accordingly, therefore, alluvial deposits

along the banks of a creek or a river do

not form part of the public domain as the

alluvial property automatically belongs to

the owner of the estate to which it may

have been added. The only restriction

provided for by law is that the owner of

the adjoining property must register the

same under the Torrens system;

otherwise, the alluvial property may be

subject to acquisition through prescription

by third persons.53cralawred

In this case, Francisco, et al. and, now,

their heirs, i.e., herein petitioners, are not

the riparian owners of the Motherland to

which the First Accretion had attached,

hence, they cannot assert ownership over

the First Accretion. Consequently, as the

Second Accretion had merely attached to

the First Accretion, they also have no right

over the Second Accretion. Neither were

they able to show that they acquired these

properties through prescription as it was

not established that they were in

possession of any of them. Therefore,

whether through accretion or,

independently, through prescription, the

discernible conclusion is that Francisco et

al. and/or petitioners’ claim of title over

the First and Second Accretions had not

been substantiated, and, as a result, said

properties cannot be reconveyed in their

favor.This is especially so since on the

other end of the fray lie respondents

armed with a certificate of title in their

names covering the First and Second

Accretions coupled with their possession

thereof, both of which give rise to the

superior credibility of their own claim.

Hence, petitioners’ action for

reconveyance with respect to both

accretions must altogether fail.

• Ece Realty & Development, Inc. Vs.

Haydyn HernandezG.R. No. 212689.

August 6, 2014

Article 2209 of the New Civil Code

provides that “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.” There is no

doubt that ECE incurred in delay in

delivering the subject condominium unit,

for which reason the trial court was

justified in awarding interest to the

respondent from the filing of his

complaint. There being no stipulation as

to interest, under Article 2209 the

imposable rate is six percent (6%) by way

of damages, following the guidelines laid

down in the landmark case of Eastern

Shipping Lines v. Court of

Appeals:16cralawred

Thus, from the finality of the judgment

awarding a sum of money until it is

satisfied, the award shall be considered a

forbearance of credit, regardless of

whether the award in fact pertained to

one.20 Pursuant to Central Bank Circular

No. 416 issued on July 29, 1974, in the

absence of written stipulation the interest






87

rate to be imposed in judgments involving

a forbearance of credit was twelve percent

(12%) per annum, up from six percent

(6%) under Article 2209 of the Civil

Code. This was reiterated in Central Bank

Circular No. 905, which suspended the

effectivity of the Usury Law beginning on

January 1, 1983.

But since July 1, 2013, the rate of twelve

percent (12%) per annum from finality of

the judgment until satisfaction has been

brought back to six percent (6%). Section

1 of Resolution No. 796 of the Monetary

Board of the Bangko Sentral ng Pilipinas

dated May 16, 2013 provides: “The rate of

interest 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, shall be six percent (6%) per

annum.” Thus, the rate of interest to be

imposed from finality of judgments is now

back at six percent (6%), the rate

provided in Article 2209 of the Civil Code.

• Elizabeth Del Carmen Vs. Spouses

Restituto Sabordo and Mima Mahilim-

SabordoG.R. No. 181723. August 11,

2014

• Petitioner's main contention is that

the consignation which she and her

co-heirs made was a judicial

deposit based on a final judgment

and, as such, does not require

compliance with the requirements

of Articles 125611 and 125712 of the

Civil Code.

•

• The petition lacks merit.

•

• At the outset, the Court quotes

with approval the discussion of the

CA regarding the definition and

nature of consignation, to


•

• … consignation [is] the act of

depositing the thing due with the

court or judicial authorities

whenever the creditor cannot

accept or refuses to accept

payment, and it generally

requires a prior tender of

payment. It should be

distinguished from tender of

payment which is the

manifestation by the debtor to

the creditor of his desire to

comply with his obligation, with

the offer of immediate

performance. 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. Tender and

consignation, where validly made,

produces the effect of payment and

extinguishes the obligation.13

•

• In the case of Arzaga v.

Rumbaoa,14 which was cited by

petitioner in support of his

contention, this Court ruled that

the deposit made with the court by

the plaintiff-appellee in the said

case is considered a valid payment

of the amount adjudged, even

without a prior tender of payment

thereof to the defendants-

appellants, because the plaintiff-

appellee, upon making such

deposit, expressly petitioned the

court that the defendants-appellees

be notified to receive the tender of

payment. This Court held that

while “[t]he deposit, by itself

alone, may not have been

sufficient, but with the express

terms of the petition, there was full

and complete offer of payment

made directly to defendants-

appellants.”15 In the instant case,

however, petitioner and her co-

heirs, upon making the deposit

with the RTC, did not ask the trial

court that respondents be notified

to receive the amount that they







88

have deposited. In fact, there was

no tender of payment. Instead,

what petitioner and her co-heirs

prayed for is that respondents and

RPB be directed to interplead with

one another to determine their

alleged respective rights over the

consigned amount; that

respondents be likewise directed

to substitute the subject lots with

other real properties as collateral

for their loan with RPB and that

RPB be also directed to accept the

substitute real properties as

collateral for the said loan.

Nonetheless, the trial court

correctly ruled that interpleader is

not the proper remedy because

RPB did not make any claim

whatsoever over the amount

consigned by petitioner and her co-

heirs with the court.

•

• In the cases of Del Rosario v.

Sandico16 and Salvante v. Cruz,17

likewise cited as authority by

petitioner, this Court held that, for

a consignation or deposit with the

court of an amount due on a

judgment to be considered as

payment, there must be prior

tender to the judgment creditor

who refuses to accept it. The same

principle was reiterated in the later

case of Pabugais v.

Sahijwani.[18 As stated above,

tender of payment involves a

positive and unconditional act by

the obligor of offering legal tender

currency as payment to the obligee

for the former’s obligation and

demanding that the latter accept

the same.19 In the instant case, the

Court finds no cogent reason to

depart from the findings of the CA

and the RTC that petitioner and her

co-heirs failed to make a prior valid

tender of payment to respondents.

•

• It is settled that compliance with

the requisites of a valid

consignation is mandatory.20

Failure to comply strictly with any

of the requisites will render the

consignation void. One of these

requisites is a valid prior tender of

payment.21cralawred

•

• Under Article 1256, the only

instances where prior tender of

payment is excused are: (1) when

the creditor is absent or unknown,

or does not appear at the place of

payment; (2) when the creditor is

incapacitated to receive the

payment at the time it is due; (3)

when, without just cause, the

creditor refuses to give a receipt;

(4) when two or more persons

claim the same right to collect; and

(5) when the title of the obligation

has been lost. None of these

instances are present in the instant

case. Hence, the fact that the

subject lots are in danger of being

foreclosed does not excuse

petitioner and her co-heirs from

tendering payment to respondents,

as directed by the court.

• Krystle Realty Development Corporation,

rep. by Chairman of the Board,

William C. Cu Vs. Domingo Alibin, etc.,

et al./Caridad Rodrigueza, as

substituted by Rufino Rodrigueza Vs.

Domingo Alibin, etc., et al.G.R. No.

196117/G.R. No. 196129. August 13,

2014

• In this case, both the RTC and the

CA conducted independent

examinations of the specimen

signatures, which is authorized by

law,40 and unanimously concluded

that the questioned signature on

the Deed of Sale dated August 23,

1962 is different from the standard

signatures of Domingo as

appearing on documents submitted

in evidence by petitioner Caridad

Rodrigueza. Absent any cogent

reason to deviate from such finding

of forgery, which is the basis for

the annulment of the said deed,

the same should be deemed

conclusive and binding upon the

Court.

•










89

• Separately, on Krystle Realty’s

claim that it is a buyer in good

faith, the Court finds that the latter

cannot veer away from the

admission of its representative, Mr.

William Cu, i.e., that he was aware

of Domingo’s interest in the subject

lot, and that Caridad had no title in

her name at the time of the sale,

thus, giving rise to the conclusion

that it (Krystle Realty) had been

reasonably apprised of the

ownership controversy over the

subject lot. This notwithstanding,

records show that Krystle Realty

proceeded with the transaction

without further examining the

seller’s title and thus, could not

claim to have purchased the

subject lot in good faith. Verily,

one is considered a buyer in bad

faith not only when he purchases

real estate with knowledge of a

defect or lack of title in his seller

but also when he has knowledge of

facts which should have alerted

him to conduct further inquiry or

investigation,41 as Krystle Realty in

this case. Further, the irregularities

attending the issuance of TCT Nos.

40467, 40468, and 40469 as

pointed out by the CA are equally

indicative of lack of good faith on

Krystle Realty’s part. Indeed, what

it failed to realize is that, as one

asserting the status of a buyer in

good faith and for value, it had the

burden of proving such status,

which goes beyond a mere

invocation of the ordinary

presumption of good

faith.42cralawred

• Anchor Savings Bank (now Equicom

Savings Bank) Vs. Pinzman Realty and

Development Corporation, et al.G.R.

No. 192304. August 13, 2014

Essentially, the sole issue for our

resolution is whether the imposition of

usurious interest rates on a loan obligation

secured by a real estate mortgage will

result in the invalidity of the subsequent

foreclosure sale of the mortgage.

It is jurisprudential axiom that a

foreclosure sale arising from a usurious

mortgage cannot be given legal

effect.14 Relevantly, in Heirs of Zoilo

Espiritu v. Sps. Landrito,15 we struck down

a foreclosure sale where the amount

declared as mortgage indebtedness

involved excessive, unreasonable, and

unconscionable interest charges. In no

uncertain terms, we ruled that a

mortgagor cannot be legally compelled to

pay for a grossly inflated loan:chanRobl

In the case at bar, the unlawful interest

charge which led to the demand for

P4,577,269.42 as stated in the Notice of

Extrajudicial Sale resulted in the invalidity

of the subsequent foreclosure sale held on

June 1, 1999. The private respondents

cannot be obliged to pay an inflated or

overstated mortgage indebtedness on

account of excessive interest charges

without offending the basic tenets of due

process and equity.

The argument of the petitioner that

defects in the Notice of Sale cannot affect

the validity of the foreclosure sale cannot

be given credence. In relying on a long

litany of cases, the petitioner failed to

realize that the issue in those cases was

the validity of the Notice of Sale per se.

Meanwhile, in the present case, the issue

is the validity of the foreclosure sale in

view of the presence of usurious interest

charges.

• People's Trans-East Asis Insurance

Corporation, a.k.a. People's General

Insurance Corporation Vs. Doctors of

New Millenium Holdings, Inc.G.R. No.

172404. August 13, 2014

• The liabilities of an insurer under

the surety bond are not

extinguished when the

modifications in the principal

contract do not substantially or

materially alter the principal’s

obligations. The surety is jointly

and severally liable with its

principal when the latter defaults

from its obligations under the

principal contract.

The principal contract of the

suretyship is the signed agreement











90

The obligations of the surety to the

principal under the surety bond are

different from the obligations of the

contractor to the client under the principal

contract. The surety guarantees the

performance of the contractor’s

obligations. Upon the contractor’s default,

its client may demand against the surety

bond even if there was no privity of

contract between them. This is the

essence of a surety agreement.

In this case, the surety bond was

executed “to guarantee the repayment of

the downpayment”46 and “to secure the

full and faithful performance”47 of Million

State Development. According to the

terms of the bond, People’s General

Insurance bound itself to be liable in the

amount of P10,000,000.00 in the event

that Million State Development defaults in

its obligations.48cralawred

Petitioner, however, contends that the

inclusion of the clause “or the Project

Owner’s waiver” in Article XIII of the

signed agreement made its obligations

more onerous and, therefore, the surety

must be released from its bond.

A suretyship consists of two different

contracts: (1) the surety contract and (2)

the principal contract which it

guarantees. Since the insurer’s liability is

strictly based only on the terms stated in

the surety contract in relation to the

principal contract, any change in the

principal contract, which materially alters

the principal’s obligations would, in effect,

constitute an implied novation of the

surety

contract:ChanRoblesVirtualawlibrary

[A] surety is released from its obligation

when there is a material alteration of the

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. A

surety, however, is not released by a

change in the contract which does not

have the effect of making its obligation

more onerous.49cralawred

Petitioner insists that the principal

contract of the suretyship was the draft

agreement since it was assured by its

principal that the draft would embody the

same terms and conditions as the final

signed agreement. The insertion of the

disputed clause in the signed agreement,

it argues, “effectively deprived petitioner

of the opportunity to objectively assess

the real risk of its undertaking and fix the

reasonable rate of premium

thereon.”50cralawred

This argument is unmeritorious.

Petitioner, as the surety, had the

responsibility to read through the terms of

the principal contract; it cannot simply

rely on the assurances of its principal. It

was petitioner’s duty to carefully scrutinize

the agreement since the Insurance Code

mandates that its liability is determined

strictly in accordance with the provisions

of the principal

contract:ChanRoblesVirtualawlibrary

If petitioner had any objection to the

terms of the signed agreement, it could

have pointed it out before its principal

defaults and it becomes liable under the

surety bond. The silence of petitioner

must be taken against it since it was

responsible for exerting diligence in the

conduct of its affairs.

On the basis of petitioner’s own

admissions, the principal contract of the

suretyship is the signed agreement. The

surety, therefore, is presumed to have

acquiesced to the terms and conditions

embodied in the principal contract when it

issued its surety bond. Accordingly,

petitioner cannot argue that the insertion

of the clause in the signed agreement

constituted an implied novation of the

obligation which extinguished its

obligations as a surety since there was

nothing to

novate:ChanRoblesVirtualawlibrary

• Rowena R. Solante Vs. Commission on





91

Audit, Chairperson Ma. Gracia Pulido-

Tan, et al.G.R. No. 207348. August 19,

2014

• The Issue

•

• The resolution of the present

controversy rests on the

determination of a sole issue: who

between the City of Mandaue and

F.F. Cruz owned during the period

material the properties that were

demolished.

•

• The Court’s Ruling

•

• The petition is meritorious. The

COA and its audit team obviously

misread the relevant stipulations of

the MOA in relation to the

provisions on project completion

and termination of contract of the

Mandaue-F.F. Cruz reclamation

contract.

•

• Essentially, the COA is alleging that

the Contract of Reclamation

establishes an obligation on the

part of F.F. Cruz to finish the

project within the allotted period of

six (6) years from contract

execution in August 1989.

Prescinding from this premise, the

COA would conclude that after the

six (6)-year period, F.F. Cruz is

automatically deemed to be in

delay, the contract considered as

completed, and the ownership of

the structures built in accordance

with the MOA transferred to the

City of Mandaue.

•

• COA’s basic position and the

arguments holding it together is

untenable.

•

• On this point, the Civil Code

provision on obligations with a

period is relevant. Article 1193

thereof

provides:ChanRoblesVirtualawlibrar

y

•

• Article 1193. Obligations for

whose fulfillment a day certain

has been fixed, shall be

demandable only when that day

comes.

•

• Obligations with a resolutory period

take effect at once, but terminate

upon arrival of the day certain.

•

• A day certain is understood to

be that which must necessarily

come, although it may not be

known when.

•

• If the uncertainty consists in

whether the day will come or not,

the obligation is conditional, and it

shall be regulated by the rules of

the preceding Section. (emphasis

supplied)

•

• A plain reading of the Contract of

Reclamation reveals that the six

(6)-year period provided for

project completion, or, with like

effect, termination of the contract

was a mere estimate and cannot

be considered a period or a “day

certain” in the context of the

aforequoted Art. 1193. To be clear,

par. 15 of the Contract of

Reclamation states: “[T]he project

is estimated to be completed in six

(6) years.” As such, the lapse of six

(6) years from the perfection of the

contract did not, by itself, make

the obligation to finish the

reclamation project demandable,

such as to put the obligor in a state

of actionable delay for its inability

to finish. Thus, F.F. Cruz cannot be

deemed to be in delay.

Parenthetically, the Ombudsman,

in a Resolution of June 29, 2006 in

OMB-V-C-03-0173-C, espoused a

similar view in dismissing the

complaint against Solante,


•

• A careful reading of the pertinent

section of the Contract of

Reclamation between F.F. Cruz and

Mandaue City, however, would






92

confirm respondents Rances-

Solante[’s] and Sungahid’s view

that herein respondent Cruz was

still the owner of the subject

properties at the time these were

demolished. Indeed, the Contract

specifies that the six (6)-year

period was no more than an

estimate of the project completion.

It was not a fixed period

agreed upon. Being so, the

mere lapse of six (6) years

from the execution of the

Contract, did not by itself deem

the reclamation project

completed, much less bring

about the fulfillment of the

condition stipulated in the MOA

(on the shift of ownership over

the demolished properties).

Herein respondent Cruz, and/or

his company, at least on this

particular regard, can be said

to be still the owner of the

structures along Plaridel

Extension x x x, when these

were demolished to give way to

road widening. It was nothing

but equitable that they get

compensated for the damages

caused by the demolition.16

(emphasis supplied)

•

• Put a bit differently, the lapse of

six (6) years from the perfection of

the subject reclamation contract,

without more, could not have

automatically vested Mandaue City,

under the MOA, with ownership of

the structures.

•

• Moreover, even if we consider the

allotted six (6) years within which

F.F. Cruz was supposed to

complete the reclamation project,

the lapse thereof does not

automatically mean that F.F. Cruz

was in delay. As may be noted, the

City of Mandaue never made a

demand for the fulfillment of its

obligation under the Contract of

Reclamation. Article 1169 of the

Civil Code on the interaction of

demand and delay and the

exceptions to the requirement of

demand relevantly

states:ChanRoblesVirtualawlibrary

•

• Article 1169. Those obliged to

deliver or to do something

incur in delay from the time the

obligee judicially or

extrajudicially demands from

them the fulfillment of their

obligation.

•

• However, the demand by the

creditor shall not be necessary in

order that delay may exist:

• (1) When the obligation or the law

expressly so declares; or

•

• (2) When from the nature and the

circumstances of the obligation it

appears that the designation of the

time when the thing is to be

delivered or the service is to be

rendered was a controlling motive

for the establishment of the

contract; or

•

• (3) When demand would be

useless, as when the obligor has

rendered it beyond his power to

perform.

• 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 the instant case, the records are

bereft of any document whence to

deduce that the City of Mandaue

exacted from F.F. Cruz the

fulfillment of its obligation under

the reclamation contract. And to be

sure, not one of the exceptions to

the requisite demand under Art.

1169 is established, let alone

asserted. On the contrary, the

then city mayor of Mandaue, no

less, absolved F.F. Cruz from

incurring under the premises in




93

delay.

As it were, the Mandaue-F.F.Cruz MOA

states that the structures built by F.F.

Cruz on the property of the city will belong

to the latter only upon the completion of

the project. Clearly, the completion of the

project is a suspensive condition that has

yet to be fulfilled. Until the condition

arises, ownership of the structures

properly pertains to F.F. Cruz.

• To be clear, the MOA does not

state that the structures shall inure

in ownership to the City of

Mandaue after the lapse of six (6)

years from the execution of the

Contract of Reclamation. What the

MOA does provide is that

ownership of the structures shall

vest upon, or ipso facto belong to,

the City of Mandaue when the

Contract of Reclamation shall have

been completed. Logically, before

such time, or until the agreed

reclamation project is actually

finished, F.F. Cruz owns the

structures. The payment of

compensation for the demolition

thereof is justified. The

disallowance of the payment is

without factual and legal basis.

COA then gravely abused its

discretion when it decreed the

disallowance.

• 188289. August 20, 2014

• In summary and review, the basic

facts are: David and Leticia are US

citizens who own properties in the

USA and in the Philippines. Leticia

obtained a decree of divorce from

the Superior Court of California in

June 2005 wherein the court

awarded all the properties in the

USA to Leticia. With respect to

their properties in the Philippines,

Leticia filed a petition for judicial

separation of conjugal properties.

•

• At the outset, the trial court erred

in recognizing the divorce decree

which severed the bond of

marriage between the parties. In

Corpuz v. Sto. Tomas,13 we stated

that:chanRoblesvirtualLawlibrary

•

• The starting point in any

recognition of a foreign divorce

judgment is the acknowledgment

that our courts do not take judicial

notice of foreign judgments and

laws. Justice Herrera explained

that, as a rule, “no sovereign is

bound to give effect within its

dominion to a judgment rendered

by a tribunal of another country.”

This means that the foreign

judgment and its authenticity must

be proven as facts under our rules

on evidence, together with the

alien’s applicable national law to

show the effect of the judgment on

the alien himself or herself. The

recognition may be made in an

action instituted specifically for the

purpose or in another action where

a party invokes the foreign decree

as an integral aspect of his claim or

defense.14

•

• The requirements of presenting the

foreign divorce decree and the

national law of the foreigner must

comply with our Rules of Evidence.

Specifically, for Philippine courts to

recognize a foreign judgment

relating to the status of a

marriage, a copy of the foreign

judgment may be admitted in

evidence and proven as a fact

under Rule 132, Sections 24 and

25, in relation to Rule 39, Section

48(b) of the Rules of

Court.15cralawlawlibrary

•

• Under Section 24 of Rule 132, the

record of public documents of a

sovereign authority or tribunal may

be proved by: (1) an official

publication thereof or (2) a copy

attested by the officer having the

legal custody thereof. Such official

publication or copy must be

accompanied, if the record is not

kept in the Philippines, with a

certificate that the attesting officer

has the legal custody thereof. The




94

certificate may be issued by any of

the authorized Philippine embassy

or consular officials stationed in the

foreign country in which the record

is kept, and authenticated by the

seal of his office. The attestation

must state, in substance, that the

copy is a correct copy of the

original, or a specific part thereof,

as the case may be, and must be

under the official seal of the

attesting officer.

•

• Section 25 of the same Rule states

that whenever a copy of a

document or record is attested for

the purpose of evidence, the

attestation must state, in

substance, that the copy is a

correct copy of the original, or a

specific part thereof, as the case

may be. The attestation must be

under the official seal of the

attesting officer, if there be any, or

if he be the clerk of a court having

a seal, under the seal of such

court.

•

• Based on the records, only the

divorce decree was presented in

evidence. The required certificates

to prove its authenticity, as well as

the pertinent California law on

divorce were not presented.

•

• It may be noted that in Bayot v.

Court of Appeals,16 we relaxed the

requirement on certification where

we held that “[petitioner therein]

was clearly an American citizen

when she secured the divorce and

that divorce is recognized and

allowed in any of the States of the

Union, the presentation of a copy

of foreign divorce decree duly

authenticated by the foreign

court issuing said decree is, as

here, sufficient.” In this case

however, it appears that there is

no seal from the office where the

divorce decree was obtained.

•

• Even if we apply the doctrine of

processual presumption17 as the

lower courts did with respect to the

property regime of the parties, the

recognition of divorce is entirely a

different matter because, to begin

with, divorce is not recognized

between Filipino citizens in the

Philippines.

•

• Absent a valid recognition of the

divorce decree, it follows that the

parties are still legally married in

the Philippines. The trial court thus

erred in proceeding directly to

liquidation.

•

• As a general rule, any modification

in the marriage settlements must

be made before the celebration of

marriage. An exception to this rule

is allowed provided that the

modification is judicially approved

and refers only to the instances

provided in Articles 66, 67, 128,

135 and 136 of the Family

Code.18cralawlawlibrary

•

• Leticia anchored the filing of the

instant petition for judicial

separation of property on

paragraphs 4 and 6 of Article 135

of the Family Code

Separation in fact for one year as a

ground to grant a judicial separation of

property was not tackled in the trial

court’s decision because, the trial court

erroneously treated the petition as

liquidation of the absolute community of

properties.

The records of this case are replete with

evidence that Leticia and David had

indeed separated for more than a year

and that reconciliation is highly

improbable. First, while actual

abandonment had not been proven, it is

undisputed that the spouses had been

living separately since 2003 when David

decided to go back to the Philippines to

set up his own business. Second, Leticia

heard from her friends that David has

been cohabiting with Estrellita Martinez,

who represented herself as Estrellita




95

Noveras. Editha Apolonio, who worked in

the hospital where David was once

confined, testified that she saw the name

of Estrellita listed as the wife of David in

the Consent for Operation form.20 Third

and more significantly, they had filed for

divorce and it was granted by the

California court in June 2005.

Having established that Leticia and David

had actually separated for at least one

year, the petition for judicial separation of

absolute community of property should be

granted.

The grant of the judicial separation of the

absolute community property

automatically dissolves the absolute

community regime, as stated in the 4th

paragraph of Article 99 of the Family

Code, thus:chanRoblesvirtualLawlibrary

Art. 99. The absolute community

terminates:chanRoblesvirtualLawlibrary

(1) Upon the death of either spouse;

(2) When there is a decree of legal

separation;

(3) When the marriage is annulled or

declared void; or

(4) In case of judicial separation of

property during the marriage under

Articles 134 to 138. (Emphasis

supplied).

Under Article 102 of the same Code,

liquidation follows the dissolution of the

absolute community regime and the

following procedure should

apply:chanRoblesvirtualLawlibrary

Art. 102. Upon dissolution of the absolute

community regime, the following

procedure shall

apply:chanRoblesvirtualLawlibrary

(1) An inventory shall be prepared, listing separately all the properties of the absolute

community and the exclusive properties of each spouse.

(2) The debts and obligations of the absolute community shall be paid out of its assets. In case

of insufficiency of said assets, the spouses shall be solidarily liable for the unpaid balance

with their separate properties in accordance with the provisions of the second paragraph of

Article 94.

(3) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to

each of them.

(4) The net remainder of the properties of the absolute community shall constitute its net

assets, which shall be divided equally between husband and wife, unless a different

proportion or division was agreed upon in the marriage settlements, or unless there has

been a voluntary waiver of such share provided in this Code. For purposes of computing the

net profits subject to forfeiture in accordance with Articles 43, No. (2) and 63, No. (2), the

said profits shall be the increase in value between the market value of the community

property at the time of the celebration of the marriage and the market value at the time of

its dissolution.

(5) The presumptive legitimes of the common children shall be delivered upon partition, in

accordance with Article 51.

(6) Unless otherwise agreed upon by the parties, in the partition of the properties, the conjugal

dwelling and the lot on which it is situated shall be adjudicated to the spouse with whom

the majority of the common children choose to remain. Children below the age of seven

years are deemed to have chosen the mother, unless the court has decided otherwise. In

case there is no such majority, the court shall decide, taking into consideration the best

interests of said children.

At the risk of being repetitious, we will not

remand the case to the trial court.

Instead, we shall adopt the modifications

made by the Court of Appeals on the trial

court’s Decision with respect to

liquidation.

• We agree with the appellate court

that the Philippine courts did not

acquire jurisdiction over the

California properties of David and

Leticia. Indeed, Article 16 of the

Civil Code clearly states that real

property as well as personal

property is subject to the law of

the country where it is situated.

Thus, liquidation shall only be

limited to the Philippine properties.

• Fe H. Okabe Vs. Ernesto A. SaturninoG.R.

No. 196040. August 26, 2014

• In essence, the issue is whether or

not, in the case at bar, an ex-parte

petition for the issuance of a writ of

possession was the proper remedy

of the petitioner in obtaining

possession of the subject property.

•

• Section 7 of Act No. 3135,28 as

amended by Act No. 4118,29

state:XXXXXXChanRoXblesVirtuala

wlibrary XXXX

Under the provision cited above, the

purchaser or the mortgagee who is also

the purchaser in the foreclosure sale may





96

apply for a writ of possession during the

redemption period,30 upon an ex-parte

motion and after furnishing a bond.

• In GC Dalton Industries, Inc. v.

Equitable PCI Bank,31 the Court

held that the issuance of a writ of

possession to a purchaser in an

extrajudicial foreclosure is

summary and ministerial in nature

as such proceeding is merely an

incident in the transfer of title.

Also, in China Banking Corporation

v. Ordinario,32 we held that under

Section 7 of Act No. 3135, the

purchaser in a foreclosure sale is

entitled to possession of the

property.

Here, petitioner does not fall under the

circumstances of the aforequoted case and

the provisions of Section 7 of Act No.

3135, as amended, since she bought the

property long after the expiration of the

redemption period. Thus, it is PNB, if it

was the purchaser in the foreclosure sale,

or the purchaser during the foreclosure

sale, who can file the ex-parte petition for

the issuance of writ of possession during

the redemption period, but it will only

issue upon compliance with the provisions

of Section 7 of Act No. 3135.

In fact, the Real Estate Mortgage35

contains a waiver executed by the

mortgagor in favor of the mortgagee,

wherein the mortgagor even waives the

issuance of the writ of possession in favor

of the mortgagee. The contract provides

that “effective upon the breach of any

condition of the mortgage and in addition

to the remedies herein stipulated, the

mortgagee is hereby likewise appointed

Attorney-in-Fact of the Mortgagor/s with

full power and authority with the use of

force, if necessary, to take actual

possession of the mortgaged property/ies

without the necessity of any judicial order

or permission, or power, to collect rents,

to eject tenants, to lease or sell the

mortgaged property/ies or any part

thereof at a private sale without previous

notice or advertisement of any kind and

execute the corresponding bills of sale,

lease or other agreement that may be

deemed convenient to make repairs or

improvements on the mortgaged

property/ies and pay for the same and

perform any other act which the

Mortgagee may deem convenient for the

proper administration of the mortgaged

property/ies.”36cralawred

Moreover, even without the waiver, the

issuance of the writ of possession is

ministerial and non-adversarial for the

only issue involved is the purchaser’s right

to possession; thus, an ex-parte

proceeding is allowed.

Nevertheless, the purchaser is not left

without any remedy. Section 6 of Act No.

3135, as amended by Act No. 4118,


SEC. 6. In all cases in which an

extrajudicial sale is made under the

special power herein before referred to,

the debtor, his successor-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-six, inclusive, of the Code of Civil

Procedure, in so far as these are not

inconsistent with the provisions of this

Act.

Consequently, the provision of Section 33,

Rule 39 of the Rules of Court relative to

an execution sale is made applicable to

extrajudicial foreclosure of real estate

mortgages by virtue of Section 6 of Act

No. 3135, as amended.37 Section 33, Rule

39 of the Rules of Court


SEC. 33. Deed and possession to be given

at expiration of redemption period; by

whom executed or given. – If no

redemption be made within one (1) year

from the date of registration of the

certificate of sale, the purchaser is entitled




97

to a conveyance and possession of the

property; or, if so redeemed whenever

sixty (60) days have elapsed and no other

redemption has been made, and notice

thereof given, and the time for

redemption has expired, the last

redemptioner is entitled to the conveyance

and possession; but in all cases the

judgment obligor shall have the entire

period of one (1) year from the date of

registration of the sale to redeem the

property. The deed shall be executed by

the officer making the sale or his

successor in office, and in the latter case

shall have the same validity as though the

officer making the sale had continued in

office and executed it.

Upon the expiration of the right of

redemption, the purchaser or

redemptioner shall be substituted to and

acquire all the rights, title, interest and

claim of the judgment obligor to the

property as of the time of the levy. The

possession of the property shall be given

to the purchaser or last redemptioner by

the same officer unless a third party is

actually holding the property

adversely to the judgment obligor.38

From the foregoing, upon the expiration of

the right of redemption, the purchaser or

redemptioner shall be substituted to and

acquire all the rights, title, interest and

claim of the judgment debtor to the

property, and its possession shall be given

to the purchaser or last redemptioner

unless a third party is actually holding the

property adversely to the judgment

debtor. In which case, the issuance of the

writ of possession ceases to be ex-parte

and non-adversarial. Thus, where the

property levied upon on execution is

occupied by a party other than a

judgment debtor, the procedure is for the

court to conduct a hearing to determine

the nature of said possession, i.e.,

whether or not he is in possession of the

subject property under a claim adverse to

that of the judgment debtor.

It is but logical that Section 33, Rule 39 of

the Rules of Court be applied to cases

involving extrajudicially foreclosed

properties that were bought by a

purchaser and later sold to third-party-

purchasers after the lapse of the

redemption period. The remedy of a writ

of possession, a remedy that is available

to the mortgagee-purchaser to acquire

possession of the foreclosed property from

the mortgagor, is made available to a

subsequent purchaser, but only after

hearing and after determining that the

subject property is still in the possession

of the mortgagor. Unlike if the purchaser

is the mortgagee or a third party during

the redemption period, a writ of

possession may issue ex-parte or without

hearing. In other words, if the purchaser

is a third party who acquired the property

after the redemption period, a hearing

must be conducted to determine whether

possession over the subject property is

still with the mortgagor or is already in

the possession of a third party holding the

same adversely to the defaulting debtor or

mortgagor. If the property is in the

possession of the mortgagor, a writ of

possession could thus be

issued. Otherwise, the remedy of a writ of

possession is no longer available to such

purchaser, but he can wrest possession

over the property through an ordinary

action of ejectment.

• To be sure, immediately requiring

the subsequent purchaser to file a

separate case of ejectment instead

of a petition for the issuance of a

writ of possession, albeit not ex-

parte, will only prolong the

proceedings and unduly deny the

subsequent purchaser of

possession of the property which

he already bought.

• Heirs of Spouses Joaquin Manguardia ans

Susana Manalo, et al. Vs. Heirs of

Simplicio Valles and Marta Valles, et

al.G.R. No. 177616. August 27, 2014

“[T]he burden of proving the status of a

purchaser in good faith and for value lies upon

him who asserts that standing.”1cralawred

Petitioners failed to discharge the burden

of proving that their predecessors-in-interest








98

were buyers in good faith.

Petitioners do not dispute that the original Deed

of Absolute Sale is a forgery because the alleged

vendors were already long dead when the

questioned deed was executed. While their

ownership rights are ultimately based upon this

forged deed, petitioners assert that the good

faith of their predecessors-in-interest validates

their title over the lots.

The Court, however, disagrees. It must be noted

that the relationships by consanguinity or affinity,

between and among the vendors and vendees in

the series of sales of the subject properties, were

established by testimonial evidence. Again, these

were not contradicted by petitioners. And as

aptly concluded by the trial court, it can

reasonably be assumed from these relations that

the spouses Manguardia and Leonardo were not

buyers in good faith,


Are the Manguardias and Leonardo Araza third

persons x x x who are innocent purchasers for

value?

The general rule x x x that a person dealing with

registered land has a right to rely on the Torrens

Certificate of Title without need of inquiring

further cannot apply when the party has actual

knowledge of facts and circumstances that would

impel a reasonably cautious man to make such

inquiry or when the purchaser has knowledge of

a defect or lack of title in his vendor or of

sufficient facts to induce a reasonably prudent

man to [inquire] into the status of the title of the

property in litigation (Voluntad vs. Dizon, 313

SCRA 209). If circumstances exist that [require]

a prudent man to investigate and he does not, he

is deemed to have acted in mala fide, and his

mere refusal to believe that a defect exists or his

willful closing of his eyes to the possibility of the

existence of a defect in his vendor’s title will not

make him an innocent purchaser for value

(Voluntad vs. Dizon, supra).

Spouses Soledad Manalo and Pedro Araza

purchased the properties in question from

Roberto Araza, x x x [Visitacion] Valles Araza’s

son. The father of Roberto Araza, Panfilo Araza,

was Pedro Araza’s brother, making Pedro Araza

the uncle of Roberto Araza. Encarnacion Ordas,

one of the two [v]endors of the land in question

to Pedro Araza and Soledad Manalo Araza, is

Roberto Araza’s cousin as the mother of

Encarnacion Ordas and Roberto’s mother, x x x

[Visitacion] are sisters. Joaquin Manguardia, on

the other hand, is the husband of Susana Manalo,

niece of Soledad Manalo Araza, being the

daughter of Jose Manalo, Soledad’s brother.

Leonardo Araza, on the other hand is x x x

[Visitacion] Valles-Araza’s son, whose father,

Panfilo Araza is brother of Pedro Araza, Soledad

Araza’s husband. x x x [Visitacion] is a sister of

Simplicio Valles and Marta Valles, both of whom

were dead when the Deed of Sale, exh. “B” was

purportedly executed in 1968, selling the

property, Lot 835, to x x x [Visitacion’s] brothers,

Rustico and Melquiades, and [Visitacion’s] nieces,

namely: Encarnacion Ordas and Adelaida Valles.

The transfers of the properties in question did not

go far, but [were] limited to close family relatives

by affinity and consanguinity. Circuitous and

convoluted [as they may be], and involving more

than two families but belonging to a clan which,

although living in different barangays, such

barangays belong to the same city and [are]

adjacent to each other. Good faith among the

parties to the series of conveyances is therefore

hard if not impossible to presume.60

Unfortunately for the petitioners, they did not

provide any sufficient evidence that would

convince the courts that the proximity of

relationships between/among the vendors and

vendees in the questioned sales was not used to

perpetrate fraud. Thus there is nothing to dispel

the notion that apparent anomalies attended the

transactions among close relations. Glaringly

emphasized were the established facts that the

parties to the alleged original sale in 1968, and

the witnesses thereto were close relatives

(siblings, children and nephew of Marta and

Simplicio). Similarly, the vendors and vendees in

subsequent sale transactions were either the co-

vendees themselves in the original sale, first

cousins, and close relatives by consanguinity and

affinity. In addition, these transactions between

close relatives happened at a time when

everybody knew everyone, in a place where

vendees lived in close proximity to the vendors,

and to the disputed properties.




99

This is not to say however, that a sale between

close relatives is automatically anomalous. It is

just that in this particular case, the

circumstances strongly show that fraud was

committed by relatives against relatives and the

evidence adduced by petitioners was insufficient

to remove the cloud of doubt pertaining to the

good faith of their predecessors-in-interest in

acquiring the properties in question.

It must be emphasized that “the burden of

proving the status of a purchaser in good faith

and for value lies upon him who asserts that

standing. In discharging the burden, it is not

enough to invoke the ordinary presumption of

good faith that everyone is presumed to act in

good faith. The good faith that is here essential is

integral with the very status that must be

proved. x x x Petitioners have failed to discharge

that burden.”61cralawr

Acquisitive prescription is not applicable

in the case at bar.

Petitioners’ contention of acquisitive prescription

cannot prevail over the rights of respondents. To

begin with, the disputed property is a duly

registered land under the Torrens system. “It is

well-settled that no title to registered land in

derogation of that of the registered owner shall

be acquired by prescription or adverse

possession. Neither can prescription be allowed

against the hereditary successors of the

registered owner, because they merely step into

the shoes of the decedent and are merely the

continuation of the personality of their

predecessor[-]in[-]interest. Consequently, since

a certificate of registration covers it, the disputed

land cannot be acquired by prescription

regardless of petitioner's good faith.”62cralawred

Laches cannot be used to perpetrate injustice.

On the claim of laches, this Court reiterates that

“[l]aches is based upon equity and the public

policy of discouraging stale claims. Since laches

is an equitable doctrine, its application is

controlled by equitable considerations. It cannot

be used to defeat justice or to [perpetrate] fraud

and injustice. Thus, the assertion of laches to

thwart the claim of respondents is foreclosed

because the [d]eed upon which [petitioners base

their] claim is[, first and foremost,] a

forgery.”63cralawred

• Philnico Industrial Corporation (formerly

Philnico Mining and Industrial

Corporation) Vs. Privatization and

Management Office (formerly Asset

Privatization Trust)/Privatization and

Management Office (formerly Asset

Privatization Trust) Vs. Philnico

Industrial Corporation (formerly

Philnico Mining and Industrial

Corporation)G.R. Nos. 199420/199432.

August 27, 2014

• RULING OF THE COURT

•

• The allegations and arguments of

PIC and PMO in their respective

Petitions essentially boil down to

two fundamental issues: (1)

Whether Section 8.02 of the ARDA

on ipso facto or automatic

reversion of the PPC shares of

stock to PMO in case of default by

PIC constitutes pactum

commissorium; and (2) Whether

the Writ of Preliminary Injunction

should be dissolved.

•

• The Court resolves the first issue in

the positive and the second issue

in the negative.

Section 8.02 of the ARDA

constitutes pactum commissorium

and, thus, null and void for being

contrary to Article 2088 of the Civil

Code.

Article 1305 of the Civil Code allows

contracting parties to establish such

stipulation, clauses, terms, and conditions

as they may deem convenient, provided,

however, that they are not contrary to

law, morals, good customs, public order,

or public policy.

Pactum commissorium is among the

contractual stipulations that are deemed

contrary to law. It is defined as “a

stipulation empowering the creditor to

appropriate the thing given as guaranty

for the fulfillment of the obligation in the

event the obligor fails to live up to his

undertakings, without further formality,

such as foreclosure proceedings, and a














100

public sale.”33 It is explicitly prohibited

under Article 2088 of the Civil Code which


ART. 2088. The creditor cannot

appropriate the things given by way of

pledge or mortgage, or dispose of

them. Any stipulation to the contrary is

null and void.

There are two elements for pactum

commissorium to exist: (1) that there

should be a pledge or mortgage wherein a

property is pledged or mortgaged by way

of security for the payment of the principal

obligation; and (2) that there should be a

stipulation for an automatic appropriation

by the creditor of the thing pledged or

mortgaged in the event of nonpayment of

the principal obligation within the

stipulated period.34cralawred

Both elements of pactum commissorium

are present in the instant case: (1) By

virtue of the Pledge Agreement dated May

2, 1997, PIC pledged its PPC shares of

stock in favor of PMO as security for the

fulfillment of the former’s obligations

under the ARDA dated May 10, 1996 and

the Pledge Agreement itself; and (2)

There is automatic appropriation as under

Section 8.02 of the ARDA, in the event of

default by PIC, title to the PPC shares of

stock shall ipso facto revert from PIC to

PMO without need of demand.

PMO though insists that there is no valid

Pledge Agreement, arguing that PIC could

not have validly pledged the PPC shares of

stock because it is not yet the absolute

owner of said shares. According to PMO,

the sale of the PPC shares of stock to PIC

is subject to the resolutory condition of

nonpayment by PIC of the installments

due on the purchase price.

Again, the Court is unconvinced.

Among the requirements of a contract of

pledge is that the pledgor is the absolute

owner of the thing pledged.37 Based on

the provisions of the ARDA, ownership of

the PPC shares of stock had passed on to

PIC, hence, enabling PIC to pledge the

very same shares to PMO. In accordance

with Section 2.07(a)(1) and 2.07(a)(2) of

the ARDA, PMO had transferred to PIC all

rights, title, and interests in and to the

PPC shares of stock, and delivered to PIC

the certificates for said shares for

cancellation and replacement of new

certificates already in the name of PIC. In

addition, Section 2.07(b) of the ARDA

explicitly declares that PIC as buyer shall

exercise all the rights, including the right

to vote, of a shareholder in respect of the

PPC shares of stock.

PMO cannot maintain that the ownership

of the PPC shares of stock did not pass on

to PIC, but in the same breath claim that

non-payment by PIC of the installments

due on the purchase price is a resolutory

condition for the contract of sale – these

two arguments are actually

contradictory. As the Court clearly

explained in Heirs of Paulino Atienza v.

Espidol38:ChanRoblesVirtualawlibrary

Regarding the right to cancel the

contract for nonpayment of an

installment, there is need to initially

determine if what the parties had was a

contract of sale or a contract to sell. In a

contract of sale, the title to the

property passes to the buyer upon the

delivery of the thing sold. In a contract

to sell, on the other hand, the ownership

is, by agreement, retained by the seller

and is not to pass to the vendee until full

payment of the purchase price. In the

contract of sale, the buyer’s

nonpayment of the price is a negative

resolutory condition; in the contract to

sell, the buyer’s full payment of the price

is a positive suspensive condition to the

coming into effect of the agreement. In

the first case, the seller has lost and

cannot recover the ownership of the

property unless he takes action to set

aside the contract of sale. In the

second case, the title simply remains in

the seller if the buyer does not comply

with the condition precedent of making

payment at the time specified in the

contract. x x x. (Emphases supplied,

citation omitted.)




101

So that it could invoke the resolutory

condition of nonpayment of an

installment, PMO must necessarily

concede that its contract with PIC was a

one of sale and that ownership of the PPC

shares of stock had indeed passed on to

PIC. And even then, having lost

ownership of the shares, PMO cannot

automatically recover the same without

taking steps to set aside the contract of

sale.

Moreover, the general rule is that in the

absence of a stipulation, a party cannot

unilaterally and extrajudicially rescind a

contract. A party must invoke the right to

rescind a contract judicially.39 It is also

settled that the rescission of a contract

based on Article 1191 of the Civil Code

requires mutual restitution to bring back

the parties to their original situation prior

to the inception of the

contract. Rescission creates the obligation

to return the object of the contract. It can

be carried out only when the one who

demands rescission can return whatever

he may be obliged to restore.40cralawred

Even though PMO had previously

acknowledged the need for restitution or

restoration following rescission, it also

qualified that such restitution or

restoration shall still be “subject x x x to

the fair determination of the amount to be

restored as may be deemed reasonable

and substantiated.”41cralawred

Section 8.02 of the ARDA provides for the

ipso facto reversion of the pledged shares

of PIC to PMO in case of default on the

part of the former, which as explained

above, is prohibited by Article 2088 of the

Civil Code. The said Section does not

mention the broader concept of rescission

of the entire ARDA.

Edelina T. Ando Vs. Department of Foreign

AffairsG.R. No. 195432. August 27, 2014

THE COURT’S RULING

The Court finds the Petition to be without merit.

First, with respect to her prayer to compel the

DFA to issue her passport, petitioner incorrectly

filed a petition for declaratory relief before the

RTC. She should have first appealed before

the Secretary of Foreign Affairs, since her

ultimate entreaty was to question the DFA’s

refusal to issue a passport to her under her

second husband’s name.

Under the Implementing Rules and Regulations

(IRR) of R.A. 8239, which was adopted on 25

February 1997, the following are the additional

documentary requirements before a married

woman may obtain a passport under the name of

her spouse:ChanRoblesVirtualawlibrary

SECTION 2. The issuance of passports to

married, divorced or widowed women shall be

made in accordance with the following

provisions:ChanRoblesVirtualawlibrary

a) In case of a woman who is married and who

decides to adopt the surname of her husband

pursuant to Art. 370 of Republic Act No. 386, she

must present the original or certified true copy of

her marriage contract, and one photocopy

thereof.

In addition thereto, a Filipino who contracts

marriage in the Philippines to a foreigner, shall be

required to present a Certificate of Attendance in

a Guidance and Counselling Seminar conducted

by the CFO when applying for a passport for the

first time.

b) In case of annulment of marriage, the

applicant must present a certified true copy of

her annotated Marriage Contract or Certificate of

Registration and the Court Order effecting the

annulment.

c) In case of a woman who was divorced by her

alien husband, she must present a certified true

copy of the Divorce Decree duly authenticated by

the Philippine Embassy or consular post which

has jurisdiction over the place where the divorce

is obtained or by the concerned foreign

diplomatic or consular mission in the Philippines.

When the divorcee is a Filipino Muslim, she must

present a certified true copy of the Divorce

Decree or a certified true copy of the Certificate

of Divorce from the Shari’ah Court or the OCRG.






102

d) In the event that marriage is dissolved by the

death of the husband, the applicant must present

the original or certified true copy of the Death

Certificate of the husband or the Declaration of

Presumptive Death by a Civil or Shari’ah Court, in

which case the applicant may choose to continue

to use her husband’s surname or resume the use

of her maiden surname.

From the above provisions, it is clear that for

petitioner to obtain a copy of her passport under

her married name, all she needed to present

were the following: (1) the original or certified

true copy of her marriage contract and one

photocopy thereof; (2) a Certificate of

Attendance in a Guidance and Counseling

Seminar, if applicable; and (3) a certified true

copy of the Divorce Decree duly authenticated by

the Philippine Embassy or consular post that has

jurisdiction over the place where the divorce is

obtained or by the concerned foreign diplomatic

or consular mission in the Philippines.

In this case, petitioner was allegedly told that she

would not be issued a Philippine passport under

her second husband’s name. Should her

application for a passport be denied, the

remedies available to her are provided in Section

9 of R.A. 8239, which reads


Sec. 9. Appeal. — Any person who feels

aggrieved as a result of the application of this Act

of the implementing rules and regulations issued

by the Secretary shall have the right to appeal to

the Secretary of Foreign Affairs from whose

decision judicial review may be had to the Courts

in due course.

Clearly, she should have filed an appeal with the

Secretary of the DFA in the event of the denial of

her application for a passport, after having

complied with the provisions of R.A. 8239.

Petitioner’s argument that her application “cannot

be said to have been either denied, cancelled or

restricted by [the DFA], so as to make her an

aggrieved party entitled to appeal”,7 as instead

she “was merely told”8 that her passport cannot

be issued, does not persuade. The law provides a

direct recourse for petitioner in the event of the

denial of her application.

Second, with respect to her prayer for the

recognition of her second marriage as valid,

petitioner should have filed, instead, a petition

for the judicial recognition of her foreign

divorce from her first husband.

In Garcia v. Recio,9 we ruled that a divorce

obtained abroad by an alien may be recognized in

our jurisdiction, provided the decree is valid

according to the national law of the foreigner.

The presentation solely of the divorce decree is

insufficient; both the divorce decree and the

governing personal law of the alien spouse who

obtained the divorce must be proven. Because

our courts do not take judicial notice of foreign

laws and judgment, our law on evidence requires

that both the divorce decree and the national law

of the alien must be alleged and proven and like

any other fact. 10cralawred

While it has been ruled that a petition for the

authority to remarry filed before a trial court

actually constitutes a petition for declaratory

relief,11 we are still unable to grant the prayer of

petitioner. As held by the RTC, there appears to

be insufficient proof or evidence presented on

record of both the national law of her first

husband, Kobayashi, and of the validity of the

divorce decree under that national law. 12 Hence,

any declaration as to the validity of the divorce

can only be made upon her complete submission

of evidence proving the divorce decree and the

national law of her alien spouse, in an action

instituted in the proper forum.

• ECE Realty and Development, Inc. Vs.

Rachel G. MandapG.R. No. 196182.

September 1, 2014

• The basic issue in the present case

is whether petitioner was guilty of

fraud and if so, whether such fraud

is sufficient ground to nullify its

contract with respondent.

•

• Article 1338 of the Civil Code

provides that “[t]here is fraud

when through insidious words or

machinations of one of the

contracting parties, the other is

induced to enter into a contract

which, without them, he would not

have agreed to.”

•

• In addition, under Article 1390 of

http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/september2014/196182.pdf





103

the same Code, a contract is

voidable or annullable “where the

consent is vitiated by mistake,

violence, intimidation, undue

influence or fraud.”

•

• Also, Article 1344 of the same

Code provides that “[i]n order that

fraud may make a contract

voidable, it should be serious and

should not have been employed by

both contracting parties.”

•

• Jurisprudence has shown that in

order to constitute fraud that

provides basis to annul contracts, it

must fulfill two conditions.

•

• First, the fraud must be dolo

causante or it must be fraud in

obtaining the consent of the

party.16 This is referred to as

causal fraud. The deceit must be

serious. The fraud is serious when

it is sufficient to impress, or to lead

an ordinarily prudent person into

error; that which cannot deceive a

prudent person cannot be a ground

for nullity.17 The circumstances of

each case should be considered,

taking into account the personal

conditions of the victim.18cralawred

•

• Second, the fraud must be proven

by clear and convincing evidence

and not merely by a preponderance

thereof.19cralawred

•

• In the present case, this Court

finds that petitioner is guilty of

false representation of a fact. This

is evidenced by its printed

advertisements indicating that its

subject condominium project is

located in Makati City when, in

fact, it is in Pasay City. The Court

agrees with the Housing and Land

Use Arbiter, the HLURB Board of

Commissioners, and the Office of

the President, in condemning

petitioner's deplorable act of

making misrepresentations in its

advertisements and in issuing a

stern warning that a repetition of

this act shall be dealt with more

severely.

•

• However, insofar as the present

case is concerned, the Court

agrees with the Housing and Land

Use Arbiter, the HLURB Board of

Commissioners, and the Office of

the President, that the

misrepresentation made by

petitioner in its advertisements

does not constitute causal fraud

which would have been a valid

basis in annulling the Contract to

Sell between petitioner and

respondent.

Indeed, evidence shows that respondent

proceeded to sign the Contract to Sell

despite information contained therein that

the condominium is located in Pasay City.

This only means that she still agreed to

buy the subject property regardless of the

fact that it is located in a place different

from what she was originally informed. If

she had a problem with the property's

location, she should not have signed the

Contract to Sell and, instead, immediately

raised this issue with petitioner. But she

did not. As correctly observed by the

Office of the President, it took respondent

more than two years from the execution

of the Contract to Sell to demand the

return of the amount she paid on the

ground that she was misled into believing

that the subject property is located in

Makati City. In the meantime, she

continued to make payments.

• The Court is not persuaded by the

ruling of the CA which expresses

doubt on the due execution of the

Contract to Sell. The fact remains

that the said Contract to Sell was

notarized. It is settled that absent

any clear and convincing proof to

the contrary, a notarized document

enjoys the presumption of

regularity and is conclusive as to

the truthfulness of its contents.20

Neither does the Court agree that

the presumption of regularity

accorded to the notarized Contract




104

to Sell was overcome by evidence

to the contrary. Respondent's

allegation that she signed the said

Contract to Sell with several blank

spaces, and which allegedly did not

indicate the location of the

condominium, was not supported

by proof. The basic rule is that

mere allegation is not evidence and

is not equivalent to proof.21 In

addition, the fact that respondent

made several payments prior to

the execution of the subject

Contract to Sell is not the kind of

evidence needed to overcome such

presumption of regularity.

In any case, even assuming that

petitioner’s misrepresentation consists of

fraud which could be a ground for

annulling their Contract to Sell,

respondent's act of affixing her signature

to the said Contract, after having acquired

knowledge of the property's actual

location, can be construed as an implied

ratification thereof.

Ratification of a voidable contract is

defined under Article 1393 of the Civil

Code as


Art. 1393. Ratification may be effected

expressly or tacitly. It is understood that

there is a tacit ratification if, with

knowledge of the reason which renders

the contract voidable and such reason

having ceased, the person who has a right

to invoke it should execute an act which

necessarily implies an intention to waive

his right.

Implied ratification may take diverse

forms, such as by silence or

acquiescence; by acts showing

approval or adoption of the contract;

or by acceptance and retention of benefits

flowing therefrom.23cralawred

• Under Article 1392 of the Civil

Code, “ratification extinguishes the

action to annul a voidable

contract.” In addition, Article 1396

of the same Code provides that

“[r]atification cleanses the contract

from all its defects from the

moment it was constituted.”

• Meyr Enterprises Corporation Vs. Rolando

CorderoG.R. No. 197336. September 3,

2014

The resolution of the case hinges on the

question of whether petitioner is guilty of

malice and bad faith in instituting Civil

Case No. CEB-28040; if it is not so, then

there is no ground to hold it liable for

malicious prosecution.

Thus, both tribunals unanimously held

that in the first instance, petitioner had no

probable cause to complain, since it had

no personality to sue, given that the

affected portion is foreshore or public

land; that petitioner did not deny that it

conducted quarrying of sand and gravel

which could have caused the erosion of its

own beach; that it offered to buy

respondent’s land; that petitioner cannot

deny and in fact constructively knew that

respondent was authorized by Resolution

No. 38 to construct the dike; that a

previous case filed by petitioner against

respondent, based on the same facts, was

dismissed; and that as a whole,

petitioner’s baseless accusations were

particularly intended to vex and humiliate

the respondent, who openly objected to

petitioner’s quarrying of sand and gravel

precisely because it caused the erosion of

his beach as well. Although it may have

been a bit extreme for the CA to declare

that petitioner had an “axe to grind”

against respondent, this characterization

is merely semantic; there is no

capriciousness or arbitrariness in the

description, because the circumstances

leading to the conclusion that petitioner is

guilty of malicious prosecution are already

present, as far as the tribunals below are

concerned. This conclusion can no longer

be questioned, given the limitations

petitioner is confronted with in a recourse

of this nature.

With the foregoing view, there is no need

to resolve the other issues and arguments

pointed out by the petitioner, which are

correspondingly discredited. Notably, the

recovery of moral damages for malicious






105

prosecution is allowed under Article 2219

of the Civil Code,31 while attorney’s fees

and expenses of litigation may be

adjudged in malicious prosecution cases

pursuant to Article 220832 of the same

Code.

• Rolando C. Dela Paz Vs. L & J Development

CompanyG.R. No. 183360. September

8, 2014

“No interest shall be due unless it has

been expressly stipulated in

writing.”1cralawre

The lack of a written stipulation

to pay interest on the loaned amount

disallows a creditor from charging

monetary interest.

Under Article 1956 of the Civil Code, no

interest shall be due unless it has been

expressly stipulated in

writing. Jurisprudence on the matter also

holds that for interest to be due and

payable, two conditions must concur: a)

express stipulation for the payment of

interest; and b) the agreement to pay

interest is reduced in writing.

Here, it is undisputed that the parties did

not put down in writing their

agreement. Thus, no interest is due. The

collection of interest without any

stipulation in writing is prohibited by

law.22cralawred

But Rolando asserts that his situation

deserves an exception to the application

of Article 1956. He blames Atty. Salonga

for the lack of a written document,

claiming that said lawyer used his legal

knowledge to dupe him. Rolando thus

imputes bad faith on the part of L&J and

Atty. Salonga. The Court, however, finds

no deception on the part of L&J and Atty.

Salonga. For one, despite the lack of a

document stipulating the payment of

interest, L&J nevertheless devotedly paid

interests on the loan. It only stopped

when it suffered from financial difficulties

that prevented it from continuously paying

the 6% monthly rate. For another,

regardless of Atty. Salonga’s profession,

Rolando who is an architect and an

educated man himself could have been a

more reasonably prudent person under

the circumstances. To top it all, he

admitted that he had no prior

communication with Atty.

Salonga. Despite Atty. Salonga being a

complete stranger, he immediately trusted

him and lent his company P350,000.00, a

significant amount. Moreover, as the

creditor, he could have requested or

required that all the terms and conditions

of the loan agreement, which include the

payment of interest, be put down in

writing to ensure that he and L&J are on

the same page. Rolando had a choice of

not acceding and to insist that their

contract be put in written form as this will

favor and safeguard him as a

lender. Unfortunately, he did not. It

must be stressed that “[c]ourts cannot

follow one every step of his life and

extricate him from bad bargains, protect

him from unwise investments, relieve him

from one-sided contracts, or annul the

effects of foolish acts. Courts cannot

constitute themselves guardians of

persons who are not legally

incompetent.”23cralawred

Even if the payment of interest has been

reduced in writing, a 6% monthly interest

rate

on a loan is unconscionable, regardless of

who

between the parties proposed the rate.

Indeed at present, usury has been legally

non-existent in view of the suspension of

the Usury Law25 by Central Bank Circular

No. 905 s. 1982.26 Even so, not all

interest rates levied upon loans are

permitted by the courts as they have the

power to equitably reduce unreasonable

interest rates.

Time and again, it has been ruled in a

plethora of cases that stipulated interest

rates of 3% per month and higher, are

excessive, iniquitous, unconscionable and

exorbitant. Such stipulations are void for

being contrary to morals, if not against

the law.29 The Court, however, stresses

that these rates shall be invalidated and

shall be reduced only in cases where the

terms of the loans are open-ended, and






106

where the interest rates are applied for an

indefinite period. Hence, the imposition of

a specific sum of P40,000.00 a month for

six months on a P1,000,000.00 loan is not

considered unconscionable.30 In the case

at bench, there is no specified period as to

the payment of the loan. Hence, levying

6% monthly or 72% interest per annum is

“definitely outrageous and

inordinate.”31cralawred

• Federal Builders, Inc. Vs. Foundation

Specialists, Inc/Foundation

Specialists Inc. Vs. Federal Builders,

Inc.G.R. No. 194507/G.R. No. 194621.

September 8, 2014

• In line, however, with the recent

circular of the Monetary Board of

the Bangko Sentral ng Pilipinas

(BSP-MB) No. 799, we have

modified the guidelines in Nacar v.

Gallery Frames,22 as


•

• I. When an obligation, regardless

of its source, i.e., law, contracts,

quasi-contracts, delicts or quasi-

delicts is breached, the

contravenor can be held liable for

damages. The provisions under

Title XVIII on "Damages" of the

Civil Code govern in determining

the measure of recoverable

damages.

•

• II. 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


•

• 1. 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 stipulation, the rate

of interest shall be 6% per

annum to be computed from

default, i.e., from judicial or

extrajudicial demand under and

subject to the provisions of Article

1169 of the Civil Code.

•

• 2. 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.

•

• 3. 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.

•

• And, in addition to the above,

judgments that have become final

and executory prior to July 1,

2013, shall not be disturbed and

shall continue to be implemented

applying the rate of interest fixed








107

therein.23

•

• It should be noted, however, that

the new rate could only be applied

prospectively and not retroactively.

Consequently, the twelve percent

(12%) per annum legal interest

shall apply only until June 30,

2013. Come July 1, 2013, the new

rate of six percent (6%) per annum

shall be the prevailing rate of

interest when applicable. Thus, the

need to determine whether the

obligation involved herein is a loan

and forbearance of money

nonetheless exists.

•

• In S.C. Megaworld Construction

and Development Corporation v.

Engr. Parada,24 We clarified the

meaning of obligations constituting

loans or forbearance of money in

the following

wise:ChanRoblesVirtualawlibrary

•

• As further clarified in the case of

Sunga-Chan v. CA, a loan or

forbearance of money, goods or

credit describes a contractual

obligation whereby a lender or

creditor has refrained during a

given period from requiring the

borrower or debtor to repay the

loan or debt then due and

payable.

Thus:ChanRoblesVirtualawlibrary

•

• In Reformina v. Tomol, Jr., the

Court held that the legal interest at

12% per annum under Central

Bank (CB) Circular No. 416 shall be

adjudged only in cases involving

the loan or forbearance of money.

And for transactions involving

payment of indemnities in the

concept of damages arising

from default in the

performance of obligations in

general and/or for money

judgment not involving a loan

or forbearance of money,

goods, or credit, the governing

provision is Art. 2209 of the

Civil Code prescribing a yearly

6% interest. Art. 2209 pertinently

provides:ChanRoblesVirtualawlibrar

y

•

• Art. 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.

•

• The term "forbearance," within the

context of usury law, has been

described as a contractual

obligation of a lender or creditor to

refrain, during a given period of

time, from requiring the borrower

or debtor to repay the loan or debt

then due and payable.25

•

• Forbearance of money, goods or

credits, therefore, refers to

arrangements other than loan

agreements, where a person

acquiesces to the temporary use of

his money, goods or credits

pending the happening of certain

events or fulfilment of certain

conditions.26 Consequently, if those

conditions are breached, said

person is entitled not only to the

return of the principal amount paid,

but also to compensation for the

use of his money which would be

the same rate of legal interest

applicable to a loan since the use

or deprivation of funds therein is

similar to a loan.27cralawred

•

• This case, however, does not

involve an acquiescence to the

temporary use of a party’s money

but a performance of a particular

service, specifically the

construction of the diaphragm wall,

capping beam, and guide walls of

the Trafalgar Plaza.

•




108

• A review of similar jurisprudence

would tell us that this Court had

repeatedly recognized this

distinction and awarded interest at

a rate of 6% on actual or

compensatory damages arising

from a breach not only of

construction contracts,28 such as

the one subject of this case, but

also of contracts wherein one of

the parties reneged on its

obligation to perform messengerial

services,29 deliver certain

quantities of molasses,30 undertake

the reforestation of a denuded

forest land,31 as well as breaches of

contracts of carriage,32 and

trucking agreements.33 We have

explained therein that the reason

behind such is that said contracts

do not partake of loans or

forbearance of money but are more

in the nature of contracts of

service.

•

• Thus, in the absence of any

stipulation as to interest in the

agreement between the parties

herein, the matter of interest

award arising from the dispute in

this case would actually fall under

the second paragraph of the

above-quoted guidelines in the

landmark case of Eastern Shipping

Lines, which necessitates the

imposition of interest at the rate of

6%, instead of the 12% imposed

by the courts below.

•

• The 6% interest rate shall further

be imposed from the finality of the

judgment herein until satisfaction

thereof, in light of our recent ruling

in Nacar v. Gallery

Frames.34cralawred

• Heirs of Valentin Basbas, et al. Vs. Ricardo

Basbas, as represented by Eugenio

BasbasG.R. No. 188773. September 10,

2014

A claim of status as heir of a decedent

must always be substantially supported by

evidence as required under our law. The

resolution of a case, in this instance, an

action for annulment of title and

reconveyance of real property, cannot be

further stalled and waylaid by a mere

assertion of a party of an ostensible

conflicting claims of heirship of the

common decedent. Not all rights to

property and incidents thereof, such as

titling, ought to be preceded by a

declaration of heirship, albeit supposedly

traced to a single decedent and original

titleholder.

We cannot subscribe to the appellate

court's ruling unqualifiedly applying Heirs

of Yaptinchay. Mistakenly, the Court of

Appeals glosses over facts, not

controverted by Crispiniano and

respondent Ricardo:

(1) Valentin was a legitimate child of

Severo and Ana Rivera; and

(2) Petitioners are themselves legitimate

descendants of Valentin.

Not only is the petitioners’ heirship to

Severo uncontroverted. The status of

Valentin as a compulsory heir of Severo

and of petitioners’ statuses as heirs of

Valentin and Severo are stipulated facts

agreed to by Crispiniano and respondent

Ricardo:

In all, Valentin’s long-possessed status as

a legitimate child and thus, heir of Severo,

need no longer be the subject of a special

proceeding for declaration of heirship as

envisioned by the Court of Appeals. There

is no need to re-declare his status as an

heir of Severo.

And, contraposed to the fact that

Valentin’s status as a legitimate child of

Severo is already established, Nicolas’

status as a purported heir of Severo can

no longer be established, Nicolas’ right

thereto expiring upon his death.

Glaringly, there is no pretension from

respondent’s end that Nicolas was born of

a valid marriage, only that he is Severo’s

son. Nonetheless, even if respondents

were minded to establish the status of

Nicolas, whether he is a legitimate or an

illegitimate child of Severo, such can no

longer be done.







109

Article 165, in relation to Articles 173 and

175, of the Family Code and Article 285 of

the Civil Code

state:ChanRoblesVirtualawlibrary

Art. 165. Children conceived and born

outside a valid marriage are illegitimate,

unless otherwise provided in this Code.

Chapter 3. Illegitimate Children

Art. 173. The action to claim legitimacy

may be brought by the child during his or

her lifetime and shall be transmitted to

the heirs should the child die during

minority or in a state of insanity. In these

cases, the heirs shall have a period of five

years within which to institute the action.

Art. 175. Illegitimate children may

establish their illegitimate filiation in the

same way and on the same evidence as

legitimate children.

The action must be brought within the

same period specified in Article 173,

except when the action is based on the

second paragraph of Article 172, in which

case the action may be brought during the

lifetime of the alleged parent.

CHAPTER 4

ILLEGITIMATE CHILDREN

SECTION 1. - Recognition of Natural

Children

Art. 285. The action for the recognition of

natural children may be brought only

during the lifetime of the presumed

parents, except in the following

cases:ChanRoblesVirtualawlibrary

(1) If the father or mother died during the

minority of the child, in which case the

latter may file the action before the

expiration of four years from the

attainment of his majority;

(2) If after the death of the father or of

the mother a document should appear of

which nothing had been heard and in

which either or both parents recognize the

child.

In this case, the action must be

commenced within four years from the

finding of the document.

Thus, we find no need for a separate

proceeding for a declaration of the heirs of

Severo in order to resolve petitioners’

Action for Annulment of Title and

Reconveyance of the subject property.

Prescinding from the foregoing, a closer

scrutiny of the documents presented in

evidence by Crispiniano and Ricardo

before the trial court, betray the

fraudulence of their claim.

We add that Valentin’s rights to the

succession vested from the moment of

death of the decedent Severo.19 In turn,

petitioners’, as Heirs of Valentin, who is an

uncontested heir of decedent Severo,

rights to the succession vested from the

moment of Valentin’s death. As such, they

own Lot No. 39, undisputedly titled in

Severo’s name and forming part of

Severo’s estate, and are entitled to the

titling thereof in their names.

In this regard, we note that the Court of

Appeals did not reverse the trials courts’

factual finding on Cripiniano’s and

Ricardo’s fraudulent titling of Lot No. 39 in

their names. The evidence presented by

Crispiniano and Ricardo highlight the

fraudulence of their

claim:ChanRoblesVirtualawlibrary

1. Title to Lot No. 39 is not in their names,

neither is it titled in the name of their

predecessors-in-interest, Nicolas and

Felomino Basbas;

2. Crispiniano and Ricardo are not the only

heirs of Severo, if they are even heirs to

begin with.

One final note. Severo, as well as

Valentin, have been long dead. It is well-

nigh that title to the subject property, Lot

No. 39 of the Santa Rosa Detached Estate,

appear in the names of the petitioners,




110

Heirs of Valentin, herein declared heirs of

Severo, or their successors-in-interest, to

finally settle title thereto and prevent

occurrences of fraudulent titling thereof.

Hence, petitioners, Heirs of Valentin and

their successors-in-interest, are directed

to take the appropriate action for titling of

the subject property.

• Spouses Francisco Sierra (substituted by

Donato, Teresita Teodora, Lorenza,

Lucina, Imelda, Vilma and Milagros

Sierra) and Antonina Santos, et al. Vs.

PAIC Savings and Mortgage BankG.R.

No. 197857. September 10, 2014

•

• The Issues Before The Court

•

• The essential issues in this case are

whether or not the CA erred

in: (a) ruling that petitioners were

aware that they were mere

accommodation mortgagors, and

(b) dismissing the complaint on the

grounds of prescription and laches.


The petition lacks merit.

A. Vitiation of Consent.

Time and again, the Court has stressed

that allegations must be proven by

sufficient evidence because mere

allegation is not evidence.47 Thus, one

who alleges any defect or the lack of

a valid consent to a contract must

establish the same by full, clear, and

convincing evidence, not merely by

preponderance of evidence.48 The rule

is that he who alleges mistake affecting a

transaction must substantiate his

allegation, since it is presumed that a

person takes ordinary care of his concerns

and that private transactions have been

fair and regular.49Where mistake or

error is alleged by parties who claim

to have not had the benefit of a good

education, as in this case, they must

establish that their personal

circumstances prevented them from

giving their free, voluntary, and

spontaneous consent to a

contract.50cralawred

After a judicious perusal of the records,

the Court finds petitioners’ claim of

mistake or error (that they acted merely

as accommodation mortgagors) grounded

on their “very limited education” and “lack

of proper instruction” not to be firmly

supported by the evidence on record.

As correctly observed by the CA, the

testimony of petitioner Francisco Sierra as

to petitioners’ respective educational

backgrounds51 remained uncorroborated.

The other petitioners-signatories to the

deed never testified that their educational

background prevented them from

knowingly executing the subject deed as

mere accommodation mortgagors.

Petitioners’ claim of lack of “proper

instruction on the intricacies in securing

[the] loan from the bank” is further belied

by the fact that petitioners Francisco and

Rosario Sierra had previously mortgaged

two (2) of the subject properties twice to

the Rural Bank of Antipolo. Moreover,

petitioners did not: (a) demand for any

loan document containing the details of

the transaction, i.e., monthly

amortization, interest rate, added

charges, etc., and the release of the

remaining amount of their alleged loan;

and (b) offer to pay the purported partial

loan proceeds they received at any time,52

complaining thereof only in 1991 when

they filed their complaint. Indeed, the

foregoing circumstances clearly show that

petitioners are aware that they were mere

accommodation mortgagors, debunking

their claim that mistake vitiated their

consent to the mortgage.

Thus, there being valid consent on the

part of petitioners to act as

accommodation mortgagors, no reversible

error was committed by the CA in setting

aside the RTC’s Decision declaring the real

estate mortgage as void for vices of

consent and awarding damages to

petitioners. As mere accommodation

mortgagors, petitioners are not entitled to

the proceeds of the loan, nor were

required to be furnished with the loan









111

documents53 or notice of the borrower’s

default in paying the principal, interests,

penalties, and other charges on due

date,54 or of the extrajudicial foreclosure

proceedings, unless stipulated in the

subject deed.55 As jurisprudence states,

an accommodation mortgagor is a third

person who is not a debtor to a principal

obligation but merely secures it by

mortgaging his or her own property.56 Like

an accommodation party to a negotiable

instrument, the accommodation

mortgagor in effect becomes a surety to

enable the accommodated debtor to

obtain credit,57 as petitioners in this case.

B. Prescription.

On a second matter, petitioners insist that

the CA erred in ruling that their action for

nullification of the subject deed had

already prescribed, contending that the

applicable provision is the ten-year

prescriptive period of mortgage actions

under Article 114258 of the Civil Code.

The contention is bereft of merit.

Based on case law, a “mortgage action”

refers to an action to enforce a right

necessarily arising from a mortgage.59

In the present case, petitioners are not

“enforcing” their rights under the

mortgage but are, in fact, seeking to be

relieved therefrom. The complaint filed by

petitioners is, therefore, not a mortgage

action as contemplated under Article

1142.

Considering, however, petitioners’ failure

to establish that their consent to the

mortgage was vitiated, rendering them

without a cause of action, much less a

right of action to annul the mortgage, the

question of whether or not the complaint

has prescribed becomes merely

academic.60cralawred

In any event, even assuming that

petitioners have a valid cause of action,

the four-year prescriptive period on

voidable contracts61 shall apply. Since the

complaint for annulment was anchored on

a claim of mistake, i.e., that petitioners

are the borrowers under the loan secured

by the mortgage, the action should have

been brought within four (4) years from

its discovery.

A perusal of the complaint, however,

failed to disclose when petitioners

learned that they were not the

borrowers under the loan secured by

the subject mortgage. Nonetheless,

considering that petitioners admitted

receipt on June 19, 198462 of PSMB’s

letter dated June 11, 1984 informing them

of the scheduled foreclosure sale on June

27, 1984 due to GCI’s breach of its loan

obligation secured by the subject

properties, the discovery of the averred

mistake should appear to be reckoned

from June 19, 1984, and not from the

dishonor of the checks on January 9, 1984

as ruled by the CA.

C. Laches.

As to this final issue, the Court holds that

laches applies.

As the records disclose, despite notice on

June 19, 1984 of the scheduled

foreclosure sale, petitioners, for

unexplained reasons, failed to impugn

the real estate mortgage and oppose the

public auction sale for a period of more

than seven (7) years from said

notice.63 As such, petitioners’ action is

already barred by laches, which, as case

law holds, operates not really to penalize

neglect or sleeping on one’s rights, but

rather to avoid recognizing a right when to

do so would result in a clearly inequitable

situation.64 As mortgagors desiring to

attack a mortgage as invalid, petitioners

should act with reasonable promptness,

else its unreasonable delay may amount

to ratification.65 Verily, to allow petitioners

to assert their right to the subject

properties now after their unjustified

failure to act within a reasonable time

would be grossly unfair to PSMB, and

perforce should not be sanctioned.

• Enriqueta M. Locsin Vs. Bernardo Hizon,

Carlos Hizon, Sps. Jose Manuel &

Lourdes GuevarraG.R. No. 204369.

September 17, 2014







112

Precautionary measures for

buyers of real property

An innocent purchaser for value is one

who buys the property of another without

notice that some other person has a right

to or interest in it, and who pays a full and

fair price at the time of the purchase or

before receiving any notice of another

person’s claim.16 As such, a defective

title––or one the procurement of which is

tainted with fraud and misrepresentation–

–may be the source of a completely legal

and valid title, provided that the buyer is

an innocent third person who, in good

faith, relied on the correctness of the

certificate of title, or an innocent

purchaser for value.17cralawlawlibrary

Complementing this is the mirror doctrine

which echoes the doctrinal rule that every

person dealing with registered land may

safely rely on the correctness of the

certificate of title issued therefor and is in

no way obliged to go beyond the

certificate to determine the condition of

the property.18 The recognized

exceptions to this rule are stated as


[A] person dealing with registered land

has a 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






litigation. The presence of anything

which excites or arouses suspicion

should then prompt the vendee to

look beyond the certificate and

investigate the title of the vendor

appearing on the face of said

certificate. One who falls within the

exception can neither be denominated

an innocent purchaser for value nor a

purchaser in good faith and, hence,

does not merit the protection of the

law.19 (emphasis added)

Thus, in Domingo Realty, Inc. v. CA,20 we

emphasized the need for prospective

parties to a contract involving titled lands

to exercise the diligence of a reasonably

prudent person in ensuring the legality of

the title, and the accuracy of the metes

and bounds of the lot embraced therein,by

undertaking precautionary measures, such

as:chanRoblesvirtualLawlibrary

• Verifying the origin, history,

authenticity, and validity of the

title with the Office of the Register

of Deeds and the Land Registration

Authority;

• Engaging the services of a competent

and reliable geodetic engineer to

verify the boundary, metes, and

bounds of the lot subject of said

title based on the technical

description in the said title and the

approved survey plan in the Land

Management Bureau;

• Conducting an actual ocular inspection

of the lot;

• Inquiring from the owners and

possessors of adjoining lots with

respect to the true and legal

ownership of the lot in question;

• Putting up of signs that said lot is being

purchased, leased, or encumbered;

and

• Undertaking such other measures to

make the general public aware that

said lot will be subject to

alienation, lease, or encumbrance

by the parties.

In the case at bar, Bolos’ certificate of title

was concededly free from liens and

encumbrances on its face. However,the

failure of Carlos and the spouses Guevara

to exercise the necessary level of caution

in light of the factual milieu surrounding

the sequence of transfers from Bolos to

respondents bars the application of the

mirror doctrine and inspires the Court’s

concurrence with petitioner’s proposition.

Carlos is not an innocent purchaser

for value




113

Foremost, the Court is of the view that

Bernardo negotiated with Bolos for the

property as Carlos’ agent. This is bolstered

by the fact that he was the one who

arranged for the sale and eventual

registration of the property in Carlos’

favor.

Consistent with the rule that the principal

is chargeable and bound by the knowledge

of, or notice to, his agent received in that

capacity,22 any information available and

known to Bernardo is deemed similarly

available and known to Carlos

Having knowledge of the foregoing facts,

Bernardo and Carlos, to our mind, should

have been impelled to investigate the

reason behind the arrangement. They

should have been pressed to inquire into


litigation in order to protect Carlos’

interest. It should have struck them as

odd that it was Locsin, not Bolos, who

sought the recovery of possession by

commencingan ejectment case against

Aceron, and even entered into a

compromise agreement with the latter

years after the purported sale in Bolos’

favor. Instead, Bernardo and Carlos

took inconsistent positions when they

argued for the validity of the transfer

of the property in favor of Bolos, but

in the same breath prayed for the

enforcement of the compromise

agreement entered into by Locsin.

At this point it is well to emphasize that

entering into a compromise agreement is

an act of strict dominion.25 If Bolos

already acquired ownership of the

property as early as 1979, it should have

been her who entered into a compromise

agreement with Aceron in 1993, not her

predecessor-in-interest, Locsin, who,

theoretically, had already divested herself

of ownership thereof.

The spouses Guevara are not innocent

purchasers for value

As regards the transfer of the property

from Carlos to the spouses Guevara, We

find the existence of the sale highly

suspicious. For one, there is a dearth of

evidence to support the respondent

spouses’ position that the sale was a bona

fide transaction. Even if we repeatedly sift

through the evidence on record, still we

cannot find any document, contract, or

deed evidencing the sale in favor of the

spouses Guevara. The same goes for the

purported payment of the purchase price

of the property in the amount of PhP 1.5

million in favor of Carlos

• Philippine National Bank Vs. Spouses

Eduardo and Ma. Rosario Tajonera, et

al.G.R. No. 195889. September 24, 2014

PNB’s assignment of errors boils down to

the sole issue of whether the CA erred in

annulling the mortgage contract

constituted over the Greenhills property of

the respondents.

The agreement between PNB and the

respondents was one of a loan. Under the

law, a loan requires the delivery of money

or any other consumable object by one

party to another who acquires ownership

thereof, on the condition that the same

amount or quality shall be paid. Loan is a

reciprocal obligation, as it arises from the

same cause where one party is the

creditor, and the other the debtor. The

obligation of one party in a reciprocal

obligation is dependent upon the

obligation of the other, and the

performance should ideally be

simultaneous. This means that in a loan,

the creditor should release the full loan

amount and the debtor repays it when it

becomes due and

demandable.19cralawlawlibrary

PNB, not having released the balance of

the last loan proceeds in accordance with

the Third Amendment had no right to

demand from the respondents compliance

with their own obligation under the

loan. Indeed, if a party in a reciprocal

contract like a loan does not perform its

obligation, the other party cannot be

obliged to perform what is expected of

them while the other's obligation remains

unfulfilled.20cralawlawlibrary

When PNB and the respondents entered

into the First, Second and Third

Amendments on January 31, 1992,







114

October 28, 1992 and November 3, 1993,

respectively, they undertook reciprocal

obligations. In reciprocal obligations, the

obligation or promise of each party is the

consideration for that of the other; and

when one party has performed or is ready

and willing to perform his part of the

contract, the other party who has not

performed or is not ready and willing to

perform incurs in delay.21 The promise of

the respondents to pay was the

consideration for the obligation of PNB to

furnish the P40,000,000.00 additional loan

under the First Amendment as well as the

P55,000,000.00 the second additional loan

under the Third Amendment. When the

respondents executed the Supplement to

REM covering their Greenhills property,

they signified their willingness to pay the

additional loans. It should be noted, as

correctly found by the CA, that the

Supplement to REM was constituted not

only as security for the execution of the

First Amendment but also in consideration

of the Second and Third Amendments.

The obligation of PNB was to furnish the

P55,000,000.00 additional loan accrued

on November 3, 1993, the date the

parties entered into the Third

Amendment. Thus, PNB’s delay in

furnishing the entire additional loan

started from the said date.

Considering that PNB refused to release

the total amount of the additional loan

granted to ERDI under the Third

Amendment amounting to

P39,503,088.84, the CA was correct in

affirming the RTC’s conclusion that there

was no sufficient valuable consideration in

the execution of the Supplement to REM.

Still in the said case, at the time the

original loan was approved, the title to the

property offered as collateral appeared to

pertain exclusively to Spouses

Omengan. By the time the application for

increase was considered, PNB had

acquired information that the said

property, although in the name of spouses

petitioners was owned in co-

ownership. The Court justified PNB’s act

of withholding the release of the additional

loan because it already had reason to

suspect the spouses’ claim of exclusive

ownership over the mortgaged

collateral. In this case, the respondents

were unquestionably the exclusive owners

of the mortgaged property (Greenhills

property) at the time the initial and the

additional loans were approved.

For said reasons, the Court holds that PNB

was indeed guilty of breach of contract of

its reciprocal obligation under the credit

agreements.

Considering that there was no sufficient

valuable consideration in the execution of

the Supplement to REM on the Third

Amendment as the balance of the last

approved additional loan in the amount of

P39,503,088.54 remained unreleased, the

cancellation of the Supplement to REM

constituted over the respondents’

Greenhills property was in order.

It is true that loans are often secured by a

mortgage constituted on real or personal

property to protect the creditor's 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 depends 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.28cralawlawlibrary

In this case, to repeat, PNB did not fulfill

its principal obligation under the Third

Amendment by failing to release the

amount of the last additional loan in

full. Consequently, the Supplement to

REM covering the Greenhills property

became unenforceable, as the said

property could not be entirely foreclosed

to satisfy the respondents’ total debts to

PNB. Moreover, the Supplement to REM

was no longer necessary because PNB’s




115

interest was amply protected as the loans

had been sufficiently secured by the

Paranaque properties. As aptly found by

the RTC, the Paranaque properties

together with the 20-storey condominium

building to be erected thereon would have

been sufficient security in the execution of

the REM even without the Greenhills

property as additional collateral. Thus,

under the circumstances, PNB’s actuation

in foreclosing the Greenhills property was

legally unfounded.

• Leonardo Bognot Vs. RPI Lending

Corporation represented by its

General Manager, Dario J.

BernandezG.R. No. 180144. September

24, 2014

• The Issues

•

• The case presents to us the

following

issues:chanRoblesvirtualLawlibrary

•

• 1. Whether the CA committed a

reversible error in holding the

petitioner solidarily liable with

Rolando;

•

• 2. Whether the petitioner is

relieved from liability by reason of

the material alteration in the

promissory note; and

•

• 3. Whether the parties’ obligation

was extinguished by: (i) payment;

and (ii) novation by substitution of

debtors.

No Evidence Was Presented to

Establish the Fact of Payment

Jurisprudence tells us that one who pleads

payment has the burden of proving it;17

the burden rests on the defendant to

prove payment, rather than on the

plaintiff to prove non-payment.18 Indeed,

once the existence of an indebtedness is

duly established by evidence, the burden

of showing with legal certainty that the

obligation has been discharged by

payment rests on the

debtor.19cralawlawlibrary

In the present case, the petitioner failed

to satisfactorily prove that his obligation

had already been extinguished by

payment. As the CA correctly noted, the

petitioner failed to present any evidence

that the respondent had in fact encashed

his check and applied the proceeds to the

payment of the loan. Neither did he

present official receipts evidencing

payment, nor any proof that the check

had been dishonored.

We note that the petitioner merely relied

on the respondent’s cancellation and

return to him of the check dated April 1,

1997. The evidence shows that this check

was issued to secure the indebtedness.

The acts imputed on the respondent,

standing alone, do not constitute sufficient

evidence of payment.

Article 1249, paragraph 2 of the Civil Code


x x x x

The delivery of promissory notes payable

to order, or bills of exchange or other

mercantile documents shall produce the

effect of payment only when they

have been cashed, or when through the

fault of the creditor they have been

impaired.

Although Article 1271 of the Civil Code

provides for a legal presumption of

renunciation of action (in cases where a

private document evidencing a credit was

voluntarily returned by the creditor to the

debtor), this presumption is merely prima

facie and is not conclusive; the

presumption loses efficacy when faced

with evidence to the contrary.

Moreover, the cited provision merely

raises a presumption, not of payment,

but of the renunciation of the credit

where more convincing evidence would be

required than what normally would be

called for to prove payment.21 Thus,

reliance by the petitioner on the legal

presumption to prove payment is

misplaced.








116

To reiterate, no cash payment was proven

by the petitioner. The cancellation and

return of the check dated April 1, 1997,

simply established his renewal of the loan

– not the fact of payment. Furthermore, it

has been established during trial, through

repeated acts, that the respondent

cancelled and surrendered the post-dated

check previously issued whenever the loan

is renewed.

The Alteration of the Promissory Note

Did Not Relieve the Petitioner From

Liability

We now come to the issue of material

alteration. The petitioner raised as

defense the alleged material alteration of

Promissory Note No. 97-035 as basis to

claim release from his loan. He alleged

that the respondent’s superimposition of

the due date “June 30, 1997” on the

promissory note without his consent

effectively relieved him of liability.

We find this defense untenable.

Although the respondent did not dispute

the fact of alteration, he nevertheless

denied that the alteration was done

without the petitioner’s consent.

Under this evidentiary situation, the

petitioner cannot validly deny his

obligation and liability to the respondent

solely on the ground that the Promissory

Note in question was tampered. Notably,

the existence of the obligation, as well as

its subsequent renewals, have been duly

established by: first, the petitioner’s

application for the loan; second, his

admission that the loan had been obtained

from the respondent; third, the post-dated

checks issued by the petitioner to secure

the loan; fourth, the testimony of Mr.

Bernardez on the grant, renewal and non-

payment of the loan; fifth, proof of non-

payment of the loan; sixth, the loan

renewals; and seventh, the approval and

receipt of the loan renewals.

In Guinsatao v. Court of Appeals,31 this

Court pointed out that while a promissory

note is evidence of an indebtedness, it is

not the only evidence, for the existence of

the obligation can be proven by other

documentary evidence such as a written

memorandum signed by the parties.

In Pacheco v. Court of Appeals,32 this

Court likewise expressly recognized that a

check constitutes an evidence of

indebtedness and is a veritable proof of an

obligation. It can be used in lieu of and for

the same purpose as a promissory note

and can therefore be presented to

establish the existence of

indebtedness.33cralawlawlibrary

In the present petition, we find that the

totality of the evidence on record

sufficiently established the existence of

the petitioner’s indebtedness (and liability)

based on the contract of loan. Even with

the tampered promissory note, we hold

that the petitioner can still be held liable

for the unpaid loan.

Novation cannot be presumed and

must be clearly and unequivocably

proven.

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.36cralawlawlibrary

Article 1293 of the Civil Code defines

novation as


“Art. 1293. Novation which consists in

substituting a new debtor in the place of

the original one, may be made even

without the knowledge or against the will

of the latter, but not without the consent

of the creditor. Payment by the new

debtor gives him rights mentioned in

Articles 1236 and 1237.”

To give novation legal effect, the original

debtor must be expressly released from

the obligation, and the new debtor must

assume the original debtor’s place in the

contractual relationship. Depending on

who took the initiative, novation by




117

substitution of debtor has two forms –

substitution by expromision and

substitution by delegacion. In both

cases, the original debtor must be

released from the obligation; otherwise,

there can be no valid novation.38

Furthermore, novation by substitution of

debtor must always be made with the

consent of the creditor.39cralawlawlibrary

The petitioner contends that novation took

place through a substitution of debtors

when Mrs. Bognot renewed the loan and

assumed the debt. He alleged that Mrs.

Bognot assumed the obligation by paying

the renewal fees and charges, and by

executing a new promissory note. He

further claimed that she issued her own

check40 to cover the renewal fees, which

fact, according to the petitioner, was done

with the respondent’s consent.

Contrary to the petitioner’s contention,

Mrs. Bognot did not substitute the

petitioner as debtor. She merely

attempted to renew the original loan by

executing a new promissory note41 and

check. The purported one month renewal

of the loan, however, did not push

through, as Mrs. Bognot did not return the

documents or issue a new post dated

check. Since the loan was not renewed for

another month, the original due date,

June 30, 1997, continued to stand.

More importantly, the respondent never

agreed to release the petitioner from his

obligation. That the respondent initially

allowed Mrs. Bognot to bring home the

promissory note, disclosure statement and

the petitioner’s previous check dated June

30, 1997, does not ipso facto result in

novation. Neither will this acquiescence

constitute an implied acceptance of the

substitution of the debtor.

In order to give novation legal effect, the

creditor should consent to the substitution

of a new debtor. Novation must be

clearly and unequivocally shown, and

cannot be presumed.

Since the petitioner failed to show that the

respondent assented to the substitution,

no valid novation took place with the

effect of releasing the petitioner from his

obligation to the respondent.

Moreover, in the absence of showing that

Mrs. Bognot and the respondent had

agreed to release the petitioner, the

respondent can still enforce the payment

of the obligation against the original

debtor. Mere acquiescence to the renewal

of the loan, when there is clearly no

agreement to release the petitioner from

his responsibility, does not constitute

novation.

The Nature of the Petitioner’s Liability

On the nature of the petitioner’s liability,

we rule however, that the CA erred in

holding the petitioner solidarily liable with

Rolando.

A solidary obligation is one in which each

of the debtors is liable for the entire

obligation, and each of the creditors is

entitled to demand the satisfaction of the

whole obligation from any or all of the

debtors.42 There is solidary liability when

the obligation expressly so states, when

the law so provides, or when the nature of

the obligation so requires.43 Thus, when

the obligor undertakes to be "jointly and

severally" liable, the obligation is solidary,

In this case, both the RTC and the CA

found the petitioner solidarily liable with

Rolando based on Promissory Note No.

97-035 dated June 30, 1997. Under the

promissory note, the Bognot Siblings

defined the parameters of their obligation

as follows:chanRoblesvirtualLawlibrary

“FOR VALUE RECEIVED, I/WE, jointly

and severally, promise to pay toxxxxxx

Although the phrase “jointly and severally”

in the promissory note clearly and

unmistakably provided for the solidary

liability of the parties, we note and stress

that the promissory note is merely a

photocopy of the original, which was

never produced.

Under the best evidence rule, when the




118

subject of inquiry is the contents of a

document, no evidence is admissible other

than the original document itself except in

the instances mentioned in Section 3, Rule

130 of the Revised Rules of

Court.45cralawlawlibrary

The records show that the respondent had

the custody of the original promissory

note dated April 1, 1997, with a

superimposed rubber stamp mark “June

30, 1997”, and that it had been given

every opportunity to present it. The

respondent even admitted during pre-trial

that it could not present the original

promissory note because it is in the

custody of its cashier who is stranded in

Bicol.46 Since the respondent never

produced the original of the promissory

note, much less offered to produce it, the

photocopy of the promissory note cannot

be admitted as evidence.

Other than the promissory note in

question, the respondent has not

presented any other evidence to support a

finding of solidary liability. As we earlier

noted, both lower courts completely relied

on the note when they found the Bognot

siblings solidarily liable.

The well-entrenched rule is that solidary

obligation cannot be inferred lightly. It

must be positively and clearly expressed

and cannot be

presumed.47cralawlawlibrary

• Ambrosio Rotairo substituted by his

Spouse Maria Ronsaryo Rotairo, et al.

Vs. Rovira Alcantara and Victor

AlcantaraG.R. No. 173632. September

29, 2014

• Rovira is not a buyer in good

faith

Rovira contended that the registered

mortgage between Pilipinas Bank and

Alcantara and Ignacio is superior to the

unregistered contract to sell between

Ignacio & Co. and Rotairo, which was

sustained by the CA. The CA applied

Section 50 of Act No. 496 or the Land

Registration Act and ruled that since the

sale to Rotairo was unregistered and

subsequent to the registered mortgage,

the latter was obligated to respect the

foreclosure and eventual sale of the

property in dispute, among

others.19cralawlawlibrary

Indeed, the rule is that as "[b]etween

two transactions concerning the same

parcel of land, the registered

transaction prevails over the earlier

unregistered right."2

Section 51 of the Land Registration Act

further states that "[e]very conveyance,

mortgage, lease, lien, attachment, order,

decree, instrument, or entry affecting

registered land x x x, if registered x x x be

notice to all persons from the time of

such registering x x x." "The principal

purpose of registration is merely to notify

other persons not parties to a contract

that a transaction involving the property

has been entered into."22 Thus, it has

been held that "registration in a public

registry creates constructive notice to the

whole world."23 Moreover, "[a] person

dealing with registered land may safely

rely on the correctness of the certificate of

title issued therefor, and he is not

required to go beyond the certificate to

determine the condition of the

property."24cralawlawlibrary

The rule, however, is not without

recognized exceptions. "The conveyance

shall not be valid against any person

unless registered, except (1) the grantor,

(2) his heirs and devisees, and (3) third

persons having actual notice or knowledge

thereof."25 Moreover, "when the party has

actual knowledge of facts and

circumstances that would impel a

reasonably cautious man to make such






litigation,26 he cannot find solace in the

protection afforded by a prior registration.

Neither can such person be considered an

innocent purchaser for value nor a

purchaser in good faith.27cralawlawlibrary








119

In this case, two factors work against

Rovira as a buyer in good faith. One, she

cannot be considered a third person for

purposes of applying the rule. Rovira does

not deny that she is the daughter and an

heir of Victor C. Alcantara, one of the

parties to the contract to sell (and the

contract of sale) executed in favor of

Rotairo. "The vendor's heirs are his

privies."28 Based on such privity, Rovira

is charged with constructive knowledge of

prior dispositions or encumbrances

affecting the subject property made by

her father.29 The fact that the contract to

sell was unregistered became immaterial

and she is, therefore, bound by the

provisions of the contract to sell and

eventually, the contract of sale, executed

by her father in favor of Rotairo.

Further, more than the charge of

constructive knowledge, the

surrounding circumstances of this case

show Rovira's actual knowledge of

the disposition of the subject property

and Rotairo's possession thereof. It is

undisputed that after the contract to

sell was executed in April 1970,

Rotairo immediately secured a mayor's

permit in September 28, 1970 for the

construction of his residential house on

the property.30 Rotairo, and

subsequently, his heirs, has been

residing on the property since then.

Rovira, who lives only fifty (50) meters

away from the subject property, in

fact, knew that there were "structures

built on the property."31 Rovira,

however, claims that "she did not

bother to inquire as to the legitimacy

of the rights of the occupants, because

she was assured by the bank of its title

to the property."32 But Rovira cannot

rely solely on the title and assurances

of Pilipinas Bank; it was incumbent

upon her to look beyond the title and

make necessary inquiries because the

bank was not in possession of the

property. "Where the vendor is not in

possession of the property, the

prospective vendees are obligated to

investigate the rights of one in

possession."33 A purchaser cannot

simply close his eyes to facts which

should put a reasonable man on

guard,34 and thereafter claim that he

acted in good faith under the belief

that there was no defect in the title of

the vendor.35 Hence, Rovira cannot

claim a right better than that of

Rotairo's as she is not a buyer in good

faith.

• Pedrito Dela Torre Vs. Dr. Arturo Imbuido,

Dra. Norma Imbuido in their capacity

as owners and operators of Divine

Spirit General Hospital and/or Dr.

Nestor PasambaG.R. No. 192973.

September 29, 2014

• Hence, this petition for review on

certiorari in which Pedrito insists

that the respondents should be

held liable for the death of Carmen.

The petition is denied.

“[M]edical 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, or his or her family as in this

case, “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 failure or action

caused injury to the

patient.”27cralawlawlibrary

The Court emphasized in Lucas, et al. v.

Tuaño28 that in medical negligence cases,

there is a physician-patient relationship

between the doctor and the victim, but

just like in any other proceeding for

damages, four essential elements must be

established by the plaintiff, namely: (1)

duty; (2) breach; (3) injury; and (4)

proximate causation. All four elements

must be present in order to find the

physician negligent and, thus, liable for

damages.29cralawlawlibrary









120

It is settled that a physician’s duty to his

patient relates to his exercise of the

degree of care, skill and diligence which

physicians in the same general

neighborhood, and in the same general

line of practice, ordinarily possess and

exercise in like cases. There is breach of

this duty when the patient is injured in

body or in health. Proof of this breach

rests upon the testimony of an expert

witness that the treatment accorded to

the patient failed to meet the standard

level of care, skill and diligence. To justify

an award of damages, the negligence of

the doctor must be established to be the

proximate cause of the

injury.30cralawlawlibrary

For the trial court to give weight to Dr.

Patilano’s report, it was necessary to show

first Dr. Patilano’s specialization and

competence to testify on the degree of

care, skill and diligence needed for the

treatment of Carmen’s case. Considering

that it was not duly established that Dr.

Patilano practiced and was an expert in

the fields that involved Carmen’s

condition, he could not have accurately

identified the said degree of care, skill,

diligence and the medical procedures that

should have been applied by her attending

physicians.

Similarly, such duty, degree of care, skill

and diligence were not sufficiently

established in this case because the

testimony of Dr. Patilano was based solely

on the results of his autopsy on the

cadaver of Carmen. His study and

assessment were restricted by limitations

that denied his full evaluation of Carmen’s

case. He could have only deduced from

the injuries apparent in Carmen’s body,

and in the condition when the body was

examined. Judging from his testimony, Dr.

Patilano did not even take full

consideration of the medical history of

Carmen, her actual health condition at the

time of hospital admission, and her

condition as it progressed while she was

being monitored and treated by the

respondents. There was also no reference

to the respondents’ defense that the

emergency caesarian section operation

had to be performed in order to protect

the lives and safety of Carmen and her

then unborn child. For lack of sufficient

information on Carmen’s health condition

while still alive, Dr. Patilano could not

have fully evaluated the suitability of the

respondents’ decisions in handling

Carmen’s medical condition as it turned

critical.

On the other hand, the CA pointed out

that Dr. Nestor, a surgeon, possessed the

reasonable degree of learning, skill and

experience required by his profession for

the treatment of Carmen. The

respondents also emphasized in their

pleadings before the RTC that Dr. Nestor

had his training and experience in surgery

and obstetrics since 1970. Without

sufficient proof from the claimant on a

different degree of care, skill and diligence

that should be expected from the

respondents, it could not be said with

certainty that a breach was actually

committed.

Moreover, while Dr. Patilano opined that

Carmen died of peritonitis which could be

due to the poor state of the hospital

equipment and medical supplies used

during her operation, there was no

sufficient proof that any such fault actually

attended the surgery of Carmen, caused

her illness and resulted in her death. It is

also significant that the Chief of the

Medico-Legal Division of the PNP Crime

Laboratory Service, Dr. Torres, testified

before the trial court that based on the

autopsy report issued by Dr. Patilano, the

latter did not comply with the basic

autopsy procedure when he examined the

cadaver of Carmen. Dr. Patilano did not

appear to have thoroughly examined

Carmen’s vital organs such as her heart,

lungs, uterus and brain during the

autopsy. His findings were then

inconclusive on the issue of the actual

cause of Carmen’s death, and the claim of

negligence allegedly committed by the

respondents.

As the Court held in Spouses Flores v.




121

Spouses Pineda, et al.,31 the critical and

clinching factor in a medical negligence

case is proof of the causal connection

between the negligence and the injuries.

The claimant must prove not only the

injury but also the defendant’s fault, and

that such fault caused the injury. A verdict

in a malpractice action cannot be based on

speculation or conjecture. Causation must

be proven within a reasonable medical

probability based upon competent expert

testimony,32 which the Court finds absent

in the case at bar.

• Spouses Mario Ocampo and Carmelita F.

Ocampo Vs. Heirs of Bernardino U.

Dionisio, et al.G.R. No. 191101.

October 1, 2014

• Ownership of the Subject

Property

•

• The respondents were able to

prove that they have a superior

right over the subject property as

against the petitioners. It is

undisputed that the subject

property is indeed covered by OCT

No. M-4559, which is registered in

the name of Dionisio, the

respondents' predecessor-in-

interest.

•

• Between the petitioners'

unsubstantiated and self-serving

claim that the subject property was

inherited by Carmelita from her

father and OCT No. M-4559

registered in Dionisio's name, the

latter must prevail. The

respondents' title over the subject

property is evidence of their

ownership thereof. That 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 and

that a person who has a Torrens

title over a land is entitled to the

possession thereof are fundamental

principles observed in this

jurisdiction.25cralawred

•

• Further, it is settled that a Torrens

Certificate of Title is indefeasible

and binding upon the whole world

unless and until it has been

nullified by a court of competent

jurisdiction. Under existing

statutory and decisional law, the

power to pass upon the validity of

such certificate of title at the first

instance properly belongs to the

Regional Trial Courts in a direct

proceeding for cancellation of

title.26 Accordingly, the petitioners

may not assail the validity of the

issuance of OCT No. M-4559 in the

name of Dionisio in their answer to

the complaint filed by the

respondents for recovery of

possession of the subject property;

it is a collateral attack to the

validity of OCT No. M-4559, which

the RTC and the CA aptly

disregarded.

• With the company’s discharge

of the burden to prove its

defense, the burden of

evidence shifted to Apolinario

to rebut the petitioners’ case.

In other words, Apolinario has to

prove by substantial evidence that

Dennis may be insane at the time

he took his life.

• BPI Express Card Corp. Vs. Ma. Antonia R.

ArmovitG.R. No. 163654. October 8,

2014

This case involves a credit card holder's

claim for damages arising from the

suspension of her credit privileges due to

her supposed failure to re-apply for their

reactivation. She has insisted that she was

not informed of the condition for

reactivation.

The relationship between the credit card

issuer and the credit card holder is a

contractual one that is governed by the

terms and conditions found in the card

membership agreement.16 Such terms and

conditions constitute the law between the

parties. In case of their breach, moral

damages may be recovered where the

defendant is shown to have acted

fraudulently or in bad faith.17 Malice or

bad faith implies a conscious and

intentional design to do a wrongful act for

http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/october2014/191101.pdf








122

a dishonest purpose or moral obliquity.18

However, a conscious or intentional design

need not always be present because

negligence may occasionally be so gross

as to amount to malice or bad faith.19

Hence, bad faith in the context of Article

2220 of the Civil Code includes gross

negligence.20cralawred

BPI Express Credit contends that it was

not grossly negligent in refusing to lift the

suspension of Armovit's credit card

privileges inasmuch as she had not

complied with the requisite submission of

a new application form; and that under

the circumstances its negligence, if any,

was not so gross as to amount to malice

or bad faith following the ruling in Far East

Bank and Trust Company v. Court of

Appeals.21cralawred

The Court disagrees with the contentions

of BPI Express Credit. The Terms and

Conditions Governing the Issuance and

Use of the BPI Express Credit Card22

printed on the credit card application form

spelled out the terms and conditions of

the contract between BPI Express Credit

and its card holders, including Armovit.

Such terms and conditions determined the

rights and obligations of the parties.23 Yet,

a review of such terms and conditions did

not reveal that Armovit needed to submit

her new application as the antecedent

condition for her credit card to be taken

out of the list of suspended cards.

Considering that the terms and conditions

nowhere stated that the card holder must

submit the new application form in order

to reactivate her credit card, to allow BPI

Express Credit to impose the duty to

submit the new application form in order

to enable Armovit to reactivate the credit

card would contravene the Parol Evidence

Rule.24 Indeed, there was no agreement

between the parties to add the submission

of the new application form as the means

to reactivate the credit card. When she did

not promptly settle her outstanding

balance, BPI Express Credit sent a

message on March 19, 1992 demanding

payment with the warning that her failure

to pay would force it to temporarily

suspend her credit card effective March

31, 1992. It then sent another demand

letter dated March 31, 1992 requesting

her to settle her obligation in order to lift

the suspension of her credit card and

prevent its cancellation. In April 1992, she

paid her obligation. In the context of the

contemporaneous and subsequent acts of

the parties, the only condition for the

reinstatement of her credit card was the

payment of her outstanding obligation.25

Had it intended otherwise, BPI Express

Credit would have surely informed her of

the additional requirement in its letters of

March 19, 1992 and March 31, 1992. That

it did not do so confirmed that they did

not agree on having her submit the new

application form as the condition to

reactivate her credit card.

• Esperanza C. Carinan Vs. Sps. Gavino

Cuento, et al.G.R. No. 198636. October

8, 2014

• In order to sufficiently substantiate

her claim that the money paid by

the respondents was actually a

donation, Esperanza should have

also submitted in court a copy of

their written contract evincing such

agreement. Article 748 of the New

Civil Code (NCC), which applies to

donations of money, is explicit on

this point as it

reads:chanRoblesvirtualLawlibrary

•

• Art. 748. The donation of a

movable may be made orally or in

writing.

•

• An oral donation requires the

simultaneous delivery of the thing

or of the document representing

the right donated.

•

• If the value of the personal

property donated exceeds five

thousand pesos, the donation and

the acceptance shall be made in

writing. Otherwise, the donation

shall be void.

•

• As the Court ruled in Moreño-

Lentfer v. Wolff,22 a donation must






123

comply with the mandatory formal

requirements set forth by law for

its validity. When the subject of

donation is purchase money,

Article 748 of the NCC is

applicable. Accordingly, the

donation of money as well as its

acceptance should be in writing.

Otherwise, the donation is invalid

for non-compliance with the formal

requisites prescribed by

law.23cralawlawlibrary

•

• The respondents’ statement that

they paid for Esperanza’s

obligations because they wanted to

help her did not contradict an

understanding for the return of the

claimed amounts. Clearly, the aid

then needed by Esperanza was for

the immediate production of the

money that could pay for her

obligations to the GSIS and effect

transfer of title, in order that her

payments and interest over the

property would not be forfeited.

The help accorded by the

respondents corresponded to such

need. It did not follow that the

respondents could no longer be

allowed to later demand the

repayment. In disputing the claim

against her, Esperanza imputed

deceit upon the respondents and

claimed that they misled her into

their real intention behind the

payment of her obligations and

possession of TCT No. T-636804.

Deceit, however, is a serious

charge which must be proven by

more than just bare allegations.

•

• Although the Court affirms the trial

and appellate courts’ ruling that,

first, there was no donation in this

case and, second, the respondents

are entitled to a return of the

amounts which they spent for the

subject property, it still cannot

sustain the respondents’ plea for

Esperanza’s full conveyance of the

subject property. To impose the

property’s transfer to the

respondents’ names would totally

disregard Esperanza’s interest and

the payments which she made for

the property’s purchase. Thus, the

principal amount to be returned to

the respondents shall only pertain

to the amounts that they actually

paid or spent. The Court finds no

cogent reason to disturb the trial

court’s resolve to require in its

Decision dated December 15,

2009, around four years after the

sums were paid for the subject

property’s acquisition and

renovation, the immediate return

of the borrowed amounts.

• Celerina J. Santos Vs. Ricardo T.

SantosG.R. No. 187061. October 8,

2014

The proper remedy for a judicial

declaration of presumptive death obtained

by extrinsic fraud is an action to annul the

judgment. An affidavit of reappearance is

not the proper remedy when the person

declared presumptively dead has never

been absent.

Annulment of judgment is the remedy

when the Regional Trial Court's judgment,

order, or resolution has become final, and

the "remedies of new trial, appeal, petition

for relief (or other appropriate remedies)

are no longer available through no fault of

the petitioner."36chanrobleslaw

The grounds for annulment of judgment

are extrinsic fraud and lack of

jurisdiction.37 This court defined extrinsic

fraud in Stilianopulos v. City of

Legaspi:38chanrobleslaw

For fraud to become a basis for annulment

of judgment, it has to be extrinsic or

actual. It is intrinsic when the fraudulent

acts pertain to an issue involved in the

original action or where the acts

constituting the fraud were or could have

been litigated, It is extrinsic or collateral

when a litigant commits acts outside of

the trial which prevents a parly from

having a real contest, or from presenting

all of his case, such that there is no fair

submission of the controversy.39

(Emphasis supplied)






124

Celerina alleged in her petition for

annulment of judgment that there was

fraud when Ricardo deliberately made

false allegations in the court with respect

to her residence.40 Ricardo also falsely

claimed that she was absent for 12 years.

There was also no publication of the notice

of hearing of Ricardo's petition in a

newspaper of general circulation.41

Celerina claimed that because of these,

she was deprived of notice and

opportunity to oppose Ricardo's petition to

declare her presumptively

dead.42chanrobleslaw

Celerina alleged that all the facts

supporting Ricardo's petition for

declaration of presumptive death were

false.43 Celerina further claimed that the

court did not acquire jurisdiction because

the Office of the Solicitor General and the

Provincial Prosecutor's Office were not

given copies of Ricardo's

petition.44chanrobleslaw

These are allegations of extrinsic fraud

and lack of jurisdiction. Celerina alleged in

her petition with the Court of Appeals

sufficient ground/s for annulment of

judgment.

Celerina filed her petition for annulment of

judgment45 on November 17, 2008. This

was less than two years from the July 27,

2007 decision declaring her presumptively

dead and about a month from her

discovery of the decision in October 2008.

The petition was, therefore, filed within

the four-year period allowed by law in

case of extrinsic fraud, and before the

action is barred by laches, which is the

period allowed in case of lack of

jurisdiction.46chanrobleslaw

There was also no other sufficient remedy

available to Celerina at the time of her

discovery of the fraud perpetrated on her.

The choice of remedy is important

because remedies carry with them certain

admissions, presumptions, and conditions.

The Family Code provides that it is the

proof of absence of a spouse for four

consecutive years, coupled with a well-

founded belief by the present spouse that

the absent spouse is already dead, that

constitutes a justification for a second

marriage during the subsistence of

another marriage.47chanrobleslaw

The Family Code also provides that the

second marriage is in danger of being

terminated by the presumptively dead

spouse when he or she reappears.

Thus:chanRoblesvirtualLawlibrary

Article 42. The subsequent marriage

referred to in the preceding Article shall

be automatically terminated by the

recording of the affidavit of reappearance

of the absent spouse, unless there is a

judgment annulling the previous marriage

or declaring it void ab initio.

A sworn statement of the fact and

circumstances of reappearance shall be

recorded in the civil registry of the

residence of the parties to the subsequent

marriage at the instance of any interested

person, with due notice to the spouses of

the subsequent marriage and without

prejudice to the fact of reappearance

being judicially determined in case such

fact is disputed. (Emphasis supplied)

In other words, the Family Code provides

the presumptively dead spouse with the

remedy of terminating the subsequent

marriage by mere reappearance.

The filing of an affidavit of reappearance is

an admission on the part of the first

spouse that his or her marriage to the

present spouse was terminated when he

or she was declared absent or

presumptively dead.

Moreover, a close reading of the entire

Article 42 reveals that the termination of

the subsequent marriage by reappearance

is subject to several conditions: (1) the

non-existence of a judgment annulling the

previous marriage or declaring it void ab

initio; (2) recording in the civil registry of




125

the residence of the parties to the

subsequent marriage of the sworn

statement of fact and circumstances of

reappearance; (3) due notice to the

spouses of the subsequent marriage of the

fact of reappearance; and (4) the fact of

reappearance must either be undisputed

or judicially determined.

The existence of these conditions means

that reappearance does not always

immediately cause the subsequent

marriage's termination. Reappearance of

the absent or presumptively dead spouse

will cause the termination of the

subsequent marriage only when all the

conditions enumerated in the Family Code

are present.

Hence, the subsequent marriage may still

subsist despite the absent or

presumptively dead spouse's

reappearance (1) if the first marriage has

already been annulled or has been

declared a nullity; (2) if the sworn

statement of the reappearance is not

recorded in the civil registry of the

subsequent spouses' residence; (3) if

there is no notice to the subsequent

spouses; or (4) if the fact of reappearance

is disputed in the proper courts of law,

and no judgment is yet rendered

confirming, such fact of reappearance.

When subsequent marriages are

contracted after a judicial declaration of

presumptive death, a presumption arises

that the first spouse is already dead and

that the second marriage is legal. This

presumption should prevail over the

continuance of the marital relations with

the first spouse.48 The second marriage,

as with all marriages, is presumed valid.49

The burden of proof to show that the first

marriage was not properly dissolved rests

on the person assailing the validity of the

second marriage.50chanrobleslaw

This court recognized the conditional

nature of reappearance as a cause for

terminating the subsequent marriage in

Social Security System v. Vda. de

Bailon.51 This court noted52 that mere

reappearance will not terminate the

subsequent marriage even if the parties to

the subsequent marriage were notified if

there was "no step . . . taken to terminate

the subsequent marriage, either by [filing

an] affidavit [of reappearance] or by court

action[.]"53 "Since the second marriage

has been contracted because of a

presumption that the former spouse is

dead, such presumption continues inspite

of the spouse's physical reappearance,

and by fiction of law, he or she must still

be regarded as legally an absentee until

the subsequent marriage is terminated as

provided by law."54chanrobleslaw

The choice of the proper remedy is also

important for purposes of determining the

status of the second marriage and the

liabilities of the spouse who, in bad faith,

claimed that the other spouse was absent.

A second marriage is bigamous while the

first subsists. However, a bigamous

subsequent marriage may be considered

valid when the following are

present:chanRoblesvirtualLawlibrary

1) The prior spouse had been absent

for four consecutive years;

2) The spouse present has a well-

founded belief that the absent

spouse was already dead;

3) There must be a summary

proceeding for the declaration of

presumptive death of the absent

spouse; and

4) There is a court declaration of

presumptive death of the absent

spouse.55

A subsequent marriage contracted in bad

faith, even if it was contracted after a

court declaration of presumptive death,

lacks the requirement of a well-founded

belief56 that the spouse is already dead.

The first marriage will not be considered

as. validly terminated. Marriages

contracted prior to the valid termination of

a subsisting marriage are generally

considered bigamous and void.57 Only a

subsequent marriage contracted in good

faith is protected by law.




126

Therefore, the party who contracted the

subsequent marriage in bad faith is also

not immune from an action to declare his

subsequent marriage void for being

bigamous. The prohibition against

marriage during the subsistence of

another marriage still

applies.58chanrobleslaw

If, as Celerina contends, Ricardo was in

bad faith when he filed his petition to

declare her presumptively dead and when

he contracted the subsequent marriage,

such marriage would be considered void

for being bigamous under Article 35(4) of

the Family Code. This is because the

circumstances lack the element of "well-

founded belief under Article 41 of the

Family Code, which is essential for the

exception to the rule against bigamous

marriages to apply.59chanrobleslaw

The provision on reappearance in the

Family Code as a remedy to effect the

termination of the subsequent marriage

does not preclude the spouse who was

declared presumptively dead from availing

other remedies existing in law. This court

had, in fact, recognized that a subsequent

marriage may also be terminated by filing

"an action in court to prove the

reappearance of the absentee and obtain

a declaration of dissolution or termination

of the subsequent

marriage."60chanrobleslaw

Celerina does not admit to have been

absent. She also seeks not merely the

termination of the subsequent marriage

but also the nullification of its effects. She

contends that reappearance is not a

sufficient remedy because it will only

terminate the subsequent marriage but

not nullify the effects of the declaration of

her presumptive death and the

subsequent marriage.

Celerina is correct. Since an undisturbed

subsequent marriage under Article 42 of

the Family Code is valid until terminated,

the "children of such marriage shall be

considered legitimate, and the property

relations of the spouse[s] in such

marriage will be the same as in valid

marriages."61 If it is terminated by mere

reappearance, the children of the

subsequent marriage conceived before the

termination shall still be considered

legitimate.62 Moreover, a judgment

declaring presumptive death is a defense

against prosecution for

bigamy.63chanrobleslaw

It is true that in most cases, an action to

declare the nullity of the subsequent

marriage may nullify the effects of the

subsequent marriage, specifically, in

relation to the status of children and the

prospect of prosecuting a respondent for

bigamy.

However, "a Petition for Declaration of

Absolute Nullity of Void Marriages may be

filed solely by the husband or

wife."64 This means that even if Celerina

is a real party in interest who stands to be

benefited or injured by the outcome of an

action to nullify the second marriage,65

this remedy is not available to her.

Therefore, for the purpose of not only

terminating the subsequent marriage but

also of nullifying the effects of the

declaration of presumptive death and the

subsequent marriage, mere filing of an

affidavit of reappearance would not

suffice. Celerina's choice to file an action

for annulment of judgment will, therefore,

lie.

• Extraordinary Development Corporation

Vs. Hermina F. Samson-Bico, et

al.G.R. No. 191090. October 13, 2014

• aving established respondents’ co-

ownership rights over the subject

property, we find no error in the

appellate court’s ruling sustaining

the validity of the Deed of Absolute

Sale but only with respect to the

rights of the heirs of Juan over

one-half of the property.

•


recognizes the absolute right of a

co-owner to freely dispose of his

pro indiviso share as well as the







127

fruits and other benefits arising

from that share, independently of

the other co-owners,27

thus:chanRoblesvirtualLawlibrary

•

• Art. 493. Each co-owner shall have

the full ownership of his part of the

fruits and benefits pertaining

thereto, and he may therefore

alienate, assign or mortgage it, and

even substitute another person in

its enjoyment, except when

personal rights are involved. But

the effect of the alienation or the

mortgage, with respect to the co-

owners, shall be limited to the

portion which may be allotted to

him in the division upon the

termination of the co-ownership.

• We are also in full accord with the

appellate court’s order for the heirs

of Juan to return one-half of the

purchase price to EDC. There is

unjust enrichment when a person

unjustly retains a benefit to the

loss of another, or when a person

retains money or property of

another against the fundamental

principles of justice, equity and

good conscience.30 Therefore, it is

correct for the Court of Appeals to

order the heirs of Juan to return

the amount of P1,487,400.00,

representing one-half of the

purchase price to prevent unjust

enrichment at the expense of EDC.

• Residents of Lower Atab & Teachers'

Village, Sto. Tomas Proper Barangay,

Baguio City, represented by Beatrice

T. Pulas, et al. Vs. Sta. Monica

Industrial & Development

CorporationG.R. No. 198878. October

15, 2014

• For an action to quiet title to

prosper, two indispensable

requisites must be present,

namely: “(1) the plaintiff or

complainant has a legal or an

equitable title to or interest in the

real property subject of the action;

and (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.”28cralawlawlibrary

•

• “Legal title denotes registered

ownership, while equitable title

means beneficial

ownership.”29cralawlawlibrary

•

• Beneficial ownership has been

defined as ownership recognized by

law and capable of being enforced

in the courts at the suit of the

beneficial owner. Black’s Law

Dictionary indicates that the term

is used in two senses: first, to

indicate the interest of a

beneficiary in trust property (also

called “equitable ownership”); and

second, to refer to the power of a

corporate shareholder to buy or

sell the shares, though the

shareholder is not registered in the

corporation’s books as the

owner. Usually, beneficial

ownership is distinguished from

naked ownership, which is the

enjoyment of all the benefits and

privileges of ownership, as against

possession of the bare title to

property.30chanrobleslaw

•

• Petitioners do not have legal or

equitable title to the subject

property. Evidently, there are no

certificates of title in their

respective names. And by their

own admission in their pleadings,

specifically in their pre-trial brief

and memorandum before the trial

court, they acknowledged that they

applied for the purchase of the

property from the government,

through townsite sales applications

coursed through the DENR. In

their Petition before this Court,

they particularly prayed that TCT

No. T-63184 be nullified in order

that the said title would not hinder

the approval of their townsite sales

applications pending with the

DENR. Thus, petitioners admitted










128

that they are not the owners of the

subject property; the same

constitutes state or government

land which they would like to

acquire by purchase. It would

have been different if they were

directly claiming the property as

their own as a result of acquisitive

prescription, which would then give

them the requisite equitable

title. By stating that they were in

the process of applying to purchase

the subject property from the

government, they admitted that

they had no such equitable title, at

the very least, which should allow

them to prosecute a case for

quieting of title.

•

• In short, petitioners recognize that

legal and equitable title to the

subject property lies in the

State. Thus, as to them, quieting

of title is not an available remedy.

• Carlos A. Loria Vs. Ludolfo P. Muñoz,

Jr.G.R. No. 187240. October 15, 2014

No person should unjustly enrich himself

or herself at the expense of another.

Loria must return Munoz’s

P2,000,000.00

under the principle of unjust

enrichment

Under Article 22 of the Civil Code of the

Philippines, “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 to the loss of

another, or when a person retains money

or property of another against the

fundamental principles of justice, equity

and good conscience.”55cralawlawlibrary

The principle of unjust enrichment has two

conditions. First, a person must have

been benefited without a real or valid

basis or justification. Second, the benefit

was derived at another person’s expense

or damage.56cralawlawlibrary

In this case, Loria received P2,000,000.00

from Muñoz for a subcontract of a

government project to dredge the

Masarawag and San Francisco Rivers in

Guinobatan, Albay. However, contrary to

the parties’ agreement, Munoz was not

subcontracted for the project.

Nevertheless, Loria retained the

P2,000,000.00.

Thus, Loria was unjustly enriched. He

retained Munoz’s money without valid

basis or justification. Under Article 22 of

the Civil Code of the Philippines, Loria

must return the P2,000,000.00 to Muñoz.

• Rolando Robles, represented by Atty.

Clara C. Espiritu Vs. Fernando Fidel

Yapcinco, et al.G.R. No. 169568.

October 22, 2014

The dispute involves the ownership of a

judicially-foreclosed parcel of land sold at

a public auction, but which sale was not

judicially confirmed. On one side is the

petitioner, the successor in interest of the

purchaser in the public auction, and, on

the other, the heirs of the mortgagor, who

never manifested interest in redeeming

the property from the time of the

foreclosure.

Ruling of the Court

The petition for review is meritorious.

Before anything more, the Court clarifies

that the failure of Apolinario Cruz to

register the certificate of sale was of no

consequence in this adjudication. The

registration of the sale is required only in

extra-judicial foreclosure sale because the

date of the registration is the reckoning

point for the exercise of the right of

redemption. In contrast, the registration

of the sale is superfluous in judicial

foreclosure because only the equity of

redemption is granted to the mortgagor,

except in mortgages with banking

institutions.34 The equity of redemption is

the right of the defendant mortgagor to

extinguish the mortgage and retain

ownership of the property by paying the

secured debt within the 90-day period

after the judgment becomes final, or even









129

after the foreclosure sale but prior to the

confirmation of the sale.35 In this light, it

was patent error for the CA to declare

that: "By Apolinario Cruz's failure to

register the 18 March 1958 Certificate of

Absolute Sale in the Office of the Register

of Deeds, the period of redemption did not

commence to run."36

The applicable rule on March 18, 1959,

the date of the foreclosure sale, was

Section 3, Rule 7037 of the Rules of Court,

which relevantly provided that: "Such sale

shall not affect the rights of persons

holding prior incumbrances upon the

property or a part thereof, and when

confirmed by an order of the court, it shall

operate to divest the rights of all the

parties to the action and to vest their

rights in the purchaser, subject to such

rights of redemption as may be allowed by

law." The records show that no judicial

confirmation of the sale was made despite

the lapse of more than 40 years since the

date of the sale. Hence, it cannot be said

that title was fully vested in Apolinario

Cruz.

However, the Court will not be dispensing

true and effective justice if it denies the

petition for review on the basis alone of

the absence of the judicial confirmation of

the sale. Although procedural rules are not

to be belittled or disregarded considering

that they insure an orderly and speedy

administration of justice, it is equally true

that litigation is not a game of

technicalities. Law and jurisprudence

grant to the courts the prerogative to

relax compliance with procedural rules of

even the most mandatory character,

mindful of the duty to reconcile both the

need to speedily put an end to litigation

and the parties' right to an opportunity to

be heard.38 The Rules of Court itself calls

for a liberal construction of its rules with

the view of promoting their objective of

securing a just, speedy and inexpensive

disposition of every action and

proceeding.39

To better serve the ends of justice, the

Court holds that the real issue to consider

and resolve is who between the parties

had the better right to the property, not

whether there was a valid transfer of

ownership to Apolinario Cruz.

It was not denied that Fernando F.

Yapcinco, as the mortgagor, did not pay

his obligation, and that his default led to

the filing of the action for judicial

foreclosure against him, in which he

actively participated in the proceedings,

and upon his death was substituted by the

administratrix of his estate. In the end,

the decision in the action for judicial

foreclosure called for the holding of the

public sale of the mortgaged property.

Due to the subsequent failure of the

estate of Fernando F. Yapcinco to exercise

the equity of redemption, the property

was sold at the public sale, and Apolinario

Cruz was declared the highest bidder.

Under the circumstances, the respondents

as the successors-in-interest of Fernando

F. Yapcinco were fully bound by that

decision and by the result of the ensuing

foreclosure sale.

In this regard, determining whether

Patrocinio Yapcinco Kelly, the

adminsitratrix of the estate, and

respondent Patrocinio Yapcinco were one

and the same person was not necessary.

Even if they were not one and the same

person, they were both bound by the

foreclosure proceedings by virtue of their

being both successors-in-interest of

Fernando F. Yapcinco.

Although the respondents admitted the

existence of the mortgage, they somehow

denied knowledge of its foreclosure. Yet,

in asserting their superior right to the

property, they relied on and cited the

entry dated February 11, 1992 concerning

the release of mortgage inscribed on TCT

No. 20458. This duplicity the Court cannot

countenance. Being the heirs and

successors-in-interest of the late Fernando

F. Yapcinco, they could not repudiate the

foreclosure sale and its consequences, and

escape such consequences that bound and

concluded their predecessor-in-interest

whose shoes they only stepped into.40




130

Given their position on the lack of judicial

confirmation of the sale in favor of

Apolinario Cruz, they should have

extinguished the mortgage by exercising

their equity of redemption through paying

the secured debt. They did not do so, and,

instead, they sought the annulment of TCT

No. 243719 and caused the issuance of

another title in their name.

Even assuming that there was no

foreclosure of the mortgage, such that the

respondents did not need to exercise the

equity of redemption, the legal obligation

to pay off the mortgage indebtedness in

favor of Apolinario Cruz nonetheless

devolved on them and the estate of

Fernando F. Yapcinco. They could not

sincerely rely on the entry about the

release or cancellation of the mortgage in

TCT No. 20458, because such entry

appeared to be unfounded in the face of

the lack of any showing by them that

either they or the estate of Fernando F.

Yapcinco had settled the obligation.

The petitioner did not tender any

explanation for the failure of Apolinario

Cruz to secure the judicial confirmation of

the sale. Fie reminds only that Apolinario

Cruz and his successors-in-interest and

representatives have been in actual,

notorious, public and uninterrupted

possession of the property from the time

of his purchase at the foreclosure sale

until the present.

The effect of the failure of Apolinario Cruz

to obtain the judicial confirmation was

only to prevent the title to the property

from being transferred to him. For sure,

such failure did not give rise to any right

in favor of the mortgagor or the

respondents as his successors-in-interest

to take back the property already validly

sold through public auction. Nor did such

failure invalidate the foreclosure

proceedings. To maintain otherwise would

render nugatory the judicial foreclosure

and foreclosure sale, thus unduly

disturbing judicial stability. The non-

transfer of the title notwithstanding,

Apolinario Cruz as the purchaser should

not be deprived of the property purchased

at the foreclosure sale. With the

respondents having been fully aware of

the mortgage, and being legally bound by

the judicial foreclosure and consequent

public sale, and in view of the

unquestioned possession by Apolinario

Cruz and his successors-in-interest

(including the petitioner) from the time of

the foreclosure sale until the present, the

respondents could not assert any better

right to the property. It would be the

height of inequity to still permit them to

regain the property on the basis alone of

the lack of judicial confirmation of the

sale. After all, under the applicable rule

earlier cited, the judicial confirmation

operated only "to divest the rights of all

the parties to the action and to vest

their rights in the purchaser, subject to

such rights of redemption as may be

allowed by law."

Consequently, the late Fernando F.

Yapcinco and the respondents as his

successors-in-interest were divested of

their right in the property, for they did not

duly exercise the equity of redemption

decreed in the decision of the trial court.

With Yapcinco having thereby effectively

ceased to be the owner of the property

sold, the property was taken out of the

mass of the assets of Yapcinco upon the

expiration of the equity of redemption.

• Republic of the Philippines Vs. Apostolita

San Mateo, Brigida Tapang, Rosita

Accion, and Celso MercadoG.R. No.

203560. November 10, 2014

• Further, it is not enough for the

PENRQ or CENRO 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

http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/november2014/203560.pdf






131

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. These facts must be

established to prove that the land

is alienable and disposable.

Respondent failed to do so because

the certifications presented by

respondent do not, by themselves,

prove that the land is alienable and

disposable.20 (emphasis supplied)

•

• Clearly, therefore, a CENRO

certification that a certain property

is alienable, without the

corresponding proof that the DENR

Secretary had approved such

certification, is insufficient to

support a petition for registration

of land. Both certification and

approval are required to be

presented as proofs that the land is

alienable. Otherwise, the petition

must be denied.

• Metro Manila Shopping Mecca Corp.,

Shoemart, Inc., SM Prime Holdings,

Inc., Star Appliances Center, Super

Value, Inc., Ace Hardware Philippines,

Inc., Health and Beauty, Inc.,

Jollimart Philippines Corp. Vs. Ms.

Liberty M. Toledo, in her capacity as

City Treasurer of Manila and The City

of ManilaG.R. No. 190818. November

10, 2014

• A compromise agreement is a

contract whereby the parties, by

making reciprocal concessions,

avoid a litigation or put an end to

one already commenced.8 It

contemplates mutual concessions

and mutual gains to avoid the

expenses of litigation; or when

litigation has already begun, to end

it because of the uncertainty of the

result.9 Its validity is dependent

upon the fulfillment of the

requisites and principles of

contracts dictated by law; and its

terms and conditions must not be

contrary to law, morals, good

customs, public policy, and public

order.10 When given judicial

approval, a compromise agreement

becomes more than a contract

binding upon the parties. Having

been sanctioned by the court, it is

entered as a determination of a

controversy and has the force and

effect of a judgment. It is

immediately executory and not

appealable, except for vices of

consent or forgery. The

nonfulfillment of its terms and

conditions justifies the issuance of

a writ of execution; in such an

instance, execution becomes a

ministerial duty of the court.11

•

• A review of the whereas clauses12

of the UCA reveals the various

court cases filed by petitioners,

including this case, for the refund

and/or issuance of tax credit

covering the local business taxes

payments they paid to respondent

City of Manila pursuant to Section

21 of the latter's Revenue Code.13

Thus, contrary to the submission of

respondents, the local business

taxes subject of the instant case is

clearly covered by the UCA since

they were also paid in accordance

with the same provision of the

Revenue Code of Manila.

•

• In this relation, it is observed that

the present case would have been

rendered moot and academic had

the parties informed the Court of

the UCA's supervening execution.14

Be that as it may, and considering

that: (a) the UCA appears to have

been executed in accordance with

the requirements of a valid

compromise agreement; (b) the

UCA was executed more than a

year prior to the promulgation of

the subject Decision; and (c) the

result of both the UCA and the

subject Decision are practically

identical, i.e., that petitioners are

not entitled to any tax













132

refund/credit, the Court herein

resolves to approve and adopt the

pertinent terms and conditions of

the UCA insofar as they govern the

settlement of the present dispute.

• Sps. Felipe Solitarios and Julia Torda Vs.

Sps. Gaston Jaque and Lilia

JaqueG.R. No. 199852. November 12,

2014

• Issue

•

• From the foregoing narration of

facts, it is abundantly clear that the

only material point of inquiry is

whether the parties effectively

entered into a contract of absolute

sale or an equitable mortgage of

Lot

4089.ChanRoblesVirtualawlibrary

At the outset, We note that, contrary to

the finding of the CA, petitioner spouses

Solitarios actually presented before the

RTC their position that the real agreement

between the parties was a mortgage, and

not a sale. Being unlettered, petitioners

may have averred that the deeds of sale

and TCT presented by respondents were

forgeries, obtained as they were through

fraud and machination. However, their

saying that the sale instruments were

"fictitious" and their signatures thereon

were "forged" amounts to alleging that

they never agreed to the sale of their lot,

and they never intended to sign such

conveyances. This reality is supported by

the testimony of petitioner Felipe

Solitarios that was offered to prove the

true intention of the parties — that Lot

4089 was only mortgaged, not sold, to the

Jaques

The Court is, therefore, not precluded

from looking into the real intentions of the

parties in order to resolve the present

controversy. For that reason, the Court

takes guidance from Article 1370 of the

Civil Code, which instructs that "if the

words [of a contract] appear to be

contrary to the evident intention of the

parties, the latter shall prevail over the

former." Indeed, it is firmly settled that

clarity of contract terms and the name

given to it does not bar courts from

determining the true intent of the parties.

In Zamora vs. Court of Appeals,7 the

Court elucidated that —

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.8

Further, in resolving this kind of

controversy, the doctrinal teaching of

Reyes vs. Court of Appeals9 impels us to

give utmost consideration to the intention

of the parties in light of the relative

situation of each, and the circumstances

surrounding the execution of the contract,

thus:chanroblesvirtuallawlibrary

In determining whether a deed absolute

inform is a mortgage, the court is not

limited to the written memorials of the

transaction. 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 all the surrounding circumstances, such

as the relative situation of the parties at

that time, the attitude, acts, conduct,

declarations of the parties, the

negotiations between them leading to the

deed, and generally, all pertinent facts

having a tendency to fix and determine

the real nature of their design and

understanding, x x x

There is no single conclusive test to

determine whether a deed of sale,

absolute on its face, is really a simple loan

accommodation secured by a mortgage.10

However, Article 1602 in relation to Article

1604 of the Civil Code enumerates several

instances when a contract, purporting to

be, and in fact styled as, an absolute sale,

is presumed to be an equitable mortgage,







133

thus:chanroblesvirtuallawlibrary

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;cralawlawlibrary

(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;cralawlawlibrary

(4) When the purchaser retains for himself

a part of the purchase

price;cralawlawlibrary

(5) When the vendor binds himself to pay

the taxes on the thing

sold;cralawlawlibrary

(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."

Art. 1604. The provisions of Article 1602

shall also apply to a contract purporting to

be an absolute sale.

As evident from Article 1602 itself, the

presence of any of the circumstances set

forth therein suffices for a contract to be

deemed an equitable mortgage. No

concurrence or an overwhelming number

is needed.12

With the foregoing in mind, We thus

declare that the transaction between the

parties of the present case is actually one

of equitable mortgage pursuant to the

foregoing provisions of the Civil Code. It

has never denied by respondents that the

petitioners, the spouses Solitarios, have

remained in possession of the subject

property and exercised acts of ownership

over the said lot even after the purported

absolute sale of Lot 4089. This fact is

immediately apparent from the

testimonies of the parties and the

evidence extant on record, showing that

the real intention of the parties was for

the transaction to secure the payment of a

debt. Nothing more.

Petitioner's Possession of the

Subject Property after the Purported

Sale

During pre-trial, the Jaques admitted that

the spouses Solitarios were in possession

of the subject property.13 Gaston Jaque

likewise confirmed that petitioners were

allowed to produce copra and till the rice

field, which comprise one-half of the lot

that was previously covered by the real

estate mortgage, after said portion was

allegedly sold to them.14

This Court had held that a purported

contract of sale where the vendor remains

in physical possession of the land, as

lessee or otherwise, is an indicium of an

equitable mortgage.15 In Rockville v. Sps.

Culla,16 We explained that the reason for

this rule lies in the legal reality that in a

contract of sale, the legal title to the

property is immediately transferred to the

vendee. Thus, retention by the vendor of

the possession of the property is

inconsistent with the vendee's acquisition

of ownership under a true sale. It

discloses, in the alleged vendee, a lack of

interest in the property that belies the

truthfulness of the sale.

During the period material to the present

controversy, the petitioners, spouses

Solitarios, retained actual possession of

the property. This was never disputed. If

the transaction had really been one of




134

sale, as the Jaques claim, they should

have asserted their rights for the

immediate delivery and possession of the

lot instead of allowing the spouses

Solitarios to freely stay in the premises for

almost seventeen (17) years from the

time of the purported sale until their filing

of the complaint. Human conduct and

experience reveal that an actual owner of

a productive land will not allow the

passage of a long period of time, as in this

case, without asserting his rights of

ownership.

Further, Gaston Jaque first claimed

possession of the subject property

through his mother-in-law, and then

through hired workers when the latter

passed away;17 not personally. It is also

undisputed that the Jaques never installed

a tenant on Lot 4089 and did not disturb

the Solitarios' possession of the same.18

On this note, We agree with the finding of

the RTC that the Jaques' alleged

possession of the subject property is

suspect and unsubstantial, and they never

possessed the same in the concept of

owners,

Not only is there a presumption that the

deeds of sale are an equitable mortgage,

it has been amply demonstrated by

petitioners that the deed of sale is

intended to be one of mortgage based on

the proof presented by petitioners and

propped up even by the admissions of

respondents.

The intention of the parties was for

the transaction to secure the

payment of a debt

To stress, Article 1602(6) of the Civil Code

provides that a transaction is presumed to

be an equitable

mortgage:chanroblesvirtuallawlibrary

(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.

This provision may very well be applied in

this case. There is sufficient basis to

indulge in the presumption that the

transaction between the parties was that

of an equitable mortgage and that the

spouses Solitarios never wanted to sell the

same to the Jaques.

The foregoing presumption finds support

in the following: First, the very testimony

of Gaston Jaque and the documents he

presented establish the existence of two

loans, which the Jaques extended to the

spouses Solitarios, that were secured by

the subject property; and, second, the

testimonies of the parties reveal that they

came to an agreement as to how these

loans would be paid.

The first loan was contracted when Gaston

Jaque gave the spouses Solitarios

P7,000.00 to help them redeem the

subject property from PNB.20 In effect, by

extending the P7,000.00 financial

assistance to the spouses Solitarios,

Gaston Jaque took over the loan, became

the lender and assumed the role of

mortgagee in place of PNB.

Thereafter, the spouses Solitarios

obtained a second loan from the Jaques

amounting to P3,000.00. This is evidenced

by an REM dated July 15, 1981 by virtue

of which the spouses Solitarios mortgaged

one-half of the subject property to the

Jaques to secure the payment of said

loan.

The parties testified that they entered into

a verbal agreement on the sharing of the

produce of the subject property. For his

part, it seemed that Gaston Jaque wanted

to impress upon the lower court that this

sharing agreement was fixed as a

condition for his allowing the Solitarios'

continued possession and cultivation of

the subject property. However, there is a

strong reason to believe that this

arrangement was, in fact, a payment

scheme for the debts that the spouses

Solitarios incurred.

It is, thus, clear from the foregoing that

the Jaques extended two loans to the

spouses Solitarios, who in exchange,




135

offered to the former the subject property,

not to transfer ownership thereto, but to

merely secure the payment of their debts.

This may be deduced from the testimonies

of both Felipe Solitarios and Gaston Jaque,

revealing the fact that they agreed upon

terms for the payment of the loans, in

particular, the sharing in the produce of

the lot.

Verily, the fact that the parties agreed on

payment terms is inconsistent with the

claim of the Jaques that when the spouses

Solitaries executed the questioned deeds

of sale they had no other intention but to

transfer ownership over the subject

property.

Thus, there is ground to presume that the

transaction between the parties was an

equitable mortgage and not a sale. There

is nothing in the records sufficient enough

to overturn this presumption.

The contracts of sale and mortgage

are of doubtful veracity

Furthermore, an examination of the

transaction documents casts doubts on

their validity. As alleged by petitioners,

their signatures therein appear to be

forged. We distinctly observe that each of

the three (3) documents bears different

versions of petitioner Julia Solitarios'

signatures. First, on the first page of the

1981 Deed of Sale, particularly on the

space provided for Julia Solitarios to

express her marital consent to the sale,

the signature "Julia Torda Solitarios"

appears.24 What is strange is that in the

acknowledgement page of the very same

document, Julia Solitarios purportedly

signed as "Julia T. Solitarios,"25cralawred

which is obviously different from the

signature appearing on the first page.

Further, while the 1981 REM document

contains the signature "Julia Turda,"26 the

1983 Deed of Sale bears the signature

"Julia Torda." These discrepancies suggest

that the documents were signed by

different persons.

Nevertheless, assuming arguendo that

these documents were really signed by

petitioners, there is reason to believe that

they did so without understanding their

real nature and that the Jaques never

explained to them the effects and

consequences of signing the same.

In negotiating the transactions,

the parties did not deal with

each other on equal terms

The Civil Code provisions that consider

certain types of sales as equitable

mortgages are intended for the protection

of the unlettered such as the spouses

Solitarios, who are penurious vis-a-vis

their creditors.27 In Cruz v. Court of

Appeals.28 the Court held -

Vendors covered by Art. 1602 usually find

themselves in an unequal position when

bargaining with the vendees, and will

readily sign onerous contracts to get the

money they need. Necessitous men are

not really free men in the sense that to

answer a pressing emergency they will

submit to any terms that the crafty may

impose on them. This is precisely the evil

that Art. 1602 seeks to guard against. The

evident intent of the provision is to give

the supposed vendor maximum

safeguards for the protection of his legal

rights under the true agreement of the

parties.

Without doubt, the spouses Solitarios

need the protection afforded by the Civil

Code provisions on equitable mortgage.

Certainly, the parties were negotiating on

unequal footing. As opposed to the

uneducated and impoverished farmer,

Felipe Solitarios,30 Gaston Jaque, was a

2nd Lieutenant of the Armed Forces of the

Philippines when he retired.31 Further,

Felipe Solitarios was constantly in financial

distress. He was constantly in debt and in

dire financial need. That he borrowed

money from the PNB twice, first in 1975

then in 1976, and mortgaged the subject

property to the Jaques suggest as much.

While Felipe Solitarios was able to settle

his 1975 loan and redeem the mortgage

with his own money,32 he no longer had

enough funds to redeem the subject




136

property after obtaining a loan in 1976.

Thus, he was impelled to borrow money

from the Jaques to get his property back

in 1981. Shortly after, on July 15, 1981,

Felipe Solitarios, again in desperate need,

borrowed money from Gaston Jaque and

mortgaged to the latter a portion of the

subject property.

It is, therefore, not difficult to imagine

that Felipe Solitarios quickly consented to

arrangements proposed to him by a

seemingly trustworthy Gaston Jaque, and

mindlessly signed instrumental documents

that were never explained to him and he

never fully understood but nonetheless

assured him of fast cash and easy

payment terms. What the court a quo

wrote in this regard merits

concurrence:chanroblesvirtuallawlibrary

Still another fact which militates against

plaintiffs' cause is their failure to prove

during trial that they really endeavored to

explain to the defendants the real nature

of the contract they were entering into, it

appearing that the defendants are of low

education compared to them especially

plaintiff Gaston Jaque who is a retired

military officer. The law requires that in

case one of the parties to a contract is

unable to read (or maybe of low

education), and fraud is alleged, the

person enforcing the contract must show

that the term thereof have been fully

explained to the former (Spouses

NenaArriola and Francisco Adolfo, et.al.

vs. Demetrio Lolita, Pedro, Nena, Brauliq

and Dominga, all surnamed Mahilum, et.

al. G.R. No. 123490, August 9, 2000).33

The law favors the least

transmission of rights

It is further established that when doubt

exists as to the true nature of the parties'

transaction, courts must construe such

transaction purporting to be a sale as an

equitable mortgage, as the latter involves

a lesser transmission of rights and

interests over the property in

controversy.34 Thus, in several cases, the

Court has not hesitated to declare a

purported contract of sale to be an

equitable mortgage based solely on one of

the enumerated circumstances under

Article 1602. So it should be in the

present case.

In Sps. Raymundo v. Sps. Bandong,35 the

Court observed that it is contrary to

human experience that a person would

easily part with his property after

incurring a debt. Rather, he would first

look for means to settle his obligation, and

the selling of a property on which the

house that shelters him and his family

stands, would be his last resort.

Here, the Court finds the spouses

Solitarios' alleged sale of the subject

property in favor of the Jaques simply

contrary to normal human behavior. Be it

remembered that the spouses Solitarios

depended much on this property as source

of income and livelihood. Further, they

made use of it to obtain and secure badly

needed loans. This property was so

important to them that they had to borrow

money from the Jaques to raise funds to

ensure its redemption. Furthermore, even

after the supposed sale, the spouses

Solitarios remained tied to this land as

they never left it to live in another place

and continued tilling and cultivating the

same. Thus, considering how valuable this

land was to the spouses Solitarios, being

their main, if not, only source of income, it

is hard to believe that they would easily

part with it and sell the same to another.

Furthermore, it is also difficult to

understand why, after going through all

the complications in redeeming the

property from PNB, the spouses Solitarios

would simply transfer this to the Jaques.

It is inconceivable that the spouses

Solitarios would sell their property just to

pay the PNB loan. It is more believable

that, if at all, they conveyed their land on

a temporary basis only, without any

intention to transfer ownership thereto

and with the assurance that upon the

payment of their debts, the same would

be returned to them.

The only reasonable conclusion that may




137

be derived from the execution of the

Deeds of Sale in favor of the Jaques is to

ensure that the Solitarios will pay their

obligation.

The transfer of the subject property

is a pactum commissorium

Further, We cannot allow the transfer of

ownership of Lot 4098 to the Jaques as it

would amount to condoning the prohibited

practice of pactum comissorium. Article

2088 of the Civil Code clearly provides

that a creditor cannot appropriate or

consolidate ownership over a mortgaged

property merely upon failure of the

mortgagor to pay a debt obligation,[36

viz.:chanroblesvirtuallawlibrary

Art. 2088. The creditor cannot appropriate

the things given by way of pledge or

mortgage, or dispose of them. Any

stipulation to the contrary is null and void.

The essence of pactum commissorium is

that ownership of the security will pass to

the creditor by the mere default of the

debtor. This Court has repeatedly declared

such arrangements as contrary to morals

and public policy.37

As We have repeatedly held, the only right

of a mortgagee in case of non-payment of

debt secured by mortgage would be to

foreclose the mortgage and have the

encumbered property sold to satisfy the

outstanding indebtedness. The

mortgagor's default does not operate to

automatically vest on the mortgagee the

ownership of the encumbered property,

for any such effect is against public policy,

as earlier indicated.38

Applying the principle of pactum

commissorium to equitable mortgages,

the Court, in Montevirgen vs. CA,39

enunciated that the consolidation of

ownership in the person of the mortgagee

in equity, merely upon failure of the

mortgagor in equity to pay the obligation,

would amount to a pactum commissorium.

The Court further articulated that if a

mortgagee in equity desires to obtain title

to a mortgaged property, the mortgagee's

proper remedy is to cause the foreclosure

of the mortgage in equity and buy it at a

foreclosure sale.

In Sps. Cruz vs. CA,40 the Court again

reiterated that, in an equitable mortgage,

perfect title over the mortgaged property

may not be secured in a pactum

commissorium fashion, but only by

causing the foreclosure of the mortgage

and buying the same in an auction sale.

The Court held -

Indeed, all the circumstances, taken

together, are familiar badges of an

equitable mortgage. Private respondents

could not in a pactum commissorium

fashion appropriate the disputed property

for themselves as they appeared to have

done; otherwise, their act will not be

countenanced by this Court being contrary

to good morals and public policy hence

void. If they wish to secure a perfect title

over the mortgaged property, they should

do so in accordance with law, i.e., by

foreclosing the mortgage and buying the

property in the auction sale.

It does not appear, under the premises,

that the Jaques availed themselves of the

remedy of foreclosure, or that they bought

the subject property in an auction sale

after the spouses Solitarios failed to pay

their debt obligation. What seems clear is

that the Jaques took advantage of the

spouses Solitarios' intellectual and

educational deficiency and urgent need of

money and made it appear that the latter

executed in their favor the questioned

Deeds of Sale, thereby automatically

appropriating unto themselves the subject

property upon their debtors' default.

The amount reflected in the 1981 Deed of

Sale is telling. The sum of P7,000.00

representing the alleged purchase price of

one-half of the subject property in the

1981 Deed of Sale is actually the amount

advanced to the spouses Solitarios by way

of loan. Other than the testimony of

Gaston Jaque, there is no evidence

showing that this purchase price was

actually paid or that the subject property




138

was bought in a foreclosure sale.

Further, it can be gleaned from the

testimony of Gaston Jaque that when the

spouses Solitarios failed to pay their loan

of P3,000.00, reflected in the July 15,

1981 REM covering the remaining half of

the subject property,41 the Jaques did not

foreclose the mortgage and purchase the

said lot in an auction sale. Rather, they

supposedly bought the lot directly from

the spouses Solitarios and offset the loan

amount against a portion of the supposed

purchase price they agreed upon.42

Indubitably, the subject property was

transferred to the Jaques in a prohibited

pactum commisorium manner and,

therefore, void. Thus, the foregoing

transaction and the registration of the

deeds of sale, by virtue of which the

Jaques were able to obtain the impugned

TCT No. 745 must be declared void.43

Furthermore, given that the transaction

between the parties is an equitable

mortgage, this means that the title to the

subject property actually remained with

Felipe Solitarios, as owner-mortgagor,

conformably with the well-established

doctrine that the mortgagee does not

become the owner of the mortgaged

property because the ownership remains

with the mortgagor.44 Thus, Felipe

Solitarios' ownership over the subject

property is not affected by the fact that

the same was already registered in the

name of the Jaques. The pronouncement

in Montevirgen v. Court of Appeals is

instructive:chanroblesvirtuallawlibrary

x x x Equity looks through the form and

considers the substance, and no kind of

engagement can be allowed which will

enable the parties to escape from the

equitable doctrine adverted to. In other

words, a conveyance of land,

accompanied by registration in the name

of the transferee and the issuance of a

new certificate, is no more secured from

the operation of this equitable doctrine

than the most informal conveyance that

could be devised.

Finally, the circumstance that the original

transaction was subsequently declared to

be an equitable mortgage must mean that

the title to the subject land which had

been transferred to private respondents

actually remained or is transferred back to

petitioners herein as owners-mortgagors,

conformably to the well-established

doctrine that the mortgagee does not

become the owner of the mortgaged

property because the ownership remains

with the mortgagor (Art. 2088, New Civil

Code).45

• S.V. More Pharma Corporation and Alberto

A. Santillana Vs. Drugmakers

Laboratories, Inc. and Eliezer Del

MundoG.R. Nos. 200408/200416.

November 12, 2014


•

• The primordial issue for the Court’s

resolution is whether or not the CA

correctly affirmed petitioners’

liability for breach of contract.


The consolidated petitions are partly

meritorious.

The existence of contractual breach in this

case revolves around the exclusive status

of Drugmakers as the manufacturer of the

subject pharmaceutical products which

was stipulated and, hence, recognized

under the following contracts: (a) the CMA

dated October 30, 1992 between

Drugmakers, as manufacturer, and S.V.

More, as the holder of the CPR covering

the pharmaceutical products; (b) the

Agreement dated May 31, 1993 covering

the change in ownership in E.A. Northam,

or the distributor of the pharmaceutical

products manufactured by Drugmakers

and covered by S.V. More’s CPR; and (c)

the Deed of Sale/Assignment of even date

between E.A. Northam and S.V. More,

whereby the former’s distributorship rights

were transferred to the latter.

In particular, the CMA states that

Drugmakers, being the exclusive

manufacturer of the subject

pharmaceutical products, had to first give








139

its written consent before S.V. More could

contract the services of another

manufacturer:chanroble

These provisions notwithstanding, records

disclose that petitioner S.V More, through

the CMPP and absent the prior written

consent of respondent Drugmakers, as

represented by its President, respondent

Eliezer, contracted the services of Hizon

Laboratories to manufacture some of the

pharmaceutical products covered by the

said contracts. Thus, since the CMPP with

Hizon Laboratories was executed on

October 23, 1993,54 or seven (7) days

prior to the expiration of the CMA on

October 30, 1993, it is clear that S.V.

More, as well as its President, petitioner

Alberto, who authorized the foregoing,

breached the obligation to recognize

Drugmakers as exclusive manufacturer,

thereby causing prejudice to the latter.

While the CA correctly affirmed the

existence of the aforementioned breach,

the Court, however, observes that the

appellate court’s award of actual damages

(due to loss of profits) in the amount of

P6,000,000.00 was erroneous due to

improper factual basis.

Records reveal that in their attempt to

prove their claim for loss of profits

corresponding to the aforesaid amount,

respondents based their computation

thereof on a Sales Projection Form55 for

the period November 1993 to February

1995.56 However, it is readily observable

that the breach occurred only for a

period of seven (7) days, or from

October 23, 1993 until October 30,

1993 – that is, the date when the CMA

expired. Notably, the CMA – from which

stems S.V. More’s obligation to recognize

Drugmakers’s status as the exclusive

manufacturer of the subject

pharmaceutical products and which was

only carried over in the other two (2)

above-discussed contracts – was never

renewed by the parties, 57 nor contained

an automatic renewal clause, rendering

the breach and its concomitant effect, i.e.,

loss of profits on the part of Drugmakers,

only extant for the limited period of, as

mentioned, seven (7) days.

Aside from the lack of substantiation as

regards the length of time for which

supposed profits were lost, it is also

evident that only six (6) of the 28

pharmaceutical products58 were caused by

petitioners to be manufactured by Hizon

Laboratories.

Since the sales projection on which the CA

based its award for actual damages was

derived from figures representing the

“alleged unregistered or fabricated sales

invoices” of E.A. Northam from 1990 to

199359 and the “desired profit” of 15-

20%,60 it would therefore be a legal

mishap to sustain that award. As case law

holds, the amount of loss warranting the

grant of actual or compensatory damages

must be proved with a reasonable degree

of certainty, based on competent proof

and the best evidence obtainable by the

injured party.61 The CA’s finding on

respondents’ supposed loss of profits in

the amount of P6,000,000.00 based on

the erroneous sales projection hardly

meets this requirement. Accordingly, it

must be set aside.

• Rolando S. Abadilla, Jr. Vs. Sps. Bonifacio

P. Obrero and Bernabela N.

ObreroG.R. No. 199448. November 12,

2014

• As holders of the disputed

land's

• TCT, the respondents are

entitled

• to its possession.

•

• "Ejectment proceedings are

summary proceedings intended to

provide an expeditious means of

protecting actual possession or

right to possession of property.

Title is not involved. The sole issue

to be resolved is who is entitled to

the physical or material possession

of the premises or possession de

factor."20 "Issues as to the right of

possession or ownership are not

involved in the action; evidence

thereon is not admissible, except

only for the purpose of determining







140

the issue of possession."21

•

• Thus, where the parties to an

ejectment case raise the issue of

ownership, the courts may pass

upon that issue but only to

determine who between the parties

has the better right to possess the

property. As such, any adjudication

of the ownership issue is not final

and binding; it is only provisional,

and not a bar to an action between

the same parties involving title to

the property.22

•

• Here, the right of possession

claimed by both parties is anchored

on ownership. The respondents

posited that they are the registered

owners of the subject land by

virtue of TCT No. T-38422 issued

on July 3, 2007. They further

asserted that their ownership

actually dates back to August 26,

1991 when the ownership over the

subject land was waived in their

favor by its previous owner, Palma

through an Affidavit of Waiver and

Quitclaim. They have occupied and

possessed it by residing thereon,

building structures for commercial

purposes and declaring it for realty

tax purposes. Meanwhile, the

petitioner contended that he and

his co-heirs are the owners of the

subject land having inherited it

from their father, Abadilla, Sr., who

in turn acquired it from the

respondents themselves through

an unregistered Deed of Absolute

Sale executed sometime in 1991.

•

• As between the petitioner's Deed of

Absolute Sale and the respondents'

TCT No. T-38422, the latter must

prevail. A certificate of title is

evidence of indefeasible and

incontrovertible title to the

property in favor of the person

whose name appears therein.23

"[A] title issued under the Torrens

system is entitled to all the

attributes of property ownership,

which necessarily includes

possession."24 Hence, as holders of

the Torrens title over the subject

land, the respondents are entitled

to its possession.

• The criminal case filed by Palma

against respondent Bonifacio

involving the Quitclaim through

which the respondents trace their

ownership is immaterial to the

controversy at bar. Questions on

the validity of a Torrens title are

outside the jurisdiction and

competence of the trial court in

ejectment proceedings which are

limited only to the determination of

physical possession.26 This is in

consonance with the settled

doctrine that questions relating to

the validity of a certificate of title

during ejectment proceedings are

deemed and proscribed as

collateral attack to such title. A

Torrens certificate of title cannot

be the subject of collateral attack.

The title represented by the

certificate cannot be changed,

altered, modified, enlarged, or

diminished except in a direct

proceeding.27 Thus, issues as to

the validity of the respondents' title

can only be definitively resolved in

a direct proceeding for cancellation

of title before the RTCs.

• Amada Cotoner-Zacarias Vs. Sps. Alfredo

Revilla and the Heirs of Paz Revilla

G.R. No. 190901. November 12, 2014

Well-settled is the rule that “conveyances

by virtue of a forged signature. . . are void

ab initio [as] [t]he absence of the

essential [requisites] of consent and cause

or consideration in these cases rendered

the contract inexistent[.]”1

I.

On the first issue, petitioner argues that

respondents Revilla spouses’ claim is

barred by laches since they allowed 16

years to lapse, with petitioner having

possession of the property, before filing

suit.46

Laches has been defined as “the failure or






141

neglect, for an unreasonable and

unexplained length of time, to do that

which — by the exercise of due diligence

— could or should have been done

earlier.”47

The elements that need to be present and

proven before an action is considered

barred by laches are the following:

The four basic elements of laches are: (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 and for which the complaint seeks a

remedy; (2) delay in asserting the

complainant's rights, the complainant

having had knowledge or notice of the

defendant’s conduct and having been

afforded an opportunity to institute suit;

(3) lack of knowledge or notice on the part

of the defendant that the complainant

would assert the right on which he bases

his suit; and, (4) injury or prejudice to the

defendant in the event relief is accorded

to the complainant or the suit is not held

to be barred.48

There was no delay by respondents Revilla

spouses in asserting their rights over the

property. The lower courts found that

respondents Revilla spouses first learned

of the existence of the “Kasulatan ng

Bilihan ng Lupa” in February 1995 when

they were served a copy of the pleading in

the land registration case instituted by the

Sun spouses.49 They filed their complaint

within the same year, specifically, on

November 17, 1995. The lapse of only

nine (9) months from the time they

learned of the questionable transfers on

the property cannot be considered as

sleeping on their rights.

In any case, doctrines of equity such as

laches apply only in the absence of

statutory law. The Civil Code clearly

provides that “[t]he action or defense for

the declaration of the inexistence of a

contract does not prescribe.”50

II.

On the second issue, petitioner argues

that respondents Revilla spouses did not

pay the correct docket fees. She submits

that docket fees paid were based on the

prayer for actual damages of P50,000.00,

moral damages of P50,000.00, and

attorney’s fee of P80,000.00, when the

spouses Revilla should have based it on

P12,000,000.00, the value of the property

they alleged in their supplemental pre-trial

brief.52 Petitioner cites Supreme Court

Circular No. 7 and jurisprudence holding

that the payment of proper docket fees is

crucial in vesting courts with jurisdiction

over the subject matter.53

This court finds that respondents Revilla

spouses paid the proper docket fees, thus,

the trial court acquired jurisdiction.

It is true that “[i]t is not simply the filing

of the complaint or appropriate initiatory

pleading, but the payment of the

prescribed docket fee, that vests a trial

court with jurisdiction over the subject

matter or nature of the action.”54

In Manchester Development Corporation

v. Court of Appeals,55 this court

“condemned the practice of counsel who

in filing the original complaint omitted

from the prayer any specification of the

amount of damages although the amount

of over ?78 million is alleged in the body

of the complaint.”56 The court gave the

following warning against this unethical

practice that serves no other purpose than

to avoid paying the correct filing fees:

The Court serves warning that it will take

drastic action upon a repetition of this

unethical practice. This ruling was

circularized through Supreme Court

Circular No. 758 addressed to all lower

court judges and the Integrated Bar of the

Philippines for dissemination to and

guidance for all its members.

The facts of this case differ from

Manchester and similar situations

envisioned under the circular. The

complaint filed by respondents Revilla

spouses included in its prayer the amount

of P50,000.00 as actual damages, without




142

mention of any other amount in the body

of the complaint. No amended complaint

was filed to increase this amount in the

prayer.

III.

The third issue involves the reinstatement

of respondents Revilla spouses in the

property and reconveyance of its tax

declaration in their favor.

Petitioner argues that antichresis is a

formal contract that must be in writing in

order to be valid.68 Respondents Revilla

spouses were not able to prove the

existence of the alleged antichresis

contract. On the other hand, the sale of

the property to petitioner was established

by the “Kasulatan ng Bilihan ng Lupa” and

the testimony of Rosita Castillo, the

second wife of the previous owner,

Felimon Castillo.69

We affirm the lower courts’ order of

reinstatement and reconveyance of the

property in favor of respondents Revilla

spouses.

Respondents Revilla spouses’ complaint

sought “to annul the sales and transfers of

title emanating from Tax Declaration No.

7971 registered in their name involving a

15,000-square[-]meter unregistered land

. . . with prayer for reconveyance and

claims for damages.”70 There was no

prayer to declare the purported contract

of sale as antichresis.71 Thus,

respondents Revilla spouses neither

discussed nor used the term “antichresis”

in their comment and memorandum

before this court. They focused on the

nature of their complaint as one for

annulment of titles on the ground of

forgery.72

Article 2132 of the Civil Code provides

that “[b]y the contract of antichresis the

creditor acquires the right to receive the

fruits of an immovable of his debtor, with

the obligation to apply them to the

payment of the interest, if owing, and

thereafter to the principal of his credit.”

Thus, antichresis involves an express

agreement between parties such that the

creditor will have possession of the

debtor’s real property given as security,

and such creditor will apply the fruits of

the property to the interest owed by the

debtor, if any, then to the principal

amount.74

The term, antichresis, has a Greek origin

with “‘anti’ (against) and ‘chresis’ (use)

denoting the action of giving a credit

‘against’ the ‘use’ of a property.”75

In the Civil Code, antichresis provisions

may be found under Title XVI, together

with other security contracts such as

pledge and mortgage.

Antichresis requires delivery of the

property to the antichretic creditor, but

the latter cannot ordinarily acquire this

immovable property in his or her

possession by prescription.82

Similar to the prohibition against pactum

commissorium83 since creditors cannot

“appropriate the things given by way of

pledge or mortgage, or dispose of

them,”84 an antichretic creditor also

cannot appropriate the real property in his

or her favor upon the non-payment of the

debt.85

Antichresis also requires that the amount

of the principal and the interest be in

writing for the contract to be valid.86

However, the issue before us does not

concern the nature of the relationship

between the parties, but the validity of the

documents that caused the subsequent

transfers of the property involved.

The reinstatement of the property in favor

of respondents Revilla spouses was

anchored on the lower courts’ finding that

their signatures as sellers in the

“Kasulatan ng Bilihan ng Lupa” were

forged.

This court has held that the “question of

forgery is one of fact.”87 Well-settled is

the rule that “[f]actual findings of the




143

lower courts are entitled great weight and

respect on appeal, and in fact accorded

finality when supported by substantial

evidence on the record.”88

The Court of Appeals agreed with the

finding of the trial court that the signature

of Alfredo Revilla in the “Kasulatan ng

Bilihan ng Lupa” was forged:

Petitioner contends that the lower courts

never declared as falsified the signature of

Alfredo’s wife, Paz Castillo-Revilla. Since

the property is conjugal in nature, the sale

as to the one-half share of Paz Castillo-

Revilla should not be declared as void.90

The transaction took place before the

effectivity of the Family Code in 2004.

Generally, civil laws have no retroactive

effect.91 Article 256 of the Family Code

provides that “[it] shall have retroactive

effect insofar as it does not prejudice or

impair vested or acquired rights in

accordance with the Civil Code or other

laws.”

Article 165 of the Civil Code states that

“[t]he husband is the administrator of the

conjugal partnership.” Article 172 of the

Civil Code provides that “[t]he wife cannot

bind the conjugal partnership without the

husband’s consent, except in cases

provided by law.”92 In any case, the

Family Code also provides as

follows:XXXXX

Thus, as correctly found by the Court of

Appeals, “assuming arguendo that the

signature of plaintiff-appellee Paz on the

Kasulatan ng Bilihan ng Lupa was not

forged, her signature alone would still not

bind the subject property, it being already

established that the said transaction was

made without the consent of her husband

plaintiff-appellee Alfredo.”93

Lastly, petitioner argues that she has no

obligation to prove the genuineness and

due execution of the “Kasulatan ng Bilihan

ng Lupa” considering it is a public

document.94

The trial court found otherwise. Atty.

Diosdado de Mesa, who allegedly

notarized the “Kasulatan ng Bilihan ng

Lupa,” was not a commissioned notary

public.

Petitioner contends that the Sun spouses

were buyers in good faith for value, thus,

the court erred in ordering reinstatement

of the property in favor of respondents

Revilla spouses.96

This court has held that “the rule in land

registration law that the issue of whether

the buyer of realty is in good or bad faith

is relevant only where the subject of the

sale is registered land and the purchase

was made from the registered owner

whose title to the land is clean[.]”97 Our

laws have adopted the Torrens system to

strengthen public confidence in land

transactions:

Necessarily, those who rely in good faith

on a clean title issued under the Torrens

system for registered lands must be

protected. On the other hand, those who

purchase unregistered lands do so at their

own peril.99

This good faith argument cannot be

considered as this case involves

unregistered land. In any case, as

explained by respondents Revilla spouses

in their memorandum, this is a defense

personal to the Sun spouses and cannot

be borrowed by petitioner.100 The Sun

spouses no longer raised this argument on

appeal, but only made a partial appeal

regarding legal interest on the award.101

• Orion Savings Bank Vs. Shigekane Suzuki

G.R. No. 205487. November 12, 2014

• Philippine Law governs the

• transfer of real property

It is a universal principle that real or

immovable property is exclusively subject

to the laws of the country or state where

it is located.21 The reason is found in the

very nature of immovable property — its

immobility. Immovables are part of the

country and so closely connected to it that

all rights over them have their natural

center of gravity

there.22chanRoblesvirtualLawlibrary





144

Thus, all matters concerning the title and

disposition of real property are determined

by what is known as the lex loci rei sitae,

which can alone prescribe the mode by

which a title can pass from one person to

another, or by which an interest therein

can be gained or lost.23 This general

principle includes all rules governing the

descent, alienation and transfer of

immovable property and the validity,

effect and construction of wills and other

conveyances.24chanRoblesvirtualLawlibrar

y

This principle even governs the capacity of

the person making a deed relating to

immovable property, no matter what its

nature may be. Thus, an instrument will

be ineffective to transfer title to land if the

person making it is incapacitated by the

lex loci rei sitae, even though under the

law of his domicile and by the law of the

place where the instrument is actually

made, his capacity is

undoubted.25chanRoblesvirtualLawlibrary

On the other hand, property relations

between spouses are governed principally

by the national law of the spouses.26

However, the party invoking the

application of a foreign law has the burden

of proving the foreign law. The foreign law

is a question of fact to be properly

pleaded and proved as the judge cannot

take judicial notice of a foreign law. 27 He

is presumed to know only domestic or the

law of the

forum.28chanRoblesvirtualLawlibrary

To prove a foreign law, the party invoking

it must present a copy thereof and comply

with Sections 24 and 25 of Rule 132 of the

Revised Rules of Court which

reads:chanroblesvirtuallawlibrary

SEC. 24. Proof of official record. — The

record of public documents referred to in

paragraph (a) of Section 19, when

admissible for any purpose, may be

evidenced by an official publication thereof

or by a copy attested by the officer having

the legal custody of the record, or by his

deputy, and accompanied, if the record is

not kept in the Philippines, with a

certificate that such officer has the

custody. If the office in which the record is

kept is in a foreign country, the certificate

may be made by a secretary of the

embassy or legation, consul general,

consul, vice consul, or consular agent or

by any officer in the foreign service of the

Philippines stationed in the foreign country

in which the record is kept, and

authenticated by the seal of his office.

(Emphasis supplied)

SEC. 25. What attestation of copy must

state. — Whenever a copy of a document

or record is attested for the purpose of the

evidence, the attestation must state, in

substance, that the copy is a correct copy

of the original, or a specific part thereof,

as the case may be. The attestation must

be under the official seal of the attesting

officer, if there be any, or if he be the

clerk of a court having a seal, under the

seal of such court.

Accordingly, matters concerning the title

and disposition of real property shall be

governed by Philippine law while issues

pertaining to the conjugal nature of the

property shall be governed by South

Korean law, provided it is proven as a

fact.

In the present case, Orion, unfortunately

failed to prove the South Korean law on

the conjugal ownership of property. It

merely attached a “Certification from the

Embassy of the Republic of Korea”29 to

prove the existence of Korean Law. This

certification, does not qualify as sufficient

proof of the conjugal nature of the

property for there is no showing that it

was properly authenticated by the

seal of his office, as required under

Section 24 of Rule

132.30chanRoblesvirtualLawlibrary

Accordingly, the International Law

doctrine of presumed-identity approach or

processual presumption comes into play,

i.e., where a foreign law is not pleaded or,

even if pleaded, is not proven, the




145

presumption is that foreign law is the

same as Philippine

Law.31chanRoblesvirtualLawlibrary

Under Philippine Law, the phrase "Yung

Sam Kang ‘married to' Hyun Sook Jung”

is merely descriptive of the civil status of

Kang.32 In other words, the import from

the certificates of title is that Kang is the

owner of the properties as they are

registered in his name alone, and that he

is married to Hyun Sook Jung.

We are not unmindful that in numerous

cases we have held that registration of the

property in the name of only one spouse

does not negate the possibility of it being

conjugal or community property.33 In

those cases, however, there was proof

that the properties, though registered in

the name of only one spouse, were indeed

either conjugal or community properties.34

Accordingly, we see no reason to declare

as invalid Kang’s conveyance in favor of

Suzuki for the supposed lack of spousal

consent.

The petitioner failed to adduce

sufficient

evidence to prove the due execution

of the

Dacion en Pago

Article 1544 of the New Civil Code of the

Philippines provides

that:chanroblesvirtuallawlibrary

ART. 1544. If the same thing should have

been sold to different vendees, the

ownership shall be transferred to the

person who may have first taken

possession thereof in good faith, if it

should be movable property.

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.

The application of Article 1544 of the New

Civil Code presupposes the existence of

two or more duly executed contracts

of sale. In the present case, the Deed of

Sale dated August 26, 200335 between

Suzuki and Kang was admitted by Orion36

and was properly identified by Suzuki’s

witness Ms. Mary Jane Samin

(Samin).37chanRoblesvirtualLawlibrary

It is not disputed, too, that the Deed of

Sale dated August 26, 2003 was

consummated. In a contract of sale, the

seller obligates himself to transfer the

ownership of the determinate thing sold,

and to deliver the same to the buyer, who

obligates himself to pay a price certain to

the seller.38 The execution of the

notarized deed of sale and the actual

transfer of possession amounted to

delivery that produced the legal effect of

transferring ownership to

Suzuki.39chanRoblesvirtualLawlibrary

On the other hand, although Orion claims

priority in right under the principle of prius

tempore, potior jure (i.e., first in time,

stronger in right), it failed to prove the

existence and due execution of the Dacion

en Pago in its favor.

At the outset, Orion offered the Dacion en

Pago as Exhibit “5” with submarkings “5-

a” to “5-c” to prove the existence of the

February 6, 2003 transaction in its Formal

Offer dated July 20, 2008. Orion likewise

offered in evidence the supposed

promissory note dated September 4, 2002

as Exhibit “12” to prove the existence of

the additional P800,000.00 loan. The RTC,

however, denied the admission of Exhibits

“5” and “12,” among others, in its order

dated August 19, 2008 “since the same

[were] not identified in court by any

witness.”40chanRoblesvirtualLawlibrary

Despite the exclusion of its most critical

documentary evidence, Orion failed to

make a tender of excluded evidence, as

provided under Section 40, Rule 132 of

the Rules of Court. For this reason




146

alone, we are prevented from seriously

considering Exhibit “5” and its

submarkings and Exhibit “12” in the

present petition.

• Moreover, even if we consider

Exhibit “5” and its submarkings

and Exhibit “12” in the present

petition, the copious

inconsistencies and contradictions

in the testimonial and documentary

evidence of Orion, militate against

the conclusion that the Dacion en

Pago was duly executed.

• First, there appears to be no d

ue and demandable obligation

when the Dacion en Pago was

executed, contrary to the

allegations of Orion. Orion’s

witness Perez tried to impress upon

the RTC that Kang was in default in

his P1,800,000.00 loan.

A reading of the supposed promissory

note, however, shows that there was no

default to speak of when the

supposed Dacion en Pago was

executed.

Based on the promissory note, Kang’s loan

obligation would mature only on August

27, 2003. Neither can Orion claim that

Kang had been in default in his installment

payments because the wordings of the

promissory note provide that “[t]he

principal of this loan and its interest

and other charges shall be paid by

me/us in accordance hereunder:

SINGLE PAYMENT LOANS.42” There

was thus no due and demandable loan

obligation when the alleged Dacion en

Pago was executed.

• Second, Perez, the supposed

person who prepared the Dacion en

Pago, appears to only have a

vague idea of the transaction he

supposedly prepared.

Third, the Dacion en Pago, mentioned

that the P1,800,000.00 loan was secured

by a real estate mortgage. However, no

document was ever presented to prove

this real estate mortgage aside from it

being mentioned in the Dacion en Pago

itself.

• Fourth, the Dacion en Pago was

first mentioned only two (2)

months after Suzuki and Samin

demanded the delivery of the titles

sometime in August 2003, and

after Suzuki caused the annotation

of his affidavit of adverse

claim. Records show that it was

only on October 9, 2003, when

Orion, through its counsel,

Cristobal Balbin Mapile &

Associates first spoke of the

Dacion en Pago.45 Not even

Perez mentioned any Dacion en

Pago on October 1, 2003, when he

personally received a letter

demanding the delivery of the

titles. Instead, Perez refused to

accept the letter and opted to first

consult with his

lawyer.46chanRoblesvirtualLawlibrar

y

Fifth, it is undisputed that

notwithstanding the supposed execution

of the Dacion en Pago on February 2,

2003, Kang remained in possession of the

condominium unit. In fact, nothing in the

records shows that Orion even bothered to

take possession of the property even six

(6) months after the supposed date of

execution of the Dacion en Pago. Kang

was even able to transfer possession of

the condominium unit to Suzuki, who then

made immediate improvements thereon.

If Orion really purchased the condominium

unit on February 2, 2003 and claimed to

be its true owner, why did it not assert its

ownership immediately after the alleged

sale took place? Why did it have to assert

its ownership only after Suzuki demanded

the delivery of the titles? These gaps

have remained unanswered and unfilled.

In Suntay v. CA,48 we held that the most

prominent index of simulation is the

complete absence of an attempt on the

part of the vendee to assert his rights of

ownership over the property in question.

After the sale, the vendee should have

entered the land and occupied the

premises. The absence of any attempt

on the part of Orion to assert its right




147

of dominion over the property

allegedly sold to it is a clear badge of

fraud. That notwithstanding the

execution of the Dacion en Pago,

Kang remained in possession of the

disputed condominium unit – from the

time of the execution of the Dacion en

Pago until the property’s subsequent

transfer to Suzuki – unmistakably

strengthens the fictitious nature of

the Dacion en Pago.

• These circumstances, aside from

the glaring inconsistencies in the

documents and testimony of

Orion’s witness, indubitably prove

the spurious nature of the Dacion

en Pago.

The fact that the

Dacion en Pago is

a notarized

document does

not support the

conclusion that

the sale it

embodies is a true

conveyance

Public instruments are evidence of the

facts that gave rise to their execution and

are to be considered as containing all the

terms of the agreement.49 While a

notarized document enjoys this

presumption, “the fact that a deed is

notarized is not a guarantee of the validity

of its contents.”50 The presumption of

regularity of notarized documents is not

absolute and may be rebutted by clear

and convincing evidence to the

contrary.51chanRoblesvirtualLawlibrary

In the present case, the presumption

cannot apply because the regularity in the

execution of the Dacion en Pago and the

loan documents was challenged in the

proceedings below where their prima facie

validity was overthrown by the highly

questionable circumstances surrounding

their

execution.52chanRoblesvirtualLawlibrary

• Owen Prosper A. Mackay Vs. Spouses

Dana Caswell and Cerelina Caswell

G.R. No. 183872. November 17, 2014

• The CA correctly ruled that

Caswells’

• effort to communicate with Owen

effectively

• served as a demand to rectify the

latter’s work.

•

• Under Article 1715 of the Civil

Code, if the work of a contractor

has defects which destroy or lessen

its value or fitness for its ordinary

or stipulated use, he may be

required to remove the defect or

execute another work. If he fails to

do so, he shall be liable for the

expenses by the employer for the

correction of the work. The

demand required of the employer

under the subject provision need

not be in a particular form. In the

case at bar, we agree with the CA

that Owen was given the

opportunity to rectify his work.

Subsequent to Zameco II’s

disapproval to supply the Caswells

electricity for several reasons, the

Court gives credence to the latter’s

claim that they looked for Owen to

demand a rectification of the work,

but Owen and his group were

nowhere to be found. Had Owen

really been readily available to the

Caswells to correct any deficiency

in the work, the latter would not

have entertained the thought that

they were deceived and would not

have been constrained to undergo

the rigors of filing a criminal

complaint and testifying therein.

Without doubt, the Caswells

exercised due diligence when they

demanded from Owen the proper

rectification of his work. As

correctly held by the CA, the

Caswells substantially complied

with the requirement of Article

1715 of the Civil Code,


•

• To Our mind, however, the effort to

communicate with [Owen]

effectively served as [the






148

Caswells’] request for the former to

rectify the flaws in the contracted

work. In fact, [the Caswells’] act of

demanding that [Owen] secure the

permit and to subject the

transformer to testing can already

be construed as a substantial

compliance with Article 1715. It

must be emphasized that it was

[Owen’s] refusal to secure the

necessary permits and to comply

with the requirements of Zameco

[II] as well as his refusal to

communicate with [the Caswells]

that impelled the latter to file a

case for estafa against him. Had he

been willing to make good his

obligation, then it would not have

been necessary for [the Caswells]

to file the said criminal case.

Instead of complying with his end

of the bargain, [Owen] opted to file

a case for collection of sum of

money with damages. Thus, any

effort to require [Owen] either to

rectify his flawed work or to

remove the same would have been

futile since [Owen’s] act of

demanding payment through the

said complaint showed his belief

that his work in the house was

done.36

•

• Furthermore, to require the

Caswells to file an action for

specific performance, as opined by

the RTC, not only deprives them of

hiring someone else to rectify the

work, but also defeats the very

purpose of the contracted work,

i.e., to immediately have electricity

in their home. In this situation,

time is of the essence.

• Bank of the Philippine Islands Vs. Vicente

Victor C. Sanchez, et al./Generoso

Tulagan, et al. Vs. Vicente Victor C.

Sanchez, et al./Reynaldo V. Maniwang

Vs. Vicente C. Sanchez and Felisa

Garcia Yap G.R. No. 179518/G.R. No.

179835/G.R. No. 179954. November 19,

2014


relevantly states:

•

• Article 453. If there was bad faith,

not only on the part of the person

who built, planted or sowed on the

land of another, but also on the

part of the owner of such land, the

rights of one and the other shall be

the same as though both had acted

in good faith.

•

• It is understood that there is

bad faith on the part of the

landowner whenever the act

was done with his knowledge

and without opposition on his

part. (emphasis supplied)

•

• The second paragraph of the

provision clearly reads that a

landowner is considered in bad

faith if he does not oppose the

unauthorized construction thereon

despite knowledge of the same. It

does not, however, state what

form such opposition should take.

The fact of the matter is that the

Sanchezes did take action to

oppose the construction on their

property by writing the HLURB and

the City Building Official of Quezon

City. As a result, the HLURB issued

two (2) Cease and Desist Orders

and several directives against

Garcia/TSEI which, however, were

left unheeded.

•

• In addition, the Sanchezes could

not be faulted for not having been

able to enjoin the sale of the

townhouses by Garcia and TSEI to

the intervenors Sps. Caminas,

Maniwang, Tulagan, and Marquez

who bought their townhouse units

during the same period that the

Sanchezes were demanding the full

payment of the subject lot and

were exercising their right of

extrajudicial rescission of the

Agreement. As the intervenors

asserted having bought the

townhouse units in early 1989, it

can be seen that the pre-selling

was done almost immediately after










149

the Sanchezes and Garcia/TSEI

agreed on the terms of the sale of

the subject lot, or shortly after

Garcia and TSEI had taken over

the property and demolished the

old house built thereon. In either

case, the pre-selling already

commenced and was continuing

when the two postdated checks

amounting to the remaining

balance of P800,000 bounced. And

when the Sanchezes informed

Garcia and TSEI that they were

rescinding the Agreement in early

1989, the intervenors apparently

were already in the process of

closing their deals with TSEI for the

purchase of townhouse units.

•

• As to the transactions between

FEBTC and Garcia/TSEI and that

between VTCI and Garcia/TSEI, it

is suffice to state that the

Sanchezes, despite the actions

they undertook, were not aware of

the said dealings.

The effects of attributing bad

faith to the intervenors, BPI, TSEI,

and Garcia

Rescission of the Agreement was not

barred by the subsequent transfer

Article 1191 of the Civil Code states that

rescission is available to a party in a

reciprocal obligation where one party fails

to comply therewith:

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. (emphasis supplied)

Article 1385 of the Civil Code does provide

that rescission shall not take place if the

subject matter of the prior agreement is

already in the hands of a third party who

did not act in bad faith, to wit:

Article 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 obliged 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. (emphasis added)

In the extant case, the failure of TSEI to

pay the consideration for the sale of the

subject property entitled the Sanchezes to

rescind the Agreement. And in view of the

finding that the intervenors acted in bad

faith in purchasing the property, the

subsequent transfer in their favor did not

and cannot bar rescission.

The Sanchezes are to elect their option

under the Arts. 449-450 of the

New Civil Code

Moreover, bad faith on the part of TSEI,

Garcia and the intervenors leads to the

application of Articles 449-450 of the New

Civil Code, which provide:

Article 449. He who builds, plants or sows

in bad faith on the land of another, loses

what is built, planted or sown without




150

right to indemnity.

Article 450. The owner of the land on

which anything has been built, planted or

sown in bad faith may demand the

demolition of the work, or that the

planting or sowing be removed, in order to

replace things in their former condition at

the expense of the person who built,

planted or sowed; or he may compel the

builder or planter to pay the price of the

land, and the sower the proper rent.

Consequently, the Sanchezes have the

following options: (1) acquire the property

with the townhouses and other buildings

and improvements that may be thereon

without indemnifying TSEI or the

intervenors;63 (2) demand from TSEI or

the intervenors to demolish what has been

built on the property at the expense of

TSEI or the intervenors; or (3) ask the

intervenors to pay the price of the

land.64 As such, the Sanchezes must

choose from among these options within

thirty (30) days from finality of this

Decision. Should the Sanchezes opt to ask

from the intervenors the value of the land,

the case shall be remanded to the RTC for

the sole purpose of determining the fair

market value of the lot at the time the

same were taken from the Sanchezes in

1988.

If the Sanchezes decide to appropriate the

townhouses, other structures and

improvements as their own pursuant to

Article 449 of the Civil Code, then the

intervenors-purchasers Caminas,

Maniwang, Tulagan, Marquez and VCTI

shall be ordered to vacate said premises

within a reasonable time from notice of

the finality of the decision by the

Sanchezes. They have a right to recover

their investment in the townhouses from

Garcia and TSEI. If the Sanchezes do not

want to make use of the townhouses and

improvements on the subject lot, then the

purchasers can be ordered to demolish

said townhouses or if they don’t demolish

the same within a reasonable time, then it

can be demolished at their expense. On

the 3rd option, if the Sanchezes do not

want to appropriate the townhouses or

have the same demolished, then they can

ask that the townhouse purchasers pay to

them the fair market value of the

respective areas allotted to their

respective townhouses subject of their

deeds of sale.

The suit is not a collateral attack on

TSEI’s title

Finally, BPI argues that the CA erred in

ordering the cancellation of TCT 383697

considering that Section 48 of Presidential

Decree No. 1529, or the Property

Registration Decree, states that a Torrens

certificate of title cannot be cancelled

except in a direct attack thereon. The

provision reads:

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 canceled

except in a direct proceeding in

accordance with law.

In Sarmiento v. Court of Appeals,65 the

Court differentiated a direct and a

collateral attack in this

wise:chanroblesvirtuallawlibrary

An action is deemed an attack on a title

when the object of the action or

proceeding 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 enjoin its

enforcement. On the other hand, the

attack is indirect or collateral when, in an

action to obtain a different relief, an

attack on the judgment is nevertheless

made as an incident thereof.

In the instant case, contrary to the

contention of BPI, although the case was

originally an action for rescission, it

became a direct attack on TCT 383697. To

be sure, there is no indication that when

the Sanchezes filed their complaint with

the RTC they already knew of the

existence of TCT 383697. However, when

they were confronted with the title

through the filing of the various Answers

of the intervenors, the Sanchezes directly




151

stated that the title was a fake. Thus, in

their Answer with Counterclaims to

Complaint in Intervention filed by Varied

Traders Concept, Inc. dated April 2, 1991,

paragraph 2.1. thereof states:

2.1. Like the rest of the intervenors

herein, VTCI is claiming rights under a

forged deed and a fake or absolutely void

title. There was never any Deed of

Absolute Sale between plaintiffs and

defendants. Much less was there any valid

land title issued to defendants. Whatever

deeds defendants may have shown VTCI

are definitely fakes or foregeries, hence,

null and void. Thus, no rights to plaintiff’s

property ever passed to VTCI.66

An identical paragraph is also contained in

the Sanchezes’ Answer with Counterclaims

to Intervention filed by Far East Bank and

Trust Company and Supplement to

Complaint dated January 11,

1993.67 Thus, the complaint filed by the

Sanchezes later became a direct attack

against TCT 383697 and the CA correctly

ordered the cancellation thereof.

• Juan P. Cabrera Vs. Henry YsaacG.R. No.

166790. November 19, 2014

Unless all the co-owners have agreed to

partition their property, none of them may

sell a definite portion of the land. The

co-owner may only sell his or her

proportionate interest in the co-

ownership. A contract of sale which

purports to sell a specific or definite

portion of unpartitioned land is null and

void ab initio.

There was no valid contract of sale

between petitioner and respondent

We find that there was no contract of sale.

It was null ab initio.

As defined by the Civil Code, "[a] contract

is a meeting of minds between two

persons whereby one binds himself, with

respect to the other, to give something or

to render some service."75 For there to be

a valid contract, there must be consent of

the contracting parties, an object certain

which is the subject matter of the

contract, and cause of the obligation

which is

established.76chanRoblesvirtualLawlibrary

Sale is a special contract. The seller

obligates himself to deliver a determinate

thing and to transfer its ownership to the

buyer. In turn, the buyer pays for a price

certain in money or its equivalent.77 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.'"78 The seller

and buyer must agree as to the certain

thing that will be subject of the sale as

well as the price in which the thing will be

sold. The thing to be sold is the object of

the contract, while the price is the cause

or consideration.

The object of a valid sales contract must

be owned by the seller. If the seller is not

the owner, the seller must be authorized

by the owner to sell the

object.79chanRoblesvirtualLawlibrary

Specific rules attach when the seller co-

owns the object of the contract. Sale of a

portion of the property is considered an

alteration of the thing owned in common.

Under the Civil Code, such disposition

requires the unanimous consent of the

other co-owners.80 However, the rules also

allow a co-owner to alienate his or her

part in the co-ownership. These two rules

are reconciled through

jurisprudence.81chanRoblesvirtualLawlibrar

y

If the alienation precedes the partition,

the co-owner cannot sell a definite portion

of the land without consent from his or

her co-owners. He or she could only sell

the undivided interest of the co-owned

property.82 As summarized in Lopez v.

Ilustre,83 "[i]f he is the owner of an

undivided half of a tract of land, he has a

right to sell and convey an undivided half,

but he has no right to divide the lot into

two parts, and convey the whole of one

part by metes and

bounds."84chanRoblesvirtualLawlibrary

The undivided interest of a co-owner is

also referred to as the "ideal or abstract





152

quota" or "proportionate share." On the

other hand, the definite portion of the land

refers to specific metes and bounds of a

co-owned property.

To illustrate, if a ten-hectare property is

owned equally by ten co-owners, the

undivided interest of a co-owner is one

hectare. The definite portion of that

interest is usually determined during

judicial or extrajudicial partition. After

partition, a definite portion of the property

held in common is allocated to a specific

co-owner. The co-ownership is dissolved

and, in effect, each of the former co-

owners is free to exercise autonomously

the rights attached to his or her ownership

over the definite portion of the land.

It is crucial that the co-owners agree to

which portion of the land goes to whom.

Hence, prior to partition, a sale of a

definite portion of common property

requires the consent of all co-owners

because it operates to partition the land

with respect to the co-owner selling his or

her share. The co-owner or seller is

already marking which portion should

redound to his or her autonomous

ownership upon future partition.

The object of the sales contract between

petitioner and respondent was a definite

portion of a co-owned parcel of land. At

the time of the alleged sale between

petitioner and respondent, the entire

property was still held in common. This is

evidenced by the original certificate of

title, which was under the names of

Matilde Ysaac, Priscilla Ysaac, Walter

Ysaac, respondent Henry Ysaac, Elizabeth

Ysaac, Norma Ysaac, Luis Ysaac, Jr.,

George Ysaac, Franklin Ysaac, Marison

Ysaac, Helen Ysaac, Erlinda Ysaac, and

Maridel

Ysaac.85chanRoblesvirtualLawlibrary

The rules allow respondent to sell his

undivided interest in the co-ownership.

However, this was not the object of the

sale between him and petitioner. The

object of the sale was a definite portion.

Even if it was respondent who was

benefiting from the fruits of the lease

contract to petitioner, respondent has "no

right to sell or alienate a concrete, specific

or determinate part of the thing owned in

common, because his right over the thing

is represented by quota or ideal portion

without any physical

adjudication."86chanRoblesvirtualLawlibrar

y

There was no showing that respondent

was authorized by his co-owners to sell

the portion of land occupied by Juan

Cabrera, the Espiritu family, or the Borbe

family. Without the consent of his co-

owners, respondent could not sell a

definite portion of the co-owned property.

Respondent had no right to define a 95-

square-meter parcel of land, a 439-

square-meter parcel of land, or a 321-

square-meter parcel of land for purposes

of selling to petitioner. The determination

of those metes and bounds are not

binding to the co-ownership and, hence,

cannot be subject to sale, unless

consented to by all the co-owners.

At best, the agreement between petitioner

and respondent is a contract to sell, not a

contract of sale. A contract to sell is a

promise to sell an object, subject to

suspensive conditions.89 Without the

fulfillment of these suspensive conditions,

the sale does not operate to determine

the obligation of the seller to deliver the

object.

A co-owner could enter into a contract to

sell a definite portion of the property.

However, such contract is still subject to

the suspensive condition of the partition of

the property, and that the other co-

owners agree that the part subject of the

contract to sell vests in favor of the co-

owner's buyer. Hence, the co-owners'

consent is an important factor for the sale

to ripen.

A non-existent contract cannot be a

source of obligations, and it cannot be

enforced by the courts

The absence of a contract of sale means




153

that there is no source of obligations for

respondent, as seller, or petitioner, as

buyer. Rescission is impossible because

there is no contract to rescind. The rule in

Article 1592 that requires a judicial or

notarial act to formalize rescission of a

contract of sale of an immovable property

does not apply. This court does not need

to rule whether a letter is a valid method

of rescinding a sales contract over an

immovable property because the question

is moot and academic.

Even if we assume that respondent had

full ownership of the property and that he

agreed to sell a portion of the property to

petitioner, the letter was enough to cancel

the contract to sell.

Generally, "[t]he power to rescind

obligations is implied in reciprocal ones, in

case one of the obligors should not comply

with what is incumbent on

him."95chanRoblesvirtualLawlibrary

For the sale of immovable property, the

following provision governs its

rescission:chanroblesvirtuallawlibrary

Article 1592. In the sale of immovable

property, even though it may have been

stipulated that upon failure to pay the

price at the time agreed upon the

rescission of the contract shall of right

take place, the vendee may pay, even

after the expiration of the period, as long

as no demand for rescission of the

contract has been made upon him either

judicially or by notarial act. After the

demand, the court may not grant him a

new term.

This provision contemplates (1) a contract

of sale of an immovable property and (2)

a stipulation in the contract that failure to

pay the price at the time agreed upon will

cause the rescission of the contract. The

vendee or the buyer can still pay even

after the time agreed upon, if the

agreement between the parties has these

requisites. This right of the vendee to pay

ceases when the vendor or the seller

demands the rescission of the contract

judicially or extrajudicially. In case of an

extrajudicial demand to rescind the

contract, it should be notarized.

Hence, this provision does not apply if it is

not a contract of sale of an immovable

property and merely a contract to sell an

immovable property. A contract to sell is

"where the ownership or title is retained

by the seller and is not to pass until the

full payment of the price, such payment

being a positive suspensive condition and

failure of which is not a breach, casual or

serious, but simply an event that

prevented the obligation of the vendor to

convey title from acquiring binding force."9

• Davao Holiday Transport Services

Corporation Vs. Spouses Eulogio and

Carmelita EmphasisG.R. No. 211424.

November 26, 2014

• Article 2180 of the New Civil Code

provides that an obligation for

damages is demandable not only

for one’s own acts or omissions,

but also for those of persons for

whom he is responsible.

Employers, in particular, shall be

liable for the damages caused by

their employees acting within the

scope of their assigned tasks. The

responsibility of employers shall

only cease upon proof that they

observed all the diligence of the

good father of a family to prevent

damage.

•

• The CA correctly held that the

petitioner, being Tungal’s

employer, was presumed liable to

the heirs of Christian after a finding

that it was Tungal who should be

faulted for the accident that caused

the death of the child. In Cang v.

Cullen,6 the Court emphasized that

when an employee causes damage

due to his own negligence while

performing his own duties, there

arises the juris tantum

presumption that his employer is

negligent, rebuttable only by proof

of observance of the diligence of a

good father of a family. In the

selection of prospective employees,







154

employers are required to examine

them as to their qualifications,

experience and service records.

With respect to the supervision of

employees, employers must

formulate standard operating

procedures, monitor their

implementation and impose

disciplinary measures for breaches

thereof. These facts must be shown

by concrete proof, including

documentary evidence.7

•

• The petitioner failed in this aspect.

There then appears no cogent

reason for the Court to depart from

the RTC’s and CA’s observation

that the petitioner failed to

establish the modes and measures

it adopted to ensure the proper

selection and supervision of

Tungal. This makes proper the

order upon the petitioner to

compensate the spouses Emphasis

for damages.

• Remman Enterprises, Inc. Vs. Republic of

the Philippines G.R. No. 188494.

November 26, 2014

• 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, who must prove

that the properties subject of the

application are alienable and

disposable.21 Even the notations on

the survey plans submitted by the

petitioner cannot be admitted as

evidence of the subject properties'

alienability and disposability. Such

notations do not constitute

incontrovertible evidence to

overcome the presumption that the

subject properties remain part of

the inalienable public

domain.22chanroblesvirtuallawlibrar

y

•

• Given the foregoing, the dismissal

of the petitioner's application for

registration was proper. Under

pertinent laws and jurisprudence,

the petitioner had to sufficiently

establish that: first, the subject

properties form part of the

disposable and alienable lands of

the public domain; second, the

applicant and his predecessors-in-

interest have been in open,

continuous, exclusive, and

notorious possession and

occupation of the same; and third,

the possession is under a bona fide

claim of ownership since June 12,

1945 or

earlier.23chanroblesvirtuallawlibrary

•

• Without sufficient proof that the

subject properties had been

declared alienable and disposable,

the Court finds no reason to look

further into the petitioner's claim

that the CA erred in finding that it

failed to satisfy the nature and

length of possession that could

qualify for land registration.

• Hermano Oil Manufacturing and Sugar

Corporation Vs. Toll Regulatory Board,

et al. G.R. No. 167290. November 26,

2014

• The issue to be determined

concerns the demand of the

petitioner to have access to the

North Luzon Expressway (NLEX) by

way of an easement of right of

way. The demand was rebuffed by

the respondents, and upheld by

both the trial and appellate courts.

•

In our view, the TRB, Dumlao and the

DPWH correctly invoked the doctrine of

sovereign immunity in their favor. The

TRB and the DPWH performed purely or

essentially government or public

functions. As such, they were invested

with the inherent power of sovereignty.

Being unincorporated agencies or entities

of the National Government, they could

not be sued as such. On his part, Dumlao

was acting as the agent of the TRB in

respect of the matter concerned.

In Air Transportation Office v. Ramos,16

we expounded on the doctrine of

sovereign immunity in the following

manner:chanroblesvirtuallawlibrary









155

An unincorporated government agency

without any separate juridical personality

of its own enjoys immunity from suit

because it is invested with an inherent

power of sovereignty. Accordingly, a claim

for damages against the agency cannot

prosper; otherwise, the doctrine of

sovereign immunity is violated. However,

the need to distinguish between an

unincorporated government agency

performing governmental function and one

performing proprietary functions has

arisen. The immunity has been upheld in

favor of the former because its function is

governmental or incidental to such

function; it has not been upheld in favor

of the latter whose function was not in

pursuit of a necessary function of

government but was essentially a

business.

Nonetheless, the petitioner properly

argued that the PNCC, being a private

business entity, was not immune from

suit. The PNCC was incorporated in 1966

under its original name of Construction

Development Corporation of the

Philippines (CDCP) for a term of fifty years

pursuant to the Corporation Code.17 In

1983, the CDCP changed its corporate

name to the PNCC to reflect the extent of

the Government’s equity investment in

the company, a situation that came about

after the government financial institutions

converted their loans into equity following

the CDCP’s inability to pay the loans.18

Hence, the Government owned 90.3% of

the equity of the PNCC, and only 9.70% of

the PNCC’s voting equity remained under

private ownership.19 Although the majority

or controlling shares of the PNCC belonged

to the Government, the PNCC was

essentially a private corporation due to its

having been created in accordance with

the Corporation Code, the general

corporation statute.20 More specifically,

the PNCC was an acquired asset

corporation under Administrative Order

No. 59, and was subject to the regulation

and jurisdiction of the Securities and

Exchange Commission.21 Consequently,

the doctrine of sovereign immunity had no

application to the PNCC.

Frustrated homicide requires intent to kill

on the part of the offender. Without proof

of such intent, the felony may only be

serious physical injuries. Intent to kill may

be established through the overt and

external acts and conduct of the offender

before, during and after the assault, or by

the nature, location and number of the

wounds inflicted on the victim.

• Vicente Torres, Jr., Carlos Velez and The

Heirs of Mariano Velez, namely Anita

Chiong Velez, Robert Oscar Chiong

Velez, et al. Vs. Lorenzo Lapinid and

Jesus VelezG.R. No. 187987. November

26, 2014

• Admittedly, Jesus sold an area of

land to Lapinid on 9 November

1997. To simplify, the question

now is whether Jesus, as a co-

owner, can validly sell a portion of

the property he co-owns in favor of

another person. We answer in the

affirmative.

•

A co-owner has an absolute ownership of

his undivided and pro-indiviso share in the

co-owned property.17 He has the right to

alienate, assign and mortgage it, even to

the extent of substituting a third person in

its enjoyment provided that no personal

rights will be affected. This is evident from

the provision of the Civil

Code:chanroblesvirtuallawlibrary

Art. 493. Each co-owner shall have the full

ownership of his part and of the fruits and

benefits pertaining thereto, and he may

therefore alienate, assign or mortgage it,

and even substitute another person in its

enjoyment, except when personal rights

are involved. But the effect of the

alienation or the mortgage, with respect

to the co-owners, shall be limited to the

portion which may be allotted to him in

the division upon the termination of the

co-ownership.

A co-owner is an owner of the whole and

over the whole he exercises the right of

dominion, but he is at the same time the

owner of a portion which is truly

abstract.18 Hence, his co-owners have no

right to enjoin a co-owner who intends to

alienate or substitute his abstract portion

or substitute a third person in its









156

enjoyment.19

In this case, Jesus can validly alienate his

co-owned property in favor of Lapinid, free

from any opposition from the co-owners.

Lapinid, as a transferee, validly obtained

the same rights of Jesus from the date of

the execution of a valid sale. Absent any

proof that the sale was not perfected, the

validity of sale subsists. In essence,

Lapinid steps into the shoes of Jesus as

co-owner of an ideal and proportionate

share in the property held in common.20

Thus, from the perfection of contract on 9

November 1997, Lapinid eventually

became a co-owner of the property.

Even assuming that the petitioners are

correct in their allegation that the

disposition in favor of Lapinid before

partition was a concrete or definite

portion, the validity of sale still prevails.

In a catena of decisions,21 the Supreme

Court had repeatedly held that no

individual can claim title to a definite or

concrete portion before partition of co-

owned property. Each co-owner only

possesses a right to sell or alienate his

ideal share after partition. However, in

case he disposes his share before

partition, such disposition does not make

the sale or alienation null and void. What

will be affected on the sale is only his

proportionate share, subject to the results

of the partition. The co-owners who did

not give their consent to the sale stand to

be unaffected by the alienation.22

• Sps. Tagumpay N. Albos and Aida C. Albos

Vs. Sps. Nestor M. Embisan, et al.G.R.

No. 210831. November 26, 2014

• The compounding of interest

should be in writing

•

• For academic purposes, We first

determine whether or not the

stipulation compounding the

interest charged should specifically

be indicated in a written

agreement.

•

• We rule in the affirmative.

•

• Article 1956 of the New Civil Code,

which refers to monetary interest,

provides:

• Article 1956. No interest shall be

due unless it has been expressly

stipulated in writing.

• As mandated by the foregoing

provision, payment of monetary

interest shall be due only if: (1)

there was an express stipulation

for the payment of interest; and

(2) the agreement for such

payment was reduced in writing.

Thus, We have held that collection

of interest without any stipulation

thereof in writing is prohibited by

law.13chanrobleslaw

•

• In the case at bar, it is undisputed

that the parties have agreed for

the loan to earn 5% monthly

interest,the stipulation to that

effect put in writing. When the

petitioners defaulted, the period for

payment was extended, carrying

over the terms of the original loan

agreement, including the 5%

simple interest. However, by the

third extension of the loan,

respondent spouses decided to

alter the agreement by changing

the manner of earning interest

rate, compounding it beginning

June 1986. This is apparent from

the Statement of Account prepared

by the spouses Embisan

themselves.

•

• Given the circumstances, We rule

that the first requirement––that

there be an express stipulation for

the payment of interest––is not

sufficiently complied with, for

purposes of imposing compounded

interest on the loan. The

requirement does not only entail

reducing in writing the interest rate

to be earned but also the manner

of earning the same, if it is to be

compounded. Failure to specify the

manner of earning interest,

however, shall not automatically

render the stipulation imposing the






157

interest rate void since it is readily

apparent from the contract itself

that the parties herein agreed for

the loan to bear interest. Instead,

in default of any stipulation on the

manner of earning interest, simple

interest shall accrue.

Imposing 5% monthly interest,

whether compounded or simple, is

unconscionable

Nevertheless, even if there was such an

agreement that interest will be

compounded, We agree with the

petitioners that the 5% monthly rate, be it

simple or compounded, written or verbal,

is void for being too exorbitant, thus

running afoul of Article 1306 of the New

Civil Code, which provides:

Article 1306. 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. (emphasis

added)

• As case law instructs, the

imposition of an unconscionable

rate of interest on a money debt,

even if knowingly and voluntarily

assumed, is immoral and unjust. It

is tantamount to a repugnant

spoliation and an iniquitous

deprivation of property, repulsive

to the common sense of man. It

has no support in law, in principles

of justice, or in the human

conscience nor is there any reason

whatsoever which may justify such

imposition as righteous and as one

that may be sustained within the

sphere of public or private

morals.17chanrobleslaw

The foreclosure sale should be

nullified

In view of the above disquisitions, We are

constrained to nullify the foreclosure

proceedings with respect to the

mortgaged property in this case, following

the doctrine in Heirs of Zoilo and Primitiva

Espiritu v. Landrito.21chanrobleslaw

In Heirs of Espiritu, the spouses Maximo

and Paz Landrito, sometime in 1986,

borrowed from the spouses Zoilo and

Primitiva Espiritu the amount of

P350,000.00, secured by a real estate

mortgage. Because of the Landritos’

continued inability to pay the loan, the

due date for payment was extended on

the condition that the interest that has

already accrued shall, from then on, form

part of the principal. As such, after the

third extension, the principal amounted to

P874,125.00 in only two years. Despite

the extensions, however, the debt

remained unpaid, prompting the spouses

Espiritu to foreclose the mortgaged

property.

The foreclosure proceeding in Heirs of

Espiritu, however,was eventually nullified

by this Court because the Landritos were

deprived of the opportunity to settle the

debt, in view of the overstated amount

demanded from them. As held:

Since the Spouses Landrito, the debtors in

this case, were not given an opportunity

to settle their debt, at the correct amount

and without the iniquitous interest

imposed, no foreclosure proceedings may

be instituted. A judgment ordering a

foreclosure sale is conditioned upon a

finding on the correct amount of the

unpaid obligation and the failure of the

debtor to pay the said amount. In this

case, it has not yet been shown that the

Spouses Landrito had already failed to pay

the correct amount of the debt and,

therefore, a foreclosure sale cannot be

conducted in order to answer for the

unpaid debt. x x x

As a result, the subsequent registration of

the foreclosure sale cannot transfer any

rights over the mortgaged property to the

Spouses Espiritu. The registration of the

foreclosure sale, herein declared invalid,

cannot vest title over the mortgaged

property. x x x

• Cagayan II Electric Cooperative, Inc.

represented by its General Manager

and Chief Executive Officer, Gabriel A.

Tordesillas Vs. Allan Rapanan and

Mary Gine TangonanG.R. No. 199886.

http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2014/december2014/199886.pdf








158

December 3, 2014

Thus, there are two main issues that need

to be resolved by this Court: (1) Was

petitioner’s negligence in maintenance of

its facilities the proximate cause of the

death of Camilo and the injuries of

Rapanan? and (2) In the event that

petitioner’s negligence is found to be the

proximate cause of the accident, should

damages be awarded in favor of Camilo’s

heirs even if they were not impleaded?

Negligence is defined as the failure to

observe for the protection of the interest

of another person that degree of care,

precaution, and vigilance which the

circumstances justly demand, whereby

such other person suffers injury.12 Article

2176 of the Civil Code provides that

“[w]hoever by act or omission causes

damage to another, there being fault or

negligence, is obliged to pay for the

damage done. Such fault or negligence, if

there is no pre-existing contractual

relation between the parties, is a quasi-

delict.” Under this provision, the elements

necessary to establish a quasi-delict case

are: (1) damages to the plaintiff; (2)

negligence, by act or omission, of the

defendant or by some person for whose

acts the defendant must respond, was

guilty; and (3) the connection of cause

and effect between such negligence and

the damages.13chanrobleslaw

The presence of the first element is

undisputed because the unfortunate

incident brought about the death of

Camilo and physical injuries to Rapanan.

This Court, however, finds that the second

and third elements are lacking thus

precluding the award of damages in favor

of respondents.

Adviento, petitioner’s employee testified

that their electric poles along the

highways, including the one where the

mishap took place, were erected about

four to five meters from the shoulder of

the road. Another employee of petitioner,

Rasos, testified that after the typhoons hit

Cagayan, he together with his co-

employees, after checking the damage to

the electric lines, rolled the fallen electric

wires and placed them at the foot of the

electric poles so as to prevent mishaps to

pedestrians and vehicles passing by.

Thus, there is no negligence on the part of

petitioner that was allegedly the

proximate cause of Camilo’s death and

Rapanan’s injuries. From the testimonies

of petitioner’s employees and the excerpt

from the police blotter, this Court can

reasonably conclude that, at the time of

that fatal mishap, said wires were quietly

sitting on the shoulder of the road, far

enough from the concrete portion so as

not to pose any threat to passing motor

vehicles and even pedestrians. Hence, if

the victims of the mishap were strangled

by said wires, it can only mean that either

the motorcycle careened towards the

shoulder or even more likely, since the

police found the motorcycle not on the

shoulder but still on the road, that the

three passengers were thrown off from

the motorcycle to the shoulder of the road

and caught up with the wires. As to how

that happened cannot be blamed on

petitioner but should be attributed to

Camilo’s over speeding as concluded by

the police after it investigated the mishap.

SPO2 Tactac, in his testimony, explained

how they made such conclusion:

The foregoing shows that the motorcycle

was probably running too fast that it lost

control and started tilting and sliding

eventually which made its foot rest cause

the skid mark on the road. Therefore, the

mishap already occurred even while they

were on the road and away from

petitioner’s electric wires and was not

caused by the latter as alleged by

respondents. It just so happened that

after the motorcycle tilted and slid, the

passengers were thrown off to the

shoulder where the electric wires were.

This Court hence agrees with the trial

court that the proximate cause of the

mishap was the negligence of Camilo. Had

Camilo driven the motorcycle at an

average speed, the three passengers

would not have been thrown off from the

vehicle towards the shoulder and

eventually strangulated by the electric

wires sitting thereon. Moreover, it was




159

also negligent of Camilo to have allowed

two persons to ride with him and for

Rapanan to ride with them when the

maximum number of passengers of a

motorcycle is two including the driver.

This most likely even aggravated the

situation because the motorcycle was

overloaded which made it harder to drive

and control. When the plaintiff’s own

negligence was the immediate and

proximate cause of his injury, he cannot

recover damages.16chanrobleslaw

As to the second issue, assuming

arguendo that petitioner was indeed

negligent, the appellate court erred in

awarding damages in favor of Camilo’s

legal heirs since they were not impleaded

in the case. It should be noted that it was

Mary Gine, the common law wife of

Camilo, who is the complainant in the

case. As a mere common law wife of

Camilo, she is not considered a legal heir

of the latter, and hence, has no legal

personality to institute the action for

damages due to Camilo’s death.

• Florentino W. Leong and Elena Leong, et

al. Vs. Edna C. SeeG.R. No. 194077.

December 3, 2014

The sole issue for resolution is whether

respondent Edna C. See is a buyer in good

faith and for value.

We affirm the Court of Appeals.

The Torrens system was adopted to

“obviate possible conflicts of title by giving

the public the right to rely upon the face

of the Torrens certificate and to dispense,

as a rule, with the necessity of inquiring

further.”57

One need not inquire beyond the four

corners of the certificate of title when

dealing with registered

property.58 Section 44 of Presidential

Decree No. 1529 known as the Property

Registration Decree recognizes innocent

purchasers in good faith for value and

their right to rely on a clean title:

An innocent purchaser for value refers to

someone who “buys the property of

another without notice that some other

person has a right to or interest in it, and

who pays a full and fair price at the time

of the purchase or before receiving any

notice of another person’s claim.”60 One

claiming to be an innocent purchaser for

value has the burden of proving such

status.61

The protection of innocent purchasers in

good faith for value grounds on the social

interest embedded in the legal concept

granting indefeasibility of titles. Between

the third party and the owner, the latter

would be more familiar with the history

and status of the titled

property. Consequently, an owner would

incur less costs to discover alleged

invalidities relating to the property

compared to a third party. Such costs

are, thus, better borne by the owner to

mitigate costs for the economy, lessen

delays in transactions, and achieve a less

optimal welfare level for the entire

society.62

The question of whether Florentino and

Carmelita were already American citizens

at the time of the property’s sale to Edna

— thus no longer covered by our laws

relating to family rights and duties77 —

involves a factual question outside the

ambit of a petition for review on certiorari.

In any event, respondent exerted due

diligence when she ascertained the

authenticity of the documents attached to

the deed of sale such as the marital

settlement agreement with Florentino’s

waiver of interest over the property. She

did not rely solely on the title. She even

went to the Registry of Deeds to verify the

authenticity of the title.78 These further

inquiries were considered by the lower

courts in finding respondent to be an

innocent purchaser in good faith and for

value.

Lastly, an allegation of fraud must be

substantiated. Rule 8, Section 5 of the

Rules of Court provides:

SEC. 5. Fraud, mistake, condition of the

mind. – In all averments of fraud or

mistake, the circumstances






160

constituting fraud or mistake must be

stated with particularity . Malice

intent, knowledge or other condition of the

mind of a person may be averred

generally. (Emphasis supplied)

Even assuming the procurement of title

was tainted with fraud and

misrepresentation, “such defective title

may still be the source of a completely

legal and valid title in the hands of an

innocent purchaser for value.”80

Respondent, an innocent purchaser in

good faith and for value with title in her

name, has a better right to the property

than Elena. Elena’s possession was

neither adverse to nor in the concept of

owner.81

Article 428 of the Civil Code provides:

Art. 428. The owner has the right to

enjoy and dispose of a thing, without

other limitations than those established by

law.

The owner has also a right of action

against the holder and possessor of the

thing in order to recover it.82

Thus, respondent had every right to

pursue her claims as she did.

• Norma A. Del Socorro, for and in behalf of

her minor child Roderigo Norjo Van

Wilsem Vs. Ernst Johan Brinkman Van

WilsemG.R. No. 193707. December 10,

2014

Hence, the present Petition for Review on

Certiorari raising the following issues:

• Whether or not a foreign national has an

obligation to support his minor

child under Philippine law; and

Whether or not a foreign national can be

held criminally liable under R.A. No. 9262

for his unjustified failure to support his

minor child.27

It cannot be negated, moreover, that the

instant petition highlights a novel question

of law concerning the liability of a foreign

national who allegedly commits acts and

omissions punishable under special

criminal laws, specifically in relation to

family rights and duties. The inimitability

of the factual milieu of the present case,

therefore, deserves a definitive ruling by

this Court, which will eventually serve as a

guidepost for future cases. Furthermore,

dismissing the instant petition and

remanding the same to the CA would only

waste the time, effort and resources of the

courts. Thus, in the present case,

considerations of efficiency and economy

in the administration of justice should

prevail over the observance of the

hierarchy of courts.

Now, on the matter of the substantive

issues, We find the petition meritorious.

Nonetheless, we do not fully agree with

petitioner’s contentions.

To determine whether or not a person is

criminally liable under R.A. No. 9262, it is

imperative that the legal obligation to

support exists.

Petitioner invokes Article 19530 of the

Family Code, which provides the parent’s

obligation to support his child. Petitioner

contends that notwithstanding the

existence of a divorce decree issued in

relation to Article 26 of the Family Code,31

respondent is not excused from complying

with his obligation to support his minor

child with petitioner.

On the other hand, respondent contends

that there is no sufficient and clear basis

presented by petitioner that she, as well

as her minor son, are entitled to financial

support.32 Respondent also added that by

reason of the Divorce Decree, he is not

obligated to petitioner for any financial

support.33

On this point, we agree with respondent

that petitioner cannot rely on Article 19534

of the New Civil Code in demanding

support from respondent, who is a foreign

citizen, since Article 1535 of the New Civil

Code stresses the principle of nationality.

In other words, insofar as Philippine laws

are concerned, specifically the provisions

of the Family Code on support, the same








161

only applies to Filipino citizens. By

analogy, the same principle applies to

foreigners such that they are governed by

their national law with respect to family

rights and duties.36

The obligation to give support to a child is

a matter that falls under family rights and

duties. Since the respondent is a citizen

of Holland or the Netherlands, we agree

with the RTC-Cebu that he is subject to

the laws of his country, not to Philippine

law, as to whether he is obliged to give

support to his child, as well as the

consequences of his failure to do so.37

In the case of Vivo v. Cloribel,38 the Court

held that –

Furthermore, being still aliens, they are

not in position to invoke the

provisions of the Civil Code of the

Philippines, for that Code cleaves to

the principle that family rights and

duties are governed by their personal

law, i.e., the laws of the nation to which

they belong even when staying in a

foreign country (cf. Civil Code, Article

15).39

It cannot be gainsaid, therefore, that the

respondent is not obliged to support

petitioner’s son under Article 195 of the

Family Code as a consequence of the

Divorce Covenant obtained in Holland.

This does not, however, mean that

respondent is not obliged to support

petitioner’s son altogether.

In international law, the party who wants

to have a foreign law applied to a dispute

or case has the burden of proving the

foreign law.40 In the present case,

respondent hastily concludes that being a

national of the Netherlands, he is

governed by such laws on the matter of

provision of and capacity to support.41

While respondent pleaded the laws of the

Netherlands in advancing his position that

he is not obliged to support his son, he

never proved the same.

It is incumbent upon respondent to plead

and prove that the national law of the

Netherlands does not impose upon the

parents the obligation to support their

child (either before, during or after the

issuance of a divorce decree), because

Llorente v. Court of Appeals,42 has already

enunciated that:

True, foreign laws do not prove

themselves in our jurisdiction and our

courts are not authorized to take judicial

notice of them. Like any other fact, they

must be alleged and proved. 43

In view of respondent’s failure to prove

the national law of the Netherlands in his

favor, the doctrine of processual

presumption shall govern. Under this

doctrine, if the foreign law involved is not

properly pleaded and proved, our courts

will presume that the foreign law is the

same as our local or domestic or internal

law.44 Thus, since the law of the

Netherlands as regards the obligation to

support has not been properly pleaded

and proved in the instant case, it is

presumed to be the same with Philippine

law, which enforces the obligation of

parents to support their children and

penalizing the non-compliance therewith.

Moreover, while in Pilapil v. Ibay-

Somera',45 the Court held that a divorce

obtained in a foreign land as well as its

legal effects may be recognized in the

Philippines in view of the nationality

principle on the matter of status of

persons, the Divorce Covenant presented

by respondent does not completely show

that he is not liable to give support to his

son after the divorce decree was issued.

Emphasis is placed on petitioner’s

allegation that under the second page of

the aforesaid covenant, respondent’s

obligation to support his child is

specifically stated,46 which was not

disputed by respondent.

We likewise agree with petitioner that

notwithstanding that the national law of

respondent states that parents have no

obligation to support their children or that

such obligation is not punishable by law,




162

said law would still not find applicability, in

light of the ruling in Bank of America, NT

and SA v. American Realty Corporation,47

to wit:

In the instant case, assuming arguendo

that the English Law on the matter were

properly pleaded and proved in

accordance with Section 24, Rule 132 of

the Rules of Court and the jurisprudence

laid down in Yao Kee, et al. vs. Sy-

Gonzales, said foreign law would still not

find applicability.

Thus, when the foreign law, judgment

or contract is contrary to a sound and

established public policy of the forum,

the said foreign law, judgment or

order shall not be applied.

Additionally, prohibitive laws concerning

persons, their acts or property, and those

which have for their object public order,

public policy and good customs shall not

be rendered ineffective by laws or

judgments promulgated, or by

determinations or conventions agreed

upon in a foreign country.

The public policy sought to be protected in

the instant case is the principle imbedded

in our jurisdiction proscribing the splitting

up of a single cause of action.

Section 4, Rule 2 of the 1997 Rules of Civil

Procedure is pertinent —

If two or more suits are instituted on the

basis of the same cause of action, the

filing of one or a judgment upon the

merits in any one is available as a ground

for the dismissal of the others.

Moreover, foreign law should not be

applied when its application would

work undeniable injustice to the

citizens or residents of the forum. To

give justice is the most important function

of law; hence, a law, or judgment or

contract that is obviously unjust negates

the fundamental principles of Conflict of

Laws.48

Applying the foregoing, even if the laws of

the Netherlands neither enforce a parent’s

obligation to support his child nor penalize

the non-compliance therewith, such

obligation is still duly enforceable in the

Philippines because it would be of great

injustice to the child to be denied of

financial support when the latter is

entitled thereto.

We emphasize, however, that as to

petitioner herself, respondent is no longer

liable to support his former wife, in

consonance with the ruling in San Luis v.

San Luis,49 to wit:

As to the effect of the divorce on the

Filipino wife, the Court ruled that she

should no longer be considered married to

the alien spouse. Further, she should not

be required to perform her marital duties

and obligations. It held:

To maintain, as private respondent

does, that, under our laws, petitioner

has to be considered still married to

private respondent and still subject to

a wife's obligations under Article 109,

et. seq. of the Civil Code cannot be

just . Petitioner should not be obliged to

live together with, observe respect and

fidelity, and render support to private

respondent. The latter should not continue

to be one of her heirs with possible rights

to conjugal property. She should not be

discriminated against in her own

country if the ends of justice are to be

served. (Emphasis added)50

Based on the foregoing legal precepts, we

find that respondent may be made liable

under Section 5(e) and (i) of R.A. No.

9262 for unjustly refusing or failing to give

support to petitioner’s son, to wit:

SECTION 5. Acts of Violence Against

Women and Their Children.- The crime of

violence against women and their children

is committed through any of the following

acts:chanroblesvirtuallawlibrary

x x x x

(e) Attempting to compel or compelling

the woman or her child to engage in

conduct which the woman or her child has




163

the right to desist from or desist from

conduct which the woman or her child has

the right to engage in, or attempting to

restrict or restricting the woman's or her

child's freedom of movement or conduct

by force or threat of force, physical or

other harm or threat of physical or other

harm, or intimidation directed against the

woman or child. This shall include, but not

limited to, the following acts committed

with the purpose or effect of controlling or

restricting the woman's or her child's

movement or conduct:

x x x x

(2) Depriving or threatening to

deprive the woman or her children of

financial support legally due her or

her family , or deliberately providing the

woman's children insufficient financial

support;

x x x x

(i) Causing mental or emotional anguish,

public ridicule or humiliation to the woman

or her child, including, but not limited to,

repeated verbal and emotional abuse, and

denial of financial support or custody

of minor children of access to the

woman's child/children.51

Under the aforesaid special law, the

deprivation or denial of financial support

to the child is considered an act of

violence against women and children.

In addition, considering that respondent is

currently living in the Philippines, we find

strength in petitioner’s claim that the

Territoriality Principle in criminal law, in

relation to Article 14 of the New Civil

Code, applies to the instant case, which

provides that:“[p]enal laws and those of

public security and safety shall be

obligatory upon all who live and sojourn in

Philippine territory, subject to the principle

of public international law and to treaty

stipulations.” On this score, it is

indisputable that the alleged continuing

acts of respondent in refusing to support

his child with petitioner is committed here

in the Philippines as all of the parties

herein are residents of the Province of

Cebu City. As such, our courts have

territorial jurisdiction over the offense

charged against respondent. It is likewise

irrefutable that jurisdiction over the

respondent was acquired upon his arrest.

Finally, we do not agree with respondent’s

argument that granting, but not

admitting, that there is a legal basis for

charging violation of R.A. No. 9262 in the

instant case, the criminal liability has been

extinguished on the ground of prescription

of crime52 under Section 24 of R.A. No.

9262, which provides that:

SECTION 24. Prescriptive Period. – Acts

falling under Sections 5(a) to 5(f) shall

prescribe in twenty (20) years. Acts falling

under Sections 5(g) to 5(I) shall prescribe

in ten (10) years.

The act of denying support to a child

under Section 5(e)(2) and (i) of R.A. No.

9262 is a continuing offense,53 which

started in 1995 but is still ongoing at

present. Accordingly, the crime charged in

the instant case has clearly not

prescribed.

Given, however, that the issue on whether

respondent has provided support to

petitioner’s child calls for an examination

of the probative value of the evidence

presented, and the truth and falsehood of

facts being admitted, we hereby remand

the determination of this issue to the RTC-

Cebu which has jurisdiction over the case.

• NFF Industrial Corporation Vs. G & L

Associates Brokerage and/or Gerardo

TrinidadG.R. No. 178169. January 12,

2015

Simply, the issue before us is whether or

not there was valid delivery on the part of

petitioner in accordance with law, which

would give rise to an obligation to pay on

the part of respondent for the value of the

bulk bags.

The resolution of the issue at bar

necessitates a scrutiny of the concept of

“delivery” in the context of the Law on

Sales.33 Under the Civil Code, the vendor

is bound to transfer the ownership of and

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164

deliver, as well as warrant the thing which

is the object of the sale.34 The ownership

of thing sold is considered acquired by the

vendee once it is delivered to him in the

following wise:ChanRoblesVirtualawlibrary

Art. 1496. The ownership of the thing sold

is acquired by the vendee from the

moment it is delivered to him in any of the

ways specified in Articles 1497 to 1501, or

in any other manner signifying an

agreement that the possession is

transferred from the vendor to the

vendee.

Art. 1497. The thing sold shall be

understood as delivered, when it is placed

in the control and possession of the

vendee.

Thus, ownership does not pass by mere

stipulation but only by delivery.35 Manresa

explains, “the delivery of the thing x x x

signifies that title has passed from the

seller to the buyer."36 Moreover, according

to Tolentino, the purpose of delivery is not

only for the enjoyment of the thing but

also a mode of acquiring dominion and

determines the transmission of ownership,

the birth of the real right.37 The delivery

under any of the forms provided by

Articles 1497 to 1505 of the Civil Code

signifies that the transmission of

ownership from vendor to vendee has

taken place.38 Here, emphasis is placed on

Article 1497 of the Civil Code, which

contemplates what is known as real or

actual delivery, when the thing sold is

placed in the control and possession of the

vendee.39chanRoblesvirtualLawlibrary

In Equatorial Realty Development, Inc. v.

Mayfair Theater, Inc.,40 the concept of

“delivery” was elucidated, to

wit:ChanRoblesVirtualawlibrary

Delivery has been described as a

composite act, a thing in which both

parties must join and the minds of both

parties concur. It is an act by which one

party parts with the title to and the

possession of the property, and the other

acquires the right to and the possession of

the same. In its natural sense, delivery

means something in addition to the

delivery of property or title; it means

transfer of possession. In the Law on

Sales, delivery may be either actual or

constructive, but both forms of delivery

contemplate "the absolute giving up of

the control and custody of the

property on the part of the vendor,

and the assumption of the same by

the vendee."41

Applying the foregoing criteria to the case

at bar, We find that there were various

occasions of delivery by petitioner to

respondents, and the same was duly

acknowledged by respondent Trinidad.

Based on the foregoing, it is clear that

petitioner has actually delivered the bulk

bags to respondent company, albeit the

same was not delivered to the person

named in the Purchase Order. In addition,

by allowing petitioner’s employee to pass

through the guard-on-duty, who allowed

the entry of delivery into the premises of

Hi-Cement, which is the designated

delivery site, respondents had effectively

abandoned whatever infirmities may have

attended the delivery of the bulk bags. As

a matter of fact, if respondents were wary

about the manner of delivery, such issue

should have been brought up immediately

after the first delivery was made. Instead,

Mr. Trinidad acknowledged receipt of the

first batch of the bulk bags and even

followed up the remaining balance of the

orders for delivery.

At any rate, We find merit in petitioner’s

argument that despite its failure to strictly

comply with the instruction to deliver the

bulk bags to the specified person,

acceptance of delivery may be inferred

from the conduct of the respondents.52

Accordingly, respondents may be held

liable to pay for the price of the bulk bags

pursuant to Article 1585 of the Civil Code,

which provides


ARTICLE 1585. The buyer is deemed to

have accepted the goods when he

intimates to the seller that he has

accepted them, or when the goods have

been delivered to him, and he does any

act in relation to them which is

inconsistent with the ownership of the

seller, or when, after the lapse of a

reasonable time, he retains the goods




165

without intimating to the seller that he has

rejected them.

As early as Sy v. Mina,53 it has been

pronounced that the vendee’s acceptance

of the equipment and supplies and

accessories, and the use it made of them

is an implied conformity to the terms of

the invoices and he is bound thereby.54

The Court in that case also held that the

buyer’s failure to interpose any objection

to the invoices issued to it, to evidence

delivery of the materials ordered as per

their agreement, should be deemed as an

implied acceptance by the buyer of the

said

conditions.55chanRoblesvirtualLawlibrary

Indeed, the use by respondent of the bulk

bags is an act of dominion, which is

inconsistent with the ownership of

petitioner

• Saint Mary Crusade to Alleviate Poverty of

Brethren Foundation, Inc. Vs. Hon.

Teodoro T. Riel, acting Presding

Judge, Regional Trial Court,

respondent, University of the

Philippines G.R. No. 176508. January

12, 2015

A petition for the judicial reconstitution of

a Torrens title must strictly comply with

the requirements prescribed in Republic

Act No. 26;1 otherwise, the petition should

be dismissed.

• Velerio E. Kalaw Vs. Ma. Elena Fernandez

G.R. No. 166357. January 14, 2015

Dissenting OpinionJ. Del Castillo

• I

• Psychological incapacity as a

ground for the nullity of marriage

under Article 36 of the Family Code

refers to a serious psychological

illness afflicting a party even prior

to the celebration of the marriage

that is permanent as to deprive the

party of the awareness of the

duties and responsibilities of the

matrimonial bond he or she was about to assume.

The foregoing guidelines have turned out

to be rigid, such that their application to

every instance practically condemned the

petitions for declaration of nullity to the

fate of certain rejection. But Article 36 of

the Family Code must not be so strictly

and too literally read and applied given

the clear intendment of the drafters to

adopt its enacted version of “less

specificity” obviously to enable “some

resiliency in its application.” Instead,

every court should approach the issue of

nullity “not on the basis of a priori

assumptions, predilections or

generalizations, but according to its own

facts” in recognition of the verity that no

case would be on “all fours” with the next

one in the field of psychological incapacity

as a ground for the nullity of marriage;

hence, every “trial judge must take pains

in examining the factual milieu and the

appellate court must, as much as possible,

avoid substituting its own judgment for that of the trial court.”

After a long and hard second look, we

consider it improper and unwarranted to

give to such expert opinions a merely

generalized consideration and treatment,

least of all to dismiss their value as

inadequate basis for the declaration of the

nullity of the marriage. Instead, we hold

that said experts sufficiently and

competently described the psychological

incapacity of the respondent within the

standards of Article 36 of the Family Code.

We uphold the conclusions reached by the

two expert witnesses because they were

largely drawn from the case records and

affidavits, and should not anymore be

disputed after the RTC itself had accepted

the veracity of the petitioner’s factual

premises.

Admittedly, Dr. Gates based her findings

on the transcript of the petitioner’s

testimony, as well as on her interviews of

the petitioner, his sister Trinidad, and his

son Miguel. Although her findings would

seem to be unilateral under such

circumstances, it was not right to

disregard the findings on that basis alone.

After all, her expert opinion took into

consideration other factors extant in the

records, including the own opinions of

another expert who had analyzed the








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166

issue from the side of the respondent

herself. Moreover, it is already settled that

the courts must accord weight to expert

testimony on the psychological and mental

state of the parties in cases for the

declaration of the nullity of marriages, for

by the very nature of Article 36 of the

Family Code the courts, “despite having

the primary task and burden of decision-

making, must not discount but, instead,

must consider as decisive evidence the

expert opinion on the psychological and

mental temperaments of the parties.”

The expert opinion of Dr. Gates was

ultimately necessary herein to enable the

trial court to properly determine the issue

of psychological incapacity of the

respondent (if not also of the petitioner).

Consequently, the lack of personal

examination and interview of the person

diagnosed with personality disorder, like

the respondent, did not per se invalidate

the findings of the experts. The Court has

stressed in Marcos v. Marcos that there is

no requirement for one to be declared

psychologically incapacitated to be

personally examined by a physician,

because what is important is the presence

of evidence that adequately establishes

the party’s psychological incapacity.

Hence, “if the totality of evidence

presented is enough to sustain a finding of

psychological incapacity, then actual

medical examination of the person concerned need not be resorted to.”

Verily, the totality of the evidence must

show a link, medical or the like, between

the acts that manifest psychological

incapacity and the psychological disorder

itself. If other evidence showing that a

certain condition could possibly result

from an assumed state of facts existed in

the record, the expert opinion should be

admissible and be weighed as an aid for

the court in interpreting such other evidence on the causation.

Indeed, an expert opinion on

psychological incapacity should be

considered as conjectural or speculative

and without any probative value only in

the absence of other evidence to establish

causation. The expert’s findings under

such circumstances would not constitute

hearsay that would justify their exclusion

as evidence. This is so, considering that

any ruling that brands the scientific and

technical procedure adopted by Dr. Gates

as weakened by bias should be eschewed

if it was clear that her psychiatric

evaluation had been based on the parties’ upbringing and psychodynamics.

In her Psychological Evaluation Report, Dr.

Dayan impressed that the respondent had

“compulsive and dependent tendencies” to

the extent of being “relationship dependent.”

The frequency of the respondent’s

mahjong playing should not have

delimited our determination of the

presence or absence of psychological

incapacity. Instead, the determinant

should be her obvious failure to fully

appreciate the duties and responsibilities

of parenthood at the time she made her

marital vows. Had she fully appreciated

such duties and responsibilities, she would

have known that bringing along her

children of very tender ages to her

mahjong sessions would expose them to a

culture of gambling and other vices that would erode their moral fiber.

Nonetheless, the long-term effects of the

respondent’s obsessive mahjong playing

surely impacted on her family life,

particularly on her very young children.

We do find to be revealing the disclosures

made by Valerio Teodoro Kalaw – the

parties’ eldest son – in his deposition,

whereby the son confirmed the claim of

his father that his mother had been

hooked on playing mahjong,

The fact that the respondent brought her

children with her to her mahjong sessions

did not only point to her neglect of

parental duties, but also manifested her

tendency to expose them to a culture of

gambling. Her willfully exposing her




167

children to the culture of gambling on

every occasion of her mahjong sessions

was a very grave and serious act of

subordinating their needs for parenting to

the gratification of her own personal and

escapist desires.

The respondent revealed her wanton

disregard for her children’s moral and

mental development. This disregard

violated her duty as a parent to safeguard

and protect her children, as expressly

defined under Article 209 and Article 220 of the Family Code

More than twenty (20) years had passed

since the parties parted ways. By now,

they must have already accepted and

come to terms with the awful truth that

their marriage, assuming it existed in the

eyes of the law, was already beyond

repair. Both parties had inflicted so much

damage not only to themselves, but also

to the lives and psyche of their own

children. It would be a greater injustice

should we insist on still recognizing their

void marriage, and then force them and

their children to endure some more damage.

In this case, the marriage never existed

from the beginning because the

respondent was afflicted with

psychological incapacity at and prior to

the time of the marriage. Hence, the Court

should not hesitate to declare the nullity

of the marriage between the parties.

To stress, our mandate to protect the

inviolability of marriage as the basic

foundation of our society does not

preclude striking down a marital union

that is “ill-equipped to promote family

life,” t

• Republic of the Philippines Vs. Sps. Jose

Castura and CastueraG.R. No. 203384.

January 14, 2015

• The advance plan and the CENRO

certification are insufficient proofs

of the alienable and disposable

character of the property. The

Spouses Castuera, as applicants for

registration of title, must present a

certified true copy of the

Department of Environment and

Natural Resources Secretary’s

declaration or classification of the

land as alienable and disposable.

•

• Imelda, Leonardo, Fidelino, Azucena,

Josefina, Anita and Sisa, all surnamed

Syjuco Vs. Felisa D. Bonifacio and VSD

Realty & Development Corporation

G.R. No. 148748. January 14, 2015

It is an established doctrine in land

ownership disputes that the filing of an

action to quiet title is imprescriptible if the

disputed real property is in the possession

of the plaintiff. One who is in actual

possession of a piece of land claiming to

be owner thereof may wait until his

possession is disturbed or his title is

attacked before taking steps to vindicate

his right, the reason for the rule being

that his undisturbed possession gives him

a continuing right to seek the aid of a

court of equity to ascertain and determine

the nature of the adverse claim of a third

party and its effect on his own title, which

right can be claimed only by one who is in possession.

In this case, petitioners have duly

established during the trial that they

and/or their predecessors-in-interest have

been in uninterrupted possession of the

subject land since 1926 and that it was

only in 1994 when they found out that

respondent Bonifacio was able to register

the said property in her name in another

title. It was also only in 1995 when

petitioners learned that respondent

Bonifacio was able to sell and transfer her

title over the subject land in favor of

respondent VSD Realty.

Moreover, the rule on the

incontrovertibility or indefeasibility of title

has no application in this case given the

fact that the contending parties claim

ownership over the subject land based on

their respective certificates of title thereon

which originated from different sources.

Certainly, there cannot be two or even










168

several certificates of title on the same

parcel of real property because “a land

registration court has no jurisdiction to

order the registration of land already

decreed in the name of another in an

earlier land registration case” and “a

second decree for the same land would be

null and void, since the principle behind

original registration is to register a parcel

of land only once.” The indefeasibility of a

title under the Torrens system could be

claimed only if a previous valid title to the

same parcel of land does not exist. Where

the issuance of the title was attended by

fraud, the same cannot vest in the titled

owner any valid legal title to the land

covered by it; and the person in whose

name the title was issued cannot transmit

the same, for he has no true title thereto.

This ruling is a mere affirmation of the

recognized principle that a certificate is

not conclusive evidence of title if it is

shown that the same land had already

been registered and that an earlier

certificate for the same land is in

existence. Accordingly, petitioners’ filing

of an action to quiet title over the subject

land is in order.

• Glenn Viñas Vs. Mary Grace Parel-Viñas

G.R. No. 208790. January 21, 2015

issue of whether or not sufficient evidence

exist justifying the RTC’s declaration of

nullity of his marriage with Mary Grace.

Ruling of the Court

The instant petition lacks merit.

The lack of personal examination or

assessment of the respondent by a

psychologist or psychiatrist is not

necessarily fatal in a petition for the

declaration of nullity of marriage. “If the

totality of evidence presented is enough to

sustain a finding of psychological

incapacity, then actual medical

examination of the person concerned need

not be resorted

to.”29chanRoblesvirtualLawlibrary

In the instant petition, however, the

cumulative testimonies of Glenn, Dr.

Tayag and Rodelito, and the documentary

evidence offered do not sufficiently prove

the root cause, gravity and incurability of

Mary Grace’s condition. The evidence

merely shows that Mary Grace is outgoing,

strong-willed and not inclined to perform

household chores. Further, she is

employed in Dubai and is romantically-

involved with another man. She has not

been maintaining lines of communication

with Glenn at the time the latter filed the

petition before the RTC. Glenn, on the

other hand, is conservative, family-

oriented and is the exact opposite of Mary

Grace. While Glenn and Mary Grace

possess incompatible personalities, the

latter’s acts and traits do not necessarily

indicate psychological incapacity.

It is worth noting that Glenn and Mary

Grace lived with each other for more or

less seven years from 1999 to 2006. The

foregoing established fact shows that

living together as spouses under one roof

is not an impossibility. Mary Grace’s

departure from their home in 2006

indicates either a refusal or mere

difficulty, but not absolute inability to

comply with her obligation to live with her

husband.

Further, considering that Mary Grace was

not personally examined by Dr. Tayag,

there arose a greater burden to present

more convincing evidence to prove the

gravity, juridical antecedence and

incurability of the former’s condition.

Glenn, however, failed in this respect.

Glenn’s testimony is wanting in material

details. Rodelito, on the other hand, is a

blood relative of Glenn. Glenn’s

statements are hardly objective.

Moreover, Glenn and Rodelito both

referred to Mary Grace’s traits and acts,

which she exhibited during the marriage.

Hence, there is nary a proof on the

antecedence of Mary Grace’s alleged

incapacity. Glenn even testified that, six

months before they got married, they saw

each other almost everyday.32 Glenn saw

“a loving[,] caring and well[-]educated

person”33 in Mary Grace.

In the case at bar, Dr. Tayag made

general references to Mary Grace’s status





169

as the eldest among her siblings,36 her

father’s being an overseas contract worker

and her very tolerant mother, a

housewife.37 These, however, are not

sufficient to establish and explain the

supposed psychological incapacity of Mary

Grace warranting the declaration of the

nullity of the couple’s marriage.

The Court understands the inherent

difficulty attendant to obtaining the

statements of witnesses who can attest to

the antecedence of a person’s

psychological incapacity, but such

difficulty does not exempt a petitioner

from complying with what the law

requires. While the Court also

commiserates with Glenn’s marital woes,

the totality of the evidence presented

provides inadequate basis for the Court to

conclude that Mary Grace is indeed

psychologically incapacitated to comply

with her obligations as Glenn’s spouse.

• Ruks Konsult and Construction Vs.

Adworld Sign and Advertising

Corporation and Transworld Media

Ads, Inc.G.R. No. 204866. January 21,

2015


•

• The primordial issue for the Court’s

resolution is whether or not the CA

correctly affirmed the ruling of the

RTC declaring Ruks jointly and

severally liable with Transworld for

damages sustained by Adworld.

After a judicious perusal of the records,

the Court sees no cogent reason to

deviate from the findings of the RTC and

the CA and their uniform conclusion that

both Transworld and Ruks committed acts

resulting in the collapse of the former’s

billboard, which in turn, caused damage to

the adjacent billboard of Adworld.

Jurisprudence defines negligence as 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.27 It is

the failure to observe for the protection of

the interest of another person that degree

of care, precaution, and vigilance which

the circumstances justly demand, whereby

such other person suffers

injury.28chanRoblesvirtualLawlibrary

In this case, the CA correctly affirmed the

RTC’s finding that Transworld’s initial

construction of its billboard’s lower

structure without the proper foundation,

and that of Ruks’s finishing its upper

structure and just merely assuming that

Transworld would reinforce the weak

foundation are the two (2) successive acts

which were the direct and proximate

cause of the damages sustained by

Adworld. Worse, both Transworld and

Ruks were fully aware that the foundation

for the former’s billboard was weak; yet,

neither of them took any positive step to

reinforce the same. They merely relied on

each other’s word that repairs would be

done to such foundation, but none was

done at all. Clearly, the foregoing

circumstances show that both Transworld

and Ruks are guilty of negligence in the

construction of the former’s billboard, and

perforce, should be held liable for its

collapse and the resulting damage to

Adworld’s billboard structure. As joint

tortfeasors, therefore, they are solidarily

liable to Adworld. Verily, “[j]oint

tortfeasors are those who command,

instigate, promote, encourage, advise,

countenance, cooperate in, aid or abet the

commission of a tort, or approve of it after

it is done, if done for their benefit. They

are also referred to as those who act

together in committing wrong or whose

acts, if independent of each other, unite in

causing a single injury. Under Article

219429 of the Civil Code, joint tortfeasors

are solidarily liable for the resulting

damage. In other words, joint tortfeasors

are each liable as principals, to the same

extent and in the same manner as if they

had performed the wrongful act

themselves.”3

• First Optima Realty Corporation Vs.

Securitron Security Services Inc.G.R.

No. 199648. January 28, 2015

• In a potential sale transaction, the

prior payment of earnest money





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170

even before the property owner

can agree to sell his property is

irregular, and cannot be used to

bind the owner to the obligations

ofa seller under an otherwise

perfected contract ofsale; to cite a

well-worn cliche, the carriage

cannot be placed before the horse.

The property ov\.rner-prospective

seller may not be legally obliged to

enter into a sale with a prospective

buyer through the latter's

employment of questionable

practices which prevent the owner

from freely giving his consent to

the transaction; this constitutes a

palpable transgression ofthe

prospective seller's rights of

ownership over his property, an

anomaly which the Court will certainly not condone.

It cannot be denied that there were

negotiations between the parties

conducted after the respondent’s

December 9, 2004 letter-offer and prior to

the February 4, 2005 letter. These

negotiations culminated in a meeting

between Eleazar and Young whereby the

latter declined to enter into an agreement

and accept cash payment then being

tendered by the former. Instead, Young

informed Eleazar during said meeting that

she still had to confer with her sister and

petitioner’s board of directors; in turn,

Eleazar told Young that respondent shall await the necessary approval.

Thus, the trial and appellate courts failed

to appreciate that respondent’s offer to

purchase the subject property was never

accepted by the petitioner at any instance,

even after negotiations were held between

them. Thus, as between them, there is no

sale to speak of. “When there is merely an

offer by one party without acceptance of

the other, there is no contract.”

Since there is no perfected sale between

the parties, respondent had no obligation

to make payment through the check; nor

did it possess the right to deliver earnest

money to petitioner in order to bind the

latter to a sale. As contemplated under

Art. 1482 of the Civil Code, “there must

first be a perfected contract of sale before

we can speak of earnest money.” “Where

the parties merely exchanged offers and

counter-offers, no contract is perfected

since they did not yet give their consent to

such offers. Earnest money applies to a

perfected sale.”

In a potential sale transaction, the prior

payment of earnest money even before

the property owner can agree to sell his

property is irregular, and cannot be used

to bind the owner to the obligations of a

seller under an otherwise perfected

contract of sale; to cite a well-worn cliche,

the carriage cannot be placed before the

horse. The property owner-prospective

seller may not be legally obliged to enter

into a sale with a prospective buyer

through the latter’s employment of

questionable practices which prevent the

owner from freely giving his consent to

the transaction; this constitutes a palpable

transgression of the prospective seller’s

rights of ownership over his property, an

anomaly which the Court will certainly not

condone. An agreement where the prior

free consent of one party thereto is

withheld or suppressed will be struck

down, and the Court shall always

endeavor to protect a property owner’s

rights against devious practices that put

his property in danger of being lost or

unduly disposed without his prior

knowledge or consent. As this ponente

has held before, “[t]his Court cannot

presume the existence of a sale of.land, absent any direct proof ofit.

Nor will respondent's supposed payment

be 'treated as a deposit or guarantee; its

actions will not be dignified and must be

called for what they are: they were done

irregularly and with a view to acquiring

the subject property against petitioner's consent.

Finally, since there is nothing in legal

contemplation which petitioner must

perform particularly for the respondent, it

should follow that Civil Case No. 06- 0492

CFM for specific performance with

damages is left with no leg. to stand on; it




171

must be dismissed.

• Rodolfo S. Aguilar Vs. Edna G. SiasatG.R.

No. 200169. January 28, 2015

• Our Ruling

The Court grants the Petition.

This Court, speaking in De Jesus v. Estate of Dizon, has held that –

The filiation of illegitimate children, like

legitimate children, is established by (1)

the record of birth appearing in the civil

register or a final judgment; or (2) an

admission of legitimate filiation in a

public document or a private

handwritten instrument and signed by

the parent concerned. In the absence

thereof, filiation shall be proved by (1) the

open and continuous possession of the

status of a legitimate child; or (2) any

other means allowed by the Rules of Court

and special laws. The due recognition of

an illegitimate child in a record of

birth, a will, a statement before a

court of record, or in any authentic

writing is, in itself, a consummated

act of acknowledgment of the child,

and no further court action is

required. In fact, any authentic

writing is treated not just a ground

for compulsory recognition; it is in

itself a voluntary recognition that

does not require a separate action for

judicial approval. Where, instead, a

claim for recognition is predicated on

other evidence merely tending to prove

paternity, i.e., outside of a record of birth,

a will, a statement before a court of

record or an authentic writing, judicial

action within the applicable statute of

limitations is essential in order to establish the child’s acknowledgment.

A scrutiny of the records would show that

petitioners were born during the

marriage of their parents. The

certificates of live birth would also identify Danilo de Jesus as being their father.

There is perhaps no presumption of

the law more firmly established and

founded on sounder morality and

more convincing reason than the

presumption that children born in

wedlock are legitimate. This

presumption indeed becomes conclusive in

the absence of proof that there is physical

impossibility of access between the

spouses during the first 120 days of the

300 days which immediately precedes the

birth of the child due to (a) the physical

incapacity of the husband to have sexual

intercourse with his wife; (b) the fact that

the husband and wife are living separately

in such a way that sexual intercourse is

not possible; or (c) serious illness of the

husband, which absolutely prevents sexual

intercourse. Quite remarkably, upon the

expiration of the periods set forth in

Article 170, and in proper cases Article

171, of the Family Code (which took effect

on 03 August 1988), the action to impugn

the legitimacy of a child would no longer

be legally feasible and the status

conferred by the presumption becomes fixed and unassailable.

Thus, applying the foregoing

pronouncement to the instant case, it

must be concluded that petitioner – who

was born on March 5, 1945, or during the

marriage of Alfredo Aguilar and Candelaria

Siasat-Aguilar and before their respective

deaths – has sufficiently proved that he is

the legitimate issue of the Aguilar

spouses. As petitioner correctly argues,

Alfredo Aguilar’s SSS Form E-1 (Exhibit

“G”) satisfies the requirement for proof of

filiation and relationship to the Aguilar

spouses under Article 172 of the Family

Code; by itself, said document constitutes

an “admission of legitimate filiation in a

public document or a private handwritten

instrument and signed by the parent

concerned.”

To repeat what was stated in De Jesus,

filiation may be proved by an admission of

legitimate filiation in a public document or

a private handwritten instrument and

signed by the parent concerned, and such

due recognition in any authentic writing is,

in itself, a consummated act of

acknowledgment of the child, and no





172

further court action is required. And,

relative to said form of acknowledgment, the Court has further held that:

In view of the pronouncements herein

made, the Court sees it fit to adopt the

following rules respecting the requirement

of affixing the signature of the

acknowledging parent in any private

handwritten instrument wherein an

admission of filiation of a legitimate or illegitimate child is made:

1) Where the private handwritten

instrument is the lone piece of

evidence submitted to prove filiation,

there should be strict compliance with

the requirement that the same must

be signed by the acknowledging parent; and

2) Where the private handwritten

instrument is accompanied by other

relevant and competent evidence, it

suffices that the claim of filiation therein

be shown to have been made and

handwritten by the acknowledging parent

as it is merely corroborative of such other

evidence.

As to petitioner's argument that

respondent has no personality to impugn

his legitimacy and cannot

collaterally·attack his legitimacy, and that

the action to impugn his legitimacy has

already prescribed pursuant to Articles

170 and 171 of the Family Code, the Court

has held before that -

Article 263 refers to an action to impugn

the legitimacy of a child, to assert and

prove that a person is not a man's child by

his wife. However, the present case is not

one impugning petitioner's legitimacy.

Respondents are asserting not merely

thatfetitioner is not a legitimate child

ofJose, but that she is not a child of Jose

at all.

Finally, ifpetitioner has shown that he is

the legitimate issue ofthe Aguilar spouses,

then he is as well heir to the latter's

estate. Respondent is then left with no

right to inherit from her aunt Candelaria

Siasat-Aguilar's. estate, since succession

pertains, in the first place, to the

descending direct line.

• Republic of the Philippines Vs. Cecilia

Grace L. Roasa, married to Greg

Ambrose Roasa, as herein

represented by her Attorneys-in-fact,

Bernardo M. Nicolas, Jr. and Alvin B.

Acayen G.R. No. 176022. February 2,

2015

• issue as to when an applicant's

possession should be reckoned and

the resulting prevailing doctrine

•

Respondent’s right to the original

registration of title over the subject

property is, therefore, dependent on the

existence of (a) a declaration that the land

is alienable and disposable at the time of

the application for registration and (b)

open and continuous possession in the

concept of an owner through itself or

through its predecessors-in-interest since June 12, 1945 or earlier.

In the present case, there is no dispute

that the subject lot has been declared

alienable and disposable on March 15,

1982. This is more than eighteen (18)

years before respondent's application for

registration, which was filed on December

15, 2000. Moreover, the unchallenged

testimonies of two of respondent's

witnesses established that the latter and

her predecessors-in-interest had been in

adverse, open, continuous, and notorious

possession in the concept of an owner

even before June 12, 1945.

• Spouses Rolando and Herminia Salvador

Vs. Spouses Rogelio and Elizabeth

Rabaja and Rosario GonzalesG.R. No.

199990. February 4, 2015

The failure of Spouses Salvador to

attend pre-trial conference warrants

the presentation of evidence ex parte

by Spouses Rabaja

On the procedural aspect, the Court

reiterates the rule that the failure to

attend the pre-trial conference does not

result in the default of an absent party.

Under the 1997 Rules of Civil Procedure, a

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173

defendant is only declared in default if he

fails to file his Answer within the

reglementary period. On the other hand, if

a defendant fails to attend the pre-trial

conference, the plaintiff can present his

evidence ex parte.

From the foregoing, the failure of a party

to appear at the pre-trial has indeed

adverse consequences. If the absent party

is the plaintiff, then his case shall be

dismissed. If it is the defendant who fails

to appear, then the plaintiff is allowed to

present his evidence ex parte and the

court shall render judgment based on the

evidence presented. Thus, the plaintiff is

given the privilege to present his evidence

without objection from the defendant, the

likelihood being that the court will decide

in favor of the plaintiff, the defendant

having forfeited the opportunity to rebut

or present its own evidence. The stringent

application of the rules on pre-trial is

necessitated from the significant role of

the pre-trial stage in the litigation process.

Pre- trial is an answer to the clarion call

for the speedy disposition of cases.

Although it was discretionary under the

1940 Rules of Court, it was made

mandatory under the 1964 Rules and the

subsequent amendments in 1997. “The

importance of pre-trial in civil actions

cannot be overemphasized.”

Gonzales, as agent of Spouses

Salvador, could validly receive the

payments of Spouses Rabaja

Even on the substantial aspect, the

petition does not warrant consideration.

The Court agrees with the courts below in

finding that the contract entered into by

the parties was essentially a contract of sale which could be validly rescinded.

Spouses Salvador insist that they did not

receive the payments made by Spouses

Rabaja from Gonzales which totalled

P950,000.00 and that Gonzales was not

their duly authorized agent. These

contentions, however, must fail in light of

the applicable provisions of the New Civil

Code which state:

Art. 1900. So far as third persons are

concerned, an act is deemed to have been

performed within the scope of the agent's

authority, if such act is within the terms of

the power of attorney, as written, even if

the agent has in fact exceeded the limits

of his authority according to an

understanding between the principal and

the agent.

xxx x

Art. 1902. A third person with whom the agent wishes to

contract on behalf of the principal may

require the presentation of the power of

attorney, or the instructions as regards

the agency. Private or secret orders and

instructions of the principal do not

prejudice third persons who have relied

upon the power of attorney or instructions shown them.

xxxx

Art. 1910. The principal must comply with

all the obligations which the agent may

have contracted within the scope of his

authority.

Persons dealing with an agent must

ascertain not only the fact of agency, but

also the nature and extent of the agent’s

authority. A third person with whom the

agent wishes to contract on behalf of the

principal may require the presentation of

the power of attorney, or the instructions

as regards the agency. The basis for

agency is representation and a person

dealing with an agent is put upon inquiry

and must discover on his own peril the

authority of the agent.

According to Article 1990 of the New Civil

Code, insofar as third persons are

concerned, an act is deemed to have been

performed within the scope of the agent's

authority, if such act is within the terms of

the power of attorney, as written. In this

case, Spouses Rabaja did not recklessly




174

enter into a contract to sell with Gonzales.

They required her presentation of the

power of attorney before they transacted

with her principal. And when Gonzales

presented the SPA to Spouses Rabaja, the

latter had no reason not to rely on it.

The law mandates an agent to act within

the scope of his authority which what

appears in the written terms of the power

of attorney granted upon him. The Court

holds that, indeed, Gonzales acted within

the scope of her authority. The SPA

precisely stated that she could administer

the property, negotiate the sale and

collect any document and all payments

related to the subject property. As the

agent acted within the scope of his

authority, the principal must comply with

all the obligations. As correctly held by the

CA, considering that it was not shown that

Gonzales exceeded her authority or that

she expressly bound herself to be liable,

then she could not be considered

personally and solidarily liable with the

principal, Spouses Salvador.

• G.R. No. 192718. February 18, 2015

Dissenting Opinion

• J. Leonen

• The Court’s Ruling

• The main issue is whether the

totality of the evidence adduced

proves that Luz was psychologically

incapacitated to comply with the

essential obligations of marriage

warranting the annulment of their

marriage under Article 36 of the Family Code.

“Psychological incapacity," as a ground to

nullify a marriage under Article 36 of the

Family Code, should refer to no less than

a mental – not merely physical –

incapacity that causes a party to be truly

incognitive of the basic marital covenants

that concomitantly must be assumed and

discharged by the parties to the marriage

which, as so expressed in Article 68 of the

Family Code, among others, include their

mutual obligations to live together;

observe love, respect and fidelity; and

render help and support. There is hardly a

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.

Psychological incapacity as required by

Article 36 must be characterized by (a)

gravity, (b) juridical antecedence and (c)

incurability. The incapacity must be grave

or serious such that the party would be

incapable of carrying out the ordinary

duties required in marriage. It must be

rooted in the history of the party

antedating the marriage, although the

overt manifestations may only emerge

after the marriage. It must be incurable

or, even if it were otherwise, the cure

would be beyond the means of the party

involved.

Guided by these pronouncements, the

Court is of the considered view that

Robert’s evidence failed to establish the psychological incapacity of Luz.

First, the testimony of Robert failed to

overcome the burden of proof to show the

nullity of the marriage. Other than his

self-serving testimony, no other evidence

was adduced to show the alleged

incapacity of Luz. He presented no other

witnesses to corroborate his allegations on

her behavior. Thus, his testimony was

self-serving and had no serious value as evidence.

Second, the root cause of the alleged

psychological incapacity of Luz was not

medically or clinically identified, and

sufficiently proven during the trial. Based

on the records, Robert failed to prove that

her disposition of not cleaning the room,

preparing their meal, washing the clothes,

and propensity for dating and receiving

different male visitors, was grave, deeply

rooted, and incurable within the

parameters of jurisprudence on psychological incapacity.

http://sc.judiciary.gov.ph/pdf/web/viewer.html?file=/jurisprudence/2015/february2015/192718_leonen.pdf




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The alleged failure of Luz to assume her

duties as a wife and as a mother, as well

as her emotional immaturity,

irresponsibility and infidelity, cannot rise

to the level of psychological incapacity

that justifies the nullification of the

parties' marriage. The Court has

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. Indeed, to

be declared clinically or medically

incurable is one thing; to refuse or be

reluctant to perform one's duties is

another. 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.

As correctly found by the CA, sexual

infidelity or perversion and abandonment

do not, by themselves, constitute grounds

for declaring a marriage void based on

psychological incapacity. Robert argues

that the series of sexual indiscretion of

Luz were external manifestations of the

psychological defect that she was

suffering within her person, which could

be considered as nymphomania or

“excessive sex hunger.” Other than his

allegations, however, no other convincing

evidence was adduced to prove that these

sexual indiscretions were considered as

nymphomania, and that it was grave,

deeply rooted, and incurable within the

term of psychological incapacity embodied

in Article 36. To stress, Robert’s testimony

alone is insufficient to prove the existence

of psychological incapacity.

Third, the psychological report of

Villanueva, Guidance Psychologist II of the

Northern Mindanao Medical Center,

Cagayan de Oro City, was insufficient to

prove the psychological incapacity of Luz.

There was nothing in the records that

would indicate that Luz had either been

interviewed or was subjected to a

psychological examination. The finding as

to her psychological incapacity was based

entirely on hearsay and the self-serving information provided by Robert.

Fourth, the decision of the Metropolitan

Tribunal is insufficient to prove the

psychological incapacity of Luz. Although

it is true that in the case of Republic v.

Court of Appeals and Molina, the Court

stated that interpretations given by the

NAMT of the Catholic Church in the

Philippines, while not controlling or

decisive, should be given great respect by

our courts, still it is subject to the law on evidence.

In this regard, the belated presentation of

the decision of the NAMT cannot be given

value since it was not offered during the

trial, and the Court has in no way of

ascertaining the evidence considered by the same tribunal.

Granting that it was offered and admitted,

it must be pointed out that the basis of

the declaration of nullity of marriage by

the NAMT was not the third paragraph

of Canon 1095 which mentions causes of

a psychological nature similar to Article 36

of the Family Code, but the second

paragraph of Canon 1095 which

refers to those who suffer from grave

lack of discretion of judgment

concerning essential matrimonial

rights and obligations to be mutually

given and accepted.

Hence, Robert’s reliance on the NAMT

decision is misplaced. To repeat, the

decision of the NAMT was based on the

second paragraph of Canon 1095

which refers to those who suffer from

a grave lack of discretion of judgment

concerning essential matrimonial

rights and obligations to be mutually

given and accepted, a cause not of

psychological nature under Article 36 of

the Family Code. A cause of psychological

nature similar to Article 36 is covered by

the third paragraph of Canon 1095 of




176

the Code of Canon Law

To hold that annulment of marriages

decreed by the NAMT under the second

paragraph of Canon 1095 should also be

covered would be to expand what the

lawmakers did not intend to include. What

would prevent members of other religious

groups from invoking their own

interpretation of psychological incapacity?

Would this not lead to multiple, if not inconsistent, interpretations?

To consider church annulments as

additional grounds for annulment under

Article 36 would be legislating from the

bench. As stated in Republic v. Court

ofAppeals and Molina, interpretations

given by the NAMT of the Catholic Church

in the Philippines are given great respect

by our courts, but they are not controlling or decisive.

As asserted by the OSG, the allegations of

the petitioner make a case for legal

separation. Hence, this decision is without

prejudice to an action for legal separation

if a party would want to pursue such

proceedings. In this disposition, the Court

cannot decree a legal separation because

in such proceedings, there are matters

and consequences like custody and

separation of properties that need to be

considered and settled.

• R. Transport Corporation Vs. Luisito G. Yu

G.R. No. 174161. February 18, 2015

Under Article 2180 of the New Civil Code,

employers are liable for the damages

caused by their employees acting within

the scope of their assigned tasks. Once

negligence on the part of the employee is

established, a presumption instantly arises

that the employer was remiss in the

selection and/or supervision of the

negligent employee. To avoid liability for

the quasi-delict committed by its

employee, it is incumbent upon the

employer to rebut this presumption by

presenting adequate and convincing proof

that it exercised the care and diligence of

a good father of a family in the selection

and supervision of its employees.

Unfortunately, however, the records of

this case are bereft of any proof showing

the exercise by petitioner of the required

diligence. As aptly observed by the CA, no

evidence of whatever nature was ever

presented depicting petitioner’s due

diligence in the selection and supervision

of its driver, Gimena, despite several

opportunities to do so. In fact, in its

petition, apart from denying the

negligence of its employee and imputing

the same to the bus from which the victim

alighted, petitioner merely reiterates its

argument that since it is not the

registered owner of the bus which bumped

the victim, it cannot be held liable for the

damage caused by the same. Nowhere

was it even remotely alleged that

petitioner had exercised the required

diligence in the selection and supervision

of its employee. Because of this failure,

petitioner cannot now avoid liability for

the quasi-delict committed by its negligent

employee.

it must be noted that the case at hand

does not involve a breach of contract of

carriage, as in Tamayo, but a tort or

quasi-delict under Article 2176, in relation

to Article 2180 of the New Civil Code. As

such, the liability for which petitioner is

being made responsible actually arises not

from a pre-existing contractual relation

between petitioner and the deceased, but

from a damage caused by the negligence

of its employee. Petitioner cannot,

therefore, rely on our ruling in Tamayo

and escape its solidary liability for the

liability of the employer for the negligent

conduct of its subordinate is direct and

primary, subject only to the defense of

due diligence in the selection and supervision ofthe employee.

Hence, considering that the negligence of

driver Gimena was sufficiently proven by

the records of the case, and that no

evidence of whatever nature was

presented by petitioner to support its

defense of due diligence in the selection





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and supervision of its employees,

petitioner, as the employer of Gimena,

may be held liable for damages arising

from the death of respondent Y u's wife.

• New World Developers and Management,

Inc. Vs. AMA Computer Learning

Center, Inc./AMA Computer Learning

Center, Inc. Vs. New World

Developers and Management, Inc.

G.R. Nos. 187930 & 188250. February 23,

2015

1. I.

AMA is liable for six months’

worth of rent as liquidated damages.

Quite notable is the fact that AMA never

denied its liability for the payment of

liquidated damages in view of its

pretermination of the lease contract with

New World. What it claims, however, is

that it is entitled to the reduction of the

amount due to the serious business losses

it suffered as a result of a drastic decrease in its enrollment.

The law does not relieve a party from the

consequences of a contract it entered into

with all the required formalities. Courts

have no power to ease the burden of

obligations voluntarily assumed by parties,

just because things did not turn out as expected at the inception of the contract.

It must also be emphasized that AMA is an

entity that has had significant business

experience, and is not a mere babe in the

woods.

Articles 1159 and 1306 of the Civil Code state:

Art. 1159. Obligations arising from

contracts have the force of law between

the contracting parties and should be

complied with in good faith.

xxx x

Art. 1306. 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.

The fundamental rule is that a contract is

the law between the parties. Unless it has

been shown that its provisions are wholly

or in part contrary to law, morals, good

customs, public order, or public policy, the

contract will be strictly enforced by the courts.

It is quite easy to understand the reason

why a lessor would impose liquidated

damages in the event of the

pretermination of a lease contract.

Pretermination is effectively the breach of

a contract, that was originally intended to

cover an agreed upon period of time. A

definite period assures the lessor a steady

income for the duration. A pretermination

would suddenly cut short what would

otherwise have been a longer profitable

relationship. Along the way, the lessor is

bound to incur losses until it is able to find

a new lessee, and it is this loss of income

that is sought to be compensated by the

payment of liquidated damages.

• Mariflor T. Hortizuela (represented by

Jovier Tagufa) Vs. Gregoria Tagufa,

Roberto Tagufa and Rogelio Lumaban

G.R. No. 205867. February 23, 2015

• Contrary to the pronouncements of

the MCTC and the CA, however,

the complaint of Hortizuela was not

a collateral attack on the title

warranting dismissal. As a matter

of fact, an action for reconveyance

is a recognized remedy, an action

in personam, available to a person

whose property has been

wrongfully registered under the

Torrens system in another’s name.

In an action for reconveyance, the

decree is not sought to be set

aside. It does not seek to set aside

the decree but, respecting it as

incontrovertible and no longer open

to review, seeks to transfer or

reconvey the land from the

registered owner to the rightful












178

owner. Reconveyance is always

available as long as the property

has not passed to an innocent third

person for value.

• There is no quibble that a

certificate of title, like in the case

at bench, can only be questioned

through a direct proceeding. The

MCTC and the CA, however, failed

to take into account that in a

complaint for reconveyance, the

decree of registration is respected

as incontrovertible and is not being

questioned. What is being sought is

the transfer of the property

wrongfully or erroneously

registered in another's name to its

rightful owner or to the one with a

better right. If the registration of

the land is fraudulent, the person

in whose name the land is

registered holds it as a mere

trustee, and the real owner is

entitled to file an action for reconveyance of the property.

The fact that Gregoria was able to secure

a title in her name does not operate to

vest ownership upon her of the subject

land. “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. It cannot be used to protect a

usurper from the true owner; nor can it be

used as a shield for the commission of

fraud; neither does it permit one to enrich

himself at the expense of others. Its

issuance in favor of a particular person

does not foreclose the possibility that the

real property may be co-owned with

persons not named in the certificate, or

that it may be held in trust for another

person by the registered owner.”

The Court is not unaware of the rule that

a fraudulently acquired free patent may

only be assailed by the government in an

action for reversion pursuant to Section 101 of the Public Land Act.

An action for reconveyance is proper

The foregoing rule is, however, not

without exception. A recognized exception

is that situation where plaintiff-claimant

seeks direct reconveyance from defendant

of public land unlawfully and in breach of

trust titled by him, on the principle of enforcement of a constructive trust.

In this case, in filing the complaint for

reconveyance and recovery of possession,

Hortizuela was not seeking a

reconsideration of the granting of the

patent or the decree issued in the

registration proceedings. What she was

seeking was the reconveyance of the

subject property on account of the fraud

committed by respondent Gregoria. An

action for reconveyance is a legal and

equitable remedy granted to the rightful

landowner, whose land was wrongfully or

erroneously registered in the name of

another, to compel the registered owner

to transfer or reconvey the land to him.

Thus, the RTC did not err in upholding the

right of Hortizuela to ask for the

reconveyance of the subject property. To

hold otherwise would be to make the

Torrens system a shield for the

commission of fraud.